The Everlasting Significance of Marx's Capital, Vygodsky, 1975

PART II "... NOT A DOCTRINE BUT A METHOD"

As we looked at certain stages in the history of Capital, we saw the tremendous role played at every stage by Marx's method of economic research. It would be no exaggeration to say that scientific method was decisive to the development of Marx's economic theory. "The working out of the method which forms the foundation of Marx's criticism of political economy," Engels observed, "we consider a result of hardly less importance than the basic materialist outlook itself." [52] It was the superiority of Marx's method of research over the method of bourgeois political economy that enabled him to solve the fundamental problems of economics and produce an economic theory which is still relevant to this day.

As he built up his theory, Marx would always clear away the "scaffolding" of method.- At the close of 1861, he wrote to Engels: "My writing is getting on, but slowly. ... Anyway, it will be much more popular and the method much better hidden away." [53] Still, by making a close study of the history of the development of Marx's economic doctrine, and in the first place of the economic drafts which comprise the different versions of Capital, one can reconstruct one after another the stages of its progress and see, to quote Hegel, "... the result along with the process of arriving at it." [54]

The basic feature of Marx's economic manuscripts is that they reflect, above all, the process of theoretical investigation of the capitalist economy while the three volumes of Capital mainly contain an exposition of the already developed theory. For this reason the method of economic inquiry which Marx developed and applied in the process of his investigation, later, when the theory was expounded, was "hidden away." This is what makes it so important to study Marx's legacy as a whole, for it is only in this way that one may form a comprehensive idea of Marxist economic doctrine.

In this part of the book we would like to describe certain features of Marx's scientific method (already disclosed in part in the discussion of how Capital was written) and illustrate them by concrete examples.

1. Understanding Reality

At the end of August 1857 Marx wrote an outline for the Introduction to Capital. In it he stated in more detail than anywhere else his ideas respecting the method of studying political economy he had worked out. Marx described it as advancing from the simplest, the most general and abstract to more concrete concepts of reality. The readers may be aware that that is the general method by which every science develops, and the main principles of which were formulated by Hegel long ago. Nevertheless, Marx was the first to apply this method from materialist positions, the first to give it a materialist interpretation. Marx showed, firstly, that advancing from the abstract to the concrete is necessarily preceded by proceeding from the concrete to the abstract. Thus reality serves as the starting-point of scientific theory. Secondly, Marx showed that advancing from the abstract to the concrete essentially corresponds to the actual process of history and terminates in a scientific, integral reproduction of the concrete.

Let us illustrate this important feature of Marx's scientific method by discussing how he evolved his theory of value. Marx expounded this theory for the first time in the part of the manuscript of 1857-58, entitled The Chapter on Money and opening with the criticism of the petty-bourgeois theory of money advanced by Proudhon and Proudhonians. This fact has its own profound methodological reasons. After all money is a form in which the value of a commodity is expressed. Money is the external expression of value. In his criticism of petty-bourgeois and then also of bourgeois political economy (the petty-bourgeois Proudhonian theory of money was actually nothing but a bourgeois interpretation carried to an absurdity) Marx always began by going from the surface to the essence gradually delving deeper and deeper into capitalist reality. For this reason Marx began his manuscript with a study of the theory of money and only after that proceeded to examine the value of a commodity. Later on Marx wrote: "In fact we started from exchange-value, or the exchange relation of commodities, in order to get at the value that lies hidden behind it." [55] In the course of research Marx showed that the theory of money was the consequence of the theory of value and therefore the false bourgeois and petty-bourgeois theories of value were consequences of false theories of value as also of the essential shortcomings of the labour theory of value of the classical bourgeois economists.

How a bourgeois economist understood the category of money was therefore to Marx the test of his understanding of the category of value. And the same can be said of Marx's own theory: his theory of value stands or falls on the soundness of his theory of money. In his works of the latter half of the 1840s Marx largely shared the Ricardian theory of value with all its shortcomings.[*] Marx also shared the Ricardian so-called quantitative theory of money. According to this theory which was shared—and is still shared—by the majority of bourgeois economists, money is not a specific commodity performing the part of the universal equivalent, but merely an instrument of circulation. Marx wrote in The Poverty of Philosophy: "...precisely gold and silver, as money, are of all commodities the only ones not determined by their cost of production; and this is so true that in circulation they can be replaced by paper." [56] The falsity of the typically quantitative approach to the theory of money becomes strikingly obvious at the time of monetary crises, when paper money is drastically depreciated and its absolute dependence on gold, this specific commodity, comes to light.

Having worked out his theory of value, Marx immediately took a critical look at the quantitative theory of money. "Ricardo's theory of money," he stated in the manuscript of 185758, "is as completely refuted as its false assumptions." [57] It is important to note that already in The Poverty of Philosophy Marx posed the question of the objective necessity of money under a system of production which rests on the individual exchange of the products of labour. Simultaneously he stressed that the question that had concerned Proudhon, as to why gold and silver performed this particular function was a secondary question the answer to which should be sought not in the bourgeois economic system as a whole but in the specific qualities of gold and silver as substances [58] Raising the question of the necessity of money under commodity production, Marx in The Poverty of Philosophy did not yet offer any solution. That could be furnished only in conjunction with the theory of value, as one of its consequences. Thus the working out of the Marxist theory of value in the manuscripts of 1857-58 simultaneously attests that Marx produced his own theory of value only at that time.

In the first volume of Capital the category of a commodity as the "economic cell-form" of bourgeois society appears as the starting-point from which Marx built his theory advancing from the abstract to the concrete. Behind it, however, lies the process of inquiry which brought Marx to this conception of a commodity. And this process is of great importance, as it alone makes it possible to avoid forming a false conception of a theory as an a priori construction. In other words, it makes it possible to avoid a dogmatic approach to Marx's economic theory. The study of the draft versions of Capital affords us the unique opportunity of being present, as it were, at the birth of a new theory, tracing every detail of the difficult process of the discovery of the "economic cell-form" of capitalism.

Examination of Marx's scientific method—the method of advancing from the abstract to the concrete--inevitably gives rise to certain questions in the reader's mind. First, Marx's analysis has shown that every social structure must have an elementary "economic cell-form" peculiar to it, which furnishes the starting-point for building an economic theory for the society it is part of. The construction of such a theory must necessarily be preceded by the isolation of certain "determinant, abstract, general relations..." [59] which together constitute the "cell-form" to be found. This gives rise to the question as to what requirements the "economic cell-form" must satisfy. Or, to put it differently, what limits the transition from the concrete to the abstract may (and must) reach before there begins the reverse process of advancing from the abstract to the concrete, i.e. the proper process of developing an economic theory. Second, the method of advancing from the abstract to the concrete dictates the necessity of making an economic theory concrete, advancing from the abstract, underlying categories to the concrete. "surface" categories.

What can be said in this respect of Marx's economic theory? Is it concrete or is it abstract? Does it need to be made more concrete? To these and some other questions we shall now proceed.

2. "The Splitting of a Single Whole..."

First of all it must be recalled that in The German Ideology (1845-46) Marx and Engels, analysing the category of social production, for the first time consistently applied the fundamentally important method of studying social phenomena based on the determination of material content and social form of every social phenomenon. The category of social production was for the first time presented as a dialectical, conflicting unity of the productive forces and the relations of production.

The conflict between the productive forces and the relations of production appears as the source of the development of social production and ultimately as the source of historical development at large. Social material production conceived in this particular way was defined by Marx in 1857 as the object of his research. The productive forces are subject to economic analysis as the material content of social production. the material embodiment of the relations of production. The latter--like all other social relations—cannot be perceived by the senses, "by touch"; we can only have a mental conception of them. We can fix them in thought, separately from the productive forces which are their material exponents. But in actual fact the relations of production do not exist apart from the productive forces.

Having developed a scientific method of studying economic phenomena, Marx and Engels left far behind, from a methodological standpoint, bourgeois political economy whose best representatives still failed to "split" the category of social production as well as other economic categories. Bourgeois economists failed to solve this problem because they strove, wittingly or unwittingly, to present the economic laws of capitalism as the eternal laws of nature. The conception of social production as a unity of the productive forces and the relations of production, on the contrary, made it possible to view history as a succession of social formations, a succession of different modes of social production.

In Capital Marx gave a classical analysis of the process of capitalist production. Throughout the process of advancing from the abstract to the concrete Marx considers each economic category—the commodity, money, capital, etc.—from the point of view of the dialectical unity of material content, which ultimately reflects the development of the productive forces, and social form, which reflects the capitalist relations of production. Marx pointed out: "... neither 'value' nor 'exchange-value' are the categories I consider, but the commodity." [60] The commodity, as a unity of the use-value (the material content) and value (the social form) constitutes the elementary "economic cell-form" of bourgeois society, and as such is the point of departure for theoretical analysis in Capital.

It is the distinction between the social form of an economic phenomenon and its material content that determines the limits of abstraction permissible in each individual case, the limits within which one may proceed from the concrete to the abstract. Marx applies this yardstick both to very general problems—e.g., the antagonistic character of bourgeois production and its material content, the "economic cell-form" of bourgeois society—and to more concrete, special questions, e.g., productive labour under capitalism. But important as it is to differentiate between the social form and material content of economic phenomena, any dissociation from the social form of economic phenomena investigated is impermissible. In other words, the economic categories giving expression to economic phenomena cannot he deduced independently of the relations of production (the relations of production are the social form of economic phenomena), merely from the material characteristics, from the material content of the phenomena. Bourgeois political economy does not take into consideration the antagonistic form of capitalist production and regards its laws as dominant in all formations. That was the reason why bourgeois economists failed to discover and analyse the "economic cell-form" of capitalism.

But the question of determining the social form and material content of an economic phenomenon has also another side to it. Whereas specific features of economic phenomena and processes peculiar to a particular mode of production can be deduced solely from their social form, the study of their material content makes it possible to establish and describe the general characteristics and attributes common to all (or to some) modes of production. This is what makes it possible to apply Marxist economic theory to the analysis of socialist production, to scientific forecasting in a communist economy. For example, Lenin's well-known proposition that under "pure communism" too the Marxist formulas of extended reproduction (they are stated in Volume II of Capital) will be operative and accumulation will go on [61] proceeds from the material basis of Marx's schemes of reproduction.

In Capital Marx makes a clear distinction every time between the material content of the capitalist mode of production on the one hand,and its antagonistic social form on the other. It is here, in the descriptions of the material content of the capitalist economic system, that the great mass of material is found which forms the groundwork of the Marxist theory of the communist mode of production. Marx's conclusions on the communist economic system follow each time directly from his economic theory, from the analysis of the material content of the economic processes going on under capitalism. Every time Marx casts aside the antagonistic social form which distorts, in capitalist conditions, the actual material content of the economic processes studied, and this enables him to predict scientifically (not like the Utopian socialists with their usual practice of crystal-gazing) how these processes will develop under communism. In the third part of this book we shall deal with some of the forecasts made by Marx. And now it remains to describe one of the most important aspects of Marx's method, thanks to which it serves as a method of scientific abstraction.

3. The Force of Abstraction

The title of this section comes from a quotation in the Foreword to Volume I of Capital in which Marx wrote: "In the analysis of economic forms, moreover, neither microscopes or chemical reagents are of use. The force of abstraction must replace both." [62] Why must abstraction be used in scientific study? It is because in real life things are usually not what they seem. The object of science is to penetrate through the appearance to the essence of things. Abstraction is just what enables science to tackle this highly complex task. "Thought proceeding from the concrete to the abstract—provided it is correct. . . does not get away f r o m the truth but comes closer to it," Lenin wrote in the Philosophical Notebooks. "The abstraction of matter, of a law of nature, the abstraction of value, etc., in short all scientific (correct, serious, not absurd) abstractions reflect nature more deeply, truly and c o m p l e t e l y." [63]

In applying the method of scientific abstraction it is most important to determine the degree of abstraction necessary in each case. There is no ready-made formula for this. One thing is clear. In every case Marx abstracts secondary, inessential points which encumber the investigation of the subject. Without that kind of abstraction it would be plainly impossible  to study things, as their essence would be concealed or camouflaged by numerous side issues. Even so it must be stressed - and is what makes it so difficult to determine the necessary degree of abstraction - that the secondary facts from which Marx abstracts are secondary only as regards a particular case. In another case, viewed from a different aspect, they may lie of primary importance and by no means to be abstracted from.

Here are a few examples. In his investigation Marx based himself on the fact that the wage, or the price of labour-power, the capitalist pays to the worker is equal to its value, although in bourgeois practice there is a stable tendency for lowering wages in various ways, below the value of labour-power. Marx, however, pointed out: "We must always presuppose here that the wage paid is economically just, i.e. that it is determined by the general laws of economics. The contradictions have to follow here from the general relations themselves, and not from fraud by individual capitalists.'' [64] It is worth noting that by the "general laws of economics" Marx means above all the law of value. And Marx's economic theory explains capitalist exploitation on the basis of the law of value and not in conflict with it, not because of "fraud by individual capitalists." Nevertheless, in other cases, at a more concrete level of study, in analysing the dynamics of wages, their deviation from the value of labour-power can no longer be neglected.

Abstraction from actual deviation of the price of labour-power from its value is a particular example of a more general assumption made by Marx throughout Capital by which price is equated to value. The thing is that all economic laws and categories, like all the social laws of capitalism in general, in actual practice emerge merely as tendencies, in a roundabout way, or, as Engels put it, "...only with asymptotic approximation." [65] However, in his economic theory Marx proceeds on the assumption that theoretical categories are exact expressions of economic phenomena. This feature of Marx's method is particularly evident from his postulation of the identity of commodity values and market prices. In Volume III of Capital Marx wrote: "We proceed in this entire analysis from the assumption that the rise or fall in prices expresses actual fluctuations in value.'' [66] At the first glance this assumption seems to be in contradiction with the principles of the Marxist theory of value. After all it is in the deviation of the market price from value that the law of value is realised under the anarchic capitalist commodity production. "The possibility, therefore, of quantitative incongruity between price and magnitude of value, or the deviation of the former from the latter," Marx writes in the first volume of Capital, "is inherent in the price-form itself." [67] Nonetheless Marx bases his analysis of value on the assumption of the identity of a market price and the value of a commodity. Why?

Price - value expressed in terms of money - is the only possible expression of the value of a commodity. Value as such, "pure" value can only be expressed through price. (Sometimes, toaccentuate this fact, they speak of "exchange-value," thus pointing to the close connection between value and exchange, the realisation of commodities in the market.) Under "normal" conditions of competition, when supply and demand are equal, price is an adequate, accurate expression of value. Why, then, should prices deviate from value? The reason is the anarchy of capitalist production, the conditions under which commodities are realised, or sold, in the market. Market price depends on short-term factors operative in a given market at a given time, and accordingly may be either greater or smaller than the value of the commodity. As it deviates from value, the price no longer expresses value adequately. Therefore, if the goal is - as it is in Capital - to evolve an economic theory on the basis of the law of value (value finding expression solely in money, i.e., in price), then price should he regarded as equal to value, as price will not adequately express value otherwise. Consequently, just as it is normal in real life for market price to deviate from value, so is it necessary in working out an economic theory to neglect the fluctuations and regard value and market price as equivalent. The conditions of sale are, in this case, merely incidental, a matter of redistribution of value already produced. They can only blur the picture.

On the other hand, the price of production, as we saw, is, in principle, not equal to value because the transformation of surplus-value into average profit occurs through total surplus-value produced by capital being redistributed among different capitals invested in different branches of production.

Lastly, here are two more examples illustrating the method of scientific abstraction. In "... an abstract study of bourgeois society," this method requires "... leaving foreign trade out of account." [68] Although foreign trade plays an immense role under capitalism, it is an extraneous factor as regards the capitalist mode of production as such. Hence Marx builds his theory of this mode of production, in its main aspects, without taking account of foreign trade. Suffice it to recall the brilliant explanation he gave of extended reproduction under capitalism, founded entirely on the internal conditions of the bourgeois economy. As we know, Lenin, in a polemical articles on Russia's economic future, devoted much effort to the defence and substantiation of this principle of Marx.

Yet at the same time Marx points out that "...foreign trade and ... the world market ... are at once the precondition and the result of capitalist production." [69]

Considered as it really is, in concrete conditions, capitalist production would be greatly impeded, or not even possible, in the absence of foreign trade. In this connection Marx observes: "If surplus-labour or surplus-value were represented only in the national surplus product, then the increase of value for the sake ofvalue  and therefore the exaction of surplus-tabour would be restricted by the limited, narrow circle of use-values in which the value of the [national] labour would be represented. But it is foreign trade which develops its [the surplus product's] real nature as value." [70] Thus, without foreign trade and the world market, it would be extremely difficult to achieve the very purpose of capitalist production, i.e., the extraction of profit. Here we have a striking example of the concrete historical character of the Marxist method of scientific abstraction: foreign trade, which is a secondary, incidental factor, for instance, in the theory of reproduction, comes to the fore when the mechanism of the operation of capitalist economy is considered concretely.

The other example we should like to cite here is concerned with the Ricardian theory of rent which Marx analysed in his draft for the fourth volume of Capital: Theories of Surplus-Value. Although of a strictly special character, this example is of a general methodological significance for it demonstrates how the method of scientific abstraction should—and how it should not          be used.

The Ricardian theory of rent presupposes the free movement of capital in agriculture. Ricardo's opponents objected that his theory of rent failed to take into account the difficulty of withdrawing capital from agriculture for a farmer with much fixed capital. Marx finds this objection "quite correct" and points out that "The history of England from 1815 to 1830 provides strong proof for this." Nevertheless, Marx goes on, this objection "does not in any way affect the theory, it leaves it quite untouched, because in this case it is invariably only a question of the more or less rapid or slow operation of the economic law." [71] That capital is difficult to withdraw does not depend on the essence of the economic law—the law of ground-rent in this case—but on its external form, on the way it operates, i.e., on external factors which should be abstracted from.

However, the Ricardian theory of rent also presupposes free investment of capital in agriculture. On this point Marx resolutely sides with Ricardo's opponents, pointing out that penetration of capital into agriculture is resisted by landlords. Ricardo, in fact, abstracted from the monopoly of private land ownership. Marx calls this abstraction basically fallacious as this monopoly determines the very existence of ground-rent and consequently affects the very foundations of this branch of bourgeois economy.

From these examples two conclusions may be drawn. First, that the general methodological principle underlying Marx's theory is analysis of a "pure" capitalist mode of production. This is plainly seen in the theory of surplus-value which regards surplus-value per se, independently of its derivatives - profit, rent and interest. Second, it follows from the same methodological principle that Marx's economic theory, set forth in Capital, is highly abstract. For instance, examining in Capital the structure of bourgeois society, Marx assumed the capitalist mode of production to be completely predominant, although it was not so in fact.

The strictly scientific, theoretical, or abstract character of Marx's economic doctrine is clearly expressed also in its structure, worked out in 1857-58. Marx divided the whole material into six volumes: (I) on capital; (II) on land property; (III) on wage-labour; (IV) on the state; (V) international trade; (VI) the world market. It is not hard to see that this plan follows the method of advancing from the abstract to the concrete, and reflects the objective structure of bourgeois economy. The plan of Book I, in which Marx's economic studies are concentrated, was outlined as follows: (a) capital in general; (b) competition of capitals; (c) credit; (d) joint-stock capital. The first section, on capital in general, has the following subdivisions: (1) production of capital; (2) circulation of capital; (3) capital and profit. It will not escape the reader that the latter subdivision actually represents the structure of three volumes of Capital. This proves once again the high level of abstraction in Capital.

Thus in the first section of Book I all the diverse phenomena of capitalist economy were to be considered exclusively from the angle of production and appropriation of surplus-value. Separately from this analysis, and on the basis of it, were to be examined the relatively independent, more concrete categories: competition, credit and joint-stock capital. It soon became clear to Marx that he would be able to carry through only a part of his vast programme. On March 11, 1858, he wrote that it was by no means his intention to develop all six books to an equal extent. And in 1862 Marx wrote that Capital "contains what the English call the principles of political economy. It is the quintessence ...and the development of the rest ...could be easily accomplished by others on the basis thus provided." [72] The high degree of abstraction characteristic of Marx's theory is its great merit which has made it viable and applicable in circumstances rather different from those of its own day. But it also follows from the general, abstract character of Marxist theory that it cannot be applied directly in studying another epoch or other conditions in the same epoch, that it provides merely the starting points for such studies because reality is completely different from its abstract (theoretical) model. Marx was perfectly aware of the need of giving his theory a concrete basis. That, above all, was why he undertook in the 1870s and early 80s a broad study of the economies of Russia and the United States which quite obviously went beyond the framework of Capital.

Marxist economic theory, based on British capitalism, which was classical when Marx lived, had to be supplemented by some intermediate links to make it applicable to analysis Of the trends of economic development of such "non-classical" countries as Russia. Marx actually stated as much in a letter to the magazine Otechestvenniye zapiski: "In order that I might be specially qualified to estimate the economic development of Russia, I learnt Russian and then for many years studied the official publications and others bearing on this subject." Marx goes on to say that one cannot hope to understand concrete economic processes "by using as one's master key a general historico-philosophical theory." [73] Marx did not live to carry his studies through to the end,       but a series of works written by Lenin in the       1890's terminating with The Development of Capitalism in Russia, is the logical continuation of the last economic studies by Marx. The fact that the drafts of Capital and the preliminary sketches of The Development of Capitalism in Russia follow parallel patterns is striking evidence that we have to do here with the rigid requirements of the Marxist method of research which rules that the one and only way to proceed from abstract theory to concrete economic facts is to study the latter and explain the logic of their development. And by merely superimposing the theoretical model on the economy as it is, one arrives at the false conclusion that the theory presumably lacks confirmation. Already in this early work Lenin wrote: "...the explanation of how capitalism develops in general does not in the least help to clear up the question of the 'possibility' (and necessity) of the development of capitalism in Russia." In 1894 Lenin pointed out that the application of Marx's theory to Russia "can be only the INVESTIGATION of Russian production relations and their evolution, EMPLOYING the established practices of the MATERIALIST method and of THEORETICAL political economy." The sole criterion by which the correctness of the investigation could be measured was "the facts of contemporary Russian economic reality." [74]

It must be noted that the concrete studies of the Russian economy undertaken by Marx and Lenin were necessitated from the methodological point of view also by the need to proceed from the concrete to the abstract, which is an absolutely indispensable part of the process of theoretical investigation. In this respect too Lenin's studies provide a brilliant example of the employment of Marx's method. Marxist criticism of Narodism (the ideology of peasant democracy in Russia) had been voiced long before Lenin's works appeared, but it was based on the general principles of Marx's theory, exemplified by individual facts characterising Russian economic reality. Lenin was the first Marxist to carry out an investigation proceeding from the concrete to the abstract – from examination of the total body of evidence on Russia's development after the 1861 reform to a general summing-up of this evidence showing that the trend of economic growth in Russia concurred with the general tendencies of capitalism set out in Marx's economic theory. This, in effect, meant that capitalism was inexorably developing in Russia. Simultaneously, it was a conclusive refutation of the Narodist doctrine which denied the historical revolutionary mission of the proletariat.

Lenin's studies of the Russian economy are, as we see, of a general methodological significance. But Lenin, the great revolutionary, also gave concrete form to Marx's economic doctrine, bringing it to bear on the entirely different historical epoch of imperialism and transition to socialism. This fact makes Lenin's theoretical legacy an absolutely indispensable part of modern Marxism. Just as we could say modern physics is inconceivable without Einstein's theory of relativity, so we could say it would be impossible to study modern capitalism without Lenin's economic works. We shall see this for ourselves in the third part of this book. For the present let us note that the characteristic. features of Marx's method of economic study we have discussed show that it is a method of dialectics applied to a particular sphere, that of the capitalist economy.

The two aspects of Marx's method that are the most essential in our view are its materialist and its concrete-historical character. A materialist approach to the analysis of economic reality requires the deduction of economic laws from the objective conditions of the process of production itself. Hence, the economic laws, which explain the essence of economic phenomena, must be at the same time material laws. This gives concrete form to one of the most important principles of the materialist conception of history, viz., the primacy of material production (which was discussed in the first part of this book). A concrete historical approach to the analysis of economy requires that economic laws be viewed as historical laws deduced from given economic conditions, which operate only with respect to these conditions, and change following a change in the latter. This aspect of Marx's method too is a concrete form of Marxist dialectics which demands that "each proposition should be considered (α) only historically, (β) only in connection with others, (γ) only in connection with the concrete experience of history." [75]

The present writer is aware that the reader may have found the contents of this part of the book rather too abstract and difficult. Yet, he is convinced that anyone who wants to have a clear idea of Marx's theory and of how it is applied in finding solutions to the fundamental issues of our times, must understand these principles on which it is based.