v. Kirchmann's profession, though he must be credited with having

incurred disciplinary censure on two occasions. Nevertheless, after these unpromising preliminaries, v. Kirchmann goes right to the root of the matter. He admits that his assuming the surplus product in a concrete use-form is the reason why the surplus value cannot be usefully employed. As a remedy he now allows the entrepreneurs to devote half of the social labour appropriated as surplus value to the production not of common goods but of luxuries. The 'essence of luxury-goods being that they enable the consumer to use up more capital and labour power than in the case of ordinary goods', the three entrepreneurs manage to consume by themselves in the form of laces, fashionable carriages and the like, their entire half-share in all the labour performed by the society. Now nothing unsaleable is left, and the crisis is happily avoided; over-production is made impossible once and for all, capitalists and workers alike are safe; the name of v. Kirchmann's magic cure which has brought all these benefits to pass, and which re-establishes the balance between production and consumption, being: luxury. In other words, the capitalists who do not know what to do with their surplus value which they cannot realise, are advised by the dear fellow--to eat it up! As it happens, luxury is in fact an old familiar invention of capitalist society, and still there are recurrent crises. Why is this? v. Kirchmann enlightens us: 'The answer can only be that in real life sluggish markets are entirely due to the fact that there are still _not enough_ luxuries, or, in other words, that the capitalists, i.e. those who can afford to consume, still consume too little.'

This misguided abstinence of the capitalists, however, results from a bad habit which political economists have been ill-advised to encourage: the desire to save for purposes of 'productive consumption'. In other words: crises are caused by accumulation. This is v. Kirchmann's principal thesis. He proves it again by means of a touchingly simple example: 'Let us assume conditions which economists praise as more favourable,' he says, 'where the entrepreneurs say: we do not want to spend our income to the last penny in splendour and luxury, but will re-invest it productively. What does this mean? Nothing but the setting-up of all sorts of productive enterprises for delivering new goods of such a kind that their sale can yield interest (v. Kirchmann means profits) on a capital saved and invested by the three entrepreneurs from their unconsumed revenues. Accordingly, the three entrepreneurs decide to consume only the produce of a hundred workers, that is to say to restrict their luxury considerably, and to employ the labour power of the remaining 350 workers together with the capital they use for setting up new productive enterprises. The question now arises in what kind of productive enterprises these funds are to be used.'

Since, according to v. Kirchmann's assumption, constant capital is not reproduced, and the entire social product consists entirely of consumer goods, 'the three entrepreneurs can only choose again between enterprises for the manufacture of ordinary goods or for that of luxuries'.

In this way, however, the three entrepreneurs will be faced with the already familiar dilemma: if they turn out 'common goods', there will be a crisis, since the workers lack means to purchase these additional provisions, having been bought off with half the value of their produce. If they go in for luxuries, they will have to consume them alone. There is no other possibility. The dilemma is not even affected by foreign trade which would 'only increase the range of commodities on the home market' or increase productivity.

'These foreign commodities are therefore either common goods--then the capitalist will not, and the worker, lacking the means, cannot buy them, or they are luxuries, in which case the worker, of course, is even less able to buy them, and the capitalist will not want them either because of his efforts to save.'

This argument, however primitive, yet shows quite nicely and clearly the fundamental conception of v. Kirchmann and the nightmare of all economic theory: in a society consisting exclusively of workers and capitalists, accumulation will be impossible. v. Kirchmann is therefore frankly hostile to accumulation, 'saving', 'productive consumption' of the surplus value, and strongly attacks these errors advocated by classical economics. His gospel is increasing luxury together with the productivity of labour as the specific against crises. We see that v. Kirchmann, if he grotesquely aped Ricardo and Say in his theoretical assumptions, is a caricature of Sismondi in his final conclusions. Yet it is imperative to get v. Kirchmann's approach to the problem perfectly clear, if we are to understand the import of Rodbertus' criticism and the outcome of the whole controversy.

FOOTNOTES:

[230] _Die Forderungen der arbeitenden Klassen._

[231] _Die Handelskrisen und die Hypothekennot der Grundbesitzer._

[232] _Zur Erkenntnis unserer staatswirtschaftlichen Zustände._

[233] _Über die Grundrente in sozialer Beziehung._

[234] _Die Tauschgesellschaft._

[235] _Soziale Briefe._

[236] Rodbertus quotes v. Kirchmann's arguments explicitly and in great detail. But according to his editors, no complete copy of _Demokratische Blätter_ with the original essay is obtainable.

_CHAPTER XVI_

RODBERTUS' CRITICISM OF THE CLASSICAL SCHOOL

Rodbertus digs deeper than v. Kirchmann. He looks for the roots of evil in the very foundations of social organisation and declares bitter war on the predominant Free Trade school--not against a system of unrestricted commodity circulation or the freedom of trade which he fully accepts, but against the Manchester doctrine of _laissez-faire_ within the internal social relations of economy. At that time, after the period of storm and stress of classical economics, a system of unscrupulous apologetics was already in full sway which found its most perfect expression in the 'doctrine of harmony' of M. Frédéric Bastiat, the famous vulgarian and idol of all Philistines, and quite soon the various Schultzes were to flourish as commonplace, German imitations of the French prophet of harmony. Rodbertus' strictures are aimed at these unscrupulous 'peddlers of free trade'. In his first _Letter on Social Problems_[237] he exclaims:

'Because of their paltry incomes, five-sixths of the population are not only deprived of most of the benefits of civilisation, but are in constant danger of the most terrible outbreaks of real distress to which they sometimes succumb. Yet they are the creators of all the wealth of the society. Their labours begin at dawn and end at dusk, continuing even after night has fallen--but no exertion can change this fate; they cannot raise their income, and only lose that little leisure which ought to remain nowadays for the improvement of their minds. Hitherto it might have seemed as if all this suffering were necessary to the progress of civilisation, but now that a series of the most wonderful discoveries and inventions have increased human labour power more than a hundredfold, new prospects of changing these grim conditions are suddenly revealed. As a result, the wealth and assets of a nation increase at a growing rate as compared with the population. Could anything be more natural, I ask, or more justly demanded, than that this increase should also somehow benefit the creators of this old and new wealth? that their incomes should be raised or their working-hours shortened, or that they might join in increasing numbers the ranks of the lucky ones, privileged to reap the fruits of labour? Yet state economy, or better, national economy has only achieved the opposite result. Increasing poverty of these classes goes together with increasing wealth of the nation, there is even need of special legislation, lest the working day become longer, and finally, the working classes swell in number out of proportion with the others. Even that is not enough! The hundredfold increase of labour efficiency which was powerless to relieve five-sixths of the population, even threatens periodically the remaining sixth of the nation and thus society as a whole.'

'What contradictions in the economic sphere in particular! And what contradictions in the social sphere in general! The wealth of society is growing, and this growth is accompanied by a growth of poverty.--The creative efficiency of the means of production is increasing, and the consequence is that they are scrapped. Social conditions demand that the material position of the working classes should be raised to the level of their political status, and economic conditions, by way of answer, depress them further. Society needs the unrestricted growth of wealth, and contemporary leaders of production must create restrictions, in order to discourage poverty. In a single respect alone is there harmony: just as wrong as the conditions is the authoritative section of the society with its inclination to look for the root of the evil everywhere except in the right place. This egotism, which only too often dons the scholar's gown, also accuses the vices of the workers of being the cause of poverty. The responsibility for the crimes committed against them by all-powerful facts is ascribed to their alleged discontent and shiftlessness, and where even such egotism cannot close its eyes to their innocence, it makes an elaborate dogma of the "necessity of poverty". Unremittingly, it exhorts the workers only to work and to pray, impresses upon them the duty of abstinence and economy, and at best infringes upon their rights by the institution of compulsory saving, adding to the misery of the workers. It does not see that a blind force of commerce has transformed the prayer for work into the curse of enforced unemployment, that ... abstinence is impossible or cruel, and that, lastly, morals always remain ineffective if commended by those of whom the poet says that they drink wine in secret but preach water in public.'[238]

Thirty years after Sismondi and Owen, twenty years after the indictment made by the English socialists, the followers of Ricardo, and last but not least, after the publication of the Communist Manifesto, such bold words alone cannot claim to break new ground. What matters above all now is the theoretical foundation of this indictment. Rodbertus here proposed a complete system which can be reduced to the following simple statements.

Owing to the laws of an economy left to its own devices, the high level of labour productivity achieved by history, together with the institutions of positive law, that is to say the right of private ownership, a whole series of wrong and unethical phenomena had emerged:

(1) In the place of 'normal', 'constituted' value we have exchange value, and accordingly coined money instead of a proper 'paper' or 'labour' currency which would genuinely correspond to the concept of money. The first principle is that all economic goods are products of labour, or, as we might put it, that labour alone is creative. This statement, however, does not imply that the value of the product must always equal the cost of labour, or that, in other words, value is even now measured in terms of labour. The truth is rather 'that this still has not become a _fact_, but is only an _idea_ of political economy'.[239]

'If the value could be constituted in accordance with the labour expended on the product, we might imagine a kind of money which would be, as it were, a leaf torn from the public account-book, a receipt written on the most rubbishy material, on rags, which everyone would receive for the value he has produced, and which he would realise as a voucher for an equivalent part of the national product subsequently under distribution.... If, however, for some reason or another, it is _impossible_ or _not yet possible_ to establish this value, money as such must still retain the value it is designed to liquidate; made of an intrinsically valuable commodity like gold or silver, it has to represent a pledge or pawn of the same value.'[240] 'As soon as capitalist commodity production has come into existence, everything is turned upside down: there can no longer be a constituted value, since it can only be exchange value',[241] and, 'since the value cannot be constituted, money cannot be _purely_ money, it cannot fully conform to its concept'.[242] In an equitable exchange, the exchange value of the products would have to equal the quantity of labour needed for producing them, and an exchange of products would always mean an exchange of equal quantities of labour. Even assuming, however, that everybody produced just those use-values which another person requires, yet, 'since we are here concerned with human discernment and human volition, there must always be for a start a correct calculation, adjustment and allocation of the labour quantities contained in the products for exchange, there must be a _law_ to which the facts will conform'.[243]

It is well-known that Rodbertus, in his discovery of 'constituted value', laid great stress on his priority to Proudhon which we shall gladly concede him. Marx, in his _Poverty of Philosophy_, and Engels in his preface to it, have comprehensively shown that this 'concept' is a mere phantom, still used in theory but in practice buried already in England well before Rodbertus' time, that it is but a Utopian distortion of Ricardo's doctrine of value. We therefore need not deal further with this 'music of the future, performed on a toy trumpet'.

(2) The 'economy of exchange' resulted in the 'degradation' of labour to a commodity, the labour wage being determined as an item of expenditure (_Eichmann's der Arbeit_) instead of representing a fixed rate of the national product. By a daring jump in history, Rodbertus derives his wages law indirectly from slavery and regards the specific traits which a capitalist production of commodities imposes on exploitation as no more than a lying deception against which he fulminates from a moral point of view.

'So long as the producers themselves remained the property of those who were not producing, so long as slavery was in existence, it was the advantage of the "masters" alone which unilaterally determined the volume of this share (of the workers). With the producers attaining full liberty of person, if nothing more as yet, both parties agree on the wage in advance. The wage, in modern terminology, is the object of a "free contract", that is to say, an object of competition. Labour is therefore as a matter of course subjected to the same laws of exchange as its products: labour itself acquires exchange value; the size of the wage depends on the effects of supply and demand.'

Rodbertus, after having thus turned everything upside down, after deriving the exchange value of labour from competition, now immediately derives its value from its exchange value.

'Under the laws of exchange value, labour, like produced goods, comes to have a kind of "cost value" which exercises some magnetic effects upon its exchange value, the amount of the labour wage. It is that particular amount of payment which is necessary for the "maintenance" of labour, in other words, which enables labour to continue, if only in the persons of its progeny--it is the so-called "minimum of subsistence".'

For Rodbertus, however, this is not a statement of objective economic laws, but merely an object for moral indignation. He calls the thesis of the classical school, that labour is worth no more than the wages it can command, a 'cynical' statement, and he is determined to expose the 'string of lies' leading to this 'crude and unethical' conclusion.[244]

'It was a degrading view to estimate the wages of labour in accordance with the "necessary subsistence", like so many machines to be kept in repair. Now that labour, the fountainhead of all commodities, has itself become a commodity of exchange, it is no less degrading to speak of its "natural price", of its "costs", just as we speak of the natural price and costs of its product, and to include this natural price, these costs, in the amount of goods that is necessary to call forth a continuous flow of labour on the market.'

This commodity character of labour power, however, and the corresponding determination of its value, are nothing but a malicious misrepresentation of the Free Trade school. Like the good Prussian he was, Rodbertus put capitalist commodity production as a whole in the dock, as offending against the obtaining constitutional law, instead of pointing out its inherent contradiction, the conflict between determining the value of labour and determining the value _created by_ labour, as the English disciples of Ricardo had done.

'Stupid beyond words', he exclaims, 'is the dualist conception of those economists who would have the workers, as far as their legal status is concerned, join in deciding the fate of society, and would for all that, have these same workers from an economic point of view, always treated as mere commodities!'[245]

Now it only remains to find out why the workers put up with such stupid and blatant injustice--an objection which Hermann for instance raised against Ricardo's theory of value. Rodbertus is ready with this answer:

'What were the workers to do after their emancipation other than to agree to these regulations? Imagine their position: when the workers were freed, they were naked or in rags, they had nothing but their labour power. The abolition of slavery or serfdom, moreover, rescinded the master's legal or moral obligation to feed them and care for their needs. Yet these needs remained, they still had to live. How, then, could their labour power provide them with a living? Were they simply to grab some of the capital existing in the society for their maintenance? The capital of society was already in the hands of other people, and the organs of the "law" would not have tolerated such a step. What, then, could the workers have done? Only these alternatives were before them: either to overthrow the law of society or to return, under roughly the same conditions as before, to their former masters, the owners of the land and of capital, and to receive as wages what was formerly doled out to them to keep them fed.'[246]

It was fortunate for mankind and the Prussian state that the workers were 'wise' enough not to overthrow civilisation and preferred to submit to the 'base demands' of their 'former masters'. This, then, is the origin of the capitalist wage system, of the wages law as 'a kind of slavery' resulting from an abuse of power on the part of the capitalists, and from the precarious position and the meek acquiescence on the part of the proletariat--if we are to believe the highly original explanations of that very Rodbertus whose theories Marx is reputed to have 'plagiarised'. Let Rodbertus claim 'priority' in this particular theory of value without challenge, seeing that English socialists and other social critics had already given far less crude and primitive analyses of the wage-system. The singular point about it all is that Rodbertus' display of moral indignation about the origin and the economic laws of the wages system does not lead up to the demand for doing away with this abominable injustice, the 'dualism stupid beyond words'. Far from it! He frequently reassures his fellow-men that he does not really mean anything very serious by roaring--he is no lion fell, only one Snug the joiner. Indeed, an ethical theory of the wages law is necessary only to achieve a further conclusion:

(3) Since the 'laws of exchange value' determine the wage, an advance in labour productivity must bring about an ever declining share in the product for the workers. Here we have arrived at the Archimedean fulcrum of Rodbertus' system. This 'declining wage rate' is his most important 'original' discovery on which he harps from his first writings on social problems (probably in 1839) until his death, and which he 'claims' as his very own. This conception, for all that, was but a simple corollary of Ricardo's theory of value and is contained implicit in the wages fund theory which dominated bourgeois economics up to the publication of Marx's _Capital_. Rodbertus nevertheless believed that this 'discovery' made him a kind of Galileo in economics, and he refers to his 'declining wage rate' as explaining every evil and contradiction in capitalist economy. Above all, he derives from the declining wage rate the phenomenon of pauperism which, together with the crises, in his opinion constitutes the social question. It would be as well to draw the attention of contemporaries, 'out for Marx's blood', to the fact that it was not Marx but Rodbertus, a man much nearer their own heart, who set up a whole theory of progressive poverty in a very crude form, and that he, unlike Marx, made it the very pivot, not just a symptom, of the entire social problem. Compare for instance his argument in his first _Letter on Social Problems_ to v. Kirchmann on the absolute impoverishment of the working class. The 'declining wage rate' must serve in addition to explain the other fundamental phenomena of the social problem--the crises. In this connection Rodbertus tackles the problem of balancing consumption with production, touching upon the whole lot of cognate controversial issues which had already been fought out between the schools of Sismondi and Ricardo.

Rodbertus' knowledge of crises was of course based upon far more material evidence than that of Sismondi. In his first _Letter on Social Problems_ he already gives a detailed description of the four crises in 1818-19, 1825, 1837-9 and 1847. Since his observations covered a much longer period, Rodbertus could by and large gain a much deeper insight into the essential character of crises than his predecessors. As early as 1850 he formulated the periodical character of the crises which recur at ever shorter intervals and at the same time with ever increasing severity:

'Time after time, these crises have become more terrible in proportion with the increase in wealth, engulfing an ever greater number of victims. The crisis of 1818-19, although even this caused panic in commerce and inspired misgivings in economics, was of small importance compared to that of 1825-6. The first crisis had made such inroads on the capital assets of England that the most famous economists doubted whether complete recovery could ever be made. Yet it was eclipsed by the crisis of 1836-7. The crises of 1839-40 and 1846-7 wrought even greater havoc than previous ones.'--'According to recent experiences, however, the crises recur at ever shorter intervals. There was a lapse of 18 years between the first and the third crisis, of 14 years between the second and the fourth, and of only 12 years between the third and the fifth. Already the signs are multiplying that a new disaster is imminent, though no doubt the events of 1848 put off the catastrophe.'[247]

Rodbertus remarks that an extraordinary boom in production and great progress in industrial technique always are the heralds of a crisis. 'Every one of them [of the crises] followed upon a period of outstanding industrial prosperity.'[248]

From the crises in history he demonstrates that 'they occur only after a considerable increase of productivity'.[249] Rodbertus opposes what he terms the vulgar view which conceives of crises as mere disturbances in the monetary and credit system, and he criticises the whole of Peel's currency legislation as an error of judgment, arguing the point in detail in his essay _On Commercial Crises and the Mortgage Problem_. There he makes the following comment among others: 'We would therefore deceive ourselves if we were to regard commercial crises merely as crises of the monetary, banking, or credit system. This is only their outer semblance when they first emerge.'[250]

Rodbertus also shows a remarkably acute grasp of the part played by foreign trade in the problem of crises. Just like Sismondi, he states the necessity of expansion for capitalist production, but he simultaneously emphasises the fact that the periodical crises are bound to grow in volume.

'Foreign trade', he says, 'is related to slumps only as charity is related to poverty. They ultimately only enhance one another.'[251] And further: 'The only possible means of warding off further outbreaks of crises is the application of the two-edged knife of expanding foreign markets. The violent urge towards such expansion is largely no more but a morbid irritation caused by a sickly organ. Since one factor on the home market, productivity, is ever increasing, and the other factor, purchasing power, remains constant for the overwhelming majority of the population, commerce must endeavour to conjure up a similarly unlimited amount of purchasing power on the foreign market.'[252] In this way, the irritation may be soothed to some extent so that at least there will not be a new outbreak of the calamity right away. Every foreign market opened defers the social problem in a like manner. Colonisation of primitive countries would have similar effects: Europe rears a market for herself in places where none had been before. Yet such a medicine would essentially do no more than appease the ill. As soon as the new markets are supplied, the problem will revert to its former state--a conflict between the two factors: limited purchasing power versus unlimited productivity. The new attack would be warded off the small market only to re-appear, in even wider dimensions and with even more violent incidents, on a larger one. And since the earth is finite and the acquisition of new markets must some time come to an end, the time will come when the question can no longer be simply adjourned. Sooner or later, a definite solution will have to be found.'[253]

Rodbertus also recognises the anarchical character of capitalist private enterprise to be conducive to crises, but only as one factor among many, seeing it as the source of a particular type of crises, not as the real cause of crises in general. About the crises at v. Kirchmann's _Ort_, e.g., he says: 'I maintain that a slump of this kind does not occur in real life. The market of to-day is large, there are countless wants and many branches of production, productivity is considerable and the data of commerce are obscure and misleading. The individual entrepreneur does not know how much others are producing, and so it may easily happen that he over-estimates the demand for a certain commodity with which he will then overstock the market.'

Rodbertus says outright that the only remedy for these crises is the 'complete reversal' of contemporary property-relations or a planned economy, concentrating all means of production 'in the hands of a single social authority'. To set troubled minds at rest, however, he is quick to add that he reserves judgment as to whether there can actually be such a state of affairs--'yet this would be the only possible way to prevent slumps of this kind'. Thus he expressly regards anarchy in the modern mode of production as responsible for only a specific and partial manifestation of crises.

Rodbertus scornfully rejects Say-Ricardo's axiom of a natural equilibrium between consumption and production; just like Sismondi, he emphasises that everything turns on the purchasing power of society, and also takes it to be dependent upon the distribution of income. All the same, he does not endorse Sismondi's theory of crises and disagrees sharply with the conclusions drawn from it. If Sismondi saw the source of all evil in the unlimited expansion of production without regard to the limitations of incomes, and advocated a restriction of production, Rodbertus, quite on the contrary, champions the most powerful and unrestricted expansion of production, of wealth and of the productive forces, believing this to be a social necessity. Whoever rejects the wealth of society, rejects at the same time its power, its progress, and, with its progress, its virtues. Whoever stands in the way of growing wealth, stands in the way of all social progress whatever. Every increase in knowledge, resolve and capacity is conceived as bound up with an increase in wealth.[254] From this point of view, Rodbertus is strongly in favour of issuing houses which he regards as the indispensable foundations for a rapid and unrestricted expansion of company promoting. Both his essay of 1859 on the mortgage problem and the treatise on the _Financial Crisis in Prussia_[255] are devoted to this plea. He even polemises outright against the Sismondian type of _caveat_, as usual broaching the matter first from his peculiar Utopian ethics.

'The entrepreneurs', he holds forth, 'are essentially civil servants of economy. By the institution of property, they are once and for all entrusted with the nation's means of production. If they set them to work and strain all their energies in the process, they do but their duty, since capital--let me repeat--exists entirely for the sake of production.' And a further, factual argument: 'Or would you have them (the entrepreneurs) turn acute attacks of suffering into a chronic state by working persistently and from the first with fewer forces than are given by the means of production; are they to pay for a less severe form of the evil with its permanent duration? Even if we were silly enough to give them this advice, they would not be able to follow it. How could the entrepreneurs of the world recognise the limits beyond which the market would cease to be healthy? They engage in production without knowing the one of the other, they are producing in the most distant corners of the earth for a market hundreds of miles away, they produce with such vast forces that a month's production may already overstep the limit. How could production--so divided and yet so powerful--conceivably estimate in good time what will be enough? Where, for instance, are the organisations, the up-to-date statistical bureaux and the like to help them in this task? What is worse, the price alone, its rise and fall, indicates the position of the market, and this is not like a barometer which predicts the temperature of the market, but more like a thermometer which only registers it. If the price falls, the limit has been passed already, and the evil is with us.'[256]

These thrusts, obviously aimed at Sismondi, exhibit quite fundamental differences between the two opponents. If Engels then says in his _Anti-Duehring_ that Sismondi first explained the crises as resulting from under-consumption, and that Rodbertus borrowed this view from him, he is not strictly accurate. All that Rodbertus and Sismondi have in common is their opposition against the classical school and the general explanation of crises as the result of the distribution of incomes. Even in this connection Rodbertus mounts his own particular hobby horse: over-production is not caused by the low level of working class incomes, nor yet, as Sismondi maintains, by the capitalists' limited capacity for consumption, but solely by the fact that with a growing productivity of labour, the workers' income, in terms of value, represents an ever smaller share of the product. Rodbertus takes pains to convince the opposition that it is not the small volume of the workers' share which causes the crises.

'Just imagine', he goes on to lecture v. Kirchmann, 'these shares to be so small as to ensure only a bare subsistence for those who are entitled to them. As long as you establish them as representing a proportion of the national product, you will have a constant "vessel for value" which can absorb ever increasing contents, and an ever increasing prosperity of the working classes as well.... And now imagine on the contrary as large a share for the working classes as you please, and let it become an ever smaller fraction of the national product that grows with increasing productivity. Then, provided it is not reduced to the present pittance, this share will still protect the workers from undue privations since the amount of products it represents will still be considerably greater than it is to-day. Once this share begins to decline, however, there will be spreading discontent, culminating in a commercial crisis for which the capitalists are not to blame inasmuch as they did no more than their duty in laying down the volume of production according to the given magnitude of these shares.'

That is why the 'declining wage rate' is the real cause of crises. It can only be counteracted by legal measures to ensure that the workers' share represents a stable and unchanging rate of the national product. This grotesque notion takes some understanding if we are to do justice to its economic implications.

FOOTNOTES:

[237] To v. Kirchmann, in 1880.

[238] Dr. Carl Rodbertus-Jagetzow, _Schriften_ (Berlin, 1899), vol. iii, pp. 172-4, 184.

[239] Op. cit., vol. ii, pp. 104 f.

[240] Op. cit., vol. i, p. 99.

[241] Ibid., p. 173.

[242] Ibid., p. 176.

[243] Op. cit., vol. ii, p. 65.

[244] _Schriften_, vol. i, pp. 182-4.

[245] Ibid., pp. 182-4.

[246] Ibid., p. 72.

[247] _Schriften_, vol. iii, pp. 110-11.

[248] Ibid., p. 108.

[249] Op. cit., vol. i, p. 62.

[250] _Schriften_, vol. iv, p. 226.

[251] In _Towards the Understanding of Our Politico-Economic Conditions_, part ii, n. 1.

[252] In _On Commercial Crises and the Mortgage Problem of the Landowners_, quoted above (op. cit., vol. iii, p. 186).

[253] Op. cit., vol. iv, p. 233. It is interesting to note in this connection how Rodbertus appears in practice as an extremely sober and realistically-minded prophet of capitalist colonial policy, in the manner of the present-day 'Pan-Germans', his moral ranting about the unhappy fate of the working classes notwithstanding. In a footnote to the above quotation, he writes: 'We can go on to glance briefly at the importance of the opening up of Asia, in particular of China and Japan, the richest markets in the world, and also of the maintenance of English rule in India. It is to defer the solution of the social problem.' (The eloquent avenger of the exploited ingenuously discloses the means by which the profiteering exploiters can continue 'their stupid and criminal error', their 'flagrant injustice' for as long as possible.) 'For the solution of this problem, the present lacks in unselfishness and moral resolution no less than in intelligence.' (Rodbertus' philosophical resignation is unparalleled!) 'Economic advantage cannot, admittedly, constitute a legal title to intervention by force, but on the other hand, a strict application of modern natural and international law to all the nations of the world, whatever their state of civilisation, is quite impracticable.' (A comparison with Dorine's words in Molière's _Tartuffe_ is irresistible: 'Le ciel défend, de vraie, certains contentements, mais il y a avec lui des accommodements.')--'Our international law has grown from a civilisation of _Christian_ ethics, and since all law is based upon reciprocity, it can only provide the standard for relations between nations of the same civilisation. If it is applied beyond these limits, it is sentiment rather than natural and international law and the Indian atrocities should have cured us of it. Christian Europe should rather partake of the spirit which made the Greeks and the Romans regard all the other peoples of the world as barbarians. The younger European nations might then regain the drive for making world history which impelled the Ancients to spread their native civilisation over the countries of the globe. They would reconquer Asia for world history by _joint action_. Such common purpose and action would in turn stimulate the greatest social progress, a firm foundation of peace in Europe, a reduction of armies, a colonisation of Asia in the ancient Roman style--in other words, a genuine solidarity of interests in all walks of social life.' The vision of capitalist colonial expansion inspires the prophet of the exploited and oppressed to almost poetical flights, all the more remarkable for coming at a time when a civilisation of Christian ethics accomplished such glorious exploits as the Opium Wars against China and the Indian atrocities--that is to say, the atrocities committed by the British in their bloody suppression of the Indian Mutiny.--In his second _Letter on Social Problems_, in 1850, Rodbertus had expressed the conviction that if society lacks the 'moral resolution' necessary to solve the social question, in other words, to change the distribution of wealth, history would be forced to 'use the whip of revolution against it' (op. cit., vol. ii, p. 83). Eight years later, however, the stalwart Prussian prefers to crack the whip of a colonial policy of Christian ethics over the natives of the colonial countries. It is, of course, what one might expect of the 'original founder of scientific socialism in Germany' that he should also be a warm supporter of militarism, and his phrase about the 'reduction of armies' is but poetic licence in his verbal fireworks. In his essay _On the Understanding of the Social Question_ he explains that the 'entire national tax burden is perpetually gravitating towards the bottom, sometimes in form of higher prices for wage goods, and sometimes in form of lower money wages'. In this connection, he considers conscription 'under the aspect of a charge on the state', explaining that 'as far as the working classes are concerned, it is nothing like a tax but rather a confiscation of their entire income for many years'. He adds immediately: 'To avoid misunderstanding I would point out that I am a staunch supporter of our present military constitution (i.e. the military constitution of counter-revolutionary Prussia)--although it may be oppressive to the working classes and demand great financial sacrifices from the propertied classes' (op. cit., vol. iii, p. 34). That does not even sound like a lion's roar!

[254] _Schriften_, vol. iii, p. 182.

[255] Published already in 1845.

[256] _Schriften_, vol. iv, p. 231.

_CHAPTER XVII_

RODBERTUS' ANALYSIS OF REPRODUCTION

To begin with, what does it mean that a decrease in the workers' share is bound immediately to engender over-production and commercial crises? Such a view can only make sense provided Rodbertus takes the 'national product' to consist of two parts, _vide_ the shares of the workers and of the capitalists, in short of _v + s_, one share being exchangeable for the other. And that is more or less what he actually seems to say on occasions, e.g. in his first _Letter on Social Problems_:

'The poverty of the working classes precludes their income from giving scope to increasing production. The additional amount of products from the entrepreneurs' point of view lowers the value of the aggregate product so far as to bar production on the former scale, leaving the workers at best to their accustomed straits, though, if it could be made available to the workers, it would not only improve their lot but would further act as a counterweight by increasing the value of what is retained by the capitalists (and so enable the latter to keep their enterprises at the same level).'[257]

The 'counterweight' which in the hand of the workers increases the 'value' of 'what is retained' by the entrepreneurs, can in this context only be the demand. Once again, we have landed happily at the familiar _Ort_ of v. Kirchmann's where workers and capitalists exchange their incomes for the surplus product, and where the crises arise because variable capital is small and the surplus value large. This peculiar notion has already been dealt with above. There are other occasions, however, when Rodbertus advances a somewhat different conception. The interpretation of his theory in the fourth _Letter on Social Problems_ is that the continual shifts in the relations of demand, evident in the share of the working class and caused by the share of the capitalist class, must result in a chronic disproportion between production and consumption.

'What if the entrepreneurs endeavour to keep always within the limits of those shares, yet the shares themselves are all the time on the decline for the great majority of the society, the workers, decreasing gradually, unnoticeably, but with relentless force?--What if the share of these classes is continually decreasing to the same extent as their productivity is increasing?'--'Is it not really the fact that the capitalists of necessity organise production in accordance with the present volume of shares in order to make wealth universal, and that yet they always produce over and above this volume (of previous shares), thereby perpetuating dissatisfaction which culminates in this stagnation of trade?'[258]

On this showing, the explanation of crises should be as follows: the national product consists of a number of 'common goods', as v. Kirchmann puts it, for the workers, and of superior goods for the capitalists. The wages represent the quantity of the former, and aggregate surplus value that of the latter. If the capitalists organise their production on this footing, and if at the same time there is progressive productivity, a lack of proportion will immediately ensue. For the share of the workers to-day is no longer that of yesterday, but less. If the demand for 'common goods' had involved, say, six-sevenths of the national product yesterday, then to-day it involves only five-sevenths, and the entrepreneurs, having provided for six-sevenths of 'common goods', will find to their painful surprise that they over-produced by one-seventh. Now, wiser by this experience, they try to organise to-morrow's output of 'common goods' to a mere five-sevenths of the total value of the national product, but they have a new disappointment coming to them, since the share of the national product falling to wages to-morrow is bound to be only four-sevenths, and so on.

In this ingenious theory there are quite a few points to make us wonder. If our commercial crises are entirely due to the fact that the workers' 'wage rate', the variable capital, represents a constantly diminishing portion of the total value of the national product, then this unfortunate law brings with it the cure for the evil it has caused, since it must be an ever smaller part of the aggregate product for which there is over-production. Although Rodbertus delights in such terms as 'an overwhelming majority', 'the large popular masses' of consumers, it is not the number of heads that make up the demand, but the value they represent which is relevant. This value, if Rodbertus is to be believed, forms a more and more trifling part of the aggregate product. Crises are thus made to rest on an ever narrowing economic basis, and all that remains to discover is how in spite of it all it can still happen that the crises are universal and increasingly severe besides, as Rodbertus is fully aware. The purchasing power lost by the working classes should be gained by the capitalist class; if _v_ decreases, _s_ must grow larger to make up for it. On this crude scheme, the purchasing power of society as a whole cannot change, as Rodbertus says in so many words: 'I know very well that what is taken from the workers' share goes ultimately to swell that of the "rentiers" (rent and surplus value are used as synonyms, _R.L._), and that purchasing power remains constant on the whole and in the long run. But as far as the product on the market is concerned, the crisis always sets in before this increase can make itself felt.'[259]

In short, the most it can amount to is that there is 'too much' of 'common goods' and 'too little' of superior goods for the capitalists. Quite unawares, and by devious ways, Rodbertus here falls in with the Say-Ricardian theory he so ardently contested, the theory that over-production on one side always corresponds to under-production on the other. Seeing that the ratio of the two shares is persistently shifting to the advantage of the capitalists, our commercial crises might be expected on the whole to take on increasingly the character of periodical under- instead of over-production! Enough of this exercise in logic. The upshot of it all is that Rodbertus conceives the national product in respect of its value as made up of two parts only, of _s_ and _v_, thus wholly subscribing to the views and traditions of the classical school he is fighting tooth and nail, and even adding his own flourish that the capitalists consume the entire surplus value. That is why he repeatedly says without mincing his words, as in the fourth _Letter on Social Problems_:

'Accordingly, we must abstract from the reasons which cause the division of rent in general into rent proper and capital rent, to find the basic principle underlying the division of rent (surplus value) in general, the principle underlying _the division of the labour product into wage and rent_.'[260] And, in the third _Letter_: 'Ground rent, capital profit and the wage of labour are, let me repeat, revenue. By this means landlords, capitalists and workers must live, must satisfy, that is to say, their immediate human necessities. They must therefore draw their income in the form of goods suitable for this purpose.'[261]

The misrepresentation of capitalist economy has never been formulated more crudely, and there is no doubt that Rodbertus claims the palm of 'priority'--not so much over Marx as over all popular economists--with full justification. To leave the reader in no doubt about the utter muddle he has made, he goes on, in the same letter, to rank capitalist surplus value as an economic category on the same level as the revenue of the ancient slave-owner:

'The first state (that of slavery) goes with the most primitive natural economy: that portion of the labour product which is withheld from the income of workers or slaves and forms the master's or owner's property, will undividedly accrue to the one man who owns the land, the capital, the worker and the labour product; there is not even a distinction of thought between rent and capital profits.--The second state entails the most complicated money economy: that portion of the labour product, withheld from the income of the now emancipated workers, and accruing to the respective owners of land, and capital, will be further divided among the owners of the raw material and the manufactured product respectively; the one rent of the former state will be split up into ground rent and capital profits, and will have to be differentiated accordingly.'[262]

Rodbertus regards the splitting-up of the surplus value 'withheld' from the workers' 'income' as the most striking difference between exploitation by slavery and modern capitalist exploitation. It is not the specific historical form of sharing out newly created value among labour and capital, but the distribution of the surplus value among the various people it benefits, which, irrelevant to the productive process, is yet the decisive fact in the capitalist mode of production. In all other respects, capitalist surplus value remains just the same as the old 'single rent' of the slave-owner: a private fund for the exploiter's own consumption!

Yet Rodbertus again contradicts himself in other places, remembering all of a sudden the constant capital and the necessity for its renewal in the reproductive process. Thus, instead of bisecting the aggregate product into _v_ and _s_, he posits a triple division: _c_, _v_, and _s_. In his third _Letter on Social Problems_ he argues on the forms of reproduction in a slave-economy:

'Since the master will see to it that part of the slave labour is employed in maintaining or even improving the fields, herds, agricultural and manufacturing tools, there will be "capital replacement", to use a modern term, in which part of the national economic product is immediately used for the upkeep of the estate, without any mediation by exchange or even by exchange value.'[263] And, passing on to capitalist reproduction, he continues: 'Now, in terms of value, one portion of the labour product, is used or set aside for the maintenance of the estate, for "capital replacement", another, for the workers' subsistence as their money wage; and the owners of the land, of capital, and of the labour product retain the last as their revenue or rent.'[264]

This, then, is an explicit expression of the triple division into constant capital, variable capital, and surplus value. Again, in this third _Letter_, he formulates the peculiarity of his 'new' theory with equal precision: 'On this theory, then, and under conditions of adequate labour productivity, the portion of the product which remains for wages after the replacement of capital, will be distributed among workers and owners as wages and rent, on the basis of the ownership in land and capital.'[265]

It does seem now as if Rodbertus' analysis of the value of the aggregate product represents a distinct advance over the classical school. Even Adam Smith's 'dogma' is openly criticised a little further on, and it is really surprising that Rodbertus' learned admirers, Messrs. Wagner, Dietzel, Diehl & Co. failed to claim their white-headed boy's 'priority' over Marx on such an important point of economic theory. As a matter of fact, in this respect no less than in the general theory of value, Rodbertus' priority is of a somewhat dubious character. If he seems on occasion to gain true insight, it immediately turns out to be a misunderstanding, or at best a wrong approach. His criticism of Adam Smith's dogma affords a supreme example of his failure to cope with the triple division of the national product towards which he had groped his way. He says literally:

'You know that all economists since Adam Smith already divided the value of the product into wage of labour, rent, and capital profit, that it is therefore not a new idea to ground the incomes of the various classes, and especially the various items of the rent, in a division of the product. But the economists at once go off the track. All of them, not even excepting Ricardo's school, make the mistake, first, not to recognise that the aggregate product, the finished good, the national product as a whole, is an entity in which workers, landowners, and capitalists all share, but conceiving the division of the unfinished product to be of one kind shared among three partners, and that of the manufactured product as of another kind again, shared between only two partners. For these theories both the unfinished product and the manufactured product constitute as such separate items of revenue. Secondly,--though both Sismondi and Ricardo are free from this particular error--they regard the natural fact that labour cannot produce goods without material help, i.e. without the land, as an economic fact, and take the social fact for a primary datum that capital as understood to-day is required by the division of labour. Thus they set up the fiction of a fundamental economic relationship on which they base also for the shares of the various owners, ground rent springing from the contribution of the land lent by the owner to production, capital profits from the contribution of capital employed by the capitalist to this end, and the wages finally from labour's contribution, seeing that there are separate owners of land, capital, and labour in the society. Say's school, elaborating on this mistake with much ingenuity, even invented the concept of productive service of land, capital, and labour in conformity with the shares in the product of their respective owners, so as to explain these shares as the result of productive service.--Thirdly, they are caught up in the ultimate folly of deriving the wage of labour and the items of rent from the value of the product, the value of the product in turn being derived from the wage of labour and the items of rent, so that the one is made to depend on the other and _vice versa_. This absurdity is quite unmistakable when some of these authors attempt to expound "The Influence of Rent Upon Production Prices" and "The Influence of Production Prices Upon Rent" in two consecutive chapters.'[266]

Yet for all these excellent critical comments--the last, particularly acute, actually does to some extent anticipate Marx's criticism of this point in _Capital_, volume ii--Rodbertus calmly falls in with the fundamental blunder of the classical school and its vulgar followers: to ignore altogether that part of the value of the aggregate product which is needed to replace the constant capital of the society. This way it was easier for him to keep up the singular fight against the 'declining wage rate'.

Under capitalist forms of production, the value of the aggregate social product is divided into three parts: one corresponding to the value of the constant capital, the second to the wage total, i.e. the variable capital, and the third to the aggregate surplus value of the capitalist class. In this composition, the portion corresponding to the variable capital is relatively on the decline, and this for two reasons. To begin with, the relation of _c_ to (_v + s_) within _c + v + s_ changes all the time in the direction of a relative increase of _c_ and a relative decrease of _v + s_. This is the simple law for a progressive efficiency of human labour, valid for all societies of economic progress, independently of their historical forms, a formula which only states that living labour is increasingly able to convert more means of production into objects for use in an ever shorter time. And if (_v + s_) decreases as a whole, so must _v_, as its part, decrease in relation to the total value of the product. To kick against this, to try and stop the decrease, would be tantamount to contending against the general effects of a growing labour productivity. Further, there is within (_v + s_) as well a change in the direction of a relative decrease in _v_ and a relative increase in _s_, that is to say, an ever smaller part of the newly created value is spent on wages and an ever greater part is appropriated as surplus value. This is the specifically capitalist formula of progressive labour productivity which, under capitalist conditions of production, is no less valid than the general law. To use the power of the state to prevent a decrease of _v_ as against _s_ would mean that the fundamental commodity of labour power is debarred from this progress which decreases production costs for all commodities; it would mean the exemption of this one commodity from the economic effects of technical progress. More than that: the 'declining wage rate' is only another expression of the rising rate of surplus value which forms the most powerful and effective means of checking a decline of the profit rate, and which therefore represents the prime incentive for capitalist production in general, and for technical progress within this system of production in particular. Doing away with the 'declining wage rate' by way of legislation would be as much as to do away with the _raison d'être_ of capitalist society, to deal a crippling blow to its entire system. Let us face the facts: the individual capitalist, just like capitalist society as a whole, has no glimmering that the value of the product is made up from the sum total of labour necessary in the society, and this is actually beyond his grasp. Value, as the capitalist understands it, is the derivative form, reversed by competition as production costs. While in truth the value of the product is broken down into the values of its component fragments _c_, _v_ and _s_, the capitalist mind conceives of it as the summation of _c_, _v_ and _s_. These, in addition, also appear to him from a distorted perspective and in a secondary form, as (1) the wear and tear of his fixed capital, (2) his advances on circulating capital, including workers' wages, and (3) the current profits, i.e. the average rate of profit on his entire capital. How, then, is the capitalist to be compelled by a law, say of the kind envisaged by Rodbertus, to maintain a 'fixed wage rate' in the face of the aggregate value of the product? It would be quite as brilliant to stipulate by law for exactly one-third, no more, no less, of the total price of the product to be payable for the raw materials employed in the manufacture of any commodity. Obviously, Rodbertus' supreme notion, of which he was so proud, on which he built as if it were a new Archimedean discovery, which was to be the specific for all the ills of capitalist production, is arrant nonsense from all aspects of the capitalist mode of production. It could only result from the muddle in the theory of value which is brought to a head in Rodbertus' inimitable phrase: that 'now, in a capitalist society, the product must have value-in-exchange just as it had to have value-in-use in ancient economy'.[267] People in ancient society had to eat bread and meat in order to live, but we of to-day are already satisfied with knowing the price of bread and of meat. The most obvious inference from Rodbertus' monomania about a 'fixed wage rate' is that he is quite incapable of understanding capitalist accumulation.

Previous quotations have already shown that Rodbertus thinks solely of simple commodity production, quite in keeping with his mistaken doctrine that the purpose of capitalist production is the manufacture of consumer goods for the satisfaction of 'human wants'. For he always talks of 'capital replacements', of the need to enable the capitalists to 'continue their enterprise on the previous scale'. His principal argument, however, is directly opposed to the accumulation of capital. To fix the rate of the surplus value, to prevent its growth, is tantamount to paralysing the accumulation of capital. Both Sismondi and