Wednesday, November 29, 2006

 

Notes for our discussion on pages 266-458

Exploiting, destructive, civilising, creative...

Reprise

In the Introduction, Marx has discussed method; in the essay on Bastiat and Carey, he has sketched in polemical form his focus on identifying the real subversive, creative impulses within capitalist development; in pages 115-172, he has started his substantive economic discussion by criticising the Proudhonists and showing that any serious critique of capital must also be a critique of the basic social relations involved in exchange-value.
He then moves on to start that critique. Pages 172 to 250 are a draft, or notes, for chapters 1 to 3 of Capital, covering commodities, exchange, and money. In pages 250-266 Marx moves on from money to capital, the terrain of chapters 4 to 6 of Capital.
In pages 266-458 Marx's notes cease to correspond so closely with what he will later write in Capital. These pages correspond roughly to chapters 7 to 15 in Capital, the chapters that move from the labour process (in general) through to the modern factory system, developing the concept of surplus value along the way.
After page 458 Marx will move back to studying the genesis of capitalism - its contrast to, and evolution from, pre-capitalist economic formations (corresponding to chapters 26-31 of Capital).

Outline

Pages 266-274: how, among all the other economic exchanges in capitalist society, the exchange between capital and labour (though obeying the same laws as the other exchanges) has a special, and pivotal, character.
Pages 274-281: interrelation between capital, wage-labour, and landed property.
Pages 282-333: further expansion on the exchange between capital and labour.
Pages 333-401: investigation, through numerical examples, of the relations between labour productivity and surplus value.
Pages 401-424: the problem of how the surplus value is "realised", i.e. of how the capitalist gets to sell the products at a price which brings to him the added value which the workers' labour has contributed. Interspersed in these and later pages are comments on propensity of capitalism to crisis.
Pages 426-433: further numerical examples on similar lines to pages 333-401.
Pages 433-450: equalisation of the rate of profit (what will become the "transformation problem" in Capital volume 3).
Pages 450-458: how capitalist production not only produces goods and services, but, "even more important", reproduces capitalist relations on an ever-expanding scale. (This corresponds to chapter 24 in Capital).

Grundrisse and capital on exploitation

In the Grundrisse, unlike Capital, Marx uses many pages, and much vivid prose, to explain why it is labour, and not anything else, that capital sustains itself from, and to showing how the interchange between labour and capital simultaneously produces wealth for capital and poverty, exclusion, and oppression for labour.
In Capital, Marx is much more laconic about why it is labour that sustains capital.
"In order to be able to extract value from the consumption of a commodity, our friend, Moneybags, must be so lucky as to find, within the sphere of circulation, in the market, a commodity, whose use-value possesses the peculiar property of being a source of value, whose actual consumption, therefore, is itself an embodiment of labour, and, consequently, a creation of value. The possessor of money does find on the market such a special commodity in capacity for labour or labour-power". [Chapter 6].
It just so happens that way, and that's that.
Describing exploitation in Capital, Marx starts off very neutral and "matter-of-fact", and lets his picture of the class oppression involved build up over hundreds of pages, with much empirical input, from chapter 7 to chapters 25 and 32. When he first introduces the concept of surplus value, he starts by imagining that wages are equal to the amount of value added by a worker in a day, and showing that is impossible under capitalism. An insoluble conundrum? No, because in fact the value of labour-power (which underpins wages) is determined by the labour-time embodied in working-class subsistence, not by the labour done by the worker after the capitalist has bought the labour-power.
"The owner of the money has paid the value of a day’s labour-power; his, therefore, is the use of it for a day; a day’s labour belongs to him. The circumstance, that on the one hand the daily sustenance of labour-power costs only half a day’s labour, while on the other hand the very same labour-power can work during a whole day, that consequently the value which its use during one day creates, is double what he pays for that use, this circumstance is, without doubt, a piece of good luck for the buyer, but by no means an injury to the seller". [Chapter 7]
Note the neutral, indeed mollifying, language: "by no means an injury to the seller". Only over hundreds of pages will Marx build up the picture which shows that the market criterion, "by no means an injury to the seller", is only a half, or quarter, or one-tenth truth. In Capital, Marx does not even use the words "exploit" or "exploitation" until chapter 11. Even there, those words are mostly used in a fairly neutral way. Only very briefly, by way of signalling what he will develop later, does he mention the more vivid connotations.
"Capital further developed into a coercive relation, which compels the working class to do more work than the narrow round of its own life-wants prescribes. As a producer of the activity of others, as a pumper-out of surplus-labour and exploiter of labour-power, it surpasses in energy, disregard of bounds, recklessness and efficiency, all earlier systems of production based on directly compulsory labour". [Chapter 11].
It is easy to understand why Marx chose this "objective", take-nothing-for-granted, assert-nothing-until-proved, give-your-opponent-their-strongest-argument approach in Capital. It means, however, that the treatment in the Grundrisse is much more fast-burning and vivid.
It dispels one common misunderstanding about exploitation: that it is an arithmetical problem, a problem of workers having less (of the same sort of thing) and capitalists having more. It makes it easier to understand Marx's comment in the Critique of Gotha Programme. About a clause in the programme which said that the problem with wage-labour was an "iron law" keeping wages too low, he complained that:
"It is as if, among slaves who have at last got behind the secret of slavery and broken out in rebellion, a slave still in thrall to obsolete notions were to inscribe on the program of the rebellion: Slavery must be abolished because the feeding of slaves in the system of slavery cannot exceed a certain low maximum!"
Of course slaves generally did not get enough food. Of course Marx would sympathise with slave revolts even if limited to demanding bigger food rations. Of course it is inherent in the system of capitalist wage-labour that workers do get less. Of course it is right and important that workers struggle to get even a little bit more. But Marx did theory so as to encourage workers to revolt against wage-labour as a whole, not just against low wages, just as, in their time, slaves had eventually revolted against slavery as such, and not just against small food rations.

Capital and labour

Marx's argument that "the real non-capital is labour" [p.274] is couched in very "Hegelian" terms. I'll comment on that later in these notes. Just note, for now, that this "philosophical" argument is wrong, in terms of Marx's later conclusions. In those terms, the "opposite of capital" is not labour. It is labour-power, and the distinction between labour and labour-power is highly important.
In Capital, Marx does not just leave it at the deadpan comment that it just so happens that there is a suitable commodity available, namely labour-power. He follows up immediately with a passage showing that special social relations are required in order that labour-power be thus available. "Nature does not produce on the one side owners of money or commodities, and on the other men possessing nothing but their own labour-power. This relation has no natural basis, neither is its social basis one that is common to all historical periods. It is clearly the result of a past historical development, the product of many economic revolutions, of the extinction of a whole series of older forms of social production". [Chapter 6].
But is it possible to "go behind" the initial deadpan, rabbit-out-of-hat comment that it so happens that labour-power is available and is a commodity such as capital requires for its sustenance? Can the notes in the Grundrisse help us with that?
Maybe. Marx's demonstration [p.271] that capital cannot sustain itself by exchange with ordinary particular commodities does hold (so long as we assume a society where exchange relations are fairly all-encompassing; for centuries before full-scale capitalism, merchant capital was able to sustain itself precisely by "buying cheap and selling dear" in such exchanges with particular commodities, taking advantage of the fact that they were exchanged between communities without fully-developed internal markets and without an impersonal world market connecting them).
Capital must exchange with a commodity whose "use-value possesses the peculiar property of being a source of value". But that labour-power is such a commodity is no happenstance. If labour is the substance of value, then labour-power is the unique commodity whose use-value is to produce new value.

Exploitation

Read Marx. "The exchange between capital and labour, then we find that it splits into two processes which are not only formally but also qualitatively different, and even contradictory:
(1) The worker sells his commodity... for a specific sum of money... (2) The capitalist obtains labour itself.. the productive force...
The worker cannot become rich in this exchange, since, in exchange for his labour capacity as a fixed, available magnitude, he surrenders its creative power, like Esau his birthright for a mess of pottage. Rather, he necessarily impoverishes himself... the creative power of his labour establishes itself as the power of capital, as an alien power confronting him..."
The worker gets a pittance, smaller or greater, but a pittance. The capitalist gets the general, ever-increasing power of human creativity. The exchange produces exclusion and alienation and (relative) poverty for the worker, and spiralling riches for the capitalist. It is not, or not primarily, that it yields less for the worker than for the capitalist. It yields different things for the two classes, and it yields a class opposition between them.

Marx and the working class: the "civilising influence of capital"

While more vivid in its denunciation of capitalist exploitation than Capital is (at least in the early chapters of Capital, where Marx first introduces the concept), the Grundrisse also seems to be at pains to "balance" this with a greater appreciation of what Marx calls the "civilising influence of capital".
I don't think it is really a matter of "balance". Marx is clear that the "positive aspects" of capitalist development are inextricably intertwined with - really, are the same thing as - the "negative aspects". They are the same process looked at from a different angle. And they are "positive" not because they make capitalism not so bad after all, but because they create within capitalism an immense potential for abolishing and going beyond capitalism.
It is precisely the drive to exploit - to extract more and more surplus-labour and then to "realise" it (by selling the products) - that drives the "civilising influence".
"The great historic quality of capital is to create this surplus labour... develop general industriousness as the general property of the new species... develop the productive powers of labour... drive labour beyond the limits of its natural paltriness, and thus create the material elements for the development of the rich individuality...
A system of general exploitation of the natural and human qualities... while there appears nothing higher in itself, nothing legitimate for itself, outside this circle of social production and exchange... Hence the great civilizing influence of capital; its production of a stage of society in comparison to which all earlier ones appear as mere local developments of humanity and as nature-idolatry..."

What makes the working class subversive; and crisis

The Grundrisse marks a decisive shift in Marx's view of the revolutionary role of the working class. And it is a shift which is registered there much more clearly than anywhere else. The same ideas are visible in Capital, in chapter 15, where Marx argues that modern industrial conditions create a more potently and multivalently creative and subversive working class than older conditions, but there they are very much more "tucked away". Quite likely Marx was keeping back a further, finished development of the ideas for the book on wage labour which he planned as a sequel to Capital but never wrote.
In the first text in which he identified the working class as the agency of socialist revolution, his Introduction to the Critique of Hegel's Philosophy of Right (1844), Marx put it like this:
"Where, then, is the positive possibility of a German emancipation?
Answer: In the formulation of a class with radical chains, a class of civil society which is not a class of civil society, an estate which is the dissolution of all estates, a sphere which has a universal character by its universal suffering and claims no particular right because no particular wrong, but wrong generally, is perpetuated against it; which can invoke no historical, but only human, title; which does not stand in any one-sided antithesis to the consequences but in all-round antithesis to the premises of German statehood; a sphere, finally, which cannot emancipate itself without emancipating itself from all other spheres of society and thereby emancipating all other spheres of society, which, in a word, is the complete loss of man and hence can win itself only through the complete re-winning of man. This dissolution of society as a particular estate is the proletariat".
The working class is able to create a new, more human, society because it has been dehumanised and brutalised, "is the complete loss of man". There is nothing but dialectical flourish to explain this postulated transition.
This exposition takes us no further than the hopeful but puzzled comments by Engels in a letter to Marx of October 1844:
"As it is, the workers had already reached the final stage of the old civilisation a few years ago, and the rapid increase in crime, robbery and murder is their way of protesting against the old social organisation. At night the streets are very unsafe, the bourgeoisie is beaten, stabbed and robbed; and, if the proletarians here develop according to the same laws as in England, they will soon realise that this way of protesting as individuals and with violence against the social order is useless, and they will protest, through communism, in their general capacity as human beings. If only one could show these fellows the way! But that’s impossible".
In the Communist Manifesto (1848), Marx has moved forward. Building on the prefigurations of "the brotherhood of man" which he has seen in his association with organised French socialist workers in Paris in 1844, and on the understanding of the importance of trade-union struggles which he has developed from studying the English experience and in his polemic against Proudhon (1846), he adduces positive properties of the working class itself - its self-organisation in economic struggles, its building of links using modern communications, its learning about political action thanks to the bourgeoisie being compelled to draw it into that action - rather than simply postulating it as the negation of capitalist society.
He also distinguishes between the working class, as a revolutionary force, and those who are most brutalised and dehumanised by capitalism, the lumpenproletariat, whom he considers more likely to be reactionary.
Even in the Communist Manifesto, though, Marx has not emancipated himself from the old "iron law of wages" (the idea, commonplace among socialists at the time, that capitalism necessarily limited wages to physical-subsistence level), and so there are still large elements of his view of the working class as the epitome of brutalisation and dehumanisation.
"It is only the most simple, most monotonous, and most easily acquired knack, that is required of him. Hence, the cost of production of a workman is restricted, almost entirely, to the means of subsistence that he requires for maintenance, and for the propagation of his race. But the price of a commodity, and therefore also of labour, is equal to its cost of production. In proportion, therefore, as the repulsiveness of the work increases, the wage decreases..."
In the Grundrisse and in chapter 15 of Capital, Marx argues differently. Developed capitalist production, precisely because of its drive to extract and realise surplus value, has no choice but to "drive labour beyond the limits of its natural paltriness", to replace "labour in which a human being does what a thing could do", to create a workforce of varied and wide potentialities, and also to create new aspirations and needs among the working class.
Marx's discussion of all this in the Grundrisse is, I think, still limited by a tendency to see "crisis" as being, in some rather mysterious way, the thing that will finally trigger all these potentialities. In his book, Marx's Theory of Crisis, Simon Clarke has shown convincingly that, in the years after the Grundrisse, Marx moved decisively away from that equation of revolution with crisis, and came to see revolution more as the culmination of the build-up of subversive working-class potential within capitalism.
Quite a lot of this section of the Grundrisse deals with the propensity of capitalism to crisis, but I think everything on that subject here represents only a very sketchy and initial version of ideas developed much better later (notably in Theories of Surplus Value), and has no independent value.

The limits of "consumerism"?

There can be no doubt about it: in contrast to most socialist thinking, Marx, in the Grundrisse, sees capitalist consumerism as a highly "progressive" force. Of course he was aware of the "other side". Marx could not and did nopt anticipate our contemporary environmental concerns, but he did point out:
"All progress in capitalistic agriculture is a progress in the art, not only of robbing the labourer, but of robbing the soil; all progress in increasing the fertility of the soil for a given time, is a progress towards ruining the lasting sources of that fertility. The more a country starts its development on the foundation of modern industry, like the United States, for example, the more rapid is this process of destruction. Capitalist production, therefore, develops technology, and the combining together of various processes into a social whole, only by sapping the original sources of all wealth - the soil and the labourer". [Chapter 15].
His emphasis, however, was on the way that capitalist development enlarged needs and aspirations, and thus created the force which could eventually make a better society.
Do we need to adopt a more "pessimistic" view today? Although large-scale capitalist agriculture today is actually more careful about the soil than much 19th-century agriculture was, in general capitalist industry imposes a much bigger threat to "the original sources of all wealth" now than in the 19th century.
A long series of studies have shown that increased income and consumption levels did produce more health and happiness up to a certain point, somewhere around the mid-'70s, but since then it is not true that having more stuff in your house - more electronic gadgets, exotic foods, designer clothes - makes you happier, even on average.
We know that, for a fully communist society to be possible, there has to be a certain limit to people's desire to have more stuff. As Trotsky put it: "The deathblow to money fetishism will be struck only upon that stage when the steady growth of social wealth has made us bipeds forget our... humiliating fear about the size of our ration". If, when everyone has enough of the basics, we are still anxiously jostling each other to see who can get the most luxurious car or the newest widescreen tv, then there will be no full communism.
There is plenty of good reason to suppose that the anxious jostling can be got rid of, over generations. Plenty of human societies in history have seen excessive consumption, and outdoing your neighbours, as bad. They have rejected the capitalist credo, "greed is good". Even in present-day capitalist society, bombarded with advertising and all the rest, a fair number of people reject "greed is good".
But then the question is, where's the limit? It doesn't have to be, and can't be, something fixed, but there has to be a ballpark limit. Plainly the limit has to be high enough to give everyone food, clothing, shelter, and reasonable access to culture and travel. Plainly also, if the limit is so high that in any future human society large numbers will have an irrepressible, aching desire to live like Paris Hilton, then communism is impossible.
Maybe the level reached by the better-off sections of the working class in the most prosperous countries by the 1970s marks the approximate limit, and expansion of consumerism beyond that is more regressive than progressive?
On the other hand, back in 1986 Ernest Mandel was debating this issue of limits to consumer desire with Alec Nove, a "market socialist" who insisted that the unlimited nature of consumer desire meant that any future society would have to be dominated by markets - the only alternative being rationing of the scarce desired goods from above, which would bring worse evils than markets would. To prove his case, Mandel had to suggest that there were some consumer goods which people would really not mind doing without. Casting around for an example, he picked on the video cassette recorder, then an expensive new luxury.
"Might it not be preferable to forego the Betamax [i.e. VCR], the second car (perhaps even the first, if adequate public transport were available), the electrical meat-cutting knife, and to work ten hours fewer a week, with much less stress - if the satisfaction of all primary needs were not endangered by such a reduction?" (New Left Review I/159, September-October 1986).
Today, it is not just that almost all working-class people in prosperous countries have VCRs or DVD players. Apparently it's commonplace in Third World shanty-towns to find dwellings which have no running water but still have a TV and VCR, run off pirate cables. In Kabul under the Taliban, one of the things that people would risk terrible reprisals for was to gather in cellars and watch videotapes of the film Titanic on VCRs and TVs carefully hidden from the religious police.
An Indian film-maker once described to me his attempt to shoot footage in a village chosen to be untouched by the 20th century. His researchers found a village in Indonesia which they said fitted the bill. After a difficult journey by boat down a river, he eventually got there, and yes, it did seem untouched. A few hours later he saw another boat come down the river. On the front of it, a sign - "Blockbuster Video".
In short, it would not go down well to tell the working class, even the working class in poorer countries, that communism will be good, but some luxuries like VCRs may be unavailable.
The answer may be that there is a limit, but it is inherently blurred. There will always be new things coming within the limit, but at the same time there will be things going out of it, too. After all, in Marx's day most middle-class families, and even some better-off working-class families, would regard it as ridiculously austere to say that under communism domestic servants would no longer be available.
But again, maybe the expansion of capitalist consumerism in the last 20 years has had as progressive a character as any expansion of capitalist consumerism ever has? VCR, DVD players, iPods, personal computers, the Internet - haven't these all expanded working-class people's culture and cultural aspirations, despite all the dross connected with them?
When considering the way that workers had been able to get "a share of civilization which distinguishes [them] from the slave", Marx adduced "participation in the higher, even cultural satisfactions, the agitation for his own interests, newspaper subscriptions, attending lectures, educating his children, developing his taste etc".
But Marx would have known very well that the workers who used their little discretionary income to read newspapers and books, attend lectures and political or trade-union meetings, visit art galleries, and so on were the minority. So even were those who used it for other "cultural" activities such as the more varied forms of religious service newly available, or sports. The typical new goods of mass consumption at the time were tea, spirits, opium, sugar, processed foods, and mass entertainment of a sort which makes Home And Away or Big Brother look hochkultivierte.
Public executions were still a major form of mass entertainment in England until they were ended as late as 1868. The newer forms of mass entertainment, available in the most prosperous countries, were epitomised by P T Barnum.
Barnum began his career as a showman in 1835 with his purchase and exhibition of a blind and almost completely paralysed African-American slave woman, Joice Heth, claimed by Barnum to have been the nurse of George Washington, and to be over a hundred and sixty years old.
He then ran a museum in New York, where he made a special hit in 1842 with the exhibition of Charles Stratton, the celebrated midget "General Tom Thumb" and the Fiji Mermaid. His collection also included the original Siamese twins, Chang and Eng Bunker.
After a temporary retirement, and a couple of failures, he opened his last enterprise in 1871 - P T Barnum's Grand Traveling Museum, Menagerie, Caravan & Hippodrome, a travelling amalgamation of circus, menagerie and museum of "freaks".

Culture and stupidity

Marx sees great subversive and creative potential in capitalism's creation of a system of "artificial" needs, i.e. of culture. He knows that capitalism intertwines the creation of that system with an inculcation of "stupidity", which includes driving us towards trying to satisfy all needs with ever-more private possessions. "Private property has made us so stupid and one-sided that an object is only ours when we have it – when it exists for us as capital, or when it is directly possessed, eaten, drunk, worn, inhabited, etc., – in short, when it is used by us". "Das Privateigentum hat uns so dumm und einseitig gemacht, daß ein Gegenstand erst der unsrige ist, wenn wir ihn haben, also als Kapital für uns existiert oder von uns unmittelbar besessen, gegessen, getrunken, an unsrem Leib getragen, von uns bewohnt etc., kurz, gebraucht wird". [1844 Manuscripts, section on "Private Property and Communism"].
The emancipation of culture from that "stupidity" can come only through human activity pushing through and beyond capitalist development, not by an attempt to back out of it into an earlier, simpler era.
"Crude communism... how little this annulment of private property is really an appropriation is in fact proved by the abstract negation of the entire world of culture and civilisation, the regression to the unnatural simplicity of the poor and crude man who has few needs and who has not only failed to go beyond private property, but has not yet even reached it. The community is only a community of labour, and equality of wages paid out by communal capital – by the community as the universal capitalist. Both sides of the relationship are raised to an imagined universality – labour as the category in which every person is placed, and capital as the acknowledged universality and power of the community". [1844 MS, ibid].

The "Hegelian Marx"

After his initial statement on labour as the "opposite of capital", the force which sustains capital, Marx devotes pages 275-8 to demonstrating a dialectical interrelation between the three concepts capital, wage-labour, and landed property, each generating a "transition" to the next concept.
The basic problem here is one we've discussed earlier - that Marx tends to present the transition to capitalism in England, where it proceeded through a long and comprehensive "agricultural revolution" long before the industrial revolution, as the universal template. In fact, in most countries the transition has been quite different. In some countries, Tsarist Russia for example, advanced industrial capitalism has grown up in the cities while the transformation of landed-property relations lags long behind.
Another question is raised, that of the "Hegelian", or supposedly "Hegelian", character of the Grundrisse. Martin Nicolaus's foreword to the English translation of the Grundrisse places great stress on this (pp.26-43), and Nicolaus follows up by adding footnotes to the text with references to Hegel's Logic wherever he can.
Nicolaus justifies all this by reference to a letter from Marx to Engels of 14 January 1858.
"I am getting some nice developments. For instance, I have thrown over the whole doctrine of profit as it has existed up to now. In the method of treatment the fact by mere accident I have again glanced through Hegel's Logic has been of great service to me - Freiligrath found some volumes of Hegel which originally belonged to Bakunin and sent them to me as a present. If there should ever be time for such work again, I should greatly like to make accessible to the ordinary human intelligence, in two or three printer's sheets, what is rational in the method which Hegel discovered but at the same time enveloped in mysticism".
This is thin stuff. Notice, for a start, that this January letter comes very late in the process of Marx writing the Grundrisse - he started in August 1857 and finished in March 1858 - yet no-one can separate out the supposedly unenlightened earlier bits of the Grundrisse, before Marx "again glanced through" the Logic, from the supposedly more enlightened later bits.
Nicolaus interprets Marx's comment that he has discovered new things about profit as a reference to Marx's argument that the rate of profit (surplus-value divided by capital advanced) misrepresents exploitation (surplus-value divided by payment for labour-power). Why and how is that argument particularly "Hegelian"? Nicolaus refers to pages 373-86 of the Grundrisse, part of the section we are studying this week; but those pages are largely taken up with numerical examples ("the devil take this wrong arithmetic!", writes Marx [p.377]), and much of what the numerical examples purport to prove is, as we shall see, wrong.
There is a simple explanation for Marx's frequent use of Hegelian tropes in private notebooks, hurriedly scribbled down, like the Grundrisse: namely, that the Hegelian style of argument and exposition was what he had been trained in as a young man. To write "in Hegelian" was for Marx not a peculiar effort, as it would be for us today, but a drilled-in instinct. That style was all-pervading in early writings like The Holy Family and The German Ideology. Marx increasingly eliminated it from his later published works, but when writing private notes he might well fall back on it.
Why did he eliminate the style from his later published works? Out of deference to philistine public opinion? I doubt it. Marx was not that sort of person. The obvious explanation is that his considered opinion was that the style of argument, however suggestive and illuminating it might be in private notes, just did not stand up as scientific demonstration.
My argument is not, of course, that there was no influence of Hegel on Marx - but that it is not the case that more "Hegelian" passages in Marx are necessarily more profound, or more insightful, than non-"Hegelian" ones. Rather the opposite.
Rather than base ourselves, as Nicolaus does, on Marx's offhand remark in his 1858 letter, we would do better to base ourselves on Marx's considered and detailed, but so-often-ignored, argument in his "Critique of the Hegelian Dialectic" of 1844.
Marx there concludes that Hegel's philosophy is pervaded by the "illusions of speculation", by a sort of "false positivism, or of his merely apparent criticism... reason is at home in unreason... There can be [no] question about an act of accommodation on Hegel’s part vis-à-vis religion, the state, etc. [i.e. a pragmatic adaptation in conflict with his basic outlook], since this lie is the lie of his principle".

Marx's numerical examples. C/v and the tendency of the rate of profit to fall

Pages 333-401, and 426-433, are largely taken up with investigations through numerical examples. Marx knew that he was frequently getting himself tangled up here, making comments to himself like "this highly irksome calculation" and "the devil take this wrong arithmetic!"
As regards positive results from all the number-bashing, there is essentially only one: that if labour productivity rises, then so does surplus value, but generally in a smaller proportion. If the working day is 8 hours, and the value of labour-power corresponds to 4 hours' labour time, then a doubling of labour productivity (assuming workers' level of subsistence stays the same) will increase surplus-value by 50%, from 4 hours to 6. And so on.
Embedded among the number-bashing, however, are two wrong assumptions. Marx corrected one in Capital. He never corrected the other.
Firstly, around page 352, Marx follows an argument fairly commonplace in his day - that accumulation of capital will lead to to increased wages, but that this tendency will eventually be counterbalanced by the increased wages encouraging workers to have more children, and allowing more of those children to survive, thus creating a surplus population. Such a "counterbalancing" mechanism would be too slow to be effective (even in Marx's day, 12 years or so before the increased birth-rate filters through into an increased workforce); in the meantime, of course, capital would have accumulated further, so very likely the counterbalancing would not be effective even with delay; and, also in the meantime, the larger number of children to be looked after, however much the workers could be coerced to neglect them, could not but reduce the effective availability of labour-power. Moreover, in modern societies, and even in not-so-modern ones like late 19th century France, capitalist advance means a fall in the working-class birth-rate, not a rise.
in Capital, Marx corrected himself on this point by showing that the accumulation of capital also produces a strong drive to replace workers by machines. "The labouring population therefore produces, along with the accumulation of capital produced by it, the means by which it itself is made relatively superfluous, is turned into a relative surplus-population; and it does this to an always increasing extent. This is a law of population peculiar to the capitalist mode of production; and in fact every special historic mode of production has its own special laws of population, historically valid within its limits and only in so far as man has not interfered with them". [Chapter 25]
More seriously, everywhere in Marx's numerical examples he assumes that the total capital advanced will not decrease when labour productivity rises. Mostly he just assumes it. On page 390 he explains the assumption. He argues that it is "false" to suppose "that, despite the double force of production, capital [would] continue to operate... without spending more for raw material and instrument of labour". In other words, the constant capital (capital advanced for means of production) must increase relative to variable capital (capital advanced for labour-power) as labour productivity rises.
In a footnote on that same page, he considers a possible exception. The "false" supposition is in fact correct "for every industrialist if the force of production doubles not in his branch, but in the branch whose output he uses".
But the possible "exception" is in fact the general rule. There is absolutely no reason to suppose that labour productivity will rise less in the industries producing inputs for other industries than in those producing final consumer goods. Increased labour productivity generally means a reduction of constant capital as measured in labour-time terms, though not necessarily as measured in physical-bulk or in paper-money terms.
The error here is the fundamental one underpinning Marx's mistaken idea of a "tendency of the rate of profit to fall". We will have to discuss that again, when we come to page 748, where Marx declares that tendency to be "in every respect the most important law of modern political economy, and the most essential".
There is evidence that Marx, on a re-reading, would have, maybe not identified his earlier error, but at least crossed out those words as foolish exaggeration. In any case, he never asserted any "tendency of the rate of profit to fall" in any of the many writings which he finished for publication.

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Tuesday, November 28, 2006

 

Key passages from section 5

Pages 172-250

"Economy of time, along with the planned distribution of labour time among the various branches of production, remains the first economic law on the basis of communal production. It becomes law, there, to an even higher degree. However, this is essentially different from a measurement of exchange values (labour or products) by labour time. The labour of individuals in the same branch of work, and the various kinds of work, are different from one another not only quantitatively but also qualitatively. What does a solely quantitative difference between things presuppose ? The identity of their qualities. Hence, the quantitative measure of labours presupposes the equivalence, the identity of their quality..." [p.172].

"Exchange value, posited in the character of money, is price..." [p.189]."The commodity is not price, in the way in which its social substance stamped it as exchange value; this quality is not immediately coextensive with it; but is mediated by the commodity’s comparison with money; the commodity is exchange value, but it has a price. Exchange value was in immediate identity with it, it was its immediate quality, from which it just as immediately split, so that on one side we found the commodity, on the other (as money) its exchange value; but now, as price, the commodity relates to money on one side as something existing outside itself... The price is a property of the commodity, a quality in which it is presented as money. It is no longer an immediate but a reflected quality of it". [p.190]. (As it stands, Marx contradicts himself here. He is working towards the concept of value as distinct from exchange value. In the terms used in Capital, commodities are values, but have exchange-values or prices. Exchange-value is synonymous with price if there is a developed money system).

Marx goes on to discuss the different "characters" of money - as measure, as means of exchange, as store of value, etc. - and the relation between price levels and the volume of money in circulation. Anticipating the discussion of capital which he will undertake full-scale some pages later, he distinguishes between C-M-C and M-C-M+.

"If circulation is looked at not as a constant alternation, but as a series of circular motions which it describes within itself, then this circular path appears as a double one: Commodity–Money–Money–Commodity; and in the other direction Money–Commodity–Commodity–Money; i.e. if I sell in order to buy, then I can also buy in order to sell. In the former case money only a means to obtain the commodity, and the commodity the aim; in the second case the commodity only a means to obtain money, and money the aim...
To exchange commodity for commodity makes sense, since commodities, although they are equivalent as prices, are qualitatively different, and their exchange ultimately satisfies qualitatively different needs. By contrast, exchanging money for money makes no sense, unless, that is, a quantitative difference arises, less money is exchanged for more...
It already implies that money functions neither only as measure, nor only as medium of exchange, nor only as both; but has yet a third quality. It appears here firstly as an end in itself... as material representative of wealth". [p.210-3].

Marx notes that for circulation, money-tokens will function just as well as precious metals. "If a fake pound were to circulate in the place of a real one, that would render absolutely the same service in circulation as a whole as if it were genuine". [p.210].

But when money becomes a general material representative of wealth, something more happens.

"Before it is replaced by exchange value, every form of natural wealth presupposes an essential relation between the individual and the objects, in which the individual in one of his aspects objectifies [vergegenständlicht] himself in the thing, so that his possession of the thing appears at the same time as a certain development of his individuality: wealth in sheep, the development of the individual as shepherd, wealth in grain his development as agriculturist, etc.
Money, however... does not at all presuppose an individual relation to its owner; possession of it is not the development of any particular essential aspect of his individuality; but rather possession of what lacks individuality, since this social [relation] exists at the same time as a sensuous, external object which can be mechanically seized, and lost in the same manner. Its relation to the individual thus appears as a purely accidental one; while this relation to a thing having no connection with his individuality gives him, at the same time, by virtue of the thing's character, a general power over society, over the whole world of gratifications, labours, etc.
It is exactly as if, for example, the chance discovery of a stone gave me mastery over all the sciences, regardless of my individuality. The possession of money places me in exactly the same relationship towards wealth (social) as the philosophers' stone would towards the sciences.
Money is therefore not only an object, but is the object of greed [Bereicherungssucht]...
Monetary greed, or mania for wealth, necessarily brings with it the decline and fall of the ancient communities [Gemeinwesen]. Hence it is the antithesis to them. It is itself the community [Gemeinwesen], and can tolerate none other standing above it". [p.221-3].

"But this presupposes the full development of exchange values, hence a corresponding organization of society. In antiquity, exchange value was not the nexus rerum; it appears as such only among the mercantile peoples, who had, however, no more than a carrying trade and did not, themselves, produce. At least this was the case with the Phoenicians, Carthaginians, etc. But this is a peripheral matter. They could live just as well in the interstices of the ancient world, as the Jews in Poland or in the Middle Ages". [p.223].

Marx, continuing, links the development of money into capital with the development of social, value-creating labour.

"It is inherent in the simple character of money itself that it can exist as a developed moment of production only where and when wage labour exists; that in this case, far from subverting the social formation, it is rather a condition for its development and a driving-wheel for the development of all forces of production, material and mental...
As material representative of general wealth, as individualized exchange value, money must be the direct object, aim and product of general labour, the labour of all individuals. Labour must directly produce exchange value, i.e. money. It must therefore be wage labour. Greed, as the urge of all, in so far as everyone wants to make money, is only created by general wealth. Only in this way can the general mania for money become the wellspring of general, self-reproducing wealth. When labour is wage labour, and its direct aim is money, then general wealth is posited as its aim and object. (In this regard, talk about the context of the military system of antiquity when it became a mercenary system.)
Money as aim here becomes the means of general industriousness. General wealth is produced in order to seize hold of its representative. In this way the real sources of wealth are opened up. When the aim of labour is not a particular product standing in a particular relation to the particular needs of the individual, but money, wealth in its general form, then, firstly the individual's industriousness knows no bounds; it is indifferent to its particularity, and takes on every form which serves the purpose; it is ingenious in the creation of new objects for a social need, etc....
General industriousness is possible only where every act of labour produces general wealth, not a particular form of it; where therefore the individual's reward, too, is money. Otherwise, only particular forms of industry are possible. Exchange value as direct product of labour is money as direct product of labour. Direct labour which produces exchange value as such is therefore wage labour. Where money is not itself the community [Gemeinwesen], it must dissolve the community..." [p.223-4].

"It is the elementary precondition of bourgeois society that labour should directly produce exchange value, i.e. money; and, similarly, that money should directly purchase labour, and therefore the labourer, but only in so far as he alienates [veräussert] his activity in the exchange. Wage labour on one side, capital on the other, are therefore only other forms of developed exchange value and of money (as the incarnation of exchange value). Money thereby directly and simultaneously becomes the real community [Gemeinwesen]..." [p.225].

"When the economic form, exchange, posits the all-sided equality of its subjects, then the content, the individual as well as the objective material which drives towards the exchange, is freedom. Equality and freedom are thus not only respected in exchange based on exchange values but, also, the exchange of exchange values is the productive, real basis of all equality and freedom. As pure ideas they are merely the idealized expressions of this basis; as developed in juridical, political, social relations, they are merely this basis to a higher power. And so it has been in history. Equality and freedom as developed to this extent are exactly the opposite of the freedom and equality in the world of antiquity...
In present bourgeois society as a whole, this positing of prices and their circulation etc. appears as the surface process, beneath which, however, in the depths, entirely different processes go on, in which this apparent individual equality and liberty disappear..." [p.245, 247].

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Notes from our discussion on pages 172-250

Money and community

Reprise

In the Introduction, Marx has discussed method; in the essay on Bastiat and Carey, he has sketched in polemical form his focus on identifying the real subversive, creative impulses within capitalist development; in pages 115-172, he has started his substantive economic discussion by criticising the Proudhonists and showing that any serious critique of capital must also be a critique of the basic social relations involved in exchange-value.
He then moves on to start that critique. This whole section of the Grundrisse can be read as a draft, or notes, for chapters 1 to 3 of Capital:
Ch. 1: Commodities
Ch. 2: Exchange
Ch. 3: Money, or the Circulation of Commodities

There are long passages which are false starts, or digressions (some of them amusing, as when we discover on page 178 that a source for Marx's discussion of the qualities, and methods for extracting, gold is a handbook produced by the British Government School of Mines for emigrants going to Australia to join the 1850s gold rush).
But there are also passages where we can gain insight from seeing Marx work out - in detail, over many pages - ideas which he will later express very tersely, in one or two sentences, in Capital. And there are interesting extrapolations and digressions which Marx will omit from Capital as too speculative.

Money and community

In the second category are Marx's comments on money and community. On pages 221-2 Marx shows that money, once developed, goes beyond its "servile role" as "mere medium of circulation". It becomes "the lord and god of the world of commodities".
Before the full development of money, says Marx, the possession of wealth, which was always particular wealth, was also "a certain development of [the owner's] individuality". Possession of money, however, is "possession of what lacks individuality".
When money-relations have spread to cover the whole of society, then money itself "is the community, and can tolerate none other standing above it". "Monetary greed, or mania for wealth, necessarily brings with it the decline and fall of the ancient communities". "Money becomes the real community".
This community becomes "a mere abstraction, a mere external, accidental thing for the individual, and at the same time merely a means for his satisfaction as an isolated individual". But do not suppose that Marx is falling into the romantic critique of capitalism.
In a developed money system, "money becomes the means of general industriousness... the real sources of wealth are opened up... the individual's industriousness knows no bounds; it is indifferent to its particularity, and takes on every form which serves the purpose; it is ingenious in the creation of new objects for a social need". It is to the contradictions in the development of this new human creativity that Marx looks for revolutionary possibilities, not a reversion to the old community.

Wage-labour. What distinguishes capitalism from other money systems

In this section Marx starts to argue that a fully-developed money system must be a wage-labour system. The argument is that a fully-developed money system means that everyone buys their means of subsistence. That presupposes that they are separated from the means of subsistence, but have some way of getting money, i.e. by selling the only thing they have for sale if separated from the means of subsistence, labour-power. They are wage-labourers. If there is wage-labour, then there must also be capital, i.e. the mass of wealth which buys wage-labour and sells products.
Thus [p.205]: "Exchange value presupposes social labour as the substance of all products, quite apart from their natural make-up... Since labour is motion, time is its natural measure... labour as substance and labour-time as the measure of commodities".
[p.223]: "Money... can exist as a developed moment of production only where and when wage-labour exists".
[p.240]: "... exchange-value and the social mode of production corresponding to it".
But this all begs several questions. Marx knows, indeed insists, that money and merchant capital can and do develop partially for centuries, "in the interstices" of pre-capitalist societies, without dissolving them.
Where is the threshhold? The dividing line? The tipping-point? Marx offers other ideas which are relevant - though not really any answers - later in the Grundrisse, and we should discuss the issue again in relation to them.

Edging towards...

In these pages we see Marx edging towards (but not yet arrived at) some of the key ideas in Capital. Notice, by the way, that nowhere in the Grundrisse does he concern himself with "proving the labour theory of value": he simply alludes to it as an obvious, accepted fact, that labour is the substance of value.
1. The difference between value and price. Here, he says exchange-value and price, because he has not yet distinguished between value and exchange-value. Exchange-value is in fact, once a fully monetary economy is in operation, the same as price; value is not only numerically different from price, but a different sort of thing.
2. Abstract and concrete labour. In Capital, Marx will write that the "twofold nature of the labour contained in commodities", the fact that "so far as it finds expression in value, it does not possess the same characteristics that belong to it as a creator of use values", is "the pivot on which a clear comprehension of political economy turns". Here, and in the following pages, he is edging towards this idea - see, for example, his comment that "Exchange value presupposes social labour as the substance of all products" - but he has not actually reached it. The discussion in the Grundrisse strongly suggests, I think, that the distinction between abstract labour and concrete labour, and the distinction between labour and labour-power, are inseparably linked.
By 1861-3, in the manuscripts later published as Theories of Surplus Value, Marx will have clarified his views, via a critique of Ricardo. "Ricardo does not examine the form - the peculiar characteristic of labour that creates exchange-value or manifests itself in exchange-values - the nature of this labour. Hence lie does not grasp the connection of this labour with money or that it must assume the form of money. Hence he completely fails to grasp the connection between the determination of the exchange-value of the commodity by labour-time and the fact that the development of commodities necessarily leads to the formation of money...
[When discussing wages,] Instead of labour, Ricardo should have discussed labour-power. But had he done so, capital would also have been revealed as the material conditions of labour, confronting the labourer as power that had acquired an independent existence and capital would at once have been revealed as a definite social relationship". [Theories of Surplus Value, Part 2, chapter X.A.2 and chapter XV.A.6].
3. Commodity fetishism. For example, a little later on Marx argues that "bourgeois wealth is always expressed to the highest power as exchange value, where it is posited as mediator" - and he compares this with the fact that "in the religious sphere, Christ, the mediator between God and humanity - a mere instrument of circulation between the two - becomes their unity, God-man, and, as such, becomes more important than God; the saints more important than Christ; the popes more important than the saints". [p.332].
4. "Liberty, Equality, Freedom and Bentham". Several pages of this section are given over to developing the idea which Marx will later express crisply, in just eight sentences, at the end of chapter 6 of Capital.
"This sphere... within whose boundaries the sale and purchase of labour-power goes on, is in fact a very Eden of the innate rights of man. There alone rule Freedom, Equality, Property and Bentham. Freedom, because both buyer and seller of a commodity, say of labour-power, are constrained only by their own free will. They contract as free agents, and the agreement they come to, is but the form in which they give legal expression to their common will. Equality, because each enters into relation with the other, as with a simple owner of commodities, and they exchange equivalent for equivalent. Property, because each disposes only of what is his own. And Bentham, because each looks only to himself. The only force that brings them together and puts them in relation with each other, is the selfishness, the gain and the private interests of each. Each looks to himself only, and no one troubles himself about the rest, and just because they do so, do they all, in accordance with the pre-established harmony of things, or under the auspices of an all-shrewd providence, work together to their mutual advantage, for the common weal and in the interest of all.
On leaving this sphere of simple circulation or of exchange of commodities, which furnishes the 'Free-trader Vulgaris' with his views and ideas, and with the standard by which he judges a society based on capital and wages, we think we can perceive a change in the physiognomy of our dramatis personae. He, who before was the money-owner, now strides in front as capitalist; the possessor of labour-power follows as his labourer. The one with an air of importance, smirking, intent on business; the other, timid and holding back, like one who is bringing his own hide to market and has nothing to expect but - a hiding".

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Notes on our discussion of pages 135-172

Labour-money, money, and a beginning of the discussion on money and community

Reprise

In the Introduction, Marx discussed method. He rejected an approach which would start off from supposed eternal constants in favour of probing, from the start, the characteristic structures of the particular society he is dealing with. The Introduction, to my mind, is a bit of a false start, since Marx gets involved in attempts to prove the primacy of production more or less a priori - "confusing to anticipate results which still have to be substantiated", as he would later write - and his actual choice of starting point in Capital had more to do with his analytical conclusions from probing the connection between the basic commodity-form and capital (as he does in his critique of the Proudhonists) than with any a priori argument.
The section on Bastiat and Carey stands somewhat apart from the whole, but there already you find the theme sketched out in the Communist Manifesto but developed in the Grundrisse more than any other of Marx's writings - that working-class socialism builds on and grows out of the potentialities and contradictions generated by capitalist development, that it is a matter of "pushing through" and eventually beyond the limits of capitalist development rather than of trying to stop it being capitalist.
In the Grundrisse proper, Marx starts with a discussion of the free credit scheme of the Proudhonist Darimon. The reasons for that starting point? Perhaps because Proudhonism was a strong force at the time. Perhaps because Marx wanted to "work through" the influence which Proudhon had had on him in Paris in 1844 and late 1843, the time when Marx himself became a communist. Perhaps because he considered the critique of Proudhonism, i.e. of the then-dominant form of "bourgeois socialism", central for creating a distinctively working-class socialism free of bourgeois assumptions and limits.
The first part of the discussion (see pages 115-134) is mostly concerned with Darimon's idea that the banking system can be re-cast so as to eliminate interest and the restrictions on credit caused by limited supplies of the money-standard (gold).
This second part looks in more detail at the idea of "labour-money" or "time-chits". "Labour money" had been advocated long before Proudhon. In fact, there was a real attempt to put it into practice in Britain in the 1830s. A "National Equitable Labour Exchange" was founded in 1832 by Robert Owen. It was located in Grays Inn Road and then in Charlotte Street, in London. It operated as a depot where workers could exchange products they had made by means of labour notes representing hours of work.
The Exchange was initially successful. Branches opened in South London and Birmingham. But gradually they filled up with unsaleable and unwanted furniture. Furniture-makers, apparently, were particularly keen on using the Exchanges - and liable to take along to them the items they had made but been unable to sell on the regular capitalist market. All the branches closed in 1834.

Labour money/ time-chits

Marx argues (pp.137-9) that time-chits cannot resolve the social problems created by money. It is in the nature of commodity exchange that price diverges from value. Prices may be based on labour-time, but - since they are market prices, not the results of a priori calculations of labour times - they may and indeed must oscillate away from labour-time. In any case (p.139) labour productivity is constantly increasing, so any set system of labour-money valuations would immediately become out of date.
To work, a time-chit system presupposes a bank which would in fact be a general ruler of production. In which case, if that bank planned everything, what would be the purpose of the chits? The bank would have to be either "a despotic ruler of production and trustee of distribution" or "a board which keeps the books and accounts for a society producing in common" (notice, having in mind debates about the nature of Stalinism, that Marx assumes that these two possibilities are radically different from each other). (p.115-6).
In short, "This demand [for labour money] can be satisfied only under conditions where it can no longer be raised." [p.172]. Marx is quite clear that fully-developed communism is a society without money. Money cannot be abolished overnight. But to try to replace capitalist money by a sort of socialist money (labour-money) is foolish on two grounds. Firstly, it is unworkable. Secondly, despite the proposal's unworkability, it is too limited, too lacking in radicalism, too tied to present-day assumptions.
(The same sort of criticism is relevant to false-radical demands in other spheres, too. Take the demand for a single secular-democratic state in Israel-Palestine. This can be satisfied only under conditions where the two nations, Israeli Jews and Palestinian Arabs, have already, by some other means, become reconciled and friendly to a very high degree - higher than all the other neighbouring pairs of nations in the world who are not yet ready to merge into a single state. If that reconciliation and friendliness does not exist, then the single state cannot be democratic, but only the product of the conquest of one nation by the other. If the reconciliation and friendliness does exist, why ever would the two friendly nations want to create a new small state rather than both merging into a larger regional unit? "This demand can be satisfied only under conditions where it can no longer be raised".)

Labour-money after the Grundrisse

Surprisingly, after his devastating critique of the labour-money idea, in the Critique of the Gotha Programme (1875) Marx would suggest labour-money as a makeshift to be introduced in "a communist society just as it emerges from capitalist society". The worker "receives a certificate from society that he has furnished such-and-such an amount of labour (after deducting his labor for the common funds); and with this certificate, he draws from the social stock of means of consumption as much as the same amount of labour cost. The same amount of labour which he has given to society in one form, he receives back in another".
This does not make sense, though. Marx had already shown in the Grundrisse that for labour-money to be possible, all labour must be directly social labour. That is, labour must be so organised that all production is equally advanced and efficient, and what is produced corresponds exactly to what is wanted. If such perfect social planning is achieved, then who would want any sort of money, time-chit or otherwise? If it is not, then labour-money won't work.
Actually, in "a communist society just as it emerges from capitalist society", and for a long while after, generations maybe, we will be far from ensuring that all labour is directly social labour to any adequate approximation. There will be nothing for it but to use money for distribution - real money, not labour-money. Karl Kautsky explained this clearly enough while Engels was still alive, in his 1892 exposition of the Erfurt Programme: "It is entirely utopian to imagine that a special system of distribution is to be manufactured... Socialist society... will go on from the point at which capitalist society ceases. The distribution of goods in a socialist society might possibly continue for some time under forms that are essentially developments of the existing system of wage-payment. At any rate, this is the point from which it is bound to start". Engels seems to have tacitly conceded that the labour-certificate scheme in the Critique of the Gotha Programme was a nonsense.
In 1936 Trotsky would criticise the Stalinists for false radicalism as regards the monetary system of the USSR. At the stage the USSR was at, and probably for a very long time, a stable monetary system was necessary, if only for the information it would grant to the planners in their necessarily imperfect schemes to direct the economy. "Such characteristically anarchist demands as the 'abolition' of money, 'abolition' of wages, or 'liquidation' of the state and family, possess interest merely as models of mechanical thinking. Money cannot be arbitrarily 'abolished', nor the state and the old family 'liquidated'. They have to exhaust their historic mission, evaporate, and fall away..."
The Critique of the Gotha Programme does explain very clearly the folly of the "principle" upon which the whole labour-money scheme was founded: returning to the producer the full "proceeds" of his or her labour.
This is a petty-bourgeois, not a working-class demand - a demand tailored to the situation of the small producer producing goods by his or her individual effort, and wanting a "fair" price for them. In developed capitalist production, it is simply impossible to identify the individual "proceeds of labour" of the individual worker. Moreover, the basic drive of socialist development must be to convert more and more of the social product to general social use, not individual consumption.
And the demand for the worker to get the full proceeds of his or her labour necessarily means that all non-workers (children, sick people, elderly people) become dependent on a worker for their subsistence - through the family, in fact. (Thus Proudhon, as Marx put it - in a letter to Annenkov, in 1846, summarising the ideas of The Poverty of Philosophy - "sings the praises of the petty bourgeoise and of the miserable patriarchal amorous illusions of the domestic hearth").

Money and community

Woven into the time-chit argument is a development by Marx of the idea - much returned to by Marx later in the Grundrisse - that a comprehensive money economy is indeed cruelly shaking up human social relations, but that in doing so it is expanding human potentialities and creating the basis for communism.
Very many thinkers in the 19th century were shocked by the way in which developed capitalism was atomising human relations. Engels' comment in The Condition of The Working Class in England (1845) is especially vivid:
"One realises for the first time that these Londoners have been forced to sacrifice the best qualities of their human nature, to bring to pass all the marvels of civilisation which crowd their city... The very turmoil of the streets has something repulsive, something against which human nature rebels. The hundreds of thousands of all classes and ranks crowding past each other, are they not all human beings with the same qualities and powers, and with the same interest in being happy? And have they not, in the end, to seek happiness in the same way, by the same means? And still they crowd by one another as though they had nothing in common, nothing to do with one another...
The brutal indifference, the unfeeling isolation of each in his private interest, becomes the more repellent and offensive, the more these individuals are crowded together, within a limited space. And, however much one may be aware that this isolation of the individual, this narrow self-seeking, is the fundamental principle of our society everywhere, it is nowhere so shamelessly barefaced, so self-conscious as just here in the crowding of the great city. The dissolution of mankind into monads, of which each one has a separate principle, the world of atoms, is here carried out to its utmost extreme.
Hence it comes, too, that the social war, the war of each against all, is here openly declared... People regard each other only as useful objects; each exploits the other, and the end of it all is that the stronger treads the weaker under foot; and that the powerful few, the capitalists, seize everything for themselves, while to the weak many, the poor, scarcely a bare existence remains.
What is true of London, is true of Manchester, Birmingham, Leeds, is true of all great towns. Everywhere barbarous indifference, hard egotism on one hand, and nameless misery on the other, everywhere social warfare..."
Marx had neither forgotten nor become indifferent to this inhumanity. But he had gone beyond simply recoiling from it. He had diagnosed the immense subversive potential within it.
"Within bourgeois society, the society that rests on exchange value, there arise relations of circulation as well as of production which are so many mines to explode it. (A mass of antithetical forms of the social unity, whose antithetical character can never be abolished through quiet metamorphosis. On the other hand, if we did not find concealed in society as it is the material conditions of production and the corresponding relations of exchange prerequisite for a classless society, then all attempts to explode it would be quixotic.)" [p.159]
"Universally developed individuals, whose social relations, as their own communal [gemeinschaftlich] relations, are hence also subordinated to their own communal control, are no product of nature, but of history. The degree and the universality of the development of wealth where this individuality becomes possible supposes production on the basis of exchange values as a prior condition, whose universality produces not only the alienation of the individual from himself and from others, but also the universality and the comprehensiveness of his relations and capacities.
The degree and the universality of the development of wealth where this individuality becomes possible supposes production on the basis of exchange values as a prior condition, whose universality produces not only the alienation of the individual from himself and from others, but also the universality and the comprehensiveness of his relations and capacities. In earlier stages of development the single individual seems to be developed more fully, because he has not yet worked out his relationships in their fullness, or erected them as independent social powers and relations opposite himself." [p.162]

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Notes from our discussion on pages 250-266

From money to capital

Reprise

In the Introduction, Marx has discussed method; in the essay on Bastiat and Carey, he has sketched in polemical form his focus on identifying the real subversive, creative impulses within capitalist development; in pages 115-172, he has started his substantive economic discussion by criticising the Proudhonists and showing that any serious critique of capital must also be a critique of the basic social relations involved in exchange-value.
He then moves on to start that critique. Pages 172 to 250 are a draft, or notes, for chapters 1 to 3 of Capital, covering commodities, exchange, and money.
In pages 250-266 Marx moves on from money to capital, the terrain of chapter 4 of Capital.


Capital

Marx rejects the conventional definition of capital as "accumulated labour" or "objectified labour". "The catch is that if all capital is objectified labour which serves as means for new production, it is not the case that all objectified labour which serves as means for new production is capital. Capital is conceived as a thing, not as a relation..." [p.258]
"To develop the concept of capital", he continues, "it is necessary to begin not with labour but with value, and, precisely, with exchange value in an already developed movement of circulation. It is just as impossible to make the transition directly from labour to capital as it is to go from the different human races directly to the banker, or from nature to the steam engine". [p.259].
This makes it clear that in the opening chapters of Capital, Marx is not developing some sort of historical exposition - simple commodity production in chapter 3, moving on to capitalist production in chapter 4, or something of that short. When he starts off with the commodity, he starts off with the commodity as it appears in "those societies in which the capitalist mode of production prevails", as he explains in the opening sentence of chapter 1.
We cannot understand capital just by deducing it from labour - as, say, "accumulated labour", or "objectified labour" - argues Marx. We have to understand it in relation to the particular form of labour existing in a society with "already developed" domination of exchange-value.
Marx arrives at the following explanation of capital: "Money (as returned to itself from circulation), as capital, has lost its rigidity, and from a tangible thing has become a process. But at the same time, labour has changed its relation to its objectivity; it, too, has returned to itself. But the nature of the return is this, that the labour objectified in the exchange value posits living labour as a means of reproducing it, whereas, originally, exchange value appeared merely as a product of labour. Exchange value emerging from circulation, a presupposition of circulation, preserving and multiplying itself in it by means of labour". [p.263-4].
In Capital, he will be much more terse, discussing the circuit M-C-M+ and its difference from C-M-C, and concluding: "Value therefore now becomes value in process, money in process, and, as such, capital". [Capital, chapter 4].

From pre-capitalist money-economy to capitalism

Marx makes many comments relevant to, but leaves open the answers to, a big question raised by his discussion: the threshhold at which an economy using money steps over into the "general" development of value and "a mode of production founded on capital".
In some places Marx seems to suggest that the gradual influence of increasing trade can change a society bit by bit from pre-capitalist to capitalist. Thus, for example, on page 257 he seems to credit the influence of Netherlands trade in the 16th century with a decisive role in the capitalist transformation of England. He makes a qualification - "the degree to which the movement towards the establishment of exchange-value then attacks the whole of production depends... on the degree of development attained by the elements of domestic production" - but does not expand on it.
Elsewhere he seems emphatic that a certain degree of development of industrial productivity is a precondition for the transition to capitalism. Mere changes of form in the distribution of products - an increasing role for market exchange - will not be sufficient. "Production resting on capital and wage labour differs from other modes of production not merely formally, but equally presupposes a total revolution and development of material production..." [p.277]. "The relation of production... becomes real only with the development of a particular material mode of production and of a particular stage in the development of the industrial productive forces". [p.296-7].
It is hard to see how these two different strands of thought - the impulse from trade, and the impulse from technology - mesh together. Worse, both are too "disembodied", too abstracted from specific class interests and processes of class struggle, to be an adequate account of social transformation. And both sit at some distance from the defining idea stated emphatically by Marx in Capital chapter 6 (and elsewhere): "The essential difference between the various economic forms of society, between, for instance, a society based on slave-labour, and one based on wage-labour, lies only in the mode in which this surplus-labour is in each case extracted from the actual producer, the labourer". Even more emphatically: "The historical conditions of its existence are by no means given with the mere circulation of money and commodities. It can spring into life only when the owner of the means of production and subsistence meets in the market with the free labourer selling his labour-power. And this one historical condition comprises a world’s history. Capital, therefore, announces from its first appearance a new epoch in the process of social production".
Returning to this issue in the last section of Capital, Marx ties the ideas together much more clearly. "The historical movement which changes the producers into wage-workers, appears, on the one hand, as their emancipation from serfdom and from the fetters of the guilds, and this side alone exists for our bourgeois historians. But, on the other hand, these new freedmen became sellers of themselves only after they had been robbed of all their own means of production, and of all the guarantees of existence afforded by the old feudal arrangements. And the history of this, their expropriation, is written in the annals of mankind in letters of blood and fire.
"The industrial capitalists, these new potentates, had on their part not only to displace the guild masters of handicrafts, but also the feudal lords, the possessors of the sources of wealth. In this respect, their conquest of social power appears as the fruit of a victorious struggle... against feudal lordship.." - but simultaneously they waged a struggle to reduce the workers to wage labour. [chapter 26].
Even then, Marx nowhere says anything much about the role of the bourgeois revolution in England in this process. In Capital he notes that the process "in different countries, assumes different aspects, and runs through its various phases in different orders of succession, and at different periods. In England alone, which we take as our example, has it the classic form"; but, the problem is, in most countries of the world the process has had forms so radically different from the "classic" English one that they cannot be understood as slight variations on it.

Three questions

Maybe the later sections of the Grundrisse, on pre-capitalist economic formations, will offer more light on this question.
For the present, we can sketch out three questions.
1. In England, there was an "agricultural revolution" - a big increase in productivity, and a shift to capitalist relations - on the land before the industrial revolution. Marx tacitly takes that as the norm of capitalist development. But in most countries of the world, capitalist development has not happened that way. It has taken root, often in the form of large-scale modern enterprises, in the cities, the ports, the mines, and the plantations, with much of the countryside left in pre-capitalist relations and being transformed only tardily.
Tsarist Russia is a classic example. In such countries, the workers are not only forced off the land by destruction of the "guarantees of existence afforded by the old feudal arrangements" (though that happens, too), but also, and maybe more extensively, positively pulled into the cities by the chances of participating even in some marginal way in advanced bourgeois civilisation. What you get of advanced bourgeois civilisation living in a shanty-town in Sao Paulo, and relying on odd jobs, petty trading, or petty theft, is meagre. But it can still exert an attractive pull on the rural poor. Rather than developing capitalistically, agriculture may in fact wither and collapse as capitalist industry grows. Iraq is a prime example of that.
So, to summarise: a society where the most dynamic element, in the big cities, comprises more or less modern industrial capitalism, but where the majority of the population lives in a hinterland dominated by pre-capitalist and semi-capitalist relations - is it capitalist? Plainly the odd capitalistically-run mine or plantation set up within a pre-capitalist society does not make the whole society instantly capitalist. But, as that capitalist enclave expands - to create railways, ports, cities, ancillary manufacturing industries, and so on - it can become not an enclave but decisive. At what point?
2. At least for England - and Marx evidently considered the history in England "classic" enough to set the template for all other countries - Marx suggests that the influence of external trade can be decisive in pushing a society over the threshhold into capitalism.
Such a view would give direct support to a view that would be influential later, in the 1960s and 1970s, about capitalist development in Latin America.
The official Communist Party doctrine had been that the countries of Latin America were still "feudal" (and so the next stage was an alliance with "patriotic" capitalist interests to carry through a "bourgeois revolution", to be followed only in the remote future by a second socialist "stage").
In polemic against that view, Andre Gunder Frank wrote a book, Capitalism and Underdevelopment in Latin America, which argued that Latin America had been capitalist ever since its integration into the world market by Spanish and Portuguese colonialism. Only, this was a peculiar form of capitalism, "the development of underdevelopment". Despite his furious hostility to the official Communist Parties, Frank was highly influenced by Stalinist modes of thinking, and particularly the Stalinist redefinition of socialism as developmentalism. (He got that from his teacher Paul Baran, a dissident non-CP Stalinist, and Baran's book The Political Economy of Growth). Frank's stated conclusion was that socialist revolution was the only way forward in Latin America, and indeed, not just the only way to liberation, but the only way to economic development. Paradoxically, this led him to the idea that any sort of vigorous economic nationalism in Latin America, however obviously bourgeois its proponents, could not but be somehow proto-socialist or crypto-socialist, and thus deserving of support.
In 1971, Ernesto Laclau wrote a polemic against Frank [New Left Review I/67, May-June 1971]. Laclau's case was that capitalism is a mode of production, not just a society of extensive trade. Capitalism in Latin America was indeed becoming dominant, but relatively recently. Large areas of hinterland remained dominated by pre-capitalist relations; one could very well reject the official CP's stageist strategy without denying that fact.
Whatever about Laclau's politics at the time (a sort of Maoism, as far as I can make out: see his article in New Left Review I/62, July-August 1970) or later (he has become a well-known "post-Marxist", i.e. a species of pretentious bourgeois liberal), and indeed whatever about the rather pompous and logic-chopping character of his article, it seems undeniable that he was essentially right against Frank. In other words, if Marx was right about the role of external trade in the English development - and was he? - the conclusion could not be extended to other countries.
In fact there are plenty of counter-examples. The Black Death of 1348-9 shook up society all across Europe, and sharpened conflict between lords and peasants. In England, at one extreme, the outcome was the abolition of serfdom. By the 15th century, only remnants of feudal relations remained on the land. In Eastern Europe the outcome was the exact opposite. Serfdom which had been gradually weakening was reimposed in fiercer form. As Engels put it, there was "a second serfdom after the middle of the fifteenth century... the general re-introduction of serfdom was one of the reasons why no industry could develop in Germany in the seventeenth and eighteenth centuries... In England at this stage migration to the territory outside the guild took place, but in Germany this was prevented by the transformation of the country people and the inhabitants of the agricultural market towns into serfs" [Letter to Marx, 15/12/1882].
This "second serfdom" was nailed down, and made a very lucrative business for the lords of Eastern Europe, precisely by the growth of international trade. Vast amounts of goods, extracted from the peasants of Eastern Europe by feudal exploitation, were exported via the Baltic to Western Europe.
In Capital, chapter 10 section 2, Marx recognised that involvement in capitalist international trade could actually reinforce and sharpen pre-capitalist relations of exploitation, rather than dissolving them in favour of more modern relations. "As soon as people, whose production still moves within the lower forms of slave-labour, corvée-labour, &c., are drawn into the whirlpool of an international market dominated by the capitalistic mode of production, the sale of their products for export becoming their principal interest, the civilised horrors of over-work are grafted on the barbaric horrors of slavery, serfdom, &c. Hence the negro labour in the Southern States of the American Union preserved something of a patriarchal character, so long as production was chiefly directed to immediate local consumption. But in proportion, as the export of cotton became of vital interest to these states, the over-working of the negro... became... a calculated and calculating system... So was it also with the corvée [feudal labour obligation], e.g., in the Danubian Principalities (now Rumania)".
Capitalist trade does not automatically or quickly generate capitalist relations of production wherever it touches. In Capital volume 3 Marx is at pains to emphasise that merchant capital could coexist with pre-capitalist modes of production for centuries. Moreover, even if proper capitalist production is established in some area, it does not necessarily spread like wildfire.
Marx, in Capital, identified the cities of northern Italy, in the 14th century, as the first site of capitalist production. But he noted that this capitalist development was soon set back - by the rise of the world market! "In Italy, where capitalistic production developed earliest, the dissolution of serfdom also took place earlier than elsewhere. The serf was emancipated in that country before he had acquired any prescriptive right to the soil. His emancipation at once transformed him into a free proletarian, who, moreover, found his master ready waiting for him in the towns, for the most part handed down as legacies from the Roman time. When the revolution of the world-market, about the end of the 15th century, annihilated Northern Italy’s commercial supremacy, a movement in the reverse direction set in. The labourers of the towns were driven en masse into the country, and gave an impulse, never before seen, to the petite culture, carried on in the form of gardening". [Chapter 26].
3. Marx identifies capitalism indiscriminately with a society where exchange-value dominates, and a society where wage-labour dominates. He bridges the gap by arguing that the domination of one must mean the domination of the other. For example, if exchange-value dominates, then the mass of the population have no direct access to the means of subsistence, but have to buy them for money. Since they do not own the means of subsistence, they can get that money only by selling what they do still own - their own labour-power.
On the very broadest scale this equation may work. But in actual history there is a lot of slippage.
Some societies may be more or less dominated by exchange-value while wage-labour is still secondary. In the countryside, the working population has some access to the land, but uses that more to grow cash-crops than to supply itself directly, and moreover every household depends on bits and pieces of paid labour for others as well as its own work on its own land. Paid labour takes place under a variety of relations, but rarely in straightforward capitalist forms. Some of it is tied into quasi-feudal relations of dependence, for example by "debt servitude". Some of it has more the character of an exchange of services between neighbours on not-very-different economic levels than of capitalist employment.
Conversely, take the Stalinist states. Some Marxists deny that wage-labour existed there at all. Leave that debate aside for a moment, and consider the debate among the large and diverse number who agree that wage-labour (in impure, distorted forms) did exist there. Many of them would still say that, because exchange-value did not dominate sufficiently there, the Stalinist states were not (state-)capitalist.
True, the workers were paid wages and had to buy their means of subsistence in the market, or rather in a variety of markets (official publicly-run markets; officially-licensed free markets; grey and black markets). Even if those markets were very far from a neo-classical economist's ideal, they were still markets. But for producer goods the role of the market was much smaller. There were grey markets operating between different enterprises, but to a large degree the enterprise's acquisition of consumer goods depended on government allocation rather than on straightforward purchasing-power. Therefore (they say) not capitalist. Some even argue that state capitalism, in contradistinction to competitive capitalism, is a contradiction in terms, because if the state dominates capital then exchange-value cannot dominate the distribution of producer goods.

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Notes from our discussion on section 3, pages 115-134


Reprise

We reprised on sections 1 and 2. In the Introduction (section 1), Marx tried to decide and set down his method of approach.
The bourgeois economists, so he noted, start with production in general. They state that production in general requires labour, land, and means of production (capital), and then under "distribution" and "circulation" they can look at possible variations on the returns to those three eternal "factors".
The bourgeois economists' totality is chaotic and arbitrarily chopped up.
Marx, by contrast, tries to construct a totality in theory which is a combination of structured abstractions. This emphasis meant that the 1970s publication of the Grundrisse had a big effect on many areas of social science, increasing the popularity of various forms of "structuralism".

Bastiat and Carey

The limits of Bastiat's or Carey's critical attitude was a wish to moderate or improve capitalism, by free trade for Bastiat or by protection for Carey.
Marx insisted on a more thoroughgoing criticism. Within the terms of the free-trade/ protection debate, he preferred fair trade, but only because he thought it would heighten and push forward the conflicts within capitalism which would eventually lead to the overthrow of capital. Marx derided Carey for endorsing "domestic" capitalist development within the USA, but adopting a peevish, blank-negative attitude to the same processes of capitalist development where they develop in their full scope and logic, i.e. on the world market. He attacked Carey's expedient of blaming all the evils of capitalist development on the external influence of too-powerful English capitalism. Marx's criticism here has continuing force today against the "Yankophobia" of those large sections of the left who identify capitalism with the evil external influence of the USA.
Marx wants to knock down not only the bourgeois economists, but also the superficial criticisms of capitalism made by those who, in the Communist Manifesto, he had called the "bourgeois socialists".
"Conservative or Bourgeois Socialism: To this section belong economists, philanthropists, humanitarians, improvers of the condition of the working class, organisers of charity, members of societies for the prevention of cruelty to animals, temperance fanatics, hole-and-corner reformers of every imaginable kind. This form of socialism has, moreover, been worked out into complete systems. We may cite Proudhon’s Philosophie de la Misère as an example of this form".

Marx and Proudhonism

Thus in the Grundrisse manuscript proper, Marx starts with a criticism of those "bourgeois socialist" co-thinkers of Proudhon. He wants to develop a socialist politics which is based on clear analysis of the developments, tendencies, and conflicts within the actual process of capitalist development, not one based on this or that scheme for arbitrarily reshaping capitalist development by lopping off the "bad bits" and expanding the "good bits".
He wants to mark off his communist working-class politics from the "amateurism" of the Proudhonists - to free communism from this "false brother".
Marx will have had in mind Proudhonist attitudes such as reported to him by Engels in a letter from Paris of 18 September 1846:
"I believed [Proudhon] had perpetrated a trifling nonsense, a nonsense within the bounds of sense. Yesterday the matter came up again and was discussed at great length, and it was then I learned that this new nonsense is in truth wholly unbounded nonsense.
"Imagine: Proletarians are to save in the form of small shares. This will enable the initial building... of one or more workshops devoted to one or more trades, some of the shareholders to be occupied there and the products to be sold, 1) to the shareholders (who thus have no profit to pay for) at the price of the raw material plus labour, and 2) any surplus to be sold on the world market at the current price.
"As the association’s capital is increased by new shareholders joining or by new savings of the old ones, this will be used for building new workshops and factories and so on and so forth, until all the proletarians are employed, all the country’s productive forces have been bought up, thereby depriving the capital still in bourgeois hands of the power to command labour and produce profit!
"Thus capital is abolished by ‘finding an authority under which capital, i.e. the interest system’... ‘so to speak disappears’... By dint of proletarian savings, and by waiving the profit and interest on their capital, these people intend, for the present, to buy up the whole of France, no more nor less, and later, perhaps, the rest of the world as well...
"And the workers here, fools that they are - the Germans, I mean - believe this rubbish. They, who can’t keep six sous in their pockets to visit a marchand de vin on the evenings of their meetings, propose to buy up toute la belle France with their savings..."
Twelve years later, Marx is still teasing out the theoretical background of this criticism.

The development of Proudhon's ideas and of Marx's attitude to Proudhon

In 1845, in The Holy Family, Marx had been warmly appreciative of Proudhon. "Proudhon's treatise", he wrote, referring to Qu'est-ce que la propriété? [1840], "will... be scientifically superseded by a criticism of political economy, including Proudhon's conception of political economy. [But] this work became possible only owing to the work of Proudhon himself... Proudhon makes a critical investigation - the first resolute, ruthless, and at the same time scientific investigation - of the basis of political economy, private property. This is the great scientific advance he made, an advance which revolutionizes political economy and for the first time makes a real science of political economy possible. Proudhon's treatise Qu'est-ce que la propriété? is as important for modern political economy as Sièyes' work Qu'est-ce que le tiers état? for modern politics".
Even much later - in 1865, when Proudhon died, and Marx wrote a brief survey of Proudhon's work for a German socialist newspaper - Marx was warm about Qu'est-ce que la propriété?
"His first work, Qu’est-ce que la propriété?, is undoubtedly his best. It is epoch-making, if not because of the novelty of its content, at least because of the new and audacious way of expressing old ideas... The provocative defiance, which lays hands on the economic 'holy of holies', the ingenious paradox which made a mock of the ordinary bourgeois understanding, the withering criticism, the bitter irony, and, revealed here and there, a deep and genuine feeling of indignation at the infamy of the existing order, a revolutionary earnestness – all these electrified the readers of Qu’est-ce que la propriété? and provided a strong stimulus on its first appearance. In a strictly scientific history of political economy the book would hardly be worth mentioning. But sensational works of this kind have their role to play in the sciences..."
"But", Marx notes, "in spite of all his apparent iconoclasm one already finds in Qu’est-ce que la propriété? the contradiction that Proudhon is criticising society, on the one hand, from the standpoint and with the eyes of a French small-holding peasant (later petit bourgeois) and, on the other, that he measures it with the standards he inherited from the socialists".
In 1846 Marx wrote his first systematic criticism of Proudhon, in The Poverty of Philosophy. In his view Proudhon went from bad to worse after that. "Proudhon’s discovery of 'crédit gratuit' [free credit] and the “people’s bank” (banque du peuple), based upon it, were his last economic 'deeds'... But to regard interest-bearing capital as the main form of capital and to try to make a particular form of the credit system comprising the alleged abolition of interest, the basis for a transformation of society is an out-and-out petty-bourgeois fantasy". Proudhon's final efforts "must be described as works not merely bad but base, a baseness, however, which corresponds to the petty-bourgeois point of view".

Looking for the "bad side that produces the movement"

Already in The Poverty of Philosophy, Marx had asserted, against Proudhon's repeated efforts to find ways to get rid of the "bad side" of capitalism and expand the "good side", the idea that: "It is the bad side that produces the movement which makes history, by providing a struggle".
Proudhon, in fact, had many ideas which seem to us today plainly right-wing. He was racist, anti-semitic, sexist, and opposed to workers' trade-union organisation and strikes. In the 20th century, ideas similar to Proudhon's were more likely to be found in right-wingers, like Ezra Pound, than left-wingers.
But Marx is not concerned just to fend off Proudhon factionally. By the time he comes to write the Grundrisse, Marx is deep in the attempt to "scientifically supersede" both Proudhon and his conventional bourgeois opponents "by a criticism of political economy". He wants to find "the bad side that produces the movement" within capitalism.
Thus he teases out the logic of the Proudhonists' ideas about "labour money" or about "free credit" in great detail, to show that the "good" principle to which they appeal - economic equal exchange - is, within capitalist society, part of an inseparable whole with the inequalities of capitalism. In the course of doing that, he seems to convince himself that his, Marx's, critique of political economy should not start in the way he had just suggested in his own Introduction - with production - but, in fact, with circulation, with the commodity. "The wealth of those societies in which the capitalist mode of production prevails, presents itself as ‘an immense accumulation of commodities,’ its unit being a single commodity. Our investigation must therefore begin with the analysis of a commodity.”

Criticism and sectarianism

At first sight, Marx's criticism of the Proudhonists seems very "sectarian". All right, labour money and free credit are limited. But mightn't they be good first steps? If you have well-intentioned socialists going for such ideas, even if they're not quite what we'd wish, why not build on what's positive rather than deride and analyse them to death?
In fact, Marx's criticism of the Proudhonists is profoundly anti-sectarian. It defines the criteria for what is sectarian or what is not - serious criteria, beyond the hopelessly vague and wishy-washy idea that being highly critical is "sectarian", and being easy-going and broad-alliance-minded is not. It establishes that what "produces the movement which makes history, by providing a struggle" is the development of capitalism itself, and the class contradictions embedded within it. It shows that to stand aside from that development of capitalism, and construct ingenious (or even popular) schemes for rearranging capitalism to boost its "good sides" and suppress its "bad sides", is fundamentally sectarian.
There is a close link between Marx's ultra-polemical teasing-out of the follies of "labour-money" and "free credit" schemes, and the big idea which comes out more clearly in the Grundrisse than any of Marx's other writings: that socialism is not about trying to stop capitalism developing in a capitalist way, but about "pushing through" capitalist development, basing oneself on the revolutionary and subversive elements generated by capitalist development itself.

Contemporary relevance?

There are no Proudhonists today. Nobody argues for labour-money. In general, the idea that socialism can be brought about by currency manipulation is dead. "Bimetallism" briefly dominated US leftist politics in the 1890s - the demand that silver be recognised as a money-standard as well as gold. William Jennings Bryan declared: "It is simply a question... upon which side shall the Democratic Party fight. Upon the side of the idle holders of idle capital, or upon the side of the struggling masses?... Having behind us the producing masses of this nation and the world, supported by the commercial interests, the labouring interests and the toilers everywhere, we will answer their [the idle capitalists'] demand for a gold standard by saying to them: You shall not press down upon the brow of labour this crown of thorns, you shall not crucify mankind upon a cross of gold". That has no resonance today, too.
But Proudhonism represented, for Marx, the most worked-out form of "bourgeois socialism". And "bourgeois socialism" is constantly re-born in bourgeois society, in one form or another - sometimes broadly left-wing, sometimes clearly right-wing. There was Social Credit in the 1930s. Pauline Hanson put forward some "socialistic" economic policies as part of a right-wing package. The Tobin Tax movement (ATTAC), particularly in France, identifies socialist progress with a particular formula for taxing financial transactions (one proposed by its author, James Tobin, as a way to stabilise capitalism, but now advocated by leftists as a way to... undercut capitalism).

Labour money/ time-chits

"Labour money" was advocated long before Proudhon. In fact, there was a real attempt to put it into practice in Britain in the 1830s. A "National Equitable Labour Exchange" was founded in 1832 by Robert Owen. It was located in Grays Inn Road and then in Charlotte Street, in London. It operated as a depot where workers could exchange products they had made by means of labour notes representing hours of work.
The Exchange was initially successful. Branches opened in South London and Birmingham. But gradually they filled up with unsaleable and unwanted furniture. Furniture-makers, apparently, were particularly keen on using the Exchanges - and liable to take along to them the items they had made but been unable to sell on the regular capitalist market. All the branches closed in 1834.
In Marx's Critique of the Gotha Programme (1875) labour-money appears as a makeshift to be introduced in "a communist society just as it emerges from capitalist society". The worker "receives a certificate from society that he has furnished such-and-such an amount of labour (after deducting his labor for the common funds); and with this certificate, he draws from the social stock of means of consumption as much as the same amount of labour cost. The same amount of labour which he has given to society in one form, he receives back in another".
This does not make sense, though. Marx had already shown in the Grundrisse that: "This demand [for labour money] can be realised only under circumstances where it can no longer be raised".
For labour-money to be possible, all labour must be directly social labour. That is, labour must be so organised that all production is equally advanced and efficient, and what is produced corresponds exactly to what is wanted. If such perfect social planning is achieved, then who would want any sort of money, time-chit or otherwise? If it is not, then labour-money won't work.
Actually, in "a communist society just as it emerges from capitalist society", and for a long while after, generations maybe, we will be far from ensuring that all labour is directly social labour to any adequate approximation. There will be nothing for it but to use money for distribution - real money, not labour-money. Karl Kautsky explained this clearly enough while Engels was still alive, in his 1892 exposition of the Erfurt Programme: "It is entirely utopian to imagine that a special system of distribution is to be manufactured... Socialist society... will go on from the point at which capitalist society ceases. The distribution of goods in a socialist society might possibly continue for some time under forms that are essentially developments of the existing system of wage-payment. At any rate, this is the point from which it is bound to start". Engels seems to have tacitly conceded that the labour-certificate scheme in the Critique of the Gotha Programme was a nonsense.
In 1936 Trotsky would criticise the Stalinists for false radicalism as regards the monetary system of the USSR. At the stage the USSR was at, and probably for a very long time, a stable monetary system was necessary, if only for the information it would grant to the planners in their necessarily imperfect schemes to direct the economy. "Such characteristically anarchist demands as the 'abolition' of money, 'abolition' of wages, or 'liquidation' of the state and family, possess interest merely as models of mechanical thinking. Money cannot be arbitrarily 'abolished', nor the state and the old family 'liquidated'. They have to exhaust their historic mission, evaporate, and fall away..."
However, the Critique of the Gotha Programme explains very clearly the folly of the "principle" upon which the whole labour-money scheme was founded: returning to the producer the full "proceeds" of his or her labour.
This is a petty-bourgeois, not a working-class demand - a demand tailored to the situation of the small producer producing goods by his or her individual effort, and wanting a "fair" price for them. In developed capitalist production, it is simply impossible to identify the individual "proceeds of labour" of the individual worker. Moreover, the basic drive of socialist development must be to convert more and more of the social product to general social use, not individual consumption.
And the demand for the worker to get the full proceeds of his or her labour necessarily means that all non-workers (children, sick people, elderly people) become dependent on a worker for their subsistence - through the family, in fact. (Thus Proudhon, as Marx put it - in a letter to Annenkov, in 1846, summarising the ideas of The Poverty of Philosophy - "sings the praises of the petty bourgeoise and of the miserable patriarchal amorous illusions of the domestic hearth").

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