V

The visit to America, in 1907, of a distinguished English critic of Socialism, Mr. W. H. Mallock, had the effect of thrusting into prominence a common misconception of Marxian Socialism, and it is highly significant that, except in the Socialist press, none of the numerous comments which the series of university lectures delivered by that gentleman occasioned, called attention to the fact that they were based throughout upon a misstatement of the Marxian position. Briefly, Mr. Mallock insisted that Marx believed and taught that all wealth is produced by manual labor, and that, therefore, it ought to belong to the manual workers. In order that there may be no misstatement of our amiable critic's position, it will be best to quote his own words. He says, in Lecture I: "The practical outcome of the scientific economics of Marx is summed up in the formula which is the watchword of popular Socialism. 'All wealth is due to labor; therefore all wealth ought to go to the laborer'—a doctrine in itself not novel, but presented by Marx as the outcome of an elaborate system of economics"[156](page 6). The careful readerwill notice that Mr. Mallock does not profess to give the exact words of Marx, nor refer to any particular passage, but says that the formula quoted by him is the "practical outcome" of the economic system of Marx, "presented by Marx" as such. But to quote again: "Wealth, says Marx, not only ought to be, but actually can be distributed amongst a certain class of persons, namely, the laborers.... Because these laborers comprise in the acts of labor everything that is involved in the production of it" (page 7). Again: " ... Marx makes of his doctrine that labor alone produces all economic wealth" (page 7). Also: " ... that theory of production which the genius of Karl Marx invested with a semblance, at all events, of sober, scientific truth, and which ascribes all wealth to thatordinary manual labor which brings the sweat to the brow of the ordinary laboring man" (page 12).[157]All the foregoing passages are taken from a single lecture, the first of the series. We will take only a few from the others: " ... the doctrine of Marx that all productive effort is absolutely equal in productivity" (Lecture III, page 46); "Marx based the ethics of distribution on what purported to be an analysis of production" (Lecture IV, page 61); " ... Count Tolstoy, ... like Socialists of the school of Marx, declares that ordinary manual labor is the source of all wealth" (Lecture IV, page 76)."One is the attempt of Marx and his school, which represents ordinary manual labor as the sole producer of wealth" (Lecture IV, page 81); " ... the Marxian doctrine ... that manual labor is the sole producer of wealth" (Lecture V, page 115). It would be easy to add many other quotations very similar to these, but it is unnecessary. From the quotations given we can gather Mr. Mallock's conception of what Marx taught regarding the source of wealth.

It will be seen that Mr. Mallock alleges: (1) That Marx believed and taught that all wealth is produced by ordinary manual labor; (2) that he held, as a consequence, that all wealth ought to belong to the manual laborers, thus basing an ethic of distribution upon production; (3) that he taught that all productive effort is absolutely equal in productive value, in other words, that ten hours' work of one kind is economically as valuable as ten hours' of any other kind, so long as the labor is productive.

It is not easy to command the necessary self-restraint to reply with dignity to such wholesale misrepresentation as this. There is not the slightest scintilla of a foundation in fact for any one of the three statements. Not a single passage can be quoted from Marx which justifies any one of them. As we shall see, Marx specifically repudiated each one of them, a great deal more forcefully than Mr. Mallock does.That such misrepresentations of Marx should have been permitted to pass unchallenged in so many of our great colleges and universities is to our national shame. We will briefly consider the teaching of Marx under each of the three heads.

First, the source of wealth. It is true that such phrases as "Labor is the source of all wealth" are constantly met with in the popular literature of Socialism, but so far as that is the case it is not due to the teaching of Marx, but rather in spite of it. In the writings of the early Ricardian Socialists these phrases abound, but nowhere in all the writings of Marx will such a statement be found. For many years the opening sentence in the Programme of the German party contained the phrase "Labor is the source of all wealth and of all culture,"but it was adopted in spite of the protest of Marx. The Gotha Programme was adopted in 1875. A draft was submitted to Marx and he wrote of it that it was "utterly condemnable and demoralizing to the party." Of the passage in question, he wrote: "Labor isnotthe source of all wealth. Nature is just as much the source of use-values (and of such, to be sure, is material wealth composed) as is labor, which itself is but the expression of a natural force, of human labor-power."[158]That the clause was adopted was abitter disappointment to Marx, and was due to the insistence of the followers of Ferdinand Lassalle. To say that Marx held labor to be the sole source of wealth is to misrepresent his whole teaching.[159]

But while the Lassallians, and before them the Ricardians, used thephrase, it is evident that they assumed the inclusion of what Marx calls "Nature." They know very well that labor, mere exertion of physical strength, could produce nothing. If, for instance, a man were to spend all his strength trying to lift the pyramids, alone and unaided by mechanical power, it is quite evident to the meanest intellect that his exertions would not produce a single atom of wealth. It is equally obvious that if we take any use-value, whether it be an exchange-value or not being immaterial, we cannot eliminate from it the substance of which it is composed. Take, for example, the canoe of a savage, which is a simple use-value, and a meerschaum pipe, which is a commodity. In the canoe we have part of the trunk of a tree taken from the primeval forest, one of Nature's products. But without the labor of the savage it would never have become a canoe. It would have remained simply part of the trunk of a tree, and would not have acquired the use-value it has as a canoe. But it is likewise true that without the tree the canoe could nothave existed. So with our meerschaum pipe. It is not simply a use-value: it is also an article of commerce, an exchange-value, a commodity. Its elements are, the silicate mineral which Nature provided and the form which human labor has given it. We can apply this test to every form of wealth, whether simple use-values or commodities, and we shall find that, in Mill's phrase, wealth is produced by the application of human labor toappropriate natural objects.

This brings us to the second point in Mr. Mallock's criticism, namely, that Marx held that only "ordinary manual labor" is capable of producing wealth, and that, therefore, all wealth ought to go to the manual laborers. One looks in vain for a single passage in all the writings of Marx which will justify this criticism. It may be conceded at once that if Marx taught anything of the kind, the defect in Marxian theory is fatal. But it must be proven that the defect exists—and theonus probandirests upon Mr. Mallock. One need not be a trained economist or a learned philosopher to see how absurd such a theory must be. Suppose we take, for example, a man working in a factory, at a great machine, making screws. We go to that man and say: "Every screw here is made by manual labor alone. The machine does not count; the brains of the inventors of the machine have nothing to do with the making of screws."Our laborer might be illiterate and unable to read a single page of political economy with understanding, but he would know that our statement was foolish and untrue. Or, suppose we take the machine itself and say to the laborer: "That great machine with all its levers and wheels and springs working in such beautiful harmony was made entirely by manual workers, such as molders, blacksmiths, and machinists; no brain workers had anything to do with the making of it; the labor of the inventors, and of the men who drew the plans and supervised the making, had nothing to do with the production of the machine"—our laborer would rightly conclude that we were either fools or seeking to mock him as one.

Curiously enough, notwithstanding the frequent reiteration of this criticism of Marx by Mr. Mallock, he himself, in an unguarded moment, provides the answer by which Marx is vindicated! Thus, speaking of the great classical economists, Adam Smith, Ricardo, and John Stuart Mill, he points out that they included "all forms of living industrial effort, from those of a Watt or an Edison down to those of a man who tars a fence, grouped together under the common name of labor" (Lecture I, page 16). And again: "At present the orthodox economists and the socialistic economists alike give usall human effort[160]tied up, as it were, in a sack, and ticketed 'humanlabor'" (Lecture I, page 18). Now, if the Socialist includes in his definition of labor "all human effort," it stands to reason that he does not mean only "ordinary manual labor" when he uses the term. Thus Mallock answers Mallock and vindicates Marx!

Of course, Marx, like all the great economists, includes in his concept of labor every kind of productive effort, mental as well as physical, as Mr. Mallock, to the utter destruction of his disingenuous criticism, unconsciously—we must suppose—admitted. Take, for example, this definition: "By labor power or capacity for labor is to be understood the aggregate of thosemental and physicalcapabilities existing in a human being, which he exercises when he produces a use-value of any description."[161]As against this luminous and precise definition, it is but fair to quote that of Mr. Mallock himself. He defines labor as "the faculties of an individualapplied to his ownlabor"[162]—a meaningless jumble of words. The fifty-seven letters contained in that sentence would mean just as much if put in a bag, well shaken, and put on paper just as they happened to fall from the bag.

Marx never argued that the producers of wealth had arightto the wealth produced. The "right of labor to the whole of its produce" was, it is true, the keynote of the theories of the Ricardian Socialists. An echo of the doctrine appeared in the Gotha Programme of the German Socialists to which reference has already been made, and in the popular agitation of Socialism in this and other countries it is echoed more or less frequently. Just in proportion as the ethical argument for Socialism is advanced, and appeals made to the sense of justice, the rich idler is condemned and an ethic of distribution based upon production becomes an important feature of the propaganda. But Marx nowhere indulges in this kind of argument. Not in a single line of "Capital," or his minor economic treatises, can any hint of the doctrine be found. He invariably scoffed at the "ethical distribution" idea. In the judgment of the present writer, this is at once his great strength and weakness, but that is beside the point of this discussion. Suffice it to say, though it involves some reiteration, that Marx never took the position that Socialismoughtto take the place ofcapitalism, because the producers of wealthoughtto get the whole of the wealth they produce. His position was rather that Socialismmustcome, simply because capitalismcould notlast.

Finally, we come to the charge that Marx taught that "all productive effort is absolutely equal in productivity." Incredible as it may seem, it is nevertheless a fact that everything Marx has to say upon the subject is directly opposed to this notion, and that, as we shall see later on, his famous theory of value is not only not dependent upon a belief in the equal productivity of all productive effort, but would be completely shattered by it. Not only Marx, but also Mill, Ricardo, and Smith, his great predecessors, recognized the fact that all labor is not equally productive. Of course, it requires no special genius to demonstrate this. That a poor mechanic with antiquated tools will produce less in a given number of hours than an expert mechanic with good tools, for example, is too obvious for comment. The Marx assailed by Mr. Mallock, and numerous critics like him, is a myth. The real Marx they do not touch—hence the futility of their work. The Marx they attack is a man of straw, not the immortal thinker. Endowed

"With just enough of learning to misquote,"

their assaults are vain.

Having thus disposed of some of the more prevalent criticisms of Marx as an economist, we are ready for a definite, consecutive statement of the economic theory of modern Socialism. First, however, a word as to the term "scientific" as commonly applied to Marxian Socialism. Even some of the friendliest of Socialist critics have contended that the use of the term is pretentious, bombastic, and altogether unjustified. From a certain narrow point of view, this appears to be an unimportant matter, and the vigor with which Socialists defend their use of the term seems exceedingly foolish, and accountable for only as a result of enthusiastic fetish worship—the fetish, of course, being Marx.

Such a view is very crude and superficial. It cannot be doubted that the Socialism represented by Marx and the modern political Socialist movement is radically different from the earlier Socialism with which the names of Fourier, Saint-Simon, Cabet, Owen, and a host of other builders of "cloud palaces for an ideal humanity," are associated. The need of some word to distinguish between the two is obvious, and the only question remaining is whether or not the word "scientific" is the most suitable and accurate one to make that distinction clear; whether the words "scientific" and "utopian" express withreasonable accuracy the nature of the difference. Here the followers of Marx feel that they have an impregnable position. The method of Marx is scientific. From the first sentence of his great work to the last, the method pursued is that of a painstaking scientist. It would be just as reasonable to complain of the use of the word "scientific" in connection with the work of Darwin and his followers, to distinguish it from the guesswork of Anaximander, as to cavil at the distinction made between the Socialism of Marx and Engels and their followers, and that of visionaries like Owen and Saint-Simon.

Doubtless both Marx and Engels lapsed occasionally into Utopianism. We see instances of this in the illusions Marx entertained regarding the Crimean War bringing about the European Social Revolution; in the theory of the increasing misery of the proletariat; in Engels' confident prediction, in 1845, that a Socialist revolution was imminent and inevitable; and in the prediction of both that an economic cataclysm must create the conditions for a sudden and complete revolution in society. These, I say, are Utopian ideas, evidences that the founders of scientific Socialism were tinctured with the older ideas of the Utopists, and even more with their spirit. But when we speak of "Marxism," what mental picture does the word suggest, what intellectual concept is the word a name for? Is it these forecasts andguesses, and the exact mode of realizing the Socialist ideal which Marx laid down, or is it the great principle of social evolution determined by economic development? Is it his naïve and simple description of the process of capitalist concentration, in which no hint appears of the circuitous windings that carried the actual process into unforeseen channels, or the broad fact that the concentration has taken place and that monopoly has come out of competition? Is it his statement of the extent to which labor is exploited, or thefactof the exploitation? If we are to judge Marx by the essential things, rather than by the incidental and non-essential things, then we must admit his claim to be reckoned with the great scientific sociologists and economists.

After all, what constitutes scientific method? Is it not the recognition of the law of causation, putting exact knowledge of facts above tradition or sentiment; accumulating facts patiently until sufficient have been gathered to make possible the formulation of generalizations and laws enabling us to connect the present with the past, and in some measure to foretell the outcome of the present, as Marx foretold the culmination of competition in monopoly? Is it not to see past, present, and future as one whole, a growth, a constant process, so that instead of vainly fashioning plans for millennial Utopias, we seek in the facts of to-day the stream of tendencies, and so learn thedirection of the immediate flow of progress? If this is a true concept of scientific method, and the scientific spirit, then Karl Marx was a scientist, and modern Socialism is aptly named Scientific Socialism.

FOOTNOTES:[137]An English edition of this work, translated by H. Quelch, was published in 1900 under the titleThe Poverty of Philosophy.[138]Cf. F. Engels, Preface toLa Misère de la Philosophie, English translation,The Poverty of Philosophy, page iv.[139]The Right to the Whole Produce of Labour, by Anton Menger, 1899.[140]Edward Bernstein,Ferdinand Lassalle as a Social Reformer, page ix.[141]Criticism of the Gotha Programme, from the posthumous papers of Karl Marx.[142]It should perhaps be pointed out here, to avoid misunderstanding, that Ricardo hedged this doctrine about with important qualifications—not always observed by his followers—till it no longer remained the simple proposition stated above. See Dr. A. C. Whitaker'sHistory and Criticism of the Labour Theory of Value in English Political Economy, page 57, for a suggestive treatment of this point.[143]The Right to the Whole Produce of Labour.[144]Cf.Capital, Vol. I, page 644, and Vol. II, page 19, Kerr edition.[145]Cf., for instance,The Wealth of Nations, Vol. I, Chapter VI.[146]Introduction to Menger'sThe Right to the Whole Produce of Labour.[147]The Life of Francis Place, by Graham Wallas, M.A., London, 1898, page 268.[148]For this brief sketch of the works of these Ricardian Socialist writers I have drawn freely upon Menger'sThe Right to the Whole Produce of Labour, and Professor Foxwell's Introduction thereto.[149]Karl Marx: Biographical Memoirs, by Wilhelm Liebknecht, translated by E. Untermann, 1901, page 32.[150]Much of this work has been collated and edited by Marx's daughter, the late Mrs. Eleanor Marx-Aveling, and her husband, Dr. Edward Aveling, and published in two volumes,The Eastern QuestionandRevolution and Counter-Revolution.[151]The note is quoted by Liebknecht,Memoirs of Marx, page 177, and in the Introduction toRevolution and Counter-Revolution, by the editor, Eleanor Marx-Aveling.[152]Political Economy, page 115.[153]Luigi Cossa,Guide to the Study of Political Economy, English translation, 1880.[154]The Economic Writings of Sir William Petty, edited by Charles Henry Hull, Vol. I, page 244.[155]The italics are mine.—J. S.[156]All quotations from Mr. Mallock are taken from the volume containing the text of his lectures, entitledSocialism, published by The National Civic Federation, New York, 1907.[157]The italics are mine.—J. S.[158]Letter on the Gotha Programme, by Karl Marx, published in the collection of the posthumous writings of Marx and Engels, edited by Mehring, 1902. See a translation of the letter by Dr. Harriet E. Lothrop,International Socialist Review, May, 1908.[159]I note that my friend, Mr. J. R. Macdonald, M.P., "Whip" of the Labour Party in the British House of Commons, so misrepresents Marx in his admirable little book,Socialism, page 54.[160]Italics mine.—J. S.[161]The italics are mine. The passage occurs on page 186, Vol. I, ofCapital, Kerr edition. In the last of the series of lectures printed in his book, Mr. Mallock attempts a reply to the criticism of an American Socialist, Mr. Morris Hillquit who quoted this passage from Marx to show that Mr. Mallock was in error in saying that Marx regarded manual labor as the sole source of wealth. He evades the real point, namely, that Marx clearly included mental as well as physical labor in his use of the term, and with an ingenuity equaled only by the disingenuousness of the argument, seeks refuge in the fact that it does not cover the special "directive ability" which is a special function, "a productive force distinct from labor." The trick will not do. The fact is that Marx clearly and precisely covers that point in another place. The reader is referred to Chapter XIII of Part IV, Vol. I, ofCapital, pages 363-368, Kerr edition, for a brilliant and honest treatment of the whole subject of the place of the "directing few" in modern industry. We shall treat the matter briefly later on.[162]Italics mine.—J. S. The passage occurs in Lecture III, page 36.

[137]An English edition of this work, translated by H. Quelch, was published in 1900 under the titleThe Poverty of Philosophy.

[138]Cf. F. Engels, Preface toLa Misère de la Philosophie, English translation,The Poverty of Philosophy, page iv.

[139]The Right to the Whole Produce of Labour, by Anton Menger, 1899.

[140]Edward Bernstein,Ferdinand Lassalle as a Social Reformer, page ix.

[141]Criticism of the Gotha Programme, from the posthumous papers of Karl Marx.

[142]It should perhaps be pointed out here, to avoid misunderstanding, that Ricardo hedged this doctrine about with important qualifications—not always observed by his followers—till it no longer remained the simple proposition stated above. See Dr. A. C. Whitaker'sHistory and Criticism of the Labour Theory of Value in English Political Economy, page 57, for a suggestive treatment of this point.

[143]The Right to the Whole Produce of Labour.

[144]Cf.Capital, Vol. I, page 644, and Vol. II, page 19, Kerr edition.

[145]Cf., for instance,The Wealth of Nations, Vol. I, Chapter VI.

[146]Introduction to Menger'sThe Right to the Whole Produce of Labour.

[147]The Life of Francis Place, by Graham Wallas, M.A., London, 1898, page 268.

[148]For this brief sketch of the works of these Ricardian Socialist writers I have drawn freely upon Menger'sThe Right to the Whole Produce of Labour, and Professor Foxwell's Introduction thereto.

[149]Karl Marx: Biographical Memoirs, by Wilhelm Liebknecht, translated by E. Untermann, 1901, page 32.

[150]Much of this work has been collated and edited by Marx's daughter, the late Mrs. Eleanor Marx-Aveling, and her husband, Dr. Edward Aveling, and published in two volumes,The Eastern QuestionandRevolution and Counter-Revolution.

[151]The note is quoted by Liebknecht,Memoirs of Marx, page 177, and in the Introduction toRevolution and Counter-Revolution, by the editor, Eleanor Marx-Aveling.

[152]Political Economy, page 115.

[153]Luigi Cossa,Guide to the Study of Political Economy, English translation, 1880.

[154]The Economic Writings of Sir William Petty, edited by Charles Henry Hull, Vol. I, page 244.

[155]The italics are mine.—J. S.

[156]All quotations from Mr. Mallock are taken from the volume containing the text of his lectures, entitledSocialism, published by The National Civic Federation, New York, 1907.

[157]The italics are mine.—J. S.

[158]Letter on the Gotha Programme, by Karl Marx, published in the collection of the posthumous writings of Marx and Engels, edited by Mehring, 1902. See a translation of the letter by Dr. Harriet E. Lothrop,International Socialist Review, May, 1908.

[159]I note that my friend, Mr. J. R. Macdonald, M.P., "Whip" of the Labour Party in the British House of Commons, so misrepresents Marx in his admirable little book,Socialism, page 54.

[160]Italics mine.—J. S.

[161]The italics are mine. The passage occurs on page 186, Vol. I, ofCapital, Kerr edition. In the last of the series of lectures printed in his book, Mr. Mallock attempts a reply to the criticism of an American Socialist, Mr. Morris Hillquit who quoted this passage from Marx to show that Mr. Mallock was in error in saying that Marx regarded manual labor as the sole source of wealth. He evades the real point, namely, that Marx clearly included mental as well as physical labor in his use of the term, and with an ingenuity equaled only by the disingenuousness of the argument, seeks refuge in the fact that it does not cover the special "directive ability" which is a special function, "a productive force distinct from labor." The trick will not do. The fact is that Marx clearly and precisely covers that point in another place. The reader is referred to Chapter XIII of Part IV, Vol. I, ofCapital, pages 363-368, Kerr edition, for a brilliant and honest treatment of the whole subject of the place of the "directing few" in modern industry. We shall treat the matter briefly later on.

[162]Italics mine.—J. S. The passage occurs in Lecture III, page 36.

Thegeistof social and political evolution is economic, according to the Socialist philosophy. This view of the importance of man's economic relations involves some very radical changes in the methods and terminology of political economy. The philosophical view of social and political evolution as a world-process, through revolutions formed in the matrices of economic conditions, at once limits and expands the scope of political economy. It destroys on the one hand the idea of the eternality of economic laws and limits them to particular epochs. On the other hand, it enhances the importance of the science of political economy as a study of the motive force of social evolution. With Marx and his followers, political economy is more than an analysis of the production and distribution of wealth; it is a study of the principal determinant factor in the social and political progress of society, consciously recognized as such.

The sociological viewpoint appears throughout thewhole of Marxian economic thought. It appears, for instance, in the definition of a commodity as the unit of wealthin those societies in which the capitalist mode of production prevails. Likewise wealth and capital connote special social relations or categories. Wealth, which in certain simpler forms of social organization consists in the ownership of use-values, under the capitalist system consists in the ownership of exchange-values. Capital is not a thing, but a social relation between persons established through the medium of things. Robinson Crusoe's spade, the Indian's bow and arrow, and all similar illustrations given by the "orthodox" economists, do not constitute capital any more than an infant's spoon is capital. They do not serve as the medium of the social relation between wage-worker and capitalist which characterizes the capitalist system of production. The essential feature of capitalist society is the production of wealth in the commodity form; that is to say, in the form of objects that, instead of being consumed by the producer, are intended to be exchanged or sold at a profit. Capital, therefore, is wealth set aside for the production of other wealth with a view to its exchange at a profit. A house may consist of certain definite quantities of bricks, timber, lime, iron, and other substances, but similar quantities of these substances piled up without plan will not constitute a house. Bricks, timber, lime, and ironbecome a house only in certain circumstances, when they bear a given ordered relation to each other. "A negro is a negro; it is only under certain conditions that he becomes a slave. A certain machine, for example, is a machine for spinning cotton; it is only under certain defined conditions that it becomes capital. Apart from these conditions, it is no more capital than goldper seis money; capital is a social relation of production."[163]

This sociological principle pervades the whole of Socialist economics. It appears in every economic definition, practically, and the terminology of the orthodox political economists is thereby often given a new meaning, radically different from that originally given to it and commonly understood. The student of Socialism who fails to appreciate this fact will most frequently land in a morass of confusion and difficulty, but the careful student who fully understands it will find it of great assistance. Take, as an illustration, the phrase "the abolition of capital" which frequently occurs in Socialist literature. The reader who thinks of capital as consisting ofthings, such as machinery, materials of production, money, and so on, finds the phrase bewildering. He wonders how it is conceivable that production should go on if these things were done away with. But the student who fully understands the sociological principleoutlined above comprehends at once that it is not proposed to do away with thethings, but withcertain social relations expressed through them. He understands that the "abolition of capital" no more involves the destruction of the physical things than the abolition of slavery involved the destruction of the slave himself. What is aimed at is the social relation which is established through the medium of the things commonly called capital.

In common with all the great economists, Socialists hold that wealth is produced by human labor applied to appropriate natural objects. This, as we have seen, does not mean that labor is the sole source of wealth. Still less does it mean that the mere expenditure of labor upon natural objects must inevitably result in the production of wealth. If a man spends his time digging holes in the ground and filling them up again, or dipping water from the ocean in a bucket and pouring it back again, the labor so expended upon natural objects would not produce wealth of any kind. Nor is the productivity of mental labor denied. In the term "labor" is implied the totality of human energies expended in production, regardless of whether those energies be physical or mental. In modern society wealth consists of social use-values, commodities.

We must, therefore, begin our analysis of capitalist society with an analysis of a commodity. "A commodity," says Marx, "is, in the first place, an object outside us, a thing that by its properties satisfies human wants of some sort or another. The nature of such wants, whether, for instance, they spring from the stomach or from fancy, makes no difference. Neither are we here concerned to know how the object satisfies these wants, whether directly as means of subsistence, or indirectly as means of production."[164]But a commodity must be something more than an object satisfying human wants. Such objects are simple use-values, but commodities are something else in addition to simple use-values. The manna upon which the pilgrim exiles of the Bible story were fed, for instance, was not a commodity, though it fulfilled the conditions of this first part of our definition by satisfying human wants. We must carry our definition further, therefore. In addition to use-value, then, a commodity must possess exchange-value. In other words, it must have a social use-value, a use-value to others, and not merely to the producer.

Thus, things may have the quality of satisfying human wants without being commodities. To state the matter in the language of the economists, use-values may, and often do, exist without economicvalue, value, that is to say, in exchange. Air, for example, is absolutely indispensable to life, yet it is not—except in special, abnormal conditions—subject to sale or exchange. With a use-value that is beyond computation, it has no exchange-value. Similarly, water is ordinarily plentiful and has no economic value; it is not a commodity. A seeming contradiction exists in the case of the water supply of cities where water for domestic use is commercially supplied, but a moment's reflection will show that it is not the water, but the social service of bringing it to a desired location for the consumer's convenience that represents economic value. Over and above that there is, however, the element of monopoly-price which enters into the matter. With that we have not, at this point, anything to do. Under ordinary circumstances, water, like light, is plentiful; its utility to man is not due to man's labor, and it has, therefore, no economic value. But in exceptional circumstances, as in an arid desert or in a besieged fortress, a millionaire might be willing to give all his wealth for a little water, thus making the value of what is ordinarily valueless almost infinite. What may be called natural use-values have no economic value. And even use-values that are the result of human labor may be equally without economic value. If I make something to satisfy some want of my own, it will have no economic value unless it will satisfy thewant of some one else. So, unless a use-value is social, unless the object produced is of use to some other person than the producer, it will have no value in the economic sense: it will not beexchangeable.

A commodity must therefore possess two fundamental qualities. It must have a use-value, must satisfy some human want or desire; it must also have an exchange-value arising from the fact that the use-value contained in it is social in its nature and exchangeable for other exchange-values. With the unit of wealth thus defined, the subsequent study of economics is immensely simplified.[165]

The trade of capitalist societies is the exchange of commodities against each other, through the medium of money. Commodities utterly unlike each other in all apparent physical properties, such as color, weight, size, shape, substance, and so on, and utterly unlike each other in respect to the purposes for which intended and the nature of the wants they satisfy, are exchanged for one another, sometimes equally, sometimes in unequal ratio. The question immediately arises: what is it that determines the relative value of commodities so exchanged? A dress suit and a kitchen stove, for example, are very differentcommodities, possessing no outward semblance to each other, and satisfying very different human wants, yet they may, and actually do, exchange upon an equality in the market. To understand the reason for this similarity of value of dissimilar commodities, and the principle which governs the exchange of commodities in general, is to understand an important part of the mechanism of modern capitalist society.

This is the problem of value which all the great economists have tried to solve. Sir William Petty, Adam Smith, David Ricardo, John Stuart Mill, and Karl Marx developed what is known as the labor-value theory as the solution of the problem. This theory, as developed by Marx, not in its cruder forms, is one of the cardinal principles in Socialist economic theory. The Ricardian statement of the theory is that the relative value of commodities to one another is determined by the relative amounts of human labor embodied in them; that the quantity of labor embodied in them is the determinant of the value of all commodities. When all their differences have been carefully noted, all commodities have at least one quality in common. The dress suit and the kitchen range, toothpicks and snowshoes, pink parasols and sewing-machines, are unlike each other in every other particular save one—they are all products of human labor, crystallizations of human labor-power. Here, then, say the Socialists, as did the great classicaleconomists, we have a hint of the secret of the mechanism of exchange in capitalist society. The amount of labor-power embodied in their production is in some way connected with the measure of the exchangeable value of the commodities.

Stated in the simple, crude form, that the quantity of human labor crystallized in them is the basis and measure of the value of commodities when exchanged against one another, the labor theory of value is beautifully simple. At least, the formula is simplicity itself. At the same time, it is open to certain very obvious criticisms. It would be absurd to contend that the day's labor of a coolie laborer is equal in productivity to the day's labor of a highly skilled mechanic, or that the day's labor of an incompetent workman is of equal value to that of the most proficient. To refute such a theory is as beautifully simple as the theory itself. In all seriousness, arguments such as these are constantly used against the Marxian theory of value, notwithstanding that they do not possess the slightest relation to it. Marxism is very frequently "refuted" by those who do not trouble themselves to understand it.

The idea that the quantity of labor embodied in them is the determinant of the value of commodities was held by practically all the great economists. Sir William Petty, for example, in a celebrated passage, says of the exchange-value of corn: "If a man canbring to London an ounce of silver out of the earth in Peru in the same time that he can produce a bushel of corn, then one is the natural price of the other; now, if by reason of new and more easy mines a man can get two ounces of silver as easily as formerly he did one, then the corn will be as cheap at ten shillings a bushel as it was before at five shillings a bushel,cæteris paribus."[166]

Adam Smith, following Petty's lead, says: "The real price of everything, what everything really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What everything is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and labor which it can save to himself, and which it can impose on other people.... Labor was the first price, the original purchase money, that was paid for all things.... If among a nation of hunters, for example, it usually costs twice the labor to kill a beaver which it does to kill a deer, one beaver would naturally be worth or exchange for two deer. It is natural that what is usually the produce of two days' or two hours' labor, should be worth double of what is usually the produce of one day's or one hour's labor."[167]

Benjamin Franklin, whose merit as an economistMarx recognized, takes the same view and regards trade as being "nothing but the exchange of labor for labor, the value of all things being most justly measured by labor."[168]From the writings of almost every one of the great classical economists of England it would be easy to compile a formidable and convincing volume of similar quotations, showing that they all took the same view that the quantity of human labor embodied in commodities determines their value. One further quotation, from Ricardo, must, however, suffice. He says:—

"To convince ourselves that this (quantity of labor) is the real foundation of exchangeable value, let us suppose any improvement to be made in the means of abridging labor in any one of the various processes through which the raw cotton must pass before the manufactured stockings come to the market to be exchanged for other things; and observethe effects which will follow. If fewer men were required to cultivate the raw cotton, or if fewer sailors were employed in navigating, or shipwrights in constructing, the ship in which it was conveyed to us; if fewer hands were employed in raising the buildings and machinery, or if these, when raised, were rendered more efficient; the stockings would inevitably fall in value, and command less of other things. They would fall because a less quantity of labor was necessary to their production, and would therefore exchange for a smaller quantity of those things in which no such abridgment of labor had been made."[169]

It is evident from the foregoing quotations that these great writers regarded the quantity of human labor crystallized in them as the basis of all commodity values, and their real measure. The great merit of Ricardo lies in his development of the idea of social labor as against the simple concept of the labor of particular individuals, or sets of individuals. In the passage cited, he includes in the term "quantity of human labor" not merely the total labor of those immediately concerned in the making of stockings, from the cultivation of the raw cotton to the actual making of stockings in the factory, but all the labor indirectly expended, even in the making and navigating of ships, and the building of the factories.One does, indeed, find hints of the social labor concept in Adam Smith, but it is Ricardo who first clearly develops it. Marx further developed this principle, and all criticisms of the labor-value theory in Marxian economic theory which are based upon the assumption that quantity of labor means the simple, direct labor embodied in commodities fall of their own weight.

Thus, if we take any commodity, we shall find that it is possible to ascertain with tolerable certainty the amount of direct labor embodied in it, but that it is equally as impossible to ascertain the amount of the indirect expenditure of labor power which entered into its making. In the case of a table, for example, it may be possible to trace with some approximation to accuracy the labor involved in felling the tree and preparing the lumber out of which the table was made; the labor directly spent in bringing the lumber to the factory, and the direct labor expended in making out of the lumber a finished table; allowance may also be made for the labor embodied in the nails, glue, stain, and other articles used in making the table. So we have a fairly accurate statement of the direct labor embodied in the table. But what of the labor used to make the tools of the men who felled the trees and prepared the lumber? What of the coal miner and the iron miner and the tool maker? And what of the numerous and incalculableexpenditures of labor to make the railroads, the railway engines, and to provide these with steam-power? What, also, of the machinery in the factory, and of the factory buildings themselves, and, back of them, again, the tool makers and the providers of raw materials? It is obvious that no human intellect could ever unravel the tangled skein of human labor, and that in actual exchange there can be no calculation of the respective labor content of commodities. If the law of value holds good, it must operate mechanically, automatically. And this it does, through the incidence of bargaining and the law of supply and demand.

We have noted elsewhere the variations in human capacity and productiveness. Superficial critics still frequently charge Marx with having overlooked this very obvious fact, whereas it has not only been fully treated by him, but was actually covered by Smith and Ricardo before Marx! With these writers and their followers it is the law of averages which solves the difficulties arising from variations in individual capacity and productivity. It is theaverageamount of labor expended in killing the beaver which counts, not the actual individual labor in a specified case. Nor did these writers overlook the important differentiation between simple, unskilled labor and labor that is highly skilled. If A in ten hours' labor produces exactly double the amount of exchange-value whichB produces in the same time devoted to labor of another kind, it is obvious that the labor of B is not equal in value to that of A. Quantity of labor cannot, therefore, be measured, in individual cases, by time units. Despite a hundred passages which, detached from their context, seem to imply the contrary, Adam Smith recognized this very clearly, and attempted to solve the riddle by a differentiation of skilled and unskilled labor in which he likens skilled labor to a machine; and insists that the labor and time spent in acquiring the skill which distinguishes skilled labor must be reckoned.[170]

Another frequent criticism of the Marxian theory has not only been answered by Marx himself—is, in fact, ruled out by the terms of the theory itself—but was amply replied to by Ricardo.[171]The criticism in question consists in the selection of what may be called "unique values," or scarcity values, articles which cannot be reproduced by labor, and whose value is wholly independent of the quantity of labor originally necessary to produce them. Such articles are unique specimens of coins and postage stamps, autograph letters, rare manuscripts, Stradivarius violins, Raphael pictures, Caxton books, articles associated with great personages—such as Napoleon's snuffbox—great auks' eggs, and so onad infinitum.No possible amount of human labor could reproduce these articles, reproduce, that is to say, the exact utilities in them. Napoleon's snuffbox might be exactly duplicated so far as its physical properties are concerned, but the association with Napoleon's fingers, the sentimental quality which gives it its special utility, is not reproducible. But the trade of capitalist society does not consist in the manufacture and sale of these things, which, after all, form a very insignificant part of the exchange-values of the world.

Marx saw the soul of truth in the labor-value theory, as propounded by his predecessors, especially Ricardo, and devoted himself to its development and systematization. He has been accused of plagiarizing his theory from the Ricardians, but it is surely not plagiarism when a thinker sees the germ of truth in a theory, and, separating it from the mass of confusion and error which envelops it, restates it in scientific fashion with all its necessary qualifications. This is precisely what Marx did. He developed the idea of social labor which Ricardo had propounded, disregarding entirely individual labor. He recognized the absurdity of the contention that the value of commodities is determined by the amount of labor, either individual or social,actually embodied in them.If two workers are producing precisely similar commodities, say coats, and one of them expends twice as much labor as the other and uses tools and methods representing twice the social labor, it is clearly foolish to suppose that the exchange-value of his coat will be twice as great as that of the other worker, regardless of the fact that their utility is equal. Labor, Marx pointed out, has two sides, the qualitative and the quantitative. The qualitative side, the difference in quality between specially skilled and simply unskilled labor, is easily recognized, though the relative value of the one compared with the other may be somewhat obscured. The secret of that obscurity lies hidden in the quantitative side of labor. Here we must enter upon an abstract inquiry, that part of the Marxian theory which is most difficult to comprehend. Yet, it is not so very difficult, after all, to understand that the years devoted to learning his trade, by a mechanical engineer, for instance, during all of which years he must be provided with the necessities of life, must be reckoned somewhere and somehow; and that when they are so reckoned, his day's labor may be found to contain, concentrated, so to speak, an amount of labor time equivalent to two or even many days' simple unskilled labor time. It may be, and in fact is, quite impossible to set forth mathematically the relation of the two, for the reason that the process of developing skilled labor is toocomplex to be unraveled. Of the fact, however, there can be no doubt.

The real law of value, then, according to Marx, is as follows: Under capitalism,in free competition, the value of all commodities, other than those unique things which cannot be reproduced by human labor, is determined by the amount ofabstractlabor embodied in them; or, better, by the amount of social human labor power necessary, on the average, for their production. We may conveniently illustrate this theory by a concrete example. Let us, therefore, return to our coat-makers. Now, always assuming their equal utility, no one will be willing to pay twice as much for the coat produced by the slow worker with poor tools as for the other. If the more economical methods of production employed by the man who makes his coats in half the time taken by the other man are the methods usually employed in the manufacture of coats, and the time he takes represents the average time taken to produce a coat, then the average value of coats will be determined thereby, and coats produced by the slower, less economical process will command only the same price in the market, the fact that they may embody twice the amount of actual labor counting for nothing. If we reverse the order of this proposition, and suppose the slower, less economical methods to be those generally prevailing in the manufacture of coats, and the quicker, moreeconomical methods to be exceptional, then, all other things being equal, the exchange-value, of coats will be determined by the amount of labor commonly consumed, and the fortunate producer who adopts the exceptional, economical methods will, for a time, reap a golden harvest. Only for a time, however. As the new methods prevail, competition being the impelling force, they become less and less exceptional, and, finally, the regular, normal methods of production and the standard of value.

It is this very important qualification, fundamental to the Marxian theory, which is most often lost sight of by the critics. They persist in applying to individual commodities the test of comparing the amounts of labor-power actually consumed in their production, and so confound the Marxian theory with its crude progenitors. In refuting this crude theory, they are quite oblivious of the fact that Marx himself accomplished that by no means difficult feat. To state the Marxian theory accurately, we must qualify the bald statement that the exchange-value of commodities is determined by the amount of labor embodied in them, and state it in the following manner:The exchange-value of commodities is determined by the amount of average labor at the time socially necessary for their production.This is determined, not absolutely in individual cases, but approximately in general, by the bargaining andhiggling of the market, to adopt Adam Smith's well-known phrase.

Now, this theory applies to those things, exclusive of the category of "unique values," which cannot be made by labor and are commonly supposed to owe their value to their rarity. For example, we may take diamonds. A man walking along the great wastes of the Africankaroocomes across a little stream. As he stoops to drink, he sees in the water a number of glittering diamonds. To pick them out is the work of a few minutes only, but the diamonds are worth many thousands of dollars. The law of value above outlined applies just as much to them as to any other commodity. The value of diamonds is determined by the amount of labor expenditure necessaryon an averageto procure them. If the normal method of obtaining diamonds were simply to go to the nearest stream and pick them out, their value would fall, possibly to zero:—

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