Karl Marx's Life, Ideas, and Influences

MARX, ENGELS, AND MARXISMS
Karl Marx’s Life,

Ideas, and Influences
A Critical Examination on the Bicentenary
Edited by Shaibal Gupta

Marcello Musto · Babak Amini
Marx, Engels, and Marxisms
Series Editors
Marcello Musto
York University
Toronto, ON, Canada
Terrell Carver
University of Bristol
Bristol, UK
The Marx renaissance is underway on a global scale. Wherever the critique
of capitalism re-emerges, there is an intellectual and political demand for
new, critical engagements with Marxism. The peer-reviewed series Marx,
Engels and Marxisms (edited by Marcello Musto & Terrell Carver, with
Babak Amini and Kohei Saito as Assistant Editors) publishes monographs,
edited volumes, critical editions, reprints of old texts, as well as transla-
tions of books already published in other languages. Our volumes come
from a wide range of political perspectives, subject matters, academic dis-
ciplines and geographical areas, producing an eclectic and informative col-
lection that appeals to a diverse and international audience. Our main
areas of focus include: the oeuvre of Marx and Engels, Marxist authors
and traditions of the 19th and 20th centuries, labour and social move-
ments, Marxist analyses of contemporary issues, and reception of Marxism
in the world.
More information about this series at

http://www.palgrave.com/gp/series/14812
Shaibal Gupta • Marcello Musto
Babak Amini
Editors
Karl Marx’s Life,

Ideas, and Influences
A Critical Examination on the Bicentenary
Editors
Shaibal Gupta Marcello Musto
Asian Development Research Institute Department of Sociology
Patna, Bihar, India York University
Toronto, ON, Canada
Babak Amini
London School of Economics
London, UK
ISSN 2524-7123 ISSN 2524-7131 (electronic)

Marx, Engels, and Marxisms
ISBN 978-3-030-24814-7 ISBN 978-3-030-24815-4 (eBook)
https://doi.org/10.1007/978-3-030-24815-4
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Series Foreword
The Marx Revival

The Marx renaissance is under way on a global scale. Whether the puzzle
is the economic boom in China or the economic bust in ‘the West’, there
is no doubt that Marx appears regularly in the media nowadays as a guru,
and not a threat, as he used to be. The literature dealing with Marxism,
which all but dried up twenty-five years ago, is reviving in the global con-
text. Academic and popular journals and even newspapers and online jour-
nalism are increasingly open to contributions on Marxism, just as there are
now many international conferences, university courses and seminars on
related themes. In all parts of the world, leading daily and weekly papers
are featuring the contemporary relevance of Marx’s thought. From Latin
America to Europe, and wherever the critique to capitalism is re-emerging,
there is an intellectual and political demand for a new critical encounter
with Marxism.
Types of Publications
This series brings together reflections on Marx, Engels and Marxisms
from perspectives that are varied in terms of political outlook, geographi-
cal base, academic methodologies and subject-matter, thus challenging
many preconceptions as to what ‘Marxist’ thought can be like, as opposed
to what it has been. The series will appeal internationally to intellectual
communities that are increasingly interested in rediscovering the most
powerful critical analysis of capitalism: Marxism. The series editors will
v
vi SERIES FOREWORD
ensure that authors and editors in the series are producing overall an eclec-
tic and stimulating yet synoptic and informative vision that will draw a
very wide and diverse audience. This series will embrace a much wider
range of scholarly interests and academic approaches than any previous
“family” of books in the area.
This innovative series will present monographs, edited volumes and
critical editions, including translations, to Anglophone readers. The books
in this series will work through three main categories:
Studies on Marx and Engels
The series will include titles focusing on the oeuvre of Marx and Engels
which utilize the scholarly achievements of the on-going Marx-Engels
Gesamtausgabe, a project that has strongly revivified the research on these
two authors in the past decade.
Critical Studies on Marxisms
These volumes will awaken readers to the overarching issues and world-
changing encounters that shelter within the broad categorization ‘Marxist’.
Particular attention will be given to authors such as Gramsci and Benjamin,
who are very popular and widely translated nowadays all over the world,
but also to authors who are less known in the English-speaking countries,
such as Mariátegui.
Reception Studies and Marxist National Traditions
Political projects have necessarily required oversimplifications in the twen-
tieth century, and Marx and Engels have found themselves ‘made over’
numerous times and in quite contradictory ways. Taking a national per-
spective on ‘reception’ will be a global revelation and the volumes of this
series will enable the worldwide Anglophone community to understand
the variety of intellectual and political traditions through which Marx and
Engels have been received in local contexts.
Toronto, Canada Marcello Musto

Bristol, UK Terrell Carver
Series Foreword vii
Titles Published
1. Terrell Carver & Daniel Blank, A Political History of the Editions of Marx and
Engels’s “German Ideology” Manuscripts, 2014.
2. Terrell Carver & Daniel Blank, Marx and Engels’s “German Ideology”
Manuscripts: Presentation and Analysis of the “Feuerbach chapter”, 2014.
3. Alfonso Maurizio Iacono, The History and Theory of Fetishism, 2015.
4. Paresh Chattopadhyay, Marx’s Associated Mode of Production: A Critique of
Marxism, 2016.
5. Domenico Losurdo, Class Struggle: A Political and Philosophical History, 2016.
6. Frederick Harry Pitts, Critiquing Capitalism Today: New Ways to Read
Marx, 2017.
7. Ranabir Samaddar, Karl Marx and the Postcolonial Age, 2017.
8. George Comninel, Alienation and Emancipation in the Work of Karl
Marx, 2018.
9. Jean-Numa Ducange & Razmig Keucheyan (Eds.), The End of the Democratic
State: Nicos Poulantzas, a Marxism for the 21st Century, 2018.
10. Robert Ware, Marx on Emancipation and the Socialist Transition: Retrieving
Marx for the Future, 2018.
11. Xavier LaFrance & Charles Post (Eds.), Case Studies in the Origins of
Capitalism, 2018.
12. John Gregson, Marxism, Ethics, and Politics: The Work of Alasdair
MacIntyre, 2018.
13. Vladimir Puzone & Luis Felipe Miguel (Eds.), The Brazilian Left in the 21st
Century: Conflict and Conciliation in Peripheral Capitalism, 2019.
14. James Muldoon & Gaard Kets (Eds.), The German Revolution and Political
Theory, 2019.
15. Gustavo Moura de Cavalcanti Mello & Mauricio de Souza Sabadini (Eds.),
Financial Speculation and Fictitious Profits: A Marxist Analysis, 2019.
16. Michael Brie, Lenin—Dialectics of Revolution and Metaphysics of
Domination, 2019.
17. August H. Nimtz, Marxism versus Liberalism: Comparative Real Time
Political Analysis, 2019.
18. Gustavo Moura de Cavalcanti Mello & Mauricio de Souza Sabadini (Eds.),
Financial Speculation and Fictitious Profits: A Marxist Analysis.
19. Michael Brie, Rediscovering Lenin: Dialectics of Revolution and Metaphysics of
Domination.
20. August H. Nimtz, Marxism versus Liberalism: Comparative Real-Time
Political Analysis.
viii Series Foreword
Titles Forthcoming
Igor Shoikhedbrod, Revisiting Marx’s Critique of Liberalism: Rethinking Justice,
Legality, and Rights.
Juan Pablo Rodríguez, Resisting Neoliberal Capitalism in Chile: The Possibility of
Social Critique.
Alfonso Maurizio Iacono, The Bourgeois and the Savage: A Marxian Critique of the
Image of the Isolated Individual in Defoe, Turgot and Smith.
Antonio Oliva, Ivan Novara & Angel Oliva, Marx and Contemporary Critical
Theory: The Philosophy of Real Abstraction.
Jean-Numa Ducange, Jules Guesde: The Birth of Socialism and Marxism in France.
Spencer A. Leonard, Marx, the India Question, and the Crisis of Cosmopolitanism.
Kevin B. Anderson, Kieran Durkin & Heather Brown, Raya Dunayevskaya’s
Intersectional Marxism: Race, Gender, and the Dialectics of Liberation.
Kaan Kangal, Friedrich Engels and the Dialectics of Nature.
Vesa Oittinen, Marx’s Russian Dimension.
Victor Wallis, Socialist Practice: Histories and Theories.
Giuseppe Vacca, Alternative Modernities: Antonio Gramsci’s Twentieth Century.
Marcello Mustè, Marxism and Philosophy of Praxis: An Italian Perspective from
Labriola to Gramsci.
Preface
Capitalism was ushered into Europe when the First Industrial Revolution
began in about 1760. Since then, global material production has increased
manifold. But this has simultaneously resulted in skewed development.
Some people have become ultra-rich, while others remain poor and devas-
tated. Marx wrote about the unfolding of economic and social script since
the French Revolution. Not only did he interpret the world the way it was,
but he also provided a strategy to change it. If an author’s eternal youth
consists in his capacity to keep stimulating new ideas, then it may be said
that Marx has without question remained young in the past 200 years.
Thus, even after two centuries, Marx is still relevant.
Marx was born when the First Industrial Revolution was over. When he
died, the Second Industrial Revolution was in full swing. He could not see
the ultimate face of the Industrial Revolution manifesting as “assembly
line production”. Most of his formulations were around these two indus-
trial revolutions. Marx left many of his most famous texts incomplete.
Volumes II and III of Capital were posthumously edited by Engels, while
the Economic and Philosophic Manuscripts of 1844, The German Ideology
and Grundrisse—all of them non-conceived for publication—appeared
almost one century after they were written. Recently, the resumed publica-
tion of the Marx-Engels-Gesamtausgabe (MEGA2), the new historical-
critical edition of his complete works, has been helping scholars around
the world for an overall reassessment of Marx’s oeuvre. Many new materi-
als show us an author very different from the one that numerous critics or
self-styled followers presented for such a long time. For example, they
reveal an author who extended his examination of the contradictions of
ix
x Preface
capitalist society beyond the conflict between capital and labour to other
domains. In the lesser-known period of his life, Marx also devoted a lot of
his time to the study of non-European issues. Moreover, contrary to inter-
pretations that equate Marx’s conception of socialism with the develop-
ment of productive forces, some manuscripts demonstrated that ecological
concerns figured in his work.
Amongst the biggest authors of political and economic thought, Marx
is the one whose profile has changed the most in recent years. Some man-
uscripts highlighted that he was widely interested in several other topics
that people often ignore when they talk about him. Among them, there
are the potential of technology, the search for collective forms of owner-
ship not related to state control, and the need for individual freedom in
contemporary society: all fundamental issues of our times. The renewal in
the interpretation of Marx’s thought is a phenomenon destined to con-
tinue. He is not at all an author about whom everything has already been
said or written, despite frequent claims to the contrary. Many sides of
Marx remain to be explored.
Marxism is not as alive today as it was in the past. Aside from the Soviet
Union and the Eastern Bloc, most of the anti-colonial struggles across the
world in the last century were anchored around Marxian doctrine. At one
point of time, “actually existing socialism” countries covered nearly one-
third of the world. Yet the changed political landscape also contributed to
the present Marx revival. The fall of the Berlin Wall liberated him from the
chains of an ideology that had little to do with his conception of society.
The implosion of the Soviet Union helped to free Marx from the role of
figurehead for a state apparatus. At the same time, to relegate Marx to the
position of an embalmed classic, suitable only for academia, would be a
serious mistake.
Returning to Marx is still indispensable to understand the logic and
dynamics of capitalism. While billionaires have mushroomed around the
globe, the recent Inequality Index, Global Hunger Index or Human
Development Index all tell dismal stories about the other side of the world.
Starvation is still a diabolic reality. At the same time, there is a continuous
move to fetter the workers, instead of ensuring their welfare. Moreover,
Marx’s work is also a very useful tool that provides a rigorous examination
addressing why previous socio-economical experiments to replace capital-
ism with another mode of production failed. Economic crises, profound
inequalities that exist in our society—in particular between the Global
North and South—and the dramatic environmental issues of our time
Preface xi
have urged several scholars and politicians to reopen the debate on the
future of capitalism and the need for an alternative.
This volume contains the proceedings of the five-day international con-
ference, Karl Marx’s Life, Ideas, Influences: A Critical Examination on the
Bicentenary. This event, held at Asian Development Research Institution
(Patna, India), from 16 to 20 June 2018, was amongst the largest interna-
tional conferences in the world convened to celebrate the 200th anniver-
sary of Marx’s birth. It included the participation of 53 scholars, from all
continents and 17 countries.
The Bicentenary conference on Marx in Patna in 2018 was a follow-up
to the conference on Marx, 50 years ago, in a small subdivisional town of
Begusarai in Bihar (India) in 1967, to celebrate the 150th anniversary of
his birth. The canvas of the Begusarai conference was limited to “Marx
and India”; in contrast, the canvas of the Patna conference was much
wider geographically as well as thematically. In the Patna conference, it
was not Marx alone who was remembered; there were 38 dedicated
memorial lectures in the memory of philosophers, economists, academics
and political figures, such as Friedrich Engels, Rudolf Hilferding, György
Lukács, Kozo Uno, E. M. S. Namboodripad, Puran Chand Joshi and
Frantz Fanon, who had either influenced him or were influenced by him.
This book contains a selection of 16 papers that were presented at the
conference, divided into two parts: “On the Critique of Politics” and “On
the Critique of Political Economy”. Part I begins with an essay by Miguel
Vedda which offers an interpretation of Marx as an essayist and one of the
founding figures of the modern critic-Intellectual. By comparing Heinrich
Heine and Marx, the chapter highlights the authenticity of Marx’s role as
a critic-Intellectual beyond the Hegelian concept of “torn conscience” as
a politically engaged orientation towards the world with the purpose of
understanding and transforming it. The next chapter by Marcello Musto
argues that Marx’s idea of socialism was profoundly different from State
socialism and reformism that emerged in the German Social Democratic
Party and that became hegemonic after the foundation of the Second
International. Marx’s vision of a revolutionary transition from capitalism
is what Kohei Saito’s chapter probes into. It sees Marx’s theory of revolu-
tion as an attempt to overcome the modern dualism of the state and civil
society through a dialectic understanding of the “separation” and “unity”
of the economic and the political under capitalism. The chapter uses this
framework to propose a critique of post-Marxist theorists. Michael Brie’s
chapter elaborates on Marx’s theoretical- methodological approach as
xii Preface
consisting of a new mode of critique that is both dialectical and emancipa-

tory. The chapter exemplifies the maturation of this mode of critique in
Capital in which the dramatic exploration of the exploitive dynamics of
capital also reveals pathways that point to elements for the formation of a
new society. Peter Hudis’s chapter delves deeper into how Marx’s critique
of political economy always already c ontains an emancipatory vision of a
post-capitalist society. The chapter by Peter Beilharz audits some of the
new innovations in scholarships on Marx in the Anglophone world that
drive the Marx revival in recent years. Babak Amini’s chapter traces the
genesis of the notion of “workers’ control”, defined in contrast to a vision
of a communist society based on state or party control, in Marx and
Marxists from the Paris Commune up to the February Revolution in
Russia. Another example of such an innovative reading of Marx is exhib-
ited in Andrew J. Douglas’s chapter, which considers Martin Luther King
Jr.’s call for a “revolution of values” through the lens of a theory of value
production and circulation within global (racial) capitalism, the founda-
tions of which can be traced to Marx’s critique of political economy. Part
I closes with a chapter by Paula Rauhala which presents the (dis)continu-
ities in the interpretations of Capital in Germany between the 100th and
150th anniversaries of its publication by contextualizing these receptions
in the historical contexts within which they emerged. The chapter there-
fore argues that any new readings of Capital must put the specificity of the
present historical conjecture at the centre of their interpretive frame-
work—a task that requires historicization of the past receptions of Capital.
Jan Toporowski opens Part II of the book by exploring Marx’s critique
of the classical theory of interest, as articulated by David Ricardo. The
chapter argues that in a purely capitalist economy, interest is a simple
transfer of capitalists’ monetary resource. Therefore, interest does not
require a surplus of production over costs and is independent of the rate
of profit. Ramaa Vasudevan takes a philosophical view of Marx’s theory of
money (including credit money) and argues that it reflects both his mate-
rialist conception of history and dialectic method of analysis. Samuel
Hollander seeks to replace the view of Marx as a “revolutionary” who
embraced a violent overthrow of capitalism with an evolutionary one. He
argues that Marx’s evolutionism extends not only to his understanding of
advanced capitalism but also to his vision of the transition beyond it. Tian
Yu Cao analyses the possibility of a non-statist model of socialism guided
by Marx’s ideas of establishing a socialized economy through the struggle
of the working classes. It offers a framework of socializing economic
Preface xiii
activities based on the Marxian notion of association of free and equal

producers which still leaves room for various forms of embedded market
transactions. Ajit Sinha’s chapter locates the root of Marx’s problem of
relating values to prices and surplus values to profits in his analysis of
labour time in a capitalist economy. The chapter further argues that Piero
Sraffa was able to overcome these problems by liberating Marx from his
metaphysics of “human labour”. Cynthia Lucas Hewitt empirically exam-
ines the validity of Marx’s understanding of the monopolizing tendency of
capital amidst capitalist market expansion at a global scale by analysing the
IMF Financial Access Survey Data. It also analyses the particular chal-
lenges that the rise of China has introduced within the capitalist world
system and the possibilities for African peripheries with communal princi-
ples in a period of core system collapse. In the last chapter of the book,
Muhammad Ali Jan and Barbara Harriss-White critically examine the
extent to which Marx’s conceptions regarding the dynamics of transition
from pre-capitalist to capitalist societies are applicable to understand the
scale and persistence of petty commodity production in India.
These contributions all come together to give a sense of new directions
in the scholarship around Marx. What they make clear is that the ideas of
Marx continue to engage the intellect, imagination and conscience of
human minds across the world from perspectives that are understandably
very diverse. Thus, during the bicentenary of the great philosopher, it is
certainly an apt moment not just to remember him, but also to rethink
and interrogate all that is sourced to him, both academically and politically.
Patna, India Shaibal Gupta

Toronto, ON, Canada Marcello Musto
London, UK Babak Amini
Contents
Part I On the Critique of Politics 1
Heinrich Heine and Marx As Essayists: On the Genesis and

the Function of the Critic-Intellectuals 3
Miguel Vedda
Marx’s Critique of German Social Democracy: From the

International to the Political Struggles of the 1870s 21
Marcello Musto
Revolution and Radical Democracy: Marx Versus Post-

Marxism 41
Kohei Saito
Marx’ Research Project As a Future Science for Emancipatory

Action: A Delineation 61
Michael Brie
The Intimations of a Post-Capitalist Society in Marx’s Critique

of Political Economy 85
Peter Hudis
xv
xvi Contents
Recovering Marx: Steps Towards a Breakdance103

Peter Beilharz
On the Notion of “Workers’ Control” in Marx and Marxists

(1871–1917): A Survey121
Babak Amini
King, Marx, and the Revolution of Worldwide Value159

Andrew J. Douglas
Fetishism and Exploitation Marx - 150 and Marx 200: What

Has Changed?181
Paula Rauhala
Part II On the Critique of Political Economy 209
Marx’s Observations on the Classical Theory of Interest211

Jan Toporowski
Money, Power, and Capitalism: Marx’s Theory of Money and

the Contemporary State-Credit Standard229
Ramaa Vasudevan
Marx as Evolutionary and Some “Revisionist” Implications247

Samuel Hollander
Marx’s Ideas and Conceptions of Socialism in the Twenty-First

Century273
Tian Yu Cao
Marx’s Metaphysics of Human Labour in the Light of Sraffa:

Labour Theory of Value Reconsidered289
Ajit Sinha
Contents xvii
Marx’s Prescient Theory of Centralization of Capital: Crises

and an Nkrumahist Response319
Cynthia Lucas Hewitt
Petty Production and India’s Development345

Muhammad Ali Jan and Barbara Harriss-White
Index369
Notes on Contributors
Babak Amini is a PhD Candidate in Sociology at the London School of

Economics. He is the editor of The Radical Left in Europe in the Age of
Austerity (2016) and the co-editor of Routledge Handbook of Marx’s
Capital: A Global History of Translation (forthcoming).
Peter Beilharz is Professor of Critical Theory at Sichuan University,
China, and Professor of Culture and Society at Curtin University, Australia.
He is the author of Socialism and Modernity (2009), Circling Marx (forth-
coming), Alastair Davison—Gramsci in Australia (forthcoming) and
Working with Zygmunt Bauman (forthcoming).
Michael Brie is a senior fellow at the Institute for Critical Social Analysis
of the Rosa Luxemburg Stiftung, Berlin, Germany. He is the author of
Lenin neu entdecken. Zur Dialektik der Revolution und Metaphysik der
Herrschaft (2017) and Luxemburg neu entdecken. Freiheit für den Feind
(2019). He is the editor of Karl Polanyi in Dialogue. A Socialist Thinker
of Our Times (2017) and co-editor of Karl Polanyi’s Vision of a Socialist
Transformation (2018).
Tian Yu Cao is Professor of Philosophy at Boston University, USA. He is
the author of Power and Rationality: Marxism and Liberalism in the World
History (2016). He is the editor of Labor’s Property Rights and the China
Model (2006), The Social Democratic Trends in China’s Contemporary
Reform (2008), Culture and Social Transformations in Reform Era China
xix
xx NOTES ON CONTRIBUTORS
(2010) and Culture and Social Transformations—Theoretical Framework

and Chinese Context (2014).
Andrew J. Douglas is Associate Professor of Political Science at
Morehouse College, Atlanta, GA, USA. He is the author of In the Spirit
of Critique: Thinking Politically in the Dialectical Tradition (2013) and
W. E. B. Du Bois and the Critique of the Competitive Society (2019).
Shaibal Gupta is the founding Member Secretary of Asian Development
Research Institute in Patna, India. He is the author of Idea of the Hindi
Heartland (2014) and Idea of Bihar (2013). He is the co-editor of
Resurrection of the State—A Saga of Bihar: Essays in Memory of Papiya
Ghosh (2013).
Barbara Harriss-White is Emeritus Professor of Development Studies at
Oxford University, UK. She is the author of Rural Commercial Capital:
Agricultural Markets in West Bengal (2008) and Dalits and Adivasis in India’s
Business Economy (2014). She is the editor of The Comparative Political
Economy of Development: Africa and South Asia (2010), Mapping India’s
Capitalism: Old and New Regions (2015), Middle India and Urban-Rural
Development: Four Decades of Change (2016) and The Wild East: Criminal
Political Economies in South Asia (2019).
Cynthia Lucas Hewitt is Associate Professor of Sociology and Faculty of
the Sustainability Minor and the African American Studies Program at
Morehouse College, Atlanta, GA, USA. She is the author of The Nana
Ohemaas (“Queen Mothers”) of Ghana and Good Governance in Africa
(forthcoming).
Samuel Hollander is an Officer in the Order of Canada and University
Professor Emeritus at the University of Toronto, Canada. Among his
recent publications are The Economics of Karl Marx: Analysis and
Application (2008), Friedrich Engels and Marxian Political Economy
(2011), John Stuart Mill: Political Economist (2015) and A History of
Utilitarian Ethics: Studies in Individual Motivation and Distributive
Justice, 1700–1875 (2019).
Peter Hudis is Professor of Philosophy and Humanities at Oakton
Community College, Illinois, USA. His most recent works are Marx’s
Concept of the Alternative to Capitalism (2012) and Frantz Fanon,
Philosopher of the Barricades (2015). He is the co-editor of The Rosa
NOTES ON CONTRIBUTORS xxi
Luxemburg Reader (2004) and The Letters of Rosa Luxemburg (2011). He

currently serves as general editor of The Complete Works of Rosa Luxemburg.
Muhammad Ali Jan is a junior research fellow at Wolfson College,
University of Oxford, UK.
Marcello Musto is Associate Professor of Sociological Theory at York
University in Toronto, Canada. He is the author of Another Marx: Early
Manuscripts to the International (2018) and The Last Years of Karl Marx:
An Intellectual Biography (forthcoming). He is the editor of Karl Marx’s
Grundrisse: Foundations of the Critique of Political Economy 150 Years
Later (2008), Marx for Today (2012) and Workers Unite! The International
150 Years Later (2014); and the co-editor of Routledge Handbook of
Marx’s Capital: A Global History of Translation (forthcoming).
Paula Rauhala is a doctoral researcher at Tampere University, Finland.
Kohei Saito is Associate Professor of Political Economy at Osaka City
University in Osaka, Japan. He is the author of Karl Marx’s Ecosocialism:
Capital, Nature and the Unfinished Critique of Political Economy (2017).
He is the co-editor of Marx-Engels-Gesamtausgabe, vol. IV/18, Exzerpte
und Notizen: Februar 1864 bis Oktober 1868, November 1869, März, April,
Juni 1870, Dezember 1872 (with Teinosuke Otani and Timm Graßmann,
De Gruyter, 2019).
Ajit Sinha is Professor of Economics at Azim Premji University,
Bengaluru, India. He is the author of Theories of Value from Adam Smith
to Piero Sraffa (2010), A Revolution in Economic Theory: The Economics of
Piero Sraffa (2016) and Essays on Theories of Value in the Classical Tradition
(2019). He is the editor of A Reflection on a Revolution in Economic
Theory (forthcoming).
Jan Toporowski is Professor of Economics and Finance at SOAS
University of London, UK. He is the author of Why the World Economy
Needs a Financial Crash and Other Critical Essays on Finance and
Financial Economics (2010), Michał Kalecki: An Intellectual Biography
Volume I, Rendezvous in Cambridge 1899–1939 (2013) and Michał
Kalecki: An Intellectual Biography, Volume II: By Intellect Alone 1939–1970
(2018).
xxii NOTES ON CONTRIBUTORS
Ramaa Vasudevan is an associate professor at the Department of

Economics, Colorado State University, USA. She is the author of Things
Fall Apart: From the Crash of 2008 to the Great Slump (2013).
Miguel Vedda is a Full Professor of German Literature at the University
of Buenos Aires, Argentina, and Principal Investigator of the National
Scientific and Technical Research Council (CONICET). His recent publi-
cations include Siegfried Kracauer: Un pensador más allá de las fronteras
(2010), Urbane Beobachtungen: Walter Benjamin und die neuen Städte
(2010), La irrealidad de la desesperación: Estudios sobre Siegfried Kracauer
y Walter Benjamin (2011), Walter Benjamin: Experiência histórica e ima-
gens dialéticas (2015) and Leer a Goethe (2015).
List of Figures
Marx’ Research Project As a Future Science for Emancipatory

Action: A Delineation
Fig. 1 Marx’s concept of critique 67
Fig. 2 Marx’s prism of intervention 69
Fig. 3 Marx’s Capital as a process in the form of a spiral 73
Fig. 4 The reproductive relationship of capitalist societies 79

and an Nkrumahist Response
Fig. 1 The spiral of wage labour and capital 323
Fig. 2 Automated teller machines (ATMs) per 100,000 adults, 2015 331
Fig. 3 Mobile money accounts registered (MMAR) per 1000 adults,
2012333
Fig. 4 Mobile money accounts registered (MMAR) per 1000 adults,
2015333
Fig. 5 Linear growth in density of ATMs annually, from 2008, in
semi-periphery countries 335
Fig. 6 Growth in density of ATMs in year, linear and exponential
projections from 2008, in China 336
xxiii
List of Tables

and an Nkrumahist Response
Table 1 Foreign direct investment (FDI), net outflows (in millions)
five-year average, 2012–2016 326
Table 2 Foreign direct investment stocks, 2017 (2016) (in millions) 328
Table 3 World-systems status and IMF percentage of votes by country,
Top 30 329
Table 4 ATM machines per 1000 persons by world-system position 332
Table 5 ATM machines per 1000 persons by region 332
Table 6 Mobile money accounts registered (MMAR) per 1000 persons
by world-system position 334
Table 7 Mobile money accounts registered (MMAR) per 1000 persons
by region 334
xxv
PART I
On the Critique of Politics

Heinrich Heine and Marx As Essayists:
On the Genesis and the Function
of the Critic-Intellectuals
Miguel Vedda
I. On Genesis and Functions of the Intellectuals

These reflections could begin by referring to the words with which the Latin
American Marxist thinker José Carlos Mariátegui defines his particular
thought and writing style at the beginning of his most famous work: “None
[of these essays] is finished; they never will be as long as I live and think and
have something to add to what I have written, lived and thought. […] I am
not an impartial, objective critic. […] I am far removed from the academic
techniques of the university”.1 He commends the heuristic and aesthetic
value of what is provisional against that systematic philosophy which attempts
to conceal every trace of the bond with the living experience, under the
pretention of conclusion and closure. Georges Sorel, one of Mariátegui’s
1
José Carlos Mariátegui, Seven Interpretive Essays on Peruvian Reality, trans. Marjory
Urquidi (Texas: Texas University Press, 1971), 12.
M. Vedda (*)
University of Buenos Aires, Buenos Aires, Argentina
Scientific and Technical Research Council (CONICET), Buenos Aires, Argentina
© The Author(s) 2019 3

S. Gupta et al. (eds.), Karl Marx’s Life, Ideas, and Influences, Marx,
Engels, and Marxisms, https://doi.org/10.1007/978-3-030-24815-4_1
4 M. VEDDA
most celebrated models, shows a similar disposition in his methodological

considerations. In the letter to Daniel Halévy which precedes Reflections on
violence, the French thinker writes back to those who have objected to him
for abiding by writing style conventions and making readers uncomfortable
due to the untidiness of his expositions. Sorel smugly introduces himself not
as a professor or as a science reporter, but as an autodidact who publicly
exhibits the notebooks that have fuelled his own learning. He is not as inter-
ested in registering knowledge as he is in deleting the ideas imposed on him;
hence his method: “I put before my readers the product of a mental effort
which is endeavoring to break through the constraints of what has previ-
ously been constructed for common use and which seeks to discover what is
personal. […] I readily skip the points of transition because they nearly
always fall into the category of commonplaces”.2 You can say that ideas such
as Mariátegui’s and Sorel’s take us back to a particular historical and philo-
sophical context—the irrationalism of the beginning of the twentieth cen-
tury, whose most negative features we do not have to (nor can we) mention.
But we do not intend to pinpoint the conditions in which these ideas are
born; what we mean to point out today is the absence of positions such as
the aforementioned and, because of that, their validity.
What the foregoing authors highlight is the exploratory dimension of
Marxism, that which has been its method since the hour of its birth and
for each of its leading representatives. What is involved here is to promote,
in revolutionary thinking, an openness and a ductility which are not the
product of intellectual laziness; instead, they result from the proximity to
experience, from the attention to each of its realities and latencies and, at
the same time, from the rejection of dogmas and received ideas. This posi-
tion evinces the elective affinity between dialectical materialism and the
tradition of essayism, not only as a genre but also, and more importantly,
as a method of enquiry and even as an ethical and political stance towards
the world. The word used by Montaigne to refer to the tradition that he
himself starts, points at the direction we are discussing. The term suggests
that this type of writing is characterized by experimentation in a double
sense: on the one hand, it aims to be just a test, an experiment, an explora-
tion; on the other hand, its proximity to the concrete experience distin-
guishes it from the dogmatic abstraction of the treatise. The essayist, from
Georges Sorel, Reflections on Violence, ed. Jeremy Jennings (Cambridge: Cambridge

2
University Press, 1991), 328.

HEINRICH HEINE AND MARX AS ESSAYISTS: ON THE GENESIS… 5
the beginnings of the genre, is someone who only considers true those
judgements which he has formed out of his own experience or, at any rate,
those which match such experience. The scepticism towards received ideas
accounts for the development of a writing which, as Friedrich explains in
relation to Montaigne, “is not a subsequent addition to a finished result,
rather, it is an accompanying process of capturing his own process of
change”.3 The interest in the path, rather than the goal, is the expression
of a thought that escapes what is definitive and that appears to manifest
itself in the same moment in which it is wrought, as we have commented
in relation to Mariátegui.
The topic is relevant for us today because it helps, above all, to define
the possibilities and the limits of Marxism in Latin America. The revolu-
tionary thought in “Nuestra América” (Our America) was not directed
mainly towards the composition of systematic and comprehensive works,
due to the material conditions and the dominant traditions of thought, as
well as the institutional precariousness and the unstable conditions in
which Latin American intellectuals had to live. It managed, though, to
turn necessity into virtue, which explains the broad and fruitful produc-
tion of essays by Latin American Marxism. This corpus gathers, amongst its
outstanding representatives, not only “classic” writers such as Mariátegui,
Aníbal Ponce, Ernesto Guevara and Caio Prado Júnior, but also more
contemporary figures such as Carlos Nelson Coutinho, Antônio Candido,
David Viñas, León Rozitchner and Roberto Schwarz, to mention just a
few important names, some arbitrariness notwithstanding. A second rea-
son for the relevance of essay writing in Latin America is related to a cen-
tral question of our times: the problem of the genesis, the history, the
functions and the vanishing of the figure of the critic-Intellectual. In the
third place, the previously mentioned affinity between essayism and
Marxism is a fundamental feature in Marx’s work and the tradition of
thought and praxis he has started. Forsaking this essayist perspective has
had devastating effects on historical materialism.
Let’s start with the second point. A question that has remained unex-
plored is to what extent the genesis of the modern critic-Intellectual devel-
oped in the Paris of the Restoration period. One of the first outlines of
that model—if not the first one—emerges in the context of the dispute
between Ludwig Börne and Heinrich Heine, about what Enzensberger
3
Hugo Friedrich, Montaigne, trans. Dawn Eng (Berkeley: University of California Press,
1991), 328.
6 M. VEDDA
wrote: “[It] is possibly the controversy with the greatest consequences for
German literature. Their debate lasts one hundred and fifty years and no
ending in sight”.4 The essay “Ludwig Börne: A Memorial” (1840) is one
of the first and most challenging attempts to define the peculiarities and
the function of the modern intellectual. This figure is defined in contrast
with the model embodied by the author of Dramaturgical Pages. The
book about Börne was thought of as a livre maudit when it appeared.
Heine’s hostility towards the essayist from Frankfurt earned him much
scathing criticism from those who only perceived the argumentum ad
hominem but failed to reach the core of the book, which partly focused on
the confrontation between two intellectual models and two kinds of politi-
cal praxis. In the German-speaking intellectual stage, there was a notewor-
thy exception: Marx. At the beginning of April 1846, he wrote to Heine
about the “Börne debate” as follows:
A few days ago a short lampoon against you happened to fall into my
hands—posthumous letters of Börne’s. I should never have held him to be
so dull, petty and inept as it is possible to read here in black and white.
[…] I shall be writing a detailed review of your book on Börne for a
German periodical. A more clumsy treatment than that suffered by this
book at the hands of these Christian-Teutonic jackasses would be hard to
find in any period of literature, and yet there’s no lack of clumsiness in
period of Germany.5
The revision of the Heine/Börne controversy is one of Marx’s invaluable yet

unfulfilled projects. Part of what we will hereby say aims at clarifying where
the affinity between the revolutionary philosopher and the radical poet may
lie. The first aspect worth mentioning may be Heine’s inflamed essayism. In
the context of the debates with the untimely Jacobin Börne, Heine expressed
his conviction that the only reasonable option for the modern intellectual
could not mean embracing a doctrinaire Weltanschauung which had already
resolved all theoretical problems and should therefore be simply spread and
applied by his advocates. Instead, it should be an exploratory practice for
which there are no predetermined paths or goals. Located between the fronts,
the intellectual cannot find shelter in the aestheticist withdrawal or in the
comfort of a political doctrine, but rather in a search deprived of certainties,
4
Hans Magnus Enzensberger, “EditorischeNotiz,” in Ludwig Börne und Heinrich Heine.
Ein deutsches Zerwürfnis, ed. H. M. Enzensberger (Leipzig: Reclam, 1989), 385; when not
otherwise stated, the translations are mine.
5
Karl Marx, Capital, vol. III, in MECW (New York: International Publishers, 1998), 38.
which represents the only and genuine commitment to the wretched of the
earth. The typical tearing of Modernity demands that the intellectuals should
forsake their dogmatic certainties and uncertainties typical of the torn con-
sciousness. In the Pictures of Travel, Heine alluded to the meaning of this
homology between the fragmentation of the world and the inner fragmenta-
tion of the writer’s mood:
Ah dear reader, if you would complain of morbidness and want of harmony

and division, then as well complain that the world itself is divided. For, as
the heart of the poet is the central point of the world, it must, in times like
these, be miserably divided and torn. He who boasts that his heart has
remained whole, confesses that he has only a prosaic out-of-the-way corner-
heart. But the great world-wound passed through my own heart, and on
that account I know that the great Gods have highly blessed me above many
others, and held me to be worthy of a poet-martyrdom.6
Such an attitude allowed “torn” Heine to become the Urform of a central

figure of Modernity: that of the critic-Intellectual. It is known that for
Sartre the birth date of the modern intellectual is the last third of the nine-
teenth century, in the context of the agitation around the Dreyfus affair.
However, Gerhard Höhn well pointed out that “before ‘les intellectuels’
manifest themselves, there were already individual intellectuals”7 and that
the Paris of the Restoration had already offered the favourable grounds for
their emergence.8 The fact that, according to Sartre, the tearing (déchirure)
is a defining feature of the intellectual endorses Höhn’s proposal, espe-
cially if it is considered to what extent Heine felt torn apart between the
meticulous task of writing and the necessity to surpass the limits of his own
métier to commit to the reality of his time. It is telling that not only was
Heine the target of the conservative offensive due to his political radical-
ism, but he was also questioned by the revolutionaries who found his
respect for artistic perfection unacceptable. But Heine was also pestered
for not making his criticism serve one political party and for preserving his
6
Heinrich Heine, Pictures of Travel, trans. Charles Godfrey Leland, 8th revised ed.
(Philadelphia: Schaefer & Koradi, 1879), 312.
7
Gerhard Höhn, Heine-Handbuch. Zeit, Person, Werk (Stuttgart: Metzler, 1987), 67.
8
“Without having had to do a change of place, but with a clear chronological postpone-
ment, Paris 1832 and not Paris 1898 can be identified as the authentic hour of birth of the
modern intellectual—with the ‘contestation permanente’ of the old German society and with
the radical criticism of French modern society; with, in short, the Preface and the French
Conditions as documentary act” (Ibid., 31).
8 M. VEDDA
autonomy in terms of an independent intellectual.9 Heine anticipated one

of the dilemmas that the critic-Intellectual faced throughout the twentieth
century: the difficulty and the necessity to keep the independent individu-
al’s lucid stance and to affirm, nonetheless, a commitment to social reality.
Heine thus embodies the attempt to represent the role of the intellectual
who takes the risk of choosing their own ways forward by delineating his
own paths. It is not by chance that the German poet questioned the para-
lysing effect of the orthodoxies. Less enthusiastic than his republican or
conservative contemporaries, he feels attracted by scepticism; better still,
he feels dragged by a swinging movement between certainty and doubt,
action and thought, pathos and satire. Each of these extremes dialectically
contributes to relativize the abuses that the other may carry with it. This
problematic appears in the Börne book as an alternation between the revo-
lutionary ebb and flow, or between the zeal of empathy and the cold criti-
cal distance. Unable to examine the essential dialectics of the movement of
history, Börne is carried away in one direction or the other by the move-
ments produced on the surface of the agitated social life.
Heine introduces his rival as a subject imprisoned in the present, inca-
pable of looking beyond the closest visual field, in keeping with Börne’s
own identification with the model of the Zeitschriftsteller (the writer for
reviews). The description of the character suggests, at the beginning,
some shallowness and a rush that will become his constituent elements:
Börne comes into the room where Heine is reading and begins to walk to
and fro looking for, precisely, a newspaper. Years later, when Heine meets
him again in Paris, he notices that the writer has kept his interest in fleet-
ing phenomena, though the previous joviality has been replaced by resent-
ment and bigotry:
His skipping from one topic to another no longer arose from a mad
mood but from a moody madness, and was probably to be ascribed to the
variety of newspapers with which Börne at that time occupied himself day
and night. In the middle of one of his terroristic expectorations, he sud-
denly reached for one of the daily papers that lay strewn in front of him
in great heaps.10
9
According to Laube, Heine has made the following comment to him in the course of a con-
versation: “how can you expect […] that I should renounce to all that for the sake of the wisdom
of your party! I do not belong to any party, or only- he finished with a laugh—to my party”
(H. M. Enzensberger, ed., Ludwig Börne und Heinrich Heine. Ein deutsches Zerwürfnis, 109).
10
Heinrich Heine, Ludwig Börne: A Memorial, trans. Jeffrey L. Sammons (New York:
Camden House, 2006), 53.
Börne’s unexpected “jumping from a morose mood into a gay one”11

provides further evidence for the fact that the essayist is a subject who
swings between opposite positions, carried by zigzagging times. Börne,
however, ignores it and believes that he remains invariable and that it is
others who swing. The strategy which evinces Börne’s behaviour as child-
ish aims at highlighting the infantile feature of voluntarism: according to
Heine, this is an aesthetic or “political Sturm und Drang”, which should
be followed by a “mature” reflection, guided not so much by subjective
enthusiasm rather than by a definition of one’s own perspectives of action
based on a survey of the historical reality. This mode of reflection makes it
possible to relativize both activist optimism and depression into despon-
dency and melancholy, which tend to afflict the utopian when history does
not satisfy his whims.
Subjectivism hinders Börne’s sober enquiry into historical reality and
imposes limits on him at the level of artistic production: confined to the
confines of his environment, he disregards both the thoughtful consider-
ation of the object he is to shape and the technical means he is to use.
Fascination with the present paralyses the critic, who “had his eye only on
the present day, and the objects that occupied him all lay within his imme-
diate horizon. He spoke about the book that he just read, the event that
had just happened, Rothschild, whose house he passed every day”.12 Once
again, this attraction to what is close at hand appears as a feature of Börne’s
political or artistic personality. This short-sightedness leads to a paradox:
the subjectivist who wants to shape the world according to his own will is
also the clay which adopts the multiple shapes external influences impose
on him. In this regard, Heine states:
The objects with which Börne accidentally came into contact not only gave
his mind immediate occupation but also had a direct effect on his mental
mood, and his good or bad humor stood in direct connection to their
alternation. Like the sea from passing clouds, Börne’s soul took on its
respective coloration from the objects he encountered on his way.13
This malleability is a key to understanding Börne’s behaviour after the July

Revolution—his inflammation at the minor variation of the political cli-
mate and his tendency to allow agitators to invoke him and manipulate
11
Ibid., 73.
12
Ibid., 8–9.
13
Ibid., 13.
10 M. VEDDA
him like an effigy or a puppet in order to carry out their projects. It is as if

Börne’s extremely impressionable character, which has allowed him to
grasp the smallest variations of his contemporary reality, has also con-
demned him to a permanent swing and, eventually, to a shipwreck.
Imagery related to the sea and the seafarer pervade Heine’s essay. In his
letters from Helgoland, the sea is the image of history. Its ebb and flow
depend on laws which will be understood only by those who can think of
those movements free of hasty hopes and fears. As far as the sailor is con-
cerned, Börne is the reckless captain who exposes himself to the danger of
a shipwreck: haunted by the urgencies of the present, he lacks the freedom
to tackle what is beyond the current moment. Heine describes Börne’s
shipwreck as inevitable and confesses to being incapable of reaching out
his hand: “I could not grasp it; I could not abandon the precious cargo,
the sacred treasures entrusted to me, to certain destruction. I carried on
board my ship the gods of the future”.14
The restriction to current sociopolitical circumstances is connected
with an activism that made Börne more and more vulnerable to the opti-
mism of the will. The experimental essay writing of his early work started
to give way to an instrumental concept of literature. For him, the aesthetic
dimension remains behind the rhetorical will to transmit contents and
convince the reader—a concept in which doctrinaire features increasingly
prevail. This literary asceticism is coupled with that Nazarene austerity
which relates Börne to both the Jacobinism in Robespierre’s fashion and
the Christian mysticism of Lamennais. We know that among the distinc-
tive identity traits of the Jacobin ideology there are the postponement of
economic differentiations and the endowment of politics with exaggerated
importance.15 In keeping with this, Börne bestows less interest and
importance on material circumstances than he does on political institu-
tions, contrary to Heine. According to Hohendahl:
After the disappointing experience of the 1830 Revolution, Heine’s interest

moves onto economic problems, whereas Börne sticks to the model of the
French Revolution in 1789. It is not by chance that, from 1833 onwards,
Börne should be again concerned with the French Revolution and that he
Ibid., 25.
14
Leo Löwenthal, Das bürgerliche Bewußtsein in der Literatur (Frankfurt/M: Suhrkamp,

15
1990), 435.
submits historical bibliography to critical revision. Studying the French

Revolution is for Börne the path towards a model of a radical German
revolution.16
It is faith in the validity of Jacobin moralism that leads Börne to exert

violence on history, by trying to impose a possibility which is not present
in it. Unlike Börne, Heine believes that the possibilities of political inter-
vention can only be found within the historical process. In order to discover
them, it is necessary to look into the tendencies of the present that point
to the future. These conditions cannot be artificially created. Trying to
impose a historical change without paying attention to reality will only
lead to catastrophe. In his essay about Don Quixote (1836), Heine refers
to the risks of a political practice of such nature; voluntarism is presented
as a greater insanity than that of the hidalgo, who expected to revive a past
long expired:
Alas! I have found since that it is just as fruitless a form of folly to try to
bring the future too soon into the present, if in such an attack on the pon-
derous interest of the day one has only a very sorry jade, very rotten armour
and a body itself in as bad repair. The wise shake their sagacious heads as
much at one as at the other kind of Quixotism.17
In his Börne, Heine directs his criticism to those revolutionaries who can
only administer radical treatments whose effect is a steeper decline and, in
general, to those who want to produce a revolution without paying atten-
tion to historical conditions. At the end of chapter IV, there appears an
allegory of the revolution in the image of golden chains which hold the
Messiah down, since “without these fetters the Messiah, when he some-
times loses patience, would otherwise suddenly hurry down and under-
take the work of salvation too soon, in the wrong hour”.18 The idea is to
prevent a rush which would exert violence upon history from thwarting
the messianic liberation from all forms of oppression; hence the appeal for
16
Peter Uwe Hohendahl, “Kosmopolitischer Patriotismus. Ludwig Börne und die
Identität Deutschlands,” in ‘Die Kunst—eine Tochter der Zeit’. Neue Studien zu Ludwig
Börne, ed. Inge Rippmann and Wolfgang Labuhn (Bielefeld: Aisthesis, 1988), 183.
17
Heinrich Heine, “On Cervantes and the Don Quixote,” in Bloom’s Literary Themes: The
Grotesque, ed. Blake Hobby (New York: Infobase Publishing, 2009), 51.
18
Heine, Ludwig Börne, 103.
12 M. VEDDA
human emancipation to not be thwarted due to voluntarist zeal: “Oh,

despair not, handsome Messiah, who wants not only to save Israel, as the
superstitious Jews think, but all of suffering mankind! Oh, do not break
your golden chains! Oh, keep him bound for a time so that he does not
come too soon, the saving king of the world!”19 The doctrinaires tend to
believe that if historical and material facts do not match their own obses-
sions, so much worse for the facts. This accounts for Börne’s stubbornness
to introduce himself as an internally unitary personality, rooted in convic-
tions which can be encoded into fixed dogmas and spread as such. This
also explains his anger at Heine’s reluctance to ossify himself in a mono-
lithic intellectual sedentarism. In his first sketch of Ludwig Börne, Heine
thus defines his stance towards Jacobinist voluntarism and towards the
reactionaries:
We, the others, who are neither Jacobins nor Jesuits, want to keep the lie as
long as possible, since we cannot justify ourselves by means of the firmness
of our convictions. Many times we have doubts about ourselves. Any mental
draft moves our thoughts, roots in a sandy soil of school wisdom, as reeds in
the water. We do not find happiness in our beliefs; we would find less happi-
ness in martyrdom.20
Whereas Börne suffers from sclerotic moralism, Heine—as already said—

swings between pathos and satire. The latter intends to reveal contempo-
rary reality as a comedy and hints at dismantling all empathic identification
with reality, every attempt to endow it with tragic seriousness and gran-
deur. From this perspective, the controversy between Börne and Heine
reminds us of the opposition between the noble consciousness and the base
consciousness, as it is developed in the Phenomenology of Spirit, from an
analysis of Neveu de Rameau, by Diderot. We can recall that Hegel’s
conclusion is that the indecorous nephew is more in keeping with modern
times than the advocates of an uncorrupted morality. The bohemian is the
representative figure of a world in which wealth means everything, in
which the spirit feels like a pilgrim on earth and in which there exist the
“absolute and universal inversion and alienation of the actual world and of
Ibid., 104.
19
Heinrich Heine, “Erster Entwurf zu Ludwig Börne. Eine Denkschrift,” in Ludwig Börne
20
und Heinrich Heine. Ein deutsches Zerwürfnis, ed. H. M. Enzensberger (Leipzig: Reclam,
1989), 99.
thought”.21 In these conditions, the noble consciousness means depravity

and hypocrisy, while the base consciousness reaches a paradoxical probity:
“The language of this disrupted consciousness is, however, the perfect
language and the authentic existent Spirit of this entire world of culture”,22
in contrast with the apparently noble and essentially base language of
hypocrisy. Jean Hyppolite remarks that, in this passage of the treatise,
[t]he bohemian strips the veil off a world and a social system which have lost
their substantiveness, a world whose moments lack all stability. The con-
sciousness of this loss transforms action into a stage comedy and pure inten-
tions into hypocrisy. Ambition and the desire for money, the wish to master
power, these are the truth of this comedy.23
The torn consciousness sarcastically speaks the language of economy,

whereas the noble consciousness keeps on using the language of an anach-
ronistic moralism. This explains why Rameau, in Hegel’s view, not only
embodies a historical period but also symbolizes progress in the light of
the philosopher’s conservative perspective.24 Marx acknowledged the
depth of this analysis and in a letter to Engels on April 15, 1869, he
referred to both the importance of the novel and the comments of Hegel.
II. The Method of Essayism in Karl Marx

So far, we have barely talked about Marx. Nevertheless, the foregoing
comments hint at him since he is one of the most outstanding figures in
that first generation of critic-Intellectuals who made use of the essay as an
eminent form. Marx is, in fact, one of the major nineteenth-century
German essayists. This does not mean that the German revolutionary was
not a great philosopher or a brilliant scientist; we simply highlight, on the
21
Georg Wilhelm Friedrich Hegel, Phenomenology of the Spirit, trans. A. V. Miller (Oxford,
New York, Toronto, and Melbourne: Oxford University Press, 1977), 316.
22
Ibid.
23
Jean Hyppolite, Genesis and Structure of Hegel’s Phenomenology of Spirit, trans. Samuel
Cherniak and John Heckman (Evanston, IL: Northwestern University Press, 1974), 412.
24
“The consciousness that is aware of its disruption and openly declares it, derides exis-
tence and the universal confusion, and derides its own self as well; it is at the same time the
fading, but still audible, sound of all this confusion. This vanity of all reality and every defi-
nite Notion, vanity which knows itself to be such, is the double reflection of the real world
into itself: once in this particular self of consciousness qua particular, and again in the pure
universality of consciousness, or in thought” (Hegel, Phenomenology of the Spirit, 319–20).
14 M. VEDDA
one hand, that among Marx’s talents there was also his capacity to write
essays argumentatively acute, aesthetically remarkable and stirring. On the
other hand, as we have anticipated, essayism is for him a methodology and,
further, a way of relating to the world. It is suggestive that one of the first
and major attempts to understand these questions was born in Latin
America. We are making reference to the study by Ludovico Silva; the
Venezuelan thinker discovers in Marx a technique we have identified as a
feature of the essay as a form—the development of a type of writing that is
not closed beforehand but seems to form itself at the very moment
of writing:
It is typical for great thinkers who are at the same time great stylists to
present their work not as the result of previous thoughts, but as the process
or the very act of thinking. The reader thus attends an uninterrupted birth
and profits from it since, instead of being forced to digest hardened
thoughts, he is moved to think, to rethink, to recreate the very act of theo-
retical discoveries.25
As an essayist, Marx was capable of using a multiplicity of styles and regis-

ters. In all of them excels his resolution to break with pre-established
forms. Manifesto of the Communist Party offers a typical example. As it is
known, the first version written by Engels—The Principles of Communism—
was composed as a catechism articulated upon questions and answers, as it
was usual in his time. The Manifesto, whose writing only corresponds to
Marx, abides by the demand Engels issued on November 23–24, 1847
(“Give a little thought to the Confession of Faith. I think we would do
best to abandon the catechetical form”).26 The text thus rids itself of a
tradition of scholastic socialism in a brilliant way. The style, the aesthetic
and rhetorical structure of the Manifesto, the rich imagery, the effective
use of satire and irony are such defining features of this essay as the demands
it puts forward to the reading public of its time. Readers do not find a set
of conclusive answers but an invitation to delve, like explorers, into terra
incognita. Marx’s obsession to learn from reality is an authentic essayistic
gesture. It would be worth highlighting in Marx, as Lukács has done in
Balzac, his scrupulous attention to “the structure of objective reality
whose wealth we can never adequately grasp and reflect with our ever all
25
Ludovico Silva, El estilo literario de Marx, 2nd ed. (Mexico: Siglo XXI, 1975), 6.
26
Marx, Capital, vol. III, 149.
too abstract, all too rigid, all too direct, all too unilateral thinking”.27 The
struggle against prevailing idealism, especially in the 1840s, is a fight
against the logicist attempts to exert violence upon reality by subduing it
to a priori rigid moulds, instead of paying attention to its complex and
varied dialectics. What annoys Marx, above all, is Bruno Bauer’s, Széliga’s
or Proudhon’s obstinate expectation for the natural and social world to be
kind enough to adapt themselves to their abstract schemes inspired by Hegel.
This attention is related to Marx’s unwavering hatred against everything
that is petrified. One of the most prominent expressions of such hatred in
the Manifesto is the acclaimed passage which celebrates the outbreak of the
bourgeois era, in spite of its ill-fated aspects, because in that period “[a]ll
fixed, fast-frozen relations, with their train of ancient and venerable preju-
dices and opinions, are swept away, all new-formed ones become anti-
quated before they can ossify. All that is solid melts into air, all that is holy
is profaned”.28 Just like Heine, Marx wanted to rescue Germany from the
inertia during the Restoration period. Apart from these specific circum-
stances, his attitude describes the philosopher’s fundamental stance. In
addition, liberating historical reality from the spell that captivates it is valid,
according to Marx, in so far as this liberation does not mean imposing on
such reality a course of action which is alien to it. This liberation means
paying scrupulous attention to the latent elements in the core of reality.
Young Marx refers to this in his well-known statement: “these petrified
relations must [be] force[d] to dance by singing their own tune to them”.29
Marx’s basic idea is that the transformation of the world does not call for
the imposition of an external idea, but the liberation of the potentialities
that remain locked in the world. Unknowingly, Walter Benjamin recovers
this principle in the thesis On the Concept of History when he celebrates
Saint-Simon’s conception of labour which, “far from exploiting nature,
would help her give birth to the creations that now lie dormant in her
womb”.30 The essence of this method can be summarized in Michelangelo’s
27
György Lukács, “Balzac: Lost Illusions,” in Studies in European Realism, trans. Edith
Bone (New York: Grosset & Dunlap, 1964), 58.
28
Karl Marx and Friedrich Engels, Manifesto of the Communist Party, in MECW (New
York: International Publishers, 1976), 6: 514.
29
Karl Marx, “A Contribution to the Critique of Hegel’s ‘Philosophy of Right’.
Introduction,” in MECW (New York: International Publishers, 1975), 3: 178.
30
Walter Benjamin, “On the Concept of History,” in Selected Writings. Vol. 4, trans.
Edmund Jephcott et al. (Cambridge, MA and London: The Belknap Press of Harvard
16 M. VEDDA
verses, which Lukács took pleasure in paraphrasing: “The greatest sculptor

can no thought conceive/That doth not lie deep buried in stone”.31
In very different periods, Marx frequently condemns subjective vio-
lence, harshly questioned by Heine as well in relation to Börne and his
followers and contested by the allegory of the chained Messiah. It is pres-
ent in his literary discussions. In his analysis of Mystères de Paris, Marx
finds it annoying how the author manipulates his materials instead of
examining their latencies. Sue is carried away by the temptation to reduce
his characters to automata, subservient to the author’s abstract concep-
tions. His novel gains some vitality when its characters manage not to
subdue to the author’s spiritualist ethics. Along these lines, Lukács states
that a great writer’s learning from reality is expressed as long as he “locks
himself with his characters; he lives life according to their own rules of
movement—not his desires; he learns from them, he accepts their
destiny”.32 This criticism against aesthetic voluntarism also plays a major
role in the “Sickingen-Debate”, since it establishes a relation with the con-
cept of the theorist and the revolutionary leader. What Marx and Engels
deplore in Lassalle’s writing is, on the one hand, the fact that he is driven
by his subjective idealism and reduces his characters to mere spokesper-
sons of their Zeitgeist. On the other hand, Lassalle deems the revolution a
process which unfolds mainly in the revolutionary leader’s mind; the cor-
ruption of the revolutions is that of the leader’s thought, who becomes a
Realpolitiker. Subjectivism prevents Lassalle (as a writer, as a revolutionary
leader) from examining historical reality, to learn from reality. Against the
manipulative artistic praxis which as such ruins the object and hinders the
development of the creator’s essential forces, Marx introduces that activity
through which “man knows how to produce in accordance with the
standard of every species, and knows how to apply everywhere the inher-
ent standard to the object. Man, therefore, also forms things in accor-
dance with the laws of beauty”.33
It is conspicuous how close these positions are to Heine’s in his contro-
versy with Börne, Ludwig; as conspicuous as the distance Marx stays at
from those intellectuals who stick to the surface of social life without
31
Michelangelo Buonarotti, The Sonnets, trans. S. Elizabeth Hall (London: Kegan Paul,
Trench, Trübner & Co., Ltd., 1905), 99.
32
György Lukács, Moskauer Schriften. Zur Literaturtheorie und Literaturpolitik 1934–1940,
ed. Frank Benseler (Frankfurt/M: Sendler, 1981), 133.
33
Karl Marx, “Economic and Philosophic Manuscripts of 1844,” in MECW (New York:
International Publishers, 1975), 3: 277.
examining its laws. Marx was aware of the fact that the downside of the
phenomenological closeness to the world of the nineteenth-century essay-
ist’s own life was the danger of remaining attached to immediacy, to the
hectic surface of appearances. Marx shared with Hegel the conviction that
it is necessary to focus on die Ruhe des Wesens—the calm of the essence,
that is, the principles that lie on the base of apparent phenomena and are,
thus, less visible. As we have seen, Heine addresses his criticism towards
Zeitschriftsteller such as Börne, and his shallow perspective. The search for
what is essential behind the shaken circumstances is a feature that charac-
terizes Marx and distinguishes Heine from his contemporaries’ perpetual
swing between extreme optimism and extreme hopelessness; let’s remem-
ber once again his criticism against Börne. Old Lukács has well contrasted
young Marx’s dispositions with Ruge’s pessimism, with the “Hölderlin-
Stimmung” of the desperate intellectuals of the Vormärz. In his 1925
study about Lassalle’s letters, Lukács already referred to the depressions,
which sometimes “reached such an intensity that he wished to withdraw
completely from the movement. It cannot be decided, of course, to what
an extent such wishes would have been translated in action. […] What we
can say is that Marx, Bebel and Lenin (to pick out three completely differ-
ent personalities of the opposite type) never knew such moods at all”.34
Marx’s objectivity is in keeping with a feature that has essentially distin-
guished all the great essayists: the resistance to accept worshipped authori-
ties and received ideas without questioning them. The word critique,
which is present in so many titles of Marx’s work, defines his stance as
regards his preceding traditions. Unlike many of his young fellows, Marx
never was a Young Hegelian. This also accounts for his relationship with
Feuerbach or with the political economists. His attitude is different from
Engels’, who was much more prone to a receptive attitude towards other
thinkers and who, when young, blindly worshipped Ludwig Börne. In his
well-known essay “Of the Education of Children”, Montaigne expressed
his desire to turn essay writing into the base of the education of men:
I had a private interview at Pisa with an honest man, but so great an

Aristotelian, that his general thesis was: “That the touchstone and standard of
all solid imaginations, and of all truths, was their conformity to the doctrine
34
György Lukács, “The New Edition of Lassalle’s Letters,” in Tactics and Ethics. Political
Writings 1919–1929, trans. Michael McColgan, ed. Rodney Livingstone (New York, etc.:
Harper & Row, 1972), 161.
18 M. VEDDA
of Aristotle; that all besides was vain and chimerical; for that he had seen all,
and said all”. […]
Let the tutor make his pupil thoroughly sift everything he reads, and
lodge nothing in his fancy upon mere authority. Let the principles of
Aristotle be no more principles to him than those of the Stoics or Epicureans,
only let this diversity of opinions be laid before him; he will himself choose,
if he be able; if not, he will remain in doubt: “Che non men the saver, dub-
biar m’aggrata” [“I love to doubt, as well as to know”—Dante, Inferno, xi.
93]. For, if he embrace the opinions of Xenophon and Plato, by his own
discourse, they will no longer be theirs, but his. He that follows another,
follows nothing, finds nothing, nay, does not seek for anything.35
Undoubtedly, Marx would have endorsed these propositions, which are

vividly embodied in his writings: for him, truth did not lie in the writing
of a thinker, but in the free exploration of a living reality. One could not
imagine a starker contrast than that between the founder of Marxism and
many of his so-called disciples. We started this article with an allusion to a
Latin American thinker; we will finish by referring to another one: in his
aforementioned study about Marx’s literary style, Silva highlights that in
the core of the attack to Proudhon there lies the conviction that such work
is no more than an attempt to subdue history to Hegelian categories.
According to Marx, the mistake Proudhon made is the same “grave mis-
take that inspectors-philosophers in Marxism make today. They behave as
the Pretorian Guard in relation to the ‘three laws of dialectics’ and turn
Marx into the most frenzied Hegelian idealist. […] For Marx, dialectics
was not a logic[al] method strictly speaking; it was a historical method.
For a method to be formally correct, emptiness is its first condition; but
Marx was fully interested in history, its multiple concretion”.36 There
might not be a more appropriate way to describe Marx’s essayism.
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lated by Edmund Jephcott et al., 389–411. Cambridge, MA and London: The
Belknap Press of Harvard University Press, 2002.
Buonarotti, Michelangelo. The Sonnets. Translated by S. Elizabeth Hall. London:
Kegan Paul, Trench, Trübner & Co., Ltd., 1905.
35
Michel de Montaigne, Essays, trans. Peter Coste (London: C. Baldwin, 1981), 169–70.
36
Silva, El estilo literario de Marx, 40.
Enzensberger, Hans Magnus. “Editorische Notiz”. In Ludwig Börne und Heinrich

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Leipzig: Reclam, 1989.
Friedrich, Hugo. Montaigne. Translated by Dawn Eng. Edited by Philippe Desan.
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Heine, Heinrich. Pictures of Travel. Translated by Charles Godfrey Leland. 8th
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by Marjory Urquidi. Texas: Texas University Press, 1971.
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229–347. New York: International Publishers, 1975b.
20 M. VEDDA
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International Publishers, 1998.
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6. 477–519. New York: International Publishers, 1976.
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Cambridge University Press, 1991.
Marx’s Critique of German Social
Democracy: From the International
to the Political Struggles of the 1870s
Marcello Musto
I. The Limited Participation of the Germans

in the International Working Men’s Association
The workers’ organizations that founded the International Working Men’s
Association in 1864 were something of a motley. The central driving
forces were British trade unionism and the mutualists, long dominant in
France but strong also in Belgium and French-speaking Switzerland.
Alongside these two components, there were the communists, grouped
around the figure of Karl Marx, elements that had nothing to do with the
socialist tradition, such as the followers of Giuseppe Mazzini, and some
groups of French, Belgian and Swiss workers who joined the International
with a variety of confused theories, some of a utopian inspiration. The
General Association of German Workers—the party led by followers of
Ferdinand Lassalle—never affiliated to the International but orbited
around it. This organization was hostile to trade unionism and conceived
of political action in rigidly national terms.
M. Musto (*)
Department of Sociology, York University, Toronto, ON, Canada

22 M. MUSTO
In 1865, the International expanded in Europe and established its first

important nuclei in Belgium and French-speaking Switzerland. The
Prussian Combination Laws, which prevented German political associa-
tions from having regular contacts with organizations in other countries,
meant that the International was unable to open sections in what was then
the German Confederation. The General Association of German
Workers—the first workers’ party in history,1 founded in 1863 and led by
Lassalle’s disciple Johann Baptist von Schweitzer—followed a line of
ambivalent dialogue with Otto von Bismarck and showed little or no
interest in the International during the early years of its existence. It was
an indifference shared by Wilhelm Liebknecht, despite his political prox-
imity to Marx. Johann Philipp Becker tried to find a way around these
difficulties through the Geneva-based “Group of German-speaking
Sections”.
While Liebknecht did not understand the centrality of the international
dimension for the struggle of the workers’ movement, Marx also had deep
theoretical and political differences with von Schweitzer. In February
1865 he wrote to the latter that “the aid of the Royal Prussian govern-
ment for co-operative societies”, which the Lassalleans welcomed, was
“worthless as an economic measure, whilst, at the same time, it serve[d]
to extend the system of tutelage, corrupt part of the working class and
emasculate the movement”. Marx went on to reject any possibility of an
alliance between the workers and the monarchy:
Just as the bourgeois party in Prussia discredited itself and brought about its
present wretched situation by seriously believing that with the “New Era”
the government had fallen into its lap by the grace of the Prince Regent, so
the workers’ party will discredit itself even more if it imagines that the
Bismarck era or any other Prussian era will make the golden apples just drop
into its mouth, by grace of the king. It is beyond all question that Lassalle’s
ill-starred illusion that a Prussian government might intervene with socialist
measures will be crowned with disappointment. The logic of circumstances
will tell. But the honour of the workers’ party requires that it reject such
illusions, even before their hollowness is punctured by experience. The
working class is revolutionary or it is nothing.2
At this time, the German party had about 5000 members.
1
Karl Marx to Johann Baptist von Schweitzer, 13 February 1865, quoted in Karl Marx,
2
“Marx to Engels, 18 February 1865,” in MECW (New York: International Publishers,

1987), 42: 96.
MARX’S CRITIQUE OF GERMAN SOCIAL DEMOCRACY… 23
The critique of state socialism was a common theme in Marx’s political

reflections during that period. A few days after the letter to Schweitzer, he
suggested to Engels that the position of the Lassalleans in Germany was
akin to the “alliance of the ‘proletariat’ with the ‘government’ against the
‘liberal bourgeoisie’” which the two of them had firmly opposed in 1847.3
Marx’s critique to the policy of German social democracy continued in
1866. In the Instructions for Delegates of the Provisional General Council,
prepared for the Geneva congress, Marx underlined the basic function of
trade unions against which not only the mutualists but also certain follow-
ers of Robert Owen in Britain and of Lassalle in Germany had taken a
stand. Lassalle advocated the concept of an “iron law of wages”, which
held that efforts to increase wages were futile and a distraction for workers
from the primary task of assuming political power in the state. Marx wrote:
This activity of the Trades’ Unions is not only legitimate, it is necessary. It

cannot be dispensed with so long as the present system of production lasts.
On the contrary, it must be generalized by the formation and the combina-
tion of Trades’ Unions throughout all countries. On the other hand, uncon-
sciously to themselves, the Trades’ Unions were forming centres of
organization of the working class, as the mediaeval municipalities and com-
munes did for the middle class. If the Trades’ Unions are required for the
guerrilla fights between capital and labour, they are still more important as
organized agencies for superseding the very system of wages labour and
capital rule.
In the same document, Marx did not spare the existing unions his criti-
cism. For they were “too exclusively bent upon the local and immediate
struggles with capital [and had] not yet fully understood their power of
acting against the system of wages slavery itself. They therefore kept too
much aloof from general social and political movements”.4
In September 1868, Marx returned to the question of state socialism.
In a letter to Engels, he suggested that what von Schweitzer had described
the previous month in Hamburg at the congress of the General Association
of German Workers as the “summa of Lassalle’s discoveries”—that is, state
credit for the foundation of productive associations—was “literally copied
3
Karl Marx, “Marx to Engels, 18 February 1865,” in MECW (New York: International
Publishers, 1987), 42: 97.
4
Karl Marx, “Resolutions of the Geneva Congress (1866),” in Workers Unite! The
International after 150 Years, ed. Marcello Musto (London: Bloomsbury, 2014), 86.
24 M. MUSTO
from the programme of French Catholic socialism”, inspired by Philip

Buchez, which went back to “the days of Louis-Philippe”.5
Instead, strong opposition to the government would have been good
for the social struggle: “The most essential thing for the German working
class is that it should cease to agitate by permission of the high govern-
ment authorities. Such a bureaucratically schooled race must undergo a
complete course of ‘self help’.”6
In a letter to Schweitzer, Marx set out at greater length his differences
with the Lassallean tendency. The first question was his opposition to the
strategy of “state aid versus self-help”, which Buchez, the leader of
Catholic socialism, had used against the genuine workers’ movement in
France, and on the basis of which Lassalle himself had later made “conces-
sions to the Prussian monarchy, to Prussian reaction (the feudal party)
and even to the clericals”. For Marx, it was essential that the workers’
struggle should be free and independent. “The main thing is to teach [the
worker] to walk by himself”, especially in Germany, where “he is regu-
lated bureaucratically from childhood onwards” and believes in the
authority of superiors.
The other significant area of disagreement was the theoretical and
political rigidity of Lassalle and his followers. Marx criticized the comrade
with whom he had been in touch for many years, on the grounds that “like
everyone who claims to have in his pocket a panacea for the sufferings of
the masses, [Lassalle] gave his agitation, from the very start, a religious,
sectarian character”, and, being the founder of a sect, “he denied all natu-
ral connection with the earlier movement, both in Germany and abroad”.
Lassalle was guilty of the same error as Proudhon—that of “not seeking
the real basis of his agitation in the actual elements of the class movement,
but of wishing, instead, to prescribe for that movement a course deter-
mined by a certain doctrinaire recipe”. For Marx, any “sect seeks its raison
d’être and its point d’honneur not in what it has in common with the class
5
Karl Marx, “Marx to Engels, 19 September 1868,” in MECW (New York: International
Publishers, 1988), 43: 105.
6
Karl Marx, “Marx to Engels, 26 September 1868,” ibid., 115. Although he declined an
invitation to the Hamburg congress, Marx nevertheless found some signs of progress. To
Engels he remarked: “I was glad to see that the starting points of any ‘serious’ workers’
movement—agitation for complete political freedom, regulation of the working day and
international co-operation of the working class—were emphasised in their programme for
the congress. […] [I]n other words, I congratulated them on having abandoned Lassalle’s
programme”, Karl Marx, “Marx to Friedrich Engels, 26 August 1868,” ibid., 89–90.
movement, but in the particular shibboleth distinguishing it from that

movement”.7 His opposition to that kind of politics could not have
been clearer.8
In the fight against state socialism, Marx also took issue with Liebknecht.
After one of his speeches in the Reichstag in summer 1869, Marx com-
mented to Engels: “The brute believes in the future ‘state of democracy’!
Secretly that means sometimes constitutional England, sometimes the
bourgeois United States, sometimes wretched Switzerland. He has no
conception of revolutionary politics.”9
What disappointed Marx most was that in the North German
Confederation, despite the existence of two political organizations of the
workers’ movement—the Lassallean General Association of German
Workers and the Marxist Social Democratic Workers’ Party of Germany—
there was little enthusiasm for the International and few requests to affiliate
to it. During its first three years, German militants virtually ignored its exis-
tence, fearing persecution at the hands of the authorities. The weak interna-
tionalism of the Germans ultimately weighed more heavily than any legal
aspects, however, and declined still further when the movement became
more preoccupied with internal matters.10
The unification of Germany in 1871 confirmed the onset of a new age
in which the nation state would be the central form of political, legal and
territorial identity. This placed a question mark over any supranational
body that required its members to surrender a sizeable share of their polit-
ical leadership. At the same time, the growing differences between national
movements and organizations made it extremely difficult for the General
Council of the International to produce a political synthesis capable of
satisfying the demands of all. Anyway, after the end of the International, in
September 1872,11 Marx continued to criticize the path of German Social
Democracy any time he had a chance.
7
Karl Marx, “Marx to Johann Baptist von Schweitzer, 13 October 1868,” ibid., 133–5.
The actual letter has been lost, but fortunately Marx preserved his draft.
8
Cf. also Marcello Musto, Another Marx: Early Writings to the International (London:
Bloomsbury, 2018), esp. chapters 7, 8 and 9.
9
Karl Marx, “Marx to Engels, 10 August 1869,” in MECW (New York: International
Publishers, 1988), 43: 343.
10
Cf. Jacques Freymond, ed., Études et documents sur la Première Internationale en Suisse
(Geneva: Droz, 1964), x.
11
Cf. Marcello Musto, “Introduction,” in Workers Unite!, esp. 42–51.
26 M. MUSTO
II. Against the “Gotha Programme” and the Social

Democratic Deviation
At the end of 1874, Marx learned from the papers that the General
Association of German Workers, founded by Ferdinand Lassalle, and the
Social Democratic Workers’ Party, linked to Marx, intended to unite into
a single political force. Marx and Engels were not consulted about the
merits of the project, and it was only in March that they received the draft
programme of the new party.12 Engels then wrote to August Bebel that he
could not “forgive his not having told us a single word about the whole
business”,13 and he warned that he and Marx could “never give [their]
allegiance to a new party” set up on the basis of Lassallean state social-
ism.14 Despite this sharp declaration, the leaders who had been active in
building what would become the Socialist Workers’ Party of Germany
(SAPD) did not change their positions.
Marx therefore felt obliged to write a long critique of the draft pro-
gramme for the unification congress to be held on 22 May 1875 in the city
of Gotha. In the letter accompanying his text, he recognized that “every
step of real movement is more important than a dozen programmes”.15
But in the case of “programmes of principles”, they had to be written with
great care, since they set “benchmarks for all the world to … gauge how
far the party [has] progressed”.16 In the Critique of the Gotha Programme
(1875), Marx inveighed against the numerous imprecisions and mistakes
in the new manifesto drafted in Germany. For example, in criticizing the
concept of “fair distribution”, he asked polemically: “Do not the bour-
geois assert that present-day distribution is ‘fair’? And is it not, in fact, the
only ‘fair’ distribution on the basis of the present-day mode of
production?”17 In his view, the political demand to be inserted into the
programme was not Lassalle’s “undiminished proceeds of labour”18 for
every worker, but the transformation of the mode of production. Marx
12
Frederick Engels, “Engels to August Bebel, 18–28 March 1875,” in MECW (New York:
International Publishers, 1991), 60.
13
Ibid., 66.
14
Ibid., 64.
15
Karl Marx, “Marx to Wilhelm Bracke, 5 May 1875,” in MECW (New York: International
Publishers, 1991), 70.
16
Ibid.
17
Karl Marx, Critique of the Gotha Programme, in MECW (New York: International
Publishers, 1989), 24, 84.
18
Ibid.
explained, with his customary rigour, that Lassalle “did not know what
wages were”. Following bourgeois economists, he “took the appearance
for the essence of the matter”. Marx explained:
Wages are not what they appear to be, namely the value, or price, of
labour, but only a masked form for the value, or price, of labour power.
Thereby the whole bourgeois conception of wages hitherto, as well as all
the criticism hitherto directed against this conception, was thrown over-
board once for all and it was made clear that the wage-worker has permis-
sion to work for his own subsistence, that is, to live only insofar as he
works for a certain time gratis for the capitalist (and hence also for the
latter’s co-consumers of surplus value); that the whole capitalist system of
production turns on increasing this gratis labour by extending the work-
ing day or by developing productivity, that is, increasing the intensity of
labour power, etc.; that, consequently, the system of wage labour is a sys-
tem of slavery, and indeed of a slavery which becomes more severe in
proportion as the social productive forces of labour develop, whether the
worker receives better or worse payment.19
Another controversial point concerned the role of the state. Marx

maintained that capitalism could be overthrown only through the “revo-
lutionary transformation of society”. The Lassalleans held that “socialist
organization of the total labour arises from the state aid that the state gives
to the producers’ co-operative societies which the state, not the worker,
calls into being”.20 For Marx, however, “cooperative societies [were] of
value only insofar as they [were] the independent creations of the workers
and not protégés either of governments or of the bourgeois”21; the idea
“that with state loans one can build a new society just as well as a new
railway” was typical of Lassalle’s theoretical ambiguities.22
All in all, Marx observed that the political manifesto for the fusion con-
gress showed that socialist ideas were having a hard time penetrating the
German workers’ organizations. In keeping with his early convictions,23 he
19
Ibid., 92.
20
Ibid., 93.
21
Ibid., 94.
22
Ibid., 93.
23
See Karl Marx, “Contribution to the Critique of Hegel’s Philosophy of Law,” in MECW
(New York: International Publishers, 1975), 3, where he writes, concerning “the antithesis
of state and civil society”, that “the state does not reside in, but outside civil society” (ibid.,
49). “In democracy, the state as particular is merely particular. The French have recently
28 M. MUSTO
emphasized that it was wrong on their part to treat “the state as an inde-
pendent entity that possesses its own intellectual, ethical and libertarian
bases”, instead of “treating existing society as … the basis of the existing
state”.24 By contrast, Wilhelm Liebknecht and other German socialist
leaders defended their tactical decision to compromise on the programme,
on the grounds that this was necessary to achieve a unified party.25 Once
again, Marx had to face up to the great difference between choices made
in Berlin and in London; he had already remarked on it in relation to the
scant involvement of German organizations in the International Working
Men’s Association.26
During the spring of 1875, Marx continued working on the studies he
needed for some outstanding sections of Capital. At the same time, he
reworked parts of Johann Most’s popular compilation of extracts from
Volume I, with a view to the printing of a second edition.27 Between mid-May
interpreted this as meaning that in true democracy the state is annihilated. This is correct
insofar as the political state … no longer passes for the whole” (ibid., 30).
24
Marx, Critique of the Gotha Programme, 94.
25
In the calmer waters of 1877, Engels returned to the argument in a letter to Liebknecht:
“The moral and intellectual decline of the party dates from the unification and could have
been avoided had a little more caution and intelligence been shown at the time” (Frederick
Engels “Engels to Wilhelm Liebknecht, 31 July 1877,” in MECW (New York: International
Publishers, 1991), 45, 257). Years later, Liebknecht recalled that “Marx, who could not
survey the condition of things from abroad as well as we in Germany, would not hear of such
concessions.” And he claimed: “That I did not make a wrong calculation in this respect has
been brilliantly demonstrated by the consequences and the successes.” In McLellan, Karl
Marx: Interviews and Recollections (New York: Barnes & Noble, 1981), 48.
26
After the printing of the programme ratified at Gotha, Engels noted that “not a single
critical text” appeared in “the bourgeois press”. Had there been one, it might have noted
“the contradictions and economic howlers … and exposed … [the] party to the most dread-
ful ridicule. Instead of that the jackasses on the bourgeois papers have taken this programme
perfectly seriously, reading into it what isn’t there and interpreting it communistically”. He
went on to stress that “the workers [were] apparently doing the same” and that this had
“made it possible for Marx and himself not to disassociate [themselves] publicly from the
programme” (Frederick Engels, “Engels to August Bebel, 12 October 1875,” in MECW
(New York: International Publishers, 1991), 45: 98). Marx’s Critique of the Gotha Programme
was published only in 1891, the year in which the Erfurt programme, much closer to his own
principles, was adopted. Cf. Boris Nicolaevsky and Otto Maenchen Helfen, Karl Marx—
Man and Fighter (London: Methuen, 1936), 376, who argued: “The split, which Marx
regarded as inevitable, [did not] occur. The Party remained united, and in 1891, at Erfurt,
adopted a pure Marxist programme.”
27
Johann Most, Kapital und Arbeit: Ein Populärer Auszug aus “Das Kapital” von Karl
Marx (Chemnitz: G. Rübner, n.d. [1873]). The second edition came out in 1876.
and mid-August, he composed another manuscript for Volume III, “The

Relationship between Rate of Surplus-Value and Rate of Profit Developed
Mathematically” (1875),28 and in September he was animated once again by
the desire to progress as much as possible in his writing of Capital, Volume II.
In the early months of 1876, having received new books and publica-
tions with statistics about Russia, Marx engaged in further systematic
research into the social-economic changes taking place there. His study, in
1870, of The Situation of the Working Class in Russia (1869)—a work by
the economist and sociologist Vassilii Vassilievich Bervi, known by the pen
name N. Flerovsky—had also given him the political motivation to delve
deeper into the reality of the country.29 Marx’s reading in the mid-1870s
also included a little book entitled Revolutionary Conservatism (1875) by
the Slavophile thinkers Yuri Samarin and Fyodor Dmitriev, and several
volumes of the Proceedings of the Tributary Commission from 1872 to 1873.
During this period, there were significantly less social struggles and
Marx, whenever his health allowed, dedicated himself to new theoretical
questions. He took the opportunity to expand his range of interests to
areas he had little explored before. In the spring, he turned his attention
to physiology, both botanical and human. In addition, he planned to read
new books on subjects of major interest such as agronomy, landownership
and credit, again after he had finished his studies for the completion
of Capital.
From the middle of March, Marx returned to his research on forms of
collective property. Among the texts he summarized by the end of the year
were the very important History of the Village Order in Germany (1865–66)
by the historian and statesman Georg Ludwig von Maurer, an Essay on the
History of Landownership in Spain (1873) by the lawyer and minister
Francisco de Cárdenas Espejo, and Common Abodes of the South Slavs
(1859) by the writer and politician Ognjeslav Utješenović.
His new research endeavours were interrupted by the summer break,
which his physical problems had made a necessity rather than a diversion.
Also, in the autumn of 1876, Marx suffered from several complicated health
28
Karl Marx, “Mehrwertrate und Profitrate mathematisch behandelt,” in MEGA2 (Berlin:
Dietz, 2003), II/14: 19–150.
29
In a letter dated 12 February 1870, Marx wrote to Engels that Flerovsky’s “book shows
incontestably that the present conditions in Russia are no longer tenable, that the emancipa-
tion of the serfs of course only hastened the process of disintegration, and that fearful social
revolution is at the door”, Karl Marx, “Marx to Engels, 12 February 1870,” in MECW
(New York: International Publishers, 1988), 43: 429–30.
30 M. MUSTO
issues. Despite these tribulations and the constant work pressure from many
sides, Marx made a major effort to find a publisher for the German version
of Histoire de la Commune de 1871 (1876) by the French journalist and
Communard Prosper-Olivier Lissagaray.30 Between September and the end
of 1877, he invested time and energy in revising the translation of what he
called “the first authentic history of the Commune”.31
III. Political Battles at an International Level

Despite adversities and poor health, Marx continued to follow all the
major political and economic events attentively and critically, attempting
to envisage the new scenarios to which they might give rise and how these
would affect struggles for the emancipation of the working class.
At the beginning of 1877, Jenny von Westphalen communicated to
Sorge that her husband was “deeply in the Eastern question and highly
elated by the firm, honest bearing of the sons of Mohammed vis-à-vis all
the Christian humbugs and hypocritical atrocity mongers”.32 In April,
Tsar Alexander II declared war on Turkey in pursuit of his expansionist
aims, using the pretext of the rebellions against Constantinople by
Christians living in the European territories of the Ottoman Empire.
Marx had already been active against the British Liberals’ support for
Russia: between February and March, together with the journalist
Maltman Barry, he had written three short articles—“Mr. Gladstone and
Russian Intrigue”, “Mr. Gladstone” and “The Great Agitator Unmasked”—
which were printed in Barry’s name in The Whitehall Review and Vanity
Fair (and later in various local English, Scottish and Irish papers).33 Marx
30
For a recent edition in English, see Prosper Olivier Lissagaray, History of the Paris
Commune of 1871 (St. Petersburg, FL: Red and Black Publishers, 2007).
31
Karl Marx, “Marx to Wilhelm Bracke, 23 September 1876,” in MECW (New York:
International Publishers, 1991), 45: 149. The English translation was done by Eleanor, who at
the time, against her father’s wishes, was emotionally attached to the French revolutionary.
32
Jenny Marx, “Jenny Marx to Friedrich Adolph Sorge, 20 or 21 January 1877,” ibid., 45:
447. The main reference was to the British Liberal Prime Minister William Gladstone, author
of the highly successful pamphlet The Bulgarian Horrors and the Question of the East
(London: William Ridgway, 1876), who, like “all the freemen and stillmen and merrymen”,
had depicted the Russians as “civilizers” (ibid.).
33
See Maximilien Rubel, Bibliographie des œuvres de Karl Marx (Paris: Rivière, 1956), 193.
Also, of interest here are two letters to Liebknecht (4 and 11 February 1878), composed in
the form of articles, which the Social Democrat leader eventually published in an appendix
to the second edition of his pamphlet Zur orientalischen Frage oder Soll Europa kosakisch
werden? (Leipzig: Commissions, 1878).
reported to Engels that many papers had “shied away” and that the deputy
editor of Vanity Fair feared a “libel action”.34 To Sorge, he wrote with
satisfaction that “English parliamentarians in the Commons and the Lords
… would throw up their hands in horror if they knew that it was the Red
Terror Doctor, as they call me, who had been their souffleur during the
oriental crisis.”35
Marx was critical of Bracke, however, since in his view “the workers’
press concern[ed] itself too little with the oriental question, forgetting
that the government’s politics gamble wantonly with the lives and money
of the people”.36 With excessive optimism, he wrote to Sorge: “That crisis
marks a new turning-point in European history.” He thought that Russia
had “long been on the verge of an upheaval” and hoped that the Turks
might “advance the explosion … through the blows they have dealt … to
the Russian army and Russian finances”. “This time”, he concluded, “the
revolution will begin in the East, hitherto the impregnable bastion and
reserve army of counter-revolution”.37 Engels reiterated this conviction to
the editor of the Italian paper La Plebe, Enrico Bignami: “Once Russia has
been spurred to revolution, the whole face of Europe will change. Until
now, Old Russia has been the great army of European reaction. It acted as
such in 1789, in 1805, in 1815, in 1830 and in 1848. Once this army is
destroyed—we shall see!”38
When it became clear in February 1878 that the Russians had been
victorious, Marx regretted the fact in a letter to Liebknecht, repeating that
defeat would not only have “greatly expedited social revolution in Russia”
but also brought about “radical change throughout Europe”.39
Nevertheless, buoyed up by his confident expectations at the time, he
predicted to the English Chartist and publicist Thomas Allsop that there
would soon be a “succession of wars, which w[ould] precipitate the Social
34
Karl Marx, “Marx to Engels, 7 March 1877,” in MECW (New York: International
Publishers, 1991), 45: 209.
35
Karl Marx, “Marx to Friedrich Adolph Sorge, 27 September 1877,” ibid., 277–8.
36
Karl Marx, “Marx to Wilhelm Bracke, 21 April 1877,” ibid., 223.
37
Marx, “Marx to Friedrich Adolph Sorge, 27 September 1877,” 278.
38
Frederick Engels, “Letter to Enrico Bignami on the General Elections of 1877, 12
January 1878,” in Marx and Engels, Lettere 1874–1879 (Milano: Lotta Comunista, 2006),
p. 247. This letter was lost and the only parts we know are the ones included by Bignami in
an article he published on La Plebe on 22 January 1878.
39
Karl Marx, “Marx to Wilhelm Liebknecht, 4 February 1878,” in MECW (New York:
32 M. MUSTO
Crisis and engulf all the so-called Powers, those sham-powers, victors and
vanquished—to make room for a European Social Revolution”.40 In a let-
ter he sent to Engels in September, the horizon was similar: “Nothing
Russia and Prussia … can now do on the international stage can have
other than pernicious consequences for their regime, nor can it delay the
latter’s downfall, but only expedite its violent end.”41
From time to time, Marx had to concern himself again with the
International Working Men’s Association, in order to defend its name and
to recall the esteem that its political line still enjoyed. In July 1878, in
answer to George Howell—an old member of the organization who had
become a reformist trade-unionist—Marx pointed out in an article for The
Secular Chronicle that what had gained the International “a worldwide
reputation and a place in the history of mankind” was not “the size of its
finances”, as Howell had slanderously argued, but “the strength of its
intellect and its abundant energy”.42
Marx also continued to trust in developments on the other side of the
Atlantic. In July 1877, he noted in a letter to Engels “the first outbreak
against the associated capital oligarchy that has arisen since the Civil War”;
it would “of course, be suppressed”, but it might “well provide a point of
departure for a serious workers’ party in the United States”.43 Britain, on the
other hand, was a country about which the two friends no longer had any
illusions. In February 1878, Marx wrote to Liebknecht that “the English
working class had gradually become ever more demoralized, as a result of
the period of corruption after 1848, and finally reached the stage of being
no more than an appendage of the great Liberal Party, i.e., of its oppressors,
the capitalists”.44 In a letter to Eduard Bernstein, Engels was even more
realistic: “A genuine workers’ movement in the continental sense is non-
existent here”; there might still be strikes, “victorious or otherwise”, but
“the working class makes no progress whatsoever” as a result of them.45
40
Karl Marx, “Marx to Thomas Allsop, 4 February 1878,” ibid., 299.
41
Karl Marx, “Marx to Engels, 24 September 1878,” ibid., 332.
42
Karl Marx, “Mr. George Howell’s History of the International Working-Men’s
Association,” in MEGA2 (Berlin: Dietz, 1985), I/25: 157.
43
Karl Marx, “Marx to Engels, 25 July 1877,” in MECW (New York: International
Publishers, 1991), 45: 251.
44
Karl Marx, “Marx to Wilhelm Liebknecht, 11 February 1878,” ibid., 299.
45
Frederick Engels, “Engels to Eduard Bernstein, 17 June 1879,” ibid., 361.
IV. The Critique of “Armchair Socialism”

Marx never lost sight of the main political developments in Germany.
After the major tensions surrounding the Gotha congress had passed, he
continued his attempts to orient the Socialist Workers’ Party of Germany
in an anti-capitalist direction. However, other tendencies were developing
that would create fresh occasions of conflict. From 1874 Eugen Dühring,
an economics professor at Berlin University, began to receive significant
attention from Party intellectuals. Articles in support of his positions
appeared in Der Volksstaat (The People’s State), which had been the organ
of the Social Democratic Workers’ Party of Germany. Therefore, having
been asked by Liebknecht to get involved, and having listened to Marx’s
view that it was necessary “to criticize Dühring without any compunction”,46
Engels decided to write a full-scale critique of the German positivist. This
task, which extended from late 1876 until July 1878, ended in the book
Anti-Dühring (1877–78), whose publication was preceded by excerpts in
the columns of Vorwärts [Forward], the daily paper of the Socialist
Workers’ Party of Germany born out of the Gotha fusion congress.47
Marx played an active part in the Anti-Dühring project: in the winter
of 1877, he wrote the key chapter “On ‘Critical History’”, both on
Engels’s behalf and in his own name, conceiving it as a response to attacks
contained in Dühring’s Critical History of Political Economy and Socialism
(1871). Marx shows that “by value Herr Dühring understands five totally
different and directly contradictory things, and, therefore, to put it at its
best, himself does not know what he wants”. Moreover, in the German
economist’s book, the “‘natural laws of all economics’, ushered in with
such pomp, prove to be merely universally familiar, and often not even
properly understood, platitudes of the worst description”.48 The “sole
explanation” he gives of “economic facts” is that “they are the result of
46
Karl Marx, “Marx to Engels, 25 May 1876,” ibid., 119.
47
On the importance of this text, see Karl Kautsky, “Einleitung,” in Friedrich Engels’
Briefwechsel mit Karl Kautsky, ed. Benedikt Kautsky (Vienna: Danubia, 1955), 4, where
the German Party theorist recalls that no book did more to advance his understanding of
socialism. H.-J. Steinberg, showed that “both Bernstein, who studied Anti-Dühring in
1879, and Kautsky, who did the same in 1880, became ‘Marxists’ through reading that
book,” in Sozialismus und Deutsche Sozialdemokratie (Hannover: Verlag für Literature und
Zeitgeschehen, 1967), 23.
48
Frederick Engels, Anti-Dühring, in MECW (New York: International Publishers, 1987),
25: 242.
34 M. MUSTO
‘force’, a term with which the philistine of all nations has for thousands of
years consoled himself for everything unpleasant that happens to him, and
which leaves us just where we were”.49 For Marx, Dühring does not try to
“investigate the origin and effects of this force”, and, when compelled to
elucidate the capitalist exploitation of labour, he “first represents it in a
general way as based on taxes and price surcharges” à la Proudhon, then
“explains it in detail by means of Marx’s theory of surplus-labour”. The
result is totally implausible: “two totally contradictory modes of outlook,
… cop[ied] down without taking his breath”.50
In the elections of January 1877, the Socialist Workers’ Party of
Germany won nearly half a million votes, raising its share above 9 per
cent. But despite this success, the state of the party continued to trouble
Marx. Writing to the German doctor Ferdinand Fleckles, he ridiculed the
“short pamphlet” entitled The Quintessence of Socialism (1879) of soci-
ologist Albert Schäffle as “fantastic, truly Swabian … picture of the future
socialist millennium as … the kingdom come of your cosy petty
bourgeois”.51 In this context, when asked by the journalist Franz Wiede
to take a prominent role in founding a new review, Marx commented to
Engels: “It would certainly be very nice if a really scientific socialist peri-
odical were to appear. This would provide an opportunity for criticism
and counter-criticism in which theoretical points could be discussed by us
and the total ignorance of professors and university lecturers exposed,
thereby simultaneously disabusing the minds of the general public.”52 In
the end, however, he had to accept that the shortcomings of its contribu-
tors would have precluded “the prime requirement in all criticism”: that
49
Ibid.
50
Ibid.
51
Karl Marx, “Marx to Ferdinand Fleckles, 21 January 1877,” in MECW (New York:
International Publishers, 1991), 45: 190. Few years later, in a letter to Karl Kautsky, Engels
wrote of the numerous inaccuracies and misunderstandings that the German economist
Albert Schäffle and other “armchair socialists [Kathedersozialisten]” displayed in relation to
Marx’s work: “to refute, for example, all the monstrous twaddle which Schäffle alone has
assembled in his many fat tomes is, in my opinion, a sheer waste of time. It would fill a fair-
sized book were one merely to attempt to put right all the misquotations from Capital
inserted by these gentlemen between inverted commas”. He concluded in peremptory fash-
ion: “They should first learn to read and copy before demanding to have their questions
answered”, Frederick Engels, “Engels to Karl Kautsky, 1 February 1881,” in MECW (New
52
Karl Marx, “Marx to Friedrich Engels, 18 July 1877,” in MECW (New York:
is, “ruthlessness”.53 Marx also directed sharp comments against Zukunft

[Future], deriding its “endeavour to substitute ideological catch-phrases
such as ‘justice’, etc., for materialist knowledge [and …] to peddle phan-
tasms of the future structure of society”.54
In October, Marx complained to Sorge of a “corrupt spirit” spreading
in the party, “not so much among the masses as among the leaders”.55 The
agreement with the Lassalleans had “led to further compromise with other
waverers”. In particular, Marx had no time for “a whole swarm of imma-
ture undergraduates and over-wise graduates who want[ed] to give social-
ism a ‘higher, idealistic’ orientation”. They thought they could substitute
for its “materialist basis” (which “calls for serious, objective study if one is
to operate thereon”) a “modern mythology with its goddesses of Justice,
Liberty, Equality and Fraternity”.56
What lay behind these criticisms was never feelings of jealousy or
rivalry. Marx wrote to the journalist and parliamentarian Wilhelm Blos
that he did not “care a straw for popularity”, reminding him that “such
was [his] aversion to the personality cult that at the time of the
International, when plagued by numerous moves … to accord [him] pub-
lic honour, [he] never allowed one of them to enter the domain of public-
ity”, nor “ever repli[ed] to them, save with an occasional snub”. This
attitude had sustained him ever since the political commitments of his
youth, so that when the Communist League was born in 1847, he and
Engels had joined “only on condition that anything conducive to a super-
stitious belief in authority be eliminated from the Rules”.57 His only con-
cern had been, and continued to be, that the nascent workers’ organizations
53
Ibid. Engels was certainly in agreement with Marx about this. As he put it in a letter to
the zoologist Oscar Schmidt, “ruthless criticism … alone does justice to free science, and …
any man of science must welcome [it], even when applied to himself”. Frederick Engels,
“Engels to Oscar Schmidt, 19 July 1878,” ibid., 314.
54
Karl Marx, “Marx to Wilhelm Bracke, 23 October 1877,” ibid., 285.
55
Karl Marx, “Marx to Friedrich Adolph Sorge, 19 October 1877,” ibid., 283. Steinberg
had convincingly demonstrated the theoretical eclecticism among German Party activists at
the time. “If we take the mass of members and leaders,” he wrote, “their socialist concep-
tions may be described as an ‘average socialism’ composed of various elements. The view of
Marx and Engels that the Party’s ‘shortcomings’ and theoretical ignorance and insecurity
were the negative consequence of the 1875 compromise was only an expression of the
Londoners’ warnings about members coming out of the General Association of German
Workers,” Steinberg, Sozialismus und Deutsche Sozialdemokratie, 19.
56
Marx, “Marx to Friedrich Adolph Sorge, 19 October 1877,” 283.
57
Karl Marx, “Marx to Wilhelm Blos, 10 November 1877,” ibid., 288.
36 M. MUSTO
should not blur their anti-capitalism and—in the manner of the British
labour movement—adopt a moderate, pro-bourgeois line.58
A major event in the late 1870s was the attempted assassination of
Kaiser Wilhelm I by the anarchist Karl Nobiling in June 1878. Marx’s
reactions were later recorded by Kovalevsky: “I happened to be in Marx’s
library when he got news of [the] unsuccessful attempt. … [His] reaction
was to curse the terrorist, explaining that only one thing could be expected
from his attempt to accelerate the course of events, namely, new persecu-
tions of the socialists.”59 That was precisely what ensued, as Bismarck used
the pretext to introduce the Anti-Socialist Laws and get them adopted by
the Reichstag in October. Marx commented to Engels: “Outlawing has,
from time immemorial, been an infallible means of making anti-government
movements ‘illegal’ and protecting the government from the law—‘legality
kills us’.”60 The debate in parliament took place in mid-September, and
Bracke sent Marx the stenographic record of the Reichstag sessions and a
copy of the draft legislation. Marx planned to write a critical article for the
British press61 and began to compile extracts and notes for that purpose.
In a few pages, he outlined the difference between the mass Socialist
Workers’ Party of Germany and the anarchists: the former constituted
“the genuine historical movement of the working class; the other … a
phantom of a dead-end youth intent on making history, [which] merely
shows how the ideas of French socialism are caricatured in the declassed
58
Two years later, Engels wrote in similar vein to Bebel: “You know that Marx and I have
voluntarily conducted the defence of the party against its opponents abroad throughout the
party’s existence, and that we have never asked anything of the party in return, save that it
should not be untrue to itself.” Using diplomatic language, he tried to get comrades in
Germany to understand that, although his and Marx’s “criticism might be displeasing to
some”, it might be advantageous to the party to have “the presence abroad of a couple of
men who, uninfluenced by confusing local conditions and the minutiae of the struggle, com-
pare from time to time what has been said and what has been done with the theoretical tenets
valid for any modern proletarian movement”, Frederick Engels, “Engels to August Bebel, 14
November 1879,” ibid., 420–1.
59
McLellan, Karl Marx—Interviews and Recollections, 131.
60
Karl Marx, “Marx to Engels, 17 September 1877,” in MECW (New York: International
Publishers, 1991), 45: 322. Marx wrote the final clause in French—la légalité nous tue—
harking back to the words used by Odilon Barrot, briefly prime minister in 1848–49 under
Louis Bonaparte, in a speech he gave to the Constituent Assembly in January 1849 that
defended the outlawing of “extremist” political forces.
61
Marx, “Marx to Engels, 24 September 1878,” 332.
men of the upper classes”.62 In rebutting the argument of the Prussian

interior minister, August Eulenburg, that the workers’ aims were violent,
he made his position quite clear:
The objective [is] the emancipation of the working class and the revolution
(transformation) of society implicit therein. An historical development can
remain “peaceful” only for so long as its progress is not forcibly obstructed
by those wielding social power at the time. If in England, for instance, or the
United States, the working class were to gain a majority in Parliament or
Congress, they could, by lawful means, rid themselves of such laws and
institutions as impeded their development. […] However, the “peaceful”
movement might be transformed into a “forcible” one by resistance on the
part of those interested in restoring the former state of affairs; if (as in the
American Civil War and French Revolution) they are put down by force, it
is as rebels against “lawful” force.63
For Marx, then, the government was “seeking to suppress by force a

development it dislike[d] but could not lawfully attack”. That, necessarily,
was “the prelude to violent revolution”—“an old story which yet remains
eternally true”, he added, quoting Heinrich Heine (1797–1856).64
In a letter to Sorge from September 1879, Marx described the new ten-
dencies emerging in the German party. He stressed that people like the
publisher Karl Höchberg, “nonentities in theory and nincompoops in prac-
tice”, were “seeking to draw the teeth of socialism (which they have rehashed
in accordance with academic formulae) and of the Party in particular”.65
Their aim was “to enlighten the workers, … to provide them, out of their
confused and superficial knowledge, with educative elements” and, above
all, “to make the party ‘respectable’ in the eyes of the philistines”. They
were, he concluded, “poor counter-revolutionary windbags”.66 With subtle
humour, he suggested that Bismarck had “done a lot of good not to him-
self, but us”, by imposing selective silence in Germany and allowing such
windbags “a chance of making themselves plainly heard”.
62
Karl Marx, “The Parliamentary Debate on the Anti-Socialist Laws (Outline of an
Article),” in MECW (New York: International Publishers, 1989), 24: 247.
63
Ibid., 248.
64
Ibid., 249.
65
Karl Marx, “Marx to Friedrich Adolph Sorge, 19 September 1879,” ibid., 413.
66
Ibid.
38 M. MUSTO
In a French police report from London, an agent claimed that, “follow-

ing the death of Lassalle, Marx [had become] the undisputed leader of the
German revolutionaries. If the socialist deputies in Germany [were] the offi-
cial leaders, the divisional commanders, Marx [was] the chief of the general
staff. He devised the battle plans and watch[ed] over their implementation”.67
In reality, Marx’s criticisms of the party often went unheeded, and from his
study in London he observed “the depths” to which “parliamentary repre-
sentatives” had “already been brought by parliamentarism”.68
Another polemical focus was the question of who should edit the new
journal of the Socialist Workers’ Party of Germany, Der Sozialdemokrat
[The Social Democrat], publication of which began in Zurich in September
1879. Marx and Engels, disagreeing with the proposed stance of the
paper, felt obliged to send another letter (drafted by Engels) to Bebel,
Liebknecht and Bracke. In this “Circular Letter” (1879), as it became
known, they denounced the growing consensus in the party behind the
positions of Höchberg, the main source of finance for the undertaking.
He had recently published an article in the Jahrbuch für Sozialwissenschaft
und Sozialpolitik [Annals for Social Science and Social Policy], a reformist
journal under his direction, in which he called for a return to the Lassallean
spirit. In his view, the Lassalleans had given birth to a political movement
open “not only [to] the workers but all honest democrats, in the van of
which [should] march the independent representatives of science and all
men imbued with a true love of mankind”.69
For Marx, all these were views he had firmly rejected since his early
years and the Manifesto of the Communist Party (1848). The “Circular
Letter” underlined the dangers of one of Höchberg’s statements: “In
short, the working class is incapable of emancipating itself by its own
efforts. In order to do so it must place itself under the direction of ‘edu-
cated and propertied’ bourgeois who alone have ‘the time and the oppor-
tunity’ to become conversant with what is good for the workers.” In the
view of this “representative of the petty bourgeoisie”, then, the bourgeoi-
sie was “not to be combated—not on your life—but won over by vigorous
propaganda”.70 Even the decision to defend the Paris Commune had
67
Enzensberger, Gespräche mit Marx und Engels, 490.
68
Marx, “Marx to F. Sorge, 19 September 1879,” 413.
69
Karl Marx and Frederick Engels, “Marx and Engels to August Bebel, Wilhelm Liebknecht
and Wilhelm Bracke (“Circular Letter”), 17–18 September 1879,” in MECW (New York:
70
Ibid., 403.
allegedly “put off people otherwise well-disposed towards” the workers’

movement. In conclusion, Engels and Marx noted with alarm that
Höchberg’s objective was to make “the overthrow of the capitalist order
… unattainably remote” and “utterly irrelevant to present political prac-
tice”. One could therefore “conciliate, compromise, philanthropize to
one’s heart’s content. The same thing applie[d] to the class struggle
between proletariat and bourgeoisie.”71 The disagreement was total.
Marx’s tenacious opposition to what he called the “armchair socialist
riff-raff”72 was akin to his view of those who confined themselves to empty
rhetoric, however concealed beneath radical language. Following the
launch of the journal Freiheit [Freedom], he explained to Sorge that he
had reproached its editors not for being “too revolutionary” but for hav-
ing “no revolutionary content” and “merely indulg[ing] in revolutionary
jargon”.73 In his view, both these positions, though stemming from very
different political tendencies, were no danger to the existing system and
ultimately made its survival possible.
Marx’s idea of socialism was very different from State socialism and
reformism that emerged in the German Social Democratic Party and that
became hegemonic after the foundation of the Second International. The
Marx revival under way today will be much more effective if Marx’s writ-
ings are re-examined for an understanding not only of how capitalism
works but also of the failure of socialist experiences until today. It goes
without saying that we cannot today simply rely on what Marx wrote a
century and a half ago. Nor should we lightly discount the content and
clarity of his analyses or fail to take up the critical weapons he offered for
fresh thinking about an alternative society to capitalism.
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Engels, Frederick. “Anti-Dühring.” In MECW. Vol. 25, 5–309. New York:
International Publishers, 1987a.
Engels, Frederick. “On the Socialist Movement in Germany, France, the United
States and Russia.” In MECW. Vol. 24, 203–6. New York: International
Publishers, 1987b.
71
Ibid., 406.
72
Marx, “Marx to Sorge, 19 September 1879,” 412.
73
Ibid., 411. Cf. Frederick Engels to Johann Philipp Becker, 10 April 1880,” in MECW
(New York: International Publishers, 1992), 46: 7: “Freiheit [wants] to become, by hook or
by crook, the most revolutionary paper in the world, but this cannot be achieved simply by
repeating the word ‘revolution’ in every line.”
40 M. MUSTO
Engels, Frederick. “Letter to Enrico Bignami on the General Elections of 1877.”

In Marx and Engels, Lettere 1874–1879, 246–8. Milano: Lotta Comunista, 2006.
Enzensberger, Hans Magnus. Gespräche mit Marx und Engels. Frankfurt: Insel
Verlag, 1973.
Freymond, Jacques. Études et documents sur la Première Internationale en Suisse.
Geneva: Droz, 1964.
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William Ridgway, 1876.
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edited by Benedikt Kautsky, 1–55. Vienna: Danubia, 1955.
Liebknecht, Wilhelm. Zur orientalischen Frage oder Soll Europa kosakisch werden?
Leipzig: Commissions, 1878.
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FL: Red and Black Publishers, 2007.
Marx, Karl. “Contribution to the Critique of Hegel’s Philosophy of Law.” In
MECW. Vol. 3, 3–129. New York: International Publishers, 1975.
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Association.” In MEGA2. Vol. I/25, 157. Berlin: Dietz, 1985.
Marx, Karl. Critique of the Gotha Programme. In MECW. Vol. 24, 81–99.
New York: International Publishers, 1987a.
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Article).” In MECW. Vol. 24, 240–50. New York: International Publishers, 1987b.
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Vol. II/14, 19–150. Berlin: Dietz, 2003.
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International after 150 Years, edited by Marcello Musto, 83–8. London:
Bloomsbury, 2014.
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New York: International Publishers, 1985–1992.
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Noble, 1981.
Most, Johann. Kapital und Arbeit: Ein Populärer Auszug aus “Das Kapital” von
Karl Marx. Chemnitz: G. Rübner, n.d. [1873].
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Years, edited by Marcello Musto, 1–68. London: Bloomsbury, 2014.
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Bloomsbury, 2018.
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London: Methuen, 1936.
Rubel, Maximilien. Bibliographie des œuvres de Karl Marx. Paris: Rivière, 1956.
Steinberg, H.-J. Sozialismus und Deutsche Sozialdemokratie. Hannover: Verlag für
Literature und Zeitgeschehen, 1967.
Revolution and Radical Democracy:
Marx Versus Post-Marxism
Kohei Saito
I. Introduction
The traditional Marxist project of “permanent revolution” that envisions
a transition to socialism by taking over the state power through a prole-
tarian revolution lost its appeal to the majority of the left after it was even
more harshly criticized due to the collapse of the USSR. The “idea of
communism” lost its plausibility, and it became an object of postmodern
speculation.1 Consequently, the opposition to capitalism remained
largely absent in the last decades, as the “third way” suggested by social
democrats was nothing but their adoption to the neoliberal policies.
However, the experience of the last 30 years clearly shows that the global
This work was supported by JSPS Kakenhi Grant Number JP18K12188 as well
as by the Ministry of Education of the Republic of Korea and the National
Research Foundation of Korea (NRF-2018S1A3A2075204).
1
Slavoj Žižek and Costas Douzinas, eds., The Idea of Communism (London: Verso, 2010).
K. Saito (*)
Osaka City University, Osaka, Japan

42 K. SAITO
hegemony of neoliberal capitalism which claimed to bring about the

“end of history,” far from realizing free, democratic society, not only
significantly enlarged economic inequality but also deepened structural
crises such as financial instability, environmental destruction, and far-
right xenophobia.
The world today direly needs a utopian imaginary, which social democ-
racy cannot offer. In this situation, one of the last recourses to the left is the
post-Marxian theory of “radical democracy.”2 Post-Marxists reinterpreted
Marx’s theoretical legacy through an attempt to deal with the “autonomy
of the political,” which enables envisioning the possibility of a radical social
change in the twenty-first century. However, as the prefix “post” indicates,
post-Marxists who advocate radical democracy, such as Ernesto Laclau,
Chantal Mouffe, and Jacques Rancière, do not simply accept Marx’s the-
ory, but rather add—often critical—corrections. It is thus necessary to
clarify what kinds of Marxist ideas remained and what was lost in this tran-
sition from Marxism to post-Marxism. As will be shown here, socialism as
democracy beyond capitalism is the true legacy of Marx that the left needs
to revitalize today in contrast to the uncritical celebration of the impor-
tance of political struggle and will as a way of changing the society.
To clarify this point, it is first necessary to understand Marx’s unique
conception of the modern separation of the economic and the political in
the capitalist society. However, post-Marxists often miss Marx’s point, and
rather blame Marx’s crude economic reductionism due to its negation of
the autonomy of the political. In contrast, by highlighting the difference
between the young and matured Marx, this paper explicates his vision of
socialism beyond the modern dualism of the state and civil society. As a
result, it will be clear that Marx’s theory of revolution, which is tightly
linked to his critique of political economy in Capital, does not negate the
2
There are more liberal versions as a post-Marxist alternative to Marx’s theory of revolu-
tion. See Axel Honneth, The Idea of Socialism (London: Polity, 2018), 53. Honneth’s idea
of socialism as “social freedom,” however, has almost nothing to do with Marx’s socialism by
dismissing the dimension of economic equality, and it becomes quite unclear why it is still
necessary to read Marx. The other, and more radical left alternative, is robust discussion on
post-capitalism. Despite their strong emphasis on technological development such as auto-
mation and information technology, Nick Srnicek and Alex Williams’s Inventing the Future:
Postcapitalism and a World without Work (London: Verso, 2015) also clearly points to the
need for the construction of the political subjectivity by drawing upon Laclau’s theory of
hegemony and radical democracy. This is why the current paper aims at examining whether
radical democracy can be an effective socialist strategy.
REVOLUTION AND RADICAL DEMOCRACY: MARX VERSUS POST-MARXISM 43
autonomy of the political. In contrast to Laclau and Rancière, however,

Marx did not believe that the autonomy of the political would lead to a
radical social change and human emancipation. Rather, Marx’s under-
standing of the political reveals the fetishism of post-Marxists in their
uncritical celebration of the autonomy of the political.
II. The Modern Binary of the State and Society

“Society” as an independent sphere of communal and individual life dis-
tinguished from “the state” obviously existed before the rise of modernity.
For example, it is possible to find various discussions on family and private
property in ancient Greece and Rome.3 However, it is also undeniable that
after the seventeenth century, the relationship between the state and soci-
ety attained a unique modern character. As a result of the loss of tradi-
tional communal ties in the modern society, the bellum omnium contra
omnes among private individuals on the market came to threaten the pub-
lic order, so that the reconstruction of the social and communal ties among
the atomized individuals became a topic of theoretical reflection. For
example, Thomas Hobbes and later Johann Gottlieb Fichte projected the
modern subjectivity upon a “fiction” of the endless concurrence among
atomized individuals in the “state of nature” and deduced how this end-
less conflict necessarily leads to the conscious reconstruction of the social
bonds under the state through social contract and mutual recognition. In
other words, the state as a universal communal realm must be consciously
reconstructed in the face of fragmentation and atomization of individuals
under the market economy. The fundamental ideology for the legitima-
tion of the body politic here was “possessive individualism.”4
Georg Wilhelm Friedrich Hegel criticized Fichte’s solution of the
authoritarian state and attempted to figure out the ways of mediating the
universality of state governance and the particularity of individual desires
without negating the modern subjectivity. However, his idea for the real-
ization of social freedom in his Philosophy of Right also suffers from a
certain ambivalence. On the one hand, the modern social division of
labour realizes the relations of mutual material interdependence among
3
Ellen Meiksins Wood, Democracy against Capitalism: Renewing Historical Materialism
(Cambridge: Cambridge University Press, 1994), 239.
4
C. B. Macpherson, The Political Theory of Possessive Individualism: Hobbes to Locke
(Oxford: Oxford University Press, 2011).
44 K. SAITO
free and equal persons, so the social tie in “civil society (bürgerliche
Gesellschaft)” constitutes an essential component for the realization of
“ethical life (Sittlichkeit).”5 On the other hand, the immanent tendency of
civil society to create economic inequality produces the rich and the poor
called “rabble (Pöbel),” who cannot be integrated into the society but
rather threaten to destroy the public social order. Neither the counter-
measure of civil society such as “corporation (Korporation)” and “police
(Polizei)” nor the state intervention can overcome this economic
contradiction.6
Hegel’s ambivalence is discernible here. While he recognized the need
to mediate the state and civil society, he retained the old conception that
emphasizes the uniquely modern “separation” of the public sphere and
the private sphere. However, this distinction is destabilized by the real-
ity, as the economic activity intrudes into the public sphere in the form
of rabble. In other words, despite the separation of the economic and the
political sphere, rabble reveals an intimate tie between the political and the
economic. This is usually hidden, but the neutrality and the universality of
the state are challenged with the deepening of the economic contradiction.
It was Marx who paid attention to this problem of the modern society.
Modern capitalist society differs from pre-capitalist societies in that its pri-
mary aim of social production is not concrete goods for the sake of satisfy-
ing individual needs, but the valorization of capital as such. Furthermore,
the relation of domination and obedience is emancipated from personal
and political relationship, so that social relations come to be constituted
under formally free and equal individuals. In the pre-capitalist societies,
the appropriation of the surplus product of other people’s labour is
founded directly upon the relation of political domination. There was an
original unity of the political and the economic. In contrast, exploitation
of surplus in a capitalist society dissolves this tie and attains an appearance
of being an act of exchange amongst equal individuals in the private
sphere. Here exists the uniquely modern separation of the economic and
5
When Hegel translated the term “civil society” which means “state” or “common wealth”
to a German term bürgerliche Gesellschaft, he gave it a specific meaning. As a consequence,
bürgerliche Gesellschaft cannot be simply reduced to the market, as it also includes Korporation
and Polizei, so that it has a function to mediate the public (“the state”) and the private (“the
family”).
6
Frank Ruda, Hegel’s Rabble: An Investigation into Hegel’s Philosophy of Right (New York:
Continuum, 2011).
the extra-economic, which leads to the separation of the public sphere

from the private sphere, that is, the economic sphere is depoliticized as the
sphere of private activities.
However, the separation does not mean that the state and civil society
become fully independent of each other. Modern individuals who are lib-
erated from tradition and customs attain a reflexive subjectivity with regard
to value judgements and norms.7 As seen earlier, this process also includes
liberation from economic exploitation based on direct political and per-
sonal domination. However, modern atomized individuals are not entirely
free. They are now subjected to a new type of domination and coercion
which is impersonal—an anonymous domination by things acting inde-
pendently of one’s own will. This is what Marx called “reification.” In
other words, the reified power of things attains an enormous force in the
production process and in the market, exerting the power of command in
a depoliticized form over individual judgements and behaviours.
In this situation, however, the distinction between the private and the
public inevitably becomes ambivalent and obscure. The sphere of civil
society, though considered to be “private,” actually comes to fulfil a “pub-
lic role” of social integration and disciplining, contributing to the con-
struction of the relations of domination. At the same time, the state, which
is supposed to deal with universal matters and rights, follows the logic of
capital, guaranteeing a system of private property as well as actively inter-
vening into the market for economic growth. In this sense, the state fos-
ters the “private” interests of a particular social group of capitalists. This is
how the uniquely modern “unity in separation” of the state and the soci-
ety or of the universality and the particularity emerges together with the
appearance of their separation.8
Thus, according to Marx, the separation of the public and the private
based on the separation of the state and civil society is an unstable one.
Notably, this is not because the economic sphere fully covers and domi-
nates the political sphere due to the expansion of the market activities and
the corresponding formation of the sphere of the “social.”9 According to
7
Jürgen Habermas, Between Facts and Norms: Contributions to a Discourse Theory of Law
and Democracy (Cambridge, MA: MIT Press, 1998).
8
John Holloway and Sol Picciotto, “Introduction: Towards a Materialist Theory of the
State,” in State and Capital: A Marxist Debate, ed. John Holloway and Sol Picciotto
(London: Edward Arnold, 1978), 3.
9
Hannah Arendt discussed this issue with the concept of “the social.” Hannah Arendt, The
Human Condition (Chicago: The University of Chicago Press, 1998). Wendy Brown’s
46 K. SAITO
Marx, there is no pure, ideal political realm which existed before the
invasion of the social. Rather, he argues that the state as a political appa-
ratus always already receives a uniquely capitalist “form determination
(Formbestimmung).” The political form of state governance is inevitably
tied to the economic relations of domination, as he points out in the
Grundrisse:
The specific economic form in which unpaid surplus labor is pumped out of
the direct producers determines the relationship of domination and servi-
tude, as this grows directly out of production itself and reacts back on it in
turn as a determinant. On this is based the entire configuration of the eco-
nomic community arising from the actual relations of production, and hence
also its specific political form. It is in each case the direct relationship of the
owners of the conditions of production to the immediate producers—a rela-
tionship whose particular form naturally corresponds always to a certain
level of development of the type and manner of labor, and hence to its social
productive power—in which we find the innermost secret, the hidden basis
of the entire social edifice, and hence also the political form of the relation-
ship of sovereignty and dependence, in short, the specific form of state in
each case.10
Here one should not interpret this passage as a manifestation of Marx’s

crude economic reductionism. Marx’s point is rather that the political
sphere becomes a distinct sphere separated from the economic one under
the capitalist mode of production, but it can never be fundamentally inde-
pendent from the economic, insofar as it receives the uniquely capitalist
political form. The political and economic problems are tightly interwo-
ven in capitalism because the economic relations within the capitalist mode
of production condition the relations of domination in the state.
As long as freedom and rights such as human rights are formal rights
based on the relations of commodity exchange, they cannot fully over-
come inequality and unfreedom under capitalism—this is why the political
intervention of the welfare state in the market is fundamentally limited.
Formal equality and freedom rather complement and legitimize the
Edgework (Princeton: Princeton University Press, 2005) also views the current challenge to
democracy by neoliberalism in its economic domination over the political sphere. Both Arendt
and Brown attempt to defend freedom proper in the political sphere, missing the fact that both
the economic and the political are mutually constitutive social forms of capitalist relations.
10
Karl Marx, Capital, vol. 3 (London: Penguin, 1993), 923. See also Soichiro Sumida,
“Die Zusammenfassung der bürgerlichen Gesellschaft in der Staatsform,” in Marx-Engels-
Jahrbuch 2017/2018 (Berlin: De Gruyter, 2018), 47.
e xercise of private power that enables the command over and exploitation
of the large number of workers by a few capitalists in the economic sphere,
constituting more solid relations of domination and subordination than
ever in favour of the ruling class. On the other hand, economic forces sup-
ported by the state enable the expanding and accelerating accumulation of
capital. Conversely, the augmented power of reification coercively deter-
mines judgements, behaviours, and will in various spheres, facilitating the
disciplining and domestication of the masses and increasing public order
and social integrity.
Marx believed that in order to overcome the contradiction of the reified
domination, it is necessary to abolish the dualism of the state and civil
society. The problem is twofold. On the one hand, although the “public”
meaning of the social activities of production significantly increases in our
daily life due to the deepening of mutual dependence through the increas-
ing social division of labour, the meaning of economic activities is largely
limited to the “private” sphere, whose consequences are ascribed solely to
individuals. On the other hand, although the state has a certain room for
intervening in the market, the state and civil society are ultimately comple-
mentary to each other for the sake of maintaining capitalist relations.
Therefore, formal rights within civil society cannot be expanded beyond a
certain point, so that the state cannot be a tool to eradicate the truly nega-
tive aspects of civil society. This is why Marx argued for overcoming the
uniquely modern unity in separation of the state and civil society for the
sake of the “free development of individuals,” demanding not only the
“expropriation of the expropriators” but also the “annulment” of politics.11
III. Marx’s Theory of Revolution

In order to comprehend what Marx envisioned with the transcendence of
the capitalist mode of production, one needs to examine his theoretical
development a little more carefully, especially because there are changes
and continuities in his vision of revolution. Since his theory changed over
time, its evaluation can significantly differ, depending on which text one
focuses on. While post-Marxists often draw upon Marx’s early texts such
as A Contribution to the Critique of Hegel’s Philosophy of Right and The
Communist Manifesto, it is important to comprehend his political theory
in relation to his later critique of political economy.
István Mészáros, Marx’s Theory of Alienation (London: Merlin Press, 2006), 160.
11
48 K. SAITO
According to Alex Demirovic, there exists a “large consistency” in

Marx’s theory of revolution despite various theoretical changes.12 And this
continuity precisely lies in Marx’s claim for the need to overcome the sepa-
ration of politics and economy as well as the dualism of the state and civil
society. As he argued in On the Jewish Question, modern representative
democracy brings about political emancipation, so that occupations, births,
and religious beliefs are regarded as non-political distinctions in civil society
that belong to the private sphere. In contrast, the state serves as a public
sphere which deals with universal issues free from private interests. However,
Marx argues that under such a division of the state and civil society, the
state as universal life of species-being is separated from the actual social life,
so that individuals are “deprived of [their] real individual life and endowed
with unreal universality.” The life in the state becomes an unrealistic world
of heaven because various inequality and unfreedom are preserved in reality
in a depoliticized form in civil society. Even if people constitute the state
according to the idea of democracy, they can participate in it merely as “the
imaginary member of an illusory sovereignty.” Marx calls this constitution
of social communality based on such an unrealistic mediation “the perfect
Christian state,”13 claiming that such existence of the state expresses the
alienated separation of the state and civil society.
The French Revolution is exemplary. This “Christian state” is a for-
mally “democratic state.” According to Marx, a revolution that aims only
for “political emancipation” without challenging the modern dualism
never brings about human emancipation in the end. Since the state
attempts to establish “the real species-life of man devoid of contradic-
tions,” neglecting the atomized situation of divided private interests within
the actual civil society, “it can achieve this only by coming into violent
contradiction with its own conditions of life, only by declaring the revolu-
tion to be permanent.”14 The world in which formal equality and freedom
dominate can exist only through the oppression of concrete inequalities
and unfreedoms in civil society. Seeking only political emancipation with-
out overcoming this contradiction in civil society, modern dualism would
ultimately lead to a violent conformism—the coercive force that treats real
inequalities as if they were equals. The realization of human emancipation
requires overcoming the separation of civil society from the state and
replacing the illusionary life with the real equality and freedom in social life.
12
Alex Demirovic, “Rätedemokratie oder das Ende der Politik,” Proklra 155 (2009): 186.
13
Karl Marx, On the Jewish Question, MECW vol. 3, 154, 156.
14
Ibid., 156.
It is thus necessary to go beyond the modern dualism of the private and

the public, as well as the universal and the particular, through the radical
transformation of civil society itself. This is the fundamental insight of the
young Marx.
According to Demirovic, such a recognition is not limited to the young
Marx. For example, Marx repeated the same claim in his analysis of the Paris
Commune in The Civil War in France. As long as the separation between the
state and civil society remains, there is no human emancipation. Marx argued
that political emancipation brought about through the French Revolution
only opposed the state as a “supernatural” power to civil society.
It was, therefore, forced to develop, what absolute monarchy had com-

menced, the centralization and organization of state power, and to expand
the circumference and the attributes of the state power, the number of its
tools, its independence of, and its supernaturalist sway of real society which
in fact took the place of the medieval supernaturalist heaven with its saints.
Every minor solitary interest engendered by the relations of social groups
was separated from society itself, fixed and made independent of it, and
opposed to it in the form of state interest, administered by state priests with
exactly determined hierarchical functions.15
Marx’s argument in this passage is quite similar to his critique of the “per-
fect Christian state” in On the Jewish Question. The revolutionary character
of the Paris Commune precisely lies in the “the reabsorption of the State
power by society, as its own living forces instead of as forces controlling
and subduing it, by the popular masses themselves, forming their own
force instead of the organized force of their suppression.”16 The Commune
aimed at establishing “truly democratic institutions” by realizing social
production based on associated producers. With an expression that
reminds of Lincoln, Marx characterized democracy in the Commune in
the following way: “It was a Revolution against the State itself, this super-
naturalist abortion of society, a resumption by the people for the people,
of people’s own social life. It was […] a Revolution to break down this
horrid machinery of class domination itself.”17 The Commune transformed
the social production in order to overcome the alienated power of the
state and regain the social communality.
15
Karl Marx, The Civil War in France, MECW vol. 22, 484.
16
Ibid., 487.
17
Ibid., 486.
50 K. SAITO
However, there are also theoretical changes in Marx’s socialist strategy.

His emphasis shifted from the permanent revolution based on the central-
ized state power to a reformist struggle based on trade unions and coop-
eratives. Marx in the Communist Manifesto emphasized the importance of
taking the state power through political revolution led by a vanguard
party. In other words, the plan was the nationalization of means of the
production through the “dictatorship of the proletariat,” and for the tran-
sition to socialism to be conducted through economic reforms from
above. One could discern a certain instrumentalist understanding of the
state here. In contrast, the late Marx found possibilities of the future in
cooperatives—even if he did not abandon his critique of cooperativism in
those years—and recognized the importance of social reforms such as the
legislation of the ten-hour working day and the foundation of the public
professional school. Instead of demanding the state-led reformations, he
came to emphasize the need for the management of social production
from the bottom-up association and trade union organization in a decen-
tralized manner.18
Behind this transformation of Marx’s view on socialism, there is his
recognition that the existing capitalist state does not become an emanci-
patory tool for the socialist transition, even if the workers take the state
power. Political reform alone cannot challenge the existing mode of pro-
duction. In fact, Marx explicitly said in Civil War in France that the
current form of the state is of no use for the sake of establishing social-
ism: “But the proletariat cannot […] simply lay hold of the existent state
body and wield this ready-made agency for their own purpose.”19 In the
transition to socialism, the modern socialist state must be dissolved into
the local-level system of governance based on the network of decentral-
ized communes.
It is noteworthy that this change of Marx’s view owes to the deepening
of his critique of political economy. Although he never fully elaborated on
his theory of the state in detail, he intended to comprehend the specifically
modern relationship between the state and civil society in continuation
with his critique of political economy. Marx pointed to the importance of
comprehending the political form of the state in its relation to the eco-
nomic forms of money and capital, although this relationship is hidden
18
Ryusuke Ohashi, Marx Shakaishugizo no Tenkan [The Transformation of Marx’s View on
Socialism] (Tokyo: Ochanomizu Shobo, 1996), 22–3.
19
Marx, The Civil War in France, MECW vol. 22, 533.
under the appearance of the separation of the economic and the extra-
economic forces. In the reified world of formal democracy, the “private”
power of civil society attains a “public” function to govern the masses
through its economic power of disciplining and oppression, which supple-
ments the enormous political power of the centralized state. This political
form of the state cannot be emancipatory. Thus, it is necessary to trans-
form the economic relations through association of workers in such a way
that their reified power can be weakened, and the political form can be
significantly transformed. This is why Marx claimed that without the tran-
scendence of economic forms, it is not possible to realize “truly demo-
cratic institutions.” Democracy must not be separated from the sphere of
social production—“the reabsorption of the State power by society”
through revolution. This is the fundamental condition for the establish-
ment of socialism.
IV. Post-Marxist Critique of Marx’s Historical

Materialism
However, the Marxist theory of the state and permanent revolution has
been denounced for its reductionistic attitude towards the multiplicity of
the sphere of political struggles which reduces everything to the determi-
nation by the economic in the “last instance.” According to the critics,
Marx’s theory of revolution is apolitical because politics is ultimately
reduced to the law of history driven by economic forces. Dick Howard
even argues that “revolution is an antithesis of the politics.”20 In a similar
manner, various critics repeatedly pointed out that the socialist emancipa-
tion of humans would oppress the political dimension through the
“administration of things.” Hannah Arendt wrote:
In Marx’s ideal society these two different concepts are inextricably com-
bined: the classless and stateless society somehow realizes the general ancient
conditions of leisure from labor and, at the same time, leisure from politics.
This is supposed to come about when the “administration of things” has
taken the place of government and political action.21
Dick Howard, The Specter of Democracy (New York: Columbia University Press, 2002), 20.
20
Hannah Arendt, Between Past and Future: Eight Exercises in Political Thought (London:
21
Penguin Books, 2006), 19–20.

52 K. SAITO
Arendt’s critique against the “administration of things” appears quite

credible, especially because it transformed into “the administration of peo-
ple” under Stalinism.
It was almost natural that Western Marxism and later post-Marxism
aimed to overcome economic determinism of traditional Marxism, paying
attention to the autonomy of non-economic spheres. Louis Althusser was
particularly important in this context, as he problematized Marx’s discus-
sion of base/superstructure and attempted to replace it with the concept
of “overdetermination,” emphasizing the relative autonomy of the super-
structure.22 However, Althusser also suffered for a long time from Engels’
notion of the determination in the “last instance” by the economic base.
In contrast, post-Marxists, despite Althusser’s strong influence on them,
got rid of the notion of the “last instance” and developed its unique the-
ory of the autonomy of the political.
For example, a major figure of post-Marxism, Jacques Rancière charac-
terizes Marx’s theory as “meta-politics.” He argues that meta-politics
treats “the political” as the false ideology and aims to dissolve it into “the
social” as “truth.”23 As Slavoj Žižek succinctly puts it, Marxist politics
from the standpoint of meta-politics is nothing but a “shadow-play” upon
which the economic process as truth is projected.
Marxist (or Utopian Socialist) meta-politics: political conflict is fully asserted,

but as a shadow-theatre in which events whose proper place is on Another
Scene (of economic processes) are played out; the ultimate goal of “true”
politics is thus its self-cancellation, the transformation of the “administra-
tion of people” into the “administration of things” within a fully self-
transparent rational order of collective Will.24
In meta-politics, there is thus no autonomy of the political, as politics is a

mere reflection of the economic forces. If economy is organized accord-
ing to “a fully rational order” beyond class antagonism, politics will be
dissolved too because it is nothing but a tool to mitigate the eco-
nomic conflict.
22
Louis Althusser, For Marx (London: Verso, 2006).
23
Jacques Rancière, Disagreement: Politics and Philosophy (Minneapolis: University of
Minnesota Press, 1999), 82.
24
Slavoj Žižek, The Ticklish Subject: The Absent Centre of Political Ontology (London:
Verso, 1999), 190.
In this vein, Rancière criticizes the Marxist theory of ideology that

reduces everything to the economic: “It is, in short, the concept in which
all politics is canceled out, either through its proclaimed evanescence, or,
on the contrary, through the assertion that everything is political, which
comes down to saying that nothing is, that politics is only the parasitical
mode of truth. Ideology is, finally, the term that allows the place of politics
to shift endlessly, right to the dizzy limit: the declaration of its end.”25
Again, there is no space for politics in Marx’s theory.
There is an inevitable impression that Marx neglected the importance
of politics because he did not write much on this topic during his lifetime.
Surely enough, Marx talked a lot about politics through his activities as a
journalist and in the First International, but he did not elaborate on his
own theory of politics. Consequently, critics can confidently argue that
Marx’s theory is class-centric, while politics is epiphenomenal. Economic
equality is more important than political and social freedom. Thus, Axel
Honneth writes: “The inevitable result is not only an inadequate under-
standing of politics, but also a failure to grasp the emancipatory potential
of these same rights to freedom.”26 Western Marxists conclude that Marx’s
theory cannot deal with the manifestation of the political through the
“new social movements” characterized with the non-economic differences
and pluralities of identities.
In the middle of the collapse of the authority of traditional Marxism and
the significant weakening of the left, post-Marxists explored the possibility of
theorizing the political without falling into economic determinism. One of
the most famous attempts can be found in the idea of “radical democracy” as
a critique of liberal and deliberative democracy developed by Rancière, Laclau,
and Mouffe. Despite theoretical differences,27 they all agree on the need to
reject historical materialism as determinism, emphasizing the incompleteness
of the society. According to Laclau, for example, every identity must be fixed
within a discursive space, but its articulation inevitably contains the exclusion
of the other, so that it can never be complete. Therefore, identity is always
fluid and modifiable. Class consciousness as the proletarian identity is no
exception, as it also must be constructed through various discursive praxis.
Laclau thus concludes that the “contradiction” of the economic sphere does
25
Rancière, Disagreement, 86.
26
Honneth, Idea, 33.
27
For the theoretical differences between Laclau and Rancière, see Ernesto Laclau’s On
Populist Reason (London: Verso, 2005), 244–9.
54 K. SAITO
not necessarily manifest as the political antagonism between capitalist and

proletariat: “Antagonism does not necessarily mean contradiction.”28
There is, so Laclau believes, no reason to be pessimistic about this. On
the contrary, he argues that it is possible to utilize this fluidity of identities
and to aim for the construction of the universal identity through the artic-
ulation of various interests, which he calls the construction of a “chain of
equivalences” through hegemonic practice. When a certain particular
identity occupies a hegemonic position, it loses its particularity and attains
a kind of universality as an “empty signifier,” under which all other par-
ticular identities are subsumed. This is the main condition for the emer-
gence of a revolutionary mass movement. However, Laclau adds that even
this universality cannot be truly universal, as long as the political constitu-
tion of such universal identity is characterized by antagonistic negation of
the other and thus inevitably excludes this otherness. Therefore, radical
democracy is incompatible with the “truth” of traditional Marxism that
the proletarian class is a universal class: “This point is decisive: there is no
radical and plural democracy without renouncing the discourse of the uni-
versal and its implicit assumption of a privileged point of access to ‘the
truth,’ which can be reached only by a limited number of subjects.”29
Rancière argues in a similar manner. Within the existing order of the
state—what he calls “police”—goods and rights as well as social status and
functions are justly allocated to its members in given relations of power.
However, such universality of the state hides a certain exclusion in reality,
for there is a group of people who do not possess their “part” due to this
exclusion. The politics emerges at the moment, when these people utilize
the universality of “equality” so as to disrupt the current allocation of
shares within the state. According to Rancière, this occurs “by implement-
ing a basically heterogenous assumption, that of a part of those who have
no part.”30 In this moment, the particular interest of the excluded group
intrudes into the universal and subverts the existing order of the police by
showing the latter’s particularity. There is a reversal of the universal and
the particular. In contrast, within Marxism the proletariat is predetemined
to incarnate the true universality, so that the perfect allocation of every-
thing is determined in advance in socialism, and the administration of
things excludes the possibility of the politics in Rancière’s sense.
28
Ernesto Laclau, New Reflections on the Revolution of Our Time (London: Verso, 1991), 8.
29
Ernesto Laclau and Chantal Mouffe, Hegemony and Socialist Strategy: Towards a Radical
Democratic Politics (London: Verso, 2001), 191–2.
30
Rancière, Disagreement, 30.
Post-Marxism believes that since any universality inevitably contains a

certain exclusion, any attempt to construct the true universality in the
completeness of society—the proletarian socialist revolution—is bound to
fail. However, this also means that the incompleteness of society contains
the possibility of radically changing any existing order as well. In this
sense, the possibility of a radical social transformation always exists. When
the particularity which is marginalized and excluded from the current dis-
cursive constellation transforms itself into the universal, it subverts the
existing order and realizes a new allocation of goods and rights. This is the
true moment of politics as an “event.”
V. Marx’s Critique of Post-Marxism

Is the post-Marxist theorization of “event” worthy of the prefix “post”
that takes over Marx’s theory of revolution? As seen earlier, Laclau and
Rancière believe that there is no total social emancipation under the abso-
lute universality. According to them, the idea of communism is over
because the economic contradiction can no longer occupy the position of
“empty signifier” in an a priori way. Today, there are only incessant hege-
monic struggles among various norms and interests seeking after the posi-
tion of the incomplete universality. By extending the chain of equivalence
over various groups, it is necessary to construct a new social movement, in
which the marginalized and excluded groups come to occupy the position
of the universality.
However, struggles in radical democracy inevitably cause more and
more conflicts and dissensus, which must be accompanied by violence and
abuse time to time, if they want to be truly radical. This poses a dilemma
of how to protect radical democracy from disastrous consequences. Setting
up a predetermined set of rules and norms to regulate forms of political
struggles would also prevent political movements from attaining a radical
consequence. On the other hand, since the political negotiations may not
always be peaceful processes and could incur violent oppression by the
state, there is no guarantee that they will lead to freedom and emancipation
instead of war and conflicts. Post-Marxists criticized Marxist economic
reductionism of the politics represented by “end of politics” and “die off
(absterben)” of the state. However, the post-Marxist alternative of “declar-
ing the revolution to be permanent” is also unfree.
Marx would agree with Laclau and Rancière that the moment when the
singular comes to occupy the position of the universal is essential for the
56 K. SAITO
politics. However, as long as the circular process of the singular and the
universal persists, Marx regards it as a proof that the social emancipation
is not realized yet because new struggles must be always renewed and
continued no matter what their costs might be. This makes a clear con-
trast to Laclau’s and Rancière’s positive view of the eternal construction
of temporal universalities.31 Marx rather seeks to put an end to this pro-
cess of bad infinite and replace it with the social communality based on
association.
However, let’s assume for a moment that it were possible to avoid fall-
ing into a violent conflict without also ending up with mere deliberations
and negotiations within a given normative framework. In that case, people
would strive after the universalization of their own interests, and society
would critically examine the validity of their claims and change “common
sense.” The distinction between the universality and the particularity
would be constantly redrawn. As a result, formal equality and freedom
would be expanded, so that new countermeasures would be set up against
issues of gender and ethnicity, which abstract universalities cannot ade-
quately deal with.
Of course, Marxism does not negate the importance of new achieve-
ments won through such a process. On the other hand, such a vision of
society would be nothing but a deflated idea of communism, if it were
regarded as the realization of human emancipation. If it is possible to
achieve true freedom and universality by extending the formal rights
within civil society, while the modern separation of the state and civil soci-
ety can be taken for granted, the necessity to overcome capitalism is sig-
nificantly obscured, and the establishment of socialism is no longer a
necessary condition for realizing true democracy: “To treat this appear-
ance as if it were the unmasked and ultimate reality is certainly no advance
in the analysis of capitalism. It mistakes a problem for a solution, and an
obstacle for an opportunity.”32 Thus, post-Marxism is not a socialist
project. “No socialist strategy can be taken seriously that ignores or

obscures the class barriers beyond which the extension of democracy
becomes a challenge to capitalism.”33
31
Alex Demirovic, “Kritik der Politik,” Nach Marx: Philosophie, Kritik, Praxis, eds. Rahel
Jaeggi, and Daniel Loick (Berlin: Shurkamp, 2013), 478.
32
Wood, Democracy, 282.
33
Ellen Meiksins Wood, The Retreat from Class: A New “True” Socialism (London: Verso,
1986), 138.
What Marx wanted to highlight was not that politics is a “shadow-

play,” but that the state as the realm of social communality is fundamen-
tally conditioned by the political form under the capitalist mode of
production. Although there is the appearance of the separation of politics
and economy, this separation also functions as a way of enabling capital’s
domination and coercion, so it is not possible to use this appearance of
separation as a starting point of struggle for opening up the future society.
This is why the transcendence of capitalism has a significant importance
for human liberation in Marx’s theory of socialist revolution.
However, this ultimate insight of Marx is significantly obscured by
post-Marxists, when they got rid of the “privileged” status of economy
and praised the autonomy of the political by juxtaposing various struggles.
As Ellen Meiksins Wood points out, the uniquely modern separation of
politics and economy de-economizes politics. Consequently, there are
multiplicities of non-economic struggles, so that they attain the appear-
ance of an autonomy that has nothing to do with economy. However, the
idea of democracy that presupposes such a separation falls into “fetishism”
by mystifying the relations of domination that exist underneath of the
“separation” precisely because of the uniquely capitalist unity of the pri-
vate and the public.34 Consequently, the post-Marxist vision of new revo-
lution of our time turns out to be insufficient and limited. Its fetishism
may end up accepting capitalism and its inequality and unfreedom.
In contrast, the transcendence of the separation between the state and
civil society begins with communally deciding the daily issues of produc-
tion and distribution as a social matter. The democratization in the sphere
of social production is the key for the democratization of politics.35
Although Marx did not elaborate on this point, it is worth exploring the
possibilities of such a new form of communal democracy that may look
like something totally different from “politics” based on the current dual-
ist separation—Demirovic calls this “the end of politics.” In other words,
there is the possibility of socialist democracy. Once liberated from reified
economic forces and the relation of domination in capitalism, the new
possibilities for social struggles in other non-economic spheres will deepen
significantly. Furthermore, only when association takes back the social
communality, and the state is freed from the political form prescribed by
Ibid., 150.
34
Michael Hardt and Antonio Negri, Assembly (Oxford: Oxford University Press,
35
2017), 147.
58 K. SAITO
the capitalist economic relations, can the state get engaged with issues in
a democratic manner that could not be conducted earlier because most of
the social issues could not be dealt with politically in the capitalist mode of
production. To overcome the anarchic competition in the market, social-
ism includes the “administration of the people” by the people for the sake
of overcoming reification. Liberalism and socialism are incompatible.
Of course, since Marx did not talk much about revolution as such or
about freedom and equality in socialist democracy, the current observa-
tion inevitably remains a fragmentary one. Yet, Marx’s vision of the tran-
scendence of the dualism of the state and civil society through revolution
documents his original insight into the need for the true democracy, and
this is exactly what is missing in post-Marxism due to its acceptance of
capitalism.
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Arendt, Hannah. The Human Condition. Chicago: The University of Chicago
Press, 1998.
Arendt, Hannah. Between Past and Future: Eight Exercises in Political Thought.
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Brown, Wendy. Edgework: Critical Essays on Knowledge and Politics. Princeton:
Princeton University Press, 2005.
Demirovic, Alex. “Rätedemokratie oder das Ende der Politik.” Proklra 155
(2009): 181–206.
Demirovic, Alex. “Kritik der Politik.” In Nach Marx: Philosophie, Kritik, Praxis,
edited by Rahel Jaeggi and Daniel Loick, 463–85. Berlin: Shurkamp, 2013.
Hardt, Michael and Antonio Negri. Assembly. Oxford: Oxford University
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the State.” In State and Capital: A Marxist Debate, edited by John Holloway
and Sol Picciotto, 1–31. London: Edward Arnold, 1978.
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Verso, 2010.
Marx’ Research Project As a Future Science
for Emancipatory Action: A Delineation
Michael Brie
I. Introduction
During every new crisis that proves the vulnerability of capitalism, Capital
is quick to resurface in the media. Marx appears as a modern-day Cassandra,
predicting the fall of the golden city, which re-announces itself in each of
these crises. His works have this effect because in them the praise of capi-
talism’s unique productiveness (in global historic perspective) and the
analysis of the system’s antagonistic dynamics and destructive force, alien-
ation and loss of control are inextricably linked. As much as Marx’s analy-
sis of capitalism is acknowledged, however, too little reference is made to
the conceptualization of communism that permeates his entire politico-
economic oeuvre. Marx’s question as to how precisely—because of the rule
of capital valorization over labour—nature and society, and within this
framework the conditions of a post-capitalist order, can develop, was
mostly put ad acta. Obviously, the collapse of the Soviet Union c ontributed
Translated by Tim Jack
M. Brie (*)
Institute for Critical Social Analysis of the Rosa Luxemburg Stiftung,
Berlin, Germany

62 M. BRIE
to this state of affairs. In 1989/91, many believed that the ruins of the
Soviet Union would likewise bury Marx’s revolutionary oeuvre. The the-
ory’s hotbed, as it seemed, had gone cold. Only Marx’s analysis of the
actual state of a world dominated by capitalism seemed to survive. This
assumption proved premature.
Marx, from the very beginning, struggled against the cleavage in the
reception of Capital between pure analysis and the work’s transformation-
oriented aim. As it provides such a vivid and convincing analysis of the
capitalist mode of production and forms of domination, many readers
completely missed Marx’s actual point. Referring to a letter by the textile
entrepreneur Gustav Meyer, Marx wrote to his friend Ludwig Kugelmann
in 1868: “Meyer’s letter gave me great pleasure. However, he has partly
misunderstood my exposition. Otherwise he would have seen that I depict
large-scale industry not only as the mother of the antagonism, but also as
the producer of material and intellectual conditions for resolving these
antagonisms, though this cannot proceed along pleasant lines”.1 Marx’s
fundamental conviction of the inevitable demise of capitalism rested on a
presumed objective process during which capitalism would produce the
conditions for its transformation to communism—or otherwise the sys-
tem’s downfall into barbarism.
II. Three Introductory Methodological Remarks

Understanding Capital and Marx’s conceptualization of the (capitalist)
economy requires us to return to 1843/44. At this time, Marx set a course
that would determine his further political and theoretical work. In particu-
lar against the backdrop of left-wing Hegelianism, a current of thought
already in its terminal crisis at the time, his choice of course becomes com-
prehendible. Regarding this issue, it is important to point out three things:
(1) Marx’s values and basic assumptions, (2) his research questions, and
(3) his methodology.
Turning from Kant to Hegel, Marx had written to his father in 1837:
“There are moments in one’s life which are like frontier posts marking the
completion of a period but at the same time clearly indicating a new direc-
tion. […] A curtain had fallen, my holy of holies was rent asunder, and
new gods had to be installed. From the idealism which, by the way, I had
1
Karl Marx, “Marx to Kugelmann, 11 July 1868,” in MECW (London: Lawrence &
Wishart, 1987), 42: 552.
MARX’ RESEARCH PROJECT AS A FUTURE SCIENCE FOR EMANCIPATORY… 63
compared and nourished with the idealism of Kant and Fichte, I arrived at
the point of seeking the idea in reality itself. If previously the gods had
dwelt above the earth, now they became its centre.”2 Five years later, after
witnessing the reactionary backlash in Prussia, and being deeply involved
in the intense debates and the left-wing Hegelians’ bold search for new
horizons and, as an editor of the Rheinische Zeitung newspaper, con-
fronted with the social and political problems in Prussia’s Rhine Province,
Marx was ready to install other, new “gods”. Max Weber describes such
turning points as follows: “All research in the cultural sciences in an age of
specialization, once it is oriented towards a given subject matter through
particular settings of problems and has established its methodological
principles, will consider the analysis of the data as an end in itself. It will
discontinue assessing the value of the individual facts in terms of their
relationships to ultimate value-ideas. Indeed, it will lose its awareness of its
ultimate rootedness in the value-ideas in general. And it is well that [it]
should be so. But there comes a moment when the atmosphere changes.
The significance of the unreflectively utilized viewpoints becomes uncer-
tain and the road is lost in the twilight. The light of the great cultural
problems moves on. Then science too prepares to change its standpoint
and its thinking apparatus and to view the streams of events from the
heights of thought. It follows those stars which alone are able to give
meaning and direction to its labors.”3 There are hardly better words to
describe Marx’s productive crisis in 1843, during which he rapidly wrote
the texts compiled in the German-French Annals (1844), and which,
through the direct influence of Engels’ Outline of a Critique of Political
Economy, then led Marx to focus his attention on political economy. Marx
pinpointed new—communist—stars on the horizon, which he conse-
quently followed thereafter.
An additional response to the importance of research questions is found
in Immanuel Kant. In the preface to the second edition of The Critique of
Pure Reason, Kant wrote about the founders of modern science Galileo
Galilei and Isaac Newton: “They comprehended that reason has insight
only into what it itself produces according to its own design; […] for oth-
erwise accidental observations, made according to no previously designed
plan, can never connect up into a necessary law, which is yet what reason
2
Karl Marx, “Marx to His Father, 10–11 November 1837,” in MECW (London: Lawrence
& Wishart, 1975), 1: 10, 18.
3
Max Weber, The Methodology of Social Sciences (Glencoe: The Free Press, 1949), 112.
64 M. BRIE
seeks and requires.”4 Understanding Capital requires particular consider-

ation of the questions that the “appointed judge” Marx posed and recon-
struction of his experimental arrangement. These questions, however,
were formulated by Marx in the years following 1843. His experimental
arrangement developed in a process that spanned two decades, during
which he constantly revised his approaches. Capital is constructed as an
“artistic whole”,5 and aims to condense the vast number of observations
Marx had made into a “necessary law” which points towards communism.
Understanding thinkers like Marx, who develop new perspectives with
such deep implications, requires a scientific-methodological approach that
not only touches on Marx’s values and the initial questions he strove to
answer, but also reveals how he reached his conclusions and developed his
categories and his methodology. The suggestive power of Capital lies in
the stringent presentation that very impressively blends the logic of his line
of thought with the wealth of empirical material. It is highly tempting to
think that reality itself is speaking as a “craggy melody”.6 However, the
“rational character of the thing”—there is no returning to the times before
Kant—is a construction which itself does not immediately relate to the
reality of things, but only to ideal objects, created within the theory itself.
These objects are the theory’s central categories. Based on the available
empirical material, the chosen methodology defines the possible links
between categories. As Ė. M. Čudinov writes, we need to remember the
“activity of construction”: “Not only is the essence non-observable.
Usually it cannot even be derived from a set of phenomena. The construc-
tive activity of thinking […] is the only possible form of perception. Based
on a set of initial assumptions, researchers then need to establish a system
of theoretical objects and formulas, through which then the essence of a
particular phenomenon can reveal itself.”7 While the theoretical approach
conditions the selection of empirical material, the theory also changes due
to these choices. Inversely, this implies that the analysis of theories demands
an accurate examination of the processes by which these theoretical objects
were constructed, to which the theory then directly refers, and how they
are subsequently related to each other. We are required to dissect how
4
Immanuel Kant, Critique of Pure Reason. Second Edition 1787 (Cambridge: Cambridge
5
Karl Marx, “Marx to Engels, 31 July 1865,” in MECW (London: Lawrence & Wishart,
1987), 42: 173.
6
Marx, “Marx to His Father, 10–11 November 1837,” 18.
7 ̇
E. M. Č udinov, Priroda Naučnoi Istiny (Die Natur der wissenschaftlichen Wahrheit)
(Moskva: Izdatel’stvo političeskoj literatury, 1977), 222.
these constructs highlight essential contexts, or block us from seeing rel-

evant processes, and how the empirical material was selected. These three
reasons rule out any naïve direct approach to Marx’s oeuvre.
III. Marx’s “Value Ideas” and Critical

Proletarian Communism
Marx formulated his research questions between 1843 and 1845 against
the backdrop of the dissolution of left-wing Hegelianism. The contradic-
tion between Hegel’s system and the perceived reality of Prussia and
Germany became unbearable. Arnold Ruge, who was closely tied to Marx
until 1844, demanded a break from the “lazy contemplativeness of
Hegelianism” and rekindling of “the Fichtean energy of the deed”. He
considered “the concrete and meaningful ‘ought’ of the self-knowing his-
torical present” to be “the dialectic of history itself”.8 Against the back-
drop of the crisis of left-wing Hegelianism, Marx, who worked as editor at
the Rheinische Zeitung newspaper, witnessed social injustices, the domi-
nance of the interests of major owners, and the ubiquitous limitations to
essential liberal freedoms. In 1843, this led him to formulate in the
Critique of Hegel’s Philosophy of Right the central value idea that would
guide his work over the coming decades. Marx transformed this into the
demand to participate in the practical revolutionary overthrow of society
until all forms of domination and exploitation were overcome: “The criti-
cism of religion ends with the teaching that man is the highest being for
man, hence with the categorical imperative to overthrow all relations in
which man is a debased, enslaved, forsaken, despicable being.”9
While therefore confronted in 1843 with the intellectual crisis of the
movement of which he was a part, Marx, nonetheless, had begun to search
for practical approaches to universal emancipation by means of a universal
revolution of the real conditions of a real society. This was the guiding value
idea that continuously drove him forward and provided the basis for his
critical proletarian communism.10 Organically, therefore, Marx attempted to
8
Arnold Ruge, “Zur Kritik des gegenwärtigen Staats- und Völkerrechts (1840),” in Die
Hegelsche Linke. Dokumente zu Philosophie und Politik im deutschen Vormärz, eds. Heinz
Pepperle and Ingrid Pepperle (Leipzig: Reclam jun., 1985), 153.
9
Karl Marx, “Contribution to the Critique of Hegel’s Philosophy of Law. Introduction
(1844),” in MECW (London: Lawrence & Wishart, 1975), 3: 182.
10
Marx used the term “German, […] critical communism” in 1851 with regard to the
concepts developed by him and Engels to distinguish them from other forms of communism,
66 M. BRIE
blend three approaches: a new notion of critique, a highly specific definition

of communism, and a direct link to the proletarian movement of his time.
Let us begin with his notion of critique. Between 1843 and 1845, Marx
gradually developed his new, five-tier approach to critical reflection: (1)
critique of theoretical and practical awareness, as far as they apologetically
relate to real conditions, or apply abstract moral standards from outside;
(2) critique of actual forms of domination and exploitation as temporary
forms of an antagonistic development; (3) critique as an effort to uncover
those tendencies and elements that already transcend current society; (4)
critical self-reflection by the truly emancipatory movements to clarify their
goals, means, and strategies; and (5) the permanent criticism and self-
criticism of the “enlighteners”. Such criticism should become an organic
part of these movements. This was a “Copernican revolution” of the
notion of critique following upon both Kant and Hegel.11 Marx saw cri-
tique as an organic element of revolutionary practice, as “the coincidence
of the changing of circumstances and of human activity or self-change can
be conceived and rationally understood only as revolutionary practice”.12
A critique, however, could only achieve this by being a conscious and
self-disciplined reflection of the preconditions, conditions, strategies, and
consequences of the practices aiming to transform society (Fig. 1).
While Marx’s notion of critique therefore represents the first step on his
new course, his conceptualization of communism is the second. From late
1843 onwards, Marx identified his emancipatory project with the terms
socialism and communism. In early 1843, he still saw democracy as a
“solved riddle of all constitutions”,13 and described democracy as the
“genus Constitution”.14 One year later he wrote: “Communism is the
riddle of history solved, and it knows itself to be this solution.”15 In
October 1842, Marx had written that the Rheinische Zeitung newspaper
“does not admit that communist ideas in their present form possess even
which they had criticized in the Manifesto. Karl Marx, “Revelations Concerning the
Communist Trial in Cologne,” in MECW (London: Lawrence & Wishart, 1979), 11: 455.
11
See Kurt Röttgers, Kritik und Praxis. Zur Geschichte des Kritikbegriffs von Kant bis Marx
(Berlin and New York: De Gruyter, 1975).
12
Karl Marx, “Theses on Feuerbach,” in MECW (London: Lawrence & Wishart, 1975), 5: 4.
13
Karl Marx, “Contribution to the Critique of Hegel’s Philosophy of Law,” in MECW
(London: Lawrence & Wishart, 1975), 3: 29.
14
Ibid., 29.
15
Karl Marx, “Economic and Philosophic Manuscripts of 1844,” in MECW (London:
Lawrence & Wishart, 1975), 3: 297.
Fig. 1 Marx’s concept of critique
theoretical reality, and therefore can still less desire their practical realiza-
tion, or even consider it possible”.16 But, he had added: “We are firmly
convinced that the real danger lies not in practical attempts, but in the
theoretical elaboration of communist ideas, for practical attempts, even
mass attempts, can be answered by cannon as soon as they become danger-
ous, whereas ideas, which have conquered our intellect and taken posses-
sion of our minds, ideas to which reason has fettered our conscience, are
chains from which one cannot free oneself without a broken heart; they
are demons which human beings can vanquish only by submitting to
them”.17 One year later, he subscribed to exactly this idea of communism,
held on to it for the rest of his life, and gave it a form that left a crucial
mark on the twentieth century.
At this time, Marx aimed for radical solutions to the problems of his
epoch. He therefore broke with Hegelian concepts that sought to mediate
in some way the contradictions between bourgeois society (man as bour-
geois) and the state (man as citoyen). Marx did not strive to develop new
forms of mediating between these opposite poles; he aimed to dissolve the
differences. Marx therefore redefined the term emancipation and in On
the Jewish Question he wrote: “All emancipation is a reduction of the
human world and relationships to man himself. […] Only when the real,
16
Karl Marx, “Communism and the Augsburg Allgemeine Zeitung,” in MECW (London:
17
Ibid., 220f.
68 M. BRIE
individual man […] has become a species-being in his everyday life, in his
particular work, and in his particular situation, only when man has recog-
nized and organized his ‘forces propres’ as social forces, and consequently
no longer separates social power from himself in the shape of political
power, only then will human emancipation have been accomplished.”18
In these brief sentences, Marx gives his answer to the question posed by
Rousseau in the “Social Contract” as to how a free association can be
founded. He mentions two conditions: first, the forces of the individuals
alienated from bourgeois society must be jointly appropriated and socially
organized by them; second, these forces must be transformed into ways of
free development of individuals. Through this double process of transfor-
mation every individual expression of life becomes directly social and every
social activity follows its free self-development. A direct identity of social
and individual development is established.
Third, from 1843 onwards, Marx combined his understanding of cri-
tique and communism with his orientation towards the new class of indus-
trial proletarians. In particular, through his studies of the history of the
great French Revolution, Marx had reached the conclusion that the more
radically the question of emancipation is posed, the more its representa-
tives will tend to be members of evermore disenfranchized groups of ever-
lower social standing, who nonetheless decisively determine society. Both
characteristics, according to Marx, applied to the proletariat. In bourgeois
society, freedom was tied to private property, yet the class of those with-
out property was rapidly expanding. While producing private property,
the proletariat was excluded from it. Decisively, the new, exponentially
increased capacity of capitalism to produce wealth was based precisely on
this mechanism of exclusion. What then would happen if this class ever
demanded emancipation? The political revolution would trigger a revolu-
tion of property ownership, a social revolution. An emancipation of this
new class, Marx argued, was inconceivable without a communist transfor-
mation of the whole of society. However, from Marx’ point of view, this
class was the only power that could achieve it. This provided the
cornerstone for his construct of critical proletarian communism: “Where,
then, is the positive possibility of a German emancipation? Answer: In the
formulation of a class with radical chains.”19
18
Karl Marx, “On the Jewish Question,” in MECW (London: Lawrence & Wishart,
1975), 3: 168.
19
Marx, “Contribution to the Critique of Hegel’s Philosophy of Law. Introduction
(1844),” 186.
Marx’s critical communism as a structure, however, still lacked a foun-

dation. His new method of critique had not yet been critically applied to
any particular question, and therefore remained empty. The communist
vision was nothing more than a promise of total emancipation and lifting
of all alienation of social powers. It remained undefined. Betting on the
proletariat as the agent of this universal emancipation was a bet on
uncharted territory, and its guarantee of success was to lie in the presence
of a bourgeois and industrializing society that gave rise to its own grave-
diggers. As a theory, as well as politico-practically speaking, however, they
still remained three separate elements. From there on, a spiralling, cyclical
process took hold in Marx’s work, which was guided by the materialist
basis of his method of critique, the politico-economic foundation of his
vision of communism, and his political commitment to ensuring the work-
ers’ movement became conscious of its historic role.20 This triangle was
the prism Marx used to focus his concept of universal emancipation and
through which he aimed to enlighten his objects of analysis and of politics.
Marx’s oeuvre and his work after 1843/44 can be understood as such a
“delving into” (Fig. 2).
Fig. 2 Marx’s prism of intervention
20
Lutz Brangsch, “Das Kommunistische als Erzählung der Sozialdemokratie des 19.
Jahrhunderts. Der ‘Deutsche Kritische Kommunismus’,” in Das Kommunistische. Oder: Ein
Gespenst kommt nicht zur Ruhe. Mit Beiträgen von Bini Adamczak, Friederike Habermann
Und Massimo De Angelis, ed. Michael Brie and Lutz Brangsch (Hamburg: VSA, 2016).
70 M. BRIE
IV. Capital As a Historic-Materialist Drama

The most important outcome of Marx’ lifelong research processes was of
course the Capital. Too often it is read just as a mere analysis of the capitalist
mode of production. But Capital is much more. It is definitely one of the
greatest dramas in the European history of ideas, comparable to Plato’s
Republic, Hobbes’ Leviathan, or Hegel’s Phenomenology of the Mind.
From the outset, Marx made his intentions very clear: “[T]hese petrified
relations must be forced to dance by singing their own tune to them!”21
It is no coincidence that Marx, in the introduction to the first volume
of what he planned in 1859 to become a series, but which was published
under the title A Contribution to the Critique of Political Economy, pro-
vided some “brief remarks regarding the course of [his] study of political
economy”, in addition to a brief introduction of the “guiding principle”
of his materialistic methodology. This introduction can also be seen as the
overture to his opus magnum. The central themes are there: his opposition
to domination and exploitation, the need for an informed economic analy-
sis as the basis for any analysis of society, the history of humankind charac-
terized by a historic sequel of antagonisms, and the perspective of their
communist solution.
In Capital, a critical analysis of the capitalist mode of production was to
reveal the emancipatory options to overcoming the system. A “correct
approach” of social conditions, grounded ultimately in history, would,
according to Marx, lead to “points which indicate the transcendence of the
present form of production relations, the movement coming into being, thus
FORESHADOWING the future”.22 Marx aimed to prove in Capital that the
increasing maturity of “material conditions, and the combination on a social
scale of the processes of production” also provided the basis for “contradic-
tions and antagonisms of the capitalist form” to mature, and “thereby
provide[d], along with the elements for the formation of a new society, the
forces for exploding the old one”.23 This included revealing reactionary and
barbaric counter-tendencies that were potentially capable of bringing down
the entire emancipatory project. Marx in this regard stayed true to his five-tier
approach to critique described earlier. Ernst Bloch condensed this approach
21
Marx, “Contribution to the Critique of Hegel’s Philosophy of Law. Introduction
(1844),” 178.
22
Karl Marx, “Outlines of the Critique of Political Economy (Rough Draft of 1857–58),”
in MECW (London: Lawrence & Wishart, 1986), 28: 389.
23
Karl Marx, Capital, Vol. I, in MECW (London: Lawrence & Wishart, 1996), 35: 504f.
applied by Marx in Capital into the following formula: “The dialectical-his-

torical tendency science of Marxism is thus the mediated future science of
reality plus the objectively real possibility within it; all this for the purpose
of action.”24
Marx closed the Introduction of 1859 with Dante’s words: “At the
entrance to science, as at the entrance to hell, the demand must be made:
Qui si convien lasciare ogni sospetto. Ogni vilta convien che qui sia morta.
[From Dante, Divina Commedia: Here all misgiving must thy mind reject.
Here cowardice must die and be no more].”25 In his book Marx’ Inferno:
The Political Theory of Capital, William Clare Roberts argues that “the
structure of Capital lies in the structure of Dante’s Inferno”.26 Clearly,
Capital can be understood as a materialist drama of exploitation that
closes with a perspective of liberation, of social revolution as its purifying
purgatory. It subsequently aims to provide guidance to those who have
got lost so that by going through Inferno they may find a path to libera-
tion. The Preface is the road map.
If we interpret Capital as a drama in analogy to Inferno in Dante’s
Divine Comedy as William Clare Roberts supposes,27 then the first act
presents us with the transformation of a society of free and equal people
who exchange commodities in a world in which the “the social character
of men’s labour appears to them as […] a social relation, existing not
between themselves, but between the products of their labour”.28
Hereafter, the money fetish, which they themselves have produced, rules
them. This is the antechamber to Inferno. From here, we reach the sec-
ond section of Capital, which at the same time constitutes the second act
of the drama. It describes how the free and equal separate into a society
where “the possessor of labour power” is forced into “bringing his own
hide to market and has nothing to expect but—a hiding” to the benefit of
“capitalists”.29 The very long third act develops this relation between
both classes as a production of multiple forms of surplus value and wage,
struggles over the mediation of the relation between both classes by
24
Ernst Bloch, The Principle of Hope (Cambridge, MA: The MIT Press, 1995), 1: 285.
25
Karl Marx, “A Contribution to the Critique of Political Economy,” in MECW (London:
26
William Clare Roberts, Marx’s Inferno: The Political Theory of Capital (Princeton:
Princeton University Press, 2016).
27
Dante’s text consists of three parts: Inferno, Purgatorio, and Paradiso.
28
Marx, Capital, Vol. 1, 83.
29
Ibid., 186.
72 M. BRIE
developing the real capitalist mode of production, as well as the struggle

over legal interventions to regulate the relationship between capital and
labour. These are sections three to six of Capital. In the fourth act, Marx
develops the antagonism between capital and labour as the “General Law
of Capitalist Accumulation” (section seven) of a reproductive relation-
ship: “Accumulation of wealth at one pole is, therefore, at the same time
accumulation of misery, agony of toil, slavery, ignorance, brutality, men-
tal degradation, at the opposite pole, i.e., on the side of the class that
produces its own product in the form of capital.”30 Part VIII of Capital,
the so-called primitive accumulation, reconstructs the historic develop-
ment of the classes of capitalists and workers and anticipates the expected
negation of the capitalist mode of production through a social revolution
as an exit from Inferno.
Marx takes the readers of Capital from a very general unit, commodi-
ties, through the intermediate stages of money and capital to surplus value
and from there to the concrete general concept of capitalist accumula-
tion.31 He describes this accumulation as a process that turns everything
into a commodity, antagonistically splits society into two, and subdues
workers evermore completely. Marx’s categories are theoretical objects
that he enriches over the course of the text both in terms of categories and
empirically. A spiral develops that underlies all four acts of the drama
(Fig. 3). The relationships and the actors involved are thereby transformed
and transform themselves.
V. Open Questions
The real drama of the development of the capitalist mode of production
has unfolded in a way that Marx had not anticipated. The communist
revolutions inspired by him did not take place in the centres of the capi-
talist world system but at the semi-periphery. The social systems that
emerged from these revolutions have partly collapsed or have moved in a
direction that includes the introduction of essential institutions of capital
accumulation. At the same time, global capitalism is in the midst of
30
Ibid., 640.
31
Evald V. Ilyenkov, The Dialectics of the Abstract and Concrete and Marx’s Capital
(London: Progress Publishers, 1982); Viktor A. Vazjulin, Die Logik des “Kapitals” von Karl
Marx (Norderstedt: Books on Demand, 2006); Helmut Reichelt, “Zum Problem der diale-
ktischen Darstellung ökonomischer Kategorien im Rohentwurf des Kapitals,” in Geld—
Kapital -Wert. Beiträge zur Marx-Engels-Forschung. Neue Folge 2007, ed. Rolf Hecker,
Richard Sperl, and Carl-Erich Vollgraf (Hamburg: Argument, 2007).
Fig. 3 Marx’s Capital as a process in the form of a spiral
a multi-crisis that is resulting precisely from its global success. A renewed

reading of Capital must face the real historical development of the last
150 years and this contradictory situation. This becomes clear when one
talks about the starting point of Capital—the commodity as the elemen-
tary form of wealth in capitalist societies.
One of the fundamental difficulties of Marx’s historic-materialist
method is the unbelievable complexity of his object of critique. As sketched
out in the introduction to his Outlines of the Critique of Political Economy
(1857/58), Marx’s path takes him from the abstract to the specific.
Correspondingly, Capital begins with the following sentences: “The
wealth of those societies in which the capitalist mode of production pre-
vails, 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.”32
Marx, Capital, Vol. 1, 45.

32
74 M. BRIE
These two sentences at the beginning of Capital rest on complex

underlying assumptions. They assume the capitalist mode of production’s
rule over society and the terms wealth, presents itself and commodity are
introduced. Then, Marx speaks of unit. A commodity here is as much a
theoretically constructed object (category) as an object of direct contem-
plation under specific social conditions, staring anybody in the face who
dares to enter a shopping mall. As practical experience immediately
teaches, unlike in pre-capitalist societies, under the rule of the capitalist
mode of production, merely securing one’s existence is bound to the con-
dition of commodity ownership. After the failed revolution of 1848,
Heinrich Heine, whom Marx referred to as a friend in Capital, wrote in a
poem in 1851: “But if thou hast nothing, friend, Go and hang thyself this
minute; Only they who’ve aught on earth Have a claim for living in it.” A
larger part of the wealth on which mere survival depends, but not all of it,
takes the commodity form. As Wolfgang Fritz Haug writes: “What kind of
gaze then perceives the wealth of bourgeois society merely as a collection
of commodities? It is the gaze of consumers. […] Only that part of wealth,
which is up for sale is a commodity.”33
While Marx in the introduction to the Outlines in 1857 still spoke very
generally on the “division of labour, money, value, etc.” as “abstract, gen-
eral relations”,34 his confrontation with the Proudhonists led him to
become more precise in two regards. First, Marx sought to debunk the
idea that abolishing money would lead to a free exchange of goods based
on the amount of working hours that goes into their production.
Proudhonists, he was convinced, simply did not understand that the
money form is a mere result of the commodity form. Marx’s great efforts
to derive money from commodities and his decision to begin his magnum
opus with a complex presentation of value forms is only comprehensible
against the backdrop of his specific politico-programmatic confrontation
with Proudhonism. He therefore also warned Engels: “Should you write
something, don’t forget, 1. that it extirpates Proudhonism root and
branch, 2. that the specifically social, by no means absolute, character of
bourgeois production is analysed straight away in its simplest form, that of
33
Wolfgang Fritz Haug, Vorlesungen zur Einführung ins “Kapital” (Köln: Pahl-Rugenstein,
1974), 42; see also Michael Heinrich, Wie das Marxsche “Kapital” lesen. Teil 1: Leseanleitung
und Kommentar zum Anfang des ‘Kapital’ (Stuttgart: Schmetterling, 2016), 50ff.
34
Karl Marx, “Outlines of the Critique of Political Economy (Rough Draft of 1857–58).
Introduction,” in MECW (London: Lawrence & Wishart, 1986), 28: 37.
the commodity.”35 In this regard, Marx’s theory of money results from the
internal conflict between socialist currents on the tangible options to over-
throw capitalism. The political came before the scientific goal and both
were inextricably linked. In 1859, two alternative socialist politico-
economic approaches existed: Proudhon’s elaborated theory and Marx’s
oeuvre, which had not yet matured to its full extent. The conflict within
the socialist camp and the opposition to Proudhonism clearly made its
mark on Capital. Without the documents of the deliberations of the
International Workingmen’s Association (IWMA), where they were con-
troversial issues, the centrality of the struggle for shorter working days,
salary increases, and union organization in Capital makes no sense.
Second, by emphasizing the dual nature of commodities (value and use
value) Marx showed that—unlike previous socialist economists had
assumed—capitalist exploitation (i.e. appropriation of unpaid work) does
not contradict the law of value (the exchange of commodities based on the
invested quantities of abstract labour), and actually becomes possible, in
particular when the law is consistently applied. According to Marx, for
their labour, workers receive a value commensurate to the cost of repro-
ducing their labour power (if on a market). The law of value can by no
means ensure that they receive the total value of the products their labour
in capitalist businesses produces. The common assumption that fully
applying the law of value is enough to overcome capitalism, according to
Marx, remains blind to the fact that only after capitalism developed did
this law of value become precisely the law regulating the dominant mode
of production.
This argument too is owed to the divide in the socialist camp. The
IWMA discussions focused on strategic questions: Can union struggles for
higher wages be successful in the long term? What connection exists
between the political emancipation of the working classes and their seizing
of political power as the means to achieve this? Whether a reformist trans-
formation of bourgeois capitalist societies is possible that, while retaining
the economic institutions (private property, markets, competition, credit,
banks, returns, etc.), can transform them into socialist, association-based
forms was an open question. The Proudhonists defended this position.
The aim was a new balance between the law of value, markets, competi-
tion, and state regulation. Out of free agreements between workers, and
35
Karl Marx, “Marx to Engels, 22 July 1859,” in MECW (London: Lawrence & Wishart,
1983), 40: 473.
76 M. BRIE
within the existing system, a new system was to evolve from below. For the
Proudhonists, the aim of socialist politics lay in ensuring the best possible
favourable conditions for such a transformation.
Marx in contrast referred to revolution as the way to overcome capital-
ism. In his view, the establishment of a democratic dictatorship of the
proletariat, by handing over the means of production to the working class,
would initiate a complete overhaul of the modes of production and living
and pave the way towards a communist society. In conscious reaction to
the conditions for worker’s reproduction, a total transformation of the
modes of production and living could begin and in the long term provide
opportunities for every individual’s free development in solidarity with the
development of all. Based on this position, in the IWMA, Marx promoted
uniting the union and political struggles to conquer the state, the political
independence of the workers’ movement vis-à-vis bourgeois and petty
bourgeois forces, a consistent orientation towards common property, and
a dictatorship of the proletariat as the political expression of the rule of the
working class.36
In view of this consideration, it should be noted that Marx’s attempt to
solve the socialist conflict over political economy led to a set of new prob-
lems that have remained unsolved until today. Two of them are worth
considering briefly. They are closely related to the issues we have just dis-
cussed and are inspired by the work of Karl Polanyi. One initial problem
with Marx’s critique of the political economy is that any form of institu-
tional mediation of social conditions now appears rooted in the capital
relation. This is mainly the result of his concept of a communist society.37
Communism was community-based for him.38 He consciously and “logi-
cally” derived the relationship between capital and labour from that
between the owners of commodities. Marx vehemently rejected the idea
of Proudhonists that associative forms of production and free exchange
were possible based on the value of labour.
36
See Hannes Skambraks, Das Kapital von Marx—Waffe im Klassenkampf. Aufnahme und
Anwendung der Lehren des Hauptwerkes von Karl Marx durch die deutsche Arbeiterbewegung
(Berlin: Dietz, 1977); Marcello Musto, Workers Unite! The International 150 Years Later
(New York and London: Bloomsbury Academic, 2014).
37
On the relationship between work on Capital and Marx’s understanding of a communist
society, see W. S. Wygodski, Das Werden der ökonomischen Theorie von Marx und der
Wissenschaftliche Kommunismus. (Berlin: Dietz, 1978).
38
See Peter Ruben, “Die kommunistische Antwort auf die soziale Frage,” Berliner Debatte
Initial 9, no. 1 (1998).
From here, Marx evolved to a communist position. For him, commu-

nism constituted a society grounded on the indivisible common owner-
ship of the means of production. As he wrote in Capital, the producers, as
a “community of free individuals” would produce “with the means of
production in common, in which the labour power of all the different
individuals is consciously applied as the combined labour power of the
community”.39 Marx added: “All the characteristics of Robinson’s labour
are here repeated, but with this difference, that they are social, instead of
individual.”40 A communist society is imagined as a community and a
monolithic subject. Individual property would exist only in the context of
common ownership.41 It would reveal itself as individual appropriation of
social wealth through such a transformation of the mode of production, in
which work for society contributes to the free development of each indi-
vidual and becomes their primary life concern. For Marx, communism is a
society in which the work of each and every individual becomes immedi-
ately social. Conversely, according to Marx, work for society would then
appear directly as personal development. The interests of all members of
society together and of each individual directly coincide in this model. It
is therefore only consistent for Marx to assume that once on this course,
all bourgeois forms of mediation of the commodity-money relation, laws,
and the state would die off.
A society not characterized by the contradictions between individual,
collective, and social developments, and in which the individual interests
and collective interests of everybody coincide, is unachievable—a non-
workable utopia. Marx in many instances suggests such a utopia. The
expansion of freedom that communism promises inevitably creates new
contradictions between individual, collective, and social forms of repro-
duction and development. According to the concept of socialism, the only
difference would be that the form these struggles take would no longer
exist within the framework of the primacy of capital accumulation. Not
necessarily less severe, the contradictions would nonetheless lose their
39
Marx, Capital, Vol. I, 89.
40
Ibid.
41
In Capital, where Marx delineates the perspective of a communist society, he writes:
“But capitalist production begets, with the inexorability of a law of Nature, its own negation.
It is the negation of negation. This does not re-establish private property for the producer,
but gives him individual property based on the acquisitions of the capitalist era: i.e., on co-
operation and the possession in common of the land and of the means of production.” Marx,
Capital, Vol. I, 751.
78 M. BRIE
class character. One could also say that as these questions concern personal
development, specific collective identities, and creative processes, such
contradictions would hopefully no longer play out as a threat to personal
subsistence. At the same time, they would gain a new dimension touching
on people’s innermost self-image.
Marx upheld a vision of a society in which the individual work and actions
become immediately social as part of a single plan until his later writings as
documented in his Critique of the Gotha Programme. The downside was
that any reform that does not aim to abolish the institutions of bourgeois
society, but instead strives to give them a new direction, could be considered
a sham reform—at least for as long as the proletariat does not hold the
political power. Such an approach considers breaking capital’s dominance as
essentially equal to systematically abolishing all market-based, legal, and
political forms of mediation in modern societies. A form of socialism with
room for markets becomes inconceivable. Furthermore, while a post-capi-
talist society faces considerable difficulties, the focus is merely on solving the
contradictions of capitalism, with no regard for newly arising contradictions.
This conceptualization of the capitalist economy was unable to anticipate
the expansion of the social welfare state and social property,42 the develop-
ment of a mixed economy, and the society combining different logics.43 It
made the search for transformative strategies that go beyond capitalism and
combine rupture, expansion of niches, and symbiotic development44 all the
more difficult. The ideologues of state party socialism firmly based them-
selves on these elements of Marx’s approach. The concentration of all power
at one centre appeared as consistently “Marxist”. Its role as an indispensable
representative of the mono-subject provided the legitimacy of the commu-
nist state party. Common property, the indivisible power of everybody, and
the predominance of a single concept, communism, was the model.
However, this socialism of the twentieth century failed. Based on a different
perspective for a post-capitalist society, a contemporary critique of the capi-
talist economy will require a new take on the question of “[f]reedom in a
complex society”.45
42
Horst Müller, Das Konzept PRAXIS im 21. Jahrhundert: Karl Marx und die Praxisdenker,
das Praxiskonzept in der Übergangsperiode und die latente Systemalternative (Norderstedt:
Books on Demand, 2015), 406ff.
43
T. H. Marshall, Citizenship and Social Class (Cambridge: Cambridge University Press,
1950).
44
Erik Olin Wright, Envisioning Real Utopias (London and New York: Verso, 2010), 273ff.
45
Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time,
2nd Beacon Paperback ed. (Boston, MA: Beacon Press, 2001), 257ff.
An up-to-date critique of the capitalist economy will among other con-

cepts require revisiting Marx’s starting point in Capital, his choice of the
category of commodity. As Karl Polanyi showed, central goods for the
reproduction of the capitalist mode of production are not produced as
commodities. These are what he calls “fictitious commodity”: “The cru-
cial point is this: labor, land, and money are essential elements of industry;
they also must be organized in markets; in fact, these markets form an
absolutely vital part of the economic system. But labor, land, and money
are obviously not commodities; the postulate that anything that is bought
and sold must have been produced for sale […] is emphatically untrue in
regard to them.”46 If, however, the most essential goods—labour, natural
resources, and money—are not commodities, but only to a limited and
contested extent take on the form of commodities, this fundamentally
changes the analysis of the capitalist mode of production. It is not the
commodity as an elementary form of capitalist wealth that then forms the
starting point of analysing capitalism, but rather the complex systems of
earthly nature (the Gaia sphere), life worlds, social institutions, and cul-
ture under the primacy of capital accumulation (Fig. 4). If money is not
Fig. 4 The reproductive relationship of capitalist societies
Polanyi, The Great Transformation, 75.

46
80 M. BRIE
itself created through the movement of commodities, but created in the

central bank-supported credit system, if labour force is not sold and the
use of labour force instead only temporarily rented (and the willingness to
do so is not fully ruled by the laws of the labour market), if natural
resources and their reproduction do not essentially follow market laws,
then this requires us to redefine the starting point of any, and in particular
a historic-materialistic, analysis of the capitalist mode of production.
The specifically capitalist mode of production derives its “production
factors” from the four mentioned systems. Under the primacy of capital
accumulation, they are profoundly changed or destroyed. Capitalist
wealth, expressed in the growth of the gross national product of goods on
the market and of profit, is at odds with the wealth of natural diversity and
a liveable environment, good work and good life, stable and legitimate
social institutions, and the possibilities of a free cultural society.47 The
ancient concept of household or family management (oikonomiké) would
have to be reformulated as Ecommony.48 At the heart of such an economy
would be the reproduction of those systems from which the resources stem
and to which they return after careful use. Such a changed understanding
of the capitalist mode of production also changes the perspective on
strategies of fundamental reforms in capitalism and beyond. The old con-
trast between reform and revolution is receding in the face of a new Great
Transformation that overcomes the capitalist market society. Both are
needed at the same time—reforms that relativize the subordination of the
commodities of a free life for all to capital accumulation and revolutionary
ruptures that overcome the dominance of capital accumulation over the
reproduction of nature, society, and culture.
With Beverly Silver, we could also say that the Marx-type struggles
(capital vs. labour) are today being subdued by Polanyi-type struggles.49
They are mainly struggles over the freedoms that ensure a good life50 and
47
Michael Brie, “Transformationen des Reichtums—Reichtum der Transformationen.
Eine Vier-in-Einem-Perspektive,” in Futuring. Transformation Im Kapitalismus Über Ihn
Hinaus, ed. Michael Brie (Münster: Westfälisches Dampfboot, 2014).
48
Friederike Habermann, Ecommony: UmCARE zum Miteinander (Sulzbach am Taunus:
Ulrike Helmer Verlag, 2016).
49
See Beverly J. Silver, Forces of Labor. Workers’ Movements and Globalization since 1870,
Cambridge Studies in Comparative Politics (Cambridge and New York: Cambridge
University Press, 2003), 17ff.
50
See Dieter Klein, ed., Leben statt gelebt zu werden. Selbstbestimmung und soziale Sicherheit.
Zukunftsbericht der Rosa-Luxemburg-Stiftung (Berlin: Dietz, 2003); Alberto Acosta, “Das
“Buen Vivir”. Die Schaffung einer Utopie,” Juridikum, no. 4 (2009); Eduardo Gudynas,
“Buen Vivir. Das gute Leben jenseits von Entwicklung und Wachstum,” in Demokratie,
against their subordination to capital accumulation and commodification.

The strategic questions have shifted since the time of Marx. Four ques-
tions are now at its core: What are we permitted to create and use? How
do we want to live? Which decisions do we want to take? And, to speak
with Immanuel Kant: What is human? The focus of Adam Smith’s classical
work was the question of how to increase the production of commodities
as the wealth of the nations. Now, 250 years later, it is about how to
increase the production of real human wealth with less labour and fewer
natural resources in a society based on solidarity, freedom, and equality.
This automatically brings us back to Marx. For him, wealth was
nothing but
the universality of the individual’s needs, capacities, enjoyments, productive

forces, etc., produced in universal exchange. […] What is wealth if not the
absolute unfolding of man’s creative abilities, without any precondition
other than the preceding historical development, which makes the totality of
this development—i.e. the development of all human powers as such, not
measured by any previously given yardstick—an end-in-itself, through which
he does not reproduce himself in any specific character, but produces his
totality, and does not seek to remain something he has already become, but
is in the absolute movement of becoming?51
Such an approach would lead to a new concept for transformation.52 We

could also say that “value ideas” have moved on. New struggles are now
the focus. The vision of a post-capitalist order that develops within these
struggles has changed.
It is time to revisit Capital. We should take up the challenge, and again
engage in the analysis of current capitalism as a “future science” for the
purpose of action. The power of Marx’s approach, as well as its limitations,
can teach us to endeavour towards new breakthroughs and overcome the
iron cage of the dominance of capital accumulation over nature, society,
and life that fate casts us into. This requires a new concept for the critique
of the capitalist economy and society.
Partizipation, Sozialismus. Lateinamerikanische Wege der Transformation, ed. Miriam Lang,

vol. 96 (Berlin: Rosa-Luxemburg-Stiftung, 2012).
51
Marx, “Outlines of the Critique of Political Economy (Rough Draft of 1857–58),” 411f.
52
See Judith Dellheim et al., Den Krisen entkommen. Sozialökologische Transformation
(Berlin: Karl Dietz, 2012); Dieter Klein, Das Morgen tanzt im Heute. Transformation im
Kapitalismus und über ihn hinaus (Hamburg: VSA, 2013), http://www.rosalux.de/filead-
min/rls_uploads/pdfs/sonst_publikationen/VSA_Klein_Das_Morgen.pdf.
82 M. BRIE
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The Intimations of a Post-Capitalist Society
in Marx’s Critique of Political Economy
Peter Hudis
I. Where to Begin Anew in Developing

an Alternative to Capitalism?
Two hundred years after Marx’s birth, there is no problem more urgent to
address, and difficult to resolve, than developing an emancipatory alterna-
tive to capitalism that can serve as a pole of attraction for masses of people.
The need for this is becoming increasingly clear. Capitalism’s insatiable
drive to commodify the lifeworld is subjecting an array of human activities
to monetary transactions while producing a level of environmental destruc-
tion that threatens the very basis of civilization. We have clearly reached
the point, even putting the risk of imperialist wars aside, at which the
question before us is whether humanity has a future if an alternative to
capitalism fails to arise.
However, while growing numbers of people around the world today
aspire for such an alternative, developing one is proving very difficult.
There are at least two reasons for this. One is the very nature of capitalism,
in which human relations take on the form of relations between things.
Diverse products of labour can enter into quantitative relations with one
P. Hudis (*)
Oakton Community College, Des Plaines, IL, USA

86 P. HUDIS
another only if they share a common quality. That common quality is their
value. However, as Marx noted, “[v]alue does not have its description
branded on its forehead; it rather transforms every product of labor into a
social hieroglyphic.” Since value can only show itself in a relation between
physical, material entities, it appears that what enables products to be
exchanged is the natural property of the things themselves instead of a
historically specific form of social labour. Capitalism is defined by a curious
anomaly: it is a system that produces unprecedented levels of change and
transformation at the same time as appearing to be an immutable fact of
human existence. Capitalism must appear to the common imagination in
this way, precisely because it is based on augmenting wealth computed in
monetary terms as an end in itself.
The second reason that it has proven difficult to develop a viable alter-
native is the profound crises, and ultimate failures, of the numerous efforts
to create “socialist” or “communist” regimes over the course of the last
100 years. Social democratic governments, both in the West and in parts
of the developing world, have at times managed to promote valuable social
reforms, but they ultimately failed to project an alternative to capitalism.
Instead, they ended up capitulating to neoliberalism, which has itself pro-
vided an opening for resurgent xenophobic racism and narrow national-
ism. The Marxist-Leninist regimes that came to power in much of the
developing world succeeded, by and large, in asserting national sover-
eignty against imperialism, but they proved no less of a failure. Their sub-
stitution of “market anarchy” by statist command economies led to gross
inefficiencies as well as some of the most repressive regimes on the planet.
None succeeded in making a firm break from capitalism, as shown by the
fact that virtually all of them ended up openly embracing actually existing
capitalism.
So where do we begin developing an alternative? It cannot be devised by
theoreticians irrespective of the actual struggles against existing society, by
workers, peasants, women, racial and national minorities, and LGBTQ
people. Masses of people, especially at critical turning points such as we
face today, create forms of struggle and organization that seek to reverse
the deleterious impact of capitalist social relations upon everyday life.
These need to be listened to and built upon in developing an alternative—
especially because so many of them express the need for non-hierarchical
social relations that go beyond the horizon of both capitalism and statist
“socialism.” Yet, at the same time, today’s nascent efforts to promote an
alternative need a theory that can pinpoint the specific social relations that
THE INTIMATIONS OF A POST-CAPITALIST SOCIETY IN MARX’S CRITIQUE… 87
must be transformed in order to surmount the capitalist law of value. But

what can serve as the source of such a theory if the approach of many
socialists and communists failed to live up to the task? We cannot live by
the truths of a different era. But neither can we turn our backs on history
by ignoring important sources within the socialist and communist tradi-
tion that speak to our present-day concerns.
There is, of course, no more important source of socialist and commu-
nist thought than the work of Marx. While he is wildly credited (or con-
demned) for his exhaustive critique of the capitalist mode of production,
it is often presumed that he had little or nothing to say about a post-
capitalist society. So how could his critique of political economy—which
has as its aim, as he famously stated, analyses of the law of motion of capi-
talism—have anything to tell us today about an alternative to it?
The answer first of all lies in the fact that Marx’s work does not consist
of a radical political economy; it instead represents a critique of the very
foundations of political economy. Economics deals with existing forma-
tions while taking for granted the conditions that establish the possibility
for their existence. The classical political economists—and even more so
the neoclassical economists that succeeded them—viewed capitalism as a
necessary expression and fulfilment of human nature. They therefore felt
no need to highlight the transitory and historical nature of capitalism.
They defined the future in terms of the temporal horizon of the present.
Marx’s theoretical project proceeds from a completely opposite stand-
point. His greatest theoretical work, Capital, does not consist of a theory
of capitalist development. It instead delineates capitalism’s tendency
towards crisis and dissolution. Marx could do so because he analysed capi-
talism from the conceptual standpoint of socialism. He grasps the reality
of the present through the temporal horizon of the future. One of the few
Marxists to understand this was Rosa Luxemburg. She wrote:
The secret of Marx’s theory of value, of his analysis of money, his theory of
capital, his theory of the rate of profit, and consequently of the whole exist-
ing economic system is […] the final goal, socialism. And precisely because,
a priori, Marx looked at capitalism from the socialist’s viewpoint, that is,
from the historical viewpoint, he was enabled to decipher the hieroglyphics
of capitalist economy.1
1
Rosa Luxemburg, “Social Reform or Revolution,” in The Rosa Luxemburg Reader, ed.
Peter Hudis and Kevin B. Anderson (New York: Monthly Review Press, 2004), 150–1.
88 P. HUDIS
No one doubts that Marx criticized the utopian socialists for idle specu-
lation about the future, just as it is widely known that he eschewed writing
blueprints about the new society. But that does not mean he lacked an
understanding of what is required for a socialist society to come into exis-
tence. His entire career consisted of a series of extended polemics against
other radical thinkers, from Proudhon to Lassalle, who in his view had a
defective understanding of the nature of socialism or communism. It was
on the basis of a distinctive understanding of “the final goal” that Marx
proceeded to analyse and delineate capitalism’s tendency towards crisis
and dissolution.
Closer to our age, the Czech Marxist Humanist philosopher Karel
Kosik argued along similar lines concerning the radical divide between
Marx’s project and traditional economics, in Dialectics of the Concrete:
Economics is the objective world of people and of their social products; it is not
the objectual world of the social movement of things. The social movement of
things which masks social relations of people and their products is one par-
ticular, historically transient form of economics. […] This is where Marx’s
theory is a critique of economics in the proper sense of the word, it exhibits
the real movement of economic categories as a reified form of the social move-
ment of people. This critique discovered that the categories of the social
movement of things are necessary and historically transient existential forms
of the social movement of people.2
In sum, Capital is not an empirical critique of actually existing capitalist

societies. It is a dialectical critique of what is integral to them—the logic
of capital, grounded in the law of value. Dialectical analysis, as against
empiricist approaches, does not merely describe the nature of an existing
thing but explores its process of transition into what it is not. As much as
Marx tried to avoid speculating about the future, as a deeply dialectical
thinker he could not help but intimate its future transcendence. The tran-
scendence that he had in mind, now that we have the full corpus of his
work available for study, turns out to be quite different from how most
post-Marx Marxists conceived of the new society. It is this dimension of
Marx’s work, above all else, that speaks to the realities facing us today. I
will seek to demonstrate this by re-examining the intimations of a new
society found in Marx’s critique of political economy.3
2
Karel Kosik, Dialectics of the Concrete: A Study on Problems of Man and the World
(Dordrecht-Holland: D. Reidel), 115.
3
For a fuller discussion of these issues, see Peter Hudis, Marx’s Concept of the Alternative
to Capitalism (Chicago: Haymarket Books, 2013).
II. The Humanist Content of Marx’s Value Theory

of Labour
Capital cannot be understood if its central categories are viewed as eter-

nal, quasi-natural factors that apply to all forms of society. Money, pri-
vate property, and the market do not mean the same thing in capitalism
as in pre-capitalist societies. Most importantly, Marx held that produc-
tion for the sake of increasing value—or wealth in monetary terms—is
unique to capitalism and capitalism alone. It does not exist before it or
after it. Value is not the same as material wealth, which does exist in all
societies. This distinction is the pivot upon which the entirety of Marx’s
critique of capital turns.
The distinguishing mark of capitalism is that labour assumes a value
form. Value, or wealth measured in monetary terms, is the expression of a
specific form of social labour. Hence, labour “as such” is not the source of
value. According to Marx, only a particular kind of labour is the source of
value. A commodity’s value is determined not by the actual amount of
time taken to produce it but by the socially necessary labour time estab-
lished on a global level. If value were determined by actual labour time,
workers would be made to work as slowly as possible, since the greater the
labour time, the greater is the amount of accumulated value. That never
happens, of course, because the value of commodities is determined not
by actual labour time but by socially necessary labour time over which
workers have no control. This average varies continuously, due to techno-
logical innovations that increase the productivity of labour. It is commu-
nicated to the agents of production behind their backs, through the laws
of competition. As capitalism progresses, concrete labour—the varied
kinds of labour employed in making use-values—becomes increasingly
dominated by labour that conforms to an abstract average, termed by
Marx as “abstract labour.” Abstract labour—and abstract labour alone—is
the substance of value, which takes the phenomenal form of exchange
value in the market.
Value is a rather abstract category, which makes it all the easier to over-
look the fact that it expresses a peculiar kind of human activity: labour that
is constrained by a time determination that is outside the workers’ control.
Once labour assumes a dual form in which abstract labour dominates con-
crete labour, productive activity ceases to be the expression of the workers’
creativity, but instead becomes a monotonous, thing-like form that sup-
presses it. This reification of the workers’ concrete, sensuous activity in the
drive to generate greater wealth in abstract, monetary form is the essence
of capitalism.
90 P. HUDIS
Hence, Marx’s theory of value marks a radical break from classical

political economists like Ricardo. The assumption among many followers
as well as critics of Marx is that both have the same labour theory of value
but draw different conclusions from it, since Marx singles out the exis-
tence of surplus value—the difference between the value of labour power
and the value of the product—whereas Ricardo does not. In other words,
it is assumed that both have a quantitative theory of value—that is, so
many hours of labour determine the value of the product. It logically fol-
lows from this assumption that “Marxism” is a more radical version of
Ricardianism, in that it seeks to effect a “fair” redistribution of value by
providing workers with a greater share of the surplus product.
In fact, nothing could be further from the truth. Unlike Ricardo, Marx
does not have a quantitative labour theory of value. He does not hold that
actual labour time, or concrete labour, is the source of value. Concrete
labour is only the source of use-values. He emphasizes again and again that
the substance of value is abstract labour—a qualitative determination that
Ricardo, like all classical political economists, simply ignored. Ironically,
most established Marxists have also ignored it, as seen in their failure to
grasp that value production applies only to capitalism, precisely because it is
a product of the peculiar form of social labour that is specific to capitalism—
abstract or alienated labour.
These distinctions are not a matter of scholastic hair-splitting, since
they directly determine the understanding of the alternative to capitalism.
All societies devote a certain amount of time to labour; if actual labour
time is the source of value, it follows that all societies—including socialist
ones—are defined by value production. The social form of labour that is
peculiar to capitalism becomes treated as an immutable, transhistorical fact
of human existence. The whole point and purpose of Capital—to take issue
with those who transform “into eternal laws of nature and reason the
social forms springing from the present mode of production”4—is turned
on its head. Once value production is assumed to be a permanent feature
of the human landscape, it follows that “socialism” is defined as little more
than a “fair” redistribution of value. The real problem—the reduction of
human relations to relations between things—is rendered invisible.
This standpoint has largely defined both Social-Democratic and Stalinist
approaches. The discrepancy between the amount of value produced by
workers and the amount they receive in wages would be solved, they
4
Karl Marx and Friedrich Engels, Manifesto of the Communist Party, in MECW (New
claimed, through state management of the economy. Yet this approach

ignores the real problem—the fact that labour (and other human rela-
tions) takes on a value form. The ultimate expression of value is money.
Money is a non-sensuous abstraction, but human beings are sensuous,
concrete beings. It is hardly “natural” to measure a person by how much
money they are “worth.” But it seems completely natural from a capitalist
viewpoint, since people count in its eyes only to the extent that they aug-
ment value and profit. Those who focus on the redistribution of value,
without targeting the existence of value production, therefore naturalize
and render invisible the very thing that makes capitalism a dehumaniz-
ing system.
Moreover, attempts to “abolish” surplus value by redistributing value—
fine as that may be for temporarily redressing some of the inequities of
capitalism—ultimately prove quixotic, since they leave untouched the
social relations that give rise to these inequities. Surplus value follows from
value production—not the other way around. The value of a commodity is
produced by labour power, which is not the same as living labour. This
distinction between living labour and labour power is the pivot of Marx’s
theory of surplus value and profit. Labour power is the only commodity
that is capable of producing a greater value than itself. To try to eliminate
surplus value and profit while leaving intact the abstract or alienated labour
that defines the expenditure of human labour power is akin to cutting off
the head of hydra while leaving its body intact. It is only a matter of time
before the head grows back—nay, before many more heads grow back!
Such has been the fate of statist “socialism” in the twentieth century.
The categories employed by Marx in Capital anticipate these later
developments, since they disclose that the law of value rests upon a specific
set of alienated human relations. An exit from capitalism is not possible
without uprooting them. There is no other solution. As Marx wrote in 1844,
“All emancipation is a reduction of the human world and relationships to
humanity itself.”5 This perspective never left him.
The radical depth of Marx’s humanist critique of capital is often unrec-
ognized, even by insightful commentators. For example, David Harvey
has recently argued that Marx did not really have a labour theory of value;
he says many have confused Marx with Ricardo’s labour theory of value.
He rests this on the claim that the value created in production is illusory
so long as it is not realized through market transactions. He writes: “I take
5
Karl Marx, “On the Jewish Question,” in MECW (New York: International Publishers,
1975), 3: 168.
92 P. HUDIS
the value created in production to be only a potential value until it is real-

ized. An alternative way would be to say that the value is produced but
then the value is lost if there is no demand for it in the market.”6 But if
abstract labour, as Marx insists, is the substance of value, how can the
value of which it is the substance be “lost”? Does this not imply that
abstract labour’s existence also depends on the market? Marx clearly says
the opposite, however, in Capital: “The value of a commodity is expressed
in its price before it enters into circulation, and it is therefore a pre-
condition of circulation, not its result.”7
To be sure, realization is a major component of expanded reproduc-
tion. However, what is “realized” in market exchange is not value but
capital. The value is already there, “before it enters into circulation.” If
capital cannot be exchanged for money, then the value embodied in it is
destroyed. The destruction of capital is of course integral to capitalism; it
especially occurs during recessions and depressions, when less profitable
units of capital are allowed to go under in favour of more profitable ones.
But what drives this process is not the inability to sell the product due to
a lack of effective demand on the market, but rather a decline in the rate of
profit due to the growth of the organic composition of capital relative to
the employment of living labour.
This has crucial ramifications. If the value of a commodity does not
truly exist until it is realized in exchange, it follows that the elimination of
value production—and the transcendence of capitalism—hinges on the
management of exchange relations. Organizing the arrangement of things,
such as prices, commodities, and markets, becomes viewed as the pivot of
creating a non-capitalist society. Harvey himself suggests that a revival of
Keynesian welfare-state policies that more equitably redistribute surplus
value is the path that can best promote an exit from capitalism. Aside from
the fact that there is little evidence that Keynesian measures, even at their
best, ever seriously challenged capitalism, such market-based “solutions”
leave untouched the social form of labour that grounds capitalist social
existence. The emphasis on the management of things, via organizing
exchange, leaves aside the need to transform human relations.
6
See “Marx’s Law of Law of Value: A Debate Between David Harvey and Michael Robert,”
Michael Roberts blog, April 2, 2018: https://thenextrecession.wordpress.com/2018/04/02/
marxs-law-of-value-a-debate-between-david-harvey-and-michael-roberts.
7
Karl Marx, Capital, Vol. I, trans. Ben Fowkes (New York: Penguin, 1976), 260.
Here is where it becomes essential not to treat categories like “money,”

“value,” and “exchange value” as abstract, quasi-natural categories with-
out reference to the specific social (that is, human) relations of which they
are the expression. Money, for instance, does not mean the same thing in
pre-capitalist societies (defined by the exchange of use-values) as in capi-
talism (in which use-values are produced for the sake of exchange). In
capitalism, money is the universal equivalent, and a universal equivalent
becomes possible only insofar as labour assumes a value form. Since
abstract labour is the substance of value, “value requires above all an inde-
pendent form by means of which its identity with itself may be asserted.”8
This independent form is money. The more abstract labour dominates
concrete labour, the more all-pervasive becomes the drive to augment
value; and the more this continues, the more value must posit an abstract
“self-identity with itself.” This means that the logic of capital compels
money to assume a form independent of the concrete, material properties
that makes its existence possible.
The increasingly abstract nature of money makes modern capitalism
more unstable and turbulent. Bubbles abound, and monetary crises
increase in frequency and severity. But here is where it gets tricky. Many
critics tend to see such financial crises as the decisive issue, which leads
them to argue that greater governmental control and regulation of finan-
cial (and capital) markets can produce an exit from capitalism. However,
this overlooks the fact that financial or monetary crises are made possible
(and necessary) by the evermore abstractive character of human social
activity. As a result, the need to transform the specific human relations that
necessitate that money take the form of an abstract universal is not
addressed. We are left with a critique of capitalism that fails to keep its
finger on the pulse of human relations.
Hence, grasping Capital’s intimation of a post-capitalist society requires
being attentive to Marx’s distinctive theory of value. As the U.S. Marxist-
Humanist philosopher Raya Dunayevskaya wrote:
Marx’s primary theory is a theory of what he first called “alienated labor”

and then “abstract” or “value-producing” labor. He analyzed commodities
and showed that the exchange of commodities in general had been
exchanged more or less sporadically for centuries before capitalism.
8
Ibid., 255.
94 P. HUDIS
Capitalism begins when the capacity to labor [be]comes a commodity. …

Hence, it is more correct to call the Marxist theory of capital not a labor
theory of value, but a value theory of labor.9
In essence what [Marx] said to Smith and Ricardo was: You thought your
task was done with the discovery of labor as the source of value. In reality, it
has just begun. If that theory means anything at all, it means that you must
deal with man, the laborer, directly. … Marx’s analysis of labor—and this is
what distinguishes him from all other Socialists and Communists [of] his
day and of ours—goes much further than the economic structure of society.
His analysis goes to the actual human relations.10
III. The Expansive Vision of Freedom in Capital

We are now in a position to directly turn to the intimations of a post-capitalist
society in Capital. Remarkably, the fullest discussion appears in the section
that delineates capitalism’s ultimate inhumanity—commodity fetishism. This
fetishism is very difficult to dispel, since, “the social relations between private
labours appears as what they are, i.e. they do not appear as direct social rela-
tions between persons in their work, but as material relations between per-
sons and social relations between things.”11 Since fetishism is an adequate
expression of real social relations, it is not self-evident that even the best
minds can avoid succumbing to it. The mystery of commodities only “van-
ishes,” Marx writes, once we encounter “other forms of production.”12
He first turns to the past by briefly surveying pre-capitalist economic
forms in which common ownership of the means of production prevail.
Relations of personal dependence predominate, in which “there is no need
for labour and its products to assume a fantastic form different from their
reality.” No abstract medium, such as exchange value, mediates human
relations; direct social labour prevails, not indirect social labour. Marx
would continue this line of investigation until the end of his life, as seen in
his voluminous writings of the 1870s and 1880s on communal forms in
India, China, Russia, Indonesia, North Africa, and among the Native
Americans of North and South America.13
9
Raya Dunayevskaya, Marxism and Freedom, from 1776 Until Today (Lanham, NJ:
Humanities Books, 2000), 138.
10
Ibid., 55, 60.
11
Marx, Capital, Vol. 1, 165–6.
12
Ibid., 169.
13
See Kevin B. Anderson, Marx at the Margins: On Nationalism, Ethnicity, and Non-
Western Societies (Chicago: University of Chicago Press), 2010.
He then turns to the future, writing: “Let us finally imagine, for a

change, an association of free men, working with the means of production
held in common.” It may be helpful to pause here and ask what it means
for the means of production to be held in common. It does not refer to a
merely formal transfer of private ownership to public or state entities.
Transferring the property deed from private to collective is a mere juridi-
cal relation, which does not necessarily free the working class from class
domination. Marx explicitly refers to “free men” owning the means of
production, which means they exert effective and not just nominal control
over the labour process. And of course, that is not possible unless the workers
democratically control the labour process.
He then states that in a post-capitalist society, products become
“directly objects of utility” and do not assume a value form. Exchange
value and universalized commodity production come to an end. Producers
decide how to make, distribute, and consume the total social product.14
He invokes neither the market nor the state as the medium by which this
is achieved. He instead envisions a planned distribution of labour time by
producers who are no longer subjected to socially necessary labour time.
Abstract labour is abolished, since actual labour time becomes the mea-
sure of social relations instead of an average that we do not control.
Marx goes on to state that “[w]e shall assume, but only for the sake of
a parallel with the production of commodities, that the share of each indi-
vidual producer in the means of subsistence is determined by his labor
time.”15 What is the “parallel”? Is he suggesting that socially necessary
labour time and value production continue under socialism? No, he is not.
He is saying that a “parallel” exists with the old society insofar as there is
an equal exchange—producers labour for so many actual hours and receive
goods produced in an equivalent amount of actual hours. But the content
of this exchange is radically different from what prevails in capitalism, since
it is defined by a freely associated exchange of activities instead of an
exchange of commodities based on an abstract average over which workers
have no control. Distribution of the elements of production on the basis
of actual labour time represents a radical break from capitalism, since this
signals that the peculiar social form of labour—the split between abstract
and concrete labour—has been abolished.
Marx, Capital, Vol. I, 171–2.

14
Ibid., 172.
15
96 P. HUDIS
The distinction between actual labour time and socially necessary

labour time is critical, since conflating them leads to the erroneous view
that value production continues to operate in a socialist society. Georg
Lukács erred in this direction in his Ontology of Social Being and The Process
of Democratization. He writes:
For Marx, labor exploitation can exist under socialism if labor time is expro-
priated from the laborer, since the share of every producer to the means of
production is determined by his labor time. … For Marx, the law of value is
not dependent upon commodity production … according to Marx these
classical categories are applicable to any mode of production.16
Lukács misreads Marx’s phrase about a parallel with the production of

commodities as suggesting an identity between commodity production
and the forms that prevail in socialism. The logical conclusion—which is
shared by both market and statist socialists—is that socially necessary
labour time is an inevitable part of human existence that will always be
with us. But if that is so, it follows that abstract labour, with all its alien-
ated and dehumanizing characteristics, will also be with us always. This
amounts to nothing less than defining the new society by the principles
that govern capitalism.
In contrast, Marx repeatedly stresses that in socialism or communism—
the two mean the same thing in his work and do not note distinct histori-
cal stages—socially necessary labour time is abolished. Time no longer
confronts the worker as a person apart; instead, time becomes the space
for human development. He writes in Capital Volume II:
With collective production, money capital is completely dispensed with. The

society distributes labor power and means of production between the vari-
ous branches of industry. There is no reason why the producers should not
receive paper tokens permitting them to withdraw an amount correspond-
ing to their labor time from the social consumption fund. But these tokens
are not money; they do not circulate.17
And in an earlier draft of Capital, he wrote that in socialism or communism
16
Georg Lukacs, The Process of Democratization, trans. Norman Levine (Albany: SUNY
Press, 1991), 120–1.
17
Karl Marx, Capital, Vol. II, trans. D. Fernbach (New York: Penguin, 1978).
[t]he general character of labor would not be given to it only by exchange;

its communal character would determine participation in the products. The
communal character of production would from the outset make the product
into a communal, general one. The exchange initially occurring in produc-
tion, which would not be an exchange of exchange values but of activities
determined by communal needs and communal purposes, would include
from the beginning the individual’s participation in the communal world of
products … labor would be posited as general labor prior to exchange, i.e.,
the exchange of products would not in any way be the medium mediating
the participation of the individual in general production. Mediation of
course has to take place.18
These and other passages show that it is not true that Marx never dis-
cussed a future post-capitalist society; references to it are found through-
out his work. This does not mean that Marx forgot his critique of
utopianism. Nor does it suggest (as John Holloway put it) that “to locate
[communism] in the future is in effect to leave us in the grip of the [van-
guard] party, a form of struggle that has failed and miserably so.”19 The
idea of a vanguard party that “brings” communist consciousness to the
masses “from without” was alien to Marx and only entered “Marxism”
through one of his bitterest political enemies—Ferdinand Lassalle.20
Lassalle first propagated the idea that “vehicles of science” such as himself
were needed to bring socialist consciousness to the workers, who presum-
ably can attain only trade union consciousness through their own activ-
ity—a notion that he directly passed on to Karl Kautsky, who in turn
passed it on to Lenin. There is not a hint of such a conception in Marx,
who proclaimed from start to finish that “the emancipation of the working
class is the task of the working class itself.” As the text of the Grundrisse
and Capital shows, nothing stops one from “imagining” the future while
steering clear of the notion that communist consciousness is brought to
the masses irrespective of their spontaneous struggles. And this is possible
because the future is immanent in the struggles of workers against capital.
18
Karl Marx, Economic Manuscripts of 1857–58, in MECW (New York: International
Publishers, 1986), 28: 108.
19
John Holloway, “Read Capital: The First Sentence,” Historical Materialism 23, no. 3
(2015): 8.
20
See Peter Hudis, “Political Organization,” in The Marx Revival, ed. Marcelo Musto
(Cambridge: Cambridge University Press, forthcoming 2019).
98 P. HUDIS
The fullest expression of Marx’s views on post-capitalist society is found

in his 1875 Critique of the Gotha Programme. In this critique of his own
followers, he distinguishes between two phases of socialism or commu-
nism: the first, as it emerges from the womb of the old society; the second,
as it stands on its own foundations. He states that with the initial, lower
phase, the producers “do not exchange their products; just as little does
the labor employed on the product appear here as the value of these prod-
ucts, as a material quality possessed by them, since now, in contrast to
capitalist society, individual labor no longer exists in an indirect fashion
but directly as a component part of the total labor.”21 Generalized com-
modity exchange comes to an end in the first, initial phase of socialism,
since abstract labour, the substance of value that enables products of
labour to be universally exchanged, no longer exists. With democratic,
freely associated control of the means of production, the producers them-
selves, and not some external force like socially necessary labour time,
govern their interactions. And since labour loses its dual character, value
production comes to an end—not only in the higher but also in the
“lower,” initial phase of socialism or communism.
Labour itself, however, does not come to an end in the new society.
Instead, in the lower phase, it serves as a measure for distributing the
social product. “The individual producer receives back from society—after
the deductions have been made—exactly what he gives to it. What he has
given to it is his individual quantum of labour.” Individuals receive from
society a voucher or token that they have “furnished such and such an
amount of labour” and from it obtain “the social stock of means of
consumption as much as the amount of labour costs.”22 As in Capital,
Marx is not suggesting that the worker’s labour is computed on the basis
of a social average of labour time, but rather by the actual amount of hours
performed in a given cooperative or enterprise.
Of course, this is only the lower phase of socialism or communism—it is
still defective. The new society that emerges from the womb of the old one
is incomplete, since “bourgeois right” remains. But what does this mean,
since with the lower phase the workers control the means of production and
the bourgeois class is already eliminated? He is simply repeating the same
point made in Capital that there is a “parallel” with commodity production
21
Karl Marx, Critique of the Gotha Program, in MECW (New York: International
Publishers, 1989), 24: 85.
22
Ibid., 86.
in the very restricted sense that an exchange of equivalents persists. As with

capitalist “bourgeois right,” what you get from society depends on what
you give to it. But this quid pro quo is a world removed from the exchange
of abstract equivalents. What is exchanged are human activities, not products
bearing a value form. People now learn how to master themselves and their
environment on the basis of a time determination that does not confront
them as a person apart. Only when they have achieved this mastery will it
become possible to reach “[f]rom each according to their ability, to each
according to their need” in a higher phase. At that point, the quid pro quo
is left behind. With the end of the division between mental and manual
labour and the achievement of the “all-round development of the individ-
ual,” a higher phase is reached in which actual labour time no longer serves
as a measure of social relations.
Marx’s discussion of the lower phase is not a normative view of how a
socialist society emerging from the womb of capitalism ought to be orga-
nized. He is not writing a blueprint for the future. As he states in the
Critique, once production relations have been thoroughly transformed on
a systematic, societal level, a new form of “distribution of the means of
consumption results automatically.”23 Marx is thinking out what society
will be like once it has freed itself from the dual character of labour and
value production, but the specific details depend on factors that cannot be
known in advance.
Perhaps the biggest misconception of all is to confuse Marx’s discussion
of the first phase of socialism or communism with “the dictatorship of the
proletariat.” The latter is instead a political transitional stage between capi-
talism and the new society. The Critique clearly states: “Between capitalist
and communist society lies the period … in which the state can be nothing
but the revolutionary dictatorship of the proletariat.”24 It is a transitional
stage in which the vast majority—not a minority party—seizes control of
the means of production by divesting the old classes of their property
right. It utilizes democratic means, as suggested by the Paris Commune of
1871, to eliminate class domination by revolutionizing the social relations
of production. Once socialism is arrived at, the dictatorship of the prole-
tariat becomes superfluous, since by then the proletariat ceases to exist,
because classes as a whole cease to exist.
Ibid., 95.
23
Ibid.
24
100 P. HUDIS
By confusing the “dictatorship of the proletariat” with the initial phase

of socialism, far too many have assumed that the state—which in some
form prevails in the political transition period—also continues in a post-
capitalist society. In contrast, Marx held that the state is an “excrescence”
of class society that is superseded in socialism.25
IV. Post-Marx Marxism Versus Marx’s Marxism

Tragically, the intimations of a new society found in Capital did not
inform the perspectives of post-Marx Marxism. Most dismissed any dis-
cussion of a future socialist society as a reversion to utopianism. And the
few who delved into the social forms of the future tended to define social-
ism by the elimination of “market anarchy” in favour of a state plan. Yet
the state plans that defined the USSR and Mao’s China did not lead to a
viable, emancipatory alternative to capital.
To be sure, a number of valiant attempts were made to transcend capi-
talism—and none was more valiant than the 1917 Bolshevik Revolution.
Yet Lenin himself made no secret of the fact that as of 1917 the Bolsheviks
had given very little thought as to how to create a socialist society. Their
decision to “storm the heavens” and take power in 1917 was a remarkable
achievement, but they were woefully unprepared for what happens after.
By the late 1920s, under the weight of growing isolation, a counter-
revolution led by Stalin consumed the revolution from within, leading to
outright state capitalism.
Of course, Stalin declared in 1936 that by eliminating the free market
and private property, the USSR had established “socialism.” This was
followed, in 1944, by his announcement that the law of value continues to
operate in the USSR. Stalin admitted (through one of his ideologues,
Wassili Leontief) that the existence in the USSR of universalized commod-
ity production, wage labour, exchange value, and an average rate of profit
meant that the USSR operated according to the law of value—which every-
one until then viewed as integral to capitalism. But no need to worry, Stalin
declared, the state plan will ensure that that the surplus product is “fairly”
distributed to the masses. This was no scholastic debate. It defined the
terms under which the communist (and much of the socialist) movement
Karl Marx, The Ethnological Notebooks, ed. Lawrence Krader (Assen: Van Gorcum,
25
1972), 329.
viewed a post-capitalist society for decades afterwards.26 Value production,

abstract or alienated labour, and universalized commodity production
became widely accepted as compatible with “socialism.” Mao Tse-Tung (to
give one striking example), who learned his “Marxism” not from Marx but
from Stalin, took it for granted that commodity production and value pro-
duction exists under socialism. He took this revisionism even further by
adding the preposterous claim that class struggle also exists under
“socialism”—which will presumably be around for hundreds of years until
“full communism” arrives. As a result, the communist movement lost sight
of the need to target the alienated human relations that make value produc-
tion possible.
Today we live in a different era, in which it has become clear that a com-
pletely different approach is needed. Here is where Marxist-Humanism’s
emphasis on creating a philosophically grounded alternative to capitalism
comes in. If the problem of capitalism is unequal distribution, there is no
need to transform human relations; a mere change in tax policy will suffice.
If the problem is the existence of private property, there is also no need to
transform human relations; a mere change in the deed of ownership will
suffice. But if the problem is value production—central to which is the
domination of actual labour time by socially necessary labour time—then
the only way to overcome capitalism is to create new human relations in
which time becomes “the space for human development.”
In sum, if the critique of capitalism is limited to the surface, phenom-
enal level, the understanding of the alternative to capitalism will be limited
to the surface, phenomenal level. Marx did not have a superficial or phe-
nomenal understanding of the logic of capital; and this is why his critique
of political economy—despite his objections to utopianism—provides
important insights into what constitutes an alternative to both “free mar-
ket” capitalism and the state capitalism that called itself communism.
As I argue in Marx’s Concept of the Alternative to Capitalism, this does
not mean that “the answer” to the alternative to capitalism is found in
Marx. What matters most of all is not what Marx said in 1843 or 1883,
but what Marxism means today, after a century of aborted revolutions, as
well as the emergence of new forces of liberation—such as national minor-
ities, women, LGBTQ people and others who were not prioritized by
earlier generations of Marxists. Re-examining Marx’s work with new eyes
26
See Raya Dunayevskaya, “A New Revision of Marxian Economics,” American Economic
Review 34, no. 3 (September 1944), 533–7.
102 P. HUDIS
is where our work begins, not where it ends. But without a proper begin-
ning, it is not possible to find our way to an end. Philosophy, it is often
said, is a perpetual search for a proper beginning, and that is just as true
when it comes to envisioning alternatives to capitalism.
Bibliography
Anderson, Kevin B. Marx at the Margins: On Nationalism, Ethnicity, and Non-
Western Societies. Chicago: University of Chicago Press, 2010.
Dunayevskaya, Raya. “A New Revision of Marxian Economics.” American
Economic Review 34, no. 3 (September 1944): 533–7.
Dunayevskaya, Raya. Marxism and Freedom, from 1776 Until Today. Lanham, NJ:
Humanities Books, 2000.
Holloway, John. “Read Capital: The First Sentence.” Historical Materialism 23,
no. 3 (2015): 3–26.
Hudis, Peter. Marx’s Concept of the Alternative to Capitalism. Chicago: Haymarket
Books, 2013.
Hudis, Peter. “Political Organization.” In The Marx Revival, edited by Marcelo
Musto. Cambridge: Cambridge University Press, 2019 [forthcoming].
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Dordrecht-Holland: D. Reidel, 1977.
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Albany: SUNY Press, 1991.
Luxemburg, Rosa. “Social Reform or Revolution.” In The Rosa Luxemburg
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Gorcum, 1972.
Marx, Karl. “On the Jewish Question.” In MECW. Vol. 3, 175–87. New York:
Marx, Karl. Capital. Vol. I. Translated by B. Fowkes. New York: Penguin, 1976.
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New York: International Publishers, 1986.
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Marx, Karl and Frederick Engels. Manifesto of the Communist Party. In MECW. Vol.
6, 477–519. New York: International Publishers, 1976.
Roberts, Michael. “Marx’s Law of Law of Value: A Debate Between David Harvey
and Michael Robert.” Michael Roberts blog, April 2, 2018. Accessed at https://
thenextrecession.wordpress.com/2018/04/02/marxs-law-of-value-a-debate-
between-david-harvey-and-michael-roberts
Recovering Marx: Steps Towards
a Breakdance
Peter Beilharz
I. Recovering Marx: Stedman Jones

We are all, these days, in recovery. The times are out of joint, and nothing
much seems to hold, certainly not any imaginary centre. Some of us are
recovering Marx, and there is a great deal of activity in these quarters.
What did Marx come to say? And, how does this wisdom travel across all
the spaces and time zones that we now inhabit? These are two major ques-
tions that animate our curiosity, and while they are related, they are clearly
not the same. They invite distinct responses, the first philological, the sec-
ond applied or adaptive.
This essay invites a breakdance, a sequence in six steps around these
issues and themes, punctuated in between by a segue which leads on. The
first three steps take in major new works on Marx by Gareth Stedman
Jones, Jason Barker and Marcello Musto. Three distinct steps follow. They
inquire into the history of recent Marx reception in Australia, one each for
three successive journals: Arena into the 1960s, Intervention into the
P. Beilharz (*)
Sichuan University, Chengdu, China
Curtin University, Bentley, WA, Australia

104 P. BEILHARZ
1970s and Thesis Eleven into the 1980s and since. There also appears to be
a dissonance here between the global Marx revival and an enthusiasm for
Marx in the antipodes which is past tense or at the very least different.
The biography of Marx, especially that which is theoretically interest-
ing, has until recently been thin on the ground. A generation ago, the
most substantial work would have been that which came from the pen of
David McLellan, which was innovative not least because he understood
the importance of the Grundrisse. Gareth Stedman Jones has also been
dancing with Marx, and before then Engels, for a long time. Recently we
had his introduction to the Penguin edition Communist Manifesto, where
the editorial is longer than the text. Now we have his even longer biogra-
phy, Karl Marx—Greatness and Illusion, in the same league as the girth of
Capital itself.1
Who was Karl Marx? How do we remember him? How do others

remember him?
Easy, in the realm of vox pop. He was the guy who caused the Russian
Revolution, right? Big guy, grumpy, beard.
No, sorry, that was Lenin, different time and place. Bald guy, profes-
sional revolutionary. Marx died in England in 1883. Lenin then was still
in short pants, and in a rather different part of the world. And 1917 was a
world away. And perhaps there were some other, more material than ideo-
logical issues involved in the Russian Revolution as well. This was not just
a matter of ideas, or ideology. Ideas matter, but they do not change the
world in themselves.
The irony of history is that Marx would come to be identified with Soviet
Communism. This identification proved to be fatal, in more ways than one.
As the liberal, or sceptical, father of sociology, Max Weber wrote to his
friend, the young Hungarian hothead Georg Lukács, that the Russian
Revolution would set the cause of socialism back by a hundred years.
Time’s up, after 2017, though there remains no shortage of anti-
capitalist activity on the streets. As for socialism, understood as the con-
struction of a new social order, the process looks like it is taking even
longer. How, in the meantime, to unhook these moments, times and
places? Who was Marx, disinterred out from under the dead weight of the
Russian Revolution?
Gareth Stedman Jones, Karl Marx—Greatness and Illusion (Cambridge: Belknap at

1
Harvard, 2016).
RECOVERING MARX: STEPS TOWARDS A BREAKDANCE 105
Gareth Stedman Jones has been working on this very big book for a
long time. The result, as George Steiner put it in the Times Literary
Supplement, is no friend to elegance. But it is an astonishing achievement,
even if the result is overwhelming. This book is so big that it is hard to
read; you get sore wrists.
Stedman Jones seeks to develop an approach which makes his book
freestanding, so that at any given point you do not need to head to the
shelf or to Wiki to keep up with the narrative of the nineteenth century.
The devil of the book is in its detail. This is not a book that can be criti-
cized for omission. Stedman Jones sets out to relocate Marx, if not to
replace him. The nuance of his life and times is dealt with in detail and in
finesse. Attention is duly paid to both text and context.
Texts matter, as the Bolsheviks did not know many of them, and made
Marx up in their own image. As Stedman Jones observes, for example,
Marx refers twice in passing to the idea of the dictatorship of the prole-
tariat; Lenin turns it into a core principle of Marxism. Marx uses the word
party to refer to his handful of followers; Lenin turns this into the combat,
or vanguard party of disciplined revolutionaries. Context matters, as the
story of Marx is also, in Stedman Jones’ telling, well distant, long gone.
Marx’s world is different to Lenin’s, which is different to ours. Moreover,
Marx became stuck in the vision of his own youth. He was also, as Zygmunt
Bauman used to say, a youthful hothead from the Rhine.
The core thesis of the book here is that Marx takes on an apocalyptic
worldview in the 1840s, and fails to revise it as the world of capitalism and
liberal reform change in the second half of the century. Whatever this
world is, it is before Bolshevism, before 1917. The young Marx is a roman-
tic, a poet; maybe, in this way of thinking, he should have stayed there.
Later he is a journalist, and as Stedman Jones observes, it is his columns in
the New York Daily Tribune which are the most influential of his work in
his own time; maybe he should have stuck with journalism. In between
times, he was a philosopher, but this was the least of his impacts. During
most of his lifetime, his followers could be counted on fingers and toes,
though his enemies were apparently more numerous.
Stedman Jones covers all this beautifully. Family, religion, philosophy,
money, poverty, friends, enemies, Engels, health, Hegel, exile, housing,
character, Paris, London, Manchester, Shakespeare, tippling—it is all
there. Most of all, there are Marx’s ghosts, Bourgeoisie and Proletariat,
the class actors who become locked into Marx’s choreography.
106 P. BEILHARZ
Stedman Jones has written famously in the past about the language of
class. His argument is not that class does not matter, but that Marx con-
jured up his own class actors from the revolutionary period of his youth.
By the time of Capital, however, the working class was busy doing other
things, organizing for reform, picking up the consumption side of the
Industrial Revolution, looking to its gains and not only its losses.
In this telling of the story, Marx is put back in his box—the one marked
German Philosopher, Nineteenth Century. This is an approach pioneered
by Leszek Kołakowski, whose own views on Marx began with the observa-
tion that “Karl Marx was a German philosopher.” It is a useful corrective
to the Bolshevik appropriation, which turns Marx into Lenin, or else
engages in the lazy play of Russian dolls.
This telling of the story sidesteps the 1960s, and the rediscovery of
Marx as the advocate of freedom and emancipation. It is silent on the
contemporary rediscovery of Marx by Thomas Piketty and the Occupy
Movement. In this, it keeps Marx too far away. Marx’s critical legacy
still matters.
It does, however, unhook Marx from the cartoon Marxism of popular
culture. It insists on the distance between Marx and the authors of Soviet
Communism.
Marx and Lenin never met. Neither did Marx and Weber, the stoical
voice of classical sociology. Weber is the better additive to Marx, sober and
sceptical rather than redemptive in temper. After all, as thinkers such as
Lukács and Loewith anticipated, Marx and Weber together would become
the rational basis of the Frankfurt School and the tradition of Critical
Theory, the critique of commodification and rationalization combined.
Even Weber, however, was too optimistic in his prediction. Who these
days speaks of Socialism in Our Time?
Ours is not the world Marx diagnosed in the 1840s, or misread in the
1860s. The imperative that we might do better, however, remains. As
those who follow Marx, we still face both challenges—text and context,
philology and extension, thinking and application.
II. Marx Returns: Barker

Jason Barker takes a different tack to Stedman Jones, at once more irrever-
ent and more cutting-edge. This is a new genre, a new spin, avant-garde,
as far as Marx scholarship is concerned. For Barker, Marx Returns neither
as comedy nor farce but as something new.2
2
Jason Barker, Marx Returns (Washington, DC: Zero, 2017).
How did it all begin in this telling? First, there was Marx, in Trier,
Roman city, grapevines. Then there was Engels, in Manchester. Hell on
earth, for some; fox hunting for some others. Then there was industry.
Engels and Ermen, cotton at Manchester, Salford and Eccles. Then there
was steel; Sheffield, Ford and Detroit, Stalin, Man of Steel, Magnitogorsk.
Then there were two Chinese Revolutions, one in 1949 and another more
recently. Industry everywhere.
Now there is the Marx Industry. Today there is a flood of books.
Spurred on by Marx’s 200th birthday, the Marx Industry is primed. The
good news is that its products are better than ever, perhaps because of the
distance that we might now take from Marx, perhaps because Marx has
been unhooked from the Soviet experiment, allowed to breathe again after
The Death of Stalin. These days even the Economist has given Marx a place
at the table.
As befits the times, there are some fresh genres here—the play, the film,
the graphic novel. There are ambient books, such as Love and Capital, or
Mrs Engels, for which there were other precedents. Eisenstein planned to
film Capital. Goytisolo’s postmodern farce chased the Marx Family Saga;
and there is the Canadian cartoon pastiche with Disney, The Communist
Manifesto, as funny as it is disturbing. There are truly exceptional new
scholarly works, such as Sven Erik Liedman’s Marx—A World to Win3 and
Marcello Musto’s Another Marx.4 There is even a book called Circling
Marx.5 Or, is he circling us? There are witty and well-executed artworks,
at an arm’s length such as Christopher Crouch’s Lenin in Perth. And there
are new fictions, such as Jason Barker’s Marx Returns. He’s back! There is
something about repetition here, or eternal return.
Jason Barker is Professor of English in South Korea. How does he bark?
Jason goes for the gothic. This is Marx’s story, with jokes and new dialogue
added in to Marx’s fury with his carbuncles and interest in chess and dif-
ferential calculus. Marx suffered a great deal from pain in the ass; likely, he
became a pain in the ass to those around him. The family always short;
Engels pleading for him to finish, please finish that big book. So there is
comedy here, as well as tragedy. Trotsky caricatured Hilferding as the
bent-back professor lurching turtle-like with his big book, Das
Finanzkapital, on his back. Marx’s favoured image was Prometheus, but
when it came to his book, the better image may rather be Sisyphus.
3
Sven-Eric Liedman, Marx—A World to Win (London: Verso, 2018).
4
Marcello Musto, Another Marx: Early Manuscripts to the International (London:
Bloomsbury, 2018).
5
Peter Beilharz, Circling Marx. Essays 1980–2020 (Leiden: Brill, forthcoming-b).
108 P. BEILHARZ
Marx’s life was dominated by numbers, large and small, from mathema-
ticians to bailiffs, from zero to infinity. His mother, among others, teased
him about the chronic absence of capital. But there is much more here.
The story has a strong sense of atmosphere. There is effluvium, and poetry,
intrigue and poverty. This is a book that relies not least on smell, and
smells, Dante’s Inferno. Pfui, Teufel! Barker evokes, and pokes. He makes
his subjects all too human. This indeed is one of his main axes. Why was
Marx so obsessed with the writing of one book, Capital?
Thus his wife, Jenny: “Did you ever stop to consider that your writing
might be making you ill, Karl?” Or as his father put it, you can choose
Jenny or the Book. The result of his life’s labour and his family’s tragedy
was a work that remains incomplete. It is as though Marx needed not to
finish. Look only at the last two chapters: chapter 32 is socialist revolution
arriving unannounced, like a final curtain in the dance hall; chapter 33 is
Mr. Peel on the Swan River, Perth again. The story of Capital begins with
the commodity form and ends up somewhere near where the British first
planted that Chenin blanc on the land of the local indigenous people, the
Wadjuk Noongar. No joke!
There is pathos here, as well as humour. Karl is connected to his son Edgar
and his symbolic toy locomotive; the loss of a later son, Guido, and the dedi-
cated travails of his brilliant and tragic daughters follow. For the new world is
also a world of motion, and locomotion, as well as anguish and inertia.
The story that Barker tells is incredibly witty, clever and creative. It is
amusing and entertaining as well as instructive. Perhaps it is directed to
those who already know, which might explain the need for explanatory
notes in a book ostensibly heading in the direction of fiction. But Marx
Returns suggests both a combination of rare talents and a will to create,
both themselves attributes of Karl Marx. The book is in a strange way
mimetic, just as mimesis is also innovative, a world away.
So is the joke on us? Maybe. Bernard Shaw wanted to insist that all
revolutionary ideas begin as massive jokes. This is a stimulating book,
which manages to wear the immensity of its learning lightly.
Jason Barker is among other things director of the movie Marx Reloaded
(2011). In the Age of the Screen, Marxism must also need perchance to be
visual. Better than The Matrix, this is less neomarxism than Marx Neo.
Perhaps Marx did not need to write the Big Book after all. These days you can
watch the results of the longer story on your phone. Or look out the window.
Marxism remains, as Kenneth Burke put it a long time ago, a way of seeing.
You don’t necessarily need to know it in order to see it; but it probably helps.
III. Another Marx: Musto

As Marcello Musto announces in his new biography, we are in the midst
of a Marx Revival. Only now does it become possible seriously to unhook
Marx from those who claimed to make a revolution in his name. I am
unsure as to how complete this historic uncoupling process is; but there is
certainly a Marx Revival going on. Some very good new works on Marx
have appeared over the last few years; there is clearly an ongoing process
of recovery, discovery, and reappropriation or reconstruction. Another
Marx—Early Manuscripts to the International is one of its finest achieve-
ments. It is presented as a kind of biography, though it is segmented rather
than complete or historically exhaustive. It is, I think, primarily a work of
philosophical and sociological insight, presented in biographical and his-
torical form.
Musto’s dance makes three moves, following three parts of the book or
vital moments in Marx’s path. These steps are as follows. We begin with
the early work, from youth to Paris. The second step involves the develop-
ment of the critique of political economy. The third covers political mili-
tancy from the First International to Bakunin. All of which is, as you might
say, well known. But his book suggests a starting over. And, as I shall sug-
gest, there is something special in the combination of skills and insights
that Musto brings to his task which serves to set this book apart.
To begin, it is as though we hardly know Marx at all, or at least that
we only know the iceberg peaks. As Musto reminds, earlier Marxists had
very little of the corpus actually available to them. In the English lan-
guage, readers only had the most important manuscripts available to
them into the 1960s and 1970s. This situation is continually improving.
We have 50 volumes of the Collected Works in English. In German, we are
still only up to volume 65 of the planned 114 volumes of Marx-Engels-
Gesamtausgabe (MEGA2). We discover that there are not only economic
and philosophical manuscripts or ethnological or mathematical note-
books, but also ecological notebooks. Und so weiter … And this is indeed
one important image that emerges from Musto’s book. Marx’s work
consists of a partial list of actually published works, and a mountain, an
immense accumulation of notebooks. For this is how Marx actually
worked, how he combined reading, research, and critique and writing.
The notebooks were Marx’s laboratory.
How might we read Marx, now, and why? The situation resembles the
state of play in Gramsci Studies, where there are clear distinctions between
philologists and reconstructionists, or between those who want first to get
110 P. BEILHARZ
clearly what Gramsci had to say and those who view his writing as a tool-
box whose purpose is to explain and address the present. For the philolo-
gists, the first task is to read and understand the Prison Notebooks in all
their rich complexity. For the reconstructionists, the task is to seek intel-
lectual orientation from these texts and especially their key themes, hege-
mony usw., and then turn to the pressing tasks of the day, in a world that
sometimes seems light years away from the interwar period of Gramsci.6
Musto’s task here is to begin by rereading Marx, text and context, with
full attention to both. The result is in a sense uncanny, as it both places
Marx at that distance and makes him our peer or contemporary, as we
struggle with those ongoing tasks of reading, writing, researching and
thinking the contemporary for ourselves. Musto does not address the
problems of the present directly, but he leaves the door open to this pos-
sibility. This is, to my way of thinking, a serious advance on works like
Jonathon Sperber’s Karl Marx, which seek to recover Marx by putting
him in a nineteenth-century box, past tense, all context, history of the past
rather than of our present.7
In the longer conversation that might follow, we will need again, also it
seems to me, to reassess the paths not followed by the bullyboys of
Bolshevism. This will include rethinking so-called Western Marxism, the
traditions of the Frankfurt School, council communism, Socialisme ou
Barbarie, the legacies of East European critical theory and so on. For, as
Musto reminds, the most powerful ethical legacy of Karl Marx was the
enthusiasm for emancipation or autonomy of self-development based on
the cultivation of dependence or community.
So how does this book work? Musto has a fine combination of skills and
attributes. He demonstrates sensitive and sophisticated linguistic and phil-
ological skills, acute historical sensibilities and the capacity to hear wide-
ranging philosophical and political economic resonances. He has voice,
but he also has a good ear. Marcello Musto understands the deep com-
plexity of his subject, including his appalling medical history and desperate
poverty. He combines a fine sense of detail, for example concerning Trier,
with a clear sense of the philosophical substance of Marx’s project as it
moves from Paris to London via Ireland and the Paris Commune, point-
ing later to the Russian Road. There are fine reminders of the importance
6
Peter Beilharz, “From Marx to Gramsci to Us—From Laboratory to Prison and Back,”
Thesis Eleven 132 (2016).
7
Jonathon Sperber, Karl Marx—A Nineteenth Century Life (New York: Liverwright, 2013).
of sarcasm and style in Marx, as in the famous burrowing mole, but also
the representation of Herr Vogt as a perfectly detailed skunk. Musto pulls
all this together; but he also knows full well that Marx’s brilliance was the
result or product of his cultures, and it is plain that he too knows these
cultures, as best as one could coming so much later.
A last word: this book is beautifully written and rendered by Patrick
Camiller, and a pleasure to read. It is the best book written on Marx since
Karl Korsch published Karl Marx in 1938. Eighty years is a long time to
wait, but perhaps, like capital itself, the Marx scholarship itself is now also
accelerating. Moreover, this is a Marx whose compass is pointed to today,
with all the complexity and depth of implication which that involves. This
is a great achievement, suggestive of more to come. For understanding,
like Marx’s lifework, is bound to remain unfinished.
Segue … Interval
Clearly, the global Marx revival proceeds apace. As mentioned earlier,
there are other major works too. Two major works focus on the early
Marx. Stathis Kouvelakis has delivered a major volume on Philosophy and
Revolution from Kant to Marx.8 Michael Heinrich is in the process of pub-
lishing a major and massive multivolume project working intensively out
of the German materials. These are vitally important works of Marx
scholarship, for as Musto observes, in order really to enter this labyrinth it
would be necessary not only to reread Marx hermeneutically but also to
reread what he read. How many of us read Proudhon, or Bauer or Hess,
rather than summaries of Marx’s renditions of them and all the other for-
mative thinkers that went into this mix?
This would, of course, be the work of a lifetime. Other new works fol-
low different paths or lines of curiosity. Terrell Carver, unsung hero of
careful Marx analysis since his Karl Marx—Texts on Method, 1975, has
now published his postmodern primer Marx, a clever volume pitched
frontally at the young reader who might imagine Marx alongside their
own visage in those endless selfies.9 In Marx and Russia James White
offers a different approach to Liedman’s biography.10 Where Liedman
paints the big picture, he also seeks to do justice to the connection, which
8
Stathis Kouvelakis, Philosophy and Revolution, From Kant to Marx (London: Verso, 2018).
9
Terrell Carver, Marx (Oxford: Polity, 2018).
10
James D White, Marx and Russia (London: Bloomsbury, 2018).
112 P. BEILHARZ
is indeed serious, to Liebig and Schorlemmer, to agriculture and chemis-

try. If we want to know more about how Marx thought, this may be a
more useful line of association than the endless later fuss concerning
Darwin. White, for his part, follows the Russian Road more seriously than
anyone in writing on Marx in English since Teodor Shanin. White takes as
his point of departure the fine, and marginalized if perhaps bloodless, tril-
ogy of Leszek Kołakowski. Main Currents of Marxism remains a monu-
mental work, one that has likely been sidelined because of the left’s
difficulty in placing Kołakowski as an apostate, one who knows the field
extremely well but is also past it. White looks to connecting up the Russian
lineage in detail, its continuities and deep ruptures, from Sieber and
Kovalelsky as well as Danielson and Zasulich to Bogdanov and finally,
fatally, Stalin, diverging along the way with Plekhanov to the Darwinist
orthodoxy that came to be known as diamat and histomat and with Lenin
to vanguardism, beyond the earlier consensus of the First International
that the emancipation of the workers could only take place by their own
effort. White’s strong claim is that Marx’s work shifts significantly from
early to later views of the history of capitalist development, from universal
to specific. White argues that the Russian Road was symptomatic not of a
weakness for Russian exceptionalism, so much as an opening to non-
classical paths of industrial development, all those that diverged from the
British model of capitalism and the feudalism-capitalism-socialism proces-
sion implied by the 1859 Preface.
As I have suggested in Circling Marx, there is even such a possible
interpretation of the famous double ending in chapters 32 and 33 of the
first volume of Capital, and here we begin to arc gently towards our final
three dance steps, in the direction of the antipodes.11 Chapter 32 of
Capital is often taken to be the proper culmination of the text and its
choreography. The structure of the argument is in fact dissonant. The
logic of Capital seems to demonstrate its capacity for self-reproduction,
give or take claims about the tendency of profit rate to fall, crisis tenden-
cies and so on. The arrival of proletarian revolution as announced in chap-
ter 32 is without structural support in the argument that goes before. The
proletariat is largely absent from major parts of the book, except as the
carrier of suffering and endless toil until death. Capital is its subject, more
than labour, even though we know from the early work that capital is
nothing but stored-up labour, or labour power. The content of chapter 33
11
Beilharz, Circling Marx, Introduction.
turns rather to the possibility of further capitalist development through

the settlement of lands such as Australia.
Much earlier, in the Neue Rheinische Zeitung for 1850, Marx had sug-
gested again another possible projection for capitalist development, differ-
ent to systematic colonization or to any possibilities suggested by the
Russian or kindred Roads:
Thanks to Californian gold and the tireless energy of the Yankees, both
coasts of the Pacific Ocean will soon be as populous, as open to trade and as
industrialised as the coast from Boston to New Orleans is now. And then the
Pacific Ocean will have the same role as the Atlantic has now and the
Mediterranean had in antiquity and in the Middle Ages—that of the great
water highway of world commerce; and the Atlantic will decline to the status
of an inland sea, like the Mediterranean.12
Capitalist hyper-development would be urged even further on by the

results of the Chinese Revolution. Social and socialist alternatives would
become even more remote and difficult to imagine. Clearly global Marxists
would have their work cut out, in this new scenario where even interpret-
ing the world would become a major renewed challenge. This is one other
impulse which calls out the Marx revival.
IV. In Australia: Arena
There is less evidence of any such revival in Australia, though there remains
serious innovation in application, for example in the work of Bryan and
Rafferty on Capitalism with Derivatives,13 which echoes out through the
recent work of Negri and Hardt. The political economists are still at work.
As to Marx scholarship, the picture is different. Perhaps the global inter-
national division of intellectual labour has changed; perhaps post-Marxism
rules down under. For we are all, in some sense or other, after Marx. The
intellectual scene in Australia is still comparatively small, and its main-
stream culture is one of relative prosperity and well-fed complacency. The
activity of the prominent social movements of former times has become
constricted. There has been a structural transformation in the university
12
Quoted in Rolf Hosfeld, Karl Marx, an Intellectual Biography (New York: Berghahn,
2013), 85.
13
Dick Bryan and Michael Rafferty, Capitalism and Derivatives (London: Palgrave
Macmillan, 2006).
114 P. BEILHARZ
system, which for better and for worse was a privileged space for Marxist
inquiry in the previous generation. Marxism has lost its place in the foun-
dational teaching of the universities; no, rather it is foundational teaching
itself which has been elided. Who teaches Marx these days? Or Weber,
Durkheim, Simmel, Freud? PowerPoint rules; knowledge is masticated
into bite-size pieces. Texts are deemed too difficult for students, even in
the most established of universities, where the new buzzword is apparently
something called relatability, whose premise is that students can only learn
about matters that are already within their cultural universes. Why go to
university at all? (Oh, wrong question!)
This was not always so. Even a generation back, Marx was a staple in
liberal arts teaching in Australia. And Marxism was in a state of revival on
the left. Consider Arena, founded in 1963 in the wake of Hungary and
Khruschev and the global emergence of Marxist humanism and revision-
ism. The first editorial, in its first issue, called for a renewal of Marxism;
and it was to become known for its interest in the new strata of the intel-
lectually trained and the recombination of manual and mental labour. The
work of Eugene Kamenka was one early textual point of reference, though
the Arena thesis perhaps anticipated the ideas of Gorz and Mallet and later
Sohn Rethel. In the late 1960s, students, more than workers, were on the
march, though both came together in the Moratoria against the war in
Vietnam. These were the days of the dreams of worker-student alliance,
and of Western Maoist fantasies about something to be figured as a cul-
tural revolution in the metropoles.
Arena in its prime was a remarkable achievement. Here our sample is
issue number 19:1969. The student movement was a leading motif and
enthusiasm attracting wide discussion. Another pioneering paper here was
the Maoist Humphrey McQueen’s early critique of labour movement rac-
ism, anticipating the publication of his decisive work A New Britannia in
1970. But there is more, and it is closer to the pulse of Marx and Marxist
theory. Zawar Hanfi translates and introduces Feuerbach’s Preliminary
Theses. Alastair Davidson contributes a major and comprehensive survey
of and engagement with Althusser. Bruce McFarlane engages with the
political economy of Wolfsohn, Horvath and Mandel. All this in one
issue, and more.
Arena was not a promoter of Althusser so much as of its own home-
spun rural romanticism. It did not sponsor William Morris, but some of its
ambitions were reminiscent of that kind of Marxism. Having been flagged
by Davidson, Althusser caught on elsewhere.
This is not the place for an assessment of the reception of Althusser in

Australia. It was widespread, even though the emergent Marxist cultures
of Melbourne and Sydney were to be German and French, in caricature.
Even the humanist pages of Arena were open to its discussion. While
Foucault, structuralism and poststructuralism were to become more influ-
ential in Sydney, there were also strong impulses to German thinking into
the later 1970s from George Markus, The Sydney-Konstanz Capital analy-
sis group and Wal Suchting, all working out of Sydney University’s
Department of General Philosophy. The Althusser Effect here was like the
earlier Beatles Effect. Some local rock bands copied the Beatles; others
picked up on their own emergent strategy, which was to write songs for
themselves. In Australia, one important aspect of the Althusser Effect was
that we began to read not only Reading Capital, but also Marx’s Capital.
Capital Reading Classes sprung up. The group we ran as students at
Monash, where Davidson and Hanfi were among our teachers, had up to
30 participants meeting weekly. In its early days the Political Economy
Movement did indeed look something like a movement, with annual con-
ferences bringing together a thousand or so. Davidson and Hanfi taught
us Marx and Gramsci and much else besides, verse and line. Others, such
as art historian Bernard Smith, were thinking through the texts for
themselves as they wrote their own leading studies of imperialism and
cultural traffic.14
Perry Anderson’s recent New Left Review memoir of a period meeting
with Althusser touches on some of these issues in the antipodes. Anderson
recalls with mutual amusement Althusser’s encounter with a visiting
Australian, very likely Alastair Davidson, who had become acquainted
with Althusser, Poulantzas, Buci-Glucksmann, Laclau and Mouffe,
Godelier, Lefebvre and other major drivers of French Marxism in the cusp
of the 1980s. Although famously hostile to historicism, Althusser begins
with the observation that we did not, even then, really have a clear sense
of the reception, or global invention of Western Marxism in recent times,
the hegemony of Anderson’s own mapping notwithstanding:
Althusser to Anderson: Who had really taken his ideas up, and what had they
done with them? An anecdote symbolized for him their fate. An Australian
had visited him one day to say that the universities in Australia were in an
14
See Peter Beilharz, Imagining the Antipodes: Culture, Theory and the Visual in the Work
of Bernard Smith (Melbourne: Cambridge University Press, 1997).
116 P. BEILHARZ
uproar between the supporters of Althusser and the foes of Althusser. Life
had been made impossible by their quarrels—above all by the bellicosity of
the Althusserians. … My ideas in Australia—Althusser spoke as if with a
comic despair, about an ultima thule of the workers movement.15
The antipodes may otherwise have figured as the great unknown southern
land in the northern imagination, rather than as a small mythical island to
the north of Britain. But Ben Brewster had translated Althusser, complete
with Glossary, so that we might in the south also follow the compass of the
New Left Review. So, we all read Althusser, even in the antipodes. And,
indeed, Althusser became the leading light of the next major moment in
the life of Marxist journals in Australia.
V. In Australia: Intervention
It arrived in 1972, and it was called, appropriately, Intervention. Perhaps
the best parallel elsewhere would have been Theoretical Practice, which
first appeared in London in 1970. We also read Theoretical Practice, and
we read Hindess and Hirst. (Later we all read E. P. Thompson’s Poverty of
Theory, and many of us ran to the other side of the boat. But this was
already the last gasp of Althusserian Marxism, after 1978.) Intervention,
however, in 1972 was home-grown, originally combining perhaps two key
impulses: a dedication to the immense theoretical revolution announced
by Louis Althusser; and the recognition that Australian Marxists must
know their own history, after the example of Lenin in The Development of
Capitalism in Russia. So here there was a familiar tension, that between
Marx’s theory and its application.
There were many key actors on Intervention, but two signal influences
were those of Grant Evans and Kelvin Rowley. They were associated with
the Left Tendency of the Communist Party of Australia, whose local poli-
tics were rather inflected by a kind of Maoist culturalism in Sydney and
those of emergent Eurocommunism in Melbourne. The Althusserians had
predictably little effect on the daily business of the Communist Party.
They could just as well have been speaking Japanese, as far as the Central
Committee was concerned.
Perry Anderson, “An Afternoon with Althusser,” New Left Review 113 (September
15
2018): 66.
The first issue of Intervention included papers on pastoral capitalism,

sociology and Marxism, Lefebvre and Althusser. The second issue included
analysis of Japan, radical history and Gramsci; the third focused on tech-
nocratic labourism, Korsch, Luxemburg and Marcuse. In the fourth,
among other things, Keith Tribe worried the status of the Grundrisse,
always bound to be a troubling text for those who believed in Capital as a
work of the science of history. Into its later years, Intervention shifted
from Melbourne to Sydney, and the French influence became more appar-
ent. Editorials now were privileging Nietzsche. “Our motto: No more
reformations!” Marx was looking more like the problem. So that by 1983
there appeared Beyond Marxism. Interventions after Marx. French philos-
ophy was in the air; New Philosophy was also in the air. The best and
brightest of the Sydney radicals turned their minds to French theory; and
their contribution to the broader field is considerable. Barry Hindess
arrived in Canberra, and in Sydney others such as Paul Patton did a great
deal to promote work such as that of Deleuze. There was a flourishing of
theory in Sydney, and it was French.
Intervention thus now reads like a capsule of the intellectual history of
its times. The journal continued to engage closely with white Australian
history and political economy, the latter now supplemented by the work of
The Journal of Australian Political Economy (JAPE, b 1977). Its cultural
interests went into projects such as Local Consumption and concerns with
media, leading on to enthusiasms for Baudrillard and the Foucault Effect.
The moment of Althusser could not be sustained. In retrospect, it seems
less than entirely clear how Althusser came to dominate discussion so radi-
cally. Althusser’s arguments were too heavily hermetic and scholastic to be
long maintained. The undercurrent of feminism in Intervention played
out through brilliant work in the wake of French feminism, from Liz
Grosz to Rosi Braidotti and Meaghan Morris to Moira Gatens. The ener-
gies expressed in Sydney split the Philosophy Department, famously, into
Traditional and Modern, and General, the split brought on first over
whether Marxism belonged in the curriculum, and then over the legiti-
macy of feminism. Other things were happening in Melbourne.
VI. In Australia: Thesis Eleven

The first issue of Thesis Eleven appeared late in 1980 in Melbourne. It also
looks now like something from the past: Western Marxism and critical
theory, with an inflection more German than French, and combining
118 P. BEILHARZ
enthusiasm for the Lukács of History and Class Consciousness with the
power of insight in Gramsci’s Prison Notebooks. The students of Lukács,
Fehér and Heller had arrived 18 months earlier in Melbourne, Szelenyi in
Adelaide, the Markuses in Sydney. Alastair Davidson had translated
Gramsci already in 1968.16 So the power trio of Western Marxism was
there: Gramsci, Lukács, Korsch, Rosa Luxemburg on piano, these medi-
ated for us in our twenties by local presences such as Davidson, Heller and
Markus. We were influenced by the first generation of the Frankfurt
School, and the early Habermas, Socialisme ou Barbarie, and even by
council communism. Bauman had passed through Canberra in 1970,
declining the offer of a chair there, heading on to his new home in Leeds.
Castoriadis was to become a significant influence and a major contributor
to the journal. Johann Arnason and David Roberts were further to medi-
ate all this learning. For editing a Marxist journal, and what comes after, is
also clearly a learning process.
The first issue of Thesis Eleven was entitled “Whither Marxism?” as
much of all discussion in this period coalesced around the issue of the crisis
of Marxism. It carried the views of Davidson, on Marx; Heller, on radical
philosophy; Arnason, on this very crisis of Marxism; Markus, on the forms
of Marx’s critical economy; and Backhaus, in his pioneering text, on the
value form in Marx. Three other papers were more strictly historical.
There was a piece on labour history, by N. W. Saffin; a document from
Gramsci, on the transition; and an arcane but brilliant piece by Steve
Wright on J. A. Dawson and the Southern Advocate for Workers Control.
It did not miss Wright’s attention that Dawson published the first edition
of Pannekoek’s Workers Councils in Melbourne in 1950. We, in the south-
lands, were part of a long tradition of intellectual emarginati. Wright’s
own contribution came to include the landmark study Storming Heaven—
Class Composition and Struggle in Autonomist Marxism.17 His work
belongs to a fine filament of Italian Marxism in the antipodes which
includes that of his teacher, Davidson, and the later brilliant Gramsci
scholar Peter Thomas.
What did Thesis Eleven come to be? For our 100th issue in 2010, we
commissioned George Steinmetz to read the backfile and discern some
Peter Beilharz, Alastair Davidson—Gramsci in Australia (Leiden: Brill, forthcoming-a).

16
Steve Wright, Storming Heaven—Class Composition and Struggle in Italian Autonomist

17
Marxism (London: Pluto, 2002).

trends.18 The result? It was no surprise: as the journal proceeds through

time, there is less and less work on Marx, much more on after Marx, or
seeking to apply and extend the critical tradition. But there is also a blip
in reference to Marx in these pages, after 1995. The critical horizon of
the journal shifted from capitalism to modernity, a shift consistent with
the leading trends in East European critical theory from Heller and
Fehér to Bauman. In the case of Markus, the interest expanded from
capital to culture.
As it approaches its fourth decade, the achievement and character of
Thesis Eleven remain difficult to discern. The journal became more plural-
ized and given to puzzling over problems of the world, such as, in these
days, populism, nationalism, watersheds, empires, technologies, indige-
nous and other modernities and so on. There have been recent issues on
Gramsci, on the work of the Markuses, and Lukács, and further work on
Castoriadis and Bauman.19 Forty years on, the moment of Western
Marxism has also passed, while the practice of critical theory has become
a massive and open canopy. The interests of the editors have expanded
dramatically, to take in more of popular culture and rock music, the cre-
ativity of the quotidian, matters of place, time and division as well as high
art and culture as traditionally conceived. And whatever the depth of its
distance from a project such as Intervention, there was a constant need for
Thesis Eleven also to deal with issues of place, in the antipodes as else-
where. So there is both extension and application work here, and work
given to revaluing our own traditions and thinkers.
Where is Marx, in all this? Subsumed, transformed, repeated via cre-
ative mimesis; periodically reconsidered. Certainly, there are other impulses
at work, such as that shown by the local followers of Historical Materialism.
As for me, personally, Capital remains my desert island book, the one to
which I most constantly return and imbibe from, the Grundrisse fast on its
tail. Those of us who follow Marx celebrate the revival, and hope still to
18
George Steinmetz, “Thirty Years of Thesis Eleven: A Survey of the Record and Questions
for the Future.” Thesis Eleven 100 (2010); and see thesiseleven.com for recent activities of
the journal http://thesiseleven.com
19
See James Dorahy, The Budapest School: Beyond Marxism (Leiden: Brill, 2019); Jonathon
Pickle and John Rundell, eds., Critical Theories and the Budapest School (London: Routledge,
2018); Peter Beilharz, Zygmunt Bauman—Dialectic of Modernity (London: Sage, 2000);
Peter Beilharz, ed., The Bauman Reader (Oxford: Blackwell, 2000); Peter Beilharz, Working
With Zygmunt Bauman: Sociology and Friendship (Manchester: Manchester University Press,
forthcoming-c).
120 P. BEILHARZ
pass on this legacy. There is still so much to learn, and to change, even for
us on the margins. Marx returns; we return. The repetition is additive, and
qualitative; over all these years since Marx, it represents an immense accu-
mulation of radical culture. So do we go on, dancing our lives away, hop-
ing for better, hoping ever for more. Here is the rose; dance away!
Bibliography
Anderson, Perry. “An Afternoon with Althusser.” New Left Review 113 (September
2018): 59–68.
Barker, Jason. Marx Returns. Washington, DC: Zero, 2017.
Beilharz, Peter. Imagining the Antipodes: Culture, Theory and the Visual in the
Work of Bernard Smith. Melbourne: Cambridge University Press, 1997.
Beilharz, Peter, ed. The Bauman Reader. Oxford: Blackwell, 2000a.
Beilharz, Peter. Zygmunt Bauman—Dialectic of Modernity. London: Sage, 2000b.
Beilharz, Peter. “From Marx to Gramsci to Us—From Laboratory to Prison and
Back.” Thesis Eleven 132 (2016): 77–86.
Beilharz, Peter. Alastair Davidson—Gramsci in Australia. Leiden: Brill, forthcoming-a.
Beilharz, Peter. Circling Marx. Essays 1980–2020. Leiden: Brill, forthcoming-b.
Beilharz, Peter. Working With Zygmunt Bauman: Sociology and Friendship.
Manchester: Manchester University Press, forthcoming-c.
Bryan, Dick and Michael Rafferty. Capitalism and Derivatives. London: Palgrave
Macmillan, 2006.
Carver, Terrell. Marx. Oxford: Polity, 2018.
Dorahy, James. The Budapest School: Beyond Marxism. Leiden: Brill, 2019.
Hosfeld, Rolf. Karl Marx, an Intellectual Biography. New York: Berghahn, 2013.
Kouvelakis, Stathis. Philosophy and Revolution, From Kant to Marx. London:
Verso, 2018.
Liedman, Sven-Eric. Marx—A World to Win. London: Verso, 2018.
Musto, Marcello. Another Marx: Early Manuscripts to the International. London:
Bloomsbury, 2018.
Pickle, Jonathon, and John Rundell, eds. Critical Theories and the Budapest School.
London: Routledge, 2018.
Sperber, Jonathon. Karl Marx—A Nineteenth Century Life. New York:
Liverwright, 2013.
Stedman Jones, Gareth. Karl Marx—Greatness and Illusion. Cambridge: Belknap
at Harvard, 2016.
Steinmetz, George. “Thirty Years of Thesis Eleven: A Survey of the Record and
Questions for the Future.” Thesis Eleven 100 (2010): 67–80.
White, James D. Marx and Russia. London: Bloomsbury, 2018.
Wright, Steve. Storming Heaven—Class Composition and Struggle in Italian
Autonomist Marxism. London: Pluto, 2002.
On the Notion of “Workers’ Control”
in Marx and Marxists (1871–1917): A Survey
Babak Amini
I. On the Idea of “Workers’ Control”

The notion of “workers’ control” has been used to cover a wide range of
phenomena, from limited workers’ supervision of working conditions to
full workers’ management of the social relation of production. It has also
been deployed within a broad ideological spectrum including Marxism,
anarcho-syndicalism, guild socialism, and Social Democracy.1 Therefore, it
is by no means limited to Marxism. In fact, Marxism has always had an
1
For diversity on the notion among the various schools of thoughts, see Immanuel Ness
and Dario Azzellini, eds., Ours to Master and to Own: Workers’ Control from the Commune to
the Present (Chicago: Haymarket, 2011); Dario Azzellini and Michael Kraft, eds., The Class
Strikes Back: Self-Organised Workers’ Struggles in the Twenty-First Century (Leiden: Brill,
2018); Maximilien Rubel and John Crump, eds., Non-Market Socialism in the Nineteenth
and Twentieth Centuries (New York: Palgrave Macmillan, 1984); Catherine Mulder,
Transcending Capitalism through Cooperative Practices (Basingstoke: Palgrave Macmillan,
2015); Bernard Shaw, ed., Fabian Essays (London: Allen & Unwin, 1948); Gregory K. Dow,
Governing the Firm: Workers’ Control in Theory and Practice (Cambridge and New York:
Cambridge University Press, 2003).
B. Amini (*)
London School of Economics, London, UK

122 B. AMINI
uneasy relationship with this notion either for its ideological flexibilities
that could facilitate as much an anti-political radical left stance as a class-
collaborationist liberal position, or for its conceptual antagonism with
much of the actual twentieth-century socialist systems.
It is in the latter sense, in opposition to the most hegemonic forms of
Marxism in the twentieth century, that the notion is utilized in this chap-
ter to trace the conceptual genesis of a vision of communist society based
on Marx’s notion of a “society of free and associated producers”.2 Some
might take an issue with such a radical interpretation of the idea of “work-
ers’ control” whose common use in theory and practice has set far less
revolutionary criteria. One can argue in response that for workers to have
an actual control over the relations of production, which goes beyond the
limits of the sphere of production, they must break from not only capital
towards socialization of the means of production but also the state towards
the associated administration of society.3 Workers remain under the spur of
capital and its market imperatives even if they are given supervisory or
participatory rights. They remain subject to the will of bureaucratic organs
of the centralized state even if they are formally in control of the means of
production. In emphasizing the “workers’ control”, it seeks to make a
distinction with the visions of the future society based on the state or the
party control. Therefore, this chapter surveys the theoretical manifesta-
tions of a concept defined a priori rather than the evolution of the notion
employed a posteriori through concrete experiences.
The temporal boundary adapted in this essay is from 1871, when Marx
published his reflections on the Paris Commune in Civil War in France to
just before the February Revolution of 1917. There are more reasons
behind this deliberation beyond space considerations. Although the gen-
esis of the concept can certainly be found in earlier writings of Marx such
as the Grundrisse and Capital, Volume I, the experience of the Paris
Commune (1871) invoked new ideas in Marx about the organization of
the post-capitalist society. Conversely, the experience of the February
Revolution had profound effects on Marxist theorists on the political form
of the revolutionary transition and the nature of socialist society. It is pre-
cisely the exclusion of the effects of this momentous event from the inquiry
that helps to highlight its transformative effects on Marxist thoughts on
classical Marxism and beyond.
Karl Marx, Theories of Surplus Value (Part 3) (Moscow: Progress Publishers, 1971), 157.
2
For example, see Paul Mattick, “Workers’ Control,” in Anti-Bolshevik Communism

3
(Monmouth: Merlin Press Ltd., 2007), 211–31.

ON THE NOTION OF “WORKERS’ CONTROL” IN MARX AND MARXISTS… 123
The chapter illustrates the extent to which the idea of “workers’ con-
trol” finds different expression in Marx and some of the Marxist theorists
between 1871 and the February Revolution. Needless to say, not all
Marxist thinkers of this period and not all of their writings could be anal-
ysed within the confines of this chapter. Therefore, it is not a comprehen-
sive survey even within the chosen period; its hope, nevertheless, is to at
least provide a ground for further investigation. However, certain pecu-
liarities surface from the selection, suggesting that the most “prominent”
Marxist theorists of this period did not in fact have as much to say about
the notion of “workers’ control” as compared to more “marginal” figures.
Reasons behind this and the need to re-examine Marx’s writings on this
notion are discussed in the concluding section.
The major themes that emerged from the survey resolve around the
centrality of self-emancipation of the working-class to democratically con-
trol the socialized means of production through federations of associated
producers. This implies that the question of the state and its role in such
revolutionary transformation looms large in these accounts. Some theo-
rists, especially Marx and Engels, were also keenly aware of the fact that
such a realm of freedom is unattainable as long as capitalist market impera-
tives are left in place.
II. Brief Remarks on the Historical Context

The different takes and emphasis on the notion of “workers’ control” that
we will see should be proximally understood in terms of the varieties of
political contexts that demanded different theoretical struggles. Two
underlying historical trends, one general to the period and the other par-
ticular to the national context, can be recognized.
In was in this period that socialist parties emerged and, especially in
continental Europe, gained traction towards becoming mass parties.4
Although they faced serious hurdles in translating their mass support into
political power due to electoral disenfranchisement and state repression,
the rapid expansion of the working class provided the social force behind
these parties. In the meanwhile, this period saw the growth of the union
4
See Dick Geary, ed., Labour and Socialist Movements in Europe before 1914 (Oxford: Berg,
1989); Geoff Eley, Forging Democracy the History of the Left in Europe, 1850–2000 (Oxford:
Oxford University Press, 2002).
124 B. AMINI
movement, which was not always in sync with the socialist movement in
either ideological orientation or organizational domination.5
Marxism had its own trajectory in this period which, albeit rapidly
becoming one of the most dominant theoretical orientations among the
radicals, had by no means remained unchallenged. The gulf that erupted
within the International Workingmen’s Association (IWMA) between the
anarchists and Marxists continued to widen for the next four decades.6
Anarchist thought continued to play a major influence on radical thinkers,
especially in Russia, France, and the Southern European countries.7
Therefore, Marxist theoreticians felt obliged to clearly distinguish them-
selves, sometimes even at the cost of rejecting some positive aspects of
anarchist thoughts. Another development that concerned Marxists par-
ticularly until the end of the 1900s was the significant shift within the
labour movement towards syndicalism.8
There were specific trends within each country that strongly influenced
the native theoretical development. It was only in Germany that Marxism
became the official doctrine of the Social Democratic Party of Germany
(SPD)—a party that enjoyed an exceptional hegemony within the Left and
unparalleled organizational capacity which soon translated into parliamen-
tary strength. The party was also responsible for the establishment of the
union and, therefore, had a close relationship with it, albeit not without
tensions, especially later in the 1900s. In France, there was a strong pres-
ence of Proudhonism and Blanquism until the end of the 1890s and then
the continued influence of anarchism and syndicalism within the socialist
and labour movement into the twentieth century. Therefore, the French
Marxists had to carve a space within these ideologies which often involved
5
See Donald Sassoon, One Hundred Years of Socialism: The West European Left in the
Twentieth Century (London: Tauris, 2014), 1–30; Stefano Bartolini, The Political
Mobilization of the European Left, 1860–1980: The Class Cleavage (Cambridge: Cambridge
University Press, 2000); Ira Katznelson and Aristide R. Zolberg, eds., Working-Class
Formation: Nineteenth-Century Patterns in Western Europe and the United States (Princeton:
Princeton University Press, 1986).
6
See Marcello Musto, “Introduction,” in Workers Unite! The International 150 Years
Later, ed. Marcello Musto (New York: Bloomsbury, 2014), 51–63.
7
See David Berry and Constance Bantman, eds., New Perspectives on Anarchism, Labour
and Syndicalism: The Individual, the National and the Transnational (Newcastle: Cambridge
Scholars, 2010); Peter H. Marshall, Demanding the Impossible: A History of Anarchism
(London: HarperCollins, 1992), esp. part V.
8
See Marcel van der Linden and Wayne Thorpe, eds., Revolutionary Syndicalism: An
International Perspective (Aldershot: Scolar, 1990).
leveraging on the deep-seated anarcho-syndicalist sensibilities of the

French working class. In the United Kingdom, the hegemony of reform-
ism within the labour movement which gave rise to the Labour Party left
little room for radical socialist tendencies. The Irish situation, although
under the influence of British socialism, had more room for radicalism
insofar as it could be linked to the project of independence. It should not
come as a surprise that the Marxist intellectuals in the United Kingdom,
the United States, and Ireland gravitated towards the breathing space that
was created after the emergence of the Industrial Workers of the World
(IWW). Russia was a profoundly different case. Given the weakness of the
social base due to the level of industrialization and the autocratic absolut-
ist state, the most pressing challenge of the Russian socialists appeared to
be the democratization of the state to create political space for reforms.
However, the Tsar Regime proved itself incapable of undergoing any
democratic reform.
The process of proletarization of the population intensified exponen-
tially after the outbreak of World War I,9 but the state clampdown on
political agitation and socialist parties’ capitulation to the imperialist proj-
ect in the hope of finding a stronger foothold in the sphere of formal poli-
tics substantially interrupted the radical project within the socialist camp.
Furthermore, the imperial rivalry in the lead-up to and the disastrous con-
sequences of the war presented Marxist intellectuals with new questions to
grapple with. This is why there is no text in the survey that was published
during the war.
III. “Workers’ Control” in Marx and the Early

Marxists
Karl Marx (1818–1883)
There is much in Marx’s works prior to 1871 that speaks to the idea of
“workers’ control”. However, the developments within the IWMA and
the Paris Commune had profound effects on his conception of the form of
future society. In the General Rules of the IWMA, originally written in
1864 but updated in 1871, Marx and Engels restate the fundamental
motto of the International “that the emancipation of the working classes
9
See Antoine Prost, “Workers,” in The Cambridge History of the First World War, ed. Jay
Winter (Cambridge: Cambridge University Press, 2014).
126 B. AMINI
must be conquered by the working classes themselves … [and] that the

economical emancipation of the working classes is, therefore, the great
end to which every political movement ought to be subordinated as a
means”.10 As he (and Engels) said repeatedly on numerous occasions,
what mattered was that
the emancipation of the working class must be achieved by working class

itself. Hence we [in the workers’ party] cannot cooperate with men who say
openly that the workers are too uneducated to emancipate themselves, and
must first be emancipated from above by philanthropic members of the
upper and lower middle class.11
They also cautioned strongly against allowing the leadership of the

working-class party to fall into the hands of such an element.12 They held
on uncompromisingly to this principle.
Albeit the subordination of the political movement to the economic
emancipation, they put utmost emphasis on the importance of “the con-
quest of political power” as the “great duty of the working class”.13 They
also underscored the fact that the working class cannot collectively engage
in such political actions “except by constituting itself into a political party,
distinct from, and opposed to all old parties formed by the propertied
classes”.14 Therefore, Marx’s idea of “workers’ control” is far from an
anarcho-syndicalist understanding. It sees the constitution of political par-
ties as “indispensable” to “the triumph of social revolution”,15 even
though political movement remains instrumentally subordinate to the
ultimate end of the economic emancipation of the working class by the
working class itself. They further believed that the working class must use
its forces in economic struggles “as a lever for its struggle against the
political power of landlords and capitalists”.16 In other words, “in the
10
Karl Marx and Friedrich Engels, “General Rules of the International Working Men’s
Association,” in Workers Unite, 265.
11
Karl Marx, and Frederick Engels, “Circular Letter to August Bebel, Wilhelm Liebknecht,
Wilhelm Brucke and Others,” in MECW (London: Lawrence & Wishart, 1989), 24: 269.
12
Ibid.
13
Marx and Engels, “General Rules of the International Working Men’s Association,”
268.
14
Ibid.
15
Ibid.
16
Karl Marx and Friedrich Engels, “[On the Political Action of the Working Class and
Other Matters],” in Workers Unite, 285.
ilitant state of the working class, its economical movement and its politi-
m
cal action are indissolubly united”.17
In his Civil War in France (1871), Marx analysed the emergence and
the development of the Paris Commune and assessed its theoretical impli-
cations. He argued that the Paris Commune showed that “the working
class cannot simply lay hold of the ready-made State machinery, and wield
it for its own purposes”.18 This is because the structure of the modern
state has been formed through its historical evolution, due to both politi-
cal struggle of classes (and class fractions) and economic changes in soci-
ety, in ways that the state power and its organs reflect the capitalist social
relation.19 The Commune was “the direct anthesis of the [Second]
Empire” that sought to supersede not only the form of a particular class
character of that state but “class rule itself”,20 which required a fundamen-
tal transformation of the state and its key organs such as the army, the
policy, the government, the educational institutions, and the judiciary. At
the core of such transformation lay one fundamental principle to create
the “the basis of really democratic institutions”21: “While the merely
repressive organs of the old governmental power were to be amputated, its
legitimate functions were to be wrested from an authority usurping pre-
eminence over society itself, and restored to the responsible agents of
society.”22 The “expansive political form” of government that the
Commune sought to establish was “local municipal liberty”.23
But this transformation could not be limited to the political sphere.
Marx believed that the Commune as “essentially a working-class govern-
ment [is] the produce of the struggle of the producing against the appro-
priating class”.24 Hence, the political form that the Commune sought to
establish could “serve as a lever for uprooting the economical foundations
upon which rests the existence of classes, and therefore of class rule”.25
This implied the transformation of private property into “mere i nstruments
17
Ibid.
18
Karl Marx, “The Civil War in France,” in MECW (London: Lawrence & Wishart,
1986), 22: 328.
19
Ibid., 328–9.
20
Ibid., 330–1.
21
Ibid., 334.
22
Ibid., 332–3.
23
Ibid.
24
Ibid.
25
Ibid.
128 B. AMINI
of free and associated labour”.26 Such a cooperative society of free and

associated producers whose vision had to be “emphatically international”,27
what Marx simply identified as “communism”, was to “regulate national
production upon a common plan, thus taking it under their own control”.28
Further elaboration of Marx’s radical understanding of “workers’ con-
trol” appears in Critique of the Gotha Programme (1875) in which Marx
offered a sharp critique of the draft of the programme of the Socialist
Workers’ Party of Germany. In response to the demand for state-assisted
cooperatives under the democratic control of workers, Marx argued that
“instead of arising from the revolutionary process of the transformation of
society, the ‘socialist organisation of the total labour’ ‘arises’ from the
‘state aid’ that the state gives to the producers’ co-operative societies
which the state, not the worker, ‘calls into being’”.29 He believed such a
scheme could not lead to a revolutionary transformation of the capitalist
social relation. He further questioned the seemingly democratic appeal of
the demand: “[W]hat does ‘control of the working people by the rule of
the people’ mean? And particularly in the case of working people who,
through these demands that they put to the state, express their full con-
sciousness that they neither rule nor are ripe for rule.”30 Therefore, cre-
ation of the conditions for a cooperative society to transcend the capitalist
social relation of production was only valuable, Marx argued, “only insofar
as they are the independent creations of the workers and not protégés
either of the governments or of the bourgeois”.31 Through such a critique,
Marx emphasized the need for achieving an actual rather than formal con-
trol by the workers.
Regarding the question of the transformation of the state in a commu-
nist society, Marx wrote here that in the period of political transition from
capitalism to communism, the state undergoes a phase that “can be noth-
ing but the revolutionary dictatorship of the proletariat”.32 We must note
that this was a critique of Lassallean socialism that “treat[ed] the state
26
Ibid., 335.
27
Ibid., 338.
28
Ibid., 335.
29
Karl Marx, “Marginal Notes on the Programme of The German Workers’ Party,” in
MECW (London: Lawrence & Wishart, 1989), 24: 93.
30
Ibid.
31
Ibid., 94.
32
Ibid., 95. This phrase has been notoriously abused by later Marxists even though Marx
himself rarely used it throughout his corpus.
rather as an independent entity that possesses its own ‘intellectual, ethical

and libertarian bases’”.33 Marx qualified the notion of the “dictatorship of
the proletariat” in his Notes on Bakunin’s Statehood and Anarchy
(1874–1875) where he responded to the charges that Mikhail Bakunin
made against him. The notion
implies that as long as the other classes, above all the capitalist class, still
exist, and as long as the proletariat is still fighting against it (for when the
proletariat obtains control of the government its enemies and the old organ-
isation of society will not yet have disappeared), it must use forcible means,
that is to say, governmental means.34
Therefore, the proletariat must use the power of the state to accelerate the
process of transforming the economic condition that constitutes it as a
class, so as to abolish “its own character as wage labourer and hence as a
class”.35 In response to Bakunin’s rhetorical question as to whether the
whole of the proletariat can stand at the head of the government, Marx
said “CERTAINLY! For the system starts with the self-government of the
communities.”36
In Capital, Volume III, Marx began a discussion about the supervisory
and managerial role by a general acknowledgement that it “arises where the
direct production process takes the form of a socially combined process,
and does not appear simply as the isolated labour of separated produces”.37
Therefore, it emerges in two forms: as an organizational necessity of “any
combined mode of production” in general but also in all modes of produc-
tion where there is an opposition between the director producers and the
owners of the means of production”.38 What is specific about work of
supervision and management under capitalism is that it is “directly and
inseparably fused [ ] with the productive functions that all combined social
labour assigns to particular individuals as their special work”.39 The infu-
sion implies that the work of supervision does not necessarily have to be
performed by the capitalists, just as the capitalist can become “superfluous
Ibid., 94.
33
Karl Marx, “Notes on Bakunin’s Statehood and Anarchy,” in MECW (London: Lawrence
34
& Wishart, 1989), 24: 517.

35
Ibid., 519.
36
Ibid.
37
Karl Marx, Capital, Vol. III (London: Penguin Classic, 1991), 507.
38
Ibid.
39
Ibid., 510.
130 B. AMINI
as a functionary in production”.40 Marx referred to the cooperative facto-

ries as a proof of this superfluidity whose conditions of possibility emerge
at a certain stage of the development of capitalism. A crucial difference is
that “in the case of a cooperative factory, the antithetical character of the
supervisory work disappears, since the manager is paid by the workers
instead of representing capital in opposition to them”.41 Nevertheless, “the
cooperative factories run by workers themselves are, within the old form,
the first example of the emergence of a new form, even though they natu-
rally reproduce in all cases, in their present organization, all the defects of
the existing system, and must reproduce them”.42 For Marx, freedom in
the realm of natural necessity
can consist only in this, that socialized man, the associated producers, gov-
ern the human metabolism with nature in a rational way, bringing it under
their collective control instead of being dominated by it as a blind power;
accomplishing it with the least expenditure of energy and in conditions most
worthy and appropriate for their human nature. But this always remains a
realm of necessity. The true realm of freedom, the development of human
powers as an end in itself, begins beyond it, though it can only flourish with
this realm of necessity as its basis.43
The true realm of freedom cannot be achieved unless the realm of neces-
sity falls under the actual control of associated producers, beyond mecha-
nisms of economic or political domination. This cannot be accomplished
within the wage system44 or through market economy,45 or on the basis of
centralized state control. This captures the essence of what Marx called a
“society of free and associated producers”.46
Friedrich Engels (1820–1895)

Engels published a series of articles entitled The Housing Question
(1872–1873) as a critical intervention in the debate about the housing
shortage in the major industrial cities. The text criticized the schemes
40
Ibid., 511.
41
Ibid., 512.
42
Ibid., 571.
43
Ibid., 959.
44
Marx, “Marginal Notes on the Programme of The German Workers’ Party,” 92.
45
Karl Marx, Capital, Vol. II (London: Penguin Classics, 1992), 390, 434.
46
Karl Marx, Theories of Surplus Value (Part 3) (Moscow: Progress Publishers, 1971), 157.
roposed by Proudhonian and Lassallean socialists regarding the solution

p
to the housing crisis as insufficient to transform the capitalist social rela-
tion and, therefore, to address the root cause of the problem. In the last
part, he countered the Proudhonist “redemption” scheme,47 as character-
ized in Arthur Mülberger’s writings, with respect to the seizure of the
means of production. He argued that
the “actual seizure” of all the instrument of labour, the taking possession of
the industry as a whole by the working people, is the exact opposite of the
Proudhonist “redemption”. In the latter case, the individual worker becomes
the owner of dwelling, the personal farm, the instrument of labour, in the
former case, the “working people” remain the collective owner of the
houses, factories and instruments of labour, and will hardly permit their use,
at least during a transitional period, by individuals or associations without
compensation for the cost. In the same way, the abolition of property in land
is not the abolition of ground rent but its transfer, if in a modified form, to
society. The actual seizure of all the instruments of labour by the working
people, therefore, does not at all preclude the retention of rent relations.48
Some of the most substantive discussions relevant to the idea of “work-

ers’ control” in Engels in this period are found in Part III of Anti-Dühring:
Herr Eugen Dühring’s Revolution in Science (1878).49 Like Marx, Engels
was adamant in his critique of Lassallean state socialism in using the exist-
ing state machinery to fundamentally transform the capitalist social rela-
tion.50 He argued that
47
Engels defined the Proudhonian notion of “redemption” as follows: “the abolition of
rented dwellings is proclaimed a necessity, and couched in the form of a demand that every
tenant be turned into the owner of his dwelling”. They proposed that this would be done by
fully compensating the previous house owner and the occupants (i.e. the previous tenant)
would continue to pay the equivalent amount of the previous rent annually to the society in
return for the possession of the house. According to Mülberger (as quoted by Engels), this
entailed that “society … transforms itself in this way into a totality of free and independent
owners of dwelling”. Frederick Engels, “The Housing Question,” in MECW (London:
48
Ibid., 386.
49
Part of the book, which includes much of the discussion presented here, was published
separately in 1880 under the title Socialism: Utopian and Scientific.
50
Echoing Marx, Engels said in his preface to the 1888 English edition of Communist
Manifesto that the political programme of the Manifesto “has in some details become anti-
quated”. This was because the experience of the Paris Commune has proven that “the work-
ing class cannot simply lay hold of the ready-made state machinery, and wield it for its own
132 B. AMINI
the transformation, either into joint-stock companies, or into state owner-

ship, does not do away with the capitalistic nature of the productive forces.
[…] The modern state, no matter what its form, is essentially a capitalist
machine, the state of the capitalists, the ideal personification of the total
national capital. The more it proceeds to the taking over of productive
forces, the more does it actually become the national capitalist, the more
citizens does it exploit. The workers remain wage-workers—proletarians.
The capitalist relation is not done away with. It is rather brought to a head.
But, brought to a head, it topples over.51
This essentially rejects nationalization as a revolutionary strategy. However,

the state ownership of productive forces does not offer a solution, “con-
cealed within it are the technical conditions that form the elements of that
solution”.52 As for the solution, he wrote that it
can only consist in the practical recognition of the social nature of the mod-
ern forces of production, and therefore in the harmonising of the modes of
production, appropriation, and exchange with the socialised character of the
means of production. And this can only come about by society openly and
directly taking possession of the productive forces which have outgrown all
control except that of society as a whole.53
Therefore, the solution lies only through socialization of means of pro-

duction, in the sense of the society (not the “state”) having open and
direct (not conditional or indirect) control. It is within such an arrange-
ment that “at last, [ ] the real nature of the productive forces of today, the
social anarchy of production gives place to a social regulation of produc-
tion upon a definite plan, according to the needs of the community and of
each individual”.54 Note that Engels did not foresee a substitution of the
social anarchy of production by a state-planned economy but a socially
regulated one that is for the benefit not just of the community as a whole
but also of each individual.
purpose”. Frederick Engels, “Preface to the 1888 English Edition of the Manifesto of the
Communist Party,” in MECW (London: Lawrence & Wishart, 1988), 26: 518.
51
Frederick Engels, “Anti-Dühring,” in MECW (London: Lawrence & Wishart, 1988),
25: 265–6.
52
Ibid., 266.
53
Ibid.
54
Ibid., 267.
Regarding the revolutionary process of such transformation, he wrote

that “the proletariat seizes political power and turns the means of produc-
tion in the first instance into state property. But in doing this, it abolishes
itself as proletariat, abolishes all class distinctions and class antagonisms,
abolishes also the state as state”.55 However, contrary to those who inter-
preted this as validating a (long) transitional period in which the workers’
state in its capacity as the possessor of the means of production remains
until it “naturally” withers away, it is crucial to note that he also stated that
“[t]he first act by virtue of which the state really constitutes itself [as] the
representative of the whole of society—the taking possession of the means
of production in the name of society—this is, at the same time, its last
independent act as a state”.56 It is, hence, its first and last act as a state after
which its interference in the social relation becomes progressively super-
fluous until “the government of persons is replaced by the administrative
of things”.57Afterwards, “now under the dominion and control of man”,
“[t]he laws of his own social action, hitherto standing face to face with
man as laws of nature foreign to, and dominating him, will then be used
with full understanding, and so [be] mastered by him”.58 Such a control
over social forces that govern human existence would at last usher the
realm of freedom.
Social domination is not limited to the state. Engels saw the capitalist
market competition as another subjugating force. In the same text, Engels
criticized Dühring’s idea of a federation of economic communes in which
market competition between them, conditioned upon the freedom of
movement of people between different communes, was preserved.
Dühring distinguished this from the cooperative ownership of the work-
ers’ association which he believed “would not exclude material competi-
tion and even the exploitation of wage-labour”.59 In a discussion that
resembles a critique of market socialism, Engels argued that Dühring’s
scheme preserved effective competition between different communes so
that “things are removed from the sphere of competition, but men remain
subject to it”.60
55
Ibid.
56
Ibid.
57
Ibid., 268.
58
Ibid., 270.
59
As quoted in Ibid., 274.
60
Ibid., 275.
134 B. AMINI
In his introduction to Marx’s The Civil War in France (1891), Engels

interpreted the shortcomings and confusions of the Commune in terms of
its political and economic characters respectively based on the dominance
of Proudhonians and Blanquists among the French working class.61 He
stated, for example, that, with the exception of associations in large indus-
tries, Proudhonians saw associations as “sterile, even harmful, because it
was a fetter on the freedom of the worker”.62 But since, by the time of the
Commune, there was a massive shift towards large-scale industries
in France,
by far the most important decree of the Commune instituted an organisa-

tion of large-scale industry and even of manufacture which was not only to
be based on the association of the workers in each factory, but also to com-
bine all these associations in one great union; in short, an organisation
which, as Marx quite rightly says in The Civil War, must necessarily have led
in the end to communism, that is to say, the direct opposite of the Proudhon
doctrine.63
He rejects the Blanquist revolutionary strategy based on small, highly dis-

ciplined groups of men, organized in strictly centralized groups, “not only
to seize the helm of state, but also by a display of great, ruthless energy, to
maintain power until they succeeded in sweeping the mass of the people
into the revolution and ranging them round the small band of leaders”.
He argued that this profoundly contradicts the political form of society
envisioned by the Commune.
In all its proclamations to the French in the provinces, it appealed to them to

form a free federation of all French Communes with Paris, a national organisa-
tion which for the first time was really to be created by the nation itself. It was
precisely the oppressing power of the former centralised government, army,
political police, bureaucracy, which Napoleon had created in 1798 and which
since then had been taken over by every new government as a welcome instru-
ment and used against its opponents—it was precisely this power which was to
fall everywhere, just as it had already fallen in Paris.64
61
Frederick Engels, “Introduction to Karl Marx’s The Civil War in France,” in MECW
62
Ibid., 188.
63
Ibid.
64
Ibid., 188–9.
Hence, by drawing attention to the contradictions between the actual

requirements of the movement and the formal orientations of these two
ideologies, Engels highlighted the natural tendency of an emancipatory
movement such as the Commune towards coordinated associations at all
productive levels to freely manage the society.
Engels went on to make sense of the radical measures that the Commune
took such as recallability as a way “not to lose against its only just conquered
supremacy”65 by subverting the measures that were used to undermine their
power. The Commune took the recallability and capping wages in order to
disrupt the historical transformation of the state and its organs “from ser-
vants of society into masters of society”.66 In opposition to the “supersti-
tious belief” common among Germans regarding the state as the “‘realisation
of the idea’, or the Kingdom of God on Earth”,67 Engels argued that
the state is nothing but a machine for the oppression of one class by another,
and indeed in the democratic republic no less than in the monarchy; at best
an evil inherited by the proletariat after its victorious struggle for class
supremacy, whose worst sides the victorious proletariat, just like the
Commune, cannot avoid having to lop off at once as much as possible until
such time as a generation reared in new, free social conditions is able to
throw the entire lumber of the state on the scrap heap.68
In this sense, Engels saw the notion of the dictatorship of the proletariat
exemplified in the Paris Commune.
Engels distinguished such self-government from various co-determination
schemes. He wrote a critique on the draft of the Erfurt Programme, which
was to replace the Gotha Programme as the core programme of the SPD.
While raising caution in presenting details regarding the exact form of the self-
governing structure in a short document such as the Erfurt Programme,
Engels recommended adding the following point: “Complete self-govern-
ment in the provinces, districts and communes through officials elected by
universal suffrage. The abolition of all local and provincial authorities
appointed by the state.”69 Regarding the question of regulation of industries,
he said against co-determination-type models that
Ibid., 189.
65
Ibid., 190.
66
67
Ibid.
68
Ibid.
69
Frederick Engels, “A Critique of the Draft Social-Democratic Programme of 1891,” in
MECW (London: Lawrence & Wishart, 1988), 27: 229.
136 B. AMINI
we would be taken in good and proper by labour chambers made up half of

workers and half of entrepreneurs. For years to come, the entrepreneurs
would always have a majority, for only a single black sheep among the work-
ers would be needed to achieve this. If it is not agreed upon that in cases of
conflict both halves express separate opinions, it would be much better to
have a chamber of entrepreneurs and in addition an independent chamber
of workers.70
Engels shared the key elements of Marx’s understanding of “workers’

control” and pushed them forward in his writings during and after Marx’s
death. His thoughts were surely affected but not hampered by the signifi-
cant developments in the socialist movement in Germany and internation-
ally, especially after the relaxation of the anti-socialist laws in Germany and
the founding of the Second International. Nevertheless, Engels remained
committed to the idea of “workers’ control” as the key pillar of an eman-
cipatory socialist vision.
William Morris (1834–1896)

Morris was one of the earliest British Marxists who, with the support of
Engels, co-founded the Socialist League in 1885 after his break from the
Social Democratic Federation (SDF).71 Before the clashes with the founder
of the Social Democratic Federation, Henry Hyndman, Morris co-
authored a piece with him called A Summary of the Principle Socialism
(1884). Perhaps under the influence of Hyndman, the state played a more
central role in this piece than in the later writings of Morris. Seemingly
equating the state with the people as a whole, they called for
the immediate management and ownership of the railways by the state,

so that in land communications of the country, [it] may be under the
control of the people at large, and carried on for their benefit, regard
70
Ibid., 230.
71
The question as to whether William Morris should be considered as a “Marxist” is rather
contentious (cf. E. P. Thompson, William Morris: From Romantic to Revolutionary (New
York: Pantheon Books, 1976); G. D. H. Cole, Socialist Thought. Marxism and Anarchism,
1850–1890 (London: Macmillan, 1954), 419; Florence Boos and William Boos, “The
Utopian Communism of William Morris,” History of Political Thought 7, no. 3 (1986)).
Given the broad scope of Marxism adapted in this chapter that includes libertarian interpre-
tations, we can safely categorize Morris under this banner.
being had to the full remuneration of the labour of all who are engaged
in the work of transport.72
This, however, remains uncritical of the limits of nationalization and the

actual content of the purported “control” by “the people”.
In the Manifesto of the Socialist League (1885), he and his co-author
E. Belfort Bax wrote that “the workers, although they produce all the
wealth of society, have no control over its production or distribution”.73
The programme condemned both nationalization and state socialism
“whose aim it would be to make concessions to the working class while
leaving the present system of capital and wages still in operation”.74 In
the second edition of the Manifesto, he weighed on the need for the
socialists to gain political power, not in the sense of “exercise of the fran-
chise, or even the fullest development of representative system”, but a
“direct control by the people of the whole administration of the com-
munity, whatever the ultimate destiny of that administration is to be”.75
He believed that the practical steps towards communism would create
the opportunity to establish “the decentralized voluntary organization of
production”.76
In Socialism from the Root Up (1888), Morris envisioned the future
social organization whose political aspect comprises “an organized body
of communities, each carrying on its own affairs, but unified by a dele-
gated federal body, whose function would be the guardianship of the
acknowledged principles of society”.77
One of the most intriguing expressions of the idea of “workers’ con-
trol” in Morris is found in his critique of Edward Bellamy’s extremely
popular book Looking Backward, published in 1888. Morris criticized
72
William Morris and H. M. Hyndman, A Summary of Principles of Socialism (London:
The Modern Press, 1884), 58; reproduced in David Reisman, ed., Democratic Socialism in
Britain: Classic Texts in Economic and Political Thought 1825–1952 (London: Pickering &
Chatto, 1996), 3.
73
William Morris and E. Belfort Bax, The Manifesto of The Socialist League (London:
Socialist League Office, 1885), 5; reproduced in Reisman, Democratic Socialism in Britain.
74
Ibid., 7.
75
William Morris and E. Belfort Bax, “The Manifesto of The Socialist League—Second
Edition,” William Morris Internet Archive. www.marxists.org/archive/morris/works/1885/
manifst2.htm.
76
Ibid.
77
William Morris, “Socialism from the Root Up,” in Political Writings: Contributions to
Justice and Commonwealth 1883–1890, ed. Nicholas Salmon (Bristol: Thoemmes Press,
1994), 612.
138 B. AMINI
Bellamy’s vision of a socialist society that was “satisfied with modern civi-
lization” and under centralized state control. This is why Bellamy had to
“put forward his scheme of the organization of life; which is organized
with a vengeance. His scheme may be described as State Communism,
worked by the very extreme of national centralization”.78 Morris believed
that such an overarching state is alienating for the individual. Instead,
it will be necessary for the unit of administration to be small enough for

every citizen to feel himself responsible for its details, and be interested in
them [or in] that individual; that man cannot shuffle off the business of life
on to the shoulders of an abstraction called the State, but must deal with it
in conscious association with each other.79
For Morris, the aim of communism is as much to nurture “variety of life”

as to facilitate the equality of conditions in order to bring about the realm
of freedom.80
Paul Lafargue (1842–1911)

Lafargue, the co-founder of the Federated Socialist Workers’ party of
France in 1880, was one of the earliest Marxist theoreticians in France
(and Spain) who played a key role in reshaping the French workers’ move-
ment after the Commune. In Socialism and Nationalization (1882), he
called nationalization of certain industries “socialism for the capitalists”,
marking “the last form of capitalist exploration”.81 He gave the example of
nationalization of some industries such as electric telegraph or the press as
a way to keep the sector profitable for the speculators while maintaining
control of the industries in the hands of the capitalists. He remarked that
“in capitalist society a private industry only becomes a State service in
order to better serve the interest of the bourgeoisie. […] The state, by
centralising administration, lessens the general charges; it runs the service
at a smaller cost”.82 He believed that nationalization would open up the
state to corruption. As for whether such measures would simplify the
78
William Morris, “Looking Backward,” in Political Writings of William Morris, ed. A. L.
Morton (London: Lawrence and Wishart, 1984), 250.
79
Ibid., 253.
80
Ibid.
81
Paul Lafargue, “Socialism and Nationalisation,” Socialist Standard (February 1912): 43.
82
Ibid.
rocess of expropriation for the workers’ party, he argued that the danger
p
would by far outweigh the advantages.
Although the first revolutionary act, according to Lafargue, must be to
cease the central power as the precondition for the workers’ party to begin
the process of economic expropriation, “those who busy themselves with
State-Socialism, that is to say, those who demand the nationalisation or
municipalisation of certain services, do not trouble at all about the lot of
the workers engaged in them. […] The workshops of the State and munic-
ipality are prisons quite as bad as private workshops, if not worse […] they
are bent beneath an authority that is more powerfully hierarchic; they can
neither combine nor strike”. After a period of revolutionary transition
during which the workers’ government would increase its administrative
and economic capacity, “with the needs of consumption and the powers of
production scientifically calculated, consumption as well as production
will be free”.
In Our Goal (1889), Lafargue conceived of the solution to the “situa-
tion created by capitalist centralization” in the socialists’ demand that
all the centralized labor instruments, such as the railroads, factories, textile
works, mines, large farming properties, banks, etc. become national prop-
erty and be given over to the associated workers, who will operate them with
a contract laying out conditions, not for the profit of a few capitalists, do-
nothings and thieves, but for the profit of the entire nation.83
The emphasis on the transfer of the means of production to the associated

producers is the key difference between this demand and that of state
socialism. In other words, “if the industries already taken over by the state
[…] don’t fulfill the socialist ideal, it’s because they aren’t run by the asso-
ciated workers in the interests of the nation, but by functionaries in a
budgetary interest”.84
Jules Guesde (1845–1922)

Guesde, a key figure in the early propagation of Marxism in France, met
with Marx in London in 1880 and drafted the programme of the French
Workers’ Party. The Preamble, which according to Engels was dictated to
83
Paul Lafargue, “Our Goal,” Paul Lafargue Internet Archive. www.marxists.org/archive/
lafargue/1899/04/our-goal.htm.
84
Ibid.
140 B. AMINI
Guesde,85 distinguished between private and collective properties and

argued that the former was increasingly eliminated by industrial progress
as the latter was further constituted by the very development of capitalism.
However, the collective appropriation could only come about by the revo-
lution action of the proletariat “organized in a distinct political party”.86
The Preamble further recognized that the movement for the emancipa-
tion of the working class must aim at “the political and economic expro-
priation of the capitalist class and the return to community of all the means
of production”.87 In the political section, the Programme demanded “the
Commune to be master of its administration and its policing”.88 In the
economic section, it demanded “prohibition of all interference by employ-
ers in the administration of workers’ friendly societies, provident societies,
etc., which are returned to the exclusive control of the workers”.89
Guesde wrote in The Social Problem and Its Solution (1905) that
it is only collectively that the workers, comprising the entire nation, can and
ought to possess the means of wealth (mines, railways, canals, factories, etc.)
socially operated. Capitalist evolution itself supplies the necessary elements,
material and intellectual, of this appropriation and of this production by and
for society now become a vast co-operative commonwealth.90
He emphasized the role of the state in this process, albeit not in its repres-
sive form, arguing that
[t]his economic expropriation—which would allow [] the expropriated full

participation in the benefits accruing from social appropriation—must be
preceded by a political expropriation, the establishment of the Socialist
85
Fredrich Engels, “Engels to Eduard Bernstein,” in MECW (London: Lawrence &
Wishart, 1988), 46: 147.
According to a letter from Engels to Eduard Bernstein (25 October 1881), the theme to
the programme was dictated to Guesde in the presence of Engels and Paul Lafargue.
86
Jules Guesde and Karl Marx, “The Programme of the Parti Ouvrier,” Jules Guesde
Internet Archive. www.marxists.org/archive/marx/works/1880/05/parti-ouvrier.htm.
This is the full translation of the programme and, in important ways, it is different from the
translation of the Preamble that is provided in MECW, Vol. 24, 340.
87
Ibid.
88
Ibid.
89
Ibid.
90
Jules Guesde, “The Social Problem and Its Solution,” Jules Guesde Internet Archive.
www.marxists.org/archive/guesde/1905/jan/x01.htm
Republic being only realisable by a proletariat master of the State and acting
in conformity with the law, since it itself will be and make the law.91
However, the question as to whether this “proletariat master of the State”

indicates the class origin of the state administrators or the fundamental
character of the administrative structure is unclear.
Daniel De Leon (1852–1914)

De Leon was already a Marxist before joining the Socialist Labor Party of
America (SLP) in 1890. Writing soon after the SLP’s break from the
Knight of Labour and the formation of The Socialist Trade and Labor
Alliance in 1895, De Leon defined socialism, in Reform or Revolution
(1896), on the basis of the common ownership of the means of produc-
tion, abolition of wage system, and the end of class society in which the
state in its repressive form has withered away. However, he emphasized the
importance of the coordinating role of the state without which no har-
mony can be achieved. Without going into its organizational structure, he
argued that “[the society] needs this central directing authority” so the
“cooperative commonwealth” with all its divisions of labour can work har-
moniously.92 He clearly distanced himself from the anti-political left by
emphasizing that the economic and political issues and struggles cannot
be separated and must be simultaneously tackled.
His position began to shift towards Industrial Unionism from 1904
onwards. In The Burning Question of Trade Unionism (1904), he saw
some truths in both pro- and anti-union positions but criticized both for
failing to understand the transformative potential of unions because they
limit their vision to the present form of unions. He instead advocated for
industrial unionism. He extended his criticism to the socialist strategy
towards unions by arguing that “unless the political aspect of the labour
movement is grasped, Socialism will never triumph; and that unless its
trade union aspect is grasped, the day of its triumph will be the day of its
defeat”.93 For him, it was in the political aspect of unionism that the spell
of revolution lay.
91
Ibid.
92
Daniel De Leon, “Reform or Revolution,” in Daniel De Leon: Speeches and Editorials
(New York: New York Labor News, 1940), 7–8.
93
Daniel De Leon, The Burning Question of Trade Unionism (New York City: National
Executive Committee Socialist Labour Party, 1904), 27.
142 B. AMINI
His involvement with the founding of the Industrial Workers of the

World (IWW), albeit tenuous, radicalized his political view on the role of
the industrial union. His anti-state stance became more pronounced in
Socialist Reconstruction of Society (1905):
Capitalist society requires the political State: accordingly, its economics

translate themselves into political tenets; Socialist society, on the contrary,
knows nothing of the political State: in Socialist society the political State is
a thing of the past, either withered out of existence by disuse or amputated
according to as circumstances may dictate.94
He linked that with the emergence of the industrial organization of the

working class both as the economic foundation of the future society and
the political movement to hollow out the state. Therefore, he identified
the goal of the method of political struggle at the ballot as a “purely
destructive” weapon.95
In Industrialism (1906), he argued that socialism is not the simple
overthrow of private ownership and its replacement with public or state
ownership. “Socialism is that social system under which the necessaries of
production are owned, controlled, and administered by the people, for the
people, and under which, accordingly, the cause of political and economic
despotism having been abolished, class rule is at the end.”96 Accordingly,
industrialism is an economic organization of the whole of the working
class under one big union.97
The idea of “workers’ control” in the trajectory of De Leon’s thought
was quite akin to the syndicalist notions. However, he insisted on distin-
guishing the position of Industrial Unionism from the syndicalist inclina-
tion towards direct action and frontal attack against the state, which he
thought was very particular to the European context.98 The goal of
Industrial Unionism was “the substitution of the political state with the
industrial government”, aiming at “a democratically centralized govern-
94
Daniel De Leon, Socialist Reconstruction of Society: The Industrial Vote (New York:
Socialist Labor Party, 1925), 31.
95
Ibid., 36. De Leon ran unsuccessfully for public office several times in the 1890s and the
1900s.
96
Daniel De Leon, “Industrialism,” in Industrial Unionism: Selected Editorial (New York:
National Executive Committee Socialist Labor Party, 1920), 35.
97
Ibid.
98
Daniel De Leon, “‘Syndicalism’”, Industrial Unionism: Selected Editorial (New York:
National Executive Committee Socialist Labor Party, 1920), 46–7.
ment, accompanied by the democratically requisite ‘local self-rule’”.99

Therefore, Industrial Unionism grasps the chief principle of the govern-
ment to be “the central and local administrative authorities of the produc-
tive capabilities of the people”.100
Karl Kautsky (1854–1938)

Kautsky was the leading Marxist theorist of the SPD. In State Socialism
(1881) and The Abolition of the State (1881), he argued that, even though
it might seem that the precondition for the emancipation of the proletariat
is the abolition of the state, the proletariat needed the power of the state
to preserve its class rule by disintegrating the other classes. He concluded
by saying that “the abolition of the government and the state are not the
first act of the proletariat revolution but the last consequence of this”.101
Therefore, the task of the proletariat was “not to destroy, but to conquer
the state. The next goal of the proletariat consists of becoming the ruling
class. Everything else must be subordinated to this purpose”.102
In The Free Society (1882), his vision had a pronouncedly nationalistic
angle. He noted that “not the prosperity of the individual, not the pros-
perity of the commune, the prosperity of the nation will be the highest
goal of the free society to which everything else has to submit itself”.103
Regarding the structure of such free society, he said that it “will be a fed-
eration of nations and not of groups or communes; whose production will
be left neither to free choice no[r] to the spontaneous formation of groups,
no[r] even to sheer force of social attraction; instead, production will be
placed under the direction of a well-organized administration”.104
Kautsky was one of the leading architects of the Erfurt Programme (along
with Eduard Bernstein and August Bebel). In a book entitled Class Struggle
(1892), Kautsky elaborated on the Erfurt Programme. He recognized the
state as having the requisite dimensions for the establishment of the “socialist
99
Daniel De Leon, “Industrial Unionism,” Industrial Unionism: Selected Editorial (New
York: National Executive Committee Socialist Labor Party, 1920), 64.
100
Ibid.
101
Karl Kautsky, “Die Abschaffung des Staates,” Der Sozialdemokrat, no. 51 (1881); trans-
lation by Noa Rodman available at https://libcom.org/library/abolition-state-karl-kautsky.
102
Ibid.
103
Karl Kautsky, “The Free Society,” Karl Kautsky Internet Archive. www.marxists.org/
archive/kautsky/1881/state/3-freesoc.htm.
104
Ibid.
144 B. AMINI
or co-operative commonwealth”, which coexisted with the nation.105 He

envisioned a society in which the means of production in large industries,
which are generally compatible with cooperative production, are owned by
the state while leaving the small-scale production in the realm of private
ownership. His vision of a socialist society in this writing shows profound
incompatibilities with the idea of “workers’ control”. He stated that
[i]t is true that socialist production is irreconcilable with the full freedom of
labor, that is, with the freedom of the labor to work when, where, and how
he wills. But this freedom of labor is irreconcilable with any systematic, co-
operative form of labor, whether the form be capitalist or socialist.106
Finally, in such a socialist society, “where all the means of production are in a
single hand, there is but one employer, [and] to change [jobs] is impossible”.107
In On the Day after the Social Revolution (1902), he delved into some of
the issues that might arise shortly after the outbreak of the revolution.
Regarding the process of expropriation, he did not rule out the possibility of
capitalists selling their enterprises directly to the workers who worked there so
that they could operate them cooperatively. But he also suggested that “capi-
tal would find its most extensive and generous purchaser in the State and
municipalities and for this very reason the majority of the industries could pass
into the possession of the states and municipalities”.108 Furthermore, regard-
ing the question of how to keep the workers in “labour” after the revolution,
he relied on a “democratic discipline” of the kind that a union uses during a
strike. He preserved a level of variation with respect to the organization of
labour in different industries. In industries such as the railways,
the democratic organization can be so formed that laborers choose dele-

gates, who will constitute a sort of parliament, which will fix the conditions
of labor and control for government of the bureaucratic machinery. Other
industries can be given over to the direction of the unions, and others again
can be operated co-operatively.109
Furthermore, he emphasized the impossibility of the abolition of money

and wages.
105
Karl Kautsky, Class Struggle (Erfurt Program), trans. William E. Bohn (Chicago:
Charles H. Kerr & Company, 1910).
106
Ibid., 149.
107
Ibid., 150.
108
Karl Kautsky, The Social Revolution, trans. A. M. and May Wood Simon (Chicago:
Charles H. Kerr & Company, 1916), 113.
109
Ibid., 127.
James Connolly (1868–1916)

Connolly, one of the founding members of the Irish Socialist Republican
Party (ISRP), was keenly aware of the importance of “workers’ control”
within socialism. In a remarkable passage, he argued in State Monopoly
Versus Socialism (1899) that “Socialism properly implies above all things
the co-operative control by the workers of the machinery of production;
without this co-operative control the public ownership by the State is not
Socialism—it is only State capitalism”.110 He separated ownership from
control and argued that “the ownership by the State of all the land and
materials for labour, combined with the co-operative control by the work-
ers of such land and materials, would be Socialism”.111
In Parliamentary Democracy (1900), he contrasted the parliamentary
democracy under capitalism that merely gives workers the right to choose
their masters with the socialist society in which
the freedom of the revolutionist will change the choice of rulers which we
have today into the choice of administrators of laws voted upon directly by
the people; and will also substitute for the choice of masters (capitalists) the
appointment of reliable public servants under direct public control. That
will mean true democracy—the industrial democracy of the Socialist
Republic.112
After his clashes with E. W. Stewart over trade union and electoral strat-
egies of the ISRP and emigration to the United States in 1904, Connolly
founded the Irish Socialist Federation (ISF) in New York in 1907. By this
time, Connolly’s thoughts were deeply influenced by his involvement with
the IWW. He declared the neutrality of the ISF towards existing political
parties while continuing the revolutionary fight at the economic level
through the economic organizations of the IWW. He advocated for the
formation of a new political party of the workers by the IWW to unify the
revolutionary socialist forces.113
Similar to De Leon, Connolly argued that the “political institutions are
not adapted to the administration of industry. Only industrial organisa-
tions are adapted to the administration of a co-operative commonwealth
110
James Connolly, “State Monopoly versus Socialism,” The Workers’ Republic 2, no. 3 (10
June 1899): 5.
111
Ibid.
112
James Connolly, “Parliamentary Democracy,” The Workers’ Republic 4, no. 5 (22
September 1900): 6.
113
James Connolly, “A Political Party of the Workers,” The Harp 1, no. 1 (1908): 9–10.
146 B. AMINI
that we are working for”.114 Instead of the territorially based political insti-
tutions that compose the coercive forces of capital,
the workers in the shops and factories will organize themselves into unions,
each union comprising all the workers at a given industry; that said [the]
union will democratically control the workshop life of its own industry,
electing all foremen etc., and regulating the routine of labour in that indus-
try in subordination to the needs of society in general.115
Hence, for Connolly, the structure of the new society necessarily begins in
the workshops and upwardly cascades to the rest of the industrial organi-
zation until “it reaches the culminating point of national executive power
and direction”.116 The top level would be “administrated” by “a commit-
tee of experts elected from the industries and professions of the lands”.117
This conception of socialism
destroys at one blow all the fears of a bureaucratic State, ruling and ordering
the lives of every individual from above, and thus gives assurance that the
social order of the future will be an extension of the freedom of the indi-
vidual, and not the suppression of it. In short, it blends the fullest demo-
cratic control with the most absolute expert supervision.118
Although his ideas, like those of De Leon, came close to syndicalism, he

insisted, in Political Action (1908), that industrial organizations should
coexist with a pluralist socialist party that embraced “all shades and con-
ceptions of socialist political thought”.119 He further clarified his concep-
tion of socialist political parties, where he defined two types of socialist
parties: one made up of purely revolutionary individuals with clear ideo-
logical orientation and understanding of the economics of capital, and
another, whose primary role is to educate and direct the class conscious-
ness towards the revolutionary line. He believed that even though the
second type ran the risk of confusion, the first had a tendency towards
“dictation and despotism” that sought to “purify its ranks by expulsion”.120
114
James Connolly, Socialism Made Easy (Glasgow: Socialist Labour Press, 1917), 15.
115
Ibid.
116
Ibid.
117
Ibid.
118
Ibid.
119
James Connolly, “Political Action,” The Harp 1, no. 7 (July 1908): 7.
120
Ibid., 6.
Vladimir Lenin (1870–1924)

It is difficult to talk positively about the ideas of Lenin in this period
regarding the notion of “workers’ control”. Even though in Draft and
Explanation of a Programme of Social-Democratic Party (1895–1896), he
echoed Marx in that “the emancipation of the workers must be the act of
the working class itself”,121 most of his writings in this period carried a
rather patronizing view of the working class.
In one of his most famous writings, What Is to Be Done? (1902), Lenin
expressed some of his most troubling statements about the revolutionary
potential of the working class. He wrote that
there could not have been Social-Democratic consciousness among the

workers. It would have to be brought to them from without. The history of
all countries shows that the working class, exclusively by its own effort, is
able to develop only trade union consciousness. … The theory of socialism,
however, grew out of the philosophical, historical, and economic theories
elaborated by educated representatives of the propertied classes, by
intellectuals.122
Against the spontaneous actions of the masses, he argued that such a

movement “leads to its subordination to bourgeois ideology … for the
spontaneous working-class movement is trade-unionism … and trade-
unionism means the ideological enslavement of the workers by the
bourgeoisie”.123 His intention was not to undermine mass movement as
such but to define the immediate task in the presence of such movement
not in terms of “bowing to the spontaneity of this movement; i.e. reduc-
ing the role of the Social-Democracy to mere subservience to the working
class movement as such”.124 Instead, he considered such mass movements
at any given time to present the party with new theoretical, political, and
organizational tasks to grapple with. Only through the activities of Social
Democracy, whose task was to enter among the masses as “theoreticians,
121
Vladimir Lenin, “Draft and Explanation of a Programme for the Social-Democratic
Party,” in Lenin Collected Works (London: Lawrence & Wishart, 1962), 2: 97.
122
Vladimir Lenin, “What Is to Be Done?”, in Lenin Collected Works (London: Lawrence
& Wishart, 1961), 5: 375. Later in the same document, he elaborated on this idea with
regard to class political consciousness, saying it “can be brought to the workers only from
without, that is, only from outside the economic struggle, from outside the sphere of rela-
tions between workers and employers”; ibid., 422.
123
Ibid., 384.
124
Ibid., 390.
148 B. AMINI
as propagandist, as agitators, and as organizers”125 and whose relation to

the economic struggle of the working class was one of “executive
groups”,126 that we could ensure “the stability of the movement as a whole
and carry out the aims both of Social-Democracy and of trade unions
proper”.127 On the other hand, if we “begin with a broad workers’ organi-
zation, which is supposedly most ‘accessible’ to the masses … we shall
achieve neither the one aim nor the other”.128
In an article published in February 1905 entitled “Two Tactics”, Lenin
maintained his criticism of the position that assumed a subordinate and
pliable position of the party to the movement. He held that “[i]t was in
the name of independent activity of the proletariat that the ‘organization-
as-process’ theory was invented, a theory that justified disorganization and
glorified the anarchism of the intellectuals”.129 He distinguished between
two types of independent activity of the proletariat: one that “possessed
of revolutionary initiative” and another “that is undeveloped and is held
in Leading-strings”.130 In June of that year, he published A New
Revolutionary Workers’ Association (1905) in which he analysed the impact
of the Russian Liberation Union. The group sought to organize militia to
overthrow the autocracy and establish a constitutional assembly whose
structure would consist only of “groups of workers (mainly from one and
the same workshop); (2) factory councils; (3) district meetings; and (4)
committees of the Workers’ Union”.131 Lenin believed that “by fighting
for freedom without close connection with the proletarian struggle for
socialism” such independent non-party organizations could “play a role
that objectively amounts to promoting the interests of bourgeoisie”.132
Similarly, in Two Tactics of Social-Democracy in the Democratic Revolution
(1905), he called the Social Revolutionary Party’s (SR) use of the term
“Revolutionary Communes” revolutionary phrase-mongering since it dis-
guises the errors and shortcomings of an experience (possibly the Paris
Commune) in the distant past. His issue with the use of the term as by the
125
Ibid., 425.
126
Ibid., 457.
127
Ibid., 460.
128
Ibid.
129
Vladimir Lenin, “Two Tactics,” in Lenin Collected Works (London: Lawrence &
Wishart, 1962), 8: 149.
130
Ibid., 155.
131
Vladimir Lenin, “A New Revolutionary Workers’ Association,” in Lenin Collected Works
132
Ibid., 502.
SR was that it restricted its role to spreading the insurrection. However,

Lenin insisted that such a revolutionary government would have other con-
crete administrative works to conduct, including a series of reforms.
Perhaps some of the most positive accounts by Lenin regarding “work-
ers’ control” can be found in his writings in the immediate aftermath of the
1905 Revolution. As he contemplated on the events of the 1905 Revolution
in Russia, Lenin began to express more favourable statements about the
political role of the Soviets and showed new directions in his thinking about
the revolutionary potential of the working class. In Our Tasks and the Soviet
of Workers’ Deputies (1905), Lenin addressed the question of “how to
divide, and how to combine the tasks of the Soviet and those of the Russian
Social-Democratic Labour Party”.133 He argued that since the Soviet
emerged as a result of the General Strike, which itself had both economic
and political dimensions, the economic struggles could still be carried for-
ward under a broad umbrella of political parties. With regard to the politi-
cal dimension of the Soviet, he believed that it “should be regarded as the
embryo of a provisional revolutionary government” and that it “should
proclaim itself the provisional revolutionary government of the whole of
Russia as early as possible, or should set up a provisional revolutionary
government”.134 More than marking a fundamental change in Lenin’s view
on the revolutionary capacities of the working-class self-organization, it was
meant to serve as a strategic appeal to meet the dire need for the formation
of a political centre of gravity, sufficiently deep-rooted within the masses
including the soldiers, the peasants, and the intelligentsia.
In the Lessons of the Commune (1908), Lenin reassessed the legacy of the
Commune “as a splendid example of the unanimity with which the prole-
tariat was able to accomplish the democratic tasks which the bourgeoisie
could only proclaim”.135 He praised the Commune’s actions saying that
“without any particularly complex legislation, in a simple, straightforward
manner, the proletariat, which had seized power, carried out the democra-
tisation of the social system, abolished the bureaucracy, and made all official
posts elective”.136 Its mistakes, according to Lenin, were that it did not seize
the money capital from the banks and wage frontal assault on Versailles.
133
Vladimir Lenin, “Our Tasks and the Soviet of Workers’ Deputies,” in Lenin Collected
Works (London: Lawrence & Wishart, 1962), 10: 19.
134
Ibid., 21.
135
Vladimir Lenin, “Lessons of the Commune,” in Lenin Collected Works (London:
Lawrence & Wishart, 1962), 13, 476.
136
Ibid.
150 B. AMINI
Rosa Luxemburg (1871–1919)

Much of Luxemburg’s political writings in this period is dedicated to a
perceptive dissection of revolutionary actions. Furthermore, her charac-
terization of capitalism as fundamentally anarchic limited her vision of
radical possibilities of economic organization under socialism. Nevertheless,
she always remained perceptively critical of various hurdles in the way of
creative expression of the masses. Therefore, what we can get from
Luxemburg’s thought in this period is not so much the specificities of the
idea of “workers’ control” but a political philosophy of revolutionary
praxis, firmly anchored on the spontaneous and creative potential of the
masses, and fiercely against any structure that would come in the way of
such actions.
In Social Reform or Revolution (1898), she acknowledged the signifi-
cance of trade unions and parliamentary struggles to raise awareness and
consciousness of the proletariat and organize them into a class. However,
she cautioned that “if they are considered as instruments for the direct
socialization of the capitalist economy, they lose not only their supposed
effectiveness, but also cease to be a means of preparing the working class
for the proletarian conquest of power”.137 She believed that achieving
socialism through “an unbroken chair of continually growing reforms”138
is a fantasy. Rather than automatically emerging out of the daily struggles
of the working class, socialism is “the consequence of only the ever grow-
ing contradictions of capitalist economy and the comprehension by the
working class of the unavoidability of the suppression of these contradic-
tions through a social transformation”.139 The essence of the revolutionary
praxis is “to recognize the direction of this development and then, in the
political struggle to push its consequences to the extreme”.140
However, her dedication to the SPD’s mass party politics also limited
her vision in some respects. In an important piece on the organizational
question of the Russian Social Democracy, Luxemburg renounced the
model of political organization based on “splintering, complete autonomy,
137
Rosa Luxemburg, “Social Reform or Revolution,” in Rosa Luxemburg Reader, ed.
P. Hudis and K. B. Anderson (New York: Monthly Review Press, 2004), 141.
138
Ibid.
139
Ibid., 142.
140
Ibid., 143.
and self-government for local organizations” as “the distinguishing feature

of the burdensome and politically outmoded old organizational forms”.141
Instead, she called for a centralized mass party whose distinguishing char-
acter from Blanquist centralism is that it carries the “authoritative expres-
sion of the will of the conscious and militant vanguard of the workers;
vis-à-vis the separated groups and individuals among them”.142 But partic-
ularly after the militant wave of strikes in 1905 and the Russian Revolution
in that year, Luxemburg paid a lot of attention to the creative potential of
spontaneous movements. In Mass Action (1911), she repeated her criticism
of a party structure whose centralized form rested on a small party execu-
tive. Instead, she argued that “every step forward in the struggle for eman-
cipation of the working class must at the same time mean a growing
intellectual independence of its mass, its growing self-activity, self-determi-
nation, and initiative”.143 She saw the historical essence of the proletarian
struggle in “the proletarian masses not needing ‘leaders’ in a bourgeois
sense, that they are themselves leaders”.144
In The Mass Strike, Political Party and Trade Union (1906), she argued
that Social Democracy and syndicalism both assumed that the spontane-
ous will of the masses can be decided upon at will. On the contrary, she
believed that this was a “historical phenomenon, which, at a given moment,
could result from social conditions with historical inevitability”.145
Regarding the unforeseeable consequences of such spontaneous actions,
she said that “even the relations of the worker to the employer are turned
around since the January General Strike and the strikes of 1905 which fol-
lowed upon it, the principle of the capitalist ‘mastery of the house’ is de
facto abolished”.146 In fact, it is through apparently chaotic actions that “a
feverish working organization” emerges.147
141
Rosa Luxemburg, “Organizational Questions of Russian Social Democracy,” in Rosa
Luxemburg Reader, ed. P. Hudis and K. B. Anderson (New York: Monthly Review Press,
2004), 249–50.
142
Ibid., 253.
143
Rosa Luxemburg, “Mass Action,” Rosa Luxemburg Internet Archive. www.marxists.
org/archive/luxemburg/1911/08/29.htm.
144
Ibid.
145
Rosa Luxemburg, “The Mass Strike, Political Party and Trade Union,” in Rosa Luxemburg
Reader, ed. P. Hudis and K. B. Anderson (New York: Monthly Review Press, 2004), 170.
146
Ibid., 186.
147
Ibid.
152 B. AMINI
Anton Pannekoek (1873–1960)

Although Pannekoek is known as one of the most prominent theorists of
council communism, his writings prior to 1917 have a significantly differ-
ent tone, very much revolving around the left wing of the SPD, albeit with
his characteristic creativities. In his Two Sorts of Reforms (1908), he tried
to carve out a third way between reformism and revolution by arguing for
radical reformism as a revolutionary process. While empowering and radi-
calizing the workers, such radical reforms would prove unachievable
within capitalism, making the need for a revolutionary transcendence evi-
dent. After achieving power, the working class must rapidly engage with
the suppression of the cause of poverty through a socialization process by
making the state machinery work in its interest. He continued this line of
argument in his Hope in the Future (1912) where he maintained that those
radical reforms resisted by the bourgeoisie and those measures that they
fail to implement would radicalize the working class into a “peaceful and
imperceptible passing of society to socialism”.148 In response to Kautsky’s
criticism of his Two Sorts of Reforms, Pannekoek clarified his position about
the revolution further in Marxist Theory and Revolutionary Tactics (1912)
by defining it as a process.149
In Socialism and Anarchism (1913), he presented the layout of the
revolutionary transformation from capitalism to socialism. None of the
chief characteristics of different phases of this transformation clearly speaks
to the idea of “workers’ control”. Regarding the question of the state, the
society would still require “an effective economic and carefully planned
system of production and the avoidance of all useless waste of material and
labour-power, in one word, organization”.150 In other words, the state
“becomes a corporate body with purely economic function”. Therefore,
the political system after the victory of the proletariat “will be governed by
the same principles which the workers now employed in their fighting
organizations: equality of rights for all members, expression of the will of
the whole in legal provisions and resolutions which each must obey, exe-
cution of the will of the majority by an executive”.151
148
Anton Pannekoek, “Hope in the Future,” Anton Pannekoek Internet Archive. www.
marxists.org/archive/pannekoe/1912/hope-in-future.htm.
149
Such a process-oriented approach to revolution continued to play a central role in his
thinking after his turn to council communism after 1917.
150
Ibid., 127.
151
Anton Pannekoek, “Socialism and Anarchism,” The New Review 1, no. 5 (1913): 147.
He contrasted his view with both parliamentary socialism and syndical-

ism in Socialism and Labour Unionism (1913), the former considering the
work of other labour organizations such as unions unnecessary, and the
latter believing that the working class is always already revolutionary and
dismissing the crucial role of the party. Contrary to Industrial Unionists,
Pannekoek argued that the labour union movement was revolutionary
precisely insofar as it did not pursue revolutionary aims but focused on
improving the working conditions and gathering the masses in great
organizations.
IV. Concluding Remarks
The survey highlights a pattern in which the most prominent Marxist the-
orists of this period did not in fact have as much to say about the notion
of “workers’ control” as the more “marginal” figures. A reason behind
this is that much of the energy of the Marxist theorists in this period went
into efforts to build lasting institutions to assert working-class power and
to fight the most egregious aspects of capitalism and the state through
day-to-day struggles. In the background of these preoccupations was the
general tendency among Marxists to push the discussion of the forms of
future society into the “day after the revolution”. Therefore, contempla-
tion on the notion of “workers’ control” seemed insignificant. This was in
sharp contrast with the general tendency among anarchists and syndicalists
to engage in prefigurative politics that sought to reflect the foundations of
the future society in its transformative practices here and now. This is an
important reason why some of the lesser-known Marxist figures, especially
those who had closer affinity to anarchist and syndicalist thoughts, are
accentuated in the survey.
The unique contribution of Marx (and Engels, though not without
tensions with respect to some of his writings and his interpretations of
Marx) to this debate lies precisely in his staunch defence of those working-
class movements that sought to increase the political capacities of the
working class to carry out transformative processes and in his fierce cri-
tique of their shortcomings in seeing those reforms as ends, while main-
taining prefiguration as an essential part of the revolutionary process itself.
This synthesis became clear to him after he encountered the experience of
the Paris Commune and its prefigurative politics. The spirit behind his
critique of the Gotha Programme regarding the tendency to postpone the
abolition of the wage system, the capitalist market relations, and the
154 B. AMINI
c apitalist form of the state to the day after the revolution rather than as
part of the revolutionary programme of the party is such understanding of
the importance of prefigurative politics. Such synthesis overcomes the ten-
dency in socialist movements, which all-too-often become a reality, to sac-
rifice self-emancipation for creating the institutions of working-class power.
The events following the Russian and German Revolutions had pro-
found effects on the theoretical understanding of “workers’ control”
within Marxist thoughts. They showed clearly the revolution’s demand for
a radical understanding of “workers’ control” as the transformative basis
of the future society. The thrust of these movements soon forced a major
shift among the Marxist theoreticians. Profoundly different writings
emerged from those experiences within the main canon of Marxism, at
least for some time. Numerous articles, pamphlets, and books by Lenin,
Kautsky, Luxemburg, Pannekoek, as well as Antonio Gramsci, Karl Korsch,
Otto Rühle, Ernst Däumig, Max Adler, Otto Bauer, and Herman Gorter,
directly engaged with the question of Soviets and councils in the process
of revolutionary transformation. As the Russian Revolution began to lose
some of its most emancipatory potential in the face of harsh post-war
realities, certain political decisions by the Bolshevik leadership, as well as
the failure of revolutionary attempts in Central and Western Europe, a
new trend of Marxist thinkers formed what came to be known as “left-
communism”. It was within this tradition that much of the later writings
on “workers’ control” took place. This notion resurfaced during different
phases, most notably during the “long 1960s” and again in the twenty-
first century. After the collapse of the Soviet Union, there is once again
room for rethinking and recovering such traditions which lay the ground
for an emancipatory form of communism in which socialism and democ-
racy are seen as an inseparable unity.
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King, Marx, and the Revolution
of Worldwide Value
Andrew J. Douglas
A society that performs miracles with machinery has the capacity to

make some miracles for men if it values men as highly as it values
machines. … [We] built a cotton economy for three hundred years as
slaves on which the nation grew powerful. … We, too, realize that when
human values are subordinated to blind economic forces, human beings
can become human scrap.1
Something is wrong with capitalism. … We are not interested in being
integrated into this value structure.2
1
Martin Luther King, Jr., Speech to the United Automobile Workers, Detroit, 17 April
1961.
2
Martin Luther King, Jr., Speech to the SCLC National Advisory Committee, 27 November
1967.
A. J. Douglas (*)
Morehouse College, Atlanta, GA, USA

160 A. J. DOUGLAS
I. Introduction
“I am convinced,” Martin Luther King, Jr., said in 1967, “that if we are to
get on the right side of the world revolution, we as a nation must undergo
a radical revolution of values.”3 This is one of the more resounding lines
from King’s corpus, and one of the most frequently cited. It is often taken
to capture the essence of King’s later radicalism, a sense of the political
commitment and moral urgency that he ascribed to a “second” and more
“substantive” phase of his life’s work. That second phase sought to orga-
nize a more penetrating and comprehensive assault on what he called the
“evil triplets” of racism, violence, and poverty. It is no secret that King
became increasingly outspoken in his dissatisfaction with capitalism and
the ways in which racism and violence had been interwoven into the struc-
tural workings of the economy and polity of the United States. But readers
of King still need a better understanding of the nature, and legacy, of his
critique of capitalism, both within and beyond the context of the United
States. How, we might ask, is King’s call for a “revolution of values”
affected by the production and circulation of value in capitalist society?
Though King’s analysis moved beyond, often against, key assumptions
and conceptual tools of Marxist thought, Marx’s way of thinking about
capital as “value in motion” provides a generative starting point for
addressing this question.4 Consider Marx’s account of the “commodity-
form” under capitalism and how the market actor’s singular and largely
compulsory focus on the exchange of money can be said to “conceal a
social relation.”5 Marx argued that the coordination of human labour and
activity, the human interdependencies that King catalogued under the
rubric of an “inescapable network of mutuality,” had become sustained in
the modern period by a logic of capital accumulation, or a distinctive pres-
sure put upon capitalists—and into the neoliberal era, essentially all mar-
ket actors—to pursue not only profit, but also sustained growth through
the creation of viable outlets for reinvestment.6 What we are compelled to
3
Martin Luther King, Jr., “Beyond Vietnam: A Time to Break Silence” [1967], in The
Radical King, ed. Cornel West (Boston: Beacon, 2016), 214.
4
See Karl Marx, Capital: A Critique of Political Economy, Vol. 1, trans. Ben Fowkes (New
York: Penguin, 1992), 255–6. See also Karl Marx, Capital: A Critique of Political Economy,
Vol. 2, trans. David Fernbach (New York: Penguin, 1993), 211.
5
See Marx, Capital, Vol. 1, 149.
6
See Martin Luther King, Jr., “Letter from Birmingham Jail,” in Gospel of Freedom: Martin
Luther King, Jr.’s Letter from Birmingham Jail and the Struggle That Changed a Nation, ed.
Jonathan Rieder (New York: Bloomsbury, 2014).
KING, MARX, AND THE REVOLUTION OF WORLDWIDE VALUE 161
value and devalue in capitalist society is largely dependent upon its move-
ment through cycles of accumulation and reinvestment. This movement,
this “value in motion,” is itself dependent upon the reproduction of social
inequalities, which have significant temporal and spatial dimensions, as
well as discernible racial dimensions.
In order to grasp capitalism’s racial character, it is necessary to stretch a
Marxist analysis, as Frantz Fanon put it, or to strike out onto the terrain of
what contemporary scholars refer to, following Cedric Robinson, as the
theory of racial capitalism.7 If “capital can only be capital when it is accu-
mulating,” if capital “can only accumulate by producing and moving
through relations of severe inequality among human groups,” if “accumu-
lation requires loss, disposability, and the unequal differentiation of human
value,” then, as Jodi Melamed has argued, we ought to explore how “rac-
ism enshrines the inequalities that capitalism requires.”8 We ought to
explore how racism has become, in Michael Dawson’s words, a necessary
“background condition” that enables capitalist society by shaping and
normalizing its inequalities.9 The theory of racial capitalism, which I
unpack in various ways throughout the essay, is meant not merely to call
attention to the “capitalist ‘origins’ of race and racism.” The driving point,
as Nikhil Pal Singh says, is that “racial differentiation is intrinsic to pro-
cesses of capitalist value-creation and speculation.” And into the twentieth
and twenty-first centuries especially, such processes have turned an “ideal-
ized game of merit and chance into a stacked deck.”10 These ways of think-
ing about valuation, the circulation of capital, and the racial dimensions of
the capitalist value-form prove immensely helpful to the task of recon-
structing King’s critique of political economy.
King, for his part, claimed to have read Capital by himself over the
Christmas holiday in 1949.11 Well known is King’s avowal of a dialectical
7
See Frantz Fanon, The Wretched of the Earth, trans. Richard Philcox (New York: Grove,
2005), 5. See also Cedric J. Robinson, Black Marxism: The Making of the Black Radical
Tradition (Chapel Hill: University of North Carolina Press, 2000).
8
Jodi Melamed, “Racial Capitalism,” Critical Ethnic Studies 1, no. 1 (Spring 2015): 77.
See also Jodi Melamed, Represent and Destroy: Rationalizing Violence in the New Racial
Capitalism (Minneapolis: University of Minnesota Press, 2011).
9
Michael C. Dawson, “Hidden in Plain Sight: A Note on Legitimation Crises and the
Racial Order,” Critical Historical Studies (Spring 2016): 143–61.
10
Nikhil Pal Singh, “On Race, Violence, and So-Called Primitive Accumulation,” Social
Text 128 34, no. 3 (September 2016): 30–1.
11
See Martin Luther King, Jr., Stride Toward Freedom: The Montgomery Story (Boston:
Beacon, 2010), 78.
162 A. J. DOUGLAS
methodology, which in its emphasis on processes and interconnections and

the movement of parts within social totalities helps to demystify the social
relations sustained by the circulation of capital. But in the context of a dis-
cussion of King, it makes sense to explore parallels with the revisionist
approach spawned by Robinson’s work in part because Robinson situated
the critique of racial capitalism within an account of an indigenous Black
radical tradition, one born of the lived struggles of Black people and that, by
its nature, exceeds the terms of European discourse. There is no doubt that
the theory of racial capitalism is meant partly to expose the limitations of
European radicalism, and especially the ways in which Marxist materialism
has been made to rationalize or even dismiss both racialism and the spiritual
distinctiveness of indigenous Black struggle. Robinson did not highlight
King’s critique of political economy. He opted instead to survey the contri-
butions of an earlier generation of Black scholar-activists, including W. E.
B. Du Bois and C. L. R. James. But King can and should be aligned with
this tradition, as a figure who factored the history of Black liberation strug-
gle into a creolized appropriation of European intellectual legacies and who
came to regard institutionalized practices of capital accumulation as organi-
cally interwoven with racial partition, dispossession, disinheritance, exploi-
tation, and underdevelopment—in short, racial violence.
The imperative, King said, is to get on the right side of world revolu-
tion and to embrace a radical revolution of values. “We must rapidly begin
the shift from a thing-oriented society to a person-oriented society,” for
“when machines and computers, profit motives and property rights, are
considered more important than people, the giant triplets of racism,
extreme materialism, and militarism are incapable of being conquered.”12
King saw in capitalist modernity an unprecedented, world-historical
expansion of human productive and social capacity. But he also saw a
“glaring contradiction” in the irrational and immoral persistence of mate-
rial poverty and racial segregation, the unacceptable persistence of what he
called “the other America.” It is precisely in his attentiveness to the sub-
stance of this signal contradiction that the contours of a theory of racial
capitalism emerge in his work. The following discussion begins with a brief
commentary on how King’s spiritual commitments and deference to the
distinctiveness of indigenous Black protest complicated his reception of
Marxism. It then considers King’s analysis of the concentration of Black
poverty in American cities before turning to explore the anti-imperialist
King, “Beyond Vietnam: A Time to Break Silence,” 214.

12
and internationalist dimensions of his critical theory. Ultimately, the essay

speaks to how capitalism reproduces the unequal differentiation of human
value, how it does so in racial terms, and how this process complicates the
call, King’s call, for a revolution of values.
II. “Approaching Spiritual Death”

The philosopher Nikolai Berdyaev, with whom King was familiar, wrote in
a 1935 essay on Marxism that without the “spiritual element” there “can-
not be talk about the attainment of the totality of life.” The spiritual ele-
ment, which found expression in King’s own Christian theological
commitments, adds an initial layer of complexity to King’s critique of
racial capitalism. Throughout his life, King had to reckon with anti-
communist hysteria, including American attitudes towards Marxism, and
the spirituality question was central to his manoeuvring. But King’s public
disavowal of Marxism underscores not only the difficulties he faced in
wresting his thinking from the political-economic conservatism of a rights-
based liberalism. It also vivifies the ways in which his mature critique of
racial capitalism exceeded the terms of European radicalism and exhibited
distinctive features of the Black radical tradition.
In that 1935 essay, Berdyaev would go on to claim that the “material-
ist” tradition of Marxist or Communist thought “wants to return to the
proletariat the means of production alienated from him, but it does not at
all want to return the spiritual element of human nature alienated from
him, spiritual life.” Berdyaev argued that “man belongs not only to the
kingdom of Caesar, but also to the Kingdom of God,” and that “man pos-
sesses a higher dignity and totality, a value of life, if he is a person.”13 While
King “‘believed that Marx had analyzed the economic side of capitalism
right’” (and more on this later), he, like Berdyaev, worried that, as he said
in 1966, “Marx didn’t see the spiritual undergirdings of reality.”14 There
is a temptation to read King’s emphasis on the spiritual, along with his
concern that “materialism” had mushroomed into one of modern soci-
ety’s great evils, as an expression of an overriding idealism of sorts, a sign
that his conceptual and methodological moorings discourage any sus-
tained critique of political economy. It is not clear that King ever really
13
N. A. Berdyaev, “Marxism and the Conception of Personality,” Christendom, no. 2
(December 1935), http://www.berdyaev.com/berdiaev/berd_lib/1935_400.html.
14
King, “Speech at SCLC Staff Retreat,” 20.
164 A. J. DOUGLAS
understood materialism in a strict Marxian sense of the term. As his former

college professor Melvin Watson pointed out to him in a 1953 letter, in an
effort to correct King’s reading of Marx, “Marx’s position was that the
culture, thoughts, in fact, the whole life of man is conditioned … by the
means of production.” This “variety of materialism is very difficult to
refute,” Watson said, and it is, especially for a Baptist preacher steeped in
Christian idealism, “a very disturbing phenomenon.”15 But King’s point,
like Berdyaev’s, was just that a strict methodological materialism does not
capture the spiritual dimensions of anti-capitalist protest; nor does it hon-
our the ways in which a more satisfactory or sustainable social order would
make room for the cultivation of spiritual or other meaning-making
human activities. And as King put his theological commitments into work-
ing relation with the Black freedom struggle, his philosophy began to take
on characteristic features of the Black radical tradition.
Part of what makes the Black radical tradition, Robinson said, is “the
renunciation of actual being for historical being,” or the preservation of
“the integral totality of the people themselves,” a people whose values and
principles and ideals exceed the terms of Western modernity. What emerged
from indigenous Black struggle in the modern period was a “revolutionary
consciousness that proceeded from the whole historical experience of Black
people and not merely from the social formations of capitalist slavery or the
relations of production of colonialism.”16 The spiritual occupies a central
place here, not as an opiate, not as evidence of a reactionary ideological
consciousness, but as part of the psychology of active and sustained resis-
tance. This is evident in various stages of King’s activism. He went to
Albany, Georgia, to join a people “straightening its back,” a people work-
ing through the spiritual renewal that it needed to initiate and sustain col-
lective resistance. He went to Chicago to foment something similar, a
“spiritual transformation of the ghetto.” He went to Memphis to express
his “spiritual connection with labour,” and he found there an audience
moved by how his exemplary determination to fight on, his indefatigable
courage, was itself reflective of “a good spirit.”17 The spiritual dimension
15
Melvin Watson, “Letter to King,” in The Papers of Martin Luther King, Jr., Vol. II:
Rediscovering Precious Values, July 1951–November 1955, ed. Clayborne Carson, Ralph
E. Luker, Penny A. Russell, and Pete Holloran (Berkeley: University of California Press,
1994), 156–7.
16
Robinson, Black Marxism, 168–9.
17
See Jason Sokol, There Goes My Everything: White Southerners in the Age of Civil Rights,
1945–1975 (New York: Vintage, 2007), 93–4; Thomas F. Jackson, From Civil Rights to
emerges organically from a people in movement and has a sort of autopoi-

etic function, working to persuade the foot soldiers, King included, to stay
the course, to keep on the right side of the world revolution, despite the
seductiveness of what Robinson called “actual being,” what we might call
the inertial allure of White capitalist modernity and its “materialist” prom-
ises of wealth, status, and “all of the other shallow things.”18
King’s worry about an approaching “spiritual death” was none other
than a concern about the prospective annihilation of a people and its resis-
tance struggles. And it is important to emphasize that this concern is cen-
tral to the critique of racial capitalism, which trains focus not only on the
exploitation of labour and resources, but also on the ways in which logics
of capital accumulation render Black people vulnerable to premature
death, both corporeally and spiritually. “Accumulation under capitalism is
necessarily exploitation of labor, land, and resources,” Melamed says, but
it is also “a system of expropriating violence on collective life itself.”19 At
issue is a “technology of antirelationality,” the “production of social sep-
arateness—the disjoining or deactivating of relations between human
beings (and humans and nature)—needed for capitalist exploitation to
work.”20 Melamed goes on to cite Ruth Wilson Gilmore’s seminal defini-
tion of racism as “the state-sanctioned and/or extra-legal production and
exploitation of group-differentiated vulnerabilities to premature death, in
distinct yet densely interconnected political geographies.”21 It is remarkable
how well this theoretical framework applies to King’s life and work. King
was concerned with how Black people had been partitioned and rendered
vulnerable, within what he referred to repeatedly as the “inescapable net-
work of mutuality,” and in ways that could both feed capital accumulation
and foreclose the development of alternative modes of human relation and
Human Rights: Martin Luther King, Jr., and the Struggle for Economic Justice (Philadelphia:
University of Pennsylvania Press, 2009), 279; Michael K. Honey, “To The Mountaintop:
‘Let Us Develop a Kind of Dangerous Unselfishness,’” in All Labor Has Dignity, ed. Michael
K. Honey (Boston: Beacon, 2011), 181.
18
See Martin Luther King, Jr., “The Drum Major Instinct,” in The Radical King, ed.
Cornel West (Boston: Beacon, 2016), 264.
19
Melamed, “Racial Capitalism,” 78. See Dawson, “Hidden in Plain Sight” and Nancy
Fraser, “Expropriation and Exploitation in Racialized Capitalism: A Reply to Michael
Dawson,” Critical Historical Studies (Spring 2016): 163–78.
20
Melamed, “Racial Capitalism,” 78.
21
Ruth Wilson Gilmore, “Race and Globalization,” in Geographies of Global Change:
Remapping the World, ed. R. J. Johnson, Peter J. Taylor, and Michael J. Watts (New York:
Wiley-Blackwell, 2002), 261; emphasis added.
166 A. J. DOUGLAS
valuation. King argued in 1966 that “racism is based on the affirmation

that the very being of a people is inferior,” and that “the ultimate logic of
racism is genocide.”22 This conception of racism, this concern with the
systematic annihilation of a people, undergirds King’s mature critique of
how capitalism works as a system of expropriating violence on collective
life itself, as I argue in the next two sections.
III. “The Glaring Contrast of Poverty and Wealth”

King moved beyond the terms of European radicalism, but he “believed
that Marx had analyzed the economic side of capitalism right.” Part of
what this means is that King, ever the dialectician, was generally sympa-
thetic with the grand development narrative, the idea that human history
can be understood in terms of an ongoing struggle to expand social and
productive capacity and that capitalist modernity reflects both historically
unprecedented capaciousness and, contradictorily, the persistence of inter-
nal obstacles, what Marx referred to as the “fetters,” to further develop-
ment.23 “Capitalism carries the seeds of its own destruction,” King wrote
in 1951. “I am convinced that capitalism has seen its best days in America,
and not only in America, but in the entire world. It is a well-known fact
that no social institution can survive when it has outlived its usefulness.
This, capitalism has done. It has failed to meet the needs of the masses.”24
And King was always fond of the maxim “from each according to his abil-
ity, to each according to his needs,” which he seems to have regarded as a
speculative ideal of sorts, a fugitive vision of a more publicly oriented
political economy, one in which human needs are prioritized, in which
labour is rendered socially valuable—or “socially necessary,” in Marxist
terms—only insofar as it is made to serve human needs. The insinuation is
that King was worried about how the ideological superstructure of capital-
ist modernity—established laws and political ideas, shared principles,
indeed shared values—prevents further development of productive and
22
King, “Speech at SCLC Staff Retreat,” 7, 8.
23
See Karl Marx’s “Preface” to A Contribution to the Critique of Political Economy (1859),
https://www.marxists.org/archive/marx/works/1859/critique-pol-economy/preface.
htm.
24
Martin Luther King, Jr., “Will Capitalism Survive,” in The Papers of Martin Luther King,
Jr., Volume VI: Advocate of the Social Gospel, September 1948–March 1963, ed. Clayborne
Carson, Susan Carson, Susan Englander, Troy Jackson, and Gerald L. Smith (Berkeley:
University of California Press, 2000), 104.
social capacity, further development of our very ability to relate to one

another in ways that serve human needs, both material and spiritual.
And yet, King went beyond the critique of ideology as that operation is
conventionally understood. Beyond the demystification of epistemic com-
mitments, King sought to expose a mode of domination built into the
material reproduction of capitalism’s social form. This aspect of his cri-
tique is put on more vivid display as his thinking developed into the mid-
to late 1960s, and as he sought to work through the “glaring contrast of
poverty and wealth.” The historian Thomas Jackson has shown that by
about 1966 King began to argue against not only “lonely islands of pov-
erty in a vast sea of prosperity,” but also against the ways in which White
privilege and prosperity were themselves conditioned by racial partitioning
and Black underdevelopment, how increased capaciousness for some was
bought necessarily at the expense of others. Of course, King sought to
vivify the irrationality of economic inequality and distributive injustice.
“Our nation is now so rich, so productive,” he said, “that the continuation
of persistent poverty is incendiary because the poor cannot rationalize
their deprivation.”25 But more to the point, King argued that “depressed
living conditions for Negroes are a structural part of the economy,” that
“certain industries are based upon the supply of low-wage, under-skilled
and immobile non-white labor.”26
This line of thinking came alive for King during his time in Chicago,
during a period that, as David Garrow has shown, “would hasten the
expansion of his own critical perspective on American society.”27 In
Chicago, King began to speak more openly about the racial dimensions of
systemic economic exploitation. A “total pattern of exploitation” is
“crystallized in the slum,” he said, and this situation exists simply “because
someone profits by its existence.” Following James Bevel and others, King
spoke of “a system of internal colonialism,” a “situation [that] is true only
for Negroes.”28 Here, we can begin to garner clues about the spatial or
geographical dimensions of King’s critique of racial capitalism. At issue is
the way in which White wealth and privilege are maintained through, to
quote Gilmore again, “the state-sanctioned and/or extra-legal production
25
Martin Luther King, Jr., “Freedom’s Crisis,” The Nation (1966).
26
Ibid.; emphasis added. See also Jackson, From Civil Rights to Human Rights, 250–1.
27
Garrow, Bearing the Cross, 430.
28
For a brief history of the use of the term “internal colonialism” in the United States, see
Ramón A. Gutiérrez, “Internal Colonialism: An American Theory of Race,” Du Bois Review,
1, no. 2 (2004): 281–95.
168 A. J. DOUGLAS
and exploitation of group-differentiated vulnerabilities to premature

death, in distinct yet densely interconnected political geographies.” For
King, the spatial concentration of Black poverty engendered vulnerability
to premature death, both for individuals and for the group, for what
Robinson referred to as “the integral totality of the people.” And the
urban slum, what King referred to in this moment as “the Chicago prob-
lem,” was evidence of what Melamed has described as a “technology for
reducing collective life to the relations that sustain neoliberal democratic
capitalism,” a “dialectic in which forms of humanity are separated (made
‘distinct’) so that they may be ‘interconnected’ in terms that feed capital.”29
It is worth quoting Melamed at length on this point:
Although at first glance, dense interconnections seem antithetical to ampu-

tated social relations, it is capitalism’s particular feat to accomplish differen-
tiation as dense networks and nodes of social separateness. Processes of
differentiation and dominant comparative logics create ‘certainties’ of dis-
creteness, distinctness, and discontinuity—of discrete identities, distinct ter-
ritorializations and sovereignties, and discontinuities between the political
and the economic, the internal and the external, and the valued and the
devalued. In the drawing of the line that constitutes discrete entities and
distinguishes between the valued and the devalued, people and situations
are made incommensurable to one another as a disavowed condition of pos-
sibility for world-systems of profit and governance.30
In his effort to come to grips with the “Chicago problem,” King emerged
as a critic who was deftly attuned to the ways in which Black “antirelation-
ality” was densely interwoven with and made to serve circuits of capital
accumulation, often through the production of Black vulnerability. He
underscored the point that Black people had been partitioned, isolated,
immobilized, stigmatized, in essence devalued, and that this was a “struc-
tural part of the economy.”
Consider Marx’s definition of devaluation, which is simple in itself, but
is quite useful for thinking about how the value of Black lives is affected
by the social movement of capitalist production and exchange. If we think
of capital as “value in motion,” we can think of devaluation as what hap-
pens whenever and wherever its motion is disrupted. Whenever and wher-
ever the “process of reproduction is checked,” Marx said, both “use-value

29
Ibid., 78–9.
30
and exchange-value go to the devil.”31 Devaluation must also be seen as

“the underside to overaccumulation.”32 Whenever and wherever accumu-
lated surplus is at pains to find viable outlets for reinvestment or absorp-
tion, what ensues is the non-production of value, or what we might
describe more fittingly, highlighting the artificial or manufactured charac-
ter of the system itself, as the production of non-value. As the rate of
profit tends to slow system-wide, we are confronted with, as Marx put it,
“overproduction, speculation crises and surplus capital alongside surplus
population.”33 The result is always devaluation. This simple revelation is
profoundly significant for how we might understand King’s call for a
“revolution of values.”
Deindustrialization, offshoring, and other forms of capital flight have
decimated Black communities in the United States, most proximately in
the urban north and the so-called Rust Belt. And though such decimation
came into more widespread public consciousness in the decades after
King’s death, in the wake of the accumulation crises of the 1970s and dur-
ing the subsequent neoliberal reforms of the 1980s, King appeared to
have seen the writing on the wall, as his reflections on the “Chicago prob-
lem” and his anti-war arguments indicate. In various ways, King found
himself pushing back against efforts to resolve the internal contradictions
of capital accumulation, efforts by capitalist actors, working in concert
with the state, to invest in various ways overseas, to resume circulatory
processes that had slowed on the domestic front by creating overseas
markets for the absorption of surplus. Throughout the post-war period,
such efforts introduced new modes of racial exploitation. It was a “new
jungle,” King said to a group of packinghouse workers in 1962, made
possible by “the shining glittering face of science,” by “automation and
the runaway shop.”34 The point is that what King referred to as a deaden-
ing sense of “nobodyness,” a sense of neglect and societal worthlessness
that he began to read into the material and psychic life of the Black ghetto
of the 1960s, was wrought by devaluation—of labour, of education, of
31
Karl Marx, “Theories of Surplus Value,” https://www.marxists.org/archive/marx/
works/1863/theories-surplus-value/ch17.htm.
32
David Harvey, The Limits to Capital (New York: Verso, 2006), 192.
33
Karl Marx, Capital: A Critique of Political Economy. Vol. 3, trans. David Fernbach (New
York: Penguin, 1993), 351.
34
Martin Luther King, Jr., “Thirteenth Convention, United Packinghouse Workers of
America, Minneapolis, Minnesota, May 21, 1962,” in All Labor Has Dignity, ed. Michael
K. Honey (Boston: Beacon, 2011), 51.
170 A. J. DOUGLAS
infrastructure, indeed of Black lives as such. This kind of racially marked

devaluation must be seen as an effect of the spatial flight of the circulation
of capital.35
Michael Denning has pointed out that “under capitalism, the only
thing worse than being exploited is not being exploited.”36 Today we
might well refer to “wageless life,” to a new manifestation of “surplus
population” that, in the words of the Endnotes collective, “need not find
itself completely ‘outside’ capitalist social relations. Capital may not need
these workers, but they still need to work. They are thus forced to offer
themselves up for the most abject forms of wage slavery in the form of
petty production and services—identified with informal and often illegal
markets of direct exchange arising alongside failures of capitalist
production.”37 Wagelessness presents itself, of course, as a major problem
for the reproduction of an economy built on the continuous circulation of
consumption dollars. And though King knew that “no matter how dynam-
ically the [capitalist] economy develops and expands it does not eliminate
poverty,” he argued, in 1967, that “we have come to a point where we
must make the nonproducer a consumer or we will find ourselves drown-
ing in a sea of consumer goods.” He argued that “we must create full
employment or we must create incomes. People must be made consumers
by one method or the other.”38 It is tempting to read this emphasis on the
expansion of consumption power as a sort of temporal fix to systemic
accumulation crises, an approach that might buy a little time for the con-
tinued circulation of capital and does nothing to challenge underlying
structural contradictions, or indeed racial capitalism’s social relations.
King was ambivalent on this matter, to be sure. But I wager that in his
effort to foment a “revolution of values,” in his effort to rethink “this
value system,” King sought to imagine an economy for which consump-
tion would be driven not by the reproduction of capitalism, not by the
reproduction of the unequal and obscured social relations that make accu-
mulation possible, but by the service of human needs. His emphasis on
propping up consumption power must be understood in the context of
this broader critique.
35
See, for example, King, “Letter from Birmingham Jail.”
36
Michael Denning, “Wageless Life,” New Left Review 66 (November–December 2010).
37
See “Misery and Debt,” Endnotes 2 (2010): 30f15.
38
King, Where Do We Go from Here, 172.
And indeed this broader critique of the reproduction of capitalism, of

an economic structure marked by “value in motion,” is evident in King’s
articulation of a strategy of urban “dislocation,” which began to emerge in
earnest in the summer of 1967. King knew that capital accumulates by
“producing and moving through relations of severe inequality among
human groups—capitalists with the means of production/workers with-
out the means of subsistence, creditors/debtors, conquerors of land made
property/the dispossessed and removed.”39 And he sought to galvanize an
active countermovement that could challenge the reproduction of racial
capitalism on the people’s terms. He began to call on Black citizen-activists
and their allies “to dislocate the functioning of a city,” to, as it were, throw
sand into the gears of the circulation of capital.40 Beyond Chicago, King
sought to take a poor people’s campaign to Washington, to foment a sort
of occupy movement that could, in effect, shut it down. If folks could
“just camp … and stay,” he said, “the city will not function.” Such a move-
ment, he imagined, could be “as dramatic, as dislocative, as disruptive, as
attention-getting as the riots without destroying life or property.”41 The
crucial point is just that King’s call for “dislocation,” a call born of an
evolving attentiveness to the racially marked relations and processes that
feed capital accumulation, can be understood as part of a movement to
reconstruct how human beings relate to and value one another, a strategy
that, we are now beginning to see more clearly, is deeply resonant with the
Black radical tradition.
III. “Social Stability for Our Investments”

Land concerns were also a consistent pillar of King’s global vision, as evi-
denced by, for example, his early interest in the Indian Bhoodan Movement
and, of course, his mature defence of the Northern Vietnamese struggles
for land reform.42 By 1967, and to the consternation of so many in and
outside of the Movement, King offered an apology of sorts for a Northern
Vietnamese “revolutionary government seeking self-determination,” a
“government that had been established not by China—for whom the
39
40
Martin Luther King, Jr., cited in Garrow, Bearing the Cross, 574.
41
Ibid., 579, 582.
42
On the Indian Bhoodan or Land Gift Movement of the 1950s, see Martin Luther King,
Jr., “My Trip to the Land of Gandhi,” in A Single Garment of Destiny: A Global Vision of
Justice, ed. Lewis V. Baldwin (Boston: Beacon, 2012), 107.
172 A. J. DOUGLAS
Vietnamese have no great love—but by clearly indigenous forces that

included some communists.” For the peasants of the Vietnamese country-
side, King said, “this new government meant real land reform, one of the
most important needs in their lives.”43
Too often appreciation of King’s internationalism is hemmed in by a nar-
row reading of his opposition to the Vietnam War. Such a reading, sup-
ported to be sure by King’s own insistence that “our government is more
concerned about winning an unjust war in Vietnam than winning the war
against poverty here at home,” reduces the economic dimension of King’s
antimilitarism to a matter of opportunity costs, as if the only relevant ques-
tion had to do with domestic budgetary priority, how best to allocate federal
expenditure.44 But King was clear that “the need to maintain social stability
for our investments accounts for the counterrevolutionary action of American
forces in Guatemala” and explains why “American helicopters are being
used against guerrillas in Cambodia and why American napalm and Green
Beret forces have already been active against rebels in Peru.” The systemic
need for the continuous circulation of capital and the ongoing expansion of
its spatial boundaries, the dynamic structural imperative of the global mar-
ket economy, accounts for “our alliance with the landed gentry of South
America” and explains why we see “individual capitalists of the West invest-
ing huge sums of money in Asia, Africa, and South America, only to take the
profits out with no concern for the social betterment of the countries.” King
described post-war U.S. imperialism in terms of a stubborn global class poli-
tics, an elite refusal “to give up the privileges and the pleasures that come
from the immense profits of overseas investments.”45 The implication, on a
deeper theoretical plane, is that warfare had become a crucial resource in the
capitalist struggle to resolve escalating accumulation crises. What King
sought to confront, in essence, was a proactive government movement seek-
ing to establish and maintain overseas markets for the absorption of eco-
nomic surplus. King’s anti-war arguments ought to be seen as part of a long
tradition of left criticism of military surplus spending, which he might have
described as “military Keynesianism.”46
43
King, “Beyond Vietnam: A Time to Break Silence,” 206–7.
44
King, “Local 1199,” 165.
45
King, “Beyond Vietnam: A Time to Break Silence,” 213–14.
46
Forged initially by the early-century contributions of Rosa Luxemburg, the critical theo-
rization of military stimulus spending experienced a watershed moment in the late 1960s,
with the publication of Paul A. Baran and Paul Sweezy’s Monopoly Capital: An Essay on the
American Economic and Social Order (New York: Monthly Review, 1966). See also Rosa
The key forebear of that longer tradition of left criticism once said that
“an industrial army of workmen, under the command of a capitalist,
requires, like a real army, officers [managers], and sergeants [foremen
overlookers], who, while the work is being done, command in the name
of the capitalist.”47 For so long, within the left tradition, it was presumed
that the “silent compulsion” of market relations would come to supplant
more violent dispossession and expropriation of land and labour, that the
naked violence that Marx read into capitalism’s “prehistory” would over
time take on a more covert modus operandi. It was presumed that market
rationalization would obscure the ways in which “free” living labour
would continue to be thrust into impoverishment and expendability, that
the work of critique of ideology would thus become an increasingly salient
weapon in the ongoing class struggle. Fair enough. Critique of ideology is
crucial work. But here again, it is important to invoke the theory of racial
capitalism, as the privileged vantage of European radicalism has not always
registered the real violence, racial and otherwise, that King and other
twentieth-century Black radicals have borne prophetic witness to. From
the vantage of Black labour and wageless life worldwide, there is and has
been nothing analogous about the role of military discipline and manage-
ment in the production and circulation of value. Capital accumulation
requires real armies, commanding and supervising market relations on a
global scale. And in this, racial domination plays an essential role.
Recent historical work has documented the ways in which early capital-
ism specialized in, as Nikhil Pal Singh puts it, a “form of commercial priva-
teering backed but unimpeded by sovereign power and most fully realized
in slavery, settler colonialism, and imperialism.”48 Certainly the “conscrip-
tion, criminalization, and disposability of poor, idle, or surplus labour—the
historical process of forcibly ‘divorcing the producers from the means of
production’ that for Marx is capitalism’s precondition”—has always relied
upon “racial differentiation as a directly violent yet also flexible and fungible
mode of ascription.” But, as Singh goes on to point out, “there has been no
period in which racial domination has not been woven into the management
of capitalist society.”49 The “state-sanctioned force and violence originally
required to create wage labour” has not disappeared into the era of mature,
Luxemburg, The Accumulation of Capital, trans. Agnes Schwarzschild (New York:

Routledge, 2003).
47
Marx, Capital, Vol. I, 172; emphasis added.
48
Nikhil Pal Singh, Race and America’s Long War (Oakland: University of California
Press, 2017), 79.
49
Ibid.
174 A. J. DOUGLAS
consolidated global capitalism. Indeed in our own time, force and violence
is “retained in the forms of hierarchy and competition between workers, in
the social requirements of policing unwaged labor that has migrated to pov-
erty and the informal economy, and in imperial and nationalist interpella-
tions of the urban and metropolitan working classes.”50 King spoke of
expanded social and productive capacity under capitalism, population
increase and improved living conditions, as we have seen, but he also under-
scored as the precondition of these their dialectical underside, the produc-
tion of human scrap, the disposability of living labour, the omnipresent
threat of systematic annihilation of a people. Here we would do well to
recall, quoting Singh again, that the “constant, violent dislocation of these
two processes requires constant management in the form of police and mili-
tary solutions—that is, directly coercive interventions.” We would do well
to keep in mind that capital accumulation “spurs forms of moral, temporal,
and spatial sequestration that become part of the framework of crisis man-
agement, through which the simultaneous production of growth and death
can be viewed less as a contradiction than as a necessary dimension of his-
torical progress.”51 It cannot be denied that in this, and to say it again, racial
ascription and domination play an essential role.
These sobering considerations can be read back into King’s suspicions of
global capitalism in richly generative ways. The imperial expansion of the
capitalist value-form has put more and more human beings in relation to
one another in ways that feed the production and circulation of capital. And
as Samir Amin reminds us, “far from progressively ‘homogenizing’ eco-
nomic conditions on a planetary scale,” this historical process has produced
racial inequality and uneven geographical development, a “permanent
asymmetry” in which is “affirmed, with violence still greater than that con-
templated by Marx, the law of pauperization that is indissolubly linked to
the logic of capital accumulation.”52 This is precisely what has become of the
“inescapable network of mutuality,” what will remain of it, King feared,
unless enough conscientious objectors step up to confront—actively and
politically, and not merely through the cultivation of moral conscience or
right perception—the war-making and imperial offensives that reproduce
the conditions for the production and circulation of value worldwide.
It is important to note that King’s anti-war arguments were carved
against a burgeoning mid-century Black internationalism, at a time when
50
Ibid., 96–7.
51
Ibid.
52
Samir Amin, The Law of Worldwide Value (New York: Monthly Review, 2010), 84.
he found himself immersed in what Brandon Terry has called the “problem-
space of black power.”53 This was a context in which a “resurgence of
Marxist thought in black political life helped enable a shift away from the
discourse of inclusion and citizenship rights, toward emphases on oppression
and domination,” but also a context in which pan-African commitments
augured a renewed sense of global anti-capitalist solidarity.54 King’s “sec-
ond phase” marked his reorientation towards criticism of structures of
oppression and domination, and it could be argued that this context also
enabled his pan-Africanism in compelling ways. As Terry goes on to point
out, “King often invoked African Americans’ connection to Africa, and
suggested modes of transnational solidarity,” though “his formulations
placed less emphasis on the idiom of ‘racial’ ancestry than resonant and
shared features of racial oppression between colonialism and Jim Crow.”55
And in this way, King’s internationalism hewed closer to the spirit of
Bandung, the spirit of an anti-capitalist nonaligned movement born of a
global Southern alliance, a resonant and shared experience of racial and
colonial oppression. It is telling that for King, the 1955 gathering in
Bandung, spearheaded by 29 Asian and African delegations caught in the
throes of anti-imperialist struggle, was better understood as a popular
movement than as a national or bourgeois one. “More than one billion
three hundred million of the colored peoples of the world have broken
aloose from colonialism and imperialism,” King said to a crowd in St.
Louis in 1957. “They have broken aloose from the Egypt of colonialism.
… They assembled in Bandung some months ago.”56
IV. “These Are Revolutionary Times”

Nearly a decade later, King spoke again of politics and of where the future
might go. He urged solidarity with grass-roots struggles of various kinds.
“All over the globe men are revolting against old systems of exploitation
53
Brandon M. Terry, “Requiem for a Dream: The Problem-Space of Black Power,” in To
Shape a New World: Essays on the Political Philosophy of Martin Luther King, Jr., ed. Tommie
Shelby and Brandon M. Terry (Cambridge, MA: Harvard University Press, 2018).
54
Ibid., 313.
55
Ibid, 315.
56
Martin Luther King, Jr., “‘A Realistic Look at the Question of Progress in the Area of
Race Relations,’ Address Delivered at St. Louis Freedom Rally,” in The Papers of Martin
Luther King, Jr., Volume VI: Advocate of the Social Gospel, September 1948–March 1963, ed.
Clayborne Carson, Susan Carson, Susan Englander, Troy Jackson, and Gerald L. Smith
(Berkeley: University of California Press, 2007), 175–6; emphasis added.
176 A. J. DOUGLAS
and oppression,” he said, “and out of the wounds of a frail world, new
systems of justice and equality are being born. The shirtless and barefoot
people of the land are rising up as never before. The people who sat in
darkness have seen a great light.” It is incumbent upon all of us, he said,
to “support these revolutions.”57 In the United States, King was drawn to
a burgeoning Black youth movement that had begun its own revolution of
values through indigenous confrontation with “actual being.” It was “pre-
cisely when young Negroes threw off their middle-class values that they
made an historic social contribution,” he said.58 And it is perhaps worth
noting that, in the last year of his life especially, King was tempted to move
out of his non-violent comfort zone in an effort to grapple with modes of
indigenous protest against the coming of the new phase of the capitalist
economy, often riotous protest against what critics refer to today as the
neoliberal world order.59
It is remarkable how well King’s mature reflections on political econ-
omy transcend their historical genesis. As the historian Thomas Holt has
documented, into the 1970s and 1980s, into the accumulation crises of
the early neoliberal era, “blacks found themselves the late-arriving guests
as the feast for an expanding middle class was ending.” In the throes of
deindustrialization, as the “post-production” domestic economy came to
resemble “a zero-sum game rather than an expanding pie, policies of racial
preference became the scapegoat for a tightening labor market and con-
centration of educational opportunities.”60 Today scholars argue that the
rapid economic growth of the mid-twentieth century is beginning to look
more and more like the great historical exception and that the zero-sum
tendencies of the neoliberal era indicate a likelihood that no type or degree
of government intervention can do much to build out prosperity or even
sustain an existing middle class. If the new economy is fraught with accu-
mulation crises and is moving towards a zero-sum relation between win-
ners and losers, then we ought to expect a new era of politicization, a
future resistance that sets out to work both within and beyond conven-
tional channels of liberal democracy, as King envisioned half a century ago.
The mature King knew all too well that “some Americans would need to

57
King, “A New Sense of Direction.”

58
59
See Martin Luther King, Jr., The Trumpet of Conscience (Boston: Beacon, 2011).
60
Thomas C. Holt, Children of Fire: A History of African Americans (New York: Hill and
Wang, 2010), 354, 357.
give up privileges and resources for others to live in decency.” And he

knew all too well that “that took politics.”61
In 1967, King said that “there is nothing except a tragic death wish to
prevent us from reordering our priorities so that the pursuit of peace will
take precedence over the pursuit of war … nothing to keep us from mold-
ing a recalcitrant status quo with bruised hands until we have fashioned it
into a brotherhood.”62 But surely the obstacles, from ideological and
fetishistic obfuscation to the emboldened interests of counterrevolution,
were far more formidable, far more complex, than King led on. This, of
course, King knew all too well. In the last years of his life especially, King
battled through fits of depression, a recurring sense that he was chasing a
fool’s errand. Many in his inner circle, including veteran anti-capitalist
soldiers such as Bayard Rustin and Stanley Levinson, sought to persuade
King that the United States was just not yet ready for radical political-
economic restructuring. And yet King soldiered on. Part of what he gave
us, in his last years especially, was a compelling critical theory, a diagnostic
account of racial capitalism. And this was no fool’s errand. Perhaps now
more than ever, King’s critique, especially when read in complementary
relation to the resurgence of interest in Marxism, can help to motivate
incisive thinking about the obstacles that foreclose realization of a more
just world as well as the enduring activist legacy of the Black radical
tradition.
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Fetishism and Exploitation Marx - 150
and Marx 200: What Has Changed?
Paula Rauhala
I. Introduction
“Marx’s critical theory of fetishism has become a central point of reference
for a ‘modern’ understanding of Marxism which is represented by, among
others, intellectuals who wish to distance themselves from the antiquated
dogmas of ‘traditional Marxism,’” Jan Hoff, a proponent of the contempo-
rary German New Reading of Marx (Neue Marx-Lektüre), probably the
most popular Marxist approach in Germany today, wrote in 2009.1 This
position raises an interesting question: Why does the emphasis on fetishism
differentiate between a “modern” and an “antiquated” reading of Capital?
The modern reading to which Hoff refers dates back to around 1968
and is especially connected to the Frankfurt school. A glance at the litera-
ture that appeared in Germany at the time of the centennial anniversary of
Capital (1967) and on the 150th anniversary of Marx’s birth (1968)
indicates that readers of Capital who followed the critical theory of the
1
Jan Hoff, Marx Worldwide: On the Development of the International Discourse on Marx
since 1965, trans. Nicholas Gray (Leiden: Brill, 2017), 138.
P. Rauhala (*)
Tampere University, Tampere, Finland

182 P. RAUHALA
Frankfurt school typically perceived the concept of fetishism as key to the

book. In East Germany, the fetishism theme was not as central in the most
important readings of Capital at the time. Later, the leading East German
expert on Marx’s use of this concept, Thomas Marxhausen, even once
made the pun that some West German authors fetishize the concept of
fetishism.2
Many valid reasons justified the increased interest in reading Capital
through the lens of fetishism in the Federal Republic of Germany (FRG)
in the 1960s. This chapter presents the argument that these reasons were
not pertinent in the East at the time and were no longer relevant at Marx’s
bicentennial in 2018.
In this chapter, discussions on the centennial anniversary of Capital
and the 150th anniversary of Marx’s birth in 1967–68 are considered, as
are discussions that took place 50 years later, in 2017–18, prompting the
question—what has changed? It will be argued that an interpretation of
Capital that emphasized the concept of fetishism answered the problems
encountered by its West German readers in the late 1960s much better
than a more traditional reading, in which Marx’s theory of surplus value
plays a more prominent role. The interpretation of the 1968 generation of
the Frankfurt school is, however, still popular today, 50 years later. The
argument presented in this chapter is that some of the key ideas of this
approach to Capital are becoming more and more anachronistic, as the
world has changed from what it was in 1968.
There are a number of possible explanations for why a reading of
Capital that focuses on Marx’s theory of fetishism made more sense than
a more traditional reading in Frankfurt during the 1960s. The first and
most obvious is that it follows in the tradition of Western Marxist discus-
sions on alienation and reification. Unlike the first generation of the
Frankfurt school, this generation of their students, inspired by the publi-
cation of Grundrisse in 1953 in the German Democratic Republic (GDR),
embraced Capital as Marx’s main philosophical work, rather than viewing
it primarily as a study in economics. Instead, they thought Capital con-
tains a much broader social theory. This is probably partly because most
readers of Capital in the West were philosophers or sociologists, whereas
in the East, mostly economists were considered competent commentators
2
Thomas Marxhausen, “Fetischismusfetischismus ‘linker’ Marxologie. Bemerkungen zur
Marxverfälschung durch Ulrich Erckenbrecht, ‘das Geheimnis des Fetischismus’
Grundmotive der Marxschen Erkenntniskritik,” Hallesche Arbeitsblätter zur Marx-Engels-
Forschung 6 (1979).
FETISHISM AND EXPLOITATION MARX - 150 AND MARX 200: WHAT HAS… 183
on Capital. This fact may seem trivial, but the reasons for this state of
affairs are connected to the fundamental differences between West and
East German societies.
Another reason why the focus on the concept of fetishism in Capital
made sense in Frankfurt in the 1960s is that Marx’s theory of fetishism
was applied in the West German context to both forms of modern, indus-
trial societies, that is, capitalism and state socialism—at least implicitly.
Thirdly, the fetishism theory offers an explanation for the ongoing ques-
tion of Western Marxists: Are workers still interested in overthrowing
capitalism? This question was especially urgent in West Germany during
the years of the Wirtschaftswunder (economic miracle), an exceptionally
long period of economic growth after World War II that benefitted not
only owners but also workers. The theory of fetishism brings to the fore-
front the structural effects of the capitalist market economy. The real rela-
tions appear in inverted forms. The system of class exploitation appears as
an egalitarian market system in which individuals pursue success in the
sphere of equality and freedom. In 1968 FRG, it seemed that workers,
who were relatively well off, had taken this appearance more or less for
granted. The rebelling students’ theoretical role model, Herbert Marcuse,
even announced on the podium of the Free University in West Berlin, at
the height of the student revolts in 1967, that workers were no longer able
to see the destructive nature of the system, which offered comfortable
unfreedom. Only outcasts and intellectuals were able to see the real
relations.3
During the past 50 years, which separate the Marx jubilee of 1967–68
from that of 2017–18, the world has changed. After decades during which
a challenger to the capitalist system still existed, global capitalism is now
returning to business as usual. The shortening of the work day in the West
has stagnated since the 1970s.4 Income inequality has increased.5 Also, the
link between productivity growth and the growth of real wages has been
broken. Even in Germany, the link between the increase in labour produc-
tivity and the growth of real wages has been severed since the 1990s, and
3
Herbert Marcuse, “Ziele, Formen und Aussichten der Studentenopposition,” Das
Argument 45 (1967): 399–400.
4
Christoph Hermann, Capitalism and the Political Economy of Work Time (London and
New York: Routledge, 2015), 1.
5
Anwar Shaikh, Capitalism, Competition, Conflict, Crisis (Oxford: Oxford University
Press, 2016), 755.
184 P. RAUHALA
the level of inequality between the rich and the poor has increased.6 For
these reasons, the main argument of Marx’s Capital that capitalism is a
system of private profit making by exploiting wage labour, rather down-
played in the Neue Marx Lektüre, is today much more relevant than it was
in 1960s West Germany. Therefore, in contrast to much of the Frankfurtian
reading of Capital, today, a more topical reading of the book appreciates
fetishism as a crucial concept of Marx’s critique, and yet, according to this
reading the concept of fetishism can only be understood correctly in con-
nection to the theory of surplus value.
II. The 150th Anniversary of Capital

and the Bicentennial of Marx’s Birth, 2017–18
The reading of Capital, formulated by the students of the first generation

of the Frankfurt school around 1968, was still popular in Germany on the
150th anniversary of its publication and on the bicentennial of Marx’s
birth in 2017–18, and it has gained popularity elsewhere in the world.
This reading does not consider the imperative of profit making at the
expense of wage labour as the most important aspect of Marx’s analysis of
capitalism. Rather, it finds the key insights of Capital within the first chap-
ter of the first volume, in the analysis of the commodity, in which Marx
does not yet comment on wage labour and capital. Indeed, this reading
connects Marx’s theory of fetishism primarily to the topics of the first
three chapters—that is, commodities and money.
Unlike in the reading defended here, in the Neue Marx Lektüre, the
essence of capitalism is not found in bourgeois class relations, but in
commodity production and in the fact that labour produces value in the
first place. In the words of Michael Heinrich, probably the most notable
follower of the Frankfurtian tradition of reading Capital in Germany
today, the problem of capitalism is “the rule of value over humans.”7
Politically, it follows that the goal is not primarily overcoming class
exploitation and capital as an objectified form of bourgeois class rela-
tions, but overcoming the various forms of “impersonal domination,”
6
Oliver Nachtwey, Germany’s Hidden Crisis: Social Decline in the Heart of Europe, trans.
David Fernbach and Loren Balhorn (London and New York: Verso, 2018), 112–3, 116.
7
Heinrich, Michael, An Introduction to the Three Volumes of Karl Marx’s Capital, trans.
Alexander Locascio (New York: Monthly Review Press, 2012), 77. See also Rakowitz, Nadja,
Einfache Warenproduktion. Ideal und Ideologie (Freiburg: ça ira, 2000), 86.
that is, commodities, money, capital, and the state.8 Heinrich motivates
his reading with a critique of traditional Marxism.
The simple ideas of traditional ‘Marxist political economy,’ centered around

labor and exploitation and heavily relying on the false falling rate of profit,
cannot help very much to understand contemporary capitalism. But a ‘cri-
tique of political economy,’ centered around ‘form analysis,’ fetishism and a
monetary theory of value and capital can help very well.9
Another influential reader of Capital, who contrasts his own reading to

traditional Marxism, is Moishe Postone. Being a student of Iring Fetscher,
the political science professor at the Goethe University of Frankfurt from
the early 1960s until the late 1980s, Postone is probably the most eminent
proponent of the Frankfurtian reading of Capital in the Anglophone world.
In Postone’s reading of Capital, the target of Marx’s critique is not
class domination, that is, the private ownership of the means of produc-
tion and the exploitation of wage labour. Rather, the problem of capital-
ism is the form of social labour itself, the fact that labour produces value
as abstract social labour. According to Postone, “The system constituted
by abstract labor embodies a new form of social domination. It exerts a
form of social compulsion whose impersonal, abstract, and objective char-
acter is historically new.”10
Consequently, the working class should not seek the abolition of the
appropriation of unpaid surplus labour by the owning classes. Instead, it
should aim to overcome the “value creating labour” itself.11 This is
because, according to Postone’s reading of Marx, “social domination in
capitalism does not, on its most fundamental level, consist of the domina-
tion of people by other people, but in the domination of people by
abstract social structures that people themselves constitute.”12 Fetishism
instead of exploitation is the key concept of Marx’s book, because capital-
ism is characterized by “self-generated structural domination,” which
8
Heinrich, Michael, An Introduction to the Three Volumes, 222.
9
Heinrich, Michael, “Relevance and Irrelevance of Marxian Economics,” New School
Economic Review 1, no. 1 (2004): 57.
10
Moishe Postone, Time, Labor and Social Domination. A Reinterpretation of Marx’
(Cambridge: Cambridge University Press, 2003), 158–9.
11
Ibid., 63.
12
Ibid., 30.
186 P. RAUHALA
“cannot be fully grasped in terms of class exploitation and domination,”

but rather, as “a historical dynamic beyond the control of the individuals
constituting it.”13
In the more traditional reading of Capital defended in this writing, the
specificity of a society in which the capitalist mode of production is domi-
nant, compared to other class societies, is that the appropriation of surplus
labour is mediated by the market, and therefore, is not observable and not
personal. Like in all other forms of class societies, the work day of a worker
is divided into necessary and surplus labour. In capitalism, however, the
distribution of the product of both parts of the work day among the work-
ing class and the owning classes (industrial capital, money-dealing capital,
commercial capital, and landed property) is mediated through market
mechanisms. The value added appears in the fetishized forms of wage,
profit, commercial profit, interest, and land rent. Therefore, fetishism is a
crucial concept, and it is present in all three books of Capital. The fetish-
isms of commodities and money are just the beginning of the story, and
after the fourth chapter of the first volume, the concept of fetishism is
always related to surplus value and to the mechanisms of its production,
circulation, and distribution.
Unlike this reading, in which the essence of capitalism is explained by
the concepts of capital and wage labour, for Postone, “Marx seeks to grasp
the core of capitalism with the categories of commodity and value.”14
Hence, if we follow Postone’s reading, it follows that Marx would present
his critique of capitalism already before presenting the transformation of
money into capital, and before demonstrating how the division of the
work day into necessary and surplus labour is under bourgeois relations of
production, reflected in the monetary categories of wage, profit, interest,
commercial profit, and land rent. The political implication of Postone’s
reading is that the primary goal should not be overcoming the system of
class exploitation based on the appropriation of surplus labour, but over-
coming “value” altogether.15 In a more traditional reading, as defended
herein, the essence of capitalism cannot be found in the first chapter of
Capital, and the political conclusions drawn from the book are related to
the bourgeois class relations and not to the existence of value, commodi-
ties, and money, as such.
13
Ibid., 31.
14
Ibid., 131.
15
Ibid., 26.
The Frankfurtian reading of Capital has also influenced contemporary

readers of the text in the Anglophone world. Among them is Peter Hudis,
who writes that Marx’s
primary concern is with the way social relations in modern society take on
the form of value. His main object of critique is the inverted character of
social relations in capitalism, where human relations take on the form of
relations between things. There is little doubt that Marx’s critique of capital-
ism centres upon a critique of value-production.16
As noted, this interpretation of Capital, which identifies commodities

and money, and fetishism escorting these forms, as the main target of
Marxian critique of capitalism, has its roots in West Germany around the
year 1968. In the coming sections, it will be argued that 50 years ago in
West Germany, there were good reasons to emphasize Marx’s theory of
commodity fetishism instead of the theory of surplus value and to empha-
size impersonal domination in Marx’s theory, instead of class rule. These
reasons are embedded in the specific context of reading Capital in divided
Germany around 1967–68. The next section will provide an overview of
this peculiar historical situation.
III. Centennial Anniversary of Capital and 150th

Anniversary of Marx’s Birth in East and West
Germany, 1967–68
In 1968, Germany was divided into the GDR and the FRG. The settings
for Marx and Marxist research in both states were very different. The year
1968 marked a historical break in both German states, and also for the
research on Marx and Marxism. What is common in both states is that
Marx’s works became more readily available during the jubilee. The years
preceding 1968 had been also politically interesting in both states. With
regard to the argument presented in this chapter, the most important fac-
tor in West German society at the time was the rise of the student move-
ment, while in the East, the most important events were de-Stalinization
and economic reforms.
Peter Hudis, Marx’s Concept of the Alternative to Capitalism (Leiden and Boston: Brill,
16
2012), 8.
188 P. RAUHALA
In GDR, Marx belonged to the official canon of the socialist state,

which professed a Marxist-Leninist ideology. This meant not only that
Marxist research had plenty of resources, but also that the Socialist Unity
Party (Sozialistische Einheitspartei Deutschlands, SED) interfered with the
research, which made genuine research difficult.
East Germany is, however, especially interesting for research on Marx,
and increasingly so from 1967 on, when editorial work on the historical-
critical edition of Marx’s and Engels’ works, Marx-Engels-Gesamtausgabe
(MEGA), started in East Berlin. The project, which Stalin had suppressed,
was continued on the centennial of Marx’s chef d’oeuvre. On that day,
September 14, 1967, the organ of the Communist Party of the Soviet
Union (Pravda) and the organ of the SED (Neues Deutschland) announced
that the Institute of Marxism Leninism in Moscow and the Institute of
Marxism Leninism in East Berlin would continue to work on MEGA.17
The darkest years of Stalinism were over. New volumes would not appear
before 1975, but during the 1950s and 1960s, serious research on Marx’s
work, Marxian economics, and Marxism were revived. Also, the 41 vol-
umes of Marx-Engels-Werke (MEW), which first appeared during the
“Karl Marx year” in 1953, were completed on the sesquicentennial of
Marx’s birth—May 5, 1968.18
Another factor enforcing the revival of credible scientific research and
relatively free and critical discussion on the Marxian political economy was
the New Economic System (Neues ökonomisches System, NES), a promising
reform programme of the socialist economy during the early 1960s.19 The
NES spurred not only practical but also theoretical debates on fundamen-
tal problems of Marxian economics, Marx’s method, and interpretations
of Capital.
17
“Gesamtausgabe der Werke von Marx und Engels,” Neues Deutschland, September 14,
1967, 1–2.
18
“Marx-Engels-Werkausgabe vollständig erschienen,” Neues Deutschland, May 5, 1968,
2. Both publication projects trained a considerable number of experts on Marx’s and Engels’
thought: Beiträge zur Marx-Engels-Forschung. Neue Folge (2006) presents 160 short biog-
raphies of the editors of MEW, MEGA, and the Soviet collected works of Marx and Engels,
Sočinenija. “Kurzbiografien,” in Beiträge zur Marx-Engels-Forschung. Neue Folge. Sonderband
5. Die Marx-Engels-Werkausgaben in der UdSSR und DDR (1945–1968), ed. Carl-Erich
Vollgraf, Richard Sperl, and Rolf Hecker (Hamburg: Argument Verlag, 2006).
19
See, for example, Klaus Steinitz and Dieter Walter, Plan–Markt–Demokratie. Prognose und
langfristige Planung in der DDR–Schlussfolgerungen für morgen (Hamburg: VSA-Verlag,
2014); Günter Krause, Wirtschaftstheorie in der DDR (Marburg: Metropolis-Verlag, 1998).
In West Germany, the Cold War atmosphere—not in the form of

communism as in the East but in the form of anti-communism—pre-
sented challenges for Marxist research and for dealing with Marx’s ideas
in an academic context. During the 1950s, the country had only a few
Marxian academics, and until 1968, few of Marx’s works had been pub-
lished in the West. This situation changed during the 1960s. What was
important for the Marx research in Frankfurt was that during the 1960s,
Iring Fetscher published a student edition of Marx’s and Engels’ texts.
Fetscher, known for his critiques of Soviet Marxism, was a professor
of political science at the Goethe University of Frankfurt, and Moishe
Postone’s teacher.
One of the volumes of Fetscher’s student edition contained the first
section “commodities and money” from the first edition of Capital. This
text became important for new readings of Capital among the younger
generation of the Frankfurt school, given that Marx’s presentation of the
value form and commodity fetishism differ in this first edition from the
subsequent, commonly used editions.20 Michael Heinrich reports that this
text was seen as “the ‘missing link’ between the ‘Grundrisse’ and later edi-
tions of ‘Capital’.”21
The Marx jubilee of 1967–68 made Marx’s works more available not
only in the East, but also in the West. In 1967, on the 100th anniver-
sary of Capital, an edition of the three volumes appeared, as Europäische
Verlagsanstalt (EVA) published a licensed edition of Capital by East
German Dietz Verlag. At the same time, the Grundrisse appeared for
the first time in the West, and later, Theories of Surplus Value. The jubi-
lee was the formal reason for the publication of Marx’s original texts,
but another reason was the increased demand for those texts among
radicalized youth.
Frankfurt was not only the stronghold of the Marxist critical theory,
but also, from the mid-1960s, the hub of the “anti-authoritarian wing” of
the student movement. The reading of Capital, emphasizing fetishism
and impersonal domination in Marx’s critique, came into being in close
proximity to this group of students and young researchers.
20
See Hans-Georg Backhaus, “Zur Dialektik der Wertform,” in Beiträge zur Marxistischen
Erkenntnistheorie, ed. Alfred Schmidt (Frankfurt am Main: Suhrkamp, 1969), 129.
21
Michael Heinrich, “Reconstruction or Deconstruction?,” in Re-reading Marx: New
Perspectives after the Critical Edition, ed. Riccardo Bellofiore and Roberto Fineschi (London:
Palgrave Macmillan, 2009), 73.
190 P. RAUHALA
In 1968, university students changed the whole of West German soci-

ety, but especially shook its highly elitist university culture. The appear-
ance of what is nowadays called the Neue Marx Lektüre is tightly connected
to these events. Hans-Jürgen Krahl, who was a student of Adorno, was
politically and theoretically the leading figure of the movement in
Frankfurt, as Rudi Dutschke was in Berlin. Krahl was not only a political
figure, but also one of the most important representatives of the new phil-
osophical readings of Capital.
The background for the rise of the student movement was, as Georg
Fülberth explains, the short supply of fresh labour power in the FRG after
the building of the Berlin Wall in 1961.22 After World War II and until
1961, the miraculously growing economy of the FRG benefitted from
educated labour streaming from the East to the West. After erection of the
wall, the sudden increased need for highly qualified labour opened the
doors of the academy to the children of non-academic parents. These stu-
dents encountered a conservative university culture and the rigid, undem-
ocratic structures of the university institution. This generation of students
relaxed the academic culture, and they revolted outside universities by
opposing the emergency laws (Notstandsgesetzgebung), the Vietnam War,
and the bourgeois media embodied by the Springer house, which was
central in stirring up negative attitudes towards the protesting students.
At the same time, the meaning of being academically educated changed.
Before World War II, university students in the most educated countries
(Germany, France, and Britain) accounted for no more than “one tenth of
one per cent of their joint populations.”23 By the late 1980s, “in education-
ally ambitious countries, students formed upwards of 2.5 per cent of the
total population.”24 FRG was among the countries where the number of
university students multiplied by four to five from 1960 until 1980.25 This
meant that the children of the middle class or even of working-class families
gained access to the West German academy.26 This partly explains the shift
among academic students from conservative attitudes to leftist attitudes.
22
Georg Fülberth, “Linke Hoffnungen, linke Chancen, linkes Versagen?” in Pankover
Vorträge 152. 1968—Bilanz und ungelöste Probleme (Berlin: Helle Panke, 2010), 48.
23
Eric Hobsbawm, Age of Extremes: The Short Twentieth Century 1914–1991 (London:
Abacus, 1995), 295.
24
Ibid.
25
Ibid., 296.
26
Wolfgang Abendroth, “Der Weg der Studenten zum Marxismus,” Z. Zeitschrift für
Marxistische Erneuerung 113 (March 2018): 104.
Even if the anti-authoritarian wing of the West German student move-

ment had assumed the typical West German anti-communist attitude, as
Wolfgang Abendroth puts it, the lasting result of the happenings of the
year 1968 in West Germany was the end of official anti-communism and
anti-Marxism.27 The Communist Party of Germany (Kommunistische
Partei Deutschlands, KPD) was legally banned from 1956 onwards. In
1968, the state cancelled the ban on the KPD. Dealing with Marxism was
no longer “a cardinal sin,” as Adorno had described it in 1962, in his lec-
ture on Marx’s critique of political economy.28 This is the context from
which the new reading of Capital emerged.
IV. The Concept of Fetishism in the Reading

of Capital Around 1968
Although he taught many students, Adorno himself did not write much
about Capital, but he made good use of the concepts of Marx’s critique
of political economy, such as commodity fetishism, ideology, and the idea
of real abstraction. Many of Adorno’s students came to emphasize these
themes as well. Ernst Theodor Mohl explains:
In an exclusive tutorial at the beginning of the 1960s, he [Adorno] explained

to me the section on fetish and the subject-object inversion which follows
from it in such a way that I was subsequently able to avoid taking an econo-
mistically foreshortened perspective on Marx’s critique of capitalism.29
Similarly, Jan Hoff explains that,
according to [Hans-Jürgen] Krahl, Adorno’s legacy was the transmission of

the consciousness of emancipation characteristic of the Western Marxism of
the interwar period through his specific reference to the categories of reifica-
tion, fetishisation, mystification and second nature.30
27
Ibid., 107–8.
28
Theodor W. Adorno, “Theodor W. Adorno on ‘Marx and the Basic Concepts of
Sociological Theory’: From a Seminar Transcript in the Summer Semester of 1962,”
Historical Materialism 26, no.1 (2018): 164.
29
Ernst Theodor Mohl, “Ein Reisebericht,” in In Memoriam Wolfgang Jahn: Der ganze
Marx—Alles Verfasste veröffentlichen, erforschen und den ‘ungeschriebenen’ Marx rekonstrui-
eren (Hamburg: Argument Verlag, 2002), 18–19. Quoted after: Hoff, Marx Worldwide, 77.
30
Hoff, Marx Worldwide, 28–29.
192 P. RAUHALA
Another student of Adorno, Hans Georg Backhaus, later noted that

“essentially, all of my writings deal with one and the same theme: the
problem of fetishism.”31
Why was the concept of fetishism so central for the young generation
of readers of Marx from the Frankfurt school? Why is this concept sup-
posed to make a difference between “a traditional” and a “modern,” or a
“non-dogmatic,” reading of Marx’s mature work?
In one important event in the context of the student revolts, in the fully
packed Auditorium Maximum of the Freie Universität in West Berlin in
1967, Herbert Marcuse explained that the one-dimensional society had
managed to integrate the working class. According to Marcuse, the only
opposition left consisted of intellectuals, hippies, and outcasts.32 Only
these groups were able to see behind the thoroughly bureaucratized order,
which was repressing the majority of the people by satisfying their needs
and creating more and more false needs.
Similarly, a key question for Marcuse, in his talk at the Summer school
in Korčula in 1964, had been:
[W]hy should the overthrow of the existing order be a vital necessity for
people who own, or can hope to own, good clothes, a well-stocked larder, a
TV set, a car, a house and so on, all within the existing order?33
Also, in One-Dimensional Man (1964), which appeared in a German

translation by Alfred Schmidt in 1967, Marcuse traces the reasons for the
diminishing revolutionary potential of the Western working class. As
Marcuse puts it, people seemed to “find their soul in their automobile,
hi-fi set, split-level home, [and] kitchen equipment.”34 Marcuse and those
following him suggested that workers were not able to see the true nature
of the system.
What “system” does Marcuse actually address in his critique? It is inter-
esting that Marcuse, more or less explicitly, targets his critique at both
systems—capitalism and state socialism. An indication of this is that he
31
Hans-Georg Backhaus, Dialektik der Wertform: Untersuchungen zur Marxschen
Ökonomiekritik, 2nd ed. (Freiburg: Ça ira, 2011), 34; translation mine.
32
Marcuse, “Ziele, Formen und Aussichten,” 399.
33
Herbert Marcuse, “Socialism in the Developed Countries,” in Marxism, Revolution and
Utopia: Collected Papers of Herbert Marcuse, ed. Douglas Kellner and Clayton Pierce (London
and New York: Routledge, 2014), 6: 179.
34
Herbert Marcuse, One Dimensional Man: Studies in the Ideology of Advanced Industrial
Society, 2nd ed. (London and New York: Routledge, 2002), 11.
also applies the general terms “industrial civilization” and “industrial soci-
ety” more often than the word “capitalism.” Marcuse claims that “[t]ech-
nology serves to institute new, more effective, and more pleasant forms of
social control and social cohesion.” Then, the “totalitarian tendency of
these controls” is “creating similarities in the development of capitalism
and communism.”35 This is a “comfortable, smooth, reasonable, demo-
cratic unfreedom” which “prevails in advanced industrial civilization.”36
Instead of the satisfaction of true needs, industrial society offers “repres-
sive satisfaction.”37 Hence, one possible interpretation of Marcuse’s asser-
tions is that the real social relations remain hidden in both forms of
industrialized and consumerist societies. As Douglas Kellner explains in
the preface to the second edition, the book was “taken up by the emergent
New Left as a damning indictment of contemporary Western societies,
capitalist and communist.”38
Claiming that the workers were alienated in their comfortable everyday
existence can, of course, also be criticized as patronizing, as if the radical
students or university professors who came from middle-class families knew
better what the workers should aspire to. From today’s perspective, it seems
likely that the continually rising standard of living, shortened weekly work
hours, and relatively good working conditions in both German states did,
after all, satisfy many true and vital needs of wage workers.
Even if Marcuse traces some real developments, not all of the working
class was satisfied. Especially in France and Italy, revolting students joined
forces with striking workers. In West Germany, common struggles of stu-
dents and workers were not so common, despite the economic recession,
which had set in by 1966. One reason might have been, along with the
relative weakness of the West German worker’s institutions, as Wolfgang
Abendroth explains, the students’ “Adornian” language.39 It is not easy
to draw practical conclusions from Adorno’s Marxism, and Adorno him-
self warned against doing so. As Alex Demirovic puts it, some of those
who wanted to turn theory into practice reasoned that practice equals
35
Ibid., xlvi.
36
Ibid., 3.
37
Ibid., 9.
38
Douglas Kellner, “Introduction to the Second Edition,” in One Dimensional Man:
Studies in the Ideology of Advanced Industrial Society, 2nd ed. (London and New York:
Routledge, 2002), xi.
39
Abendroth, “Der Weg der Studenten zum Marxismus.”
194 P. RAUHALA
confrontation with the police.40 As Adorno predicted, those who drew

such an extreme conclusion often got disappointed, and therefore,
became turncoats later.41 The distance between the Frankfurtian students,
the forms of their practice, and the workers might explain, in part, why
Marx’s description of how things are not as they immediately appear
appealed to the followers of the Frankfurt school much more than a read-
ing in which class conflict is seen as apparent.
Adorno was an influential teacher of the students. In the transcript
made by Adorno’s student Hans-Georg Backhaus of Adorno’s lecture on
1962, the ideas of fetishism, real abstraction, character mask, and second
nature play a prominent role. In Adorno’s reading of Capital, the main
problem Marx deals with is the constitution of economic facts. Whereas
neoclassical economics aims at a mathematically precise description of
established facts, Marx’s critique, instead, reveals the mechanisms that
constitute these facts in the first place.42
For Adorno, exchange is a process of abstraction, which does not take
place in thought, but in social reality. The parties of exchange, whether
they are conscious of it or not, reduce use values into their labour values
during the process of exchange. Thus, they conduct a real abstraction, a
conceptual operation in reality.43 This abstraction is a result of people’s
own actions in the market, and yet, they encounter it as a coercive external
reality, which becomes more violent, the less people are conscious of its
operation. This abstraction also makes the relations behind the things
appear as properties of these things themselves.44 This is not just an appear-
ance; it is not a question of a false consciousness. The structure of social
reality is such that consciousness really is determined by being.45 Individuals
are at the mercy of the market forces.
40
Alex Demirovic, “Die ‘Ideen von 1968’ und die inszenierte Geschichtslosigkeit,” in
Emanzipation als Versöhnung. Zu Adornos Kritik der »Warentausch«-Gesellschaft und
Perspektiven der Transformation, ed. Iring Fetscher and Alfred Schmidt (Frankfurt am Main:
Verlag Neue Kritik, 2002), 39.
41
Ibid.
42
Adorno, “Theodor W. Adorno on ‘Marx and the Basic Concepts of Sociological
Theory’,” 163. See also Backhaus, “Zur Dialektik der Wertform,” 139.
43
Adorno, “Theodor W. Adorno on ‘Marx and the Basic Concepts of Sociological
Theory’,” 156.
44
Ibid., 159–60.
45
Ibid., 160.
Adorno does not present, however, a circulationist model of the “com-

modity economy.” He emphasizes that not only products are commodi-
fied, but labour power also is sold as a commodity. Workers are free to
change from one employer to the other, but are, in any case, forced to sell
their labour power and to give away unpaid labour to the capitalist class. A
contract without the compulsion to perform unpaid surplus labour is not
an option. Capitalists, for their part, are also at the mercy of external
forces. They do not have personal reasons to strive for profit. They do it
because they carry the character mask of capital.46 Fetishism and the
impersonal form of domination are at the centre of Adorno’s reading
of Capital.
What about the East German readers of Capital? Did they represent
“the traditional reading,” in which the concept of fetishism was neglected?
At the least, it is safe to say that East German readers of Capital did not
neglect this concept.47 For example, Walter Tuchscheerer, in his book
Bevor das Kapital entstand (1968), claims that the concepts of commodity
and money fetishism offer the key to understanding Marx’s theory of val-
ue.48 However, Fred Oelßner, an important politician and the head of the
Institute for Social Sciences at the Academy for Social Sciences of the
central committee of SED (Akademie für Gesellschaftswissenschaften beim
ZK der SED), writes in his preface to the book that the author, in places,
overemphasizes the importance of commodity and money fetishisms in
Capital.49 Oelßner also refers to the examiners of Tuchscheerer’s doctoral
thesis, who criticized the same point.
46
Ibid., 161–2.
47
As also Jan Hoff emphasizes, especially the research carried on a few years later by an
East German researcher of the MEGA project, Thomas Marxhausen, is still worthwhile for
anyone interested in the development of the concept of fetishism in Marx’s thought. See
Thomas Marxhausen, “Die Theorie des Fetischismus im dritten Band des ‘Kapitals’,” in
Beiträge zur Marx-Engels Forschung 25 (1988): 209–43; Thomas Marxhausen,
“Fetischcharacter der Ware,” in Historisch-Kritisches Wörterbuch des Marxismus, ed. Wolfgang
Fritz Haug (Hamburg: Argument Verlag, 1999), 4: 343–54.
48
Walter Tuchscheerer, Bevor das Kapital entstand. Die Herausbildung und Entwicklung
der ökonomischen Theorie von Karl Marx in der Zeit von 1843 bis 1858, ed. Gerda Tuchscheerer
(Berlin: Akademie-Verlag, 1968), 373.
49
Fred Oelßner, “Vorwort,” in Bevor das Kapital entstand: Die Herausbildung und
Entwicklung der ökonomischen Theorie von Karl Marx in der Zeit von 1843 bis 1858, ed. Gerda
Tuchscheerer (Berlin: Akademie-Verlag, 1968), 15.
196 P. RAUHALA
Tuchscheerer’s book is certainly one of the most important East German

books on how Capital came about. Later, one of the most important fig-
ures of the Frankfurtian student movement and of the new readings of
Capital, Ernst Theodor Mohl, calls the chapter of Tuchscheerer’s book
that traces the development of Marx’s theory of fetishism “admirable.” 50
This is because it “avoids the economistic foreshortening characteristic of
previous discussion in the East,” and instead, highlights “the qualitative,
socially critical aspects of Marx’s doctrine of value.”51
Tuchscheerer’s book appeared in the GDR during the Karl Marx jubi-
lee in 1968 and was published simultaneously in FRG. The book probably
influenced the new readings of Capital in the West as well,52 as did prob-
ably another important book, The Story of a Great Discovery (Istorii a
odnogo velikogo otkrytii a K Marksa: k sozdanii u “Kapitala”, 1965) by
Vitaly Vygodsky, translated from Russian into German in the GDR to
honour the centennial anniversary of Capital in 1967. The book deals
with Marx’s different manuscripts during the course of his research from
1850 until 1863. In the beginning of his book, Vygodsky notes that Marx
overcame the fetishism (in addition to the empiricism and ahistoricism)
typical of the bourgeois political economy very early, by explaining that
the objective appearances of human labour are essentially forms of the
appearance of the relations between human beings.53 In Poverty of
Philosophy (1847), Marx “formulated the most important theses of his
economic doctrine: The relations of production are not, as in the opinion
of bourgeois economists, relations between things but relations between
people with reference to things,” Vygodsky reminds readers.54 Thus,
Vygodsky by no means ignores the centrality of fetishism in Marx’s cri-
tique of political economy. However, even if the concept of fetishism
gained some attention in the East German discussions, the Frankfurtian
way of elaborating on it was a distinctively Western phenomenon.
50
Ernst Theodor Mohl, “Germany, Austria and Switzerland,” in Karl Marx’s Grundrisse:
Foundations of the Critique of Political Economy 150 Years Later, ed. Marcello Musto
(London and New York: Routledge, 2008), 194.
51
Ibid.
52
Rolf Hecker, ”Hans-Georg Backhaus: Die Dialektik der Wertform,” Utopie kreativ 94
(August 1998): 90.
53
Vitaly Vygodsky, The Story of a Great Discovery, trans. S.V. Salt (Tunbridge Wells: Abacus
Press, 1974), 20.
54
Ibid. See also, Karl Marx, The Poverty of Philosophy, in MECW (London: Lawrence &
Wishart, 1976), 6: 165.
V. An Encounter Between East and West

In a talk at the conference organized for the centennial of Capital, 100
Jahre das Kapital in Frankfurt am Main, the translator of Marcuse’s One-
Dimensional Man and Adorno’s assistant, Alfred Schmidt, presented an
influential interpretation of Marx’s method in Capital. According to Jan
Hoff, “Schmidt’s paper represents a kind of ‘birth document’ for what was
a new phenomenon in postwar West Germany: the intensive and sophisti-
cated engagement with the critique of political economy.”55
Given that the Neue Marx Lektüre is known as a distinctively Western
way of reading Marx, it is noteworthy that in the context of Schmidt’s pre-
sentation, an interesting discussion between Schmidt and an East German
delegate took place. This discussion helps to examine why the concept of
fetishism was so central in the West, and at the same time, perhaps caused
some unease in the East. This conference was an exceptional event in the
sense that the organizer, the Institute of Political Science of the Goethe
University of Frankfurt, headed by Iring Fetscher, had invited a very het-
erogeneous group of Marxist and non-Marxist researchers—among them,
an official delegation consisting of the top political economists of GDR.
Schmidt’s reading of Capital differed fundamentally from the East
German reading of the work. For Schmidt, a sense of all of Marx’s catego-
ries is critical. The laws of the political economy are an expression of such
a society in which people do not yet control their own societal forces.
Schmidt explained that the objectified appearances of human labour are
products of our activity, forming a coercive, objective second nature.
Different from capitalism, in communism, there would not be any forces
or conditions existing independently of us, Schmidt announced.56
In other words, this philosopher claimed that all of the categories
researched by Marx—commodities, money, capital, and wage—emerge
from our own separate and non-reflected actions and belong exclusively to
capitalism. Then, under socialism, Capital would be a useless book. From
Schmidt’s perspective, dialectical materialism was by no means an onto-
logical hypothesis of the structure of reality, but instead, a description of
the state of affairs in a capitalist society, in which thought is determined by
Hoff, Marx Worldwide, 81.

55
Alfred Schmidt, “Zum Erkenntnisbegriff der Kritik der politischen Ökonomie,” in

56
Kritik der politischen Ökonomie heute: 100 Jahre ‘Kapital’, ed. Walter Euchner and Alfred
Schmidt (Frankfurt am Main and Wien: Europäische Verlagsanstalt and Europa Verlag,
1968), 57.
198 P. RAUHALA
being. People face the objectified appearances of their own labour as inde-
pendent forces, and their own actions result in the laws of the economy,
reminiscent of natural laws.
Schmidt also expressed the same idea in a collection of essays titled
Folgen einer Theorie, which appeared on the centennial of Capital: eco-
nomic determinism applies as long as humans do not control their own
societal forces.57 Ingo Elbe sums up Schmidt’s conclusion: Marx’s mes-
sage was not an automatism of liberation, but liberation from the automa-
tism of an irrational mode of socialization.58
Karl Bichtler, the head of the Department of Political Economy of
Socialism in the East German Academy of Sciences, criticized Schmidt’s
basic premise, saying that as an aggregate result of the intersecting actions
of individual economic actors, certain economic laws emerge. This is why
we need to sit in this conference, Bichtler quipped.59 In other words, for
him, it was clear that laws and forces that are independent of economic
actors still existed not only in capitalism, but also in state socialism.
Why did Alfred Schmidt’s reading of Capital seem so problematic to
Bichtler? In the Eastern bloc, every student of political economy had to
read Capital, even if the book was not read as a manual for a planned
economy. Most of Marx’s categories and laws were considered specific to
capitalism, but some very general laws were thought to operate in social-
ism as well. In the official celebrations of Capital, organized two weeks
earlier in East Berlin, the Head of State Walter Ulbricht ascertained that
the laws included the law of value, the law of the economy of time, and the
so-called law of the congruence of the forces and relations of production.60
The law of value was considered to apply because some means of pro-
duction, most of the raw materials, intermediate goods, and consumption
57
Alfred Schmidt, “Über Geschichte und Geschichtsschreibung in der materialistischen
Dialektik,” in Folgen einer Theorie: Essays über ›das Kapital‹ von Karl Marx, ed. Ernst
Theodor Mohl (Frankfurt am Main: Suhrkamp, 1967), 111.
58
Ingo Elbe, Marx im Westen. Die neue Marx-Lektüre in der Bundesrepublik seit 1965, 2nd
rev. ed. (Berlin: Akademie Verlag, 2010), 68.
59
See Kritik der politischen Okonomie heute. 100 Jahre ‘Kapital’, ed. Walter Euchner and
Alfred Schmidt (Frankfurt am Main and Wien: Europäische Verlagsanstalt and Europa
Verlag, 1968), 56.
60
Walter Ulbricht, Die Bedeutung des Werkes “Das Kapital” von Karl Marx für die
Schaffung des entwickelten gesellschaftlichen Systems des Sozialismus in der DDR und den
Kampf gegen das staatsmonopolistische Herrschaftssystem in Westdeutschland (Berlin: Dietz
Verlag, 1967).
goods were produced as commodities for exchange.61 Unlike in capital-

ism, even if the products of labour appeared as commodities and money,
the utilization of the commodities and money as capital was to be prevent-
ed.62 Still, the law of value, it was believed, had not lost its validity.
However, commodity–money relations were considered subordinate to
the socialist relations of production.63 Whereas the determining character-
istic of commodity production is the anarchistic regulation of the social
production ex post, via the functioning of the law of value, in the state
socialism, it was considered the task of the central planners. By the 1960s,
however, it had become evident that the economy was not under the con-
trol of the central planners, partly because they had to base their decisions
on incomplete information.64 Companies did not always give correct
information to the central planners, because it was not in their own best
interests.65 This is because the directors of the companies wanted to secure
as many resources and encumber as few obligations for their companies as
possible. The interests of the companies, and of individuals, did not coin-
cide with the interests of the rest of the society—“yet,” as was often added.
Hence, the relations between producers were not transparent, so to say,
which was one of the challenges of centralized planning.
The problems related to the diverging interests and incomplete infor-
mation given to planners were among the most important reasons reform
was needed, which GDR realized in the form of the New Economic
System, launched in 1963. New Economic System aimed to improve the
productivity of labour, the utilization of material resources, and the system
of planning by introducing market elements in the form of enforcing
monetary categories, increasing the independence of companies, and pro-
viding economic incentives.
Against this backdrop, it is easy to understand why Bichtler criticized
Schmidt’s presentation. From Bichtler’s perspective, in a complex modern
society, certain economic laws emerge from the actions of individual
61
N. A. Zagalow et al., Lehrbuch politische Ökonomie: Sozialismus, trans. Hermann Mertens,
Ingrid Stolte, and Günter Wermusch (Frankfurt/Main: Verlag Marxistische Blätter, 1972),
252ff.
62
Ibid., 62.
63
Ibid., 256.
64
See, for example, Elmar Altvater, “Rationalisierung und Demokratisierung. Zu einigen
Problemen der neuen ökonomischen Systeme im Sozialismus,” Das Argument 39 (1966), 286.
65
Jiří Kosta, Jan Meyer and Sibylle Weber, Warenproduktion im Sozialismus; Überlegungen
zur Theorie von Marx und zur Praxis in Osteuropa (Frankfurt am Main: Fischer Taschenbuch
Verlag, 1973), 159.
200 P. RAUHALA
producers and consumers. The task of economics was to understand and

make use of these laws for the purpose of achieving political goals. Getting
these laws under control was not a simple task, nor was the abolishment of
such laws in a complex modern system of production and exchange.
Schmidt’s answer to Bichtler’s critique was that Bichtler wrongly con-
siders the objectivity of the laws of political economy as a positive aspect
of Capital; the objectivity of these laws was the object of Marx’s critique.
One should not fetishize in theory what is already fetishized in reality.66
Schmidt also got support from Oskar Negt, another important Frankfurtian
theorist, who insisted that the scientific (Naturwissenschaftlichen) con-
cepts—meaning the objective laws of the economy—in Marx’s work have
to be understood with their disappearance in communism in mind.67
Hence, one aspect of the disagreement could be that Marx’s concept of
fetishism—not so much fetishism of capital, but fetishism of commodities
and money—enables a critique of the Eastern reading of Marx, and of
some aspects of the state socialist society. Ernest Mandel also explicated
such a critique in the conference. Mandel inquired of Bichtler whether
fetishism, alienation, and ideology necessarily escort the state socialist vari-
ant of commodity production.68
The abolition of commodities and money was surely far from the reali-
ties of the GDR at the time. The country was struggling with much more
concrete and acute problems. However, the critique presented by Western
Marxists is interesting from the perspective of both theory and practice.
With regards to social reality, state socialism seemed to be far from how
Marx had envisioned post-capitalist society. A top-down order and lack of
democracy and freedom of speech characterized the state socialism of the
twentieth century. In addition, the state socialism seemed to share some
core values with the Western capitalist societies of the time. In both sys-
tems, productionism and consumerism reigned. The workers did not have
control over production and were offered a subordinate role in the work-
place. Consent for the top-down order was bought with the promise of a
rising standard of living and increasing possibilities to consume. In this
66
See Kritik der politischen Ökonomie heute, 57.
67
Ibid., 56.
68
Ibid., 343–4.
respect, Marcuse’s pairing of the two systems traces something interesting,

even if his poetic critique does not offer a precise analysis of either one.69
From the perspective of Frankfurtian readers of Capital, East Germans
seemed to fetishize the socially specific economic forms (such as com-
modities, money, profit, interest, and wage) and laws (such as the law of
value) presented by Marx in Capital. In the opinion of the Frankfurtians,
Marx used these categories exclusively in a critical sense, including the
categories of commodities and money. In the postscript from the editors
of the conference publication 100 Jahre Kapital, Walter Euchner and
Alfred Schmidt write that economists from East Germany formulate
Marx’s critique of political economy as a positive theory of economics,
and therefore, the critical sense of Marx’s project tends to get lost.70 In the
same spirit, the “father” of the Neue Marx Lektüre Hans Georg Backhaus
claims later that as Marxism-Leninism understood Marx’s political econ-
omy affirmatively as a positive political economy, it functioned as a legiti-
mation of the new system of domination.71 Different from this, critical
theory understands Marx’s critique negatively, as a critique of fetishized
forms. In other words, for the East German economists, it was clear that
state socialism was essentially a commodity-producing society; for the
Frankfurtians, instead, the term “socialist commodity production” did not
make any sense.72
As readers of Capital, Bichtler and Schmidt operated in very different
social realities. The questions they sought to answer with the help of the
book were different. In the East, economists were mainly considered com-
petent commentators of Capital, whereas in the West, Marxian theory was
69
See Wolfgang Fritz Haug, “Das Ganze und das ganz Andere,” in Antworten auf Herbert
Marcuse, ed. Jürgen Habermas (Frankfurt am Main: Suhrkamp, 1968), 50–72.
70
Walter Euchner and Alfred Schmidt, “Nachwort der Herausgeber,” in Kritik der poli-
tischen Ökonomie heute: 100 Jahre ›Kapital‹, ed. Walter Euchner and Alfred Schmidt
(Frankfurt am Main and Wien: Europäische Verlagsanstalt and Europa Verlag, 1968), 359.
71
Hans-Georg Backhaus, “Über den Doppelsinn der Begriffe “Politische Ökonomie” und
“Kritik” bei Marx und in der Frankfurter Schule,” in Wolfgang Harich zum Gedächtnis: eine
Gedenkschrift in zwei Bänden, ed. Stefan Dornuf und Reinhard Pitsch (München: Müller &
Nerding Verlag, 2000), 2: 19. Similar views are expressed by Heinrich, “Relevance and
Irrelevance,” 54, and Postone, Time, Labor and Social Domination, 170–1.
72
See Backhaus, Hans-Georg, “Materialien zur Rekonstruktion der Marxschen
Werttheorie,” in Gesellschaft. Beiträge zur Marxschen Theorie, eds. H. G. Backhaus, G. Brandt,
and G. Dill et al. (Frankfurt am Main: Suhrkamp Verlag, 1978), 11: 59.
202 P. RAUHALA
rarely studied in economic departments. While Bichtler was interested in

finding solutions to the practical problems of the state socialist planned
economy, Schmidt was not at all concerned with such issues. Moreover,
the Cold War drove the perspectives of each side ever farther away from
each other.
The mainstream of the East German reading of Capital was grounded
on very specific historical circumstances and on the practical problems of
a centralized planned economy. Similarly, reading Capital in the context
of the 1968 generation of the Frankfurt school and the anti-authoritarian
wing of the student movement was peculiar. For the radicalized students,
reading Capital through the concept of fetishism made much more sense
than a more traditional reading. The historically specific societal condi-
tions of the divided Germany during the years of the Cold War are, how-
ever, no longer current. Therefore, it is time to reconsider both readings,
including the now dominant Western interpretation.
VI. Conclusion
There were many good reasons for the emphasis on fetishism, second
nature, and real abstraction in West Germany around 1968. First, in the
FRG, the readers of Capital were not economists, but philosophers
acquainted with the “Western Marxist” discourse of alienation and reifica-
tion. Even if Marxist theory entered the West German academy during the
1960s, mainly the social sciences and humanities departments tolerated it.
Second, Marx’s theory of fetishism—not related to capital and wage
labour, but to commodities and money—offered tools for the critique of
both forms of the “industrial society,” capitalism and state socialism.73
Third, and most important for emphasis on fetishism might be that around
1968, students arose as an independent force in society. Their revolution-
ary mood clashed with the objective conditions of the working class. Until
the late 1960s, there had been a long period of growth, and not only capi-
tal but also labour had benefitted. The globally “regulating capitals,” that
is, the most competitive capitals, were—in many cases—located in West
Germany. These companies could pay much higher wages than the com-
panies in other countries were able to pay.74
73
See Postone, Time, Labor, and Social Domination, 7.
74
See Shaikh, Capitalism, Competition, Conflict, Crisis, 265ff. I thank Miika Kabata for
this comment.
In such exceptional historical conditions, focusing on the problem of

fetishism was, for many radicals, more interesting than focusing on the
theory of surplus value. These reasons are less weighty today, because the
move to shortening of the work day has stagnated, the connection between
the growth of productivity and of wages has been broken, and the welfare
state is under attack. A more traditional reading of Capital, focusing on
the theory of surplus value, provides better justification than the reading
of the 1968 generation to explain why the length of the work day is a
question of life and death for the representatives of capital today.
Moreover, what remains to be done elsewhere is to demonstrate that a
more “traditional” reading of Capital, focusing on the theory of surplus
value, not only makes more sense in present times, but also is more accurate.
The main targets of Marx’s critique are bourgeois relations of production and
how these relations are portrayed in the bourgeois political economy, and not
the fetishism of commodities or money as such. Fetishisms of commodities
and money are, to a lesser or greater degree, present wherever a market exists.
Therefore, it might make sense to apply the concept of fetishism of com-
modities and money to the state socialism of the twentieth century as well.
Fetishism of capital is, however, another story. Fetishism of capital is
related to the specifically capitalist relations of production—the relation-
ship between capital and wage labour. Only in the beginning of the first
volume of Capital does Marx talk about fetishism of commodities and
money. From the fourth chapter of volume I onwards, Marx discusses the
bourgeois relations of production, and from this chapter on, he links the
concept of fetishism to the capital relation—that is, to the theory of sur-
plus value—and the theme of fetishism runs through all three volumes.
The problem of fetishism of capital is related to the constant and variable,
fixed and circulating capital, to the production of relative surplus value, to
the wage form, to the yearly rate of surplus value, to the rate of profit, and
finally, to the commercial profit, interest, and land rent. Thus, what
remains to be done elsewhere is to demonstrate the meaning of the con-
cept of fetishism in all three volumes of the book, and how, even if emi-
nently central, the concept of fetishism gains its proper meaning only in
connection to the theory of surplus value. In capitalism, fetishism serves to
hide the fact that the source of all value is labour, and thus, covers exploi-
tation of wage labour, even if the social relations immediately appear as
free and equal market exchanges.
There are, however, positions in the structure of production and
exchange, where the social relations are much less covered by the objective
204 P. RAUHALA
appearances of these relations, by the commodity form, money form, wage

form, or by the forms of profit, rent, and interest. These positions are the
positions of the employer and the employee, in the “fierce struggle over
the limits of the working day.”75 As Marx goes through the early legisla-
tion restricting the length of the work day, he quotes factory inspectors
who talk about “‘small thefts’ of capital from the labourer’s meal and
recreation time.”76 Marx comments on this by saying that, “it is evident
that in this atmosphere the formation of surplus value by surplus labour, is
no secret.”77 In the struggle over the length of the work day, the real rela-
tions are laid bare.
Today, the struggle over the length of the work day is once again appar-
ent, even in Germany. Marx’s theory of surplus value makes much more
sense today than it did 50 years ago in the globally privileged FRG. In the
changed circumstances, the “traditional” reading does not seem quite so
antiquated anymore, but instead, seems plausible, even common sense.
Therefore, Jan Hoff and other followers of Alfred Schmidt should recon-
sider “the antiquated dogmas of traditional Marxism.” The only reason
for this is that the antiquated form of society was restored in the decades
following 1968.
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Verlag Marxistische Blätter, 1972.
PART II
On the Critique of Political Economy

Marx’s Observations on the
Classical Theory of Interest
Jan Toporowski
I. Introduction
Despite its incompleteness, Marx’s discussion of interest represents one of
the first serious responses to the Ricardian theory of interest. It contains
insights of great value for understanding how his vision of capitalism and
finance was evolving and the direction in which it was evolving.
Section “Ricardo’s Theory of Interest” examines Ricardo’s theory of
interest, enunciating what may be referred more broadly as the classical
theory of interest. Section “Marx on Interest” describes Marx’s critical
reassessment of that theory. Despite his departure from the classical theory
of interest, Marx’s theory remained located in the “classical” capitalism of
his time, when finance was external to the capitalist system of reproduc-
tion, in the sense that capitalist finance was acquired through primitive
accumulation, or borrowed from banks less involved in intermediation
This chapter arises out of discussions with Anwar Shaikh and Riccardo Bellofiore,
neither of whom is responsible for the remaining errors in it.
J. Toporowski (*)
SOAS University of London, London, UK

212 J. TOPOROWSKI
between capitalists. In Section “Interest in a “Pure Capitalist” Economy:

A “Transfer” Theory of Interest”, the theory is extended beyond
Hilferding to modern finance capital and the changed function of the rate
of interest when capitalist financing is internal to the capitalist system of
reproduction.
II. Ricardo’s Theory of Interest

The rate of interest plays a subsidiary part in David Ricardo’s political
economy. In his Principles of Political Economy, the discussion of interest
is placed towards the end of the book, well after his exposition of the prin-
ciples of production and distribution. His key doctrine—that the rate of
interest is ultimately determined by the rate of profit—even more sharply
distinguishes his monetary theory from the modern monetary theory
descended from Wicksell. It is in the light of Wicksell’s theory that
Ricardo’s is too often interpreted.
Ricardo had first put forward the doctrine that that rate of interest is
determined by the rate of profit in 1810 in his observations on “The High
Price of Bullion,” where he denied what came to be the later Keynesian or
neoclassical notion that the rate of interest depends on the demand for
money, relative to its supply, or, in Ricardo’s words, on “the abundance of
paper money; that if it were too abundant, interest would fall, and if not
sufficiently so, interest would rise.” He went on: “It can, I think, be made
manifest, that the rate of interest is not regulated by the abundance or
scarcity of money, but by the abundance or scarcity of that part of capital,
not consisting of money.” As evidence to support this, Ricardo quoted a
passage from Chapter 2, Book II of Adam Smith’s The Wealth of Nations
in which Smith argued that money is not an input into production and
serves only to circulate the inputs of production. Elsewhere, in chapter 4
of that book, Smith had argued that the extraction of gold from newly
discovered mines in North America had greatly increased the quantity of
money, but did not lower the rate of interest. Ricardo concluded that “the
rate of interest… [is] regulated by the profits on the employment of capi-
tal, and not by the number or quality of the pieces of metal, which are
used to circulate its produce.”1
1
David Ricardo, The High Price of Bullion: A Proof of the Depreciation of Bank Notes, in The
Works and Correspondence of David Ricardo, Volume III, Pamphlets and Papers, 1809–1811,
ed. Piero Sraffa (Cambridge: Cambridge University Press, 1951), 88–9.
MARX’S OBSERVATIONS ON THE CLASSICAL THEORY OF INTEREST 213
In the same year, 1810, in his letter to the editor of the Morning
Chronicle concerning Sir John Sinclair’s pamphlet criticizing the Bullion
Report, Ricardo took issue with Sinclair’s notion that an increase in the
circulation of bank notes would reduce the rate of interest. Sinclair had
written that if the note issue and coinage circulating in Britain of £40 mil-
lion were reduced, the rate of interest would rise: “how much would not
the rate of interest be cramped? Whereas if … [the note issue and coinage
were raised] bearing an interest of 4 per cent and the whole of it actively
employed in various industrious pursuits, it cannot be doubted, that the
prosperity of the country would increase with a celerity, and be carried to
a height, which would not otherwise have been attainable.” Ricardo com-
mented, “If this reasoning be just, how incalculable would the prosperity
of the country become, if the Bank would increase their notes to 100 mil-
lions and lend them at 3 per cent.”
Ricardo went on:
If Sir John will take the trouble to consult the 4th chap. 2d book, of
Dr A. Smith’s celebrated work, he will there see it undeniably demonstrated,
that the rate of interest for money is totally independent of the nominal
amount of the circulating medium. It is regulated solely by the competition
of capital, not consisting of money. The real amount of the circulating
medium, with the same amount of commerce and confidence, must always
be the same; it may, indeed, be called 100 million, or 20 millions, but the
real value of the one or the other sum must be the same.2
In his chapter in the Principles on currency and banks, Ricardo rein-

forced this view:
The whole business, which the whole community can carry on, depends on
the quantity of its capital, that is, of its raw material, machinery, food, ves-
sels, etc. employed in production. After a well-regulated paper money is
established, these can neither be increased nor diminished by the operations
of banking. If then, the State were to issue the paper money of the country,
although it should never discount a bill, or lend one shilling to the public,
there would be no alteration in the amount of trade; for we should have the
same quantity of raw materials, of machinery, food and ships; and it is prob-
able, too, that the same amount of money might be lent, not always at 5 per
cent. Indeed, a rate fixed by law, when that might be under the market rate,
2
Ibid., 143.
214 J. TOPOROWSKI
but at 6, 7, or 8 per cent., the result of the fair competition in the market
between the lenders and the borrowers.3
Ricardo expanded on this in a chapter on “The Effects of Accumulation

on Profits and Interest,” confusingly placed earlier in the Principles, where
it is chapter XXI and separated from chapter XXVII, “On Currency and
Banks,” by chapters on “Bounties on Exportation …,” “On Bounties on
Production,” and Adam Smith’s doctrine on Rent, “On Colonial Trade,
and On Gross and Net Revenue.” In that earlier chapter, Ricardo conceded
that the rate of interest may deviate temporarily from the rate of profit: “The
rate of interest, though ultimately and permanently governed by the rate of
profit, is however subject to temporary variations from other causes.”4
Those causes could be a shortage of sales revenue in the case of a manufac-
turer, or even credit inflation: “If by the discovery of a new mine, by the
abuses of banking, or by any other cause, the quantity of money be greatly
increased, its ultimate effect is to raise the price of commodities in propor-
tion to the increased quantity of money; but there is always an interval,
during which some effect is produced on the rate of interest.”5
Ricardo had little time for the Keynesian notion that emerged a century
later that the long-term rate of interest, rather than the short-term rate in
the money markets, is the one relevant to capital accumulation: “The price
of funded property [i.e., the yield on bonds] is not a steady criterion by
which to judge of the rate of interest.”6 This is because in wartime, the
stock market is “loaded” by the funding operations of the government,
and in peacetime, is so boosted by the operations of sinking funds (to pay
off the national debt) and the demand of risk-averse investors, depressing
“the rate of interest on these securities below the general market rate.”7
Different rates of interest are payable according to the term of the bond.
At the same time, the quarterly interest payments on the national debt
regularly squeeze the money market, causing sharp increases in the rate of
interest in that market.
3
David Ricardo, On the Principles of Political Economy and Taxation, in The Works and
Correspondence of David Ricardo Volume I, ed. Piero Sraffa and Maurice Dobb (Cambridge:
Cambridge University Press, 1951), 365. The Usury Laws at the time when Ricardo was
writing restricted the rate of interest to a maximum of 5 per cent.
4
Ibid., 297.
5
Ibid., 298. See also G. L. S. Shackle, “Foreword,” in Value Capital and Rent, by Knut
Wicksell (London: George Allen and Unwin, 1954).
6
Ibid.
7
Ricardo, On the Principles of Political Economy and Taxation, 298.
In an intriguing footnote, Ricardo took issue with Jean-Baptiste Say

over a question that had bothered French political economy since the days
of the Physiocrats. Like François Quesnay and Adam Smith, Say had
deplored the offering of public loans at rates of interest in excess of the 5
per cent that agriculture, manufacturing, and commerce could afford,
drawing capital away from productive employment in those activities.
Ricardo dismissed such worries:
To the question ‘who would lend money to farmers, manufacturers and

merchants, at 5 per cent per annum, when another borrower, having little
credit, would give 7 or 8 per cent?’ I reply, that every prudent and reason-
able man would. Because the rate of interest is 7 or 8 per cent there, where
lender runs extraordinary risks, is this any reason that it should be equally
high in those places where they are secured from such risks? M. Say allows,
that the rate of interest depends on the rate of profits; but it does not, there-
fore, follow, that the rate of profits depends on the rate of interest. One is
the cause, the other the effect, and it is impossible for any circumstances to
make them change places.8
III. Marx on Interest
Marx’s first reflections on the rate of interest appear in the notes that were
subsequently published as Part III of Theories of Surplus Value. In an
Addenda entitled “Revenue and It’s Sources. Vulgar Political Economy,”
Marx argued that with capitalist production, a new type of financing
emerges, which he called “interest-bearing capital.” This acquires the char-
acter of a fetish, an existence apparently independent of capitalist produc-
tion. Marx wanted to challenge this by arguing that in industrial capitalism,
the interest is paid from surplus value. On this basis, the polemics against
interest of contemporary critics such as Proudhon, attributing the evils of
capitalism to excessive interest or usury, were “fetishistic.” Usury, Marx
argued, was a feature of mercantile capitalism, rather than industrial capital-
ism.9 In industrial capitalism, interest circulates between capitalists in the
sense that an individual capitalist can decide whether to lend his (money)
capital out at interest or employ it himself in the process of production.10
8
Ibid., 297–300. See also Jan Toporowski, Theories of Financial Disturbance: An
Examination of Critical Theories of Finance from Adam Smith to the Present Day (Cheltenham:
Edward Elgar, 2005), 17–25.
9
Karl Marx, Theories of Surplus Value Part III (Moscow: Progress Publishers, 1971), 487.
10
Ibid., 477–8.
216 J. TOPOROWSKI
In his notes, therefore, Marx’s main point was to emphasize that,

under capitalism, interest acquires a new social and economic signifi-
cance because it is now paid out of surplus value, which requires the
circulation of money through industrial production. However, his notes
are inconclusive and leave at least two ambiguities. First of all, there is
the ambiguity over whether interest is paid out of hoards of accumulated
profits—in which case, the current flow of profits forms less of a con-
straint on interest payments. Indeed, if the hoard is large enough, then
current profitability may be unnecessary, and the requirement that the
rate of profit should be at least equal to, if not greater than the rate of
interest, proves unnecessary. The second ambiguity arises in the account-
ing for interest payments. If interest is paid between capitalists, then an
individual capitalist’s income no longer just depends on the “profit of
enterprise” that is left over after payment of interest on the money capi-
tal borrowed. The individual capitalist’s income must also include the
interest received on money capital lent out earlier to other capitalists.
Marx’ admission that the capitalist may decide to be a money capitalist
or a functioning capitalist already concedes that individual capitalists are
not irrevocably committed to one or the other means of earning money
from their money capital. It, therefore, suggests that more recent Marxist
attempts to revive the critique of usury, by separating out a rentier capi-
talist class from a productive capitalist class oppressed by high interest,
may be vulnerable to this kind of fetishistic thinking. But to break out of
these ambiguities, it is necessary to break too with the classical theory
of interest.
Marx attempted to deal with these ambiguities in Vol. III of Capital.
Here, he was evidently influenced by the dissent of Thomas Tooke, and to
a lesser extent, John Stuart Mill from the real interest rate theory of David
Ricardo and Adam Smith. Ricardo had argued that the rate of interest is
“ultimately and permanently governed by the rate of profit.”11 Tooke and
Mill had argued that the rate of interest was disturbed by too many mon-
etary factors to make this a reliable relationship. Tooke put forward the
idea that it was the average rate of interest that was under the influence of
the rate of profit and “… the dissenting positions of Tooke and J.S. Mill
on the interest-profit relationship in the 1820s heavily influenced Marx in
developing a conception of the rate of interest as an autonomous variable
in the sense of being determined by forces independent of the rate of
11
Ricardo, On the Principles of Political Economy and Taxation, 297.
profit.”12 Amid the “disorderly mass of notes, comments and extracts,”

Marx’s editor Friedrich Engels found the key chapters on the rate of inter-
est “in the main, complete.”13 In the draft that became Volume III of
Capital, and which he then intended to revise, Marx concluded that it was
the average rate of interest over a span of years that was determined by the
average rate of profit. But this does not mean that all firms earn an average
rate of profit—something worth bearing in mind at a time when many
Marxist economists attach crucial importance to aggregate, or average,
rates of profit. In fact, there is a spread of profit rates at any one time and
a spread of interest rates.14 In that sense, there was no “natural rate of
interest” or marginal profit on capital, as enunciated by Joseph Massie and
later by Knut Wicksell. “In any event the average rate of profit is to be
regarded as the ultimate determinant of the maximum limit of interest.”15
Moreover, in times of speculation, interest can be paid out not out of
profit, but out of borrowed capital, and such Ponzi financing, as Minsky
would later call it, may be sustained for a while. However, such borrowing
to pay interest is usually the prelude to crisis. This borrowing raises the
rate of interest and, as Marx put it, transforms “bankrupt swindlers” into
“respectable and solvent capitalists.”16
With these exceptions, however, Marx was adamant that the rate of
interest is paid out of current profits. He quoted the Economist magazine
of January 22, 1853 “The relation between the sum paid for the use of
capital and the capital expresses the rate of interest as measured in money.”
And “The rate of interest depends 1) on the rate of profit; 2) on the pro-
portion in which the entire profit is divided between the lender and the
borrower.” Then, quoting from Joseph Massie’s An Essay on the Governing
Causes of the Natural Rate of Interest, “If that which men pay as interest
for the use of what they borrow, be a part of the profits it is capable of
producing, this interest must always be governed by those profits… The
natural rate of interest is governed by the profits of trade to particulars.”17
Marx went further along Ricardian lines, although it is not clear whether
he was here citing the classical view of interest that he proposed to criticize,
12
Matthew Smith, Thomas Tooke and the Monetary Thought of Classical Economics
(Abingdon, UK: Routledge, 2011), 212.
13
Fredrick Engels, “Preface,” in MECW (London: Lawrence & Wishart, 1998), 37: 6.
14
Karl Marx, Capital, Vol. III, in MECW (London: Lawrence & Wishart, 1998), 37:
365–6, 512.
15
Ibid., 360.
16
Ibid., 513–15.
17
Ibid., 358–9.
218 J. TOPOROWSKI
or giving his own view: “we shall find that a low rate of interest generally
corresponds to periods of prosperity or extra profit, a rise in interest rates
separates prosperity and its reverse, and a maximum of interest up to a point
of extreme usury corresponds to the period of crisis.”18 Nevertheless, Marx
went on, “the rate of interest also has a tendency to fall quite independently
of the fluctuations in the rate of profit” due to the expansion of the class of
rentiers with surplus money savings. Moreover, “the development of the
credit system and the attendant ever-growing control of industrialists and
merchants over the money savings of all classes that is effected through the
bankers, and the progressive concentration of these savings in amounts
which can serve as money capital, must also depress the rate of interest.”19
Marx’s own view was stated in the next passage about the average rate
of interest, which he linked with the long-term rate of interest. “To deter-
mine the average rate of interest we must (1) calculate the average rate of
interest during its variations in the major industrial cycles; and (2) find the
rate of interest for investments that require long-term loans of capital.”
This long-term rate, Marx thought, was more or less stable.20 This led
Marx to conclude that there is
no such thing as a natural rate of interest in the sense in which economists

speak of a natural rate of profit and a natural rate of wages… unlike the
general rate of profit, there is, on the one hand, no general law to determine
the limits of the average rate of interest as distinct from the continually fluc-
tuating market rates of interest, because it is merely a question of dividing
the gross profit between two owners of capital under different title; on the
other hand, the rate of interest—be it the average or market rate prevalent
in each particular case—appears as a uniform, definite and tangible magni-
tude in a quite different way from the general rate of profit.21
In addition to identifying (in passing) the importance of the long-term

rate of interest, which was put forward 70 years later by Keynes as the key
financial instrument for b usiness investment, Marx also anticipated
Keynes’s “euthanasia of the rentier”—the notion that a permanently low
rate of interest would finally induce business to invest. In Marx’s version,
a reduction of the rate of interest to zero would turn the money capitalists
18
Ibid., 360.
19
Ibid., 361–2.
20
Ibid., 362, 366. In the twentieth century, Keynes and Kalecki argued that it was this
long-term rate of interest that is relevant to business investment.
21
Ibid., 362, 364–5, also 366–8.
into functioning capitalists in order to earn a positive return on their

money.22 But that, in turn, implies that money and functioning capitalists
are more or less the same individuals or institutions. Marx’s repeated
equation of equivalence between the average rate of interest and the aver-
age rate of profit reinforces the idea that capitalist interest is paid from
surplus value in general, but not necessarily from the surplus value pro-
duced at the time of the interest payment.
Here, it is worth recalling Joseph Schumpeter’s criticism of the doc-
trine that lay at the origins of the Ricardian theory of interest, Nicholas
Barbon’s notion, enunciated in 1690, that interest is the “Rent of the
Wrought or Artificial Stock”—namely, the capital stock.23 For Schumpeter,
this led to the nineteenth-century classical view that economic activity is
determined by “real” factors, resources, and commodities, over which
money is a mere veil. He observed: “Thus we easily slip into a position that
may be characterized by the equivalent propositions that the business firm
earns interest or that the lender receives profit—not as would seem more
natural to the unprejudiced mind, an income sui generis of which profit is
merely the most important course.”24
There remains the second ambiguity referred to at the start of this sec-
tion, the accounting for the interest paid and its receipt by other capital-
ists. In a sense, this clarified itself with the evolution of interest-bearing
capital in the final years of Marx’s life, the emergence of finance capital,
and the development of Marx’s financial theory in Hilferding’s Finance
Capital. With finance capital, the money-capitalist and the functioning
capitalist are merged into the modern corporation or the holding com-
pany, operating symbiotically with the banking system (or investment
banking in capital market economies). It is only after Hilferding and the
discussion of “pure credit” in Wicksell and Schumpeter that we can under-
stand fully how capitalist interest involves the circulation of surplus value
in the form of accumulated money profits, but that interest is disconnected
from the rate of profit. With the concentration and development of the
money markets, the rate of interest represents the rate of exchange between
different types of financing.25 The following section examines the func-
tioning of the rate of interest in such a “pure” capitalist economy.
22
Ibid., 378.
23
Nicholas Barbon, A Discourse of Trade (London: Milbourn, 1690).
24
Joseph A. Schumpeter, History of Economic Analysis (New York: Oxford University
Press, 1954), 330.
25
Rudolf Hilferding, Finance Capital A Study of the Latest Phase of Capitalist Development
(London: Routledge and Kegan Paul, 1981): 268–9.
220 J. TOPOROWSKI
IV. Interest in a “Pure Capitalist” Economy:

A “Transfer” Theory of Interest
To understand properly Marx’s theory of interest, it needs to be put into
the context of the capitalism of his time, and the evolution of that capital-
ism. Marx’s observations on interest came during the transition in the
relationship of capitalists with finance from one in which finance is exter-
nal to industrial capitalists, controlled by banks and wealthy pre-industrial
(merchant) capitalists, and subject to religiously sanctioned legal restric-
tions, to a relationship in which finance is internal to industrial capitalists,
who can “fund” their long-term plant and equipment with long-term
obligations, in the form of bonds or shares, and short-term rates of inter-
est are no longer restricted. To some degree, this shift is reflected in the
change in the yield curve (the relationship between the long-term rate of
interest to the short-term rate) that occurred at the time when Marx was
writing. When Ricardo was enunciating his “classical” theory of interest,
the long-term rate of interest (his “price of funded property”) was the rate
on bonds issued by the government and the great trading companies. That
rate was more unstable than the short-term rate of interest that was con-
strained by the Usury Laws. With the abolition of those laws, in 1844, and
even later in the same century, with the development of markets for long-
term company finance, the situation was reversed: The short-term rate of
interest became more unstable than the long-term rate.26
Marx’s ambiguities are complicated by his choice of labour value as
numéraire. In pursuit of this, the notion of interest as Massie’s “rent on
stock” is associated in Volume II of Capital with the use of gold as money.
Marx placed the production of gold in the sector producing means of
production, and therefore using labour and having a rate of profit that
corresponds to Ricardo’s and the rate of profit in manufacturing.27 But
capitalist banking and finance were always more like a “credit club” of
capitalists. The origins of capitalist credit lie in the discounting of bills by
“merchant” or “country” banks who were originally merely capitalists
(usually merchants with good cash flow from their trading activities) in
possession of sufficient money hoards to be able to use them to buy, at a
discount, the IOUs of their business associates.28 This is implicit in Marx’s
26
See Ralph George Hawtrey, A Century of Bank Rate (London: Longmans, Green and
Co., 1938), chapter VI.
27
Karl Marx, Capital. Vol. II, in MECW (London: Lawrence & Wishart, 1997), 36: 473–7.
28
Karl H. Niebyl, Studies in the Classical Theories of Money (New York: Columbia University
Press, 1946), chapter 3.
analysis of money and interest, and later explicit in Kalecki’s first exposi-
tion of capitalist financing.29
This inter-capitalist credit and debt is what distinguishes capitalist credit
from its predecessors in usury and traditional moneylending in pre-
capitalist societies, or the sovereign debt of the absolutist state within
which merchant capitalist credit first emerged. His analysis of interest-
bearing capital30 shows that Marx was aware of the key distinguishing fea-
ture of capitalist credit—namely, that it redistributes money hoards among
capitalists, rather than exploiting the rural poor or buying pensions from
the state.31 For Marx, this redistribution distinguishes capitalist credit
from pre-capitalist redistribution among landowners or merchants.
Furthermore, in a capitalist economy, money comes into exchange through
the expenditure of capitalists’ money on production, and not as a conven-
tionally, or even legally, accepted token of value in exchange.
With the emergence of finance capital, the operations of banks as a
credit club of capitalists become the foundation of monetary endogeneity.
Capitalists have assets—including financial assets such as bills, bonds,
shares, and government paper—that they can post as security of loans, and
those loans create deposits.32 It is this financially collateralized lending,
rather than the provision of government reserves, as postulated by most
post-Keynesians that makes the supply of credit determined by demand,
or the ability of capitalists to provide collateral.
29
Michal Kalecki, “An Essay on the Business Cycle Theory,” in The Collected Works of
Michał Kalecki Volume I Capitalism: Business Cycles and Full Employment, ed. Jerzy Osiatynski
(Oxford: The Clarendon Press, 1933), 93–8.
30
Marx, Capital, Vol. III, chapter XXI.
31
It is the neglect of the distinction between capitalist credit and debt and pre-capitalist
debt, and the income and balance sheet implications of that distinction, that confuses long-
term (econometric) studies of debt, such as Carmen M. Reinhart, and Kenneth S. Rogoff,
“This Time is Different: A Panoramic View of Eight Centuries of Financial Crises,” NBER
Working Paper No. 13882 (March 2008).
32
Hartley Withers, The Meaning of Money (New York: Dutton, 1909); Dennis Holme
Robertson, “Theories of Banking Policy,” in Essays in Monetary Theory (London: P.S. King,
1940). “We have spoken of bankers and financiers as the makers of credit. But we have also
recognized that the chief financial material out of which they make it is the stocks and shares
and other certificates of value which represents the capital created by the saving and investing
classes. It is thus the growth of the forms of saving which take these financial shapes that
enables the increased credit to emerge from the financial factories. All such modern saving
can furnish material for the creation of more credit.” John Atkinson Hobson, Gold Prices and
Wages with an Examination of the Quantity Theory (London: Methuen, 1924), 89.
222 J. TOPOROWSKI
It follows that within this kind of capitalist finance, we must test the
relevance of Marx’s theory of interest rather than in the financial system
based on gold production of Marx’s time. As a first approximation to real-
ity, it is convenient, for the sake of simplicity, to leave aside the govern-
ment and foreign sectors, and assume that workers are true proletarians,
whose only asset is their labour power. This gives a “pure” capitalist econ-
omy in which the only banking is the “pure” capitalist credit club. Banks
operate holding the deposits of capitalists and advancing loans to them.
The profits of the banks are the margin between deposit and lending rates
of interest multiplied by the value of the balance sheet of every bank, after
deducting the operating costs of each bank. Bank profits are therefore
unrelated to the level of the rate of interest itself.33
In this situation, the profits of the financial sector make no difference
to profits overall in this capitalist economy: the margin between deposit
and lending rates received by capitalists engaged in banking business is
obtained at the expense of the profits of non-bank capitalists; the costs of
banking business (premises, staff) constitute demand for the output of the
non-financial sector, and in this way, returns to non-bank capitalists a part
of their profit that those capitalists hand over to bank capitalists under that
margin between borrowing and deposit rates of interest. In this sense,
bank expenses may be subsumed under Investment spending (insofar as
those expenses are a necessary part of investment) or Capitalists’
Consumption (insofar as they are merely the discretionary extravagances
that are nowadays associated with financial business) in Kalecki’s well-
known profits equation, based on Marx’s schemes of reproduction in
Volume II of Capital.34
33
“The rate of interest that is paid on deposits is always somewhat lower than the rate
charged by banks on loans. The difference between these two rates remunerates the bank …”
Knut Wicksell, Interest and Prices: A Study of the Causes Regulating the Value of Money
(London: Macmillan, 1936), 139.
34
The theory may be summarized as follows. In a closed economy, with no government,
in a given period, total income ( Y ) is equal to the sum of profits plus wages ( W + P ) , which
in turn, is equal to Consumption plus Investment ( C + I ) . Y − C = I = Saving . Saving may
be divided into the saving of workers ( Sw ) and the saving of capitalists ( Sc ) . Similarly,
Consumption may be divided into the consumption of workers ( Cw ) and the consumption
of capitalists ( Cc ) .
Profits are therefore equal to Sc + Cc . Sc is equal to total Saving or Investment minus
Sw ( I − Sw ) . Total Profits ( Sc + Cc ) therefore equal to I + Cc − Sw . See Michal Kalecki, “The
Short-term Rate of Interest and the Velocity of Cash Circulation,” Review of Economic
Studies 2 (1942).
Marx’s rejection of the classical theory of interest, the link between

interest and the gross profits of capital, may also be examined from the
“capitalists” credit club point of view. As indicated earlier, a literal reading
of Marx and the classics suggests that current interest is paid out of current
profits. In fact, at any one time capitalists hold loans, and they also hold
deposits and bank shares accumulated from past profits. As Kalecki was to
point out, it is his ownership of money capital that makes a man with
entrepreneurial ability into a capitalist.35 It is out of the total accumulation
of profits, rather than just the current accumulation of profits, that interest
is paid. But the interest received by capitalists adds to their income from
productive activities. In our “pure” capitalist economy, the total value of
those deposits and bank shares is equal to the total value of the loans in the
banking system. If rates of interest are zero, banks make no profit and the
capitalists’ net income is the profit that they make from production. If
interest rates rise, the net income of the capitalists is unchanged: as a class,
they now pay interest. But their interest income, including the dividends
received on their bank shares, has also risen by the same amount. How do
they pay that higher interest? They do so by using the deposits that they
have in the banking system. In effect, the payment of interest requires a
purely financial circulation of bank deposits, rather than the receipt of
bank deposits from current production. This is the institutional nexus
behind Kalecki’s observation that the velocity of circulation of deposits
varies in proportion to the rate of interest on money.36
What if the capitalists do not have enough deposits to pay a really exor-
bitant increase in interest rates? In a credit system, they can borrow more by
pledging assets as security against loans, and this corresponds to an increase
in their deposits. Providing that banks are accommodating, capitalists will
borrow as much deposits as are necessary to maintain interest and debt pay-
ments. From those interest and debt receipts, they can repay debts.
It follows that in a financial capitalist system, current profits are not, as
the Ricardian theory asserts, the sole source of the means of payment that
capitalists have with which to settle their financial obligations. Capitalists
have savings and may borrow against the assets that they possess. This can
It is easy to show that in the more complicated situation where banks earn money from
intermediating household or workers’ deposits and loans, the profits of banks make no dif-
ference to aggregate profits.
35
Michal Kalecki, Selected Essays on the Dynamics of the Capitalist Economy 1933–1970
(Cambridge: Cambridge University Press, 1971), 109.
36
Kalecki The Short-term Rate of Interest and the Velocity of Cash Circulation”.
224 J. TOPOROWSKI
be illustrated by considering the unlikely extreme (Grossman?) case, where

aggregate profit is equal to zero, but interest remains stubbornly positive.
Of course, this does not mean that no capitalists are making a profit,
merely that the profits of some capitalists are balanced by the business
losses of other capitalists. Any profits in the banking sector from the mar-
gin between lending and deposit rates would be at the expense of overall
losses among non-bank capitalists.
In this situation of overall zero profits, capitalists still have deposits
(from accumulated past profits and borrowing) and loans from the bank
intermediaries. Interest on that borrowing can be paid from deposits held
by capitalists who owe money. Capitalists with credit balances will, there-
fore, receive interest income. The higher the rate of interest, the higher
will be the interest paid, and received by capitalists. Bank deposits will be
redistributed from net debtor capitalists to net creditor capitalists. What
happens when, as a result of successive deposit redistributions, net debtors
start to run out of bank deposits to pay interest on their borrowing? In
that case, providing they have assets to post as collateral, they can borrow
to pay interest, or else borrow without security.37 The expansion of loans
increases also the supply of deposits. As new deposits are redistributed
from net debtors to net creditors, the net creditors accumulate the new
deposits, which the net creditors can use to repay their own loans. The
only circumstance that can prevent the continuing servicing of financial
liabilities in this way is not the failure to generate a profit in production
and trade, but a refusal of banks to lend more to net debtors.
The classical theory of interest asserts that capitalists must engage in
production and productive investment in order to generate the income
that they must pay as interest. The theory does not hold because in a capi-
talist economy, capitalists are ultimately, through the intermediation of
banks, indebted to each other and this implies that equivalent deposits
must be in the system and some of those deposits will be available to make
interest payments. With a sufficiently elastic credit system, capitalists may
pay any amount of interest to each other, and will accordingly receive that
same amount of interest (from which to pay interest in future). In practice,
37
Nobuhiro Kiyotaki, and John Moore, “Credit Cycles,” Journal of Political Economy 105,
no. 2 (April 1997) present a model of credit cycles in which the only collateral is real or
productive capital. Such a credit cycle, of course, then follows the investment cycle. The
much more convenient and widespread use of financial assets as collateral extends the range
and possibilities of the credit cycle far beyond the less financial investment cycle.
of course, the distribution of credits and debts are not the same, so the
capitalists will be either net creditors or net debtors to each other. Interest
and debt are thus ways of redistributing their income among capitalists.
They do not require production or investment to generate the profits out
of which interest may be paid.38
V. Conclusion
In Volume III of Capital, Marx put forward the elements of a critique of
the classical theory of interest that regards interest as determined by the
current rate of profit. This classical theory had been established by David
Ricardo in his Principles of Political Economy. The elements of Marx’s cri-
tique included the idea that the development of the credit system gave rise
to larger concentrations of money capital that would tend to depress the
rate of interest, a separate rate of interest on long-term loans, and a view
that the average rate of interest is determined by the average rate of profit
(other things being equal and over a longer period). It should be borne in
mind that Marx was writing in a time of “classic capitalism,” with entre-
preneurs or functioning capitalists eternally in debt to money capitalists,
and rarely playing the part of money capitalists. With finance capital, the
money capitalist and the functioning capitalist are merged. It is only after
Hilferding, and the discussion of “pure credit” in Wicksell and Schumpeter,
that we can understand fully how capitalist interest involves the circulation
of surplus value in the form of accumulated money profits. In finance capi-
tal, interest is disconnected from the rate of profit and represents the rate
of exchange between different types of financing. To Marx, we owe the
first systematic break from Ricardo’s theory of interest, in which interest is
determined by the rate of profit. Once capitalists have ownership of money
“hoards,” the rate of interest becomes disconnected from any current rate
of profit in the economy.
38
The process by which this happens in described in Jan Toporowski, “A Kalecki Fable
on Debt and the Monetary Transmission Mechanism,” London School of Economics,
Financial Markets Group Special Paper No. 239 (August 2015). Wicksell, who conceded
that capitalists hold bank deposits (Wicksell, Interest and Prices A Study of the Causes
Regulating the Value of Money, 138–9), does not draw the logical inference from this that
those capitalists then also receive interest on those deposits in addition to their income
from production and trade.
226 J. TOPOROWSKI
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Money, Power, and Capitalism: Marx’s
Theory of Money and the Contemporary
State-Credit Standard
Ramaa Vasudevan
I. Introduction
The global financial crisis triggered a resurgence of interest in Marx’s
analysis of capitalist dynamics and the financial system. What is extraordi-
nary is not simply the fact that Marx “predicted” capitalism’s propensity
to crisis, but more significantly, that the analytical framework he elabo-
rated in the three volumes of Capital is supple enough to help compre-
hend the more complex world of contemporary capitalism. My focus here
is on how Marx’s ideas about money and finance help in comprehending
the contemporary international financial system.1
1
The approach of this chapter is influenced by the work of Suzanne de Brunhoff and
Duncan Foley, in particular: Suzanne de Brunhoff, Marx on money (New York: Urizen
Books, 1976); Suzanne de Brunhoff “Marx’s Contribution to the Search for a Theory of
Money,” in Marx’s theory of Money: Modern Appraisals, ed. by Fred Moseley (New York:
Palgrave Macmillan, 2005); Duncan Foley and Suzanne de Brunhoff, “Karl Marx’s Theory
R. Vasudevan (*)
Department of Economics, Colorado State University, Fort Collins, CO, USA

230 R. VASUDEVAN
While Marx’s theory of money was integral to his analysis of capitalist

dynamics, the rich potential of Marx’s analysis of money and finance is
only recently receiving the attention it deserves. One possible reason for
this neglect is that the abstract theory of commodity money that Marx had
put forward has been seen as largely irrelevant to contemporary capitalism
where money is linked to state credit. The second reason is the challenge
of building a coherent analysis of the credit system from the “disordered
jumble of notes, comments and extract materials,”2 which Engels pulled
together in Part V of the third volume of Capital. However, even though
Marx begins his analysis in terms of commodity money, the method and
framework of analysis is robust enough to comprehend the evolution of
the non-commodity forms of modern money. The full development of the
consequences of his theory to the complex monetary and financial phe-
nomena of today’s world is a challenge that Marxist political economists
need to confront.
Marx’s abstract theory was not simply concerned with the existence of
commodity money, but more significantly, with how and why and by what
means a commodity becomes money. The analytical structure of Marx’s the-
orization of money reflect both his materialist conception of history and
the dialectical method of analysis he deployed to understand concrete phe-
nomena. We can deploy this same approach to comprehending how and
why and by what means credit money (and state-credit money, in particu-
lar) became the basis of the modern monetary system.
I begin by highlighting some aspects of the analytical approach that
Marx deployed in theorizing money, and then, turn to the concrete analy-
sis of financial markets and the emergence of state-credit money in the
nineteenth-century England, as a prelude to comprehending the contem-
porary international monetary system.
of Money and Credit,” in A Handbook of Alternative Monetary Economics, ed. Philip Arestis
and Malcolm C. Sawyer (Northampton, MA: Edward Elgar, 2007); Duncan Foley, “On
Marx’s Theory of Money,” Social Concept 1, no. 1 (1983); “Money in Economic Activity,”
in The New Palgrave: Money, ed. John Eatwell, Murray Milgate, and Peter Newman (London:
Palgrave Macmillan, 1989); Duncan Foley, “Marx’s Theory of Money in Historical
Perspective,” in Marx’s Theory of Money: Modern Appraisals, ed. Fred Moseley (New York:
Palgrave Macmillan, 2005). Ramaa Vasudevan, “The Significance of Marx’s Theory,”
Economic and Political Weekly 52, no. 37 (2017) provides a review of the analytical structure
of Marx’s theory of money.
2
Engels in the preface to Karl Marx, Capital, Vol. III (London: Penguin, 1981), 84.
MONEY, POWER, AND CAPITALISM: MARX’S THEORY OF MONEY… 231
II. Marx’s Method
Before discussing the role of money in financing capitalist production,
Marx set up a simple thought experiment to show how a product becomes
a commodity, the commodity becomes exchange value, the exchange
value of the commodity appears as its “immanent money property,” and
achieves a separate existence in the form of money. This thought experi-
ment allows him to uncover the contradictions inherent in the money
relation—contradictions that are wrapped up in the separate existence of
money alongside commodities. Marx wrote,
It is an inherent property of money to fulfill its purposes by simultaneously

negating them; to achieve independence from commodities, to be a means
which becomes an end, to realize exchange value of commodities by separat-
ing them from it; to facilitate exchange by splitting it; to overcome the dif-
ficulties of direct exchange of commodities by generalizing them; to make
exchange independent of the producers in the same measure as producers
become dependent on exchange.3
Thus, the money-form arises, in the first instance, from the contradic-
tion between the dual existence of commodities as use value and as
exchange value. This contradiction is further developed and displaced
once the act of exchange is split into two mutually independent acts of
purchase and sale. This separation between the acts of purchase and sale
contains the latent possibility of crises.4 The contradictory unity of use
value and exchange value is reproduced in that between the flows of
money and commodities. Marx’s analysis of money thus contained the
possibility of a divergence between the structure of demand and that of
the concrete use values produced in the course of these flows, anticipating
Keynes’ postulation of the principle of effective demand.
Marx also pointed to a third level of contradiction, in Grundrisse. This
arises when “the overall movement of exchange itself becomes separate
from the exchangers.” This is the sphere of commerce, concerned solely
with exchange for the sake of exchange and not for consumption, which
3
Karl Marx, Grundrisse (London: Penguin, 1973), 151.
4
Peter Kenway, “Marx, Keynes, and the Possibility of Crisis,” Cambridge Journal of
Economics 4, no. 1, (1980); James Crotty, “The Centrality of Money, Credit and Financial
Intermediation in Marx’s Crisis Theory,” in Rethinking Marxism, ed. Steven Resnick and
Richard Wolff (New York: Autonomedia, 1985).
232 R. VASUDEVAN
mediates the circulation of commodities produced under varied social

relations. This is basis for the emergence of merchant capital, the oldest
historical mode in which capital has an independent existence. Production
for exchange and consumption is subsumed into the imperatives of com-
merce—“buying cheap in order to sell and only selling in order to buy
again with the aim of acquiring money, not commodities.” A new contra-
diction emerges “since production works directly for commerce and only
indirectly for consumption, it must not only create but also be seized by
this incongruency between commerce and exchange for consumption”
and between the different laws and motives that govern commerce and the
two extremities between which commerce is conducted.5
As the contradictions of the money form continue to unfold with the
development of capitalism, the operations of the sphere of credit and
finance also emerge as distinct from the sphere of commerce. The contra-
dictions of the money form now appear in the disjunction between mon-
ey’s role as the universal equivalent and also as a particular commodity that
is subject to particular conditions of exchange in its exchange with other
commodities, “conditions which contradict its general unconditional
exchangeability.”6 If posed in terms of a commodity-money standard, this
points to the contradiction between the value of money as an expression
of exchange value of all commodities, and its particular value as produced
commodity.
More significant, these passages in the Grundrisse contain the core of
Marx’s argument of how the contradictions of the money form are dis-
placed as money evolves with the development of capitalism to become
both a general equivalent and a financial asset. These passages, also pro-
vide a road map for a path to integrating the concrete discussion of credit
and finance in Capital, Volume III with the abstract theory of Capital,
Volume I.7 In this chapter, the purpose is to highlight how these passages
also allow the extrapolation of the logical structure of Marx’s argument to
the investigation of the contemporary monetary system based on a state-
credit standard—where the monetary liability of a state functions as
money, both domestically and internationally.
5
Karl Marx, Grundrisse (London: Penguin, 1973), 148–9.
6
Ibid., 150–1.
7
This argument is made in Vasudevan, “The Significance of Marx’s Theory,” Economic
and Political Weekly 52, no. 37 (2017).
III. Marx on Credit Money

The critical link in the evolution of the state-credit standard is money in its
role as a means of payment—and as credit money—which is simply a trad-
able promise to pay. Marx investigated how money’s function as a means
of payment springs directly out of commerce. While credit money plays a
limited role when capitalism is not yet developed, the credit economy
develops on the basis of the monetary economy with the growth and
spread of capitalism, and eventually comes to dominate and replace it.8
Thus, Marx’s theory of credit money is constructed as a secondary, more
concrete layer of analysis. It is, however, critical to the analysis of capitalist
dynamics, and the structure of his argument is meant to clarify the mon-
etary roots of the credit system.
He draws an analogy between the relationship between the monetary
system and the credit system, and that between Catholicism and
Protestantism, saying that:
The monetary system is essentially a Catholic institution, the credit system

essentially Protestant… But the credit system does not emancipate itself
from the basis of the monetary system any more than Protestantism has
emancipated itself from the foundations of Catholicism.9
The forms of credit money in the early nineteenth century included bills
of exchange (which originated as IOUs between traders and producers)
and bank deposits (which were the liability of the banks). The credit sys-
tem has become considerably more complex today. The forms of credit
money too have evolved to include repos, and other forms of what is
called shadow money today.10 While the bills of exchange were promises
to pay, backed by the private guarantees of financial institutions, repos are
promises to pay, backed by a tradable collateral. Credit money is the logi-
cal and historical link between the monetary system and the financial sys-
tem and is also, I will argue, key to the evolution of world money.
8
Marx, Capital, Vol. III, chapter 25.
9
Ibid., 727.
10
Zoltan Pozsar, “Shadow Money: The Money View,” Office of Financial Research
Working Paper 14-04 (2014) provides an overview of contemporary shadow money. Ramaa
Vasudevan, “Shadow Money in the Nineteenth Century,” in “The Nineteenth Century: Is
Marx Relevant for Understanding Contemporary Shadow Money,” Review of Political
Economy 30, no. 3 (2018) discusses modern shadow money through the lens of Marx’s writ-
ings on the bill market of his time.
234 R. VASUDEVAN
The forms of credit money, which emerged in the financing of trade,

were the foundation of the capitalist financial system. The growing domi-
nance of credit money in the financial system is fundamentally an expres-
sion of the separation of the sphere of finance and money-dealing from
that of commerce that Marx alluded to in the Grundrisse. It contains the
potential contradiction between money’s value as a general equivalent and
its particular valuation as an asset.
This contradiction is in concrete practice, expressed and resolved
through the workings of the money market, where credit money and
short-term paper are traded. In the early half of the nineteenth century,
credit money in the form of bills of exchange played an important role in
mediating inland trade in England. But by the latter half of the century,
the sterling bill was the dominant instrument mediating international
trade, and the bill market had matured into a buoyant well-developed
money market. Proliferating bill trade created private monetary mecha-
nisms at a time when note issue by the Bank of England was tied to gold
reserves. These mechanisms played a crucial role in fostering liquidity
independent of gold reserves.11
Marx had stressed that the mediation of this chain of payments by
forms of credit money, like bills of exchange, does not do away with the
need for cash payments in an absolute sense. In the historical context of
the mid-nineteenth century, the credit money mechanisms of the bill mar-
ket were, in the final analysis, anchored to Bank of England notes and gold
reserves. The monetary system is a hierarchy of claims and liabilities. At
each level of this hierarchical structure, there is a higher form of money—
as a means of payment—that can extinguish debts at lower levels of the
hierarchy.12 Thus, bills of exchange had to be settled in terms of Bank of
England notes, and Bank of England notes were ultimately settled through
payment of gold.
There is thus, as Marx delineated, a contradiction inherent in the credit
money system. As long as payments balance each other, it is merely func-
tioning in the nominal form of a unit of account. However, when actual
11
Ramaa Vasudevan, “From the Gold Standard to the Floating Dollar Standard: An
Appraisal in the Light of Marx’s Theory of Money,” Review of Radical Political Economics
41, no. 4 (2009); Vasudevan, “Shadow Money in the Nineteenth Century” provide a fuller
articulation of this argument.
12
Perry Mehrling, “The Inherent Hierarchy of Money,” in Social Fairness and Economics:
Essays in the Spirit of Duncan Foley, ed. Lance Taylor, Armon Rezai and Thomas Michl (New
York: Routledge, 2012).
payments have to be made, money is needed not in this nominal form, but
in its form as money proper—the “universal commodity,” thus precipitat-
ing a monetary crisis. Such monetary crises occur, Marx writes,
where the ever-lengthening chain of payments, and an artificial system of

settling them, has been fully developed. As the hart pants after fresh water,
so pants his soul after money, the only wealth. In a crisis, the antithesis
between commodities and their value form is raised to the level of an abso-
lute contradiction.13
Developed capitalist countries replace money by credit operations or credit

money. In times of pressure, once credit dries up, money confronts all
other commodities as the only means of payment and true embodiment of
value. So, at precisely the time that there is this “violent scramble for
means of payments,”14 it becomes harder to convert credit money into
hard cash. In the context of the bill market of the nineteenth century that
Marx was writing about, the crisis appears in the form of a demand for
Bank of England notes, itself a form of credit money that was tied to gold
reserves. Thus, the Bank of England came to play a critical role in restor-
ing liquidity and re-establishing the terms of convertibility.
Such crisis occurred, for instance, in 1847 and 1857, and the Bank of
England was compelled to periodically intervene to prop up the banking
system. Marx characterized the Bank of England as “the biggest capital
power in London” and the “centre of gravity of all commercial credit.”
Even so, its power is not absolute; it had to develop the tools and mecha-
nisms for enforcing its will over the private channels of liquidity creation
in periods of normalcy when the market was dominated by the private
financial institutions—the large discount houses and joint stock banks.15
In particular, the Bank of England was constrained by the gold reserves
in its vaults. Gold was needed to secure convertibility. But gold had
another critical function in the nineteenth century. In the context of the
International Gold Standard system, gold functioned as “world money”
and was needed for the settlement of international payments. The break-
down in convertibility during the crises in 1847 and 1857 were further
compounded by the outflow of gold. These breakdowns in convertibility,
13
Karl Marx, A Contribution to a Critique of Political Economy (Chicago: International
Library Publishing, 1972), 235.
14
Ibid., 235.
15
Vasudevan, “Shadow Money in the Nineteenth Century” elaborates this argument.
236 R. VASUDEVAN
Marx argued, had far-reaching implications for the reproduction of the

existing social relations. It is the threat to the underlying system of social
relations that dictates the imperative need for central bank intervention to
ensure the conditions for convertibility and protect the value of money.
We see the same compulsions operating today in the bailouts to banks
after the financial crisis following the collapse of Lehman Brothers. At the
heart of the collapse was the implosion of what has been called the shadow
banking system—unregulated financial mechanisms of funding capital
market through the contemporary equivalent of the bills of exchange, the
repo.16 The consequences of the breakdown in these mechanisms of
liquidity and credit creation compelled massive interventions by the US
Federal Reserve.
There is another aspect of Marx’s discussion of monetary crisis and the
drain of gold—which is his analysis of the contagion-like spread of balance
of payments crisis from one country to another in succession—like volley-
firing. Thus, a balance of payments crisis may begin in one country—a
creditor country like England—but the drain of gold induced by this crisis
and the ensuing bankruptcy of importers leads to distress sales of goods
and securities and transmits the crisis to its trading partners.17
Marx recognized, much before John Maynard Keynes, the inherent
deflationary bias of the gold standard system. The Bank of England dealt
with such crisis by abandoning convertibility of sterling claims to gold in
1846, 1857, and 1866. But by the end of the century, for instance, during
the Barings crisis of 1890, the Bank was able to weather monetary and
financial crisis, without revoking its commitment to convertibility.18 It did
so by borrowing from countries like France, and special depositors like
India and Japan. This was a development that Marx did not explicitly
address or anticipate.
The historical evolution of the International Gold Standard after Marx’s
death suggests that countries like India and Japan provided a critical source
of short-term credit when other advanced capitalist countries like France
failed to lend to the Bank of England. The financial system centred in the
City of London recycled these surpluses in the form of capital exports to
16
Zoltan Pozsar et al., “Shadow Banking,” Federal Reserve Bank of New York Staff Report,
no. 458, 2010.
17
Marx, Capital, Vol. III, 623–4.
18
Vasudevan, “From the Gold Standard to the Floating Dollar Standard.”
primary commodity exporters in Latin America and Australia that bore the
brunt of convertibility crisis and destabilizing capital flows.19
Marx had recognized the elasticity that credit money provided to the
monetary system. However, he did argue that in times of crisis, the limited
stock of gold reserves with the Bank of England constrained its capacity to
intervene in the bill market. But the parallel monetary mechanisms of the
international bill market, and the asymmetric integration of less advanced
countries, and Britain’s colonial power, in effect, imparted a greater degree
of elasticity and heft to the Bank of England’s capacity to intervene in the
financial markets. The Bank of England was, in the last decades of the
century, able to exercise much greater control over the money market and
maintain convertibility through its interventions in the money market
even though it held a relatively small stock of gold reserves. In the process,
the Bank of England also took on the mantle of the lender of last resort
for the financial system, not just domestically but also internationally.20
This role was embedded in the financial revolution that put the City of
London at the hub of the international financial system. This process can
be understood in terms of the separation and growing dominance of the
sphere of finance from that of commerce alluded to in the passages in the
Grundrisse that informed Marx’s method. This process unfolded not just
within national boundaries but also internationally across national borders.
IV. The Evolution of a State-Credit Standard

The concrete history of Bank of England interventions since the 1890s also
reveals how the contemporary state-credit standard evolved out of the state
and central bank’s attempt to manage and regulate these private money
markets. Increased treasury operations in this period helped bolster the
Bank of England’s control over the bill market. With the introduction of the
treasury bill at the end of the nineteenth century, short-term claims on the
state also came to play a greater role in the money market. In the process,
gold was, over time, replaced by the monetary liability of the British state at
the top of the monetary hierarchy, and the money m arket became linked
more closely to the Bank of England’s management of public debt.21
19
This argument is put forward in ibid.
20
See ibid.
21
Vasudevan, “Shadow Money in the Nineteenth Century.”
238 R. VASUDEVAN
The issue of public debt also generates a parallel sphere of financial

transactions, which fostered the growth of financial dealers and specula-
tors. The liabilities of the state, functioning in the hands of the creditors,
as a liquid asset that can be sold and resold multiple times engender fur-
ther growth in the financial system. What the buyers of public debt lend is
transformed into tradable assets, which can be sold and resold multiple
times, to function as money. It thus represents the creation and transfer of
wealth to those who hold this debt, fostering the growth of “stock
exchange gambling and a modern bankocracy.”22 Public debt breeds spec-
ulation and the concentration of wealth. This connection between public
debt and the growth and centralization of wealth with the development
and evolution of the financial system underscored why “public credit
becomes the credo of capital,” marking “the capitalist era with its stamp.”23
This is apparent in the confounding process through which the accu-
mulation of debts appears as an accumulation of capital. To use Marx’s
evocative words,
As with a stroke of the enchanter’s wand, it endows unproductive money

with the power of creation and thus turns it into capital, without forcing it
to expose itself to the troubles and risks inseparable from its employment in
industry or even in usury.24
And so, it would appear that a nation becomes the richer the more deeply
it is in debt.
There is thus a deep nexus between public debt and private finance.
This nexus has become more entrenched through the twentieth century.
Public debt is both the anchor and the basis of expansion of the contem-
porary capitalist financial system. The growth of capitalist financial system,
Marx wrote,
develops the motive of capitalist production, enrichment by exploitation of

others labour, into the purest and most colossal system of gambling and
swindling and restricts even more the already small number of exploiters of
social wealth.25
22
Karl Marx, Capital, Vol. I (London: Penguin, 1976), 919.
23
Ibid.
24
Ibid.
25
Marx, Capital, Vol. III, 572.
The structural implications of the rise to dominance of finance for

growing inequality and the concentration are of course of profound sig-
nificance in the contemporary world. The implication of the state in the
mechanisms of financial markets—through monetary policy interventions
and bank bailouts—also highlights how the power of the state has become
crucial to preserving this dominance and buttressing the resilience of the
financial system. At the same time, the management of rising public debt
is increasingly holding the state hostage to finance, through what has been
called the doom loop.26 The gambles of the financial system keep getting
larger, threatening the functioning of the capitalist financial system. This
necessitates even larger interventions by the state and the central banks to
restore the financial system. The stranglehold of finance thus becomes
even more powerful.
The money market where short-term bills are traded is a critical ter-
rain where the connection between the financial system and state credit
is established. The liquidity of the private sterling bill derived from the
implicit back-stop that the Bank of England provided to the Discount
Houses. However, with the introduction of the treasury bill and increas-
ing recourse to this instrument in the money market after 1890, the
money market began to trade directly in short-term claims of the state.
These claims came to be regarded as close substitutes to “hard cash” or
gold precisely because they were promises to pay of the state. The trea-
sury bill has thus emerged as a critical anchor for the money market in
the twentieth century. The credit-money system that had originated in
private commercial transactions embedded in a system of private guaran-
tees established an instrument that was directly secured by the power
and prestige of the state. This has profound implications for the resil-
ience of the financial system and the evolving nexus between the state
and private finance.
The evolution of the financial system in the advanced capitalist world
after the Great Depression and the Second World War ushered in a period
where the state played an even greater role in regulating the channels of
private liquidity and the financial system.
26
Andrew G. Haldane and Piergiorgio Alessandri, “Banking on the State,” Paper Presented
at the Federal Reserve Bank of Chicago Twelfth Annual International Banking Conference
(2009).
240 R. VASUDEVAN
V. State, Private Finance, and World Money

While Marx planned to introduce the world market only after elaborating
his investigation of competition and the redistribution of surplus value
among its different claimants, world trade and commerce are, in fact, the
historic presupposition for the emergence of capitalism. Merchant capital,
which existed before the spread of capitalist social relations, can be seen as
“the oldest historical mode in which capital has an independent
existence.”27 The wealth of the merchant capital “always exists as money
wealth, and his money always functions as capital,” and the operations of
trade, separate from that of production, become a means of increasing
wealth.28 Even before merchant capital subjected production in different
regions and spheres to its control, it imparted to these spheres a greater
orientation towards trade, transforming products into commodities: “It
expands its scope, diversifies it, and renders it cosmopolitan, developing
money into world money.”29
Historically, money’s role as world money arises with the development of
the world of market and the extension of the international division of labour.
While no fundamentally new functions arise in the course of international
circulation of commodities that have not arisen in the course of domestic
circulation, the settlement of international payments with a transfer of world
money becomes the means by which wealth is transferred from one nation
to another, and is redistributed internationally. In its role as world money,
money serves as an embodiment of social power internationally.
Thus, the acquisition of power in the mercantilist period of nascent capi-
talism was associated with the accumulation of wealth in the form of
money—more specifically, as world money. When bullion served as world
money, trade surpluses led to the accumulation or reserves in the creditor
country while deficit countries were faced with an outflow of reserves and
indebtedness. Marx wrote of the early period of capitalist development, that:
the transformation of feudal agricultural societies into industrial societies,

and the resulting industrial struggle among nations on the world market,
involves an accelerated development capital which cannot be attained in a so
called natural way but only by compulsion…by the accelerated production
of the conditions of the capitalist mode of production.30
27
28
Ibid., 443.
29
Ibid., 449.
30
Ibid., 920.
The modes of accelerating the transformation include taxes, protective

duties, the forcible expropriation of independent direct producers, and the
concentration of capital. Thus,
the mercantile system is not a mere slogan in the mouths of its spokesmen.
Under the pretext of being concerned only with the wealth of the nation
and the sources of assistance for the state, they actually declare the interests
of the capitalist class, and enrichment in general, are the final purpose of the
state, and proclaim bourgeois society as against the old supernatural state.
At the same time, however, they show their awareness that the development
of the interest of capital and the capitalist class, of capitalist production, has
become the basis of a nation’s power and predominance in modern society.
With the development of capitalism, merchant capital loses its separate

existence and appears as a particular moment or function of capital. Marx
further outlines how merchant capital separates into the distinct categories
of commercial capital and money-dealing capital, which appear as special-
ist functions and forms of capital in the sphere of circulation. The former
mediates the trade of commodities, while the latter performs the technical
operations associated with commerce and monetary circulation.31
The circulation of credit money, which emerged as a way of financing
trade, breeds financial intermediaries whose primary function is the media-
tion of these credit transactions. Thus, even though money-dealing capital
arises as a specialized function of merchant capital, it becomes an integral
part of, and is further transformed by, the development of capitalism. The
banking system evolved out of the money-dealing capital once “borrowing
and lending, and the management of interest-bearing capital, emerge as a
special function of money-dealing capital.”32
Interest-bearing capital, which is also an antediluvian form of capital,
like merchant capital, gets transformed under capitalism, and manifests the
capitalist “relationship in its most superficial and fetishized form as a ‘mys-
terious and self-creating’ source of its own increase, independent of pro-
duction and circulation.”33 Unlike commercial credit that is advanced to
enable the exchange of commodities, it constitutes an advance of money
between capitalists for the finance of capitalist production. The advance of
money capital allows interest-bearing capital to claim a share of the surplus
31
Ibid., chapter 19, 20.
32
Ibid., 528.
33
Ibid., 516.
242 R. VASUDEVAN
value created in production as interest. Marx develops the category of

interest-bearing capital further into the categories of loanable capital and
bank capital. The former involves not just the lending of funds owned by
the lender, but more fundamentally, the collection and recycling of idle
funds.34 Bank capital is not simply mobilizing idle funds, it expands loan-
able capital through the creation of special liabilities—claims of money
that act like money that act as claims on money. The evolution of com-
mercial banking and investment banking can be understood through the
lens of Marx’s analysis.
Thus, commercial banking expands monetary circuits though the dou-
bling of money and claims on money, while investment banking, in a par-
allel manner, involves the doubling of industrial capital and securities.35
But, unlike the money claims that commercial banking issues, the securi-
ties the investment bank deals with are not claims on money, but on future
streams of income that have to be exchanged with money. Banking profits
accrue from market-making activity that exploits bid-ask spreads on the
traded securities.
The accumulation of funds in the banking system can thus grow in step
or even more rapidly than the scale of reproduction processes.36 The
expansion of credit enables an expansion in the scale of production and
the extraction of surplus value. It also accelerates the development of tech-
nology and the creation of the world market.
As the scope of the financial system extends beyond national boundar-
ies to embrace all parts of the global economy, the emerging global net-
works of the financial system become the engine that mobilizes and
centralizes funds on a global scale. The system serves to draw surpluses
(and revenues) from across the world, under its control, making profit by
lending it further to capitalists in other parts of the global economy.
It has been argued that the International Gold Standard was in effect
a British Pound-sterling standard, with the sterling bill being used increas-
ingly to finance trade and international transactions. The Bank of England
was able to calibrate international liquidity through its manipulation of
the discount rate, despite its relatively small reserves of gold, because it
34
Costas Lapavitsas, “Two Approaches to the Concept of Interest-Bearing Capital,”
International Journal of Political Economy 27, no.1 (1997).
35
This argument is elaborated in Duncan Lindo, “Political Economy of Financial
Derivatives: A Theoretical Analysis of the Evolution of Banking and Its Role in Derivatives
Markets” (PhD Thesis, SOAS, 2013).
36
Marx, Capital, Vol. III, chapters 31, 32.
could draw on surpluses from the colonies and other countries on the
periphery, and shift the burden of adjustment and crises to these coun-
tries. While the international acceptance of sterling bills and the City of
London’s pivotal role in international financial markets did impart elastic-
ity to the International Gold Standard beyond what the limited gold
reserves of the Bank of England would allow, the system was, in the final
analysis, based on gold.
In fact, it was only with breakdown of the post-war Bretton Woods
system and the floating of the dollar that world money was finally delinked
from gold. With this development, the monetary liability of the US
became the basis for the international financial system and the modern
international monetary system evolved to a state-credit standard hinged
on the dollar. Marx’s method, which investigates the emergence and even-
tual dominance of credit money domestically, also allows the discovery of
the logical and historical path by which an international state-credit stan-
dard developed.
A few aspects of the evolution of an international state-credit standard
are worth emphasizing. First, the pattern by which wealth is transferred
from deficit countries to the surplus countries, the consequent re-ordering
of power internationally as the reserves of world money are redistributed,
undergoes a change with this evolution. The international acceptance of
the monetary liability of a state as world money transforms the nation-
state to a borrower of last resort, creating liquidity by acting like banks do
when they borrow short and lend long.37 While the country issuing world
money needs to sustain balance of payments deficits in order to generate
international liquidity, such deficits do not imply a loss of social power on
the international arena, but rather its opposite. The pattern of deficits, the
drain of reserves, and outflow of wealth no longer applies to the nation-
state issuing world money. The dominant country can evade the conse-
quences of debt-deflationary crises that Marx saw as inherent to the
functioning of world money when it was still tied to gold. The constraint
on its capacity to intervene and create liquidity is not the stock of its for-
eign reserves holdings, but its capacity to borrow internationally.
Second, in acting as the banker to the world, the dominant nation-state
issuing world money also centralizes and recycles surpluses from and to
the periphery (and rival nation-states). The foreign assets are thus being
37
Vasudevan, “From the Gold Standard to the Floating Dollar Standard.”
244 R. VASUDEVAN
accumulated on the basis of wealth and money stocks appropriated from

creditor countries that hold the monetary liability of this state. The ease of
access to credit for the dominant country, which is key to the functioning
of the state-credit standard, is also the basis of the exorbitant privilege that
the country appropriates, from the difference on the return on its mone-
tary liability (the interest paid on foreign holdings of treasury bills), and
the returns on its accumulation of foreign assets (the income it receives
from its investments abroad).38
Third, there is a network externality associated with the use of world
money. As more countries use a particular world money to settle interna-
tional transactions, it becomes further entrenched as a liquid and safe uni-
versal equivalent and embodiment of wealth in the abstract. When a
dominant country’s currency—the monetary liability of its state—performs
the role of world money, this network externality serves to further pre-
serve and extend this disproportionate dominance in the international
financial system.
Thus, the state-credit standard reflects and perpetuates the asymmetric
exercise of power and dominance by the nation-state that issues this world
money. It also places the burden of calibrating international liquidity and
ensuring stability of international financial system on this dominant state.
VI. Conclusion
The emergence of the floating dollar standard after the dismantling of the
end of the Bretton Woods system ushered in a period when developing
countries were increasingly integrated to the international financial sys-
tem. Neo-liberalism was espoused and advocated as a tool to sustain the
dollar’s role as world money and reinforce the dominance of the US. The
rise to dominance of finance, along with the profusion of financial assets,
has been integral to the workings of the floating dollar standard. These
mechanisms of dollar liquidity have, at the same time, engendered grow-
ing global imbalances (due to growing US trade deficits), profound
inequality, and concentration of wealth, and have been fuelling increasing
financial fragility.
38
Pierre-Olivier Gourinchas and Hélène Rey, “From World Banker to World Venture
Capitalist: US External Adjustment and the Exorbitant Privilege,” NBER Working Paper
11563 (Cambridge, MA: National Bureau of Economic Research, 2005).
The crisis triggered in the wake of the collapse of Lehman Brothers

reflected some of the tensions and vulnerabilities of the system based on
the dollar standard. While the crisis was, in a very fundamental sense, a
crisis of dollar hegemony, the power of finance and the dominance of the
dollar remains entrenched a decade after the crisis. In fact, the financial
sector in the US has become even more concentrated in the wake of the
crisis, and has launched a concerted push back against regulations.
Investment banking is also witnessing a resurgence. The casino of finance
seems to be back in business. The expanding balance sheets of central
banks reflects how deeply they have been implicated in shoring up the
financial system.
While the history of the last century is testimony to the growing
capacity of the state to act as the lender of last resort for financial system
and ensure its resilience after each crisis, the growing scale of the casino
and its consequence for growing inequality suggests that Marx’s caution
about the limits to the power of the state has resonance today. The evo-
lution of world money based on an international state-credit standard
expanded the capacity of the state and central bank at the centre of the
international financial system to manage to financial system. This power
is, however, not absolute.
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Marx as Evolutionary and Some
“Revisionist” Implications
Samuel Hollander
I. Introduction
The term “revolution” suggests violent overturn, and the view of Marx as
“revolutionary” is not only standard textbook fare filtering through to
popular opinion, but also often found in authoritative professional
accounts, as by Isaiah Berlin, who unconditionally asserted that Marx
“was, all his life, a convinced and uncompromising believer in a violent
working class revolution.”1 Some formulations do not specify that vio-
lence is intended by the attribution to Marx, but such a reading is invited.
Thus, according to a recent contributor to the New York Review of Books,
“[w]ith the rise of totalitarian fascism in the 1930s, the Frankfurt School
lost confidence in the ability of workers to mount a revolution against
monopoly capitalism and the states sustaining it, as Marx predicted they
would. It regarded workers as paralyzed by conformist tendencies and
1
Isaiah Berlin, Karl Marx: His Life and Environment, 4th ed. (Oxford: Oxford University
Press, 1978), 189.
S. Hollander (*)
University of Toronto, Toronto, ON, Canada

248 S. HOLLANDER
unable to discern the source of their grievances in the capitalist system.”2

Of particular interest is the presumption of violence by Eric Hobsbawm
when he refers to “the actual revolution, in the sense of the (presumably
violent) transfer of power … [which] would in turn initiate a lengthy pro-
cess of post-revolutionary transition.”3
Needless to say, the secondary literature yields conflicting opinions.
Thus, Joseph Schumpeter refers to “the grand vision of an imminent evo-
lution of the economic process—that, working somehow through accu-
mulation, somehow destroys the economy as well as the society of
competitive capitalism and somehow produces an untenable social situa-
tion that will somehow give birth to another type of social organization,”
which he finds “constitutes Marx’s claim to greatness as an economic
analyst.”4 Yet, when discussing Darwin, Schumpeter makes no mention of
Marx’s own description of Capital as demonstrating “in the social context
the same gradual process of evolution that Darwin demonstrated in natu-
ral history.”5 Stedman Jones attributes a methodological parallel with
“Darwinism” but specifically to Engels.6 Returning now to the main
issue—evolution or revolution—Mandell Bober makes the valid point that
we are obliged to turn “to direct evidence in Marx’s utterances,” since
“the dialectic cannot inform us whether the future social synthesis will be
achieved by a revolutionary cataclysm or by a peaceful transition.”7 A
grave deficiency indeed. In any event, he finds that “up to the early 1850’s
it seems that Marx and Engels put great stress on violence, almost giving
the impression of relishing it; while from the 1860’s on they begin to
allow that at least in certain countries, a peaceful method, the ballot, may
be both available and preferable.” I shall have this reading in mind as my
argument proceeds.
2
Samuel Freeman, “The Headquarters of Neo-Marxism,” New York Review of Books 64,
no. 5 (23 March 2017): 63.
3
Eric Hobsbawm, How to Change the World: Reflections on Marx and Marxism (New
Haven and London: Yale University Press, 2011), 65.
4
Joseph A. Schumpeter, History of Economic Analysis (London: George Allen and Unwin,
1954), 441.
5
Karl Marx, “Marx to Engels, 7 December 1867,” in MECW (New York: International
Publishers, 1987), 42: 494.
6
Gareth Stedman Jones, Karl Marx: Greatness and Illusion (London: Allen Lane, 2016),
563–4, 566–7.
7
Mandell M. Bober, Karl Marx’s Interpretation of History (New York: Norton, 1965), 262.
MARX AS EVOLUTIONARY AND SOME “REVISIONIST” IMPLICATIONS 249
The perspective on Marx as “revolutionary” in the violent sense, I find

unconvincing and I shall review the evidence for this conclusion. The
repeated use of “somehow” by Schumpeter in singing the praises of Marx
as “evolutionist” certainly suggests the need to tighten up this side of the
argument. I shall maintain that while Marx was no less “evolutionary”
than, say, John Stuart Mill, his version of evolution, insofar as it relates to
prominent features of advanced capitalism, implies a powerful “laissez-
faire” bias in two senses: a concern lest reformist measures to correct per-
ceived injustices in the going system assure its permanence, halting the
allegedly necessitarian process of transmutation in its tracks; and a warning
against premature action to transform systems. Much of this is well known
and ought to have sufficed to render inappropriate the designation of
Marx himself as a “revolutionary”—“conservative” would be a far more
accurate designation. Less well known, and strongly reinforcing his laissez-
faire reasoning, is Marx’s sophisticated appreciation of the operation of
the free-market pricing system. This, I shall demonstrate.
I then carry the story further, with an eye to Marx’s evolutionism
beyond developments within advanced capitalism. There is the proletar-
ian takeover, which might, for Marx, occur by way of democratic voting
enabled by extensions of the franchise accorded by the capitalist state in
response to pressures generated by capitalist development. Here, I take
issue with Hobsbawm, who attributes this allegedly “revisionist” aban-
doning of “the old insurrectionary perspectives” to Engels alone, and
late in the day, in his 1895 Introduction to Marx’s “The Class Struggles
in France.”8
And there is the stage following a proletarian political takeover, which
includes allowance for a residual capitalist sector in the first post-capitalist
stage, for income inequality, and even for compensation of expropriated
property owners. Here, I elaborate Hobsbawm’s recognition (noted
above) of the proletarian revolution as initiating a transition period of
“uncertain and doubtless variable length, while capitalist society is gradu-
ally transformed into communist society.”9 To my mind, these three
themes in conjunction render the evolutionist perspective overwhelming.
I do not doubt that Marx himself must ultimately be held responsible
for being understood as positing a “cataclysmic vision of the overthrow of
8
Hobsbawm, How to Change the World, 67.
9
Ibid., 57.
250 S. HOLLANDER
capitalism by an uprising of the proletariat.”10 After all, there is the

famously dramatic affirmation in the Manifesto of the Communist Party:
“The Communists disdain to conceal their views and aims. They openly
declare that their ends can be attained only by the forcible overthrow of all
existing social conditions,”11 and in Capital itself: “Force is the midwife of
every old society pregnant with a new one.”12 My contention is that in
neither case does Marx follow through with respect to a violent transition
from advanced capitalism. The choice of subtitle—A Critique of Political
Economy—and the theme of non-wage income as “exploitation” were cer-
tainly intended as weapons for the proletariat, but not necessarily to the
end of achieving an institutional “revolution” by violent means. I do not,
however, argue that Marx excluded the possibility of violent revolution
under any circumstances, but rather that he dismissed such an outcome in
Britain and the United States; and I certainly do not propose a re-
evaluation of his ideal—the replacement of the capitalist exchange system
by a central control economy dispensing entirely with the price mecha-
nism, for Marx, of course, abhorred labour’s “dependency” upon capital
and all this implied for its behavioural and moral development, and in
addition, perceived an enormous siphoning off of wealth to middlemen
under capitalist arrangement. These objections he sought to undermine
by his “Critique of Political Economy.”
In what follows, I first elaborate my three-fold Marxian evolutionary
theme, relating to progress within advanced capitalism, the communist
takeover, and the first stage of communism (section “The Evolutionary
Theme Elaborated”). An account then follows of the full extent of Marx’s
laissez-faire “conservatism,” including not only fear of reformist measures
by the capitalist state, but the less familiar technical arguments for non-
intervention based on the operation of the price mechanism (section
“Marx as laissez-faire Conservative: The Economic Dimension”). Now,
reform implied that the evolutionary process might not take the path of
undermining capitalism, but, to the contrary, might guarantee capitalism’s
survival; and as I go on to show (section “Aspects of Marx’s “Revisionism”
and Implications for the Implementation of a Proletarian Programme”),
Marx came to recognize the positive impact of contemporary factory
10
Jacob S. Schapiro, “Comment,” Journal of the History of Ideas 10, no. 2 (1949): 304.
11
Karl Marx and Frederick Engels, Manifesto of the Communist Party, in MECW (New
12
Karl Marx, Capital, Vol. I, in MECW (New York: International Publishers, 1996), 35: 739.
reform and, more generally, even saw some potential for real-wage
increase, tendencies which—together with national character and even
nationalism—might account for a growing suspicion that the working
classes in Britain would be unwilling to implement a “proletarian” pro-
gramme even when in a position to do so as a result of universal (male) suf-
frage accorded by the capitalist state—that the evolutionary transition to
communism might be brought to a premature halt.
II. The Evolutionary Theme Elaborated
II.1. Evolutionary Processes within Capitalism

As I have intimated, Marx represented Capital as “demonstrat[ing] that
present society, economically considered, is pregnant with a new, higher
form … showing in the social context the same gradual process of evolu-
tion that Darwin demonstrated in natural history,” and he cautioned in
the preface that “even when a society has got upon the right track for the
discovery of the natural laws of its movement—and it is the ultimate aim
of this work, to lay bare the economic laws of motion of modern soci-
ety—it can neither clear by bold leaps, nor remove by legal enactments,
the obstacles offered by the successive phases of its normal development.”13
The evolutionary theme is nicely outlined in the Economic Manuscript of
1861–63: “Just as one should not think of sudden changes and sharply
delineated periods in considering the succession of the different geologi-
cal formations, so also in the case of the creation of the different eco-
nomic formations of society.”14 The principle is applied to the dissolution
of capitalism: “This is an essentially different conception from that of the
bourgeois political economists, themselves imprisoned in capitalist pre-
conceptions, who are admittedly able to see how production is carried on
within the capital-relation, but not how this relation is itself produced,
and how at the same time the material conditions for its dissolution are
produced within it, thereby removing its historical justification as a neces-
sary form of economic development, of the production of social wealth.”15
13
14
Karl Marx, Economic Manuscript of 1861–63, in MECW (New York: International
Publishers, 1991), 33: 442.
15
Karl Marx, Economic Manuscript of 1861–63, in MECW (New York: International
Publishers, 1994), 34, 466.
252 S. HOLLANDER
I turn now to the specific processes envisaged as at play within capital-

ism setting the stage for a transition to communism. Observations in the
third volume of Capital, composed probably in the 1860s, relate to the
joint-stock company—“the ultimate development of capitalist
production”16—as a transitional form from private to social organization:
“The capital, which in itself rests on a social mode of production and pre-
supposes a social concentration of means of production and labour power,
is here directly endowed with the form of social capital (capital of directly
associated individuals) as distinct from private capital, and its undertakings
assume the form of social undertakings as distinct from private undertak-
ings. It is the abolition of capital as private property within the framework
of the capitalist mode of production itself.” An earlier comment refers to
“[s]hare capital as the most perfected form (turning into communism)
together with all its contradictions”17
The part played by credit is much emphasized in the third (posthu-
mous) volume of Capital, and also with respect to the growth of coopera-
tives; and the formulation is one of the best I know of Marx’s evolutionary
orientation confirming his own designation of Capital as “Darwinian”:
The cooperative factories of the labourers themselves represent within the

old form the first sprouts of the new, although they naturally reproduce, and
must reproduce, everywhere in their actual organization all the shortcom-
ings of the prevailing system. But the antithesis between capital and labour
is overcome within them, if at first only by way of making the associated
labourers into their own capitalists, that is, by enabling them to use the
means of production for the employment of their own labour. They show
how a new mode of production naturally grows out of an old one, when the
development of the material forces of production and of the corresponding
forms of social production have reached a particular state. Without the fac-
tory system arising out of the capitalist mode of production, there could
have been no cooperative factories. Nor could these have developed without
the credit system arising out of the same mode of production. The credit
system is not only the principal basis for the gradual transformation of
capitalist private enterprises into capitalist stock companies, but equally

offers the means for the gradual extension of cooperative enterprises on a
more or less national scale. The capitalist stock companies, as much as the
cooperative factories, should be considered as transitional forms from the
Marx, Capital, Vol. III, in MECW (New York: International Publishers, 1998), 37: 434.
16
Karl Marx, “Marx to Engels, 2 April 1858,” in MECW (New York: International
17
Publishers, 1983), 40: 298.

capitalist mode of production to the associated one, with the only distinc-
tion that the antagonism is resolved negatively in the one, and positively in
the other.18
Cooperatives alone, be it noted, were clearly regarded by Marx as insuffi-

cient to assure a smooth transition from capitalism, but only as contribut-
ing to that outcome. Marx also refers to the growth of monopoly, which
“requires state interference”19—a theme expanded by Engels with an eye
to prospective nationalization of industry by the capitalist state.20
Apart from the foregoing applications of the principle of Historical
Materialism are tendencies emanating from capitalist development relat-
ing to proletarian character itself: “Modern industry, indeed, compels
society, under penalty of death, to replace the detail-worker of to-day,
crippled by life-long repetition of one and the sane trivial operation, and
thus reduced to the mere fragment of a man, by the fully developed indi-
vidual, fit for a variety of labours, ready to face any change of production,
and to whom the individual social functions he performs, are but so many
modes of giving free scope to his own natural and acquired powers.”21 The
circumstance that modern industry forces the predominance of technical
and vocational training is one significant feature: “one step already spon-
taneously taken towards effecting this revolution is the establishment of
technical and agricultural schools, and of écoles d’enseignement profession-
nel, in which the children of the workingmen receive some little instruc-
tion in technology and in the practical handling of the various implements
of labour.”22 At least by implication, the proletariat would become increas-
ingly competent to undertake the tasks required of it in any post-capitalist
arrangement—however that might be achieved.
I should briefly note here the so-called Russian option sometimes
attributed to Marx entailing a transition to communism based upon the
peasant commune (the obshchina), rather than upon capitalist d evelopment.
If taken seriously, this alternative would undermine the entire perception
of communism requiring a preliminary stage of advanced capitalism, in
line with the celebrated principle stated in the Preface to Capital, whereby
the “natural laws of capitalist production” entail “tendencies working with
18
19
Ibid., 436.
20
Frederick Engels, Anti-Dűhring: Herr Eugen Duhring’s Revolution in Science, in MECW
(New York: International Publishers, 1987), 25: 264–5.
21
22
Ibid., 491.
254 S. HOLLANDER
iron necessity towards inevitable results,” such that “[t]he country which
is more developed industrially only shows, to the less developed, the image
of its own future.”23 There could be no transition to communist organiza-
tion based directly on the rural commune.
II.2. The Acquisition of Proletarian Control

By a “Communist Revolution,” Marx referred specifically to the acquisition
and maintenance of political power by the proletariat. Thus, he avers in his
objections of 1875 to the Gotha Programme that “[b]etween the capitalist
and communist society lies the period of the revolutionary transformation
of the one into the other,” corresponding to which there “is also a political
transition period in which the state can be nothing but the revolutionary
dictatorship of the proletariat.”24 The term “revolution,” it may seem, might
legitimately be retained since there is no conflict with those evolutionary
processes occurring within capitalism; on the contrary, the communist take-
over occurs only when the time is ripe. But the following considerations
relating to the character of the “revolution” itself require attention.
Recall from our Introduction that the Manifesto of the Communist Party
closes with a declaration that the communists “openly declare that their
ends can be attained only by the forcible overthrow of all existing social
conditions.” But this is misleading—unless what is intended is “forcible
overthrow” after having achieved power by legal means—since from the
1840s, Marx and also Engels had recognized the potential of constitutional
reform enhancing proletarian political power. In the Principles of
Communism, upon which the Communist Manifesto was based, Engels had
recognized the possibility of achieving political control by constitutional
means,25 while the Communist Manifesto itself: (a) describes the impact of
modern industrial development on the proletariat, whose quantitative
expansion and coherence are reflected in unionization extending increas-
ingly to the national level, and the establishment of a workers’ party; (b)
expresses hostility towards a variety of “critical-utopian” socialists of the
day for “violently oppos[ing] all political action on the part of the working
class”; and (c) supports constitutional reform measures proposed by the
23
Ibid., 9.
24
Marx, Critique of the Gotha Programme, in MECW (New York: International Publishers,
1989), 24: 95.
25
Frederick Engels, Principles of Communism, in MECW (New York: International
Publishers, 1976), 6: 350.
Chartists in England, the Agrarian Reformers in America, and the Social

Democrats in France.26 Support for the Chartists is found in The Poverty of
Philosophy of 184727; and particularly significant as a sort of retrospective
evaluation after the failed revolutionary attempts of 1848 is a paper entitled
“The Chartists” of 1852, which perceives universal suffrage as synonymous
with proletarian political power: “the carrying of Universal Suffrage in
England would … be a far more socialistic measure than anything which
has been honoured with that name on the Continent. Its inevitable result,
here, is the political supremacy of the working class.”28 Needless to say, the
achievement of universal suffrage should be seen as part of the evolutionary
process, the capitalist state being obliged to offer such a concession from
fear of its own creation—the proletariat.
Recognition dating back to the 1840s of the possibility of a peaceful
transition to the proletarian dictatorship throws into question Bober’s
focus on the early 1860s as marking a distinct shift away from “violence”
as sine qua non. Stedman Jones implicitly sides with Bober when he refers
to Marx’s “belittlement” in the 1840s and early 1850s (as in the Eighteenth
Brumaire) “of the significance of manhood suffrage and the democratic
republic,” his “hostility towards political democracy and universal suf-
frage,” his “refusal to think of universal suffrage as anything other than a
pathological symptom,” and his “suspicion about demands for manhood
suffrage…. He was still prone to dismiss universal suffrage as an illusion.”29
What then comes of the potentiality of constitutional reform measures
that I have cited from the Communist Manifesto with respect to Britain,
America, and France and from “The Chartists” of 1852 referring specifi-
cally to Britain? Are they to be simply dismissed? I suggest that the appar-
ent contrast reflects Marx’s opposition to universal suffrage as a strictly
liberal principle of “one man one vote,” but approval that provided the
inevitable result would indeed be the political supremacy of the working
class—namely, a communist dictatorship. As I shall presently confirm, nei-
ther Marx nor Engels would have countenanced a democratic system that
allowed the replacement of a proletarian majority or, worse still, a situation
where so-called proletarians opted for bourgeois policies.
26
Marx and Engels, Manifesto of the Communist Party, 493, 517–18.
27
Karl Marx, The Poverty of Philosophy: Answer to the “Philosophy of Poverty” by M. Proudhon,
in MECW (New York: International Publishers, 1976), 6: 210.
28
Karl Marx, “The Chartists,” in MECW (New York: International Publishers, 1979), 11:
335–6; Marx’s emphasis.
29
Stedman Jones, Karl Marx, 307, 337, 342, 550.
256 S. HOLLANDER
When we move forwards to the violent events in France of 1870, we

find Marx in The Civil War in France (1871) criticizing the Commune for
inadequate ruthlessness, complaining, for example, that reprisals had at
one stage been merely an “empty threat.”30 And if we left the matter there,
we might perhaps better understand Marx’s reputation as the “Red
Terrorist Doctor.” But the matter is not so simple. Allowance must surely
be made for the vicious conduct of the opposing government forces work-
ing hand in hand with the Prussians which, to my mind, largely justifies
Marx’s reading of the Communards as acting defensively. As for matters of
principle, Marx goes on to admit candidly that “the working class cannot
simply lay hold of the ready-made State machinery, and yield it for its own
purposes.”31 The evolutionary processes at play could not be bypassed:
“The working class did not expect miracles from the Commune. They had
no ready-made utopias to introduce par decrét du peuple. They know that
in order to work out their own emancipation and along with it that higher
form to which present society is irresistibly tending by its own economic
agencies, they will have to pass through long struggles, through a series of
historical processes, transforming circumstances and men. They have no
ideals to realize, but to set free elements of the new society with which old
collapsing bourgeois society itself is pregnant.”32
On various occasions in the early 1870s, Marx distinguishes between
countries with respect to violent revolution, as Bober and others cor-
rectly note. All depended on the ruling circumstances. An interview
accorded to The World newspaper—only a few weeks after composition
of The Civil War in France—conveys the point in question: “In England
… [i]nsurrection would be madness where peaceful agitation would
more swiftly and surely do the work.”33 This perspective on the English
case is represented by Stedman Jones as a “revised position,”34 whereas I
have documented earlier indications of the same orientation. As for
France, Marx opines in the interview that “a hundred laws of repression
and a mortal antagonism between classes seem to necessitate the violent
30
Karl Marx, The Civil War in France, published anonymously as the Address of the General
Council of the International Working-Men’s Association, in MECW (New York: International
Publishers, 1986), 22: 327.
31
Ibid., 328.
32
Ibid., 335.
33
Karl Marx, “Record of Interview with The World Correspondent,” in MECW (New
34
Stedman Jones, Karl Marx, 551.
solution of social war,” contrasting with The Civil War in France, but
one notes that Marx expresses himself tentatively. At the 1872 Hague
Congress of the International, he expressly allows the possibility of a
peaceful transition to communism in the English, American, and possibly
Dutch cases, but considers inevitable resort to “force” in “most”
Continental states without specific mention of France:
We know that the institutions, customs and traditions in the different coun-
tries must be taken into account; and we do not deny the existence of coun-
tries, like England and America, and if I knew your institutions better I
might add Holland, where the workers may achieve their aims by peaceful
means. That being true we must also admit that in most countries on the
Continent it is force which must be the lever of our revolution; it is force
which will have to be resorted to for a time in order to establish the rule of
the workers.35
Needless to say, to allow that in most Continental countries, “force …

must be the lever of our revolution” conflicts radically with the evolution-
ary principle laid down in the Preface to Capital, whereby “the country
which is more developed industrially only shows, to the less developed,
the image of its own future.”
A word is in order here regarding a circular letter of September 1879
sent to leaders of the Social Democratic party by Engels, and also signed
by Marx, lambasting as “too moderate” a trio of Zürich journalists, includ-
ing Eduard Bernstein, proposing a new party newspaper which would be
opposed to “political radicalism” and would “adopt a line that is socialist
in principle.”36 By calling for “an influx of supporters from the ranks of the
educated and propertied classes,” especially as Reichstag members,37 the
trio also apparently denied the merits of “a workers” party,” whereas the
Communist Manifesto only tolerated entry of people from the ruling class,
subject to their commitment to the “militant proletariat.”38 And they cul-
pably applauded the Party for “showing that it does not wish to pursue the
path of forcible, bloody revolution, but rather … to tread the path of legal-
35
Karl Marx, “On the Hague Congress,” in MECW (New York: International Publishers,
1988), 23: 255.
36
Karl Marx and Frederick Engels, “Circular Letter, 17–18 September 1879,” in MECW
(New York: International Publishers, 1991), 45: 401.
37
Ibid., 403.
38
Ibid., 407.
258 S. HOLLANDER
ity, i.e. of reform.”39 But we must be cautious. Engels and Marx were not,
by all this, engaging in a call to arms and revolution. For they admitted
that Social Democratic voters “have sense enough not to break their heads
against a wall and attempt a ‘bloody revolution’ with the odds of one to
ten,” but insisted only that all options should be left open, and that Social
Democrats not “deny themselves all chance of exploiting some violent
upheaval abroad, a sudden wave of revolutionary fervour engendered
thereby.” A mild alternative is also proposed when responding to the
Zürich trio’s declaration that while they had no wish “to relinquish our
party and our programme … we shall have enough to do for years to come
if we concentrate our whole strength, our entire energies, on the attain-
ment of certain immediate objectives which must in any case be won before
there can be any thought of realizing more ambitious aspirations,”40 which
is of course Bernstein’s trademark philosophy. As an alternative, the
Engels-Marx letter merely proposed participation in “polemic,” that is in
“resolute political opposition … laying stress on ambitious goals which are
calculated to frighten off the bourgeoisie,” and “attainable anyway in our
own generation,” rather than have the party “devote all its strength and
energies to those petty-bourgeois stop-gap reforms which provide new
props for the old social order and which might, perhaps, transform the
ultimate catastrophe into a gradual, piecemeal and, as far as possible,
peaceable process of dissolution”41 One notes that there is no positive
rejection here of “petty-bourgeois stop-gaps reforms,” only the impor-
tance of supplementing such steps by “polemic” to assure against the dan-
gers posed by reform.
II.3. The First Stage of Communism

A third consideration is the extension of the evolutionary dimension
beyond the acquisition of proletarian control of the state. Needless to say,
the state itself—necessarily a repressive set of institutions as the term “dic-
tatorship” implies—is a capitalist residue which, Marx affirmed in The
Civil War in France, would ultimately have to be destroyed,42 or—as
Engels never tired of insisting—would die out naturally in the course of
39
Ibid., 404.
40
Ibid., 405.
41
Ibid., 406.
42
Berlin, Karl Marx, 257.
time.43 But beyond this general consideration, there are several more spe-
cific instances of capitalist residue.
Firstly, in an initial phase, after acquisition of proletarian control, a capi-
talist sector is to be retained—and this for an unspecified period. As
expressed in the Manifesto of the Communist Party, while the immediate
end of the revolution was to seize the state, the proletariat “centralis[ing]
all instruments of production” as well as credit, and the means of com-
munication and transport, “in the hands of the State,” nevertheless “the
proletariat will use its political supremacy to wrest, by degrees, all capital
from the bourgeoisie.”44 The same caution is implied by the function here
accorded the revolutionary dictatorship in extending “factories and instru-
ments of production owned by the State.” A gradual dismantling of the
private property system is a conspicuous feature of Engels’s Principles of
Communism.45. It would, of course, entail fine judgement to specify the
rate at which the capitalist sectors might be safely dismantled by the com-
munist regime, with reliance implicitly placed on the ability of the new
administration not to compromise the performance by what remained of
the traditional sectors in creating or maintaining the capacity required to
assure the successful implementation of a communist programme.46
Secondly, there is an affirmation by Engels that his own and Marx’s
support for “cooperatives” applied only to a transitional arrangement,47
which implies that even competing cooperatives would have been accept-
able, along with a capitalist sector in the initial stage of communism, since
centrally controlled cooperation was part of the permanent “common”
plan, as Marx insisted in the Civil War in France.48
Thirdly, the initial stage of communism would entail wage inequality
reflecting differential physical and mental abilities, Marx in the Critique of
the Gotha Programme (1875) vividly explaining that “we are dealing here
with a communist society, not as it has developed on its own foundations,
43
Samuel Hollander, Friedrich Engels and Marxian Political Economy (Cambridge:
Cambridge University Press, 2011), 323–4.
44
Marx and Engels, Manifesto of the Communist Party, 504–5; emphasis added.
45
Engels, Principles of Communism, 349–50; see Hollander, Friedrich Engels, 324.
46
This raises the issue of the productivity of the traditional compared with joint-stock
arrangement, especially with regard to innovation. Here, we should take note of Marx’s
recognition of complex decision-making by the owner-entrepreneur regarding innovation in
the face of uncertainty. On this issue, see Samuel Hollander, The Economics of Karl Marx:
Analysis and Application (Cambridge: Cambridge University Press, 2008), 438–43.
47
Hollander, Friedrich Engels, 149–50, 166.
48
Marx, The Civil War in France, 335.
260 S. HOLLANDER
but, on the contrary, just as it emerges from capitalist society, which is thus
in every respect, economically, morally, and intellectually, still stamped
with the birth-marks of the old society from whose womb it emerges.”49
Only in some “utopian” phase of communism would the principle “From
each according to his abilities to each according to his needs” apply; by
contrast, his labour certificate scheme, a prime feature of his proposed
centrally organized system, recognized natural differentials between indi-
viduals with regard to “talent”: “But one man is superior to another physi-
cally or mentally and so supplies more labour in the same time, or can
work for a longer time; and labour, to serve as a measure, must be defined
by its duration or intensity…. It is, therefore, a right of inequality.”50 The
correction on grounds of justice of what has been termed “luck inequal-
ity”—pay differentials reflecting fortuitous differences in ability, both
mental and physical—would apply only in some distant and indistinct uto-
pian phase of communism. Of Marx’s position, Friedrich Hayek had no
inkling when he insisted that “from the fact that people are very different
it follows that, if we treat them equally, the result must be inequality in
their actual position, and that the only way to place them in an equal posi-
tion would be to treat them differently.”51
Finally, there is the matter of compensation for expropriated property.
Joseph Persky refers specifically to J.S. Mill’s advocating compensation rather
than confiscation in his land reform programme, implying that such a recom-
mendation would be completely foreign to Marx,52 whereas when discussing
expropriation of big landed proprietors, once “our Party is in possession of
political power,” Engels recalled in 1894 that “[w]e by no means consider
compensation as impermissible in any event; Marx told me (and how many
times!) that in his opinion we would get off cheapest if we could buy out the
whole lot of them” and “[w]hether this expropriation is to be compensated
for or not will to a great extent depend not upon us but the circumstances
under which we obtain power.”53 I see no evident reason why the same
allowance cannot be applied to residual capitalist industrial ventures.
49
Marx, Critique of the Gotha Programme, 85–6.
50
Ibid., 86–7.
51
Friedrich Hayek, The Constitution of Liberty (Chicago: University of Chicago Press,
2011), 149–50.
52
Joseph Persky, The Political Economy of Progress: John Stuart Mill and Modern Radicalism
(Oxford: Oxford University Press, 2016), 182–3.
53
Frederick Engels, “The Peasant Question in France and Germany,” in MECW (New
III. Marx as laissez-faire Conservative:

The Economic Dimension
Marx’s evolutionary perspective implies, in and of itself, that reformist
interventionism threatens the developmental process, and thus the transi-
tion from capitalism to communism. The Manifesto of the Communist
Party refers to “Conservative, or Bourgeois Socialism,” alluding to “a part
of the bourgeoisie [which] is desirous of redressing social grievances, in
order to secure the continued existence of bourgeois society.”54 In a varia-
tion of the theme appearing in The Class Struggles in France 1848–50, Marx
opposed reformist measures designed to forcibly stem the growth of capital,
that is to prevent the evolution of the system.55 As Mises put the matter,
Marx regarded reform measures as “not progressive, but reactionary.”56
But we need not turn to Mises, since Engels himself admitted “a conserva-
tive side” to the evolutionary process, recognizing “that definite stages of
cognition and society are justified for their time and circumstances.”57 In
these terms, Engels had condemned the Ten-Hours Bill as “reactionary.”58
Marx was famously to revise his view when it came to factory legislation—a
matter I shall touch on presently.
Marx’s case for non-intervention extends beyond a fear of the conse-
quences of reform and improving living standards. His laissez-faire reason-
ing has a positive dimension, namely a sophisticated appreciation of the
operation of the free-market pricing system, a matter not sufficiently
appreciated by those commentators who take for granted that he must
necessarily have favoured interventionism.59 In fact, Marx silently allied
himself with contemporary conservative opponents of reformist state
intervention, and also to some degree with Friedrich Hayek in our own
day. Consider, first, an application by Marx of price-theoretical principles
to income-redistribution proposals, as by James Mill, entailing state
54
Marx and Engels, Manifesto of the Communist Party, 513.
55
Karl Marx, The Class Struggles in France, in MECW (New York: International Publishers,
1978), 10: 126.
56
Ludwig von Mises, Planning for Freedom (South Holland, IL: Libertarian Press, 1980), 29.
57
Frederick Engels, Ludwig Feuerbach and the End of Classical German Philosophy, in
MECW (New York: International Publishers, 1990), 26: 360.
58
Frederick Engels, “The Ten Hours Question,” in MECW (New York: International
Publishers, 1978), 10, 271–6; 288–300.
59
Murray Rothbard, Economic Thought before Adam Smith: An Austrian Perspective on the
History of Economic Thought (Aldershot: Edward Elgar, 1995), xii, 530.
262 S. HOLLANDER
confiscation of rent. The point in question for Marx is that confiscation

would require in practice land-valuation indexes (“cadastres”), whereas
these could not be taken as settled once and for all because of continuous
disturbances in technical and market conditions. Thus, regarding technol-
ogy: “rent could not be the invariable index of the degree of fertility of the
land, since every moment the modern application of chemistry is changing
the nature of the soil and the geological knowledge is just now in our days
beginning to revolutionize all the old estimates of relative fertility.”60
There were, for example, instances when “rent proper is wiped out by the
competition of new and more fertile soils” or when hitherto scarce
improvements lose their value on becoming “universal owing to the devel-
opment of agronomy.”61 But beyond this, and even in the absence of
changing technology, “fertility is not so natural a quality as might be
thought [but] is closely bound up with the social relations of the time. A
piece of land may be very fertile for corn growing, and yet the market price
may induce the cultivators to turn it into an artificial pastureland and thus
render it infertile.”62 The state, in brief, lacked the changeable detailed
knowledge required for the proposed reform, a more “Austrian” conclu-
sion than which it would be difficult to imagine.
It was also Marx’s methodological position that the entire issue of “dis-
tributive justice,” above all complaints of “unfairness” directed at capitalist
income arrangements, was rendered irrelevant by the fact that the distri-
bution pattern is the necessary outcome of the “mode of production.”63
In these terms, Marx objected to the option of reform within capital-
ist arrangement to correct allegedly gross distributional defects as pro-
posed by the 1875 Gotha Programme: Is not “present-day distribution
… the only ‘fair’ distribution on the basis of the present-day mode of
production?”64 And he denied Adolphe Wagner’s attribution to him in
1879 of the view that profit was “a deduction from, or robbery of, the
worker.”65 Indeed, by ignoring the economic role of income inequality a
redistributive programme implied the undermining of productive capacity
and the very ability to produce a surplus. So far was this argument carried
60
Marx, The Poverty of Philosophy, 203.
61
Ibid., 205.
62
Ibid., 204.
63
Hollander, The Economics of Karl Marx, 390–6, 403.
64
Marx, Critique of the Gotha Programme, 84.
65
Karl Marx, “Notes on Wagner’s Lehrbuch der Politischen Oekonomie,” in MECW (New
that in manuscript notes of 1879, Marx protested that he was falsely rep-
resented as maintaining that profit was “a deduction from, or robbery
of, the worker,” whereas in fact, “the capitalist is a necessary functionary
of capitalist production [who] enforces the production of surplus value,
thus first helping to create what is to be deducted” from the labourer.66
Already in Poverty of Philosophy, Marx had insisted against Proudhon upon
the necessity in a private property society of “classes which profited and
classes which decayed”—the latter implying the immiseration of labour—
as a condition for “the development of productive forces” and the genera-
tion of surplus.67
IV. Aspects of Marx’s “Revisionism” and Implications

for the Implementation of a Proletarian Programme
Consider next Marx’s affirmation in 1864 that the expansion of the British
cooperative movement during 1848–64 was “excellent in principle, and
… useful in practice.”68 This perhaps intimates potential for improvement
in labour’s condition, but is qualified since cooperation, because “kept
within the narrow circle of the casual efforts of private workmen,” was
unable “to arrest the growth in geometrical progression of monopoly, to
free the masses, [or] even to perceptibly lighten the burden of their miseries.”69
To have positive effects of this order, “co-operative labour ought to be
developed to national dimensions, and consequently, to be fostered by
national means,” whereas this extension would never be countenanced by
“the lords of land and the lords of capital [who] will always use their politi-
cal privileges for the defence and perpetuation of their economical monop-
olies.” Never be countenanced? Yet Marx himself in the same Inaugural
Address had retracted this sort of argument in relation to reactionary hos-
tility towards factory legislation, referring to the “immense physical, moral,
and intellectual benefits hence accruing to the factory operatives [which]
are now acknowledged on all sides” and which proved the fallacy of
middle-class predictions “that any legal restriction of the hours of labour
66
Hollander, The Economics of Karl Marx, 386–7.
67
Marx, Poverty of Philosophy, 158–9. The celebrated proposal for a “heavy progressive or
graduated income tax” (Manifesto of the Communist Party, 505), be it noted, relates to the
weakening of remnants of capitalism after the communist takeover and is not part of a
reformist redistributive programme pertaining to the existing system.
68
Karl Marx, “Inaugural Address of the Working Men’s International Association,” in
MECW (New York: International Publishers, 1985), 20: 11–12.
69
Ibid., 12; emphasis added.
264 S. HOLLANDER
must sound the death knell of British industry”—as if that had not been
his own earlier contention; it was in fact, “the first time that in broad day-
light the political economy of the middle class had succumbed to the
political economy of the working class,” namely “the blind rule of the
supply and demand laws” to “social production controlled by social
foresight.”70 Capital itself refers to the “physical and moral regeneration”
of the factory workers, reformist legislation perceived as a feature of the
evolutionary process entailing an increasingly powerful working class gen-
erated by the capitalist developmental process itself.71 Bear in mind also
Marx’s inclusion in the Preface to Capital of social welfare legislation as
one of his “tendencies working with iron necessity towards inevitable
results.”72 That the “factory magnates,” especially after 1860, were
becoming increasingly “reconciled to the inevitable” because of modern
industrial development,73 provides a new twist to the evolutionary pro-
cesses at play in advanced capitalism, and promises to undermine Marx’s
“conservatism” in a major way.
A related index of Marx’s “revisionism” is provided by a remarkable
pronouncement in the third volume of Capital regarding technological
unemployment, implying that the capitalist state would, under some con-
ditions, take measures to check the rate of innovation for fear of the pro-
letarian response: “a development of productive forces which would
diminish the absolute number of labourers, i.e., enable the entire nation
to accomplish its total production in a shorter time span, would cause a
revolution, because it would put the bulk of the population out of the
running.”74 We recall too, Marx’s presumption that the state would inter-
vene to control monopoly.
Let us look now at the notion of “absolute immizeration” of labour
inducing proletarian dissatisfaction and enthusiasm for institutional
change. In a Report to the General Council of the International of June
1865, Marx declared that unions could not reverse “the general tendency
of capitalist production … not to raise, but to sink the average standard of
wages”; at best, the working class are capable of “retarding the downward
70
Ibid., 10–11.
71
Marx, Capital, Vol. I, 300, 412.
72
Ibid., 9–10.
73
Ibid., 300.
74
movement, but not changing its direction.”75 In “Instructions,” drawn up

in August 1866 relating to the International, he emphasized primarily
their role as a political training ground, acting “as organized agencies for
superseding the very system of wages labour,” and only secondarily as
“counteracting capitalists” bargaining advantage by restricting competi-
tion between individual labourers.76 And shortly thereafter (3 July 1871),
Marx found that little had been accomplished regarding improved stan-
dards by purely national working-class organizations—unions as well as
cooperatives: “The working classes remain poor amid the increase of
wealth, wretched amid the increase of luxury. Their material privation
dwarfs their moral as well as their physical stature.”77 Indeed, the principle
whereby “[t]he country which is more developed industrially only shows,
to the less developed, the image of its own future” is applied in Capital to
predict ultimately falling wages in the United States: “Capitalist produc-
tion advances there with giant strides, even though the lowering of wages
and the dependence of the wage worker are yet far from being brought
down to the normal European level.”78 Nonetheless, in the 1871 inter-
view, Marx allowed at least the potential for real-wage improvement as a
result of international cooperation: “Formerly, when a strike took place in
one country, it was defeated by the importation of workmen from another.
The International has nearly stopped all that.”79 Furthermore, Marx might
have allowed better prospects in the British case were it not for the special
feature of Irish immigration.80 As for improvements in welfare more gen-
erally, Marx, in the 1879 circular letter, did not oppose “stop-gap”
reforms, and in 1880, approved French reforms extending to Monday
holidays, minimum wages, non-discriminatory pay between the sexes, and
employer contributions to insurance.81 As with British factory legislation,
Marx’s non-interventionist “conservatism” seems to be weakening.
75
Karl Marx, “Value, Price and Profit,” in MECW (New York: International Publishers,
1985), 20: 148–9.
76
Karl Marx, “Instructions for the Delegates of the Provisional General Council,” (New
77
Marx, “Record of Interview with The World Correspondent,” 602.
78
79
Marx, “Record of Interview with The World Correspondent,” 602.
80
Karl Marx, “Marx to S. Meyer and A. Vogt, 9 April 1870,” in MECW, vol. 43, 474–5.
81
Marx, “Preamble to the Programme of the French Workers” Party,” in MECW (New
York: International Publishers, 1989), 24: 340–1.
266 S. HOLLANDER
The dilemma created for Marx of course is that improved conditions of

work and pay threaten to compromise labour’s readiness to adopt a truly
“proletarian” stance, the 1879 letter intimating this concern by referring
to stop-gap reform as providing “new props for the old social order.”
Recourse might always be made to the standard repost that any improve-
ment is a secondary matter so long as the wages system itself remained
untouched—“Even … the most rapid possible growth of capital, however
much it may improve the material existence of the worker, does not
remove the antagonism between his interests and the interests of the bour-
geoisie, the interests of the capitalist.”82 But this assurance does not efface
Marx’s expressed doubts regarding contemporary proletarian “class con-
sciousness,” which could only be aggravated by improvement in labour’s
well-being. We encounter his concerns in discussion with Engels regard-
ing the American Civil War when he complained of “the sheeplike attitude
of the working men in Lancashire…. Of late, England has made more of
an ass of itself than any other country, the working men by their servile
Christian nature, the bourgeois and aristocrats by the enthusiasm they
have shown for slavery in its most direct form.”83 The following year,
again to Engels, Marx refers to “what seems to be a bourgeois contagion”
affecting English workers.84
Class consciousness was also undermined by working-class nationalism
manifested in hostility towards the Irish, which encouraged the worker to
feel at one with the aristocrats and capitalists against a common enemy.85
And we have encountered Marx’s disappointment with the “servile
Christian nature” attributed to working men, which introduces the role of
national character. His concern is expressed particularly clearly in his
Report to the General Council of the International of June 1865, com-
plaining that while a well-trained, self-conscious, militant proletariat was
essential to assure the pressures required for the demise of capitalism,
British unions were not filling the bill: “They fail generally from limiting
themselves to a guerilla war against the effects of the existing system,
82
Karl Marx, Wage Labour and Capital, in MECW (New York: International Publishers,
1977), 9: 220–1.
83
Karl Marx, “Marx to Engels, 17 November 1862,” in MECW (New York: International
Publishers, 1985), 41: 430.
84
Karl Marx, “Marx to Engels, 9 April 1863,” in MECW (New York: International
Publishers, 1985), 41: 468.
85
Karl Marx, “Marx to Kugelmann, 29 November 1869,” in MECW in MECW (New
instead of simultaneously trying to change it, instead of using their organ-

ised forces as a lever for the final emancipation of the working class, that is
to say, the ultimate abolition of the wages system.”86 Indeed, at the
London conference of the International in September 1871, Marx repre-
sented trade unions as “an aristocratic minority.”87
To be especially noted is the fact that several of the expressions of con-
cern are found after the passage of Disraeli’s 1867 Reform Act, which
doubled the (adult male) electorate. The implications are grave if we recall
the affirmation in “The Chartists” of 1852 that the “inevitable result” of
Universal Suffrage” would be “the political supremacy of the working
class”—the Revolutionary Dictatorship of the Proletariat no less. This was
no longer taken for granted. Marx’s expressed concerns with proletarian
class consciousness implied that a working-class parliamentary majority
might be unwilling to implement a communist programme, or even that a
working-class electorate might choose to replace the Proletarian Party at
the polls, bringing to a dead halt the entire evolutionary process relied
upon to assure the transition to communism. A paper of 1878 introduces
a further limitation created by public opinion, namely that a proletarian
Parliamentary majority in Britain and America “could, by lawful means,
rid themselves of such laws and institutions as impeded their development,
though they could only do so insofar as society had reached a sufficiently
mature development.”88 All of this seems to have passed Duncan by, for he
ascribes recognition of the unwillingness of the proletariat to confirm to
Marx’s expectations of them specifically to Bernstein, writing of Bernstein
as “alter[ing] the inherited Marxist categories to accord with what seems
to him to be existing facts.”89
Engels confirms the seriousness of the matter. The economic prosperity
in the 1850s and the collapse of the Chartist movement suggested to him
that “the English proletariat is actually becoming more and more
bourgeois”90; indeed, that “the English proletarian has declared himself in
86
Marx, “Value, Price and Profit,” 149.
87
Karl Marx, “Speech on Trades Unions at London Conference of the International
Working Men’s Association,” in MECW (New York: International Publishers, 1986), 22:
614.
88
Karl Marx, “Parliamentary Debate on the Anti-Socialist Law,” in MECW (New York:
89
Graeme Duncan, Two Views of Social Conflict and Social Harmony (Cambridge:
Cambridge University Press, 1973), 304.
90
Frederick Engels, “Engels to Marx, 7 October 1858,” in MECW (New York:
268 S. HOLLANDER
full agreement with the dominancy of the bourgeoisie.”91 And some 15

years after the Reform Act, Engels lamented labour’s failure, as evidenced
by trade union policy, to take advantage of the opportunities offered by
the enfranchisement of “the greater portion of the organized working
class” to advance measures designed to undermine the “wage system”
itself.92 The prospect for the mutation of capitalism is a grim one indeed.
VI. Concluding Remarks
The evolutionary processes discernible in Marx’s analysis discussed in this
chapter relate to progress within capitalism, the acquisition of proletarian
control, and the initial stage of communism. The most contentious issue
is surely the transition to communism, particularly its “revolutionary”
character. This chapter commenced by referring to a loss of confidence by
the Frankfurt School in the 1930s in the ability of workers to mount a
revolution against monopoly capitalism, as Marx allegedly predicted they
would, since workers had become paralysed by conformist tendencies. But
what we have shown is that Marx himself, half a century before the rise of
fascism, feared that the British proletariat might be seduced by bourgeois
ideology, wholly undermining the evolutionary processes generated by
capitalist development, in effect thwarting the logic of historical material-
ism. His expressions of doubt sometimes occur in private correspondence
and would not therefore have been common knowledge, but by no means
all of them, as in his Report to the General Council of the International of
June 1865 and at the London conference of the International in September
1871. English working-class nationalism and the general state of public
opinion were two of the complicating issues, as we have seen. But beyond
this, there was a far broader concern relating to the threats to international
working-class cooperation created by nationalist sentiment on the
Continent. For Marx warned on 23 July 1870 regarding the Franco-
Prussian War: “If the German working class allow the present war to lose
its strictly defensive character and to degenerate into a war against the
French people, victory or defeat will prove alike disastrous.”93 He judged
91
Frederick Engels, “Engels to Marx, 8 April 1863,” in MECW (New York: International
Publishers, 1985), 41: 465.
92
Frederick Engels, “Trades Unions,” in MECW (New York: International Publishers,
1989), 24: 386–7.
93
Karl Marx, “First Address of the General Council of the International Working Men’s
Association on the Franco-Prussian War,” in MECW (New York: International Publishers,
1986), 22: 6.
that “the principles of the International are … too widely spread and too
firmly rooted amongst the German working class to apprehend such a sad
consummation,” but the possibility of a “sad consummation” as a result of
extremist nationalism is clearly recognized or else there would have been
no need for the warning. Marx’s worst fears were tragically to materialize,
the term “sad consummation” scarcely capturing the bloodbath that
was to occur.
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Marx’s Ideas and Conceptions of Socialism
in the Twenty-First Century
Tian Yu Cao
I. Introduction: How to Interpret Marx’s

Conception of Socialism
The collapse of the Soviet model, along with the decline of Keynesianism
since the 1970s, has posed a serious challenge to socialists: Is it still pos-
sible to conceive a theoretically coherent and practically viable economic
model in which the socialist principle of no-alienation1 is not compro-
mised by the concerns of productivity and efficiency? What would be the
necessary conceptual resources for this endeavour? It seems that in the last
three decades, all the available or conceivable conceptual resources have
1
In this chapter, the notion of non-alienation is understood broadly: objectively, it means
no exploitation, no dominance, self-governing, freedom, equality, justice; subjectively, com-
munal solidarity, creativity, etc. For a critical review of the debate on the centrality of the
no-alienation principle in the conception of socialism and other issues related with market
socialism between Gerald Allan Cohen and David Miller, see David Miller, “Our Unfinished
Debate About Market Socialism,” Politics, Philosophy & Economics 13, no. 2 (2014): 119–39.
This chapter intends to indirectly address their concerns from an institutional rather than
individualistic-moral-psychological perspective.
T. Y. Cao (*)
Boston University, Boston, MA, USA

274 T. Y. CAO
been exhaustively tried, but the challenge remains. In this chapter, a sug-
gestion is made that in taking up the challenge, some of Marx’s ideas
should be taken as more than instructive and inspiring; in fact, they have
provided conceptual foundations for a socialist economic model that is
both coherent and viable.
Some sceptics may raise their eyebrows. Is Marx still relevant in this
endeavour? Is it not true that Marx’s ideas were responsible for the failure
of the Soviet model, whose guiding principles—the state ownership of the
means of production and central planning—were directly taken from Marx’s
teaching? It sounds true, but not quite. It was only the Soviet interpretation
of Marx’s conception of the two pillars of socialism—“social property” and
“conscious social regulation”—articulated in his Critique of the Gotha’s
Program,2 Marx’s most mature conception of what a socialist society should
be like. However, there can be a different interpretation that, it can be
argued, is truer to the spirit of Marx’s conception of socialism.
The grounds for an alternative interpretation are provided by two of
Marx’s fundamental ideas about post-capitalist society. One is the idea of “the
republican association of free and equal producers,”3 concerning the funda-
mental organization in any post-capitalist society: in its first phase, what we
commonly call socialist society, as well as its high phase, a truly communist
society. The other is the idea of “equal right,”4 which concerns exclusively the
economic foundation of the socialist, but not the communist, society.
The meaning of the first idea is clear-cut in its social and political
aspects: a firm rejection of statism. Its meaning in the economic aspect,
however, depends on the economic situation of the post-capitalist society:
in a communist society, it means “from each according to his ability, to
each according to his needs!”5 While in a socialist society, it can only mean
the exchange of equal labours.6 And this is directly linked to Marx’s s econd
idea, whose non-statist implications to his conception of the two pillars of
socialism deserve serious explorations.
2
Karl Marx, Critique of the Gotha’s Program, in MECW (New York: International
Publishers, 1989), 24: 75–99.
3
Karl Marx, “Instructions for the Delegates of the Provisional General Council,” in which
Marx used the phrase of “the republican and beneficent system of the association of free and
equal producers,” in MECW (New York: International Publishers, 1985), 20: 190.
4
Karl Marx, Critique of the Gotha’s Program, in MECW (New York: International
Publishers, 1989), 24: 86.
5
Ibid., 87.
6
Ibid., 86.
MARX’S IDEAS AND CONCEPTIONS OF SOCIALISM IN THE TWENTY-FIRST… 275
II. The Twenty-First-Century Context:
Financial Capitalism Globalized
Before proceeding with the explorations, it is critical to note that socialism
is not a doctrinaire design, but can only be the outcome of the struggles and
movement of the working classes in response to their capitalist conditions of
existence. The fundamental condition for workers’ existence in the contem-
porary era of globalization is the financialization of economic life and the
dominance of financial capital. Although Marx’s focus was on the primacy
of production, he also saw capitalist dynamics as being deeply entwined with
finance. Financial capital is what Marx called moneyed capital that functions
as an external agent providing the finance that launches the circuit of capital.
Since the 1980s, non-financial enterprises, banks, and even working-class
households in the advanced capitalist world have become increasingly impli-
cated in the web of finance, the so-called financial inclusion. The discipline
imposed by finance on production has bred the strategy of rationalize,
retrench, and outsource, leading to greater concentration and centralization
of all spheres of production on the one hand, and the growth of inequality
and concentration of wealth on the other.
The role of financial capital, just as the role of one of its special forms, the
credit system, as Marx indicated, has a dual character.7 One the one hand, it
makes possible that the expansion of individual capitalist enterprises need
not be limited to the reinvestment of their retained earnings, and thus accel-
erates the expansion of the scale of production; for the same reason, it also
accelerates the development of technology and the creation of the world
market. That is, it is crucial to the expansion and development of capitalism.
On the other hand, since it is driven by the capitalist impulse to make a
profit, it also accelerates the violent outbreak of contradiction and crisis.
Marx’s verdict was that credit system, or financial capital in general, as the
principal lever of overproduction and excessive speculation,
develops the motive of capitalist production, enrichment by exploitation of

others’ labour, into the purest and most colossal system of gambling and
swindling and restricts even more the already small number of exploiters of
social wealth.8
7
Karl Marx, Capital, Vol. III, in MECW (New York: International Publishers, 1998), 37:
397–439.
8
Ibid., 439.
276 T. Y. CAO
What should be stressed here is that in criticizing all the evil motiva-
tions and evil consequences of financial capital, Marx’s sharp insights into
its dual and contradictory nature should not be forgotten: underneath all
the evils, there is a rationale for it to emerge in the historical development
of capitalism. The ground on which financial capital is premised is the
rational and productive separation of management from ownership of
working conditions (or capital in its generalized sense). The bearings on
conceiving socialism of workers’ experience with contemporary financial
capitalism will be seen clearer when the evolution of economic formations
is examined in Sect. V from Marx’s perspective of socializing economic
activities.
III. Socialism and the Law of Value

The best place to begin exploring the implications of Marx’s idea of “equal
right” to his conception of socialism is his frequently quoted claim:
What we have to deal with here is a communist society, not as it has devel-
oped on its own foundations, but, on the contrary, just as it emerges from
capitalist society; which is thus in every respect, economically, morally, and
intellectually, still stamped with the birthmarks of the old society from
whose womb it emerges. Accordingly, the individual producer receives back
from society—after the deductions have been made—exactly what he gives
to it. What he has given to it is his individual quantum of labour.9
That is, in a socialist society, “a given amount of labour in one form is

exchanged for an equal amount of labour in another form.”10 This means
“the same principle prevails as that which regulates the exchange of com-
modities, as far as this is exchange of equal values.”11
Essentially, what Marx said here is that the law of value will still be opera-
tive in a socialist society, although there are restrictions: nothing but labour
can enter into exchange, and nothing can pass to the ownership of the
means of production.
Considering the central place of the law of value occupies, in history
and at present, in the understanding of socialism, a careful examination of
the concept of value is mandatory.
9
Marx, Critique of the Gotha’s Program, 85–6.
10
Ibid., 86.
11
Ibid.
Marx’s classical formulation was this: the value of a commodity was cre-
ated by socially necessary labour for its production. But how the value is
determined, or what kind of social process through which the value is
formed, is an interesting yet not properly understood question, which has
implications to the way of understanding the notions of value, market, and
their relationship. A proper understanding of these issues will shed some
light on an alternative model of a socialist economy.12
To clear the way to understand the social process through which value
is formed, a non-social but naturalistic view about value has to be rejected.
According to this naturalistic view, the amount of socially necessary labour
can be measured by the natural scale of time the labourer spent on its pro-
duction. The reason for rejection is simple: socially necessary labour is an
abstraction of concrete natural (physical or mental) labour; in its essence,
socially necessary labour is not concrete labouring action anymore, but
what is necessary to create what is socially needed, judged by society, which
thus can only be evaluated by society through social processes. For this rea-
son, it cannot be measured by the natural scale of labouring time, but can
only be measured by its social scale, whose form is, ultimately, money.
Another misleading thesis should also be revised. The thesis claims that
abstract labour creates value. The thesis seems to presume the existence of
abstract labour prior or simultaneous to the value it creates. But this is
unreasonable. Human activities in production are always concrete, they
become value (socially necessary labour) only through a social-economical
process of abstraction, not because they involve the exercise of some gen-
eral and thus “abstract” human physical and mental energy and effort,
which remain to be natural-individual rather than social, and thus have
nothing to do with “socially necessary labor” until it is socialized through
certain social processes. So, it is correct to say that “value is the abstraction
of concrete labour thorough social processes,” but improper to claim that
“abstract labour creates value.”13
12
The analysis and understanding of value, market and socialism underlying this chapter is
mainly taken from the late Chinese Marxist economist Zili Lin, On the Socialist Economy:
China’s Economic Reform (Beijing: Economic Science Publisher, vol. 1, 1985; vol. 2, 1986;
vol. 3, 1994), passim. His most important theoretical works were selected and translated into
English, Zili Lin, “Going towards the Market,” special issue, Chinese Economic Studies 27
(1994): 27.
13
Zili Lin, “New Theory of Value—Renewal of Classical Theory of Value” in “Going
towards the Market,” special issue, Chinese Economic Studies 27 (1994): 58.
278 T. Y. CAO
The gravest defect of this widespread but misleading thesis is that it

excludes from the process of abstraction the adaptability or utility of differ-
ent concrete labours to social demand. The exclusion betrays its untenable
presumption that social supply and demand are always in balance, which
frequently turns out not the case. Surely concrete labour not needed by
society cannot be recognized as a socially necessary labour. So the exclu-
sion of utility from value formation is practically impossible unless the
abstraction of labour (the ascription of value to concrete labour) is achieved
by an authority’s direct evaluation in a closed economy rather than through
open yet indirect social process of labour exchanges, or market transac-
tions. Theoretically, the exclusion renders the labour theory of value
unable to explain the formation and function of price that is closely related
to utility. Of course, price frequently deviates from value, but when exter-
nal factors such as monopoly, non-economic interventions, and market
failures are absent—that is, in a fully competitive and complete market—
the deviation is insignificant.
In examining the value formation, which is premised on an understand-
ing of commodity exchange, another relevant claim should be rejected.
The claim says that commodity exchange is the result of the division of
labour and the rise of private ownership. But the lack of commodity
exchange in both privately owned feudal manor and public ownership-
based command economy shows that ownership itself is irrelevant to com-
modity exchange; it also shows that the very existence of division of labour
in both these circumstances does not by itself dictate the need for com-
modity exchange as a way of coordination; the required coordination
could be done in a direct way. Then what is crucial for the emergence of
commodity exchange or market exchange? It can be argued that a combi-
nation of three factors is crucial for market exchange.
The first factor is the existence of different economic subjects who pos-
sess different products, which are the materialized forms of different
labours. The difference among labours means the difference in kind (fish-
ing differs from shoe-making) and in quality (skilled or not); it also
involves different material, technological, and organizational conditions
under which labours are performed. How could these different labours be
coordinated or exchanged between different economic subjects? Here
come the other two factors. If there is a direct knowledge of social demand
for various different labours obtainable by each and all providers, then
there is no need for market exchange, although non-market coordination
would still be very difficult. But the lack of such kind of direct knowledge
makes any non-market coordination impossible. The third factor is the

lack of a unified measurement through which different labours can be
directly measured and compared. A combination of these three factors
would render market transactions inevitable for the socially necessary
coordination of various labours, even in a society of public ownership.
Central to this argument is the notion of adaptability of labour to social
demand. Since whether or not and how good certain particular labour
meets social demand could not be measured directly, all the differences
involved in different labours have to be converted or abstracted to a uni-
fied measurement, without which no proper coordination or exchange
would be possible. Yet the abstraction itself could only be achieved through a
trial-and-error process of labour exchange—namely through market trans-
actions or market evaluations. The result of abstraction based on the
adaptability of labour to demand is the formation of price. Then what is
value? Value is the essence of price, the socially necessary labour, which explains
the formation and function of price.
The notion of socially necessary labour, accordingly, expresses not only
the quantity but also the quality and the kind of a specific labour performed
under specific material, technological, and managerial conditions that meets
specific social demand, and thus is at the same time an expression of social
demand. Precisely because the supply-demand interaction affects the forma-
tion of labour abstraction, that is, value is formed through the process of price
formation, value can regulate supply and demand and bring a roughly bal-
anced relationship between the two in a fully competitive and complete
market system. That is, the measurement of value formed in market compe-
tition evaluates the economic behaviour of producers. The evaluation exerts
severe pressures on producers, forces them to adapt their labour to social
demand, to reduce cost and speed turnover, resulting in structural improve-
ment and efficient growth of the whole economy.
Running an economy is to solve two problems: the allocation of labour
and the exchange of labour. The former refers to economic structure, the
latter affects efficiency. The historical inevitability of market economy lies
in the fact that because the three factors discussed above always exist, only
such an economy could offer relatively effective solutions to the two fun-
damental economic problems.
The task of a proper theory of value is to offer a proper understanding
of the underlying rationale for the workings of a market economy in terms
of value formation. But the classical theory of value without taking into
consideration labour’s adaptability to social demand failed precisely around
280 T. Y. CAO
these two problems: overlooking the adaptability of particular labours to

social demand is to neglect the key fact that the structure of social demand
cannot be directly known and grasped; overlooking the differences
between different labours is to ignore the difficulty, and indeed impossibil-
ity of directly measuring labour. The hidden assumption of classical theo-
ries is that labour can be directly measured, allocated, and exchanged.
Theoretically, it is untenable and was sharply criticized by Nikolai Ivanovich
Bukharin at the early stage of the Soviet economy.14 Practically, its implica-
tions are disastrous, as was vindicated by Russia’s War Communism
(1918–21) and by other experiments on command economy afterwards.
IV. Markets: Their Constitutional Core

and Contextual Realizations
The above understanding of value offers a perspective from which we may

take the rise of the market as the rise of a mechanism for socializing eco-
nomic activities, and the rise of the product market as the first step in this
direction. It is historically necessary and inevitable because it is the only
way to address two key questions in any economy in which three factors
exist: the structural balance and efficiency.
To be sure, in historically emerged markets, markets’ negative poten-
tials have been in full display: polarization, inequality, and class division;
not self-regulating, thus anarchy and periodic convulsions, monopoly, and
manipulation; nurturing a culture of greed, fear, and other forms of alien-
ation and destruction. Yet markets’ negativities should not blind economic
thinkers from realizing and recognizing markets’ constitutive core, com-
petitive equal exchanges, which has great positive potentials, and thus
should be preserved in a socialist economy.
More important, however, is the embeddedness of markets in society.
Since the operation of a market cannot be detached from its context: legal
and regulative institutions for legitimating and regulating productive, trad-
ing, tax, environmental and financial activities in relevant markets, and cul-
tural norms, bounds, and values that condition and constraint markets, it is
arguable that the nature of a market is subordinated to and even constituted
and dictated by the nature of the context in which the market is embedded.
Thus if the legal-political institutions and cultural norms are capitalist in
14
Nikolai Ivanovich Bukharin, “Notes of an Economist (the Beginning of the New
Economic Year),” Economy and Society 8, no. 4 (1979).
nature, then markets operating in such a context can only be an integrated

part of capitalism with all its negative consequences that the market-critics
frequently cite. But in a context in which a set of socialist political-legal
institutions, cultural legitimization, and regulatory regimes is firmly estab-
lished and installed, markets embedded in such a socialist context will be
socialist in nature. At the minimum, the socialist context can prevent the
existent markets’ logic, inherited from historically emerged markets, of chas-
ing profit from colonizing the political, social, and cultural spheres, as
Jürgen Habermas hoped for. At the maximum, the socialist context can
constrain historical markets’ logic by a renewed logic of reciprocity, redistri-
bution, and communality with a socialist rather than pre-capitalist Polanyian
character in organizing economic activities, so that social inclusion can be
promoted, political participation can be encouraged, and consumer culture
can be replaced by a communal and humanist culture.
To be sure, in a socialist society, in areas where social demand can be
known, or there are market failures or natural monopolies or vital national
interests, central planning as a way of social coordination is feasible and
desirable, and thus should be the guiding principle without conceding to
marketization. More importantly, the core task for a socialist government’s
regulation in areas where market is allowed to play a fundamental role is
to make sure that no forms of monopoly in capital and information is
allowed, and all institutional designs and government policies should aim at
universal and equal access to capital and information for all citizens.
With these caveats in mind, it is clear that the market mechanism, as a
mode of production and coordination, or a mode of allocation and a form
of operation is compatible with socialism and cannot be categorically
equated with capitalism. Capitalism is a regime of endless capital accumula-
tion through profit-chasing by private owners of capital, while the market
mechanism is compatible with various social systems, depending on the con-
text in which it is embedded and operating. Since the market mechanism
does not depend on private ownership and is not intrinsically contradictory
with public (communal, regional, or national) property, the capitalist mar-
kets based on private ownership can only be viewed as a historically emerged
(and somewhat alienated) form of market. In contrast, a socialist market is
premised on the abolition of closed private property through an equal and
universal access to social property or social capital (capital is generally under-
stood as the conditions of production), mediated by a socialist capital mar-
ket that is supported and protected by socialist political power and legal
institutions, and is guided by socialist cultural norms.
282 T. Y. CAO
V. Markets and Their Evolution: From Product

Markets to Labour Markets and Capital Markets
The notion of “socialization” as Marx’s organizing concept in his theo-
retical framework is crucial for understanding the market’s compatibility
or even constitutive necessity to socialism. From a very general and his-
torical perspective, Marx cultivates an idea that in the historical develop-
ment of human economic activities, there is a general tendency of moving
from closed or autarkic economies towards more and more open or social-
ized economies. That is, production and demand are more and more
socially defined. The socialization can be achieved through mechanisms of
market or planning or a combination of both. But for the reasons men-
tioned above, the market generally is relatively more efficient (and under
certain conditions, even is indispensable) for socialization, except for some
well-defined areas in a socialist context. The emergence of the product
market, the labour market, the capital and financial markets, accordingly,
can be viewed as representing different levels of socialization, and each
level features a historical epoch.
Thus, the emergence of the wage-labour system features a transition
from the closed feudal economy to an open capitalist economy, in which
labourers are freed from personal attachment and non-economic coercion.
As a result, the labour resource can be more efficiently allocated than before.
But the wage system is not part of a fully developed integral market
since the transactions that happen in the labour market are not equal
exchanges of labour. Of course, Marx claimed that labour market transac-
tions were equal exchanges, the exploitation occurred only in the process
of production in which surplus labour was appropriated without
compensation as a source of profit. But if the following facts are taken seri-
ously into full consideration, then a different view of the labour market
may be more reasonable.
First, what a capitalist buys and a labourer sells in the labour market
actually is not labour power, but rather a certain concrete labour, with
certain quantity, a certain kind, a certain quality, a certain level of skill,
performed under certain labour conditions, to be delivered later as the
hiring contract specifies. Second, such a concrete labour as a commodity
has a value that is constituted by the social process of abstraction men-
tioned in Sect. III. Third, once this is clarified, the unequal nature of the
labour market transactions is not difficult to see. Obviously, no capitalist
pays the full value of the concrete labour he buys; otherwise, no profit
would be possible. What a capitalist pays can only be the remainder of the
full value of the concrete labour a worker sells with the subtraction of a
rent the capitalist claims for offering the worker the opportunity of per-
forming his labour—namely, for providing the worker the working condi-
tions so that the worker can perform and sell his labour to the capitalist.
The rent is also determined by the market, the market of capital. Through
competitions in capital markets, the rent will reach an equilibrium, the
average rate of profit, the same amount of capital gets the same amount of
profit or rent for its being used for a certain period of time.
At a very abstract level, some Marxist economists argued that the ten-
dency in the evolution of the wage system was towards a labour market of
equal exchange.15 But the realization of the tendency, according to this
argument, premised on the socialization of capital, which in fact, would
feature a new historical epoch and characterize the transition from capital-
ism to socialism. Capitalism is characterized by the separation of workers
from the means of production, which is monopolized by private owners,
who thereby control workers, demand and receive rent, and thus make
equal exchange in labour market impossible.
Yet the state ownership of the means of production (nationalization) is
not a solution to the monopoly of capital and the separation of workers
from working conditions, neither is it a proper form of socializing capital.
In fact, the closed, monopolized ownership by the state blocks ways to an
integral market of capital, and thus undermines the very ground for uni-
versal access by workers to capital. This institutional arrangement makes
the removal of workers’ separation from the working conditions virtually
impossible, thus undermining the economic foundation for socialism. In
line with Marx’s idea of a post-capitalist “socialized individual ownership”
by free producers organized in free associations, the desirability of open
and universally accessible character of social capital entails a call for capital
markets, whose nature is critically conditioned by the context in which
these markets are embedded and operating.
The transition from monopolized (closed) to socialized (open and uni-
versally accessible) capital is a long historical process, critically relying on
the separation of operating- (use- and managing- and controlling) right
from ownership of capital. However, the separation of ownership from the
actual operation of capital, or the property rights of capital, or the prop-
erty rights of all kinds of working conditions, is a commonplace in modern
Lin, On the Socialist Economy and “Going towards the Market,” passim.
15
284 T. Y. CAO
organization of production, service, circulation, and finance. This is espe-

cially true in the era of globalization. In fact, the separation has provided
the ontological foundation for financial capitalism, although the implica-
tion of the separation for socialism is yet to be explored.
The economic meaning of ownership of capital that is separated from its
actual operation (use, management, and control) is largely reduced to the
income derived thereby. This causes the principal-agent problem, but the
fact that formal ownership alone cannot promise full control and appro-
priation of the residual is beyond dispute. In addition, even the formal
ownership itself has mostly shifted from individuals to investment institu-
tions, such as pension funds, indicating that the boundary between private
and social capital has already been somewhat blurred.
With regard to the transition discussed above, Marx’s comments on the
capital involved in joint stock companies, which are the result of the capi-
tal market involving an interplay between fictitious and real capitals, are
illuminating:
[The capital] is here directly endowed with the form of social capital, and its
undertakings assume the form of social undertaking as distinct from private
undertakings. It is the abolition of capital as private property within the
framework of capitalist production itself, …and the abolition of the capitalist
mode of production within the capitalist mode of production itself, and
hence a self-dissolving contradiction, which prima facie represents a mere
phase of transition to a new form of production.16
What Marx said here, with some modification, can also be said to capital
markets and financial markets in general. The developments of capital and
financial markets in scope and depth in the last four decades have gone far
beyond what was conceptualized by Marx, but the persuasiveness of
Marx’s insights into the dual and dialectic character of these developments
remains the same.
16
Marx, Capital, Vol. III, 434, 436. On page 434, Marx said: “The capital, which in itself
rests on a social mode of production and presupposes a social concentration of means of
production and labour power, is here directly endowed with the form of social capital (capital
of directly associated individuals) as distinct from private capital, and its undertakings assume
the form of social undertakings as distinct from private undertakings. It is the abolition of
capital as private property within the framework of the capitalist mode of production itself.”
On page 436, Marx said: “This is the abolition of the capitalist mode of production within
the capitalist mode of production itself, and hence a self-dissolving contradiction, which
prima facie represents a mere phase of transition to a new form of production.”
If the separation of operation from formal ownership of capitals, or the

separation of functioning capital from money capital and fictitious capital,
is the key to socialize capital (or property rights of working conditions in
general, including capital, land and natural resources, social and intellec-
tual resources), then it should be applicable to both private and public
ownership (except for some special areas noted above), such as collectively
owned land and state property. This is the only way leading to a complete
and healthy capital market. Such a complete capital market surely is a
desirable structure for socializing capital, namely, for providing individu-
ally dispersed associated producers a universally equalized access to all
kinds of capitals, regardless of their formal ownership. For this reason,
thus defined capital market is a necessary institutional basis for labour’s
liberation from the control of closed (capitalist or state) ownership. If such
socialization realized through capital markets can be viewed as a strategic
alternative to privatization in replacing statist socialism, then a complete
socialization of product, labour, capital, land, management, knowledge,
and other human and natural resources, and even risks involved in eco-
nomic activities, realized in relevant markets, should be duly recognized as
constitutive to the economic foundation of socialism.
VI. Markets and Socialist Economy

Once the theoretical ground for understanding the market as a way of
realizing Marx’s fundamental idea of socializing economic activities is
cleared, it becomes possible to argue that the market mechanism is
compatible and even constitutively necessary to socialism; it is more than
just an interim expedient at the primary stage of socialism.17
This argument proceeds in three steps. First, it was argued that social-
ism should be dissociated from its historical statist (Soviet or Keynesian)
models and defined only by its basic principles: no-alienation (which pro-
vided the moral-political justification for socialism to replace capitalism),
and efficiency (which provided the economic justification for the replace-
ment). Second, it was stressed that institutionally, although public owner-
ship and central planning in a socialist society would keep their important
roles, their roles would be demoted from foundational and their founda-
tional places would be occupied, respectively, by social ownership medi-
ated by capital markets, and by market coordination dictated by the law of
value, whose grounding role was duly recognized and stressed by Marx in
Lin, On the Socialist Economy: China’s Economic Reform and “Going towards the Market.”
17
286 T. Y. CAO
his Critique of the Gotha Program. Third, and decisively, it demanded that
enough strategic and constitutive moves should be conceived and imple-
mented to develop a socialist market that could avoid the negative effects
of historically developed capitalist markets, while preserving its positive
core, that is, competitive equal exchanges. The underlying idea in the
argument was to radically transform the market’s fundamental ontology
and the context in which the market operates.
More specifically, the market players should not be selfish individuals
blindly chasing for private interests. Rather, these market players should be
various communities (enterprises, trade unions, banks, investment institu-
tions, etc.). These communities should be able to manage and use, but do
not have to own, their working conditions, which could be acquired from
social pool of capital through capital markets, in an autonomous way.
Internally these communities should be organized as republican associa-
tions of free producers or workers, as was conceived by Marx in his
Critique of Gotha Program. That is, these republican associations as mar-
ket players should be organized in democratic ways for decision-making
on economic issues (most important among them are the income level of
capital owners and managers, hiring and firing, distribution of accumula-
tion and consumption), and political issues (most important among them
is the power distribution within the community), guided, culturally, by
socialist values and norms (e.g., equality, communal solidarity and justice;
human needs rather than consumption and possession). Externally, in
addition to market relations with other market players, they are subject to
democratically organized socialist government’s regulations at relevant
levels, also guided by socialist values and norms.
These Marxian associations, new kind of market players,18 have provided
the only institutional setting in which moral incentives would flourish and
dominate human’s psyche and behaviour, which Ernesto Che Guevara and
many others took as the decisive factor for socialism.19 Without this institu-
tional setting, Ernesto Che Guevara, Gerald Cohen, and numerous others’
moralistic-idealist conceptions of socialism would be groundless.
18
For a brief description and discussion of a few, so far, real-life examples of the new kind
of market players (an ideal type), which did not have all the defining features of the ideal type
and were already in the process of corrupting, see Tian Yu Cao, “Land Ownership and
Market Socialism in China,” in The Land Question—Socialism, Capitalism, and the Market,
ed. Mahmood Mamdani (Makerere Institute of Social Research Book Series, 2015).
19
Quoted from Ernesto Che Guevara, “Socialism and man in Cuba,” The Che Reader, ed.
David Deutschmann (Melbourne: Ocean Press, 2005), 212–30.
In order to avoid the communitarian trap of exclusiveness and distinguish

itself from the anarchic syndicalism, in this model, all newcomers getting into
an association through labour markets should automatically enjoy full mem-
bership of the association and the related inalienable membership rights.20
With the changed players and the changed institutional contexts, the
underlying logic of the socialist market will be radically different from that
of the capitalist market. While competitions and incentives remain the
core of the market for effective information processing that is necessary for
efficiency, the motivations and goals are no longer focused on an exclusive
and infinite accumulation of capital through chasing profits, but rather on
reciprocity and communal-regional-national balanced economic develop-
ments for meeting human needs. Thus the result of market activities would
not be polarization, class division and exclusion, but rather inclusion,
trust, personal empowerment in free choice (in consumption, employ-
ment, expressions) and in decision-making.
With these foundational changes, the labour market will no longer be a
mechanism through which workers are exploited, but rather a mechanism
through which workers’ freedom is realized: Workers entering an enter-
prise will enjoy full membership rights equal to all other members, not as
employees; those fired or voluntarily leave the enterprise will have
unconditional basic income to rely on, and will have the right to receive
self-chosen training for re-entering a preferable enterprise; these retraining
opportunities should be offered by regional or national government
funded by regional or national pool of social capital.
Similarly, the capital and financial markets will no longer be places for
speculations leading to volatility, but rather for effective use of capital (in
various forms of property rights of working conditions) through value
discovery, which is a great help in structural adjustments and various inno-
vations, and thus facilitates the change of government’s function from
administrative planning to regulations.
A conclusion can be reached, which is that markets are not only com-
patible with socialism. But rather, in terms of their subjects (communities
in which workers and all other members enjoy equal status and rights stip-
ulated and protected by a socialist constitution) and in terms of the social-
ist commons (socially usable resources: assets, knowledge, and activities)
realized through capital and financial markets, markets provide a desirable,
feasible, and indispensable mechanism, and serve as the economic founda-
tion for realizing socialist principles: no-alienation and efficiency.
Cao, “Land Ownership and Market Socialism in China.”

20
288 T. Y. CAO
VII. The Necessity of Politics
This market-based conception or model of socialism is underlain by the
fundamental assumption of the embeddedness of markets in their social-
political-legal-cultural settings, and thus is critically premised on workers’
socialist political will and political power. Their inalienable republican
rights within associations, which is constitutive for these associations to be
the new kind of market players, and without (regionally and nationally),
have to be clearly stipulated in the constitution and protected by legal
institutions. Also, to be clearly stipulated in the constitution and protected
by legal institutions is the equal and universal access by all associated citi-
zens to capital, information, and services, which is crucial for the capital
market to become a mechanism for creating the socialist commons.
Workers’ socialist political will and political power are decisive also because
the coordination and regulation of markets have to be guided by the
socialist political will and carried out by the socialist political power
structure.
Then the crucial question remains: How can such a socialist political
will and such a socialist political power structure emerge from today’s
capitalist environment? But this practical and strategic issue is beyond the
scope of this chapter and has to be properly addressed on other occasions.
Bibliography
Bukharin, Nikolai Ivanovich. “Notes of an Economist (The Beginning of the New
Economic Year).” Economy and Society 8, no. 4 (1979): 473–500.
Cao, Tian Yu. “Land Ownership and Market Socialism in China.” In The Land
Question—Socialism, Capitalism, and the Market, edited by Mahmood
Mamdani, 77–94. Makerere Institute of Social Research Book Series, 2015.
Guevara, Ernesto Che. “Socialism and Man in Cuba.” In The Che Reader, edited
by David Deutschmann, 212–30. Melbourne: Ocean Press, 2005.
Lin, Zili. On the Socialist Economy: China’s Economic Reform. Vol. 3. Beijing:
Economic Science Publisher, 1985–1994.
Lin, Zili. “Going Towards the Market.” Special issue, Chinese Economic Studies 27
(1994): 1–208.
Marx, Karl. Critique of the Gotha’s Program. In MECW. Vol. 24, 81–99. New York:
Marx, Karl. Capital. Vol. III. In MECW. Vol. 37. New York: International
Publishers, 1998.
Miller, David. “Our Unfinished Debate about Market Socialism.” Politics,
Philosophy & Economics 13, no. 2 (2014): 119–39.
Marx’s Metaphysics of Human Labour
in the Light of Sraffa: Labour Theory
of Value Reconsidered
Ajit Sinha
I. Labour as the Ultimate Cause of Value

in Classical Economics
In this chapter, I analyse the foundations of Marx’s analysis of a capitalist

economy in terms of labour time to locate the root cause of Marx’s prob-
lem of relating values to prices and surplus values to profits, and then,
show how Sraffa succeeds in solving the problem by liberating Marx from
his metaphysics of “human labour.”
The idea of measuring commodities in units of labour time is, however,
not originally Marx’s. It was used in earnest by Adam Smith,1 who wanted
to find a standard of measure for the values of commodities so that the real
wealth of a nation could be compared over periods of time, independently
of fluctuations in the prices of commodities. He thought that if the
1
Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Vol. I
(Indianapolis: Library Fund, 1981).
A. Sinha (*)
Azim Premji University, Bengaluru, India

290 A. SINHA
ltimate cause of value could be discovered, then that could provide us

u
with the standard that will remain invariant in the face of apparent changes
in prices. This led Adam Smith to think of man’s primordial state when he
must have had to act directly against nature to wrest his basic needs of
survival from it. For Adam Smith, this primordial act of man against nature
is both an act of production as well as an act of exchange. Expenditure of
labour in the process of production is also a sacrifice in terms of “toil and
trouble,” which is a payment of price for the product appropriated from
nature. Thus, all prices or all economic values must be measured by this
“originary” or the ultimate price, which measures the “real” value of the
commodity as opposed to the “nominal” value measured by the money-
commodity, such as gold or silver. After having determined the standard
of measure of values of commodities in a commodity’s ability to command
certain length of time of the labourer or his “sacrifice of labour,” Adam
Smith developed a theory of value in terms of accounting of the income
generated in production by “adding up” wages, profits, and rent, which
he considered were known data at any given point of time.
Ricardo2 rejected Adam Smith’s “adding up” theory of value on the
grounds that the value of total income must be fixed independently of
how it is cut between various recipients of it. From this point of view,
Adam Smith’s explanation of why labour is the ultimate cause of value also
becomes problematic—if labour as “sacrifice” is the cause of value of the
commodity, then a change in the cause must result in a change in the
effect, and thus a fall in the real wage—which implies an increase in the
sacrifice to acquire a commodity for the labourer—must lead to an increase
in the value of the commodity. This contradicts Ricardo’s proposition that
the size of the total must be independent of how it is cut for different
recipients. Therefore, Ricardo removed the subjective interpretation of
labour and proposed an alternative hypothesis that labour is the ultimate
cause of value not because of the subjective aspect of the “sacrifice” by the
labourer as a payment of price for the good received, but because labour
in the act of production is an objective input and since all other inputs of
production can be reduced to labour in the final analysis, it is the ultimate
cause of value. From this perspective, Ricardo needed to show that changes
in prices of commodities must, in the final analysis, be explained solely by
showing changes in the labour input required to produce the commodities.
2
David Ricardo, Principles of Political Economy and Taxation (Cambridge: Cambridge
University Press, 1951).
MARX’S METAPHYSICS OF HUMAN LABOUR IN THE LIGHT OF SRAFFA… 291
But Ricardo had to admit that in a general case, when the technique of
producing commodities are such that their ratios of direct to indirect
labour inputs are not equal, then changes in wages can have an indepen-
dent effect on prices, that is, prices can change without any changes in
their labour inputs, thus violating the fundamental proposition that labour
is the ultimate cause of value.3
II. Surplus Value and Marx’s Metaphysics

of Human Labour
Marx had a fair inkling that Adam Smith’s (and also Ricardo’s) idea that
in the final analysis, all production can be reduced to man’s direct labour-
ing activity against nature may be logically flawed since it may not be pos-
sible to reduce the material means of production to zero as one goes back
and back in the production chain to draw a long series of labouring activity
pure and simple. In Capital Volume II, Marx wrote:
The statement that the entire price of commodities is either “immediately”

or “ultimately” resolvable in v + s [wages + surplus] would only cease to be
an empty subterfuge if Smith could demonstrate that the commodity prod-
ucts whose price is immediately resolved into c (the price of the means of
production consumed) + v + s are finally compensated for by commodity
products which entirely replace these “consumed means of production”,
and which are for their part produced simply by outlay of variable capital
[wage advances only], i.e., capital laid out on labour-power. The price of
these latter commodities would then immediately be v + s. And in this way
the price of the former, too, c + v + s, where c stands for the component of
constant capital, would be ultimately resolvable into v + s. Adam Smith him-
self did not believe he had given such a proof.4
Marx’s fundamental attack on political economy was that neither Adam

Smith nor Ricardo could explain the source of profits. Both Adam Smith
and Ricardo take profits as a given income category in a bourgeois econ-
omy. Adam Smith’s argument that profit is a return on “risk taking” can
be a reasonable explanation for differential rates of interest on capital due
3
For my detailed analysis of Adam Smith’s and Ricardo’s theories of value, see Ajit Sinha,
Theories of Value from Adam Smith to Piero Sraffa (London: Routledge, 2018) and Essays on
Theories of Value in the Classical Tradition (Cham: Palgrave Macmillan, 2019).
4
Karl Marx, Capital, Vol. II (London: Penguin Classics, 1992), 450.
292 A. SINHA
to differential risks involved in different industries, but it cannot be an

explanation for the origin of profits since “risk” does not produce any-
thing. Ricardo also takes a positive rate of profits as given and only analyses
how it is affected by changes in the value of wages. So, one of the funda-
mental projects that Marx takes up in Capital was to explain the source
of profits.
To answer the question, where do profits come from?, Marx first claims
that “[t]he wealth of societies in which the capitalist mode of production
prevails appears as an ‘immense collection of commodities’; the individual
commodity appears as its elementary form. Our investigation, therefore,
begins with the analysis of the commodity.”5 He argues that an economic
good takes a commodity form if it is produced for exchange against some
other good. He then posits that a relation of exchange is a relation of
equality, and asks the question: if one-quarter of corn exchanges against
one quintal of iron, then what could be the common substance in the two
highly disparate use values that must be present in equal amount in the
two commodities? His answer is that the “common substance” can be
nothing else than the fact that both are “products of labour.” And there-
fore, exchange of commodities represents exchange of equal labour. But
of course, the labour of an ironsmith is qualitatively as different from the
labour of a farmer as iron is different from wheat. Marx argues that though
it is true that “concrete labours” of an ironsmith and a farmer are qualita-
tively different, nevertheless, underneath them lies expenditure of undif-
ferentiated human energy that can be calculated by a clock.
Leaving aside the problematic nature of Marx’s “deduction” or “dis-
covery” of exchange of equal undifferentiated labour residing under-
neath the exchange of commodities,6 it is curious that Marx argues this,
knowing well from his readings of Ricardo that such a “deduction” would
be incorrect for the most general case of capitalist economies. As a matter
of fact, Marx had already worked out his solution to the “transformation
problem” in his manuscripts of the early 1860s and therefore was well
aware that the results of his “deduction” were incorrect—he gives a hint
of it at the end of Chapter 5 in a footnote: “How can we account for the
origin of capital on the assumption that prices are regulated by the aver-
age price, i.e., ultimately by the value of the commodities? I say ‘ulti-
Karl Marx, Capital, Vol. I (New York: Vintage, 1977), 125.

5
See Ajit Sinha, Theories of Value from Adam Smith to Piero Sraffa (London: Routledge,
6
2018) for a discussion on this point.

mately’ because average prices do not directly coincide with the values of the
commodities.”7 Thus, it would be fair to interpret that the “deduction” of
equal labour in exchange for the exchange of commodities is a supposi-
tion. Marx, at this stage of analysis, could be implicitly assuming an equal
ratio of direct to indirect labour time for all the industries, or at least, we
can make sense of it by making that assumption.
The strategy Marx employs is to argue that a commodity in a barter
exchange relation appears as C1–C2, which represents equal undifferenti-
ated labour. By introducing money-commodity as a means of transaction,
we can expand the relation of exchange to C1–M–C2, which does not
change the nature of the relation. However, in a capitalist economy, he
argues, a capitalist is not interested in selling a commodity to buy another
commodity for consumption. His interest is to invest money as capital to
withdraw more money at the end of the circuit. Thus, a circuit of capital
in the sphere of exchange begins with a single capitalist starting with some
money capital M, exchanging it for some commodities C, and then
exchanging C back for money M. If both the M, before and after the
exchanges, remain equal, then the whole process would appear to be a
mad exercise. Thus, for this circuit to have any meaning for the capitalist,
the terminal M must be quantitatively larger than the initial M; in other
words, the circuit must be of the form M–C–M′, M′ > M. The problem
Marx poses to himself is: if equal labour-values exchange in the commod-
ity sphere, then where does the difference between M′ and M come from?
The transformation of money into capital has to be developed on the basis

of the immanent laws of exchange of commodities, in such a way that the
starting-point is the exchange of equivalents. The money-owner, who is yet
only a capitalist in larval form, must buy his commodities at their value, sell
them at their value, and yet at the end of the process withdraw more value
from circulation than he threw into it at the beginning. His emergence as a
butterfly must, and yet must not, take place in the sphere of circulation.
These are the conditions of the problem. Hic Rhodus, hic salta!8
One of Marx’s central criticisms of political economy was that both

Adam Smith and Ricardo did not understand the true nature of wage as
an income category. They treated wage as a price paid to the labourer for
the labour services performed. Marx argues that wage as a specific form of
7
Marx, Capital, Vol. I, 269f24; (emphasis added).
8
Ibid., 268–9.
294 A. SINHA
income for the labouring class is the differentia specifica of capitalism. In

capitalism, workers, de jure, appear as independent commodity owners
exchanging commodities with other independent commodity owners. But
the commodity they sell to the capitalists in exchange for wages is not the
labour services as such, but rather their capacity to work, which Marx
called labour-power. And the value of the labour-power is determined by
the same principle as the value of any other commodity, that is, by the
labour time it takes to (re)produce the labourer’s capacity to work. Thus,
in this specific exchange, a specified wage basket of commodities stands on
one side and the labour-power stands on the other. However, one pecu-
liarity of this particular commodity, the labour-power, is that its consump-
tion or use in the production process adds to the value of the raw materials
and other such that it works on. Another peculiarity of this particular com-
modity is that the workers’ capacity to work is quite elastic—an average
worker can or can be made to work any number of hours below a certain
natural maximum in a day. In a capitalist economy, it so happens that the
technique of production has become so productive that the wage basket
needed to (re)produce the worker’s capacity to work is produced in much
less labour time than the maximum limit to which a worker can work in a
day, and therefore the capitalists are able to stretch the working day beyond
the labour time needed to produce the wage basket. In other words, work-
ers give more labour time in the process of production than they receive
in return as their wages. Thus the value they add in the process of produc-
tion is higher than the value they take away as wages. This difference rep-
resents “surplus value,” which is the source of profits.
Thus, the total value of a commodity has three components—the first
component is the constant capital (c), which is the value of raw materials
and means of production used up in the process of production plus the
fresh labour added by the labourers, which in turn has two components—
variable capital (v), which is the value of the wage goods that workers
receive and the other is the surplus value (s), which is the extra labour time
the worker is made to work over and above the labour time needed to
produce the wage basket. In other words, if value of one ton of iron is λi
then λi = ci + vi + si , where ci stands for the value of the raw materials and
used-up machines and other such in the production of one ton of iron,
and vi and si, respectively, stand for the value of wage goods received by
the workers in producing one ton of iron and the difference between the
total labour time worked by the workers to produce one ton of iron and
the value of the wages received by them.
Now, let us analyse the three components of λi separately. How do we
determine ci? It appears that to determine the value of a commodity, one
needs to already know the value of other commodities that it uses as its
raw materials and other means of production. In Adam Smith’s and
Ricardo’s conceptual framework, one could go back and back in the chain
of production of means of production till one hits upon a stage where
labour all alone produced the first means of production. But as we have
seen above, Marx had rejected this conceptual framework. One way to get
out of this circle would be to argue that the value of all the commodities
that directly or indirectly go into the production of iron are determined
simultaneously. So let us borrow Sraffa’s example of an economic sys-
tem given by:
90 t. iron + 120 t. coal + 60 qr. wheat + 3 / 16 labour → 180 t. iron

50 t. iron + 125 t. coal + 150 qr. wheat + 5 / 16 labour → 450 t. coal
40 t. iron + 40 t. coal + 200 qr. wheat + 8 / 16 labour → 480 qr. wheat

Let us say that the unknown labour-values of iron, coal, and wheat are
given by λi , λc , and λw , respectively. Since the units of labour-values are
the same as the unit of direct labour, they can be added to each other.
Given Marx’s proposition that total value of a commodity is determined
by the value of the constant capital plus the direct labour time used in its
production, we can convert the above description of a system of produc-
tion to a set of simultaneous equations such as:
90λi + 120λc + 60λw + 3 / 16 labour = 180λi

50λi + 125λc + 150λw + 5 / 16 labour = 450λc
40λi + 40λc + 200λw + 8 / 16 labour = 480λw
180λi + 285λc + 410λw + 1 labour = 180λi + 450λc + 480λw (1)

These three equations will solve for values of λi , λc , and λw in terms of labour
time along with the value of the net output (165λc + 70λw ) = 1 labour. Now,
to understand the nature of Marx’s proposition that equal values exchange, let
296 A. SINHA
us change the unknowns from labour-values to prices such as pi, pc, and pw.
Since the unit of prices is not in terms of labour time, we will have to convert
direct labour units to its counterpart in terms of price, which would be its
income or wages.
90 pi + 120 pc + 60 pw + 3 / 16 (165 pc + 70 pw ) = 180 pi

50 pi + 125 pc + 150 pw + 5 / 16 (165 pc + 70 pw ) = 450 pc
40 pi + 40 pc + 200 pw + 8 / 16 (165 pc + 70 pw ) = 480 pw
180 pi + 285 pc + 410 pw + 1(165 pc + 70 pw ) = 180 pi + 450 pc + 480 pw (2)

The solutions for ps will confirm Marx’s proposition that λi / λc = pi / pc ,

λi / λw = pi / pw , and λc / λw = pc / pw . It should, however, be noted that
this result is contingent on the assumption that labourers receive their
share of total net income in the same proportion as their share of the
expenditure of labour time in the total expenditure of direct labour time
in the economy. If that were not so, for example, suppose coal workers
received higher income per unit of expenditure of labour, then the ratios
of ps will deviate from the ratios of λs, and thus, Marx’s proposition will
no longer be true. Now, so long as we assume that all the three kinds of
labour are unskilled or simple labour of equal intensity, then, as Adam
Smith and Ricardo had argued, a rational calculation on the part of iron
and wheat workers will make them move from the iron and wheat indus-
tries to the coal industry, bringing down coal prices vis-à-vis iron and
wheat, and therefore bringing the ratio of ps in conformity with the ratios
of λs, and so, the law of value must prevail in the long run. However, let
us suppose that the work of a coal miner is more intense than the work of
an ironsmith or a farmer. In that case, the coal miner must receive a higher
return per unit of labour than the other two workers, otherwise coal min-
ing will disappear in the long run. In this case, whatever differential returns
that get established in the society for the coal miners will determine the
ratios of ps; and for Marx’s proposition to hold, one will have to change
the values by counting every unit of the coal miner’s labour by as higher a
proportion as its share in total income. In other words, the measure of
labour time itself must become contingent on how the income (or the net out-
put) is distributed among the workers—it is the prices that determine values!
Marx admits that in the real world, the differentials in returns to labour
have very little to do with the actual expenditure of human energy:
More complex labour counts only as intensified, or rather multiplied simple

labour, so that a smaller quantity of complex labour is considered equal to a
larger quantity of simple labour. Experience shows that this reduction is con-
stantly being made. A commodity may be the outcome of most complicated
labour, but through its value it is posited as equal to the product of simple
labour. The various proportions in which different kinds of labour are reduced
to simple labour as their unit of measurement are established by a social pro-
cess that goes on behind the backs of the producers; these proportions there-
fore appear to the producers to have been handed down by tradition.9
The distinction between higher and simple labour, “skilled labour” and
“unskilled labour”, rests in part on pure illusion or, to say the least, on dis-
tinctions that have long since ceased to be real, and survive only by virtue of
a traditional conventions10;
Hence, the measure of labour time and consequently the values of com-
modities are determined by the conventional differentials in returns to
various kinds of labour.
Up till now, we have been assuming that all the net income generated
in the economy is appropriated by the labourers themselves as returns to
their labour inputs in production and hence the material means of produc-
tion have not yet become “capital” in Marx’s sense. But once we push
down the returns to the labourers from 100% of total income to less than
100%, then a surplus income emerges. Till now, we have homogenized
heterogeneous labour by taking the income differentials as the multiplica-
tion factors for measuring homogeneous labour. In the current context,
the same principle translates into measuring direct labour inputs by equat-
ing one-to-one their proportion of wage bill to the total wage bill in the
economy, with their proportion of direct labour input to the total direct
labour input in the economy. Now, the surplus that has emerged needs to
be accounted for as “profits on capital.” Ricardo had already established
that if the indirect-to-direct labour ratios (or in Marx’s case, c / v, since
c / ( v + s ) = ( c / v ) / (1 + s / v ) , given that it is assumed that s / v are equal, the
proposition boils down to equality or inequality of c / v) are equal across
industries, then a percentage decline in wages across industries would gen-
erate equal percentage returns on capital across industries, given the mea-
sure of capital on the basis of the old prices, and therefore there will be no
9
Ibid., 135.
10
Ibid., 305f19.
298 A. SINHA
rational reason for prices to change; but if the ratio of direct to indirect
labour (or c / v) is not equal across industries, which is the general case, then
industrial returns to capital will be unequal, given the measure of capital
on the basis of the old prices. In Marx’s terms, when surplus value emerges,
then, on the basis of the old prices, the industrial rate of profits must be
given by: rj = s j / ( c j + v j ) = ( s j / v j ) / ( c j / v j + 1) , where “j ” represents the
industry. Since s j / v j is assumed to be equal for all industries, unequal
c j / v j would result in unequal rj. This, Marx maintained, following Smith
and Ricardo, cannot be a stable position in the long run as rational calcula-
tion by capitalists would generate movement of capital from low profits
industries to high profits industries, forcing prices to readjust by relatively
raising the exchange ratios of low profits industries compared to high prof-
its industries. Ricardo had understood that once this happens, then capital
can no longer be measured by the old prices, and so he had to give up the
project of determining prices and the rate of profits and concentrate on
analysing only changes in those variables. Marx also poses the problem in
desperate terms: “it might seem that we must abandon all hope of under-
standing these phenomena,”11 but then goes on to provide a solution for
the determination of new set of prices and the equal rate of profits in
the system.
Marx’s solution to this problem was simple, but unfortunately incor-
rect. He correctly reckons that if all industries must receive an equal rate
of profits, then it must be the average rate of profits of the system. He,
however, proposes to derive the average rate of profits from the given
labour-value magnitudes by dividing the aggregate surplus value in the
system by the aggregate of constant plus variable capitals in the system. In
other words, if ∑ s j = S and ∑ ( c j + v j ) = ( C + V ) , where j = 1, …, n, then
Marx’s average rate of profits (r) is given by S / ( C + V ) . After calculating
the average rate of profits (r), he applies this rate of profits to mark up the
values of each industry’s constant plus variable capital by the average rate
of profits to derive the “price of production” of each commodity. In other
words, the price of production for each commodity is given by:
( c j + v j ) (1 + r ) = ( c j + v j ){(C + V + S ) / (C + V )} . It is evident from the
above equation that ∑ ( c j + v j ) (1 + r ) = C + V + S and ∑ ( c j + v j ) r = S . In
other words, total prices of production is equal to total labour-values and
11
Karl Marx, Capital, Vol. III (London: Penguin Classics, 1991), 252.
total profits is equal to total surplus values. Marx’s contention is that in a

competitive capitalist economy, commodities do not exchange in propor-
tion to their labour-values, but rather in proportion to their prices of pro-
duction. But this in itself does not invalidate the basis of his analysis of
capitalism in terms of labour-values and its three main components, since
the average rate of profits and the prices of production are derived from
value magnitudes and cannot be derived otherwise; and given the results
that the sum of the prices of production is proportional to the sum of
values, and the sum of profits is proportional to the sum of surplus values,
it stands as a proof that the source of profit is surplus value. The competi-
tive mechanism of the capitalist system only succeeds in obscuring this
fundamental truth by a reallocation of the total surplus values among the
capitalists through the price mechanism; but the nature of the fundamen-
tal relation between the capitalists and the workers, analysed on the basis
of labour-values of commodities, remains intact at the level of the system
as a whole:
The price of production includes the average profit. And what we call price
of production is in fact the same thing that Adam Smith calls ‘natural price’,
Ricardo ‘price of production’ or ‘cost of production’, and the Physiocrats
‘prix nécessaire’, though none of these people explained the difference
between price of production and value. We call it the price of production
because in the long term it is the condition of supply, the condition for the
reproduction of commodities, in each particular sphere of production. We
can also understand why those very economists who oppose the determina-
tion of commodity value by labour time, by the quantity of labour contained
in the commodity, always speak of the prices of production as the centres
around which market prices fluctuate. They can allow themselves this
because the price of production is already a completely externalized and
prima facie irrational form of commodity value, a form that appears in com-
petition and is therefore present in the consciousness of the vulgar capitalist
and consequently also in that of the vulgar economist.12
This clearly does not solve the problem, however. Since the ratios of
prices of production are not equal to the ratios of labour-values any more,
the measure of capital on the basis of their labour-values becomes illegiti-
mate, and hence Marx’s determination of the average rate of profits of the
Ibid., 300.
12
300 A. SINHA
system is not the correct average. In other words, Ricardo’s problem

remains unsolved. We still do not have the determination of either prices
or the average rate of profits. Marx apparently was well aware of it as he
goes on to admit:
The development given above also involves a modification in the determina-

tion of a commodity’s cost price. It was originally assumed that the cost
price of a commodity equaled the value of the commodities consumed in its
production. But for the buyer of a commodity, it is the price of production
that constitutes its cost price and can thus enter into forming the price of
another commodity. As the price of production of a commodity can diverge
from its value, so the cost price of a commodity, in which the price of pro-
duction of other commodities are involved, can also stand above or below
the portion of its total value that is formed by the value of the means of
production going into it. It is necessary to bear in mind this modified signifi-
cance of the cost price, and therefore to bear in mind too that if the cost price of
a commodity is equated with the value of the means of production used up in
producing it, it is always possible to go wrong.13
It is curious that even though Marx rejected the classical idea of deriv-
ing labour as the ultimate factor of production by reducing production to
man’s direct labour against nature and consistently criticized Adam Smith
and Ricardo in his Theories of Surplus Value for reducing all capital to only
wage advances and forgetting the material means of production in their
inquiry of the rate of profits, he nevertheless throughout maintains that
commodities are “products of labour.” As a matter of fact, Marx from a
very early stage had rejected the idea of starting the analysis of production
from the imagined primordial relation between man and nature. In his
Economic and Philosophic Manuscripts of 1844, Marx wrote: “Do not let us
go back to a fictitious primordial condition as the political economist does,
when he tries to explain. Such a primordial condition explains nothing”14
and one year later, in The German Ideology, Marx and Engels wrote: “The
premises from which we begin are not arbitrary ones, not dogmas, but real
Ibid., 264; emphasis added.

13
Karl Marx, The Economic and Philosophic Manuscripts of 1844 (New York: International
14

premises from which abstraction can only be made in the imagination. …

These premises can thus be verified in a purely empirical way.”15
However, by the time we get to the “Introduction” to the Grundrisse,16
which was written in 1857, Marx appears to question the idea of the
beginning of analysis from empirical givens. Here, Marx seems to suggest
that beginning with a concrete empirical reality may be a false beginning.
He argues that a quick reflection on such concrete reality as “population”
makes it clear that it is a chaotic whole unless it is understood in terms of
more abstract categories such as classes, which in turn rest on further
abstract categories such as capital and wage labour and so on. Thus, start-
ing from the most abstract categories and building up to the understand-
ing of concrete reality is “obviously the scientifically correct method.”
Marx further argues that the theoretical construct of building up from
most simple or abstract categories to the concrete empirical whole does
not represent some sort of real historical unfolding, as Hegel thought. On
the contrary, it is the state of development of the current stage of society
in which the theoretician finds himself embedded is what determines his
ability for abstraction—the more complex and advanced a society is, the
more clearly it can see the abstractions. Hence, Adam Smith and Ricardo,
who were situated in late eighteenth- and early nineteenth-century
Scotland and England, could see labour as such as an abstract category
because the society in which they were embedded had become highly
manufacturing oriented, with extensive division of labour and free move-
ments of workers from one branch of production to another. Whereas, the
Mercantilists’ and Physiocrats’ visions were constrained by the predomi-
nance of one kind of specific labour such as commercial or agricultural,
which did not allow them to see the abstract aspect of labour in general.
Though the “Introduction” was drafted to be the Introduction of A
Contribution to the Critique of Political Economy published in 1859,
Marx decided not to include it in the publication since he thought it
“anticipated the results which still had to be substantiated” and replaced
it with a relatively brief “Preface.” In the Preface, on the question of the
beginning, he simply states that “the reader who really wishes to follow
15
Karl Marx and Frederick Engels, The German Ideology (New York: International
16
Karl Marx, Grundrisse (Middlesex: Pelican Books, 1973).
302 A. SINHA
me will have to decide to advance from the particular to the general.”17

Instead of any elaboration on the question of “scientific method” and of
“beginning” of analysis, we find in this brief Preface a general statement
of historical materialism, which he presents as “the guiding principles of
his studies”:
In the social production of their existence, men inevitably enter into definite
relations, which are independent of their will, namely relations of produc-
tion appropriate to a given stage in the development of their material forces
of production. The totality of these relations of production constitutes the
economic structure of society, the real foundation, on which arises a legal
and political structure and to which correspond definite forms of social con-
sciousness. The mode of production of material life conditions the general
process of social, political and intellectual life. It is not the consciousness of
men that determines their existence, but their social existence that deter-
mines their consciousness.18
Here, we find that the object of analysis is no longer characterized as

“concrete whole” such as “population,” “nation state,” and so on, but
rather a mode of production, a theoretical construct of a stage in human
history, the foundations of which are determined by how men relate to
each other through their labour. Thus, the subject matter of economic
analysis is defined by human labour—it is the ensemble of human relations
in the act of production of their material conditions of existence. We find
a continuation of this theme in Capital published in 1867. In fact, Capital
was supposed to be in “continuation” of A Critique and the first chapter
of the first edition of Capital was supposed to be a summary of it. In the
“Preface” to the first edition of Capital, Marx proclaims that “What I have
to examine in this work is the capitalist mode of production, and the rela-
tions of production and forms of intercourse [Verkehrsverhaltnisse] that
correspond to it.”19
It appears that Marx’s notion of “human labour” as the “substance” of
value is based on the idea of a mode of production as an ensemble of
human relations mediated through human labour—the play is all about
human labour—this is Marx’s fundamental metaphysics. In capitalism,
17
Karl Marx, A Contribution to the Critique of Political Economy (New York: International
18
Ibid., 20–1.
19
humans relate to each other through their labour at two levels. First of all,
there is extensive division of human labour in society, which is regulated
through the market mechanism of commodity exchange—it is the imper-
sonal market that regulates the social division of labour. Thus, underneath
the relations of commodities lies the proportion of total labour allocated to
the production of various commodities. The other relation of production
of a capitalist economy is that the labourers do not appropriate their prod-
ucts but sell their capacity to work as a commodity to the capitalist for a
wage (or a bundle of commodities). This again is regulated by the market
and is represented by the proportion of total labour allocated to producing
the total wage basket. Now, if the total labour allocated to producing the
total wage basket is less than one, then the rest of the total labour must be
allocated to producing commodities that are appropriated by the non-
working class—in this case, the capitalists. This must also be represented by
the proportion to total labour allocated to producing the commodities
appropriated by the capitalists—this proportion of the total labour is sur-
plus value, which is appropriated by the capitalists as profits. The source of
the surplus value, however, can only be explained when we “leave this noisy
sphere [market for commodity exchange], where everything takes place on
the surface and in full view of everyone, and follow them [the capitalist and
the worker] into the hidden abode of production, on whose threshold
there hangs the notice ‘No admittance except on business’.”20
The conflict between Marx’s metaphysics and physics of production
explains the discrepancy between Marx’s reasoning and his mathematics.
From a purely scientific point of view, the human contribution to produc-
tion is nothing but a contribution of mechanical energy, which in essence,
is no different from animal’s energy or even energy contributed by
machines in the process of production. As horses or bullocks could be
replaced by tractors in agriculture, humans can also be replaced by
mechanical machines and robots once they become cheaper to employ
than humans. This does not mean that such technical changes must lead
to a fall in the surplus production—if that was the case, then such labour-
replacing techniques will not be introduced in the first place. This brings
us to inquire into the nature of surplus. According to the first law of ther-
modynamics, the total energy in the universe is constant; thus, no surplus
can be produced in the universe as a whole. However, if we restrict a
domain within the universe and create an “inside” and “outside,” then a
20
Ibid., 279–80.
304 A. SINHA
surplus can be produced in the “inside” domain by taking energy from

outside. One can think of economic production as conversion of “out-
side” energy of nature, which is freely available, and thus, has no economic
value, to a form of energy that has economic value—this was fundamentally
the approach the Physiocrats took in defining surplus output. Thus, sur-
plus production in the field of economics is simply an aspect of the tech-
nique of production—all that is needed for surplus to be produced is that
the total economic values of all the inputs used up should turn out to be
less than total economic value of all the outputs produced—that is why
wine maturing in the cellar or crops growing in the fields add to the sur-
plus. Marx’s idea that only human labour adds economic value in the
process of production unwittingly harks back to the classical notion of
labour being the ultimate cause of value.
III. Sraffa: From Marx’s Metaphysics of Human

Labour to Physics of Production
Sraffa21 stays clear from all the humanist moorings of classical economics
and Marx. The revolution of the 1870s that swept economics had rejected
the classical idea that labour is the ultimate cause of value. Instead, they
argued that the ultimate cause of value is scarcity, which is fundamentally
a subjective condition of the intensity of our desire for something in rela-
tion to its availability. If something is not freely available in the amount
that will satiate us, then we are willing to pay a price for it, which can be a
sacrifice of our comfort or sacrifice of anything that we possess which has
positive utility for us—there is nothing special about loss of comfort or
leisure (i.e., labour) as a sacrifice for acquiring something of value. In this
context, forgoing consumption is no different from forgoing comfort or
leisure, and therefore, if forgoing comfort or leisure (i.e., labour) must
receive a return for it (i.e., wages), then forgoing consumption, which is
how capital investment can be interpreted, must also receive a return as
profits. Now the question is, how do we measure the sacrifice of consump-
tion? Let us suppose a farmer “A” sacrifices one quintal of consumption of
wheat just harvested and uses it as seed for production of wheat in the next
harvest cycle and another farmer “B” sacrifices one quintal of wheat to use
as seed for production of wheat, and then another harvest cycle to turn it
21
Piero Sraffa, Production of Commodities by Means of Commodities (Cambridge:
Cambridge University Press, 1960).
into bread. Should the two farmers receive the same return on their equal
sacrifice of consumption of one quintal of wheat? The answer is no;
because farmer “B” has sacrificed one quintal of wheat for two time peri-
ods whereas farmer “A” has done it only for one. Therefore, farmer “B”
must receive a higher profit. What we have noticed here is that the notion
of sacrifice of consumption has a time dimension as the notion of labour.
This gave rise to the idea that capital could also be measured in the time
dimension as “time of waiting” by going back and back in the production
cycle of any commodity till we hit upon the primordial state. This was the
approach taken up by Jevons,22 Menger,23 Böhm-Bawerk,24 and Wicksell25
and had become highly influential in the profession as the alternative to
the classical (and Marx’s) explanation of profits in terms of some kind of
deduction from what legitimately belonged to the workers. In the late
1920s, Sraffa had set himself a task of demolishing the theories that rooted
economic calculations or the cause of prices and profits in human subjec-
tivity or human psychology. But the successful destruction of it would also
amount to the destruction of the old labour theory of value as they are the
two sides of the same coin.
Sraffa soon realized that in a commodity producing society where
means of production are produced by separate industries and bought and
sold by each other in the manner as any final or consumption goods are,
then it is impossible to trace back production of any commodity to its
primordial state—production of commodities is always by means of com-
modities. No matter how far back we go in the chain of production, some
commodity residue will always remain—the road to the primordial stage is
theoretically blocked forever. Though it is true that by going back and
back in the production chain one can always reduce the commodity resi-
due to negligible proportion, and thus ignore it in the calculation of a
long chain of labouring activity, it so happens that at what stage the com-
modity residue becomes negligible depends upon the rate of wages—if
wages are relatively high, then the commodity residue will become negli-
gible more quickly than when wages are comparatively low; and if wages
are zero, then the commodity residue will never become negligible. This
22
W.S. Jevons, The Theory of Political Economy (New York: Kelly & Millman, Inc., 1957).
23
Carl Menger, Principles of Economics (Auburn: Ludwig von Mises Institute, 2007).
24
Eugen von Böhm-Bawerk, Capital and Interest, Vols. 1–3 (Illinois: Liberation Press,
1959).
25
Knut Wicksell, Lectures on Political Economy, Vol. I: General Theory (London: George
Routledge and Sons, Ltd., 1934).
306 A. SINHA
reveals a fundamental mistake in understanding the relationship between

wages and profits when we root our theory of production in the idea of
primordial relation of man to nature—if we could reduce the production
chain to the primordial stage, then we could reduce all capital investment
to a long series of only wage advances, and in this case, if wages go to zero,
then the rate of profits must become infinity; however, if there must
remain a commodity residue, no matter how far back we go in the produc-
tion chain, then when wages go to zero, the rate of profits must reach a
finite maximum. This theoretical insight had a momentous implication for
Sraffa’s theory—later, Sraffa credited Marx for this insight:
The notion of a Maximum rate of profits corresponding to a zero wage has

been suggested by Marx, directly through an incidental allusion to the pos-
sibility of a fall in the rate of profits ‘even if the workers could live on air’;
but more generally owing to his emphatic rejection of the claim of Adam
Smith and others after him that the price of every commodity ‘either imme-
diately or ultimately’ resolves itself entirely (that is, to say, without leaving
any commodity residue) into wage, profit and rent—a claim which necessar-
ily presupposed the existence of ‘ultimate’ commodities produced by pure
labour without means of production except land, and which therefore was
incompatible with a fixed limit to the rise in the rate of profits.26
The fact that there always remains a commodity residue rules out the
possibility of conceptualizing industries as independent silos which pro-
duce all their means of production themselves and only exchange their
final commodities or consumption goods. Once the idea of independence
of industries is rejected, we realize that social production relies on a com-
plex web of interconnected industries that produce at least one good that
goes directly or indirectly into the production of all goods. An intercon-
nected web of all such “basic goods” form a social system of production,
where removal of one such industry would amount to complete cessation
of the whole economy. It is in this context that we can understand why the
industries get structurally constrained such that its productivity or the
maximum rate of profits of the system becomes a physical property of the
system of production.
Sraffa’s theoretical story begins with a subsistence system, which is sim-
ilar to Adam Smith’s “early and rude state of society” or Marx’s “simple
commodity production.” The characteristic of this system is that it pro-
26
Piero Sraffa, Production of Commodities by Means of Commodities (Cambridge:
duces outputs exactly equal to what it uses as inputs—there is no net out-

put production in the sense that all the income received by the labourers
appear as necessary consumption similar to feed for the horses. So, sup-
pose such a system is given by:
90 t. iron + 120 t. coal + 60 qr. wheat → 180 t. iron

50 t. iron + 125 t. coal + 150 qr. wheat → 285 t. coal
40 t. iron + 40 t. coal + 200 qr. wheat → 410 qr. wheat
t. iron + 285 t. coal + 410 qr. wheat → 180 t. iron + 285 t. coal + 410 qr. wheat
180
In price terms, this system can be represented by:
90 pi + 120 pc + 60 pw = 180 pi
50 pi + 125 pc + 150 pw = 285 pc
40 pi + 40 pc + 200 pw = 410 pw
180 pi + 285 pc + 410 pw = 180 pi + 285 pc + 410 pw (3)

The condition of “subsistence” that the aggregate of all inputs must be equal
to outputs reduces this system of equations to only two independent equa-
tions, and thus, given any commodity as the measuring standard, say pw = 1,
we can uniquely determine the values of pi and pc. Thus, the exchange ratios
that will ensure the historical viability of this system is uniquely and com-
pletely determined by the objective input-output data—no more information
from outside is needed. Now, let us suppose this system becomes more pro-
ductive and it produces more output than what it uses as inputs, such as:
90 pi + 120 pc + 60 pw → 180 pi
50 pi + 125 pc + 150 pw → 450 pc
40 pi + 40 pc + 200 pw → 480 pw
180 pi + 285 pc + 410 pw → 180 pi + 450 pc + 480 pw (4)

Now the constraint of the aggregate equation of the subsistence system no
longer holds, and therefore, technically we do not have an equation sys-
tem any more. We have three independent inequalities with only two
unknowns—the excess values of outputs must somehow be accounted for
on the left hand side to turn it into a system of equations again. In this
308 A. SINHA
case, we do not know what exact ratio in which the three commodities
must exchange, there can be several exchange ratios that can allow for this
system to get back its original means of production to reproduce itself. It
was at this stage that classical economists and Marx thought that they
needed extra information from outside the equations and introduced the
idea of market mechanics and rational behaviour on the part of the agents,
which leads to adjustment of supplies with demands in such a way that the
system comes to rest when each unit of capital receives equal returns.
Thus, on the basis of this extra information, one can introduce one more
unknown in the system as the rate of profits such that:
( 90 pi + 120 pc + 60 pw ) (1 + r ) = 180 pi
( 50 pi + 125 pc + 150 pw ) (1 + r ) = 450 pc
( 40 pi + 40 pc + 200 pw ) (1 + r ) = 480 pw

(180 pi + 285 pc + 410 pw ) (1 + r ) = 180 pi + 450 pc + 480 pw (5)
Now we can solve for the relative prices and the rate of profits simultaneously.
Sraffa rejects this approach.27 The assumption of rational behaviour by
the agents turns the system into a mechanism where supplies adjust to
demands to bring about equal returns to factors and this requires knowl-
edge of how changes in inputs relate to changes in outputs for every indus-
try on the side of supply and consumers’ subjectivities on the side of demand.
Sraffa was of the opinion that the analyst does not have access to such data.
He argues that instead of making any assumption about human behaviour
and the technique of production, one may stick to the data available after
the “harvest” without asking the question: why people did what they did or
how people will behave if the system is not in “equilibrium” of demand and
supply? He succeeded in showing that there is enough information in this
system of equations to not only determine the unique set of prices and the
rate of profits, but also to establish, what he considered, the fundamental
propositions of classical economics and Marx that can stand as an alternative
to the economics rooted in human subjectivity.
Let us rewrite the equation system (5) without assuming that rate of
profits across industries are equal:
27
For a detailed analysis of my reinterpretation of Sraffa, see Ajit Sinha, A Revolution in
Economic Theory: The Economics of Piero Sraffa (Cham: Palgrave Macmillan, 2016).
( 90 pi + 120 pc + 60 pw ) (1 + ri ) = 180 pi
( 50 pi + 125 pc + 150 pw ) (1 + rc ) = 450 pc
( 40 pi + 40 pc + 200 pw ) (1 + rw ) = 480 pw

(180 pi + 285 pc + 410 pw ) (1 + R ) = 180 pi + 450 pc + 480 pw (6)
where rjs represent the industrial rate of profits and R stands for the
average rate of profits of the system as a whole. Clearly, the average rate
of profits of this system is given by (165 t. coal + 70 qr. wheat)/(180
t. iorn + 285 t. + 410 qr. wheat). This ratio is mathematically unde-
fined because it is a ratio of disproportionate heterogeneous goods. It
appears that the average rate of profits cannot be found without the
knowledge of prices, which is supposed to homogenize these two col-
lections of heterogeneous goods. We, however, know that multiplying
any equation by a constant does not change the information set of the
equation system in any way. So, let us multiply the equation for iron
industry by 4/3 and the equation for coal industry by 4/5. This turns
our equation system (6) to:
(120 pi + 160 pc + 80 pw ) (1 + ri ) = 240 pi

( 40 pi + 100 pc + 120 pw ) (1 + rc ) = 360 pc
( 40 pi + 40 pc + 200 pc ) (1 + rw ) = 480 pw

( 200 pi + 300 pc + 400 pw ) (1 + R ∗) = 240 pi + 360 pc + 480 pw (6´)
Sraffa called this system of equations the Standard system, and proved that
there always exists one and only one set of multipliers (such as 4/3, 4/5,
1) that will convert any given system of equations to its Standard counter-
part. Now the average rate of profits of the Standard system, that is, R∗,
can be found out without the knowledge of prices. The ratio
( 40 iron + 60 coal + 80 wheat ) / ( 200 iron + 300 coal + 400 wheat ) must
always be equal to 1/5 or 20% no matter what prices happen to be, as this
ratio is a collection of heterogeneous goods collected in the same propor-
tion. Since the systems of Eqs. (6) and (6´) are mathematically equivalent
as (6´) is only a rescaled system of (6), their mathematical properties must
remain the same. Therefore, the systemic average rate of profits of the
system derived from (6´) must also apply to the equation system (6), that
310 A. SINHA
is, R = R ∗ . Now, if the industrial rate of profits are not equal, then some
will be greater than the average and some will be smaller than the average.
Let us call ri = ( R + ei ) , rc = ( R + ec ) and rw = ( R + ew ) . Thus we can write
our equation system (6) as:
( 90 pi + 120 pc + 60 pw ) (1 + R + ei ) = 180 pi
( 50 pi + 125 pc + 150 pw ) (1 + R + ec ) = 450 pc
( 40 pi + 40 pc + 200 pw ) (1 + R + ew ) = 480 pw

(180 pi + 285 pc + 410 pw ) (1 + R ) = 180 pi + 450 pc + 480 pw (7)
By definition,



( 90 pi + 120 pc + 60 pw )ei + ( 50 pi + 125 pc + 150 pw )ec  = 0.
 


+ ( 40 pi + 40 pc + 200 pw ) ew 

Without loss of generality, let us assume that ei > 0 and ec and ew < 0.
Now, again rescale the equation system back to its Standard counterpart
by multiplying iron-equation by 4/3 and coal-equation by 4/5. We obtain:
(120 pi + 160 pc + 80 pw ) (1 + R + ei ) = 240 pi

( 40 pi + 100 pc + 120 pw ) (1 + R + ec ) = 360 pc
( 40 pi + 40 pc + 200 pw ) (1 + R + ew ) = 480 pw

( 200 pi + 300 pc + 400 pw ) (1 + R′) = 240 pi + 360 pc + 480 pw (7´)
We should expect the average rate of profits of equation system (7´), that
is, R′, to be greater than R simply because we have increased the total
weight of the iron industry in the system, which has a higher rate of profits
than the average R. However, from inspection, we can see that
R′ = R∗ = 20% . And since we have already established that R∗ = R , it fol-
lows that all the es must be equal to zero. In other words, all the industrial
rates of profit must be equal and equal to R∗, that is, ri = rc = rw = R = R ∗.
Now we can plug the value of ri = rc = rw = R = R∗ = 20% into equation
system (6) and solve for prices. Thus we do not need the market mechan-
ics and rational human behaviour to solve for prices in this case either—
the required information to solve for the equation system could be found
out by rearranging the data. In other words, the condition of a uniform
industrial rate of profits is a structural property of the equation system.
Now let us introduce labour in the system explicitly and draw out a
complete structural relation of any given system of production. We go
back to Sraffa’s original example of a three-commodity economy:
90 t. iron + 120 t. coal + 60 qr. wheat + 3 / 16 labour → 180 t. iron

50 t. iron + 125 t. coal + 150 qr. wheat + 5 / 16 labour → 450 t. coal
40 t. iron + 40 t. coal + 200 qr. wheat + 8 / 16 labour → 480 qr. wheat

This can be represented in price terms as:
( 90 pi + 120 pc + 60 pw ) (1 + r ) + 3 / 16 w = 180 pi
( 50 pi + 125 pc + 150 pw ) (1 + r ) + 5 / 16 w = 450 pc
( 40 pi + 40 pc + 200 pw ) (1 + r ) + 8 / 16 w = 480 pw

(180 pi + 285 pc + 410 pw ) (1 + r ) + w = 180 pi + 450 pc + 480 pw (8)
Converting it to its Standard counterpart, we get:
(120 pi + 160 pc + 80 pw ) (1 + r ) + 4 / 16 w = 240 pi

( 40 pi + 100 pc + 120 pw ) (1 + r ) + 4 / 16 w = 360 pc
( 40 pi + 40 pc + 200 pw ) (1 + r ) + 8 / 16 w = 480 pw

( 200 pi + 300 pc + 400 pw ) (1 + r ) + w = 240 pi + 360 pc + 480 pw (8´)
Now, let us normalize our Standard net output to one, that is, put
( 40 pi + 60 pc + 80 pw ) = 1 , and call it the Standard commodity, which is our
money-commodity. If wages are given in terms of this money-commodity,
that is, as a proportion of the Standard net output, then we can derive the
average rate of profits of this system for all the values of wages starting
from zero to its maximum value ( 40 pi + 60 pc + 80 pw ) , because the ratio of
total profits to total capital remains in the Standard proportion and there-
fore can be determined without the knowledge of prices. This gives us a
relationship between wages and profits, which is given by: r = R ∗ (1 – w ) ,
where w is given in terms of the Standard net output and R∗, which we
have already derived from equation system (6´), is the maximum rate of
profits of the system—it is the ratio of net output to total capital or the
productivity of the system. This relationship between the productivity of
the system and the rate of profits and wages is derived on the basis of the
objective data without any knowledge of prices. Thus it is the fundamental
structural property of the equation system. Since the Standard system is
only a rescaled system of the actual system of observation, they are
312 A. SINHA
a lgebraically equivalent systems, and therefore, the mathematical proper-

ties of the two systems must be identical too. In other words, the relation-
ship r = R ∗ (1 – w ) must also hold for the observed system, if the wages
and prices in the observed system are measured by the Standard commod-
ity as the chosen money-commodity. What we directly observe in the
Standard system in terms of physical data must show up to be true in the
empirical system in terms of its calculations in prices:
Such a relation is of interest only if it can be shown that its application is not
limited to the imaginary Standard system but is capable of being extended
to the actual economic system of observation. … But the actual system con-
sists of the same basic equations as the Standard system, only in different
proportions; so that, once the wage is given, the rate of profits is determined
for both systems regardless of the proportions of the equations in either of
them. Particular proportions, such as the Standard ones, may give transpar-
ency to a system and render visible what was hidden, but they cannot alter
its mathematical properties. … The same rate of profits, which in the
Standard system is obtained as a ratio between quantities of commodities,
will in the actual system result from the ratio of aggregate values.28
When we move wages from zero to their maximum value, we find that
as wages and the rate of profits change, the set of prices change too. But
these prices change only to ensure that for every given w , prices adjust in
such a way that the structural property of the equation system,
r = R ∗ (1 – w ) , is satisfied throughout—that is, prices play the role of
accounting for the distribution of income, which is determined indepen-
dently of prices. Notice that when all the income goes to wages, then the
value of the net Standard output is equal to the value of the net output of
the observed system {( 40 pi + 60 pc + 80 pw ) = (165 pc + 70 pw )} , since in this
case the prices would be proportional to labour-values and both the sys-
tems use the same technique and one unit of labour to produce their
respective net outputs. For any other rate of wages, the values of observed
net output will not be equal to the value of the Standard net output.
However, the ratios of net output to total capital will remain constant with
respect to changes in prices throughout the variations of wages from zero
to its maximum value, as R∗ is determined independently of prices.
In some sense, given wages, the average rate of profits determined by
the Standard system gives us the multiplication factor for homogenizing
capital, which appears to us as a heterogeneous collection of commodities.
Ibid., 22–3.
28
As we have seen above, the procedure of homogenization of labour is

dependent on the available objective data—it is simply a processing of
proportions of total wage bills paid in various industries as proportions of
total undifferentiated labour utilized in those industries. Similarly,
homogenization of capital requires us to measure capital in such a way that
profits received by capital turn out to be equal for every unit of capital in
the system—that is, a return on the value of iron in each industry must be
equal to a return on the value of coal and wheat when they are used as
capital. This is possible only if returns on values of all commodities used as
capital turns out to be equal to the average rate of profits of the system as
a whole. The Standard average is the only average that can be distributed
equally across the industries.
IV. Some Concluding Remarks

So, in the light of the above analysis, what are the aspects of classical and
Marxian economics we must reject and aspects we rehabilitate? It is quite
clear that Sraffa establishes that “profit is a non-price phenomenon.” This
is what Sraffa believed was the central aspect of classical economics and
Marx. Adam Smith had clearly stated that wages and the rate of profits are
determined in the dynamic context of history, and for any point of time,
they are given “norms” and prices are determined by “adding up” the
given distributional variables. In other words, it is the distribution of
income that determines prices. In a letter to McCulloch, dated 13 June
1820, Ricardo wrote: “After all, the great questions of Rent, Wages, and
Profits must be explained by the proportion in which the whole produce
is divided between landlords, capitalists, and labourers, and which is not
essentially connected with the doctrine of value.”29 In Sraffa’s
interpretation,30 Ricardo had started off with the proposition that “it is the
profits of the farmer that regulate the profits of all other trades,” implying
that in agriculture, both inputs and outputs can be treated as a single
commodity—“corn.” In this case, the rate of profits could be determined
in physical terms independently of prices, and thus prices of all other com-
modities must adjust in such a way that all industries receive the same rate
29
David Ricardo, Works and Correspondence of David Ricardo, Vol. VIII (Cambridge:
30
Piero Sraffa, “Introduction”, In Works and Correspondence of David Ricardo, Vol. I
(Cambridge: Cambridge University Press, 1951).
314 A. SINHA
of profits. It was the criticism by Malthus, who argued that “in no case of
production, is the produce exactly of the same nature as the capital
advanced. Consequently, we can never properly refer to a material rate of
produce,” that led Ricardo to abandon his “corn model” for the determi-
nation of the rate of profits and move to a general labour theory of value.
Marx’s theory of surplus value and his derivation of the rate of profits prior
to the derivation of prices of production was also designed to show that
profit is a non-price phenomenon. Sraffa’s method of deriving the sys-
tem’s average rate of profits independently of prices, and then applying
them to production equations to derive the prices follows Marx’s proce-
dure almost step by step, except that instead of deriving the production
equations in terms of labour-values from the empirical input-output data,
Sraffa derives the equations of his Standard system from the same input-
output data. As Sraffa explains:
There are besides, many possible applications {of the Standard commodity},
which I have not mentioned in the book, in problems discussed by Marx.
Take, e.g. the determination of a general rate of profits, from the rate of
surplus value: Marx takes an average of the rates of profits obtained in the
production of the different commodities on the basis of ‘values’, and gets,
as he acknowledges, an approximately correct result. An exact result could
however be obtained by taking, instead of a simple average, a weighted aver-
age: & it can be shown that the appropriate weights can be derived directly
from the proportions in which the comm{odities} enter the ‘St{andard}
com{modity}’.31
However, with the rejection of humanism of any kind, Sraffa removes

the specificity of both the human labour and rational human behaviour
from the centre of economic analysis. The importance of commodity resi-
due as a central structural aspect of the economy clearly shows that the
idea of reducing production to the primordial relation of man’s direct
action against nature must be rejected. This implies that neither labour is
the ultimate cause of value nor productive technique can be reduced to a
quantitative measure in terms of labour time alone. Marx’s claim that only
labour adds value to the commodity in the process of production is based
on the notion that in the final analysis, labour is the only productive factor,
which can only be established if commodity residue could be reduced to
zero. For example, our equation system (6) solves for a finite positive rate
31
Piero Sraffa, Sraffa Papers (Cambridge: Wren Library), D3/12/111: 132, letter to
Eaton dated 12 February 1961.
of profits and positive prices and is compatible with either wages put equal
to zero or labour input put equal to zero. The classical approach would
suggest that when wages are put to zero, the rate of profits must become
infinite and Marx’s approach would suggest that when labour input is put
to zero, then the rate of profits must become zero. Clearly, both these
approaches are incorrect. Hence, the idea that the source of profits is sur-
plus value or exploitation of labour must be abandoned.
So, how to understand class struggle?32 In Marx’s context, class struggle
is understood to be the progenitor of surplus product—the struggle over
the length of the working day between the workers and the capitalists, given
a wage basket, is the source of the surplus and this happens prior to the
activity of production. To understand the nature of the difference between
Sraffa’s notion of surplus and Marx’s, we need to clarify some technical
issues first. In classical economics as well as Marx, wages are treated as a part
of capital, an amount of money advanced to the workers prior to produc-
tion. In Sraffa’s equations, wages are not a part of capital advanced by the
capitalists, but are rather a share in in the total net output, which is appropri-
ated on the basis of the quantity of labour provided by the workers in a simi-
lar way as profits are a share of net output appropriated by the capitalists on
the basis of the quantity of capital provided by the capitalists—class struggle
plays out directly or indirectly in determining the rates of profits and wages,
but the question of the length of the working day remains unproblematized.
Thus, in Sraffa’s framework, if we reduce the size of the economy by half,
which would also reduce the labour time worked by the workers by half, it
will not make any difference to the solution of the system of equations.
However, in Marx’s context, since the wage basket per worker is already
determined as the value of the labour-power, reduction in the labour time
worked by the workers would amount to a rise in wages per hour of labour,
which must lead to a fall in the rate of profits and changes in prices of pro-
duction. So, from Marx’s perspective, if we keep reducing the size of the
economy, then we will hit upon a stage where all the net output is just equal
32
This section is inspired by a comment to an earlier draft of this chapter by Professor
Geoffrey Harcourt, who wrote: “I have now read your essay on Marx’s Labour theory of
value…. I think it is a very clear statement of your arguments. I agree with all except your last
conclusion. I think the LTV is a qualitative argument in terms of unequal power between the
classes which explains the origin of profits in the sphere of production, prior to their realisa-
tion (or not) in the sphere of distribution and exchange. I still find that this illuminates
understanding of the essential nature of capitalist dynamics.” See GCH with Prue Kerr,
“Marx, Karl Heinrich (1818–83),” in International Encyclopedia of Business and Management,
ed. Malcolm Warner (London: Routledge, 1996), 3388–95.
316 A. SINHA
to the wage advances, which is compatible only with zero rate of profits.
This, in Sraffa’s context, translates into wage per hour of labour rising to
absorb the whole of net output, and therefore is compatible only with zero
rate of profits and labour-value price ratios. If we treat these wages as parts
of necessary inputs in the production equations as fuel for the machines or
feed for the horses, then we get back our subsistence economy.
Does this contradict our definition of economic production as conver-
sion of free energy from nature to a form of energy that has economic
value? The answer is: no. If labourers, or for that matter, even animals, are
used in the production process, then one can calculate the energy con-
sumed by the labourers and the energy contributed by the labourers in the
production process. If the two energies are equal, then there must be sur-
plus production in the system. Now, think of reducing the contribution of
the energy from the labourers to the production process such that the total
energy used in the production (including the free energy from nature)
becomes equal to the total energy consumed in the production process,
including the total consumption by the labourers. This will give us the
subsistence economy. Marx’s argument appears to be that the surplus pro-
duction from here on can only consist of getting more energy out of the
labourer in the production process, and this is made possible only because
capitalists wield power over workers, which shows itself on the factory
floor. But surplus could also be produced by making the production pro-
cess more efficient in the sense that it is able to convert more naturally
available free energy to economic goods without increasing the human
labour input. From this perspective, the labourer can be made redundant
and the surplus could be explained simply by the technique of production.
These are the two fundamental nodes on which the whole of “surplus”
discourse rests on. Thus the class struggle that Marx talks about is real in
the sense that stretching the labour time beyond a point, given subsistence
wages, does contribute to surplus production, but it is not the only means
by which a surplus can be produced. Efficiency gains on the use of any
input of production, for example, if a machine could contribute the same
energy to production by consuming less fuel or if it reduces waste of raw
materials, and so on, would also contribute to surplus production. This
explains why within capitalism, there is a tendency to stretch the working
day as long as possible on one hand and, on the other, also replace labour
by machines once machines become cheaper or more efficient to employ.
Acknowledgements I take this opportunity to thank Professors Amit Bhaduri,

Meghnad Desai, and Geoffrey Harcourt for their comments on an earlier draft of
this chapter—the usual caveat applies.
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and Sons, Ltd., 1934.
Marx’s Prescient Theory of Centralization of
Capital: Crises and an Nkrumahist Response
Cynthia Lucas Hewitt
I. Introduction
This is a study of the dynamic of centralization of capital identified by
Marx, and its applicability to the capitalist world-system of today. Marx
theorized that the centralization of capital into the hands of ever fewer
capitalists, completing the processes of accumulation and concentration,
will lead eventually to the unemployment of the masses of the people and a
crisis breakdown of the system of capitalism. This study asks the question—
is there evidence that the abstract structure of processes underlying the
system of capital, which Marx illuminated, is true and valid? Is it that his
omissions on the side of social analysis are few, explainable, and, although
maybe immense, do not invalidate the quality of his analysis of capital, and
its import to the future of political and economic change in the “modern
European world-system” of capitalism? This expression, drawn from the
seminal work of Immanuel Wallerstein1 (although the focus on the world-
1
Immanuel Wallerstein, The Modern World-System I: Capitalist Agriculture and the Origins
of the European World-Economy in the Sixteenth Century (Cambridge: Academic Press, 1976).
C. L. Hewitt (*)
Faculty of the Sustainability Minor and the African American Studies Program,
Morehouse College, Atlanta, GA, USA

320 C. L. HEWITT
system as a whole was pioneered by erudite African American sociologist

Oliver C. Cox2 as early as 1959) is perhaps the best designation of what
Marx analysed. We are subsequently correctly encouraged not only to see
the European world-system, but to recognize that there are positions out-
side looking in, as well as the possibility of seeing beyond it, to past mini-
world systems and, hopefully, to a coming new “post-modern” world.
Marx analysed capitalism as a “progressive” system of social relation-
ships with the potential for organizing ever more natural forces into pro-
duction, and that once set into motion, must be continuous and
expanding due to its nature, and thus would come to spread its tendrils
and enact its “destructive/productive” relations everywhere around the
globe. However, he also argued that the sheer force of the productivity
which would develop would outstrip its social relationships that make
possible the distribution and consumption of the output, leading to the
collapse of the market system from not being able to sell everything, and
eventual, and inevitable, revolutionary emergence of new relationships.3
It is a system with fatal internal contradictions. A key driver in this is the
centralization of capital—the progressive development of control over
the accumulation of wealth of everyone and in everything, by a diminish-
ing number of capitalists as competition leads to size efficiencies in big
factories driving smaller capitals out of the market and taking control of
their markets and production opportunities. Theoretically, once all peo-
ple are in a relationship where they are either workers dependent for
consumption on wages, or owners, the options for the owners to expand
their sales will become much more limited, as the major source of expan-
sion is new markets and dependencies of all kinds. How close have we
come to reaching this “end-game”? How close are we to full incorpora-
tion of every area and every people into the capitalist world-system sce-
nario of Marx’s analysis?
2
Oliver C. Cox, The Foundations of Capitalism (New York: Philosophical Library, 1959).
3
Doubtless, the largest omission of Marx was the consideration of the final coup de grace,
the environmental limits to endless production expansion, based on the degradation and
exhaustion of resources. Of course, as stated by Herman Daly, Beyond Growth, The Economics
of Sustainable Development (Boston: Beacon Press, 1997), the earth was “relatively” empty
at that time, and neither use of materials or disposal of waste was understood widely to create
irreparable destruction as it is understood today. Marx’s conception of the degradation of
human life through expanding production comes closest to this awareness. The environmen-
tal and population limits seen today over-determine the crisis potential of the system today.
MARX’S PRESCIENT THEORY OF CENTRALIZATION OF CAPITAL… 321
Contemporary data on the presence of “access points” of various kinds

where individuals and businesses are connected to banking and finance,
that is, global capital, are presented as evidence of the expansion of cen-
tralization. The presence of these access points is argued to be reflective of
the incorporation of peoples into the capitalist system (or proletarianiza-
tion of them). The Financial Accessibility Survey (FAS) of the International
Monetary Fund (IMF) reports access levels in core countries and “devel-
oping” countries. We look at the extent to which it could be argued that
all people have come into a relationship with capital by comparing the
density of engagement with the money systems. To what extent is there
evidence that the majority, or a substantial segment of the population
meets their consumption needs through engagement with finance institu-
tions capable of centralizing money? Based on the reported level of finan-
cial access found in fully proletarianized nations, we compare the degree
to which people outside of the Eurocentric core are also incorporated, that
is, have come to rely on monetized lifestyles. Theoretically, it can be
argued that only at the point where centralization of capital has reached a
slowdown to global completion is it fully possible to see if Marx was wrong
or right about what will occur next.
To the extent that any result of labour, any value, is deposited within
the financial system, the maximum expansion will be enabled, and to the
extent that some values are not deposited in the system—whether due to
ownership under other principles, such as socialism, or an indigenous col-
lective society, or the value is simply stored in one’s mattress, the capitalist
system has a reservoir which it could tap. Once it arrives on the border, it
experiences any resistance as a blockage to be overcome in all the ways at
its disposal: first, the destruction of communal land social structures and
“freeing” the people from any ownership and any control. This process
has also incorporated a cultural element of racism, which is used to legiti-
mate the transfer of rights over land and resource, and denial of rights to
justice as workers, to African and other Southern peoples. It is argued here
that the completion of incorporation can now be vaguely glimpsed like a
light at the end of a tunnel.4 We are still, and again, hopeful.
To summarize, Marx theorized that the progressive accumulation and
concentration of capital would lead to increasing centralization of capital in
fewer and fewer hands, higher productivity, reduced need for labour and
4
Although all bright lights in the future are not the dawn, some, like those of the Christian
tradition, could be the result of the earth going up in conflagration.
322 C. L. HEWITT
expansion of surplus labour, and inevitable irreconcilable realization crises,

and systemic change.5 Analysis of the level of incorporation6 of various areas
of the world began with consideration of how to understand the relationship
between the countries which Marx studied and experienced most closely,
and the rest of the world’s societies, which he hypothesized would basically
follow the direction the European world-system core had taken.
Wallerstein’s work, The Modern World-System I, served as a corrective to
the over emphasis on country-bounded analyses by emphasizing that there
is only one modern inter-connected capitalist world-system (w-s) contain-
ing both continuous centralizing accumulation of capital in politically and
technologically best suited arenas—core states—which have been seen to
shift in their relative prominence, and areas losing wealth—the periph-
ery—in a process of incorporation of new areas over historic time.7 It is
also possible to see that capital has been centralized racially as the inheri-
tance of endogenous European heritage families.8 Both racial and cultural
dimensions will come into play.
II. Centralization of Capital
Marx’s theory is unique in the extent of its dedication to modelling the
social dynamics of change, that includes some statics—the capitalist
cycle—but within a conceptual frame of a spiral with both reproduction
and expansion/change. In “Wage Labour and Capital” and “Value,
Price and Profit,”9 Marx presents the spiral of the capitalist system, and
5
Realization crisis refers to the inability to sell all the commodities produced, and as most
profit or surplus value becomes available in the marginal final output of a production process,
shrinking markets rapidly lead to an inability to sell all, and thus to “realize” the value put
into the commodity through sale on the market, and a loss of profits.
6
World-systems theory describes a society as “incorporated” when it is no longer self-suf-
ficient in the production of the necessities of life, becoming reliant on the world-system, and
thus taking “its place” within it.
7
There has been lively debate among world-systems theorists whether the modern
European world-system is the first and the only world-system ever existent. One wing of
theorists, including Andre Gunder Frank and Barry Gills recently still considered this an
open question for empirical exploration. See Andre Frank and Barry K. Gills, eds., The World
System, Five Hundred Years or Five Thousand? (New York: Routledge, 1996).
8
See Cynthia Lucas Hewitt, “Racial Accumulation on a World-Scale, Racial Inequality and
Employment,” Review XXV, no. 2 (2002): 137–71.
9
Karl Marx, Wage Labour and Capital, in MECW (New York: International Publishers,
1977), 9; Karl Marx, “Value, Price and Profit,” in MECW (New York: International
summarizes the analyses in clear and abbreviated form, presaging the

concept of centralization of capital presented in Volume I of Capital.
Growth in the available capital leads to capitalist production in more
areas of consumption, increasing its concentration in industries, and
more jobs. But soon, concentration leads to a struggle between the capi-
tals for market share, and they now seek to reduce their cost of produc-
tion through labour mechanization and heightened productivity, to
reduce the need for labour and its quality, to win the market. This leads
also to a relatively declining number of jobs, the bankruptcy of some
enterprises, and centralization of capital. Once again, strong profits are
made. However, Marx establishes that while “the rapid growth of capital
is the most favourable condition for wage labour,” that is, it creates
more jobs, it is also the pathway to endless competitive struggle between
them for relatively fewer positions in the new stage of production (Fig. 1).
Fig. 1 The spiral of wage labour and capital

324 C. L. HEWITT
Here, we arrive at a major contradiction—the realization crisis: if a

given amount of labour produces more products more cheaply, when they
are sold in the market, the capitalist must sell more of them to attain the
same or more total mass of surplus value. The entry of more, cheaper,
products into the market generally assumes a market expansion. But with
labour-saving mechanization in play, more people are surplus and less have
earnings to buy the goods. The history of capitalism, therefore, on the one
hand, is the history of the cheapening of labour and on the other, the
struggle for markets. Generally, the acquisition of new markets is the safety
valve that reduces the pressure by leading to new profits and new capital
agglomerations in industries (capitals) already saturated by the production
of commodities. The growth then of capitalist production at a more exten-
sive scale and concentrated penetration of arenas of human needs is
accompanied by new hiring and incorporating of labour.
However, likewise, these capitals come into competition with each
other and seek to cheapen the product, undersell, and win market shares
from each other. Winners accede to control over their market shares and
resources, creating a now temporarily less competitive environment. Now,
the capital formerly invested in failed companies will be reinvested in a
company or industry that is producing surplus value for the owners.
Capital is centralized in fewer and fewer hands. Marx writes:
Capital grows in one place to a huge mass in a single hand, because it has in
another place been lost by many. This is centralization proper, as distinct
from accumulation and concentration… The battle of competition is fought
by cheapening of commodities. The cheapness of commodities depends,
cæteris paribus, on the productiveness of labour, and this again on the scale
of production. Therefore, the larger capitals beat the smaller… The smaller
capitals, therefore, crowd into spheres of production which Modern
Industry [ignores]. Here competition rages in direct proportion to the
number, and in inverse proportion to the magnitudes, of the antagonistic
capitals. It always ends in the ruin of many small capitalists, whose capitals
partly pass into the hands of their conquerors, partly vanish.10
This cycle of production is the most fundamental internal system-

generated process of capitalism; however, Marx continues, “With capitalist
production an altogether new force comes into play—the credit system,
which in its first stages furtively creeps in as the humble assistant of
accumulation, drawing into the hands of individual or associated capitalists,
10
Karl Marx, Capital, Vol. I, in MECW (New York: International Publishers, 1996), 35: 626.
by invisible threads, the money resources which lie scattered, over the sur-
face of society, in larger or smaller amounts; but it soon becomes a new and
terrible weapon in the battle of competition and is finally transformed into
an enormous social mechanism for the centralization of capitals.”11 This
process is the focus of this chapter.
III. Centralization of Capital:
Consideration of the Evidence
This analysis assesses the objective position of countries of the world today
with respect to their citizens’ involvement in, and their control over capital
centralizing processes. Comparisons are made with respect to the level of
concentration of “financialization” (a contemporary term)12 to assess the
degree to which centralization is taking place. Countries are grouped by
w-s categories as core, periphery, or semi-periphery, derived theoretically
from The Modern World-System I by Wallerstein. By definition, core coun-
tries have high capitalization in production and associated financialization.
Periphery countries are the inverse, and constitute the “hinterland” where
surplus value is extracted from low-cost workers, but little to no capital
ownership is acquired by their citizens. The semi-periphery, on the other
hand, are those countries with a mix of core-like and periphery-like condi-
tions, often either moving upward towards core status or sliding down-
ward, unable to retain core status. The semi-periphery is a somewhat grey
area which, by analogy, tends to offer a safety valve for w-s theory, and has
become the category into which over half the world’s population is
defined, including those in China, India, Indonesia, Brazil, and Nigeria.
Fifty years ago, all would have been considered periphery.
The w-s position analysis is done for 188 countries. It is nuanced
because it includes not only assessment of the strength of their capital
(economic) position, but also of the state—the level of political strength
(militarism) that serves that capital, and of the society—particularly the
level of solidarity legitimating and strengthening that state. This analysis
begins by evaluating foreign direct investment (FDI), a measure of capital
transfer between countries when this funding constitutes basically a
controlling share for the originating country capitalists in the foreign
enterprises where it is invested—generally, approximately 20 per cent or
more of the operating capital in a particular production enterprise. FDI is
Ibid.
11
See Cédric Durand, Fictitious Capital (New York: Verso, 2017).

12
326 C. L. HEWITT
money transferred as capital for investment, rather than for other reasons,
such as for domestic consumption or for purchase of export goods, and so
on. This record is provided by the IMF.13 For analysis of centralization of
capital, a five-year average of the level of stocks of FDI claimed by a coun-
try’s nationals and the extent of annual outflow is used. This avoids too
much emphasis on any given year, which may be anomalous for some
reason. This analysis should identify the dominant and/or rising global
centres of centralized capital, which we expect to be categorized as core or
semi-periphery countries.14
Table 1 shows the 20 countries with the highest FDI flows, and their
w-s status as core or semi-periphery, with the latter separated into two
columns, the second of which separates out those countries conceivably
Table 1 Foreign direct investment (FDI), net outflows (in millions) five-year
average, 2012–2016
Country Core Semi-periphery Chinese W-S
1 United States 346,321.2

2 Netherlands 258,833.2
3 Japan 143,461.2
4 China 130,531.5
5 Germany 98,930.1
6 Hong Kong SAR, China 93,282.1
7 Ireland 88,556.3
8 Canada 65,984.0
9 British Virgin Islands 62,952.2
10 Switzerland 58,201.0
11 Russian Federation 47,362.1
12 France 45,786.4
13 Luxemburg 41,907.7
14 Spain 36,573.4
15 Singapore 34,110.0
16 Korea, Rep. of 28,150.5
17 Cayman Islands 20,974.8
18 Norway 18,214.8
19 Italy 15,763.1
20 Brazil 14,504.7
The World Bank, “Data Catalogue, Foreign Direct Investment, net outflows,” 2018
13
This process also corresponds roughly to what world-systems theory refers to as
penetration.
14
It is expected that the relative levels of FDI will also reflect early entry into the system
because returns to capital involve a geometric expansion.
part of a new political economy phenomena. The United States, with a

five-year average of $346,321.2 million of FDI is by far the first, followed
by the Netherlands with $258,833.2 million, arguably the earliest territo-
rial capitalist country, circa 1600. Japan, third, also reflects early entry. At
about the same time as the United States was moving from the politics of
a raw materials producing periphery economy to a contending core—the
period of the Civil War in the United States—the Meiji Restoration, which
launched Japanese industrialization, was taking place, circa 1865–75. As
expected, there are no periphery countries on this list.15
IV. China
Most interesting is the occupation of the fourth position, with $130,351.5
million in FDI, by China. The third column lists nations which might be
seen as part of a rising Chinese world-system. Given China’s great domi-
nation in world commodity production, strong military capacity, and uni-
fied state, it is not clear if China is not a core nation. However, is it a core
within the European world-system or an “attractor” in the formation of a
successor system?
Table 2 shows that not only in terms of average annual flows over the
last five years, but in terms of stocks of capital invested, China has risen
rapidly to occupy the fifth position. The extent of Chinese FDI is not sur-
prising, considering the Chinese need to organize the supply of all types of
materials and services to facilitate their role as the manufacturing centre of
the world. But it is very major: China’s rise on this list seems to mark a
world-historic systems shift. The rise of China is the single most challenging
new aspect of global political economy and Marxist analysis of centraliza-
tion of capital. China occupies a “semi-periphery” designation within the
world-systems categories and a “developing nation” status in the Bretton
Woods categorizations. Both of these, as will be seen, patently fail to take
into consideration the full scope of the weight of the Chinese dynamic in
global capital, to which this analysis, based on Marx’s theorized centraliza-
tion end-game, points.
In order to better assess the ranking of countries in terms of centraliza-
tion of capital, in addition to FDI, the voting rights allocations of the IMF
are considered because these reflect an internationally agreed-upon assess-
ment of the size of a country’s control over international trade—or in
Marx’s terms, international capital, whether it resides in the form of
And none appear until the Philippines, number 39 in the list of 188.
15
328 C. L. HEWITT
Table 2 Foreign direct

Rank Country FDI stock
investment stocks, 2017
(2016) (in millions) 1 United States 7,799,045.00
2 Netherlands 1,604,921.20
3 Germany 1,593,974.57
4 Great Britain 1,531,703.82
5 China 1,472,982.06
6 France 1,451,696.98
7 Japan 1,315,146.40
8 Canada 1,251,958.00
9 Switzerland 1,088,413.29
10 Ireland 899,499.88
11 Belgium 568,672.92
12 Spain 556,523.15
13 Italy 532,922.43
14 Australia 401,500.72
15 Sweden 384,817.86
16 Russia 382,278.00
17 Korea 296,641.00
18 Austria 248,271.77
19 Luxemburg 241,427.20
20 Brazil 201,767.00
21 Mexico 180,057.89
22 Norway 178,313.69
23 Denmark 175,999.89
24 South Africa 175,635.43
25 India 155,341.20
Source: Organization for Economic Co-operation

and Development, 2016
commodities, wages for labour, machinery and infrastructure, or branding

in markets. This ranking is also considered to help in adjudicating the W-S
analysis of which countries are core, semi-periphery, or periphery. If the
2016 IMF voting shares of a country show them to be among the countries
holding a dominant voting positions, it will help place them as core or
semi-periphery in w-s status (See Table 3).
There has been significant change in the locations of capital concentra-
tion as measured by the voting shares, and a shift to China, over the last
35 years. The United States, with 16.52 per cent of the vote, holds a very
dominant position, but also reflects a serious decline in hegemony, as it
held 21.5 per cent of the vote in 1980.16 Its share of the vote is more than
James M. Broughton, Silent Revolution, The International Monetary Fund, 1979–1989

16
(New York: International Monetary Fund, 2001), 856.

Table 3 World-systems
W-S status Country Economic power
status and IMF percent- % IMF votes
age of votes by country,
Top 30 C United States 16.52
C Japan 6.15
N China 6.09
C Germany 5.32
C France 4.03
C United Kingdom 4.03
C Italy 3.02
S India 2.64
C Russian Federation 2.59
C Canada 2.22
S Brazil 2.22
S Saudi Arabia 2.02
C Spain 1.92
S Mexico 1.80
C Netherlands 1.77
S Korea (Republic of) 1.73
C Australia 1.34
C Belgium 1.30
C Switzerland 1.18
S Indonesia 0.95
S Turkey 0.95
C Sweden 0.91
S Poland 0.84
C Austria 0.81
S Singapore 0.80
C Norway 0.78
S Venezuela 0.77
(Bolivarian Rep. of)
S Malaysia 0.75
S Iran (Islamic 0.74
Republic of)
C Denmark 0.71
International Monetary Fund, “IMF Member’s Quotas and

Voting power, and IMF Board of Governors,” 2018
double the allocation of Japan (6.15), which is barely holding on to sec-

ond place in the path of the rapidly rising China (6.09), in third place. The
next four positions include core nations, theoretically anticipated: Germany
(5.32), France (4.03), the United Kingdom (4.03), but also rising India
(2.64) in position #7. The Russian Federation (2.59), and Canada now
overrun by Brazil (tied at 2.22), complete the top 10 of the list of 188
nations. Historic holdings and country size matter, and China is joined by
330 C. L. HEWITT
India and Brazil, two other semi-periphery, large “BRIC” countries.

Nigeria (.520) is the first periphery country to appear in the ranking, at
position 35. In contrast, Kentor’s 1980 world-system rankings, in a con-
tinuum from top core to least periphery status within the world-system,
placed Brazil 17th, China 27th, and India 30th.17
For the first time, in 2016, the Chinese renminbi (RMB) was added to
the currencies used to create the IMF “global currency,”18 the globally
convertible Special Drawing Rights (SDRs). To mark the launch of the
new SDR basket, or mix of currencies, which define its value, Christine
Lagarde, Managing Director of the IMF, stated: “The expansion of the
SDR basket is an important and historic milestone for the SDR, the Fund,
China and the international monetary system. It is a significant change for
the Fund, because it is the first time since the adoption of the euro that a
currency is added to the basket.”19 Unlike civil institutions, the IMF
voting system is based strictly on economic power, not a democratic vote.
Based on this review, countries were divided by w-s position for the analy-
sis of the level of centralization of capital achieved and the anticipated rate
of convergence across the system.
V. Financial Access Analysis

The relatively new IMF Financial Access Survey (FAS) data can arguably
provide proxies for the level of incorporation of individuals into the capi-
talist economy. The FAS is data collected from central banks and financial
regulators. It was motivated by the desire to assess the availability, use, and
access to financial services by households and firms, in the context of
Sustainable Development Goals (SDGs).20 This study looks at the m easures
17
J. Kentor, “The Divergence of the Economic and Coercive Power in the World Economy
1960 to 2000, A Measure of Nation-State Position,” IROWS Working Paper 46, 2009,
accessed March 2019, https://irows.ucr.edu/papers/irows46/irows46.htm.
18
The others are the U. S. dollar, the Japanese yen, the euro, and the British pound. In
effect, these are the ruling currencies of the globe.
19
See International Monetary Fund, “IMF Releases the 2016 Financial Access Survey, A
Key Tool to Foster Financial Inclusion” (October 3, 2016), accessed March 2019, https://
www.imf.org/en/News/Articles/2016/10/03/PR16441-IMF-Releases-the-2016-
Financial-Access-Survey.
20
Its emergence reflects gender equity concerns embedded in the sustainability and millen-
nium development movement, reflected in the significant funding by Queen Maxima of the
Netherlands (see Andre Mialou, “The IMF’s Financial Access Survey (FAS),” Presentation
Fig. 2 Automated teller machines (ATMs) per 100,000 adults, 2015
of ATM Machines per 1000 Persons (ATMs) and the Mobile Money
Accounts Registered per 1000 Persons (MMAs) measures.
ATM machines are widely in use outside of African and some southwest
Asian nations. (See Fig. 2). Considering the spread and concentration of
ATM machines in regions of the global economy defined by world-
systems, we see that the concentration is increasing relatively rapidly in
periphery and semi-periphery nations, by 58.21 per cent and 31.29 per
cent, from 2008 to 2016, respectively. See Tables 4 and 5. The most unin-
corporated area, Africa, is registering the fastest growth rate (69.9), with
southwest Asia second (62.56), but these have very small base numbers.
In contrast, the rates in core countries in 2016 were 103.91 per 1000
persons on average. Growth is very slight (2.64 per cent), and occasionally
a downturn is recorded, which can be taken as a sign of having reached a
saturation point in ATM concentration, or perhaps the impact of growth
in online banking between 2009 and 2016.
to the IFC Workshop on Financial Inclusion Indicators (5–6 November 2012), accessed
March 2019, https://www.bis.org/ifc/publ/ifcb38h.pdf), in addition to the Bill & Melinda
Gates Foundation (see International Monetary Fund, “IMF Releases the 2016 Financial
Access Survey”) to launch its collection.
332 C. L. HEWITT
Table 4 ATM machines per 1000 persons by world-system position

World-system position 2008 2016 Per cent change
Core countries 101.24 103.91 2.64

Semi-periphery countries 54.57 71.64 31.29
Periphery countries 16.78 26.55 58.21
International Monetary Fund, Financial Access Survey (FAS)
Table 5 ATM machines per 1000 persons by region

Region 2008 2016 Per cent change
Africa 8.79 14.94 69.97

E. Asia 43.29 58.53 35.20
S.W. Asia 23.19 37.70 62.56
Europe 66.08 74.48 12.71
Latin America & Caribbean 36.06 49.73 37.90
North America 192.87 197.23 2.26
The FAS also provides data on mobile money accounts registered per
1000 people (MMAR) by country. The innovation to utilize phones to
create mobile banking is an interesting step in the de-materialization of
money and seemingly a technological leapfrog for banking, which Africa
has been theorized as likely to carry out in many arenas. The financial
incorporation of the people in African countries registers a rapid penetra-
tion, with the entry of cell phones as mobile money access points. Kenya,
where it seems to have started, and Tanzania, are in the lead in use of
mobile money, as shown in the data for 2012 and 2015. These are fol-
lowed by West Africa. See Figs. 3 and 4.
This form of penetration is now rapidly deepening in Africa in the
countries where it is in use, with an 185 per cent rate of increase between
2012 and 2016, with some increase also in terms of number of countries.
In 2012, 21 African countries in the periphery registered 206.41 MMAR
per 1000 people, in comparison to zero usage reported in the core
countries and many others (See Table 6). By 2016, the density had

increased to 588.24 per 1000 people in 25 countries in Africa as a devel-
opment region (See Table 7). There are a few cases where the data reported
in the early years is no longer reported, hence whether a continued increase
Fig. 3 Mobile money accounts registered (MMAR) per 1000 adults, 2012
Fig. 4 Mobile money accounts registered (MMAR) per 1000 adults, 2015
334 C. L. HEWITT
Table 6 Mobile money accounts registered (MMAR) per 1000 persons by

world-system position
World-system position 2012 No. 2016 No. Per cent change
Core countries 0 0 0.0 0 0

Semi-periphery countries 42.84 4 134.20 5 213.25
Periphery countries 174.05 29 487.70 40 180.21
Table 7 Mobile money accounts registered (MMAR) per 1000 persons by

region
Region 2012 No. 2016 No. Per cent change
Africa 206.41 21 588.24 25 184.99

E. Asia 127.15 5 448.90 8 253.06
S.W. Asia 36.73 3 129.36 5 252.15
Europe 23.83 1 130.18 2 446.32
Latin America & Caribbean 38.16 3 194.95 5 410.93
North America 0 0 0 0 0
occurred or it dropped off is not clear. Only one country, Afghanistan,

reported major decline, and Malaysia reported slight decline between the
two time points. The spread of MMAR is dependent upon enabling legis-
lation and financial sector regulations, which may account for the lag in its
appearance in some countries, or cessation, despite rapid growth e lsewhere.
In the few countries in other regions which have adopted the system, the
increase in density was even more rapid, at 253 per cent to 446.32 per
cent. Overall, this system shows viability as a method of increased con-
sumer access to financial structures which have the potential to engage in
centralizing capital processes in regions where other “access points” to
financial services remained low.
VI. Absorption of the Periphery and China’s Rise

The FAS data on ATM spread and mobile money emergence offer what
appear to be good proxies for the rate at which the semi-periphery and
periphery are bringing their population into the money economy and the
global financial systems which centralize capital, and acculturate wage
labour. Figure 5 shows a projection of the increase in concentration of
ATMs Per 1,000 People in Semi-Periphery

Countries
120
100 y = 2.7578x + 52.814
80
60
40
20
0
0 5 10 15 20
Years, with 0 = 2008
Fig. 5 Linear growth in density of ATMs annually, from 2008, in semi-periphery

countries
ATMs based on the five-year data for semi-periphery countries. At its aver-
age rate of change, in eight to ten years, the semi-periphery should catch up
to the core in access of individuals to financial systems as workers/consum-
ers/proletarians. In approximately 15 years, so will the periphery. Figure 6
shows projections of the growth in density of ATMs for China alone.
Depending upon whether one uses an exponential model of growth—
which actually fits the data best—or a linear projection, China would either
be arriving at a density comparable to that of the UnitedStates (103 ATMs
per 1000 persons) now or within three years.
The innovation in mobile phone banking augers that the periphery will
not take as long to reach comparable levels of financial access density as
the semi-periphery did historically using the physical technology of the
ATM and cash. The picture provided by the tremendous growth rates is
complicated by lack of clarity about why it is emerging in some countries,
particularly in Africa, and not in other.21 However, given the very brief
21
Jay Rosengard, “A Quantum Leap Over High Hurdles to Financial Inclusion: The
Mobile Banking Revolution in Kenya,” John F. Kennedy School of Government. RWP16-032.
2016, accessed June 2017, https://research.hks.harvard.edu/publications/workingpapers/
Index.aspx.
336 C. L. HEWITT
ATMs Per 1,000 People in China

300
y = 12.548e0.2195x
250
200
y = 8.061x + 1.9068
150
100
50
0
0 5 10 15 20 25
Years, with 2008 = 0
Fig. 6 Growth in density of ATMs in year, linear and exponential projections

from 2008, in China
time of its existence, it may also, in a short time, emerge in other countries
as the cultural capital spreads. This spread may even affect the growth of
ATMs, likely cancelling out and replacing some of the access they pro-
vided, so the growth of both these access points requires a more careful
assessment of how they interact in any given population. But unquestion-
ably, a calculation of the rate of increase that includes both will be higher
than that of ATM alone; thus 15 years is an outside estimate of the com-
pletion of financialization of Africa. A much shorter estimate seems more
appropriate. This augurs that the process of incorporating new areas of the
globe into the world-system will essentially come to completion within 15
years, more likely 10. The expressed goal of the advocates of the Sustainable
Development Goals of Women’s Inclusion is full access by 2020.22
Deepening of these processes should continue after this time, but the easy
pickings of new markets for expansion will be, and probably even today is,
over. Marx theorized that the centralization of capital is a process leading
22
Mayra Buvinic, “The Clock is Ticking on Financial Inclusion and a Focus on Women
Can Help,” Center for Global Development (May 14, 2018), accessed May 2019, https://
www.cgdev.org/blog/clock-ticking-financial-inclusion-and-focus-women-can-help.
to ever more global and massive crises, which ultimately will not be resolv-
able within the logic of capitalist production. These include the rising
organic composition of capital and spread of surplus labour. Theoretically,
now, and only in this period of emergence of some indication of full incor-
poration, can history prove Marx or his naysayers correct. The analysis
here favours the continued relevance of Marx today.
The puzzle exposed in the pattern of findings is the world-historic emer-
gence of a true bifurcation in the pattern of relationships within the world-
system, as the Chinese centre with its “logic” of relationships, or nexus, of
world-system processes emerges increasingly successful in competition
with the European hegemony of the spiral of capitalism for approximately
300 years. China, and its logic of relationships, or relations of production,
appears to be heading to become the dominant logic. To return to an
Nkrumaist focus on the possibilities for African socio-economic rise, it can
be seen that conditions under which the “freeing” of African culture/civi-
lization would take place are now being revolutionized with the rise of
China. It appears to be displacing the racist cultural hegemony of the
European world-system. Assessment begins with several objective factors.
First, Chinese capital is not the product of slavery; it is the product of

socialism. This is a fundamentally different foundation for concentra-
tion of wealth even if the wealth is being used in the capitalist global
market under capitalist principles today. It was not stolen through slavery.
Second, China did not invade and occupy other peoples’ land as settler-
colonialists as did the Europeans (there are some border and expansion
issues, such as with Tibet), not long-distance mass genocide and
settler-colonialism.
Third, China is reaching a point of hegemony without predatory milita-
rism as well.
These are the three hallmark features that gave the European people
their lead in accumulating capital and wealth, around which the principles
that animate their social structure were formed. But even their tremendous
theft of life, land, and resources cannot shield them from being overtaken
by a mass, united socialist system of political economy. China is arriving by
a fundamentally different path to the position of hegemon of the world-
economy23—it is a socialist path and that is already halfway there for Marx’s
23
A world-economy in distinction from a world-system implies economic integration with-
out necessarily political domination/integration.
338 C. L. HEWITT
theory. On the other hand, no particular territory and people can be

adjudged “socialist” from afar, yet many have withdrawn this designation
from China. However, whether socialism is leading, contending, or just
one orientation within a central coalition governing there, it is a factor.
And, again, that makes China’s pending dominance, and possibility of
ascending to hegemony, arguably an essentially revolutionary difference
from that of the previous countries whose succession can be traced under
solid capitalist political control—up to and including the United States.
Evan A. Feigenbaum, on the Macropolo (Paulson Institute) website,
expressed the “dis-ease” in the Eurocentric hegemon—the United
States—that even the popular pronouncing of China as “post-communist”
fails to alleviate. He wrote, “China accepts most forms but not necessarily
our preferred norms. And that disconnect between forms and norms
means that Beijing’s revisionism and demands for change often play out
within the existing international framework.”24 Feigenbaum argued that
at the time of the Chinese revolution, the United States was fearful that
China supported change from without, backing revolutionary movements
to overthrow capitalist institutions and states around the world, the “dom-
ino effect” theory that led to the Vietnam war fiasco. Today, he argued,
the danger comes not from China acting externally to overthrow capitalist
institutions, but rather its strategic acting internally, to take over institu-
tions. If Marx were alive today to read such Feigenbaum’s points, maybe
he would pronounce him a Philistine and laugh with mirthless glee at this
classic solution: “if you cannot beat ‘em, join ‘em.” A smile at this classic
example of the unanticipated results of social actions is hard to resist!
With this perspective, that we are entering a period of struggle over
norms and we need not necessarily privilege the plane of the material,
objective structures—the states, banks, and international Bretton Woods
institutions—as the sites of struggle. These institutions are still sitting
there and there are no Chinese barricades in the streets in front of them!—
yet they fear overthrow.
However, alternatively, the argument that China is now capitalist could
also be supported by Marx’s theory of centralization as what we are observing
may be resolved in a synthesis, whereby former rivals in capitalist competi-
tion merge in the next phase, as previously occurred in the world-system.
24
Feigenbaum, Evan A. Feigenbaum, “Reluctant Stakeholder: Why China’s Highly
Strategic Brand of Revisionism is more Challenging than Washington Thinks,” Macropolo
(Paulson Institute), accessed 2018, https://macropolo.org/author/evanfeigenbaum. See
also by the same author, “China and the World,” Foreign Affairs, January/February 2017.
Perhaps Chinese ascension augurs the completion of centralization, and

not a bifurcation struggle? The Marxist expectation of subsequent revolu-
tionary change being required due to capitalist crisis does not change, but
it is a question of the way in which a transition to communism takes place.
Could a cultural shift take place that will change the nature of political
struggles? Will it occur essentially through a people’s demand for change in
the name on the ledger for ownership of all the world’s resources? Or
through the people storming the Bastille and violent struggle until a mass
insubordination among the military forces occurs? To some extent, it is fair
to say that we are now observing the real-world transition to socialism, as
China is now a part of the increasingly strong global forces that rule capital.
VII. The Nkrumahist Response
On the question of revolution, Marx describes a situation where people are
operating under different principles in communist society, but he does not
take this too far. According to Marx, capitalism is the latest iteration of sys-
tems of slavery attendant upon class society. At the core is the social relation-
ship of slavery, the system of monopolization of the means of production
through private property ownership. From within the European experience,
it could be argued that this principle of social relationships overrides any
other, and makes the emergence of socialism impossible. Today, the proph-
ets of “development” are enshrining financial access as a goal for areas that
have hither-to-fore escaped incorporation into this process—that is, orga-
nizing their existence through money exchange in markets, turning people
into “free labour” dependent upon wages.25 However, this appears to be a
myopic outlook, or standpoint. As Marx points out, the worker becomes
“free” in a two-fold manner: she or he is free of any compulsion by a com-
munal or feudal organization to labour and to share, and also free of any
claim over any means of production with which to labour on one’s own
behalf. The separation of people from their subsistence organizations of col-
lective leads to entry into the “precariat”—the surplus labour proletariat
underclass always at risk of perishing for lack of availability of employment.
That, absent social revolution, this is now becoming a “lemming march to
oblivion” for surplus labour, is perceptively analysed and illustrated by Samir
Amin.26 As Wallerstein so pithily related in the introduction to his seminal
25
See UN DESA, “Sustainable Development Knowledge Platform,” https://sustain-
abledevelopment.un.org/sdg8.
26
“Forward: Rebuilding the ‘Labour Front’,” in Labour and the Challenges of Globalization,
ed. Andreas Bieler et al. (Ann Arbor: University of KwaZulu-Natal Press, 2008), xiv–xxii.
340 C. L. HEWITT
work, The Modern World-System I, that, as a graduate student in Ghana dur-

ing the independence struggle led by Kwame Nkrumsah, he “was bom-
barded by the onslaught of the colonial mentality of Europeans long resident
in Africa” as well as “privy to the angry analyses and optimistic passions of
the young militants of the African movements,” and he learned that “not
only were these two groups at odds on political issues, but that they
approached the situation with entirely different sets of conceptual frame-
works.” Wallerstein concluded: “In general, in a deep conflict, the eyes of
the downtrodden are more acute about the reality of the present, because it
is in their interests to perceive correctly in order to expose the hypocrisies of
the rulers.”27 The Africentric response is deep-rooted. Stokely Carmichael
(later known as Kwame Ture), a key Nkrumahist theorist, wrote in 1974:
“In Osagyefo’s [the Teacher’s in Akan, as Nkrumah is commonly called]
classical philosophical work, Consciencism,28 we can see that the theories of
Marx and Lenin have their roots in communalism. Thus, as an African, I
should study Nkrumahism, which knows communalism contains the very
foundation of Marxism-Leninism. “It contains my history, African history,
as it must be presented in order to ‘become a pointer at the ideology which
should guide and direct African reconstruction’.”29 An Nkrumahist response
to Marxist theory begins with Nkrumah’s theorization of the concept of
neo-colonialism,30 which emphasizes the struggle to end continued domi-
nation of African people after national liberation through imposition of cul-
tural, social, and political control, and ultimately, military force, if necessary,
to prevent accumulation of capital through ownership of resources, and
profits in industrial production.
In The Cultural Unity of Black Africa,31 renowned African social and
physical scientist, Cheikh Anta Diop, of Senegal presents the African
matriarchal social order as the most common cultural trait of African soci-
eties throughout history prior to colonialism and religious-based incur-
sions, and the most fundamental underlying structural difference in the
culture of Africa, and much of the Global South, in comparison with the
27
Wallerstein, The Modern World-System I, 3.
28
Stokely Carmichael, Consciencism, Philosophy and Ideology for De-Colonization (New
York: Monthly Review, 1970).
29
Stokely Carmichael, “Pan-Africanism—Land and Power,” in Robert Chrisman and
Nathan Hare, ed. Pan-Africanism (Ann Arbor: Bobbs-Merrill, 1974), 13.
30
Kwame Nkrumah, Neo-colonialism, The Last Stage of Imperialism (New York:
International Publishers, 1966).
31
Cheikh Anta Diop, The Cultural Unity of Black Africa (London: Karnak, 1989).
patriarchal northern societies. Matriarchy involves inheritance through the

female line and the presence of communal property in contrast to male
lineage inheritance and private property. This cultural dichotomy cannot
be explored fully here; however, Africa has been shown to have a deep
store of communal principles based on this cultural heritage.
Feminist theorists, whose liberation struggle must also take them
beyond economic questions, have theorized the rise of northern patriar-
chal class society based on a cultural clash with matriarchy. Riane Eisler
explains the shift in human development by chaos theory. Small alternative
systems—“peripheral isolates”—always exist in the interstices, or periph-
ery, around even the most developed dominant systems, and at a time of
systemic crisis, an isolate, if it can answer some, or many of the challenges
faced by the dominant system, can grow, develop, and generalize rapidly,
bringing about a new dominant system. The “revolutionary” shift from
dominance of matriarchy to patriarchy, beginning around 4500 B.C.E.,
was theorized as occasioned by the expansion of northern patriarchal soci-
eties through exposure to and adoption of technologies developed in the
matriarchal cultural south—metallurgy in particular—which led to their
cultural solution to growth: predatory invasion of the south with new
weapons and the wheel, and once introduced, the violence it engendered
required defensive violence. The history of all southern hemisphere matri-
archal societies attests to this. Chaos theory suggests that two different
systems coming into contact will yield a revolutionary moment if the
emergent system cannot be contained and co-opted by the old system,
which happens when the new system rests on different and superior social
principles. This is the essence of what Feigenbaum grasps. The structure
of capitalism is being undermined from within, as well as from increasingly
system-wide challenges from below.
The contemporary ethos and standpoints among Africans globally
reflect both cultural disintegration under oppression, and cultural cre-
ativity, due to barriers to full acculturation into the European capitalist
world-system social organization.32 What we see is not only the resistance
of African culture, but its resilience as expressions of African culture con-
tinue to achieve world prominence and to attract adherents. The scatter-
ing of the African people, both through the drawing of inane borders in
Africa and transportation of millions to other people’s lands, ensures a
32
Amilcar Cabral provides a classic explanation in his presentation “National Liberation
and Culture,” Return to the Source (New York: Monthly Review, 1974), xx–xx.
342 C. L. HEWITT
cornucopia of “peripheral isolates” any of which might rise upon a suc-

cessful principle, and attract and revolutionize human societies in a time
of capitalist systemic crisis. Carmichael continued:
If one is fighting for a revolution, one is talking about more than just chang-
ing governments and power, and that is changing the value system. What
carries that value system is one’s culture. What we have here is the beginning
of people who are trying to grope for a real fight with the culture… Black
people in America, Africans who live in America, especially must understand
that and begin to alienate our people completely from the culture and values
of Western society… It is very, very difficult, and we have to constantly try
to understand the rejection of Western values… because once they are alien-
ated there will be no influence over them. That is what we are seeking. We
are seeking to stop all influence of Western culture on our people—com-
pletely… At the same time, there will be struggles inside the United States,
always moving on different levels as black people keep trying to get a better
way of life. Just as the Chinese or Indian diaspora play a huge role in consoli-
dating their financial, human and social capital for the advancement of the
nation, so African people must do.33
The struggle to engage in change making must come in the principles

around which the system is organized and run. Revolution is ultimately a
change in principle. It is analytically useful in the African people’s struggle
to align with, as well as go beyond, the feminist subsistence perspective
and new sustainability resilience framings that include respect for indige-
nous socio-ecologies, to an Africentric critique of the principles of the
northern hemispheric culture of capitalism. In the best tradition of the
African southern hemisphere, by following the mathematical indicators to
peep into the open cracks of ideologies in mortal combat, this analysis
answers a call put forth by Queen mother of African philosophers, Marimba
Ani: Bolekaja!34 The primary and immense value of the work of Marx is
the revelation of capitalism as an abstract system, that has internal contra-
dictions that will inevitably grow in strength and disruptiveness until the
social system is reorganized, and realigned with the productive forces. The
analysis of FAS data shows rapid completion of levels of financial access
33
Carmichael, “Pan-Africanism—Land and Power,” 18.
34
A Yoruba term meaning, “Come on Down, Let’s Fight!” which she references in the
introduction to her book, Marimba Ani, Yurugu: An African-centered Critique of European
Cultural Thought and Behavior (Trenton, NJ: Africa World Press, Inc., 1994), 1, and learned
from Chinweizu et al., Toward the Decolonization of African Literature.
saturation in populations in semi-periphery and periphery countries on par

with that in core countries. By looking as this integration of access as the
obverse side of integration of capitalist access to peasants and worker sav-
ings, it can be argued that completion of centralization of capital is occur-
ring. It suggests that prior dismissal of Marx’s theory was premature. Only
now will Marx’s prediction, based on his model of capitalism and its innate
irreconcilable contradictions leading inevitably to revolution, be experi-
enced as accurate or inaccurate.
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Petty Production and India’s Development
Muhammad Ali Jan and Barbara Harriss-White
I. Introduction
Petty commodity production (PCP) has proved to be a remarkably persis-
tent form of economic production. In much of the developing world even
to this day, urban and rural small producers constitute the numerical
majority of firms.1 The preponderance of small-scale property within capi-
talist societies of the “south” has posed a theoretical quandary for ortho-
dox Marxist conceptions of capitalist development, which had long
predicted its end and the emergence of a polarized class structure with
capital owners and property-less labour confronting one another. As capi-
talist social relations spread, most small-scale producers would be unable
to compete and reduced to the status of property-less proletarians.
However, even as most societies of the Global South have made the
transition to capitalism, PCP has continued to be an important compo-
nent of their socio-economic structure.
1
Barbara Harriss-White, “Capitalism and the Common Man: Peasants and Petty Production
in Africa and South Asia,”Agrarian South: Journal of Political Economy 1, no. 2 (2012): 118.
M. A. Jan (*) • B. Harriss-White

Wolfson College, University of Oxford, Oxford, UK

346 M. A. JAN AND B. HARRISS-WHITE
The importance of PCP to the empirical realities of capitalism in devel-

oping countries is in inverse proportion to the importance given to it by
Marxist scholars. To be sure, the classical view had been challenged early
on by critical Marxist scholars. Disputes about PCP and the diverse forms
it takes developed from the classical debates on the nature of the peasantry
under capitalism.2 More recently, debates about the nature of PCP under
conditions of capitalist social relations have been revived.3 Yet, despite its
central importance in the political economy of the contemporary capitalist
south, PCP remains marginalized within Marxism.
One of the reasons for this neglect is the apparent lack of attention paid
to the concept by Marx himself. Marx focused on uncovering the “laws of
motion” of contemporary capitalism, the class relations constitutive of it,
the logic and dynamics through which the system reproduces itself, as well
as how capital’s inner logic causes it to experience systemic crises. As a
result, Marx’s analysis was systemic and the expansionary logic of capital
that he unearthed meant that in his view, those forms of social reproduc-
tion that could not conform to the imperatives of capital accumulation
would find themselves inevitably destroyed or thoroughly reconfigured
under its pressure. Small-scale property was one such form.
While it seems that Marx’s oeuvre is focused on large-scale industry, with
petty production excluded, we argue here that this is only partially true.
Marx did treat the theme of petty production extensively in his writings,
but in an incoherent manner. First, his work on petty production is scat-
tered. Second, the terms used in his writings on PCP are unstable, ranging
from “peasants”, “petty producers”, “craftsmen” to “small holders” and
“household producers”. Third, the underlying meanings and contexts
when any of these terms are used vary greatly and are not always clear.
However, a close reading of Marx’s main texts on economics that pays
attention to their contexts enables us to deduce three unifying themes.
Here, we categorize them in terms of the problematics that underlie Marx’s
work on PCP. First, the dissolution problematic, dealing with the transfor-
mation of the peasantry into a landless working class under the impact of
capitalist development, with the English transition as the paradigmatic case.
Second, the conservation problematic, which allows for the incomplete sepa-
ration of labour from its means of production under capital but views this
as a form of disguised wage labour. Third, a hitherto underexplored aspect
2
Karl Kautsky, The Agrarian Question (London: Zwan Publications, 1988), 168.
3
Barbara Harriss-White, “From Analysing Filieres Vivrieres to Understanding Capital and
Petty Production in Rural South India,” Journal of Agrarian Change 16, no. 3 (2016): 485.
PETTY PRODUCTION AND INDIA’S DEVELOPMENT 347
of Marx’s writings on PCP posits the possibility of PCP’s operating as a

contradictory form under the logic of capital but with a degree of indepen-
dence. We term this the dialectic of exploitation and autonomy and argue
that it is here that the most fruitful developments of the concept of PCP can
and do take place in India.
The chapter is divided into two parts. In part one, we present an over-
view of the three problematics we have identified in Marx’s writings per-
taining to PCP, emphasizing the tensions and contradictions they generate.
In the second part, we assess the extent to which Marx’s ideas are relevant
to actually existing capitalism in the Indian case. We argue that while all
three problematics can be found in the Indian social formation, it is impor-
tant to recognize that the diversity and internal logics of PCP are more
complex than accounted for in Marx’s writings. Hence the best way to
conceptualize PCP is to understand it as being internal to Indian capital-
ism, rather than a form that will be eventually be transcended.
II. The “Dissolution Problematic”: Large-Scale

Industry and Primitive Accumulation
Marx considered forms of PCP, particularly the peasantry and craftsmen,
to be the most widespread form of social reproduction in pre-capitalist
epochs. It was through the transformation of the key social groups repre-
senting these epochs that the social relations of capitalist production first
emerged.4 While discussing usurer’s capital in his important chapter on
“Pre-capitalist Relations” in Volume III of Capital, he observes that usu-
rers earn money by financing both the “extravagant landed magnates” as
well as “small producers who possess their own conditions of labour,
including artisans but especially peasants, since wherever pre-capitalist
conditions permit small autonomous individual producers, the peasant
class must form their great majority”.5
Though Marx identified other epochs of production such as the
“Asiatic”, “Classical” and “Germanic”,6 it was European “Feudalism”
which first produced a successful transition to capitalism. In Marx’s view,
feudalism was itself an outgrowth of the “Germanic” system of individual
4
Karl Marx, Pre-Capitalist Economic Formations (New York: International Publishers,
1964), 82.
5
Karl Marx, Capital, Vol. III (London: Penguin Books, 1981), 729.
6
Karl Marx, Grundrisse: Foundations of the Critique of Political Economy (London: Penguin
Books, 1973), 471–9.
peasant proprietors who formed the base of the social formation. The
Germanic system only transforms into “feudal” relations once towns and
a landlord class emerged above the “village communities” to live off the
latter’s surplus. Though scholars have disputed Marx’s account of the evo-
lution of pre-capitalist Western Europe, it is clear that he was not inter-
ested in the intricacies of feudalism itself but in highlighting how far the
changes within it could explain the genesis of capitalist social relations.
For our purposes, his account is important because it forms the basis for
the orthodox and the dominant Marxist position on PCP as a form des-
tined to be overcome or destroyed during the transition towards capital-
ism, that we call the “dissolution problematic”. This dissolution
problematic has two dimensions: (i) an economic one where the destruc-
tion of PCP is attained mainly through the “dull compulsions of economic
life” emanating from the logic of capital accumulation; (ii) a political-
economic dimension where the destruction of PCP is instituted by state
and class power as a pre-condition for capital accumulation, most famously
described through Marx’s analysis of “primitive accumulation”.
The economic dimension of the “dissolution problematic” emanates
mainly from the expansion of capitalist social relations, particularly in the
form of large-scale industry, which exploits wage labour and economies of
scale, against which petty production is unable to compete and entirely
dissolved. There are numerous yet scattered references to the “destruc-
tive” impact of capitalism on the economy of independent petty produc-
tion. In Volume I of Capital, for one example, Marx refers to the
revolutionary effect of large-scale industry in agriculture through the
“annihilation of the bulwark of the old society, the peasant” and its “sub-
stitution” by the “wage-labourer”.7
A similar argument is made for non-landed forms of PCP. For example,
in The German Ideology, Marx emphasizes how, where large-scale industry
penetrated, it “destroyed the crafts and all earlier stages of industry”.8 The
guild structure of many crafts became a fetter for the further development
of the “automatic system” and as a result, it had to be overcome and dis-
solved under the onslaught of propertied capitalist manufacturing. Here,
Marx’s point was the unstoppable march of the logic of capital and the
destruction of all prior forms that could not conform to, or compete with,
the imperative of capital accumulation.
7
Karl Marx, Capital, Vol. I (London: Penguin Books, 1976), 637.
8
Karl Marx, The German Ideology (London: Lawrence and Wishart, 1970), 78.
But perhaps the most widely known manifestation of the “dissolution

problematic” was Marx’s dramatic analysis of the transformation of peas-
ant producers into landless proletarians in the chapter on “primitive accu-
mulation” in Volume I of Capital. Here, Marx describes, in vivid detail
the transition to capitalist farming through the destruction of the till then
comparatively free and relatively prosperous yeoman peasantry. This pro-
cess begins in the sixteenth century through the forcible “removal of the
peasantry from the land” as well as the “coercive usurpation of commons”.9
Moreover, this is no longer brought about by the logic of capital accumu-
lation but by the political and legal power of a Parliament dominated by
“the landlord and capitalist appropriators of surplus-value”, which passed
the infamous Enclosure of the Commons Act, furthering the process of
primitive accumulation.10
Primitive accumulation for Marx is, therefore, nothing more than the
process whereby pre-capitalist petty producers are forcibly separated from
their means of subsistence and production and “hurled into the labour
market as free, unprotected and right-less proletarians”.11 This process
then results in the formation of a capitalist landlord class, a class of capital-
ist tenant farmers as well as a class of property-less agricultural workers:
Marx’s classic agrarian transition. A similar process of uprooting and sepa-
ration is experienced by independent craftsmen under the impact of mod-
ern industry as highlighted earlier, and through this process, a modern
industrial proletariat, as well as the industrial “reserve army” of labour, are
created. This political-economic process of the transformation of peasants
into proletarians is the “dissolution problematic”.
Given the central role played by the imperatives of capital accumulation
resulting in both greater concentration of units of capital alongside an
ever-increasing mass of humanity being reduced to the status of property-
less wage labour, it is no surprise that the “dissolution problematic” has
become the Marxist orthodoxy. A further reason for its status is that the
polarized class contradiction between capital and labour also prepares the
way for the inevitable overcoming of the capitalist mode of production by
socialism, whose leadership is assumed by the proletariat. Hence the idea
of an ever-increasing mass of property-less wage labourer is central to clas-
sical Marxist theory and political practice.
9
10
Ibid., 886.
11
Ibid., 876.
Yet, closer scrutiny of Marx’s writings enables us to appreciate Marx’s

alternative visions of the transition to capitalism and, through them, the
multiple ways and reasons why PCP may not only continue to survive the
transition to capitalism, but be constantly recreated within it. This is what
we term the “conservation problematic”.
III. The “Conservation Problematic” and Its Logics:

Resilience and Recreation
The view that forms of small-scale production persist during the transition
to capitalist agriculture and that the complete separation between the
labourer and his means of production is but one of the many forms that
capitalist social relations can take has preoccupied critical Marxist scholar-
ship.12 Marx recognized that the history of the separation of petty produc-
ers from their means of production was a historically varied process,
assuming different forms in different countries and running through its
various phases in different orders of succession, and at different histori-
cal epochs.
As opposed to the “dissolution problematic”, in this narrative, Marx
allowed for the possibility of capitalist control over the labour process and
the production of surplus value, even as producers retained some assets.
But while the form was preserved and petty producers retained control
over their means of production, their reproduction was now subsumed
under the logic of capital accumulation. The best-known analysis of the
“conservation problematic” occurs in the Appendix to Capital, Volume I,
on the formal and real subsumption of labour, and in the analysis of mer-
chant capital in Volume III.13
Critical Marxist scholarship has long distinguished the formal from the
real subsumption of labour as representing two historic stages in the p rocess
of subordination of petty producers to capital.14 In the former, capital begins
to take hold of the overall conditions of reproduction of petty producers so
that they become dependent on markets dominated by capital while still
retaining formal control over their land, tools and so on. Capital is appropri-
ating the producer’s labour as surplus value, which means it is already part
of capital but the form of production remains that of the small producer.
12
Jairus Banaji, “Capitalist Domination and the Small Peasantry: Deccan Districts in the
Late Nineteenth Century.” Economic and Political Weekly 12, no. 33/34 (1977): 1375–404.
13
Marx, Capital, Vol. I, 1075; Marx, Capital, Vol. III, 379.
14
Banaji, Capitalist Domination, 1376.
Formal subsumption arises because, unlike the English case, where

peasants were forcibly removed from their lands and transformed into
wage labourers, Marx admits that in most cases, capital finds the labour
process that it seeks to dominate at hand without the need to separate the
producer from his means of production. In a striking paragraph, he writes:
The fact is that capital subsumes the labour process as it finds it, that is to say, it
takes over an existing labour process, developed by different and more archaic
modes of production. And since that is the case it is evident that capital took
over an available, established labour process….If changes occur in these tradi-
tional, established labour processes after their takeover by capital, these are noth-
ing but the gradual consequences of that subsumption.15
So, in cases where capital takes hold of petty production and subsumes
it, the process of transformation from formal to real subsumption occurs
slowly. But there is a tension between the critical Marxist concept of PCP
and Marx’s analysis of the formal subsumption of labour and it is this. For
Marx, formal subsumption already implies that the surplus appropriated
from the direct producer takes the form of absolute surplus value, which
can be increased or decreased through the intensity of work. While the
external form may be that of an independent producer, it is merely an
appearance (or disguise) behind which he has, in essence, already been
transformed into a wage worker for capital.16 The contradictory, dialectical
existence of PCP as both subsumed under capital but retaining a degree of
actual not merely formal control, is missing from his analysis.
Marx contrasts formal subsumption by (agro) industrial capital to situ-
ations where capital is to be found in “certain specific, subordinate func-
tions but where it has not emerged as the immediate owner of the process
of production”, most notably usurer’s and merchant’s capital, where the
peasant or petty producer is made advances in the form of money and raw
materials in exchange for which they sell their products through him. For
example, in Volume III, he argues that a possible transition from feudal-
ism to capitalism takes the form of the “merchant taking direct control of
production himself”17 or, in Volume II, he refers to the putting out system
with respect to the cottage industries of Russia being “pressed more and
more under the service of capitalism”.18
15
16
Marx, Pre-Capitalist Economic Formations, 767.
17
18
Marx, Capital, Vol. II (London: Penguin Books, 1978), 318.
Marx also acknowledges, but does not develop, the important idea that
under certain circumstances, capital itself may generate PCP in order to
fulfil key functions for capital accumulation. For example, in his chapter
on primitive accumulation, he refers to periods in English history where
capital alternates between destroying handicrafts and rural industry in cer-
tain forms and particular branches, while it “resurrects them again else-
where because it needs them to some extent for the preparation of raw
materials”, which is why peasants and craftsmen continue to appear
throughout the period of capitalist development in English history, “but
always in diminished strength”.19
It is important to note that for Marx, this is a phenomenon of transi-
tion, with merchant’s capital as an antediluvian form. Its exploitation of
petty production is not even part of the formal subsumption of labour to
capital and the process comes to a halt once large-scale industry begins to
dominate production, tears apart rural domestic industry and paves the
way for capitalist agriculture. The main reason for this, as Marx puts
it, is that:
The immediate producer still performs the functions of selling his wares and
making use of his own labour. But the transition is more strongly marked here
than in the case of the usurer. We shall return later to these forms, both of which
survive and reproduce themselves as transitional subforms within the frame-
work of capitalist production.20
For Marx, the fact that the immediate producer retains a degree of
autonomy over decisions about his output precludes the possibility of his
being subsumed even formally under capital. Marx consistently contrasts a
situation where the direct producer retains some independence to that of
the formal subsumption of labour to capital where independence is merely
an illusion behind which capital is already appropriating surplus as abso-
lute surplus value. A further example of what is now often called “dis-
guised wage labour” (DWL) is from the Grundrisse, where he describes
the formal subsumption of hitherto independent weavers and spinners to
the control of the merchant who transforms the property of the former
into “sham property” and reduces them to the status of wage labourer.21
19
20
Ibid., 1023.
21
Marx, Grundrisse, 510.
To sum up, Marx allows for the preservation of previous forms of petty
production and even their recreation for the benefit of capital in certain
circumstances. We term this the “conservation problematic”. However,
the inherent contradiction of PCP as combining the class places of both
capital and labour sits uneasily with other arguments by Marx. First, while
recognizing that capital can dominate the conditions of reproduction
without entirely separating the producer from the means of production,
he nonetheless disallows any autonomy which is important for the concept
of PCP. Instead, he posits that the formally subsumed labourer is only
outwardly independent and has, in essence, been reduced to the status of
a wage labourer from whom absolute surplus value is appropriated.
Second, he also assumes that money or input advances by merchants and
the consequent exploitation—in the form of interest rates or through lower
prices for commodities—signify an antediluvian form of capital, which is
best theorized as a transition to capitalism prior to the stage of formal sub-
sumption. As capitalism’s hold over the labour process intensifies, PCP is
transformed into a disguised form of wage. Thus, the “conservation prob-
lematic” is primarily about the conservation of the form of petty production
behind which its autonomous existence has been circumscribed.
By contrast, PCP has been theorized as a form of production which
exists within the circuits of capital but which has a relatively autonomous
existence.22 First, even while it is exploited by capital, exploitation takes
place through markets other than labour. Second, most PCP reproduces
through multiplication of economic units rather than accumulation.23
Finally, since the form combines the class places of capital as well, there
remains in certain circumstances, the possibility of accumulation. Thus,
the dialectic is one where both exploitation and accumulation can occur,
and thus, PCP is both subsumed under the imperatives of capital accumu-
lation but also retains a certain degree of autonomy.
This brings us to Marx’s third view of PCP where in Marx’s writings its
contradictory existence is acknowledged and the question whether PCP
can retain its autonomy as a subform within the framework of capitalist
production is posed.
22
Henry Bernstein, “Capitalism and Petty-Bourgeois Production : Class Relations and
Divisions of Labour,” Journal of Peasant Studies 15, no. 2 (1988): 260.
23
Harriss-White, From Analysing Filieres Vivrieres, 479.
IV. The Dialectic of Autonomy and Exploitation

In an important section titled “The labour of handicraftsmen and peasants
in capitalist society” in his Theories of Surplus Value, Marx gives what is
perhaps the closest approximation of the critical Marxist view of PCP as a
contradictory form of production under the circuits of capital accumula-
tion. He writes:
It is possible that these producers, working with their own means of production,
not only reproduce their labour-power but create surplus-value, while their posi-
tion enables them to appropriate for themselves their own surplus-labour or a
part of it (since a part of it is taken away from them in the form of taxes, etc.).
And here we come up against a peculiarity that is characteristic of a society in
which one definite mode of production predominates, even though not all pro-
ductive relations have been subordinated to it….the independent peasant or
handicraftsman is cut up into two persons. As owner of the means of production
he is a capitalist; as labourer he is his own wage labourer. As capitalist he there-
fore pays himself his wages and draws his profit on his capital; that is to say, he
exploits himself as wage labourer and pays to himself in the surplus-value, the
tribute that labour owes to capital.24
What is remarkable about this passage is that, unlike in the rest of his writ-
ings on the theme, Marx for the first time acknowledges that forms of
petty production can not only exist under capital, but that they can exist
as precisely a contradictory mode without being fully subsumed under the
logic of capital accumulation, which reduces the independent producer to
the status of wage labour, either outright or in disguise. This also opens up
the theoretical possibility that PCP may not only be able to hold its own
(contradictory position) under capital, but that in certain circumstances, it
may be able to reproduce itself even at the expense of capital. The latter
scenario is demonstrated empirically by Marx through his important sec-
tion on the development of capitalism in the American colonies in Volume
I of Capital.
Here, Marx writes how despite the plans of the European colonizers to
implant large-scale industrial capital, the conditions found in the American
colonies prevented this from happening. The would-be colonial capitalists
possessed large quantities of “money, means of subsistence, machinery
24
Karl Marx, Theories of Surplus Value, Vol. I (London: Lawrence & Wishart, 1969),
452–3.
and other means of production” but were unable to secure that most
important condition for the development of capitalist industry—a mass of
dispossessed wage workers.25 The abundance of land in the colonies meant
that poor Europeans found it more profitable to own a piece of land and
use their own means of production, however primitive, to become inde-
pendent producers.
According to Marx, this frustration is reflected in the writings of the
English colonialist Edward Gibbon Wakefield who notices how, despite
the constant arrival of new immigrants from Europe alongside the posses-
sion of money by a handful of capitalists, “the labour market is always
understocked. The law of the supply and demand of labour consistently
collapses.” Indeed, as Marx writes, “despite throwing capital and thirsting
after exploitation”, the process in the colonies seems to be the reverse of
the mother country; “today’s wage-labourer becomes tomorrow’s inde-
pendent peasant or artisan, working for himself.”26
Moreover, wage labourers continue to vanish from the labour market
to become independent producers, and are able to enrich themselves at
the expense of the “capitalist gentlemen”. This not only has a further
negative impact on the position of the labour market but crucially demon-
strates to the producers that they can accumulate even at the expense of
capitalists, thereby reducing what Marx terms “the relation of dependence
and the feeling of dependence on the abstemious capitalist”.27
Despite Marx’s inability to see independent producers as operating
under the logic of capital with a degree of autonomy (unlike in the quote
at the beginning of the section), this brilliant analysis nonetheless antici-
pates some of the most important themes which subsequent scholars of
PCP have explored in detail: the advantage that PCP possess in certain
realms of production, its ability to deprive capital of labour power and
undercut it, the possibility of accumulation from PCP, and most impor-
tantly, the desire for autonomy and independence which motivates PCP to
reject wage labour.
So, since the first two problematics are unable to conceptualize petty pro-
duction’s playing an important role in the transition to capitalism (apart from
either being destroyed completely or being so thoroughly dominated by it
that it loses any independent existence), they are not useful in explaining why
25
26
Ibid.
27
Ibid., 933.
PCP has been such a prevalent and persistent form of production under capi-
talist social relations. It is only the third problematic where Marx recognizes
the contradictory existence of PCP as simultaneously embodying the possi-
bility of accumulation while being exploited by capital that can provide some
clues as to why small producers of various kinds have managed to reproduce
themselves so remarkably even while social formations have been entirely
dominated by the logic of commodity production.
In the next part, we see how far Marx’s problematics of dissolution,
conservation, autonomy and exploitation help us understand the actual
experience of capitalist transition in the second most populous nation on
earth—India.
V. Petty Commodity Production and Circulation

in the Development of Capitalism in India
India’s capitalist transition and ongoing transformations have created a

complex, uneven and heterogeneous social formation. Rampant differen-
tiation has occurred and advanced forms of corporate capital have been
created with family dynasties, often grafted onto former colonial manag-
ing agencies, now wielding global power, confronting a substantial orga-
nized wage workforce, and putting sustained pressure on it to casualtie.
However, the remaining 90 per cent of India’s workforce is unregistered
un-unionized and, except for a tiny minority, deprived of rights at work.28
Despite the growth of polar classes of capital and labour, it is still pos-
sible that the total capital controlled by family firms outweighs that of
corporate capital. The most common form of livelihood is still self-
employment. Out of the discursive Tower of Babel through which petty
production is construed, “self-employment” is the least unstable category.
In the 2013–14 Economic Census, 71.7 per cent of firms were self-
employed in own-account enterprises. In terms of agricultural land in
2013, more than 80 per cent was operated by people declaring themselves
self-employed.29 In terms of livelihoods, PCP provides the robust core not
only of agrarian and manufacturing production, but also services, commer-
cial and even financial capital (which, because value could not be created in
A. Srijia and Srinivas V. Shirke, An Analysis of the Informal Labour Market in India (New
28
Delhi: Confederation of Indian Industry, 2014), 1.

29
Government of India, Economic Statistics (New Delhi: Ministry of Statistics, 2014).
realization, were considered non-productive and even insignificant by

Marx). Yet, due to the low purchasing power associated with PCP, self-
employment is considered a constraint on the development of India’s
national market.
In India, PCP is unevenly distributed, rarely dominating or even popu-
lating a whole state territory. It co-exists with other forms of production,
for some of which it may be functionally necessary for accumulation, while
elsewhere it occupies niches in ways that are not directly exploited. Three
types of co-existence can be distinguished. The first is “process-sequential”,
in which PCP and wage work are deployed at different stages in a system
of commodity production (as in the smelting and crafting of metal); the
second is “process-segregated” in which certain sectors of the informal
economy are populated by PCP and others by firms with wage workers
(e.g. local informal retail versus wholesale trade); and the third is “process-
integrated” in which PCP and factory production using wage labour are
combined at all stages of a commodity supply chain (e.g. garments).30
The research literature has generated no consensus about the forces driv-
ing the persistence of PCP. Since capital and labour are fused in PCP, it is
not dynamized by contradiction—at most through “tensions” which are
specific to particular historical contexts. Over a span of several decades, char-
acterizations such as “blocked transition”31 and “blocked differentiation”32
have drawn attention to the roles of non-corporate capital in maintaining
small-scale (often fragmented) production. There is much debate over how
dependent this process of maintenance forces PCP to be.
Manifestations of all three of Marx’s problematics—dissolution, con-
servation and the dialectic of exploitation and autonomy—are found.
However, the evidence that would enable the analyst to gauge their rela-
tive numerical preponderance or political-economic significance is con-
spicuous by its absence, or it consists of national surveys that ignore
context and process, or is created in local surveys and case studies from
which generalization is not possible.
30
Alessandra Mezzadri, “Globalisation, Informalisation and the State in the Indian
Garment Industry,” International Review of Sociology 20, no. 3 (2010): 492.
31
John Harriss, Capitalism and Peasant Farming: Agrarian Structure and Ideology in
Northern Tamil Nadu (New Delhi: Oxford University Press, 1982).
32
Muhammad Ali Jan, “Rural-Commercial Capital: Accumulation, Class and Power in
Pakistani Punjab” (PhD dissertation, University of Oxford, 2017).
Dissolution
Differentiation
The diversification and complexity of India’s rural non-farm economy are
qualifiers for evidence for inequality (and by implication, differentiation)
that is based on land alone. While a small capitalist elite (0.24 per cent of
rural households in 2013) operates over 10 ha of land, average land owner-
ship declined from 1.1 ha in 1992 through 0.7 ha in 2003 to 0.6 ha in
2013. Agriculture remains a labour sponge of last resort. Yet, despite signifi-
cant regional variations, at the all-India level, entirely landless rural house-
holds form only 7.4 per cent. While agriculture has declined dramatically in
its relative contribution to GDP from over 30 per cent in 1990–91 to 14 per
cent by 2010–11, its labour force increased in absolute terms from 210 m
to 270 m33—and remains some 43 per cent of India’s total.34
I ncomplete Primitive Accumulation

The dual separation of wage labour from its means of production and the
consolidation of property compatible with capitalist investment takes place
through both market exchange and physical force. Pauperization as a
result of the loan market (demand for which is provoked by needs as var-
ied as occupation-related accidents and diseases or dowry demands) pro-
vokes migration, land sales and micro-property ownership. The deployment
of force—in inadequately compensated state land seizures for SEZs and
development-induced displacement for infrastructure, dams and irrigation,
mines, power-plants and factories—has displaced between 30 and 60 mil-
lion since Independence.35 In fact, India’s paradox of jobless growth is
resolved by dispossession under primitive accumulation (PA) being incom-
plete: “dispossession without proletarianization”, in what Adnan has
argued is a diverse repertoire of processes in which the state is active in both
preserving and creating PCP while it also both initiates and arrests PA.36
33
No doubt, some who present agriculture as their main occupation are combining work
in agriculture with work in non-agriculture.
34
Venkatesh et al., “Trends in Agriculture, Non-Farm Sector and Rural Employment in
India: An Insight from State Level Analysis,” Indian Journal of Agricultural Sciences 85, no.
5 (2017).
35
Walter Fernandes, “Singur and the Displacement Scenario,” Economic and Political
Weekly 42, no. 3 (January 2007): 204.
36
Shapan Adnan, “Primitive Accumulation and the ‘Transition to Capitalism,’ in Neoliberal
India: Mechanisms, Resistance and the Persistence of ‘Self-Employed’ Labour,” in Indian
Capitalism in Development, ed. Barbara Harriss-White and Judith Heyer (London:
Routledge, 2015), 33.
So, under PCP, it is not that dissolution and differentiation are impos-
sible. Some households are able to invest in assets and expand by employ-
ing wage labour, while others slither into ever-greater dependence on
wages. But the theoretically remarkable characteristic of the Indian case is
how comparatively rare this is, and how much more common is its ten-
dency to expand through multiplication rather than through the concen-
tration and centralization of capital. PCP exists and expands alongside
other forms of capitalist production relations.
Conservation
he (Re)creation of PCP
T
The era of “liberalization” has seen much continuity in the unregistered
economy with self-employment, a significant component of India’s eco-
nomic growth, driving workforce expansion. In agriculture, petty produc-
tion is being miniaturized. Complex micro portfolios of production, trade
and (migrant) labour proliferate throughout India. The interests of mer-
chant’s and commercial capital in not entirely dispossessing petty produc-
ers, but allowing the persistence and proliferation of micro-property which
exploits its under- or un-paid family labour has long been recognized.
Outside agriculture, between 1990 and 2011, own-account firms doubled
in number. The average wage labour force per firm in India dropped from
three workers to just two, while 95 per cent of firms in India employ fewer
than five people.37
ormal Subsumption and Disguised Wage Labour

F
In India, forms of production such as subcontracting, outsourcing, in-
sourcing, home-working and smallholder production are widely interpreted
not as independent forms, but as structurally no different from wage work,
merely differentiated by precarity, dependence and the scale of assets, or
even regarded as “disguised unemployment”.38 While in its official report of
2007, the National Council for Enterprises in the Unorganized Sector
(NCEUS) concluded that PCP is DWL, in fact their conclusion is based on
Harriss-White, Capitalism and the Common Man, 117.

37
Deepankar Basu, “An Approach to the Problem of Employment in India,” UMass

38
Amherst Economics Working Papers 239 (2018).

the example of home-working39 and, with qualifications, of “a good propor-

tion” of a “mixed bag” of case studies of non-agricultural self-employment.40
While there is no doubt that DWL proliferates in India, NCEUS subse-
quently concludes that self-employed economic units have a dual character
of enterprises and workers. In NCEUS 2007, to the extent that PCP is
treated as DWL, without making this explicit, the NCEUS recommends
supporting a transition from DWL to PCP and from PCP to petty capital.
If PCP is a transitional stage of formal subsumption of labour to capital,
it looks likely to be an indefinitely long one.
The Dialectic of Exploitation and Autonomy

PCP has also developed as a form of independent activity for the market in
the spheres of manufacturing, trade and services—production and circula-
tion: productive activity, necessary but unproductive activity, and activity
which for some commentators is neither productive nor necessary.
Yet, where petty production has been compared with wage work, it is
found, just as Marx argued, that returns are greater to the former than the
latter.41 However, it does not follow, as it does in Marx, that supply and
demand for wage labour collapses. Nor, where it has been studied, does
wage labour always develop to petty capital. Rather, self-employment and
wage labour have been found to develop separately, structured through
relations of social status.
In India, the form of PCP cannot be deduced in any pure and simple
way from the social and cultural relations in which it is embedded. Marx
called these “patriarchal, political or even religious admixtures”.42
Accumulation is both supported and constrained by micro-political rela-
tions of gender (in which men are allowed to save and invest while women
are normatively—and even forcibly—prevented from saving) and by caste:
occupational choices are still mostly restricted for Dalits and Adivasis, the
hours of toil are set customarily, and the returns to effort can and do differ
on caste-discriminating lines.
39
NCEUS, Reports on the Financing of Enterprises in the Unorganised Sector and Creation
of a National Fund for the Unorganised Sector (New Delhi: Government of India, 2007), 50.
40
Ibid., 66–73.
41
Olsen et al., “Multiple Shocks and Slum Household Economies in South India,”
Economy and Society 42, no. 3 (2013): 412.
42
Karl Marx, Economic Manuscript of 1861–63, in MECW (London: Lawrence & Wishart,
1994), 34: 102.
Accumulation, involving graduating from PCP to petty capital employ-

ing wage labour, may be constrained by consumption-investment bal-
ances. While decisions on these balances may change over time, a
household’s needs for consumption expenditure and for spending on pro-
tection against risk (including health) are not considered separately from
decisions about investments and working capital in those households
which combine production and consumption.
Constraints on class differentiation are also found in the exchange rela-
tions in non-labour markets in which PCP is embedded. The persistence
of tied contracts in several of the markets in which exchange takes place in
both agriculture and non-agriculture (above all, in the “labour-intensive”
textiles and garments sectors) has generated a large literature.43 The social
terms and conditions of tied labour reduce returns below the levels they
might otherwise be expected to reach. Less well acknowledged is the com-
mon addition to operating costs that happens when payments for what
petty producers sell are delayed, while payments for what they need to buy
are not.44 These combine to reduce the investible surplus.
Yet, despite the risk of adverse domestic balances and exchange rela-
tions, small social surpluses are accumulated and play a key part in the
multiplication of small firms through savings, borrowing, small profits and
partnerships, through the transfer of assets between and within families at
marriages, and through inheritance. As early as 1978, Moser, from a
comprehensive global review of urban informality, concluded PCP to be a
permanent feature of capitalism in developing countries.45
Therefore, while all three problematics are to be found in India, it is
nonetheless safe to say that PCP in its diverse forms has been an enduring
feature of Indian capitalism. Not only have forms of petty production sur-
vived the onslaught of capitalist social relations (while being thoroughly
reconfigured by its logic), but Indian capitalism constantly recreates PCP
anew in diverse forms in order to exploit it through input, credit and out-
put markets. But the reproduction of PCP is also the outcome of the strat-
egies of survival and desire for autonomy of petty producers themselves,
43
Mezzadri, Globalization, Informalization and the State, 496.
44
Barbara Harriss-White, “Debt, Credit and Contractual Synchrony in a South Indian
Market Town,” in Microfinance, Debt and Over Indebtedness: Juggling with Money, ed.
Isabelle Guerin, Solene Morvant-Roux, and Villarealm Magdalena (New York: Routledge,
2014).
45
Caroline Moser, “Informal Sector or Petty Commodity Production: Dualism or
Dependence in Urban Development,” World Development 6, no. 9/10 (1978): 1056–60.
which need to be understood in a dialectical relationship with their exploi-

tation through different markets controlled by capital.
The tension between capital’s need to exploit PCP and the latter’s strat-
egies for autonomy and possibilities of accumulation are always mediated
through an institutional environment, not simply informal regulation by
capitalists and PCP, but the formal regulation of the state. In many ways,
the Indian state itself has been a crucial player in the constant reproduc-
tion of PCP, even as it has simultaneously been involved in its destruction
through strategies of primitive accumulation. This is achieved through
interventions in markets for land, labour, credit, inputs and outputs, which
are never free of the contradictory goals of policy makers and the struggles
by social groups themselves, often resulting in outcomes that are the
opposite of what was intended.
So scholars, policy makers and activists who categorize PCP as a “tran-
sitional” form which will eventually be bypassed are bound to be disap-
pointed. PCP is central not only to Indian capitalism but to capitalism in
much of the Global South. The diverse forms through which PCP repro-
duces, the diverse logics underlying PCP, and their relations to labour
exploitation all need urgent and systematic mapping. So too do the politi-
cal struggles that PCP engenders.
VI. PCP: What Is to Be Done?

Do the forms taken by PCP politics accord to the forms identified by Marx?
Despite its economic significance, PCP has never generated a political

party. Considered as labour, the politics of PCP suffers from not being
labour. Labour politics focuses on struggles to improve the terms of
exploitation in, and vanquish oppression on, labour markets. But if PCP
is labour, then it requires an expansion of the concept of exploitation to
markets other than labour: those for premises, land and machines,
money and the supply of raw materials and finished commodities. Power
struggles on these markets are not recognized as labour politics by
unions, by labour policy makers or by scholars of labour. Insofar as PCP
are owners of capital, farmers’ movements and business associations
admit them to join mobilizations (such as for price support).46 But while
46
Christine Lutringer, “A Movement of Subsidized Capitalists? The Multilevel Influence
of the Bharatiya Kisan Union in India,” International Review of Sociology 20, no. 3 (2010):
518.
these forms of collective action are often termed “populist”, they rarely
allow for the political aspirations and interests of PCP to be represented
if they differ from those of local capitalist elites.
As for the mobilization of PCP for itself, the Self-employed Women’s
Association, which spread from Gujarat to cover 2 per cent of India’s
workforce, is regarded as an important political model for what may be
achieved in the fight for work security, income security, food security and
social security. But it is not generally replicable. Its unique attributes
include the vast, complex range of activities it comprises (over 80 trades,
and other activities ranging from housing and childcare to banks, educa-
tion and eco-tourism), its capacity to cross-subsidize them until enter-
prises make profits, its engagement with the state rather than directly with
employers, and a scale attracting international funding and engagement.
So, PCP has no coherent politics. The strategic questions for PCP and
India’s development are whether to try to remove the constraints to accu-
mulation and to try to destroy PCP and DWL and accelerate the creation
of a formal proletariat; or whether to try to transcend such forms by col-
lectivized, cooperative and/or socialized forms of production or whether
to accept and support it. And how.
Such questions have been rarely asked or answered. The Indian state’s
response to PCP has been incoherent and often self-defeating. When the
state engages in city beautification, when it invokes the law of eminent
domain to seize land for public infrastructure or for corporate capital, it
actively destroys PCP commonly with little or no compensation.47 PCP is
also disenfranchised under Indian labour law, because for cases to be
brought to court an individual employer must be identified, which has
proved impossible to do. The labour laws not only disenfranchise, they
also de-class petty capital, PCP and labour alike, because employers of up
to five wage workers (recall this is 95 per cent of total firms) are themselves
legally classified as “labour” on grounds of their relatively small size and
lack of access to social security.
Yet, when the state seeks to develop small-farmer agricultural technol-
ogy and extension services, implement land reforms, build micro-industrial
estates and expand micro finance, it promotes PCP. During 2005–09, for
example, the NCEUS, despite its lack of consensus over self-employment,
47
Michael Lieven, Dispossession without Development: Land Grabs in Neoliberal India
(New Delhi: Oxford University Press, 2018).
treated it as a form of entrepreneurial capital, advocating credit, skills-

training and secure sites as elements of “pro-poor development”.48 And
when the state establishes safety nets of social protection, it protects PCP
along with wage labour. PCP is also both sustained and disadvantaged
through unintended outcomes—as when the rural employment guarantee
scheme incentivizes PCP by raising the formal wage floor, under which
PCP competes, or disadvantages it by expanding and formalizing credit
for which PCP has no acceptable collateral.
Despite threats from the expansion of export agriculture, from contract
production for supermarkets and corporate capital, from stricter attempts
at phytosanitary regulation and rising hedonic standards, from speculation
in food markets by finance capital and from the commodification of applied
life sciences, such is its armoury of resistance that there is little evidence for
anything but a continuing proliferation of PCP as a constitutive form of
Indian capitalism. While PCP may undergo further transformations, it
seems all but proof against differentiation. In any case, since India’s cor-
porate sector does not absorb wage labour, any attempt by corporate capi-
tal and/or the Indian state to crush PCP in the informal economy would
be nothing short of a disaster for livelihoods.
Finally, it is important to note that PCP is increasing not only in India
and the Global South, but also in the Global North. As new technologies
emerge and entities like the “gig economy” establish themselves, we
observe a shift in the “world of work” away from wage labour to increased
“self-employment”. In the UK, for example, the last decade has seen the
number of “self-employed” people increase by 24 per cent—from 3.9 mil-
lion to 4.7 million.49 This is by no means an isolated trend: all across
Europe and North America, stable waged employment is unravelling in
favour of short-term, casual forms of work where employers are difficult to
identify and labour and capital are combined in complex ways within the
same person.
If this is true, then Marx’s famous dictum that “the country that is
more developed industrially only shows, to the less developed, the image
of its future” needs to be inverted.50 It seems more likely that labour forms
48
NCEUS, Reports on the Financing of Enterprises in the Unorganised Sector and Creation
of a National Fund for the Unorganised Sector (New Delhi: Government of India, 2007).
49
Sunny Sidhu, Trends in Self-employment in the UK: Analyzing the Characteristics, Income
and Wealth of the Self-employed (London: Office for National Statistics, 2018).
50
in the Global South are the future of capitalism in the Global North, and
for this reason alone, serious attention needs paying to PCP and its
development.
VII. Conclusion
This chapter has attempted to answer why despite their centrality to the
capitalist social formations of the Global South, petty commodity produc-
ers remain neglected in Marxian political economy. It has argued that the
main reason for this neglect is the scattered and often contradictory man-
ner in which petty production was understood by Marx himself. Through
an excavation of his writings on the subject we demonstrate that while
much of Marx’s writings view petty production as a hangover from the
past destined for oblivion under the logic of capital, a more complicated
picture emerges from a deeper reading of his texts where Marx does allow
for petty production as form of disguised wage labour and where he even
allows for its existence as a contradictory combination of capital and labour
within the framework of capitalism.
In the second part, this chapter illuminates these contradictory aspects
of Marx’s thought on PCP through a brief overview of capitalist transfor-
mations in India. While all three aspects of Marx’s views on PCP (i.e. dis-
solution, conservation and the dialectic of exploitation and autonomy) can
be found, it is in the third sense of being a contradictory form that is
simultaneously subsumed under the logic of capital and exploited by it
while retaining a degree of autonomy, that PCP can be most fruitfully
conceptualized for contemporary conditions. In paying homage to the
power of Marx’s thought, we also recognize its historical limitations and
the constant need to both benefit from it but also develop it.
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Index1
A Australia, 103, 113–120, 237

Absolute surplus value, 351–353 Autonomy, 8, 42, 43, 52, 57,
Abstract labour, 89, 185, 277 110, 150, 347, 352–357,
Accumulation 360–362, 365
capitalist, 72
primitive, 72, 211, 347–350, 352,
358–359, 358n36, 362 B
Adorno, Theodor W., 190–195, Bakunin, Mikhail, 109, 129
191n28, 194n42, 197 Banking system, 219, 223, 235, 236,
Africa, 172, 175, 331, 332, 335, 336, 241, 242
340, 341, 345n1 Bank of England, 234–237, 239,
Alienated labour, 93 242, 243
Alienation, 12, 61, 69, 182, 200, Barker, Jason, 103, 106–108
202, 280 Bebel, August, 17, 26, 36n58, 38, 143
Althusser, Louis, 52, 114–117 Benjamin, Walter, vi, 15
Althusserian, 116 Bernstein, Eduard, 32, 33n47,
American Civil War, 37, 266 140n85, 143, 257, 258, 267,
Anarchism (anarchists), 36, 124, 148, 353n22
153, 199 Bichtler, Karl, 198–202
Anti-capitalism, 36 Black radical tradition, 162–164,
Anti-Dühring, 33, 33n47, 131 171, 177
Arendt, Hannah, 45–46n9, 51, Blanquism, 124
51n21, 52 Bolshevik Revolution, 100
Note: Page numbers followed by ‘n’ refer to notes.

1

Engels, and Marxisms, https://doi.org/10.1007/978-3-030-24815-4
370 INDEX
Bolshevism (Bolsheviks), 100, 105, 282, 289, 292–294, 299,

106, 110, 154 303, 330
Börne, Ludwig, 5, 6, 8–12, 16, 17 Capitalist social relations, 86, 127,
Bourgeois (Bourgeoisie), 15, 22, 23, 128, 131, 170, 240, 345, 346,
25–27, 28n26, 34, 38, 39, 348, 350, 356, 361
67–69, 74–78, 98, 105, 128, Central bank, 80, 236, 237, 239,
138, 147–149, 151, 152, 175, 245, 330
184, 186, 190, 196, 203, 241, Centralization, 49, 138, 139, 238,
251, 255, 256, 258, 259, 261, 275, 319–343, 359
266–268 Central planning, 274, 281, 285
Bretton Woods system, 243, 244 China, v, xiii, 94, 100, 171, 325,
Buchez, Philip, 24 327–330, 334–339
Chinese Revolution, 107, 113, 338
Christianity (Christians), 6, 10, 30,
C 160–177, 266, 321n4
Capital, ix, xi, xii, 28, 29, 34n51, Circular Letter, 38, 257, 265
42, 61, 62, 64, 70–75, 76n37, City of London, 236, 237, 243
77, 77n41, 79, 81, 87–92, Civil society, xi, 27n23, 42, 44, 44n5,
94–100, 104, 106, 108, 112, 45, 47–51, 56–58
115, 117, 119, 122, 129, 161, The Civil War in France, 49, 50, 122,
172n46, 181–198, 200–203, 127, 134, 256–259
216, 220, 222, 225, 229, 230, Class struggle, 39, 101, 143, 173,
232, 248, 250–253, 257, 264, 249, 315, 316
265, 291, 292, 302, 323, Cold War, 189, 202
347–350, 354 Colonialism (colonialist), 164, 167,
Capital 173, 175, 340, 355
finance, 212, 219, 221, 225, 364 Commercial credit, 235, 241
industrial, 186, 242, 351, 354 Commodity
merchant, 232, 240, 241, 350 petty commodity production (PCP),
money, 96, 149, 185, 197, 215, xiii, 345–348, 350–365
216, 218, 225, 241, 285, 293 production, 95, 96, 98, 100, 101,
Capitalism 184, 199, 200, 327, 356, 357
capitalist economy, xii, xiii, 58, 62, Commodity money, 199, 232
78, 79, 87, 150, 170, 176, Commodity production, 95, 96, 98,
219–225, 282, 289, 292–294, 100, 101, 184, 200, 356, 357
299, 303, 330 Common ownership, 77, 94, 141
capitalist social relations, 86, 127, Communalism (communal), xiii, 43,
128, 131, 170, 240, 345, 346, 57, 94, 97, 273n1, 281, 286,
348, 350, 356, 361 287, 321, 339–341
Capitalist accumulation, 72 Commune, 23, 30, 49, 50, 127,
Capitalist economy, xii, xiii, 58, 62, 133–135, 138, 140, 143, 149,
78, 79, 87, 150, 176, 219–225, 253, 254, 256
INDEX 371
Communism, 41, 55, 56, 61, 62, Crisis, 31, 32, 61–63, 65, 87, 88, 112,
64–70, 76–78, 88, 96–99, 101, 118, 131, 174, 217, 218, 229,
104, 106, 110, 118, 128, 134, 235–237, 245, 275, 319, 320n3,
137, 138, 152, 152n149, 154, 322n5, 339, 341, 342
189, 193, 197, 200, 250–253, Critique, v, xi, xii, 17, 21–39, 42, 47,
257–261, 267, 268, 339 49–58, 66–70, 73, 76, 78, 79,
communist revolution, 72, 254 81, 85–102, 106, 109, 114, 128,
Communist Revolution, 72, 254 131, 133, 135, 137, 153,
Concrete labour, 89, 90, 93, 95, 277, 160–163, 165–167, 170, 171,
278, 282, 283, 292 173, 177, 184–187, 189, 191,
Connolly, James, 145–146 192, 194, 196, 197, 200–203,
Conservation, 353, 356, 357, 216, 225
359–360, 365 Critique of the Gotha Programme,
Conservatism (conservatives), 7, 8, 28n26, 78, 98, 128, 153, 259
13, 163, 190, 249, 250, 261,
264, 265
Consumption, 96, 98, 99, 106, 139, D
170, 198, 222, 222n34, 231, Dante, 18, 71, 108
232, 286, 287, 293, 294, Darwin, Charles, 112, 248, 251
304–307, 316, 320, 321, 323, Darwinism, 248
326, 361 De Leon, Daniel, 141–143, 145, 146
Contradiction, ix, 28n26, 44, 47, 48, Debt, 214, 221, 221n31, 223, 225,
53–55, 65, 67, 70, 77, 78, 135, 225n38, 234, 237–239
150, 162, 169, 170, 174, 231, Deindustrialization, 169, 176
232, 234, 235, 252, 275, 284, Demirovic, Alex, 48, 49, 57, 193
284n16, 320, 324, 342, 343, Democracy, 21–39, 41–58, 66, 145,
347, 349, 353, 357 154, 176, 200, 255
A Contribution to the Critique of Democratization, 57, 125
Hegel's Philosophy of Right, 47 Dialectics, xi, xii, 8, 15, 18, 65, 248,
A Contribution to the Critique of 284, 353–357, 360–362, 365
Political Economy, 70, 301 Dictatorship of the proletariat, 50, 76,
Cooperativism (cooperatives), 27, 99, 100, 105, 128, 129, 135, 267
50, 98, 128, 130, 133, 141, Dispossession, 162, 173, 358
144, 145, 252, 253, 259, 263, Divine Comedy, 71
265, 363 Division of labour, 43, 47, 74, 240,
Counter-revolution, 31, 100 278, 301, 303
Credit Domination, 44–47, 46n9, 49, 57,
commercial, 235, 241 62, 65, 66, 70, 95, 99, 101, 124,
money, xii, 230, 233–237, 130, 133, 167, 173–175,
239, 243 185–187, 189, 195, 201,
state, 23, 229–245 327, 340
Credit money, xii, 230, 233–237, 239, Du Bois, W. E. B., 162
241, 243 Dunayevskaya, Raya, 93
372 INDEX
E F
Ecology, x, 109 Federal Republic of Germany (FRG,
Economic and Philosophic Manuscripts West Germany), 182, 183, 187,
of 1844, ix, 300 190, 196, 202, 204
Economic Manuscript of Feminism, 117
1861–63, 251 Fetishism, 43, 57, 94, 181–204
Economic reductionism, 42, 46, 55 Fetscher, Iring, 185, 189, 197
Economic sphere, 45, 47, 53 Feudalism, 112, 347, 348, 351
The Eighteenth Brumaire of Louis Fichte, Johann Gottlieb, 43, 63
Napoleon (The Eighteenth Finance capital, 212, 219, 225, 364
Brumaire), 255 Financial Accessibility Survey (FAS),
Elasticity, 237, 243 321, 330, 330n20, 332, 334, 342
Elective affinity, 4 Foreign assets, 243, 244
Emancipation, 12, 29n29, 30, 37, Formal subsumption, 351–353,
43, 48, 49, 51, 55, 56, 67–69, 359, 360
75, 91, 97, 106, 110, 112, Frankfurt School, 106, 110, 118, 181,
125, 126, 143, 147, 151, 191, 182, 184, 189, 192, 194, 202,
256, 267 247, 268
Engels, Friedrich (Frederick), v, vi, Free association (freely associated
ix, xi, 14, 16, 17, 23, 24n6, mode of production; association
25, 26, 28n25, 28n26, 29n29, of free individuals; association),
31–36, 31n38, 34n51, 35n53, 68, 283
35n55, 36n58, 38, 39, 52, 63, Freedom, x, 10, 24n6, 39, 43, 46,
65n10, 74, 104, 105, 107, 46n9, 48, 53, 55, 56, 58, 65, 68,
123, 125, 126, 130–136, 77, 80, 81, 94–100, 106, 130,
139, 140n85, 153, 188, 133, 134, 138, 144–146, 148,
189, 217, 230, 248, 249, 164, 183, 200, 273n1, 287
253–255, 257–261, Free market, 100, 101, 249, 261
266–268, 300 French Revolution, ix, 10, 11, 37, 48,
Equality, 35, 42n2, 46, 48, 53, 49, 68
54, 56, 58, 81, 138, 152,
176, 183, 273n1, 286,
292, 297 G
Erfurt Programme, 28n26, 135, 143 German Democratic Republic (GDR;
Essayism, 4–6, 13–18 East Germany), 182, 187, 188,
Evolutionism (evolutionary), xii, 196, 197, 199–201
247–269 German Revolution, 11, 13, 38, 154
Exchange value, 89, 93–95, 97, 100, Germany, xii, 6, 15, 23–26, 28n25,
169, 231, 232 33, 36n58, 37, 38, 65, 124, 136,
Expropriation, 47, 139, 140, 144, 181, 183, 184, 187, 190, 202,
173, 241, 260 204, 329
Extra-economic, 45, 51 Global capitalism, 72, 174
INDEX 373
Global North, x, 364, 365 I

Global South, 340, 345, 362, India, xi, xiii, 94, 236, 325, 329, 330,
364, 365 345–365
Gold Standard, 236 Individualism (individual), x, 7,
Gotha Programme, 26–30, 135, 8, 43–45, 47, 48, 63, 68,
153, 254, 262 76–78, 77n41, 81, 95, 97–99,
Gramsci, Antonio, 110, 115, 129, 131, 132, 138, 143, 146,
117–119, 154 151, 168, 183, 186, 194, 198,
Great Depression, 239 199, 215, 216, 219, 252, 253,
Grundrisse, ix, 46, 97, 104, 117, 119, 260, 265, 275, 276, 284,
122, 182, 189, 231, 232, 234, 284n16, 286, 292, 321, 324,
237, 301, 352 330, 347, 363
Guesde, Jules, 139–141 Industrial capital, 186, 242,
351, 354
Industrial unionism, 141–143
H Industrial Workers of the World
Harvey, David, 91, 92 (IWW), 125, 142, 145
Hayek, Friedrich, 260, 261 Inequality, 42, 44, 46, 48, 57,
Hegel, Georg Wilhelm Friedrich, 12, 161, 167, 171, 174, 183,
13, 15, 17, 43, 44, 44n5, 62, 65, 184, 239, 244, 245, 249,
66, 70, 105, 301 259, 260, 262, 275, 280,
Hegelian, xi, 17, 18, 63, 67 297, 358
Heine, Heinrich, xi, 3–18, 37, 74 Intellectual, v, vi, 3–13, 7n8, 16, 17,
Hilferding, Rudolf, xi, 107, 212, 28, 28n25, 33, 62, 65, 110, 113,
219, 225 117, 118, 125, 140, 147, 151,
Historical materialism, 5, 51–55, 119, 162, 181, 183, 192, 260, 263,
253, 268, 302 276, 285, 302
History, xii, 5, 8–11, 18, 22, 30, 32, Interest
36, 51, 66, 68, 70, 87, 103, 104, rate of, 212–220, 214n3, 218n20,
110, 112, 116–118, 147, 162, 222–225, 222n33
166, 230, 237, 245, 248, 251, theory of, xii, 211–225
276, 302, 313, 324, 337, 340, International Monetary Fund (IMF),
341, 350, 352 xiii, 321, 326–330
Hobbes, Thomas, 43, 70 International Working Men’s
Hobsbawm, Eric, 248, 249 Association (IWMA; First
Hoff, Jan, 181, 191, 197, 204 International), 21–25, 28, 32, 75,
Höhn, Gerhard, 7 76, 124, 125
Honneth, Axel, 42n2, 53 IOU, 220, 233
Humanism (humanist), 88–94, 101,
114, 115, 281, 304, 314
Human labour, xiii, 91, 160, 196, J
197, 289–316 Joint-stock, 132, 252, 259n46
374 INDEX
K Liquidity, 234–236, 239, 242–244

Kalecki, Michał, 218n20, 221–223, Lukács, György (Georg), xi, 14, 16,
221n29, 223n36, 225n38 17, 96, 104, 106, 118, 119
Kant, Immanuel, 62–64, 66, 81 Luther King, Jr., Martin (King), xii,
Kautsky, Karl, 33n47, 34n51, 97, 160, 160n3, 166n24, 169n34,
143–144, 152, 154 175n56
Keynes, John Maynard, 218, 218n20, Luxemburg, Rosa, 87, 87n1, 117,
231, 231n4, 236 118, 150–151, 154, 172n46
Keynesianism (Keynesian), 172, 273
Krahl, Hans-Jürgen, 190, 191
M
Mandel, Ernest, 114, 200
L Manifesto of the Communist Party
Labour time, 95, 96 (Communist Manifesto), 14, 38,
socially necessary, 89, 95, 96, 98, 132n50, 250, 254, 259, 261,
101, 277–279 263n67
Labour-power, 152, 291, 294, Mao Zedong, 100
315, 354 Marcuse, Herbert, 117, 183, 192,
Labour theory of value, 90, 91, 278, 192n34, 193, 197, 201
289–316 Market
Laclau, Ernesto, 42, 42n2, 43, 53–56, free, 100, 101, 249, 261
53n27, 54n28, 54n29, 115 laissez-faire, 249, 250, 261–263
Lafargue, Paul, 138–139 socialism, 273n1
Laissez-faire, 249, 250, 261–263 Market socialism, 58, 133, 273n1
Landownership (land owners), 29 Marx, Karl, ix–xiii, 3–18, 21–39,
Lassalle, Ferdinand, 16, 17, 21–24, 41–58, 61–81, 85–154, 181–204,
24n6, 26, 27, 38, 88, 97 211–225, 229–245, 247–269,
Lassallean, 22–27, 35, 38, 128, 131 273–316, 319–343
Latin America, 5, 14, 237 Marx-Engels-Gesamtausgabe (MEGA),
Law of value, 75, 87, 88, 91, 96, ix, 29n28, 109, 188, 188n18,
100, 198, 199, 201, 276–280, 195n47
285, 296 Marxism, v, x, 4, 5, 18, 42, 52–54, 56,
Leadership, 25, 126, 154, 349 71, 90, 97, 100–102, 105, 106,
Lenin, Vladimir, 17, 97, 100, 108, 110, 114, 115, 117–119,
104–106, 112, 116, 147–149, 121, 122, 124, 136n71, 139,
154, 340 154, 162, 163, 177, 181, 185,
Leviathan, 70 187, 188, 191, 193, 204, 346
Liberalism, 58, 163 Marxist economics (Marxist
Liberal Party, 32 economist), 55
Liebknecht, Wilhelm, 22, 25, 28, Massie, Joseph, 217, 220
28n25, 31–33, 38 McLellan, David, 104
Life world, 79, 85 Mercantilism (Mercantilists), 240, 301
INDEX 375
Merchant capital, 232, 240, 241, 350 Party, xii, 7, 8n9, 21, 22, 24–26, 28,
Meyer, Gustav, 62 28n25, 28n26, 32–35, 35n55,
Mill, John Stuart, 216, 249, 261 36n58, 37, 38, 50, 78, 97, 105,
Mode of production, x, 26, 46, 47, 122–126, 139, 140, 145–151,
50, 57, 58, 62, 70, 72–75, 77, 153, 154, 194, 254, 257, 258,
79, 80, 87, 90, 96, 129, 186, 260, 362
240, 252, 253, 262, 281, 284, Peasants, 86, 149, 172, 253, 343,
284n16, 292, 302, 349, 354 345n1, 346–349, 351, 352,
Modernity, 7, 43, 119, 162, 164–166 354, 355
Money Periphery, xiii, 243, 322, 325,
commodity money, 199, 232 327, 328, 330–332, 334–339,
world, 233, 235, 240–245 341, 343
Money capital, 96, 149, 185, 197, semi-periphery, 72, 325–328, 330,
215, 216, 225, 241, 285, 293 331, 334, 335, 343
Monopoly, 247, 253, 263, 264, 268, Permanent revolution, 41, 50, 51
278, 280, 281, 283 Petty commodity production (PCP),
Morris, William, 114, 136–138 xiii, 345–348, 350–365
Mouffe, Chantal, 42, 53, 54n29, 115 Piketty, Thomas, 106
Polanyi, Karl, 76, 79
Political economy, xi, xii, 42, 47, 50,
N 63, 70, 76, 85–102, 109, 114,
Neue Marx-Lektüre (New Reading of 117, 161–163, 166, 176, 185,
Marx), 181 188, 191, 196–198, 200, 201,
Nkrumahism (Nkrumahist), 319–343 203, 212, 215, 264, 291, 293,
327, 337, 346, 365
Population, 125, 169, 174, 190, 264,
O 301, 302, 320n3, 321, 325, 334,
Occupy Movement, 106, 171 336, 343
On The Jewish Question, 48, 49, 67 Possessive individualism, 43
Outlines of the Critique of Political Post-capitalism, 42n2
Economy, 73 Post-Marxism, 41–58, 113
Overdetermination, 52 Postone, Moishe, 185, 186, 189
Ownership of the means of Poverty, 105, 108, 110, 152, 160,
production, 77, 274, 276, 283 162, 166–172, 174
Poverty of Philosophy, 196, 255,
263, 263n67
P Pre-capitalism (pre-capitalist societies),
Pannekoek, Anton, 118, 152–154 44, 74, 89, 221
Paris Commune, xii, 38, 49, 99, 110, Price, xiii, 27, 34, 92, 214, 220,
122, 125, 127, 131n50, 135, 250, 262, 278, 279, 289–293,
148, 153 296–300, 304–316, 322,
Parliamentary democracy, 145 353, 362
376 INDEX
Primitive accumulation, 72, 211, Rancière, Jacques, 42, 43, 52–56,

347–350, 352, 358–359, 53n27
358n36, 362 Rate of interest, 212–220, 214n3,
Principles of Communism, 218n20, 222–225, 222n33
14, 254, 259 Rate of profit, xii, 87, 100, 169, 185,
Principles of Political Economy, 212, 214–220, 225, 283, 292,
212, 225 298–300, 306, 308–316
Private property (private ownership), Realpolitik, 16
43, 45, 68, 75, 77n41, 89, 95, Real subsumption, 350, 351
100, 101, 127, 142, 144, 185, Reformism (reformists), xi, 39,
252, 259, 263, 278, 281, 284, 125, 152
284n16, 339, 341 Reification, 45, 47, 58, 89, 182,
Profit, xiii, 14, 80, 91, 112, 139, 160, 191, 202
162, 167, 168, 172, 184, 186, Religion, 65, 105
195, 201, 203, 204, 212, Reproduction, 76, 77, 79, 80, 92,
216–219, 222–225, 222–223n34, 161, 167, 168, 170, 171, 211,
242, 262, 263, 275, 281–283, 212, 222, 236, 242, 299, 322,
287, 289–292, 294, 298, 299, 346, 347, 350, 353, 361, 362
303–306, 310, 311, 313–315, Revisionism (revisionist), 101, 114,
315n32, 322–324, 322n5, 340, 162, 247–269, 338, 338n24
354, 361, 363 Revolution (revolutionary)
rate of, xii, 87, 100, 169, 185, 203, practice, 66
212, 214–220, 225, 283, 292, process, 128, 133, 152, 153
298–300, 306, 308–316 of values, xii, 160, 162, 163,
Proletariat (proletarian), 23, 36n58, 169, 170, 176
39, 41, 50, 53–55, 65–70, 76, Revolutionary practice, 66
78, 105, 112, 129, 132, 133, Revolutionary process, 128, 133,
135, 140, 141, 143, 148–152, 152, 153
163, 222, 249–251, 253–259, Rheinische Zeitung, 63, 65, 66
263–268, 335, 339, 345, Ricardo, David, xii, 90, 91, 94,
349, 363 211–216, 220, 225, 290–293,
Proundhonism, 124, 131, 134 291n3, 295–301, 313, 314
Prussia, 22, 32, 63, 65 Rousseau, Jean-Jacques, 68
Ruge, Arnold, 17, 65
Russia, xii, 29–32, 29n29, 94, 124,
R 149, 351
Racial capitalism, xii, 161–163, 165,
167, 170, 171, 173, 177
Racial violence, 162 S
Racism, 86, 114, 160–162, 165, Scepticism, 5, 8
166, 321 Schmidt, Alfred, 192, 197–202, 204
racial violence, 162 Schumpeter, Joseph, 219, 225,
Radical Democracy, 41–58 248, 249
INDEX 377
Semi-periphery, 72, 325–328, 330, Subsumption of labour

331, 335, 343 formal subsumption, 351–353,
Smith, Adam, 81, 94, 212, 214–216, 359, 360
289–291, 293, 295, 296, real subsumption, 350, 351
298–301, 306, 313 Surplus value
Social democracy, 41, 42, 121, absolute, 351–353
147, 151 Syndicalism (anarcho-syndicalism;
Social Democratic Party of Germany anarcho-syndicalist), 121, 124,
(SPD), 124, 135, 143, 150, 152 146, 151, 153, 287
Socialism
market, 58, 133, 273n1
state, xi, 23, 25, 26, 39, 131, 137, T
139, 143, 183, 192, 198–203 Tax, 34, 101, 241, 263n67,
utopian, 52, 88 280, 354
Socialist Economy, 188, 274, 277, Technology, x, 42n2, 119, 165, 168,
280, 285–287 242, 253, 262, 275, 335, 341,
Socialist Workers’ Party of Germany 363, 364
(SAPD), 26, 33, 34, 36, 38, 128 Theories of Surplus Value, 189, 215,
Socialization, 122, 132, 150, 152, 300, 354
198, 282, 283, 285 Theory of interest, xii, 211–225
Socially necessary labour time, 89, 95, Tuchscheerer, Walter, 195, 196
96, 98, 101, 277–279
Social movement, 55, 88, 113, 168
Social theory, 182 U
Solidarity, 76, 81, 175, 273n1, United States (US), 25, 32, 37, 125,
286, 325 145, 160, 169, 176, 236,
Sorge, Adolph, 30, 30n32, 31, 35, 243–245, 250, 265, 327, 328,
37, 39 338, 342
Soviets, 107, 149, 154, 188n18, 273, Universal, 12, 13n24, 43, 45, 48,
274, 280, 285 49, 54–56, 69, 81, 93, 112,
Sraffa, Piero, xiii, 289, 295, 304–316 135, 232, 244, 251, 255, 281,
Stalin, Joseph, 100, 101, 107, 283, 288
112, 188 Use value, 75, 89, 90, 93, 168, 194,
State credit, 23, 229–245 231, 292
State socialism, xi, 23, 25, 26, 39, USSR, 100
131, 137, 139, 143, 183, 192, Utopia, 77, 256
198–203
Stedman Jones, Gareth, 103–106,
248, 255, 256 V
Student movement, 114, 187, Value form, 74, 89, 91, 93, 95, 99,
189–191, 196, 202 118, 161, 174, 189, 235
Subjectivism, 9, 16 Value ideas, 63, 65–70, 81
378 INDEX
Value production, xii, 90–92, 95, 96, Wallerstein, Immanuel, 319, 322, 325,
98, 99, 101 339, 340
Voluntarism, 9, 11, 12, 16 The Wealth of Nations, 212
Vorwärts, 33 Weber, Max, 63, 104, 106, 114
Wicksell, Knut, 212, 217,
219, 222n33, 225,
W 225n38, 305
Wage (wage system), 23, 27, 71, 75, Wood, Ellen Meiksins, 57
90, 100, 129, 130, 135, 137, Workers’ control, xii, 89, 98, 118,
141, 144, 149, 153, 170, 173, 121–154
183–186, 193, 197, 201–204, World money, 233, 235, 240–245
218, 222n34, 259, 264–268, World-system (w-s), xiii,
282, 283, 290–297, 300, 301, 72, 168, 319–320, 322,
303–306, 311–313, 315, 316, 322n6, 322n7, 325–332,
320, 323, 328, 334, 339, 346, 326n13, 334, 336–338,
348, 349, 351–361, 363–365 337n23, 341

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What is the focus of the book series discussed?

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What topics are covered in the Marx, Engels and Marxisms series?

What topics are covered in the Marx, Engels and Marxisms series?

MARX, ENGELS, AND MARXISMS

Karl Marx’s Life,

Edited by Shaibal Gupta

More information about this series at

Karl Marx’s Life,

ISSN 2524-7123 ISSN 2524-7131 (electronic)

Cover illustration: © petekarici / Getty Images

The Marx Revival

Toronto, Canada Marcello Musto

consisting of a new mode of critique that is both dialectical and emancipa-

a­ctivities based on the Marxian notion of association of free and equal

Patna, India Shaibal Gupta

Part I On the Critique of Politics 1

Heinrich Heine and Marx As Essayists: On the Genesis and

Marx’s Critique of German Social Democracy: From the

Revolution and Radical Democracy: Marx Versus Post-­

Marx’ Research Project As a Future Science for Emancipatory

The Intimations of a Post-Capitalist Society in Marx’s Critique

Recovering Marx: Steps Towards a Breakdance103

On the Notion of “Workers’ Control” in Marx and Marxists

King, Marx, and the Revolution of Worldwide Value159

Fetishism and Exploitation Marx - 150 and Marx 200: What

Part II On the Critique of Political Economy 209

Marx’s Observations on the Classical Theory of Interest211

Money, Power, and Capitalism: Marx’s Theory of Money and

Marx as Evolutionary and Some “Revisionist” Implications247

Marx’s Ideas and Conceptions of Socialism in the Twenty-First

Marx’s Metaphysics of Human Labour in the Light of Sraffa:

Marx’s Prescient Theory of Centralization of Capital: Crises

Petty Production and India’s Development345

Babak Amini is a PhD Candidate in Sociology at the London School of

(2010) and Culture and Social Transformations—Theoretical Framework

Luxemburg Reader (2004) and The Letters of Rosa Luxemburg (2011). He

Ramaa Vasudevan is an associate professor at the Department of

Marx’ Research Project As a Future Science for Emancipatory

Marx’s Prescient Theory of Centralization of Capital: Crises

Marx’s Prescient Theory of Centralization of Capital: Crises

On the Critique of Politics

I. On Genesis and Functions of the Intellectuals

© The Author(s) 2019 3

most celebrated models, shows a similar disposition in his methodological

Georges Sorel, Reflections on Violence, ed. Jeremy Jennings (Cambridge: Cambridge

University Press, 1991), 328.

The revision of the Heine/Börne controversy is one of Marx’s invaluable yet

Ah dear reader, if you would complain of morbidness and want of harmony

Such an attitude allowed “torn” Heine to become the Urform of a central

autonomy in terms of an independent intellectual.9 Heine anticipated one

Börne’s unexpected “jumping from a morose mood into a gay one”11

This malleability is a key to understanding Börne’s behaviour after the July

him like an effigy or a puppet in order to carry out their projects. It is as if

After the disappointing experience of the 1830 Revolution, Heine’s interest

Leo Löwenthal, Das bürgerliche Bewußtsein in der Literatur (Frankfurt/M: Suhrkamp,

submits historical bibliography to critical revision. Studying the French

It is faith in the validity of Jacobin moralism that leads Börne to exert

human emancipation to not be thwarted due to voluntarist zeal: “Oh,

Toronto, Canada Marcello Musto

activities based on the Marxian notion of association of free and equal

Patna, India Shaibal Gupta

Part I On the Critique of Politics 1

Revolution and Radical Democracy: Marx Versus Post-

Recovering Marx: Steps Towards a Breakdance103

King, Marx, and the Revolution of Worldwide Value159

Part II On the Critique of Political Economy 209

Marx’s Observations on the Classical Theory of Interest211

Marx as Evolutionary and Some “Revisionist” Implications247

Petty Production and India’s Development345

What Marx wanted to highlight was not that politics is a “shadow-