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(sup) The Utopian Vol. 1 Anarchist's criticism of KARL MARX'S THEORY OF CAPITAL by Ron Tabor I. (1/2)

From Worker <a-infos-en@ainfos.ca>
Date Sun, 8 Jun 2003 16:35:03 +0200 (CEST)

A - I N F O S N E W S S E R V I C E

Marxism claims to be the outlook (the true interests and the natural point of
view) of the international working class, the laboring class created by
capitalism that owns no property except its ability to work, its labor-power. By
virtue of this, Marxism believes it is both the true, scientific theory of history
and the program for the liberation of humanity. What Karl Marx and his
cothinker, Friedrich Engels, claimed to have done was to discover the
underlying logic of history that would necessarily result in the establishment,
through a working class revolution, of human freedom, embodied in the
classless and stateless society they called communism.

Despite these claims, revolutions led by Marxists have not led to the creation of
the communism that Marx and Engels envisioned, nor even to the dictatorship
of the proletariat they predicted and advocated as the transition to socialism,
which they called the first stage of communist society. Instead, such
revolutions have resulted in totalitarian regimes in which bureaucratic elites
have ruled over the working class and other social strata in the name of the
workers. These systems I believe can best be described as state capitalism.

To be sure, the systems that emerged from Marxist revolutions were/are in
many respects the antithesis of Marx and Engels' vision of communist society.
But as I see it, these outcomes were not the result of mistakes by Marxists or of
unexpected ?objective conditions,? as Trotskyists and other Marxists critical of
Communist societies contend. They flow from the underlying logic of Marxism
itself. Thus, instead of being the perversion or negation of Marxism, these
regimes represent its true meaning.


I did not always see the question this way. For many years, I was a committed
Marxist, a firm believer in its validity and deeply steeped in its theoretical
assumptions. In addition to confirming my moral outrage at the barbarity of
contemporary society, Marxism's analysis of capitalism and its theory of
history seemed to me to explain a great many things in a scientific way. They
did so far better, in any case, than the alternative theories, which struck me as
uninformative, blatantly apologetic of capitalism or just plain stupid.

For much of this period, I was involved with organizations, particularly the
Revolutionary Socialist League, that claimed to defend the libertarian vision of
Marx and Engels and to oppose Communist-ruled societies as perversions of
that ideal. Yet, as a result of attempting to understand how such terrible social
systems could have arisen from such a well-intentioned worldview, I came to
the conclusion that Marxism itself was a major cause of the establishment of
such totalitarian regimes.

I am therefore no longer a Marxist, although Marxism has had a major impact
on my thinking, including, hopefully, my ability to analyze it. But unlike many
other former Marxists, I have not embraced capitalism. I still consider modern
industrial society, despite its economic, social and scientific achievements, to
be a brutal social system that condemns millions of people to poverty, disease
and premature death and a breeding ground of racism, sexism, ecological
destruction, fascism and war. Consequently, I continue to believe in the
necessity of a radical social transformation to replace global capitalism with a
democratic, egalitarian and cooperative society.

Yet, as a result of my reevaluation of Marxism, I have also come to the
conclusion that a truly revolutionary anti-elitist program is only possible within
the framework of anarchism, that is, a radical liberatory and egalitarian outlook
that stresses decentralization, direct democracy and cooperation, and that
explicitly rejects the use of the state as a vehicle to promote its goals.

Although it may seem that Marxism today is an insignificant social factor and
likely to remain so, I believe this is temporary. Sooner or later, struggles against
capitalism's injustices will intensify, and Marxism and Marxist organizations,
or something very much like them, will be revived. For this reason, I think it is
crucial that radicals who remain committed to libertarian and egalitarian ideals
understand both the content of Marxism and its social significance.

In the following article and another which will appear in a later issue of this
journal, I will attempt to lay out how I now understand Marxism, through an
examination of the centerpiece of the Marxian world view, Marx's analysis of
capitalism. I want to make it clear here that I do not claim to be proving my
case. In my opinion, most of the questions involved cannot be proved or
disproved (which is part of my argument against Marxism). What I am trying
to do is put forward an interpretation of what Marxism is and why it has led to
the results it has. If this analysis helps to explain Marxism and its historical
outcomes, it will have served its purpose.


I will present my overall argument first.

1. Marxism is a philosophical worldview, a speculative interpretation of the
world. By this I mean that it embodies a set of beliefs about such ?deep?
questions as the nature of the universe and human beings' place in it, the
meaning and goal of history, the origin of human consciousness and the
accuracy of our knowledge, the definition of freedom and how it can be
achieved. These issues have been discussed and debated by philosophers and
others for thousands of years, but neither by Marx's time nor by ours have
these issues been settled-proved or disproved-by science (or anything else).
Nor, in my view, can they ever be resolved. They are ultimately matters of
judgment and choice for every human being.

2. Despite the fact that his theory is philosophical in the sense described, Marx
presents it as scientific, as if it has been verified in the same way that the
accepted theories of physics, biology and other realms of scientific inquiry have
been. Although it has its own philosophical presuppositions, science is an open
process: it is a cooperative endeavor, occurring over time and space, that
involves many individuals from different nations and cultures who hold a
variety of religious and philosophical beliefs. (This cooperation is one of the
reasons it is successful.) It also entails accepted rules of procedure and the
continual testing of its data, methods, hypotheses and theories. These serve to
create, at any given time, a broad level of acceptance of its dominant theories
and to provide the means by which new theories may challenge and possibly
replace the old.

In contrast, Marxism is a closed system whose practitioners share the same
philosophical credo. It has no standardized rules of procedure, and despite its
assertion that it is the ?unity of theory and practice,? never allows itself to be
tested. (Whatever the historical results of Marxism, those Marxists who
remain committed to it exonerate it. Those who judge it a failure cease being
Marxists.) Moreover, its discussions usually resemble theological debates
which, where Marxists have had the means to do so, have often been decided in
blood. Stripped of its pretenses, Marxism's claim to be scientific is little more
than an attempt to give it an aura of authority that it would not otherwise

3. Although Marxism is not scientific, it makes a convincing case that it is, at
least to enough people over the years to have made it a historically significant
force. In addition to presenting a plausible theory of history, its elaborate
critique of capitalism and its call to overthrow it make Marxism particularly
attractive to middle class intellectuals and others of intellectual bent who are
already disturbed about the injustices of contemporary society.

4. The claim that Marxism is scientific rests to a considerable degree on Marx's
analysis of capitalism, particularly as elaborated in his magnum opus, Capital.
In addition to presenting an analysis of the dynamics of the capitalist economic
system, Marx's work is meant to demonstrate what Marxists call the
?materialist basis? for socialism. Specifically, it is intended to show that
capitalism contains tendencies that will create the social conditions that will
render the socialist revolution, as Marx describes it, inevitable.

(Despite Marx and Engels' frequent use of such terms as ?inevitable? and
?necessary,? Marxists have continually discussed whether
socialism/communism is inevitable and whether Marx and Engels thought it
was. To avoid futile debates on this issue, let me say here that I believe my
analysis of Marxism applies both to the belief that socialism is inevitable as
well as to the view that it is highly probable.)

5. Despite the prodigious labor involved in its production, despite the fact that
it contains reasonable explanations of a great many aspects of capitalism and
despite its vast scholarly apparatus, Marx's analysis of capital, like the rest of
his theory, is a philosophical construct, not a scientific theory. Rather than
being an objective confirmation of his broader worldview, it is infused
throughout with the philosophic assumptions and precepts of that outlook.

6. Despite making many assumptions and employing procedures that further
his conclusions, Marx does not prove his case. What he does do, in a manner of
speaking, is to find what he's looking for. Steeped in the Idealist philosophy of
G. W. F. Hegel, Marx searched for, and thought he found, human freedom as
an immanent principle embedded in the nature of humanity and in the
structure of human history and society.

7. In addition to representing a body of theory, Marxism insists that it is a guide
to revolutionary action. Beyond the general demand that Marxists organize the
workers to overthrow capitalism, it mandates that specific measures be taken
by revolutionaries should they be in a position to do so. These include the
establishment of a dictatorial state, the nationalization of all property in its
hands and the repression of all those who resist. When carried out, such
measures lead to the establishment of a totalitarian society.

8. Rather than representing the outlook of the proletariat and the path to
freedom, Marxism can best be understood as an ideology that expresses the
aspirations of certain socially-concerned intellectuals and others to reorganize
and rule society according to their values. Rightly offended by the inequities of
global capitalism, such people are attracted to a worldview that promises to
replace it with what they see as a rational, just and truly democratic industrial
system, one in which private property and social classes have been eliminated,
and economic production and distribution are carried out according to a
conscious, scientific plan rather than by means of the market.

9. Like all programs advocating an ideal society, Marxism contains an elitist
potential. Believing itself to be the truth, it posits its vision as the only truly
rational society and its strategy as the only way to achieve it. It simultaneously
assumes that the purported agents of the socialist revolution, the working class,
will automatically come to agree with it. It thus defines away the possibility of a
conflict between the Marxist program and the desires and interests of those it
claims to represent.

10. The elitist potential of Marxism becomes actual when, after a successful
revolution or some other event that enables them to assume power, Marxist
revolutionaries, pursuing the strategy prescribed by their theory, set up a
centralized state they call and believe to be the dictatorship of the proletariat.
They then have both the opportunity and the power to impose their vision on
the rest of society, including the workers. When the workers (or anyone else)
resist, they are defined as suffering from ?false consciousness? (or just plain
?counterrevolutionary?), and repressed.

11. Generally speaking, Marxists do not recognize the elitism entailed in their
worldview. Trapped in the presuppositions of Marxism, they honestly believe
that the revolution they seek to lead will eventually result in a stateless and
classless society-the true liberation of humanity-or at least in a society far more
efficient, just and democratic than capitalism. It is precisely this delusion that
gives them the moral fervor and self-discipline to carry out the Marxist
program and the repressive measures it mandates.

12. Therefore, although Marx claimed that his worldview would liberate
humanity, the logic of his program is to recreate and reinforce the relations of
domination and oppression he claimed to have transcended.

The seeds of the historical results of Marxism can be seen in Marxist theory if
one looks beneath the surface. This includes Marx's theory of capital, which,
surprisingly, has often been held up by anarchists and other anti-Marxist
radicals as a convincing critique of capitalism, somehow independent of the
authoritarian content of the rest of the Marxian worldview. It will be the
purpose of this article and its companion to demonstrate the erroneousness of
this view.


Marx and Engels called their brand of socialism ?scientific,? in contrast to
those of the other advocates of socialism, whom they dubbed ?utopians.? In
Marx and Engels' view, the utopian socialists elaborated their vision of the
ideal society independently of an analysis of the internal dynamics of
capitalism. Moreover, when they tried to set up such societies, they did so as
small colonies outside, insofar as this was possible, the social mainstream. In
this sense, these reformers, among them Robert Owen, Henri Saint-Simon and
Louis Fourier, represented the tradition of Thomas More. More's book Utopia,
written in 1516, describes an ideal society that had been established on an
island in the middle of the ocean. Thus the term ?utopian socialists.?
(?Utopia,? incidentally, means ?nowhere? in Greek.)

Insofar as the utopians had a strategy to reform society, this consisted of either
(1) convincing the ruling classes to implement the utopian models, giving up
their power and social position in the process, or (2) setting up such societies in
places at least somewhat removed from traditional social structures and then
hoping that the majority of the world's people would eventually follow these

Marx and Engels felt that such plans were doomed to fail. Instead, they sought
to ground their conceptions, both of what socialism would look like and of how
it would be established, on the internal dynamics of capitalism. For them,
socialism could only be created if it emerged as the outcome of social
development rather than as something artificially conceived and implemented
outside of the historic process.

In addition to a scientific theory of history, this concern to ground socialism on
the internal workings of capitalism required, as a specific part of that theory, an
analysis of capitalist society, which Marx and Engels saw as the latest stage of
historical development. The Communist Manifesto, the most famous
programmatic statement of Marxism, published in 1848, was an early
expression of this attempt to demonstrate that socialism is the necessary
outcome of the internal logic of capitalism and, in fact, all of history.

In 1852, Marx described his overall position in a letter to one of his followers:

?And now as to myself, no credit is due to me for discovering the existence of
classes in modern society or the struggle between them. Long before me
bourgeois historians had described the historical development of this class
struggle and bourgeois economists the economic anatomy of the classes. What
I did that was new was to prove: 1) that the existence of classes is only bound
up with particular historical phases in the development of production, 2) that
the class struggle necessarily leads to the dictatorship of the proletariat, 3) that
this dictatorship itself only constitutes the transition to the abolition of all
classes and to a classless society.? (Marx to J. Weydemeyer, March 5, 1852, in
Karl Marx, The Eighteenth Brumaire of Louis Bonaparte, International
Publishers, New York, 1963, p. 139. Emphasis in original.)


At about this time, Marx decided to substantiate this contention through a
detailed study of economics, then called ?political economy,? and the
presentation of its results. (Although he had studied political economy
previously, it thereafter became the major focus of his intellectual endeavors,
entailing many hours of research in the British Museum.) The result was what
he labeled a ?critique of political economy,? which is simultaneously a criticism
of the theories of pro-capitalist (?bourgeois?) economic theorists and a detailed
analysis of capitalism.

What is crucial to understand is that Marx's theory of capitalism is not simply
an analysis of the capitalist economic system. It is also and primarily an
attempt to prove points 2 and 3 above: that the internal dynamics of capitalism
necessarily-logically and inevitably-lead to the dictatorship of the proletariat,
which will result in the establishment of a classless and stateless communist

In other words, the theory of capital is a crucial component of the Marxist
system, not merely an independent adjunct which can be accepted or rejected
according to one's taste. As a result, a consistent anti-authoritarian critique of
Marxism must address it.

This will not be easy. For one thing, the theory is vast in scope, very complex
and difficult to summarize. For another, Marx did not complete it. Though he
published several pamphlets and a book presenting parts of his analysis, only
one volume of his most in-depth presentation, Das Kapital/Capital, was
published during his lifetime, in 1867. The other two were edited and published
by Engels after Marx's death. Added material, Theories of Surplus Value, often
referred to as Volume 4 of Capital, was published by Karl Kautsky in 1905-10,
and reissued in a new arrangement and translation by the Institute of
Marxism-Leninism in Moscow in the 1960s. An additional work known as the
Grundrisse, a kind of outline of the overall plan of Capital, was only published
in 1939 and translated into English in 1973. As a result, any critique of the
theory, and certainly one that appears in articles in a journal, has to be both
limited and at least somewhat conjectural.

Given this, what I propose to do below and in the following article is to outline
some of the key facets of Marx's analysis and show that, rather then
constituting a scientific confirmation of the Marxist program, it is infused
throughout with the unproven presuppositions of the Marxian worldview.

Although I have tried to outline Marx's theory as briefly and as clearly as I
could, I recognize that it is both obscure and dry. Those not willing to struggle
their way through these sections are invited to skim them. Hopefully, my
argument will still be discernible.


To analyze capitalist society, Marx employs a method of abstraction. Since it is
not easy to investigate social dynamics in a laboratory, Marx isolates the
phenomena he wants to analyze through a mental process. Specifically, he
temporarily eliminates from consideration what he deems inessential at any
given level of analysis in order to focus on what he sees as the fundamental
dynamics that are at work. After he investigates these processes, he
successively introduces into his analysis the phenomena he previously
excluded. He also explicitly chooses to analyze British capitalism, on the
grounds that when he wrote, the system was most developed there and that
Britain merely showed every other society its future.

In reference to this choice and as a statement of his overall method, Marx
writes: ?In the analysis of economic forms, moreover, neither microscopes nor
chemical reagents are of use. The force of abstraction must replace both.?
(Capital, Vol. 1, International Publishers, New York, 1967, p. 8.)

The result of Marx's approach is a series of models representing the internal
structure and dynamics of various facets of capitalist society, from the more
fundamental to the less. When taken together, these models are meant to
explain the workings of capitalism as a whole. Actually, it is more accurate to
say that Marx devises a model of capitalist society that evolves from the simple
to the increasingly complex. Moreover, this evolution corresponds to the
historical development of capitalism.

To be specific, Marx begins his analysis by investigating the nature of
commodities. To do so, he describes and analyzes a society whose members are
all small independent producers of commodities, such as craftspersons and
small farmers, who employ no laborers. This society is known in Marxist
literature as ?simple commodity production.? Such a society has never existed
as a discrete entity in the real world. At best, it existed in truncated forms
within or on the edges of other societies, such as feudalism. Marx uses this
model to explain the nature of commodities and what he calls the ?laws of
motion? of their production and exchange. (See Capital, Vol. 3, as above,

With this as a foundation, Marx then discusses a society in which there are
only industrial capitalists and workers. In other words, he wants to analyze
capitalism, which is a particular type of commodity-producing society, reduced
to its bare bones; without a state, commercial and financial capitalists, a
professional middle class, small businesspeople or peasants; and with
circulation (the buying and selling among capitalists) and international trade
playing no part. This is necessary to isolate the defining features and discern
the central dynamic of capitalist manufacture or production, which, to Marx, is
the core of the system.

This second model derives from the first. More precisely, the first evolves into
the second, in theory and historically, through the development of its internal
dynamics. Specifically, as commodity production expands and develops, one
group of producers under simple commodity production comes to be the
owners of the means of production (tools, machines, etc.), that is, capitalists,
while others are stripped of their tools, etc., and become proletarians, whose
only commodity is their labor-power.

Once described, this second model is used to investigate the nature of capitalist
production. Over time, the same method is utilized to analyze and factor in
other, less fundamental aspects of capitalist society, resulting in additional
models of increasing complexity. When taken together, these partial models
are supposed to yield an analysis/model detailed enough to be able to predict the
future evolution of capitalist society as a whole.


At first glance, Marx's approach seems to be a reasonable way to proceed. It
also appears to be an exemplification of the method used by two of the founders
of political economy, Adam Smith and David Ricardo, and still employed in
the social sciences. As long as it is utilized to explain a relatively narrow and
carefully defined range of phenomena in isolation from other facets of society,
it is legitimate.

But when looked at more carefully, particularly when his analysis of capital is
viewed in the context of his broader theory, Marx's approach can be seen to be
an abuse of this method.

Even limited to economic phenomena, Marx's procedure is questionable.
Whenever he reintroduces into his analysis factors he previously excluded (for
the sake of simplification), he always assumes, but never demonstrates, that
these additional factors do not vitiate the dynamics he has discerned through
the use of this prior exclusion. In other words, he always assumes that his
partial models are totally consistent with each other. (This is in fact the basis
of the most famous critique of Capital, Eugen von Böhm-Bawerk's Karl Marx
and the Close of His System.)

But however questionable Marx's approach is when applied to the strictly
economic aspects of capitalism, it becomes highly suspect indeed when he uses
it to incorporate non-economic phenomena, particularly the state, into his
analysis. In this case, it represents an example of circular reasoning: it assumes
at the beginning of the argument what one is trying to prove by that very
argument. This is because of the role the analysis of capital plays in Marx and
Engels' overall worldview.

A key tenet of the Marxist theory of history is that the foundation of human
society and the determining factor in history is economic, or to put it
Marxistically, material production. Specifically, for Marxism any given society
consists of two basic parts: (1) the ?mode of production,? the combination of
the forces of production (tools, machines, etc.) and the relations of production
(the relations between social classes) that constitutes the ?material base? of
that society; and (2) the ?superstructure,? which includes the state and political
relations in general, social customs, religion, philosophy, science and art.

While Marx conceded that the superstructure has its own internal dynamics
and a degree of independence vis-a-vis the base, he insisted that, ?in the final
analysis,? the development of the base determines the development of the
superstructure and therefore of society as a whole. In everyday language, the
development of a society's economic system determines the evolution of the
entire society.

Now, as I mentioned above, what Marx was trying to demonstrate through his
analysis of capital is that the working out of the economic dynamics of
capitalism will lead to capitalism's overthrow and replacement by
socialism/communism. To do this, he develops a model that represents an
abstract, simplified version of the capitalist economy and that excludes from
consideration what he deems inessential, including the role of the state and
other non-economic factors. He then uses this model to analyze the
fundamental dynamics of the system and show how it develops.

But to actually prove Marx's main point (that the development of capitalism
will ultimately bring about the socialist revolution), it is not enough to
construct an economic model and show how it evolves. One must also
demonstrate that the model describes the development of the entire society. In
other words, one must show that the dynamics analyzed through the model
determine the evolution of the factors that Marx originally excluded from
consideration and therefore the evolution of society as a whole.

But Marx never does this. He never proves that the economic dynamics
determine the overall development of capitalist society. He always assumes or
asserts it. In other words, Marx assumes throughout his work, including the
analysis of capital, that the economic dynamics of capitalism determine
capitalist society's overall evolution, which is, I contend, what he is really trying
prove through this analysis.

This can perhaps be seen most clearly in Marx and Engels' discussion of the
role of the state as capitalism matures. They contended that as capitalism
develops, capital is concentrated into ever larger blocks and centralized in ever
fewer hands. Eventually, they predicted, the state will be forced to take over
ever greater portions of capitalist industry and own an ever larger proportion of
the total social capital.

The result would be a highly monopolized and statified form of capitalism, in
which the state owns and runs most of the economy, the vast majority of
citizens are workers, and virtually the entire (tiny) capitalist class has been
turned into economically inactive collectors of dividends. From this condition,
we are assured, the need to overthrow the system and replace it with socialism
will be obvious to all, particularly the now-massive proletariat. (For a
discussion of this, see Friedrich Engels, Socialism: Utopian and Scientific, in
Marx and Engels: Basic Writings on Politics and Philosophy, edited by Lewis
S. Feuer, Anchor Books, Doubleday and Company, Inc., Garden City, New
York, 1959, pp. 101-104.)

There are two crucial but unstated assumptions here. One, which will be
discussed in the next article, is that the tendencies toward the concentration
and centralization of capital will be carried out to their logical conclusions.
While such tendencies certainly exist, they have not been carried out anywhere
nearly to the extent Marx and Engels predicted.

The other is that the state acts in a manner totally consistent with the
economic model, in other words, that the actions of the state are determined by
the economic dynamics Marx discerns: as capital gets concentrated and
centralized, the state will take it over. While the state has taken over sections
of capitalist industry and has increased its intervention throughout the
economy and society as whole, this process, too, has by no means reached the
point that Marx and Engels predicted and probably never will. It seems not to
have occurred to them that the capitalist state might resist taking over
industry, might divest itself of industry it previously took over and might even
break up specific industries, all in the interests of maintaining the viability of
the system as a whole. As we know, the state has done this in the past and will
probably do so in the future.

It is certainly acceptable to construct a model based on a few factors and from
which others have been excluded. But when one does so, one needs to be
explicit about what one is doing and to avoid making claims for the model that
are beyond what it can demonstrate. In the case before us, it is legitimate to
develop a model of capitalism's economic dynamics and claim that this is how
the system works, as long as one adds, ?all other things being equal,? that is, as
long as we explicitly exclude the influence of other factors, such as the state,
and do not try to sneak them in afterward without accounting for their impact.
This is Smith and Ricardo's approach and it flowed from and was consistent
with what they were trying to demonstrate.

Smith and Ricardo were ardent supporters of capitalist manufacture and trade
and sought to liberate them from the control of the state and the
entanglements of feudal relations. Among other things, they wanted to
demonstrate: (1) why capitalist manufacture is so productive; (2) how the
dynamics of the market enabled the system to regulate itself without conscious
direction; and (3) that the system would grow fastest and function most
effectively if the state did not interfere. They never contended that capitalism
would function as their models demonstrated if the state did intervene. And
they did not use these limited models to predict the longterm evolution of the
entirety of capitalist society, let alone the future of humanity.

Marx sought to base his own theory on Smith and Ricardo's work. But rather
than justifying capitalism, as they did, he wanted to show that the dynamics
they analyzed entailed internal contradictions that would eventually lead to
capitalism's overthrow and replacement by socialism. However, in his attempt
to do so he made illegitimate use of their method. Where they used their
models to show how the system functions when the state does not intervene,
Marx used his to try to confirm his broader contention that economic
dynamics determine the function of the state and the evolution of society as a
whole. But, as we have seen, he can only do this by assuming it from the

Thus, while it may appear that Marx's critique of capital has demonstrated that
the laws of capitalist production determine the evolution of capitalist society
and make socialism inevitable (or highly likely), this is not so. As a result, even
if Marx's analysis of the economic dynamics of capitalism is entirely correct,
this does not mean that capitalist society as a whole will evolve as he said it
would or that this will bring about socialism.


As I noted above, Marx begins his analysis of capitalism with a discussion of
simple commodity production and the nature of commodities. This is because
in Marx's view capitalism is a system of commodity production, in other
words, a system in which goods are produced for exchange (through the
medium of money), and in which the regulation of the economy is carried out
spontaneously, through the operation of the market.

According to Marx's definition, a commodity is something that is produced
in order to be exchanged. If one makes something for one's personal use, the
object is not a commodity. It is only when one makes something with the
intention of exchanging it for another product or selling it for money that
that object becomes a commodity.

For Marx, each commodity has two kinds of value, one describing it
qualitatively, the other quantitatively. The first is ?use-value,? which is the
particular use or utility of the commodity, defined by its specific
characteristics. For example, the commodity in question may be a loaf of
bread made of a particular type of flour and of a certain size and weight.

The other type of value is ?exchange-value,? which, after further analysis,
Marx shows to be the apparent or external form of what he calls simply
?value.? This type of value is purely quantitative. In Marx's conception, the
value of a specific commodity reflects the amount of ?socially necessary labor
time? that is needed to make that commodity or, to continue our example,
how long, on average, it takes to make that particular kind of bread at a given
stage of economic development. In other words, a commodity's value is
determined by the amount of average labor (the labor of an average worker,
working with average intensity under average conditions), measured in time,
that it takes to produce the commodity.

?We see then,? writes Marx, ?that that which determines the magnitude of
the value of any article is the amount of labour socially necessary, or the
labor-time socially necessary for its production.? (Capital, Vol. 1, as above, p.

Marx often describes the value of a commodity as the amount of socially
necessary labor that is ?embodied? in the commodity. In contrast to
use-value, which is qualitative, value is a quantitative measure by means of
which different commodities can be related and compared and which serves
as the underlying basis of the prices commodities are sold for on the market.
In the Marxian analysis, labor is the source of all value, because, economically
speaking, a commodity is a ?congelation? of labor, a specific amount of
average labor embodied in a material object.

This conclusion flows from Marx's assumption that all labor under simple
commodity production and the majority of the labor under capitalism is this
average (what he calls simple and abstract) labor, that is, unskilled. This is
because, in Marx's estimation, the same economic processes that lead to the
generalization of commodity production also lead to the reduction of most
labor to this level. Specifically, commodity production, over time, destroyed
the social bonds of feudalism. In so doing, it turned the serfs, once bound to
the land, and the artisans, once enmeshed in the restrictions of the craft
guilds, into propertyless proletarians whose labor is unskilled, or pure,
abstract labor. What skilled labor remains under capitalism can be seen and
analyzed as a compound of unskilled labor. Thus, for Marx, under simple
commodity production and capitalism, commodities are not only products of
simple, abstract labor. They are congelations or embodiments of this labor,
and the amount of this abstract labor embodied in a commodity determines
its value.

?As values, all commodities are only definite masses of congealed
labour-time.? (Capital, Vol. I, as above, p. 40.)

The twofold nature of value in commodity-producing systems reflects the
fact that labor here takes two forms or, to put in another way, can be
conceived of and analyzed in two ways. One form is concrete labor, the
specific labor of specific individuals working under specific conditions. This
concrete labor corresponds to commodities' use values. The other is abstract
labor. This is the labor of the workers conceived as a mass of average social
labor, labor carried out by average workers working under average conditions.
This average social labor corresponds to commodities' exchange value or
value, and, as we've seen, it is the amount of such average social labor that it
takes to produce a given commodity that constitutes its value.

After analyzing the nature of commodities and the two types of value, Marx,
following the general approach of Smith and Ricardo, shows how a system of
simple commodity production (and by extension, all commodity-producing
systems), distributes the labor of its economically active members among the
various branches of production without conscious direction. This occurs
through the market, specifically, through the deviation of market prices from
the values of commodities caused by the effects of supply and demand.

For example, if at any given time too many of one type of commodity have
been produced, some of the commodities will fail to find buyers and, as a
result of the interaction between supply and demand, the price of this
commodity will fall below its value. Consequently, some of the producers of
these commodities, no longer able to sell them or no longer able to sell them
at a profit, will shift their operations to produce other commodities or will go
out of business. Eventually, fewer of the original commodity will be produced
and, again as a result of supply and demand, its price will rise, back toward or
even above its value.

If, on the contrary, too few of a given commodity have been produced, the
price of this commodity will rise above its value. Spurred by the chance to
make above-average profits, those producers already manufacturing this
commodity will step up their production, other producers will shift their
resources to begin producing it, and perhaps new producers will enter the
field. Eventually, the increase in supply will lower the price of the commodity
back toward or even below its value. In this way, in a herky-jerky fashion, the
market establishes an equilibrium around which prices fluctuate. At this
equilibrium, under simple commodity production, commodities exchange at
their values. And it is through the continual establishment, disruption and
reestablishment of this equilibrium that the resources, particularly the labor,
of society are distributed among the different sectors of production.

In Marx's words: ?The law of the value of commodities ultimately determines
how much of its disposable working-time society can expend on each
particular class of commodities. But this constant tendency to equilibrium, of
the various spheres of production, is exercised, only in the shape of a reaction
against the constant upsetting of this equilibrium.? (Capital, Vol. 1, as above,
p. 356.)

This analysis of the market and its role in the capitalist economy was a
central focus of Adam Smith's book, The Wealth of Nations (1776). In it,
Smith wrote that it was as if an ?invisible hand? directed the flow of
economic resources to the various branches of production. Smith's metaphor
is another way of saying that the spontaneous, unconscious workings of the
market effect a distribution of the economic resources of society that is
rational and efficient.

But whereas Smith's terminology remains metaphorical (he doesn't contend
that there truly is an underlying rational principle or force that governs the
system), Marx takes Smith's metaphor and turns it into an actually existing
economic ?law? that directly determines the functioning and overall
evolution of capitalism. This can be seen if we look at the broad structure of
Marx's analysis of capitalism.


In the Marxist view the workings of the market can be explained by the
interplay, or what Marxists call the contradiction, between the two kinds of
value, use-value and (exchange) value. In other words, it occurs through the
interaction between the concrete qualities of a particular commodity, which
affect the demand and therefore the price of that commodity at any given
time, and the average cost of production of that type of commodity, which
determines the equilibrium around which this price fluctuates. Use-value and
(exchange) value, in turn, represent two aspects, the qualitative and the
quantitative, of each commodity. (Any given commodity is simultaneously a
specific item with discrete qualities and an embodiment of a certain quantity
of abstract social labor).

In Marx's analysis, the historical development of capitalism reflects the
working out of the interplay between these two aspects of the commodity, or,
to use Marxist jargon, the development of the commodity's internal
contradiction. (This development through internal contradictions is what
Marxists call ?dialectical.?)

In these terms, capitalism's overall evolution can be described as follows. The
internal contradiction of the commodity leads to the generalization of
commodity production. (In more conventional language, the dynamics of the
market, with its tendency to develop the social division of labor, and through
this, to develop new products and to lower the prices of existing products,
results in the expansion of the market economy and the dissolution of the
bonds of feudalism.) Among other things, this leads to the creation of the
commodity labor-power, the working class. In turn, the internal contradiction
of labor-power (as I'll discuss below), makes possible the exploitation of the
workers and the production of surplus value, which, when reinvested,
becomes capital. Finally, the internal contradiction of capital (to be discussed
in the next article) leads to a revolution. This revolution will ultimately do
away with capital, labor-power, commodity production and capitalism, and
will bring to an end the entire epoch of contradiction-ridden modes of

Posed more abstractly, this evolution of the internal contradiction of the
commodity represents the logical development of the concept of value. Value
evolves through its internal contradiction to become surplus value/capital,
which evolves through its internal contradiction into a totally new concept
that is no longer value at all.


But if we recall that the two forms of value are expressions of the two forms
of labor, we will realize that the dialectical development of value really
represents the logical development of human labor under capitalism. Under
this system-where the direct producers, the workers, are separated from the
means of production-labor itself, as labor-power, has become a commodity,
and the entire system appears to be driven by the dynamics of commodity
production and exchange, a phenomenon Marx calls the ?fetishism of
commodities.? (See Capital, Vol. 1, as above, p. 71.)

In other words, since the commodity is an embodiment or ?congelation? of
human labor, whose abstract expression is value, the evolution of commodity
production is in fact the external manifestation of the dialectical
development of labor, through the contradiction between concrete and
abstract labor, under capitalism. In short, in the Marxist view, the history of
capitalism, from its origins to its termination in the socialist revolution,
reflects and is determined by the logical development of human labor.

For Marx, this represents only one phase in the historical evolution of labor.
But it is the stage in which labor has been freed from social and customary
constraints (such as the bonds of slavery and serfdom) and can develop

In the Marxist view, labor under all forms of society has both a concrete
character and an abstract character. Any act of labor is simultaneously the
concrete labor expended to make a specific product and a certain portion of
the total labor a given society has at its disposal at a given time. But as long as
economic exchange is poorly developed and as long as the laborers are slaves
or serfs, the abstract character of labor is not apparent, the distinction
between concrete and abstract labor remains hidden and the contradiction
between the two cannot express itself. The laborers are defined by the
specific work they do and whom they do it for (whom they are owned by or
bound to), and the fact that they are also expending a certain portion of
society's total general labor is not readily apparent and has little social

But under capitalism, for the first time in history the abstract, social
character of labor becomes explicit. Here the workers are separated from the
means of production, tools, machines, etc., and exist as a vast body of
potential labor. Moreover, the process that has separated them from the
means of production has also made the vast majority of them unskilled. As
such, they are largely interchangeable within the production process. In this
way, not only has the abstract, general character of labor become clear
analytically, human labor under capitalism has, in fact, become
overwhelmingly abstract, general labor.

It is because of this that capitalism is the only economic system that allows
the contradiction within human labor-which, prior to capitalism, was
entrapped in a web of non-economic relations-to become explicit, to unleash
the tremendous power that previous lay hidden, and to evolve to its logical
conclusion. And it is because of this that, in Marx's view, it is only capitalism
that makes human liberation, through the socialist revolution, possible.

In Marx's theory, then, it is the contradiction within human labor and labor's
dialectical development that defines and drives the capitalist system. This
contradiction lies behind all of what Marxists call the ?contradictions? of
capitalism. Eventually, according to the theory, these contradictions will
bring about the socialist revolution.


Viewing Marx's theory of capital in this way puts it (and Marxism as a whole)
in a different light than it is usually presented. In the first place, it is not a
scientific theory. Scientific hypotheses and theories must be able to be
verified, that is, subjected to testing procedures that enable them to
demonstrate their ability to explain and/or predict natural or social
phenomena. (Technically, they must have, to use the term utilized in a recent
article in Scientific American, ?testable consequences? which enable them to
be disproved if they are false. See ?Mapping the Universe,? by Stephen D.
Landy, Scientific American, June 1999.)

But how can Marx's theory be tested? By his own admission, the values of
commodities cannot be directly ascertained, let alone measured. And as far as
the predictive ability of Marx's theory is concerned, no broadly agreed-upon
conclusions are possible. The theory predicts the overthrow of capitalism and
the establishment of socialism/communism. But this prediction is so
ensnared in problems of definition that few people will ever agree on what
the outcomes of Marxist-led revolutions really were/are. Was the Soviet
Union the dictatorship of the proletariat? Was socialism ever established
there? What about Eastern Europe, China, Cuba, Vietnam, Nicaragua,
Ethiopia? Even Marxists don't agree on a common characterization of
Communist societies. In contrast to scientific theories, the Marxist theory of
capital, like his world view as a whole, cannot be proved or disproved. It is, as
I've said, a philosophical construct.

Secondly, Marx's analysis of capital is not materialist. Marx presents his
analysis of capital (and his worldview as a whole) as a form of
materialism-the belief that the ultimate reality of all things is matter, that is,
atoms and other material particles. But what he is really presenting is the
history of human labor as a concept or idea. To use philosophical language,
Marx is describing the phenomenology of labor, the succession of forms that
labor takes as it undergoes its logical and historical development.

This is a form of philosophical Idealism, the belief that ideas or concepts are
the ultimate reality, not materialism. Where Adam Smith used the term
?invisible hand? as a metaphor to help describe what he saw as the underlying
rationality of the market, Marx turned the metaphor into an actually existing
rational principle-a kind of unseen force-that drives and governs the
development of capitalism.

Marx's very terminology reveals the Idealist character of his theory. As I've
described, Marx defines the value of a commodity as the amount of
socially-necessary labor embodied in the commodity, while commodities are
said to be congelations of labor. In normal language, commodities are
products of labor; once expended, the labor no longer exists. In contrast, what
does it mean to say, as Marx does, that labor is embodied in a commodity
except that it is a kind of ethereal, non-material substance that reposes there?
While the word ?labor? and the fact that Marx is analyzing the production
and distribution of material goods gives the appearance that his theory is a
materialist one, it is in fact a form of Idealism.

Thus, despite Marx's claim to be a materialist, in his theory human labor is a
non-material substance underlying and determining the evolution of
capitalism and history as a whole. In fact, for Marx, labor is the essence of the
human species and history is the external reflection of the logical
(dialectical) development of this essence. Moreover, this development will
result, logically and inevitably, in the emergence of human freedom, defined
by Marx as classless, stateless communism. In other words, freedom is
contained, as a potentiality, within human nature, and history represents the
logical and inevitable working out of this immanent quality.

If one looks at Marx's conception in comparison to the philosophical system
of the German Idealist, G. W. F. Hegel, one can see that Marx's theory is
largely a restatement of Hegel's philosophy of history.

In Hegel's view, history represents the succession of outer forms, the
phenomenology, of the journey of the human spirit or mind towards the
understanding of its true nature. For Hegel, human consciousness develops
through a series of contradictions. Each mode of consciousness entails
contradictory ideas that lead consciousness to its next stage. This
development of consciousness, particularly in the realm of philosophy,
represents the journey of the human mind or spirit toward the recognition
that it is part of, and a manifestation of, the mind or spirit of God. This
recognition constitutes, for Hegel, human freedom.

Marx and Engels explicitly cite Hegelian philosophy as one of the three
sources of their worldview, along with French socialism and British political
economy. Yet, as I see it, Hegelianism is not merely one of the sources of
Marxism; Marxism is best understood as a variant of the Hegelian system.

In the Afterword to the Second German Edition of Capital, written in 1873,
Marx described his relation to Hegel in the following way (forgive the long
quotation): ?My dialectic method is not only different from the Hegelian, but
is its direct opposite. To Hegel, the life-process of the human brain, i.e., the
process of thinking, which under the name of ?the Idea,? he even transforms
into an independent subject, is the demiurgos of the real world, and the real
world is only the external, phenomenal form of ?the Idea.? With me, on the
contrary, the ideal is nothing else than the material world reflected by the
human mind, and translated into forms of thought.

?The mystifying side of Hegelian dialectic I criticised nearly thirty years ago,
at a time when it was still the fashion. But just as I was working at the first
volume of ?Das Kapital,? it was the good pleasure of the peevish, arrogant,
mediocre [Epigones] who now talk large in cultured Germany, to treat Hegel
in [the] same way as the brave Moses Mendelssohn in Lessing's time treated
Spinoza, i.e., as a ?dead dog.? I therefore openly avowed myself the pupil of
that mighty thinker, and even here and there, in the chapter on the theory of
value, coquetted with the modes of expression peculiar to him. The
mystification which dialectic suffers in Hegel?s hands, by no means prevents
him from being the first to present its general form of working in a
comprehensive and conscious manner. With him it is standing on its head. It
must be turned right side up again, if you would discover the rational kernel
within the mystical shell.? (Capital, Vol. 1, as above, pp. 19-20.)

But whereas Marx insists that he took Hegel's dialectic and placed it ?right
side up,? that is, established it on a materialist basis, Marx's theory remains as
Idealist as his mentor's: underneath the succession of the materialist
economic forms (the modes of production) in Marx's schema, what is really
occurring is the evolution of labor, conceived as an essence or substance. For
all of his claims to be a materialist, Marx has merely replaced Hegel's mind or
spirit with another philosophical substance, human labor: Hegel's
phenomenology of mind has become Marx's phenomenology of labor. Seen
this way, Marx's theory is pure philosophy and Idealist philosophy at that.

However, in Capital and the other ?mature? works, the explicitly
philosophical/Hegelian language that is so apparent in Marx's so-called
?early? writings has been reduced. As a result, the ?mature? works and the
Marxist system as a whole have been taken and defended by Marxists as

At times this defense has approached the ludicrous. For example, the French
Communist philosopher, Louis Althusser, spent much of his career trying to
locate the precise line of demarcation between the ?immature,? philosophical
Marx and the ?mature,? scientific one. Through a series of books and other
writings, he periodically moved the date further back in Marx's life.
Apparently, he kept finding philosophical content in what he previously
thought was scientific.

He should have saved himself the trouble. The reality is that all of Marxism,
not just the ?early Marx,? is philosophical. Marxism is philosophy, not


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