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MARXIST INTERNET ARCHIVE | Marx Engels
Karl Marx
The Poverty of Philosophy
Chapter One: A Scientific Discovery
3. Application of the Law of the Proportionality of Value
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A) Money
"Gold and silver were the first commodities to have their value constituted."
[I 69]
Thus, gold and silver are the first applications of "value constituted" ... by M. Proudhon. And as M. Proudhon constitutes the value of products determining it by th e comparative amount of labor embodied in them, the only thing he had to do was to prove that variations in the value of gold and silver are always explained by variations in the labor time taken to produce them. M. Proudhon has no intention of doing so. He speaks of gold and silver not as commodities, but as money.
His only logic, if logic it be, consists in juggling with the capacity of gold and silver to be used as money for the benefit of all the commodities which have the property of being evaluated by labor time. Decidedly there is more naivete than malice in this jugglery.
A useful product, once it has been evaluated by the labor time needed to produce it, is always acceptable in exchange; witness, cries M. Proudhon, gold and silver, which exist in my desired conditions of "exchangeability"! Gold and silver, then, are value which has reached a state of constitution: they are the incorporation of M. Proudhon's idea. He could not have been happier in his choice of an example. Gold and silver, apart from their capacity of being commodities, evaluated like other commodities, in labor time, have also the capacity of being the universal agents of exchange, of being money. By now considering gold and silver as an application of "value constituted" by labor time, nothing is easier than to prove that all commodities whose value is constituted by labor time will always be exchangeable, will be money.
A very simple question occurs to M. Proudhon. Why have gold and silver the privilege of typifying "constituted value"?
"The special function which usage has devolved upon the precious metal, that of serving as a medium for trade, is purely conventional, and any other commodity could, less conveniently perhaps, but just as reliably, fulfil this function. Economists recognize this, and cite more than one example. What then is the reason for this universal preference for metals as money? And what is the explanation of this specialization of the function of money — which has no analogy in political economy?... Is it possible to reconstruct the series from which money seems to have broken away, and hence to trace it back to its true principle?"
[I 68-69]
Straight away, by formulating the question in these terms, M. Proudhon has presupposed the existence of money. The first question he should have asked himself was, why, in exchanges as they are actually constituted, it has been necessary to individualize exchangeable value, so to speak, by the creation of a special agent of exchange. Money is not a thing, it is a social relation. Why is the money relation a production relation like any other economic relation, such as the division of labor, etc.? If M. Proudhon had properly taken account of this relation, he would not have seen in money an exception, an element detached from a series unknown or needing reconstruction.
He would have realized, on the contrary, that this relation is a link, and, as such, closely connected with a whole chain of other economic relations; that this relation corresponds to a definite mode of production neither more nor less than does individual exchange. What does he do? He starts off by detaching money from the actual mode of production as a whole, and then makes it the first member of an imaginary series, of a series to be reconstructed.
Once the necessity for a specific agency of exchange, that is, for money, has been recognized, all that remains to be explained is why this particular function has developed upon gold and silver rather than upon any commodity. This is a secondary question, which is explained not by the chain of production relations, but by the specific qualities inherent in gold and silver as substances. If all this has made economists for once "go outside the domains of their own science, to dabble in physics, mechanics, history and so on", as M. Proudhon reproaches them with doing, they have merely done what they were compelled to do. The question was no longer within the domain of political economy.
"What no economist," says M. Proudhon, "has either seen or understood is the economic reason which has determined, in favor of the precious metals, the favor they enjoy."
[I 69]
This economic reason which nobody — with good ground indeed — has seen of understood, M. Proudhon has seen, understood and bequeathed to posterity.
"What nobody else has noticed is that, of all commodities, gold and silver were the first to have their value attain constitution. In the patriarchal period, gold and silver were still bartered and exchanged in ingots but even then they showed a visible tendency to become dominant and received a marked degree of preference. Little by little the sovereigns took possession of them and affixed their seal to them: and of this sovereign consecration was born money, that is, the commodity par excellence. which, notwithstanding all the shocks of commerce, retains a definite proportional value and makes itself accepted for all payments....
"The distinguishing character of gold and silver is due, I repeat, to the fact that, thanks to their metallic properties, to the difficulties of their production, and above all to the intervention of state authority, they early won stability and authenticity as commodities."
To say that, of all commodities, gold and silver were the first to have their value constituted, is to say, after all that has gone before, that gold and silver were the first to attain the status of money. This is M. Proudhon's great revelation, this is the truth that none had discovered before him.
If, by these words, M. Proudhon means that of all commodities, gold and silver are the ones whose time of production was known the earliest, this would be yet another of the suppositions with which he is so ready to regale his readers. If we wished to harp on this patriarchal erudition, we would inform M. Proudhon that it was the time needed to produce objects of prime necessity, such as iron, etc., which was the first to be known. We shall spare him Adam Smith's classic bow.
But, after all that, how can M. Proudhon go on talking about the constitution of a value, since a value is never constituted by itself? It is constituted, not by the time needed to produce it by itself, but in relation to the quota of each and every other product which can be created in the same time. Thus the constitution of the value of gold and silver presupposes an already completed constitution of a number of other products.
It is then not the commodity that has attained, in gold and silver, the status of "constituted value", it is M. Proudhon's "constituted value" that has attained, in gold and silver, the status of money.
Let us now make a closer examination of these "economic reasons" which, according to M. Proudhon, have bestowed upon gold and silver the advantage of being raised to the status of money sooner than other products, thanks to their having passed through the constitutive phase of value.
These economic reasons are: the "visible tendency to become dominant", the "marked preferences" even in the "patriarchal period", and other circumlocutions about the actual fact — which increase the difficulty, since they multiply the fact by multiplying the incidents which M. Proudhon brings in to explain the fact. M. Proudhon has not yet exhausted all the so-called economic reasons. Here is one of sovereign, irresistible force:
"Money is born of sovereign consecration: the sovereigns take possession of gold and silver and affix their seal to them."
[I 69]
Thus, the whim of sovereigns is for M. Proudhon the highest reason in political economy.
Truly, one must be destitute of all historical knowledge not to know that it is the sovereigns who in all ages have been subject to economic conditions, but they have never dictated laws to them. Legislation, whether political or civil, never does more than proclaim, express in words, the will of economic relations.
Was it the sovereign who took possession of gold and silver to make them the universal agents of exchange by affixing his seal to them? Or was it not, rather, these universal agents of exchange which took possession of the sovereign and forced him to affix his seal to them and thus give them a political consecration?
The impress which was and is still given to money is not that of its value but of its weight. The stability and authenticity M. Proudhon speaks of apply only to the standard of the money ; and this standard indicates how much metallic matter there is in a coined piece of money.
"The sole intrinsic value of a silver mark," says Voltaire, with his habitual good sense, "is a mark of silver, half a pound weighing eight ounces. The weight and the standard alone form this intrinsic value."
(Voltaire, Systeme de Law)
[ Marx quotes a chapter from Voltaire's Historie de
parlement. It is entitled "France in the Period of the
Regency and Law's System". ]But the question: how much is an ounce of gold or silver worth, remains nonetheless. If a cashmere from the Grand Colbert stores bore the trademark pure wool, this trade mark would not tell you the value of the cashmere. There would still remain the question: how much is wool worth?
"Philip I, King of France," says M. Proudhon, "mixes with Charlemagne's gold pound a third of alloy, imagining that, having the monopoly of the manufacture of money, he could do what is done by every manufacture of money, he could do what is done by every tradesman who has the the monopoly of a product. What was actually this debasement of the currency from which Philip and his successors have been so much blamed? It was perfectly sound reasoning from the point of view of commercial practice, but very unsound economic science, viz., to suppose that, as supply and demand regulate value, it is possible, either by producing an artificial scarcity or by monopolizing manufacture, to increase the estimation and consequently the value of things; and that this is true of gold and silver as of corn, wine, oil or tobacco. But Philip's fraud was no sooner suspected than his money was reduced to its true value, and he himself lost what he had thought to gain from his subjects. The same thing has happened as a result of every similar attempt."
[I 70-71]
It has been proved times without number that, if a prince takes into his head to debase the currency, it is he who loses. What he gains once at the first issue he loses every time the falsified coinage returns to him in the form of taxes, etc. But Philip and his successors were able to protect themselves more or less against this loss, for, once the debased coinage was put into circulation, they hastened to order a general re-minting of money on the old footing.
And besides, if Philip I had really reasoned like M. Proudhon, he would not have reasoned well "from the commercial point of view". Neither Philip I nor M. Proudhon displays any mercantile genius in imagining that it is possible to alter the value of gold as well as that of every other commodity merely because their value is determined by the relation between supply and demand.
If King Philip had decreed that one quarter of wheat was in future to be called two quarters of wheat, he would have been a swindler. He would have deceived all the rentiers, all the people who were entitled to receive 100 quarters of wheat. He would have been the cause of all these people receiving only 50 quarters of wheat; he would have had to pay only 50. But in commerce 100 such quarters would never have been worth more than 50. By changing the name we do not change the thing. The quantity of wheat, whither supplied or demanded, will be neither decreased nor increased by this mere change of name. Thus, the relation between supply and demand being just the same in spite of this change of name, the price of wheat will undergo no real change. When we speak of the supply and demand of things, we do not speak of the supply and demand of the name of things. Philip I was not a maker of gold and silver, as M. Proudhon says; he was a maker of names for coins. Pass off your French cashmeres as Asiatic cashmeres, and you may deceive a buyer or two; but once the fraud becomes known, your so-called Asiatic cashmeres will drop to the price of French cashmeres. When he put a false label on gold and silver, King Philip could deceive only so long as the fraud was not known. Like any other shopkeeper, he deceived his customers by a false description of his wares, which could not last for long. He was bound sooner or later to suffer the rigour of commercial laws. Is this what M. Proudhon wanted to prove? No. According to him, it is from the sovereign and not from commerce that money gets its value. And what has he really proved? That commerce is more sovereign than the sovereign. Let the sovereign decree that one mark shall in future be two marks, commerce will keep on saying that these two marks are worth no more than one mark was formerly.
But, for all that, the question of value determined by the quantity of labor has not been advanced a step. It still remains to be decided whether the value of these two marks (which have become what one mark was once) is determined by the cost of production or by the law of supply and demand.
M. Proudhon continues: "It should even be borne in mind that if, instead of debasing the currency, it had been in the king's power to double its bulk, the exchange value of gold and silver would immediately have dropped by half, always from reasons of proportion and equilibrium."
[I 71]
If this opinion, which M. Proudhon shares with the other economists, is valid, it argues in favor of the latter's doctrine of supply and demand, and in no way in favor of M. Proudhon's proportionality. For, whatever the quantity of labor embodied in the doubled bulk of gold and silver, its value would have dropped by half, the demand having remained the same and the supply having doubled. Or can it be, by any chance, that the "law of proportionality" would have become confused this time with the so much disdained law of supply and demand? This true proportion of M. Proudhon's is indeed so elastic, is capable of so many variations, combination and permutations, that it might well coincide for once with the relation between supply and demand.
To make "every commodity acceptable in exchange, if not in practice then at least by right", on the basis of the role of gold and silver is, then, to misunderstand this role. Gold and silver are acceptable by right only because they are acceptable in practice; and they are acceptable in practice because the present organization of production needs a universal medium of exchange. Right is only the official recognition of fact.
We have seen that the example of money as an application of value which has attained constitution was chosen by M. Proudhon only to smuggle through his whole doctrine of exchangeability, that is to say, to prove that every commodity assessed by its cost of production must attain the status of money. All this would be very fine, were it not for the awkward fact that precisely gold and silver, as money, are of all commodities the only ones not determined by their cost of production; and this is so true that in circulation they can be replaced by paper. So long as there is a certain proportion observed between the requirements of circulation and the amount of money issued, be it paper, gold, platinum, or copper money, there can be no question of a proportion to be observed between the intrinsic value (cost of production) and the nominal value of money. Doubtless, in international trade, money is determined, like any other commodity, by labor time. But it is also true that gold and silver in international trade are means of exchange as products and not as money. In other words, they lose this characteristic of "stability and authenticity", of "sovereign consecration", which, for M. Proudhon, forms their specific characteristic. Ricardo understood the truth so well that, after basing his whole system on value determined by labor time, and after saying:
"Gold and silver, like all other commodities, are valuable only in proportion to the quantity of labor necessary to produce them, and bring them to market",
He adds, nevertheless, that the value of money is not determined by the labor time its substance embodies, but by the law of supply and demand only.
"Though it [paper money] has no intrinsic value, yet, by limiting its quantity, its value in exchange is as great as an equal denomination of coin, or of bullion in that coin. On the same principle, too, namely, by limitation of its quantity, a debased coin would circulate at the value it should bear, if it were of the legal weight and fineness, and not at the value of the quantity of metal which it actually contained. In the history of the British coinage, we find, accordingly, that the currency was never depreciated in the same proportion that it was debased; the reason of which was, that it never was increased in quantity, in proportion to its diminished intrinsic value."
(Ricardo, loc. cit. [pp.206-07])
This is what J. B. Say observes on this passage of Ricardo's:
"This example should suffice, I think, to convince the author that the basis of all value is not the amount of labor needed to make a commodity, but the need felt for that commodity, balanced by its scarcity."
[ The reference is to Say's note on the French edition
of Ricardo's book, Vol.II, pp.206-07. ]Thus money, which for Ricardo is no longer a value determined by labor time, and which J. B. Say therefore takes as an example to convince Ricardo that the other values could not be determined by labor time either, this money, I say, taken by J. B. Say as an example of a value determined exclusively by supply and demand, becomes for M. Proudhon the example par excellence of the application of value constituted... by labor time.
To conclude, if money is not a value "constituted" by labor time, it is all the less likely that it could have anything in common with M. Proudhon's true "proportion". Gold and silver are always exchangeable, because they have the special function of serving as the universal agent of exchange, and in no wise because they exist in a quantity proportional to the sum total of wealth; or, to put it still better, they are always proportional because, alone of all commodities, they serve as money, the universal agent of exchange, whatever their quantity in relation to the sum total of wealth.
"A circulation can never be so abundant as to overflow; for by diminishing its value, in the same proportion you will increase its quantity, and by increasing its value, diminish its quantity."
(Ricardo [II 205])
"What an imbroglio this political economy is!" cries M. Proudhon. [I 72]
"Cursed gold!' cries a Communist flippantly [through the mouth of M. Proudhon]. You might as well say: Cursed wheat, cursed vines, cursed sheep! — for just like gold and silver, every commercial value must attain its strictly exact determination." [I 73]
The idea of making sheep and vines attain the status of money is not new. In France, it belongs to the age of Louis XIV. At that period, money having begun to establish its omnipotence, the depreciation of all other commodities was being complained of, and the time when "every commercial value" might attain its strictly exact determination, the status of money, was being eagerly invoked. Even in the writings of Boisguillebert, one of the oldest of French economists, we find:
"Money, then, by the arrival of innumerable competitors in the form of commodities themselves, re-established in their true values, will be thrust back again within its natural limits."
(Economistes financiers du dix-huitieme
siecle, Daire edition, p.422)One sees that the first illusions of the bourgeoisie are also their last. <"s2">
B) Surplus Labor
"In works on political economy we read this absurd hypo- thesis: If the price of everything were doubled.... As if the price of everything were not the proportion of things — and one could double a proportion, a relation, a law!"
(Proudhon, Vol.I, p.81)
Economists have fallen into this error through not knowing how to apply the "law of proportionality" and of "constituted value".
Unfortunately in the very same work by M. Proudhon, Volume I, p.110, we read the absurd hypothesis that, "if wages rose generally, the price of every thing else would rise". Furthermore, if we find the phrase in question in works on political economy, we also find as explanation of it.
"When one speaks of the price of all commodities going up or down, one always excludes some one commodity going up or down. The excluded commodity is, in general, money or labor."
(Encyclopedia Metropolitana or Universal Dictionary of
Knowledge, Vol.IV, Article "Political Economy", by [N. W.]
Senior, London 1836. Regarding the phrase under discussion,
see also J. St. Mill: Essays on Some Unsettled Questions
of Political Economy, London 1844, and Tooke: A History of
Prices, etc., London 1838.) [Full reference is Th. Tooke,
A History of Prices, and of the State of the Circulation,
from 1793 to 1837, Vols.I-II, London, 1838]Let us pass now to the second application of "constituted value", and of other proportions — whose only defect is their lack of proportion. And let us see whether M. Proudhon is happier here than in the monetarization of sheep.
"An axiom generally admitted by economists is that all labor must leave a surplus. In my opinion this proposition is universally and absolutely true: it is the corollary of the law of proportion, which may be regarded as the summary of the whole of economic science. But, if the economists will permit me to say so, the principle that all labor must leave a surplus is meaningless according to their theory, and is not susceptible of any demonstration."
(Proudhon [I 73])
To prove that all labor must leave a surplus, M. Proudhon personifies society; he turns it into a person, Society — a society which is not by any means a society of persons, since it has its law apart, which have nothing in common with the persons of which society is composed, and its "own intelligence", which is not the intelligence of common men, but an intelligence devoid of common sense. M. Proudhon reproaches the economists with not having understood the personality of this collective being. We have pleasure in confronting him with the following passage from an American economist, who accuses the economists of just the opposite:
"The moral entity — the grammatical being called a nation, has been clothed in attributes that have no real existence except in the imagination of those who metamorphose a word into a thing.... This has given rise to many difficulties and to some deplorable misunderstanding in political economy."
(Th. Cooper, Lectures on the Elements of
Political Economy, Columbia 1826)[The first edition of the book was published
in Colombia in 1826. A second, enlarged
edition appeared in London in 1831.]"This principle of surplus labor," continues M. Proudhon, "is true of individuals only because it emanates from society, which thus confers on them the benefit of its own laws."
[I 75]
Does M. Proudhon mean thereby merely that the production of the social individual exceeds that of the isolated individual? Is M. Proudhon referring to this excess of the production of associated individuals over that of non-associated individuals? If so, we could quote for him a hundred economists who have expressed this simple truth without any of the mysticism with which M. Proudhon surrounds himself. This, for example, is what Mr. Sadler says:
"Combined labor produces results which individual exertion could never accomplish. As mankind, therefore, multiply in number, the products of their united industry would greatly exceed the amount of any mere arithmetical addition calculated on such an increase.... In the mechanical arts, as well as in pursuits of science, a man may achieve more in a day... than a solitary... individual could perform in his whole life.... Geometry says... that the whole is only equal to the sum of all its parts; as applied to the subject before us, this axiom would be false. Regarding labor, the great pillar of human existence, it may be said that the entire product of combined exertion almost infinitely exceeds all which individual and disconnected efforts could possibly accomplish."
(T.Sadler, The Law of Population, London 1830)
[ Vol.I, pp.83 and 84 ]To return to M. Proudhon. Surplus labor, he says, is explained by the person, Society. The life of this person is guided by laws, the opposite of those which govern the activities of man as an individual. He desires to prove this by "facts".
"The discovery of an economic process can never provide the inventor with a profit equal to that which he procures for society.... It has been remarked that railway enterprises are much less a source of wealth for the contractors than for the state.... The average cost of transporting commodities by road is 18 centimes per ton per kilometre, from the collection of the goods to their delivery. It has been calculated that at this rate an ordinary railway enterprise would not obtain 10 per cent net profit, a result approximately equal to that of a road-transport enterprise. But let us suppose that the speed of rail transport compared with that of road transport is as 4 is to 1. Since in society time is value itself, the railway would, prices being equal, present an advantage of 400 per cent over road-transport. Yet this enormous advantage, very real for society, is far from being realized in the same proportion for the carrier, who, while bestowing upon society an extra value of 400 per cent, does not for his own part draw 10 per cent. To bring the matter home still more pointedly, let us suppose, in fact, that the railway puts up its rate to 25 centimes, the cost of road transport remaining at 18: it would instantly lose all its consignments. Senders, receivers, everybody would return to the van, to the primitive waggon if necessary. The locomotive would be abandoned. A social advantage of 400 per cent would be sacrificed to a private loss of 35 per cent. The reason for this is easily grasped: the advantage resulting from the speed of the railway is entirely social, and each individual participates in it only in a minute proportion (it must be remembered that at the moment we are dealing only with the transport of goods), while the loss strikes the consumer directly and personally. A social profit equal to 400 represents for the individual, if society is composed only of a million men, four ten-thousandths; while a loss of 33 per cent for the consumer would suppose a social deficit of 33 million.
(Proudhon [I 75, 76])
Now, we may even overlook the fact that M. Proudhon expresses a quadrupled speed as 400 per cent of the original speed; but that he should bring into relation the percentage of speed and the percentage of profit and establish a proportion between two relations which, although measured separately by percentages, are nevertheless incommensurate with each other, is to establish a proportion between the percentages without reference to denominations.
Percentages are always percentages, 10 per cent and 400 per cent are commensurable; they are to each other as 10 is to 400. Therefore, concludes M. Proudhon, a profit of 10 per cent is worth 40 times less than a quadrupled speed. To save appearances, he says that, for society, time is money. This error arises from his recollecting vaguely that there is a connection between labor value and labor time, and he hastens to identify labor time with transport time; that is, he identifies the few firemen, drivers and others, whose labor time is actually transport time, with the whole of society. Thus at one blow, speed has become capital, and in this case he is fully right in saying: "A profit of 400 per cent will be sacrificed to a loss of 35 per cent." After establishing this strange proposition as a mathematician, he gives us the explanation of it as an economist.
"A social profit equal to 400 represents for the individual, in a society of only a million men, 4/10,000ths."
Agreed; but we are dealing not with 400, but with 400 per cent, and a profit of 400 per cent represents for the individual 400 per cent, neither more nor less. Whatever be the capital, the dividends will always be in the ratio of 400 per cent. What does M. Proudhon do? He takes percentages for capital, and, as if he were afraid of his confusion not being manifest enough, "pointed" enough, he continues:
"A loss of 33 per cent for the consumer would suppose a social deficit of 33 million."
A loss of 33 per cent for the consumer remains a loss of 33 per cent for a million consumers. How then can M. Proudhon say pertinently that the social deficit in the case of a 33 per cent loss amounts to 33 million, when he knows neither the social capital nor even the capital of a single one of the persons concerned? Thus it was not enough for M. Proudhon to have confused capital with percentage; he surpasses himself by identifying the capital sunk in an enterprise with the number of interested parties.
"To bring the matter home still more pointedly let us suppose in fact" a given capital. A social profit of 400 per cent divided among a million participants, each of them interested to the extent of 1 franc, would give 4 francs profit per head — and not 0.0004, as M. Proudhon alleges. Likewise a loss of 33 per cent for each of the participants represents a social deficit of 330,000 francs and not of 33 million (100:33 = 1,000,000:330,000).
M. Proudhon, preoccupied with his theory of the person, Society, forgets to divide by 100, which entails a loss of 330,000 francs; but 4 francs profit per head make 4 million francs profit for society. There remains for society a net profit of 3,670,000 francs. This accurate calculation proves precisely the contrary of what M. Proudhon wanted to prove: namely, that the profits and losses of society are not in inverse ratio to the profits and losses of individuals.
Having rectified these simple errors of pure calculation, let us take a look at the consequences which we would arrive at, if we admitted this relation between speed and capital in the case of railways, as M. Proudhon gives it — minus the mistakes in calculation. Let us suppose that a transport four times as rapid costs four times as much; this transport would not yield less profit than cartage, which is four times slower and costs a quarter the amount. Thus, if cartage takes 18 centimes, rail transport could take 72 centimes. This would be, according to "the rigor of mathematics", the consequence of M. Proudhon's suppositions — always minus his mistakes in calculation. But here he is all of a sudden telling us the if, instead of 72 centimes, rail transport takes only 25, it would instantly lose all its consignments. Decidedly we should have to go back to the van, to the primitive waggon even. Only, if we have any advice to give M. Proudhon, it is not to forget, in his Programme of the Progressive Association, to divide by 100. But, alas! it is scarcely to be hoped that our advice will be listened to, for M. Proudhon is so delighted with his "progressive association", that he cries most emphatically:
"I have already shown in Chapter II, by the solution of the antinomy of value, that the advantage of every useful discovery is incomparably less for the inventor, whatever he may do, than for society. I have carried the demonstration in regard to this point in the rigor of mathematics!"
Let us return to the fiction of the person, Society, a fiction which has no other aim than that of proving this simple truth — that a new invention which enables a given amount of labor to produce a greater number of commodities, lowers the marketable value of the product. Society, then, makes a profit, not by obtaining more exchange values, but by obtaining more commodities for the same value. As for the inventor, competition makes his profit fall successively to the general level of profits. Has M. Proudhon proved this proposition as he wanted to? No. This does not prevent him from reproaching the economists with failure to prove it. To prove to him on the contrary that they have proved it, we shall cite only Ricardo and Lauderdale — Ricardo, the head of the school which determines value by labor time, and Lauderdale, one of the most uncompromising defenders of the determination of value by supply and demand. Both have expounded the same proposition:
"By constantly increasing the facility of production, we constantly diminish the value of some of the commodities before produced, though by the same means we not only add to the national riches, but also to the power of future production.... As soon as by the aid of machinery, or by the knowledge of natural philosophy, you oblige natural agents to do the work which was before done by man, the exchangeable value of such work falls accordingly. If 10 men turned a corn mill, and it be discovered that by the assistance of wind, or of water, the labor of these 10 men may be spared, the flour which is the produce partly of the work performed by the mill, would immediately fall in value, in proportion to the quantity of labor saved; and the society would be richer by the commodities which the labor of the 10 men could produce, the funds destined for their maintenance being in no degree impaired."
(Ricardo [II 59])
Lauderdale, in his turn, says:
In every instance where capital is so employed as to produce a profit, it uniformly arises, either — from its supplanting a portion of labor, which would otherwise be performed by the hand of man; or — from its performing a portion of labor, which is beyond the reach of the personal exertion of man to accomplish. The small profit which the proprietors of machinery generally acquire, when compared with the wages of labor, which the machine supplants, may perhaps create a suspicion of the rectitude of this opinion. Some fire-engines, for instance, draw more water from a coalpit in one day than could be conveyed on the shoulder of 300 men, even assisted by the machinery of buckets; and a fire-engine undoubtedly performs its labor at a much smaller expense than the amount of the wages of those whose labor it thus supplants. This is, in truth, the case with all machinery. All machines must execute the labor that was antecedently performed at a cheaper rate than it could be done by the hand of man....
If such a privilege is given for the invention of a machine, which performs, by the labor of one man, a quantity of work that used to take the labor of four; as the possession of the exclusive privilege prevents any competition in doing the work, but what proceeds from the labor of the workmen, their wages, as long as the patent continues, must obviously form the measure of the patentee's charge; that is to secure employment, he has only to charge a little less than the wages of the labor which the machine supplants. But when the patent expires, other machines of the same nature are brought into competition; and then his charge must be regulated on the same principle as every other, according to the abundance of machines....
The profit of capital employed..., though it arises from supplanting labor, comes to be regulated, not by the value of the labor it supplants but, as in all other cases, by the competition among the proprietors of capital that presents itself for performing the duty, and the demand for it.
[Pp.119, 123, 124, 125, 134]
Finally, then, so long as the profit is greater than in other industries, capital will be thrown into the new industry until the rate of profit falls to the general level.
We have just seen that the example of the railway was scarcely suited to throw any light on his fiction of the person, Society. Nevertheless, M. Proudhon boldly resumes his discourse:
"With these points cleared up, nothing is easier than to explain how labor must leave a surplus for each producer."
[I 77]
What now follows belongs to classical antiquity. It is a poetical narrative intended to refresh the reader after the fatigue which the rigor of the preceding mathematical demonstrations must have caused him. M. Proudhon gives the person, Society, the name of Prometheus, whose high deeds he glorifies in these terms:
First of all, Prometheus emerging from the bosom of nature awakens to life, in a delightful inertia, etc., etc. Prometheus sets to work, and on this first day, the first day of the second creation, Prometheus' product, that is, his wealth, his well-being, is equal to 10. On the second day, Prometheus divides his labor, and his product becomes equal to 100. On the third day and on each of the following days, Prometheus invents machines, discovers new utilities in bodies, new forces in nature.... With every step of his industrial activity, there is an increase in the number of his products, which marks an enhancement of happiness for him. And since, after all, to consume is for him to produce, it is clear that every day's consumption, using up only the product of the day before, leaves a surplus product for the next day."
[I 77-78]
This Prometheus of M. Proudhon's is a queer character, as weak in logic as in political economy. So long as Prometheus merely teaches us the division of labor, the application of machinery, the exploitation of natural forces and scientific power, multiplying the productive forces of men and giving a surplus compared with the produce of labor in isolation, this new Prometheus has the misfortune only of coming too late. But the moment Prometheus starts talking about production and consumption he becomes really ludicrous. To consume, for him, is to produce; he consumes the next day what he produced the day before, so that he is always one day in advance; this day in advance is his "surplus labor". But, if he consumes the next day what he has produced the day before, he must, on the first day, which had no day before, have done two days' work in order to be one day in advance later on. How did Prometheus earn this surplus on the first day, when there was neither division of labor, nor machinery, nor even any knowledge of physical forces other than fire? Thus the question, for all its being carried back "to the first day of the second creation", has not advanced a single step forward. This way of explaining things savors both of Greek and of Hebrew, it is at once mystical and allegorical. It gives M. Proudhon a prefect right to say:
"I have proved by theory and by facts the principle that all labor must have a surplus."
The "facts" are the famous progressive calculation; the theory is the myth of Prometheus.
"But," continues M. Proudhon, "this principle, while being as certain as an arithmetical proposition, is as yet far from being realized by everyone. Whereas, with the progress of collective industry, every day's individual labor produces a greater and greater product, and whereas therefore, by a necessary consequence, the worker with the same wage ought to become richer every day, there actually exist estates in society which profit and others which decay."
[I 79-80]
In 1770 the population of the United Kingdom of Great Britain was 15 million, and the productive population was 3 million. The scientific power of production equalled a population of about 12 million individuals more. Therefore there were, altogether, 15 million of productive forces. Thus the productive power was to the population as 1 is to 1; and the scientific power was to the manual power as 4 is to 1.
In 1840 the population did not exceed 30 million: the productive population was 6 million. But the scientific power amounted to 650 million; that is, it was to the whole population as 21 is to 1, and to manual power as 108 is to 1.
In English society the working day thus acquired in 70 a surplus of 2,700 per cent productivity; that is, in 1840 it produced 27 times as much as in 1770. According to M. Proudhon, the following question should be raised: why was not the English worker of 1840 27 times as rich as the one of 1770? In raising such a question one would naturally be supposing that the English could have produced this wealth without the historical conditions in which it was produced, such as: private accumulation of capital, modern division of labor, automatic workshops, anarchical competition, the wage system — in short, everything that is based upon class antagonisM. Now, these were precisely the necessary conditions of existence for the development of productive forces and of surplus labor. Therefore, to obtain this development of productive forces and this surplus labor, there had to be classes which profited and classes which decayed.
What then, ultimately, is this Prometheus resuscitated by M. Proudhon? It is society, social relations based on class antagonism. These relations are not relations between individual and individual, but between worker and capitalist, between farmer and landlord, etc. Wipe out these relations and you annihilate all society, and your Prometheus is nothing but a ghost without arms or legs; that is, without automatic workshops, without division of labor — in a word, without everything that you gave him to start with in order to make him obtain this surplus labor.
If then, in theory, it sufficed to interpret, as M. Proudhon does, the formula of surplus labor in the equalitarian sense, without taking into account the actual conditions of production, it should suffice, in practice, to share out equally among the workers all the wealth at present acquired, without changing in any way the present conditions of production. Such a distribution would certainly not assure a high degree of comfort to the individual participants.
But M. Proudhon is not so pessimistic as one might think. As proportion is everything for him, he has to see in his fully equipped Prometheus, that is, in present-day society, the beginnings of a realization of his favorite idea.
"But everywhere, too, the progress of wealth, that is, the proportion of values, is the dominant law; and when economists hold up against the complaints of the social party the progressive growth of the public wealth, and the improved conditions of even the most unfortunate classes, they unwittingly proclaim a truth which is the condemnation of their theories."
[I 80]
What is, exactly, collective wealth, public fortune? It is the wealth of the bourgeoisie — not that of each bourgeois in particular. Well, the economists have done nothing but show how, in the existing relations of production, the wealth of the bourgeoisie has grown and must grow still further. As for the working classes, it still remains a very debatable question whether their condition has improved as a result of the increase in so-called public wealth. If economists, in support of their optimism, cite the example of the English workers employed in the cotton industry, they see the condition of the latter only in the rare moments of trade prosperity. These moments of prosperity are to the periods of crisis and stagnation in the "true proportion" of 3 to 10. But perhaps also, in speaking of improvement, the economists were thinking of the millions of workers who had to perish in the East Indies so as to procure for the million and a half workers employed in England in the same industry three years' prosperity out of ten.
As for the temporary participation in the increase of public wealth, that is a different matter. The fact of temporary participation is explained by the theory of the economists. It is the confirmation of this theory and not its "condemnation", as M. Proudhon. If there were anything to be condemned, it would surely be the system of M. Proudhon, who would reduce the worker, as we have shown, to the minimum wage, in spite of the increase of wealth. It is only by reducing the worker to the minimum wage that he would be able to apply the true proportion of values, of "value constituted" by labor time. It is because wages, as a result of competition, oscillate now above, now below, the price of food necessary for the sustenance of the worker, that he can participate to a certain extent in the development of collective wealth, and can also perish from want. This is the whole theory of the economists who have no illusions on the subject.
After his lengthy digressions of railways, on Prometheus, and on the new society to be reconstituted on "constituted value", M. Proudhon collects himself; emotion overpowers him and he cried in fatherly tones:
"I beseech the economists to ask themselves for one moment, in the silence of their hearts — far from the prejudices that trouble them and regardless of the employment they are engaged in or hope to obtain, of the interests they subserve, or the approbation to which they aspire, of the honors which nurse their vanity — let them say whether before this day the principle that all labor must leave a surplus appeared to them with this chain of premises and consequences that we have revealed."
[I 80]
Next: The Metaphysics of Political Economy (The Method)