In the nineteenth century, inquiries into the nature of money were not

prompted directly by phenomena of metallic circulation, but rather by

those of bank-note circulation. The former was touched upon only in

order to discover the laws governing the latter. The suspension of

specie payments by the Bank of England in 1797, the rise of prices of

many commodities which followed it, the fall of the mint price of gold

below its market price, the depreciation of bank-notes, especially

since 1809, furnished the direct practical occasion for a party

struggle in parliament and a theoretical tournament outside of it,

both conducted with like passion. The historical background for the

controversy was furnished by the history of paper money during the

eighteenth century: the fiasco of Law’s bank; the depreciation of the

provincial bank-notes of the English Colonies in North America from the

beginning to the middle of the eighteenth century which went hand in

hand with the increase in the number of tokens of value; further, the

Continental bills issued as legal tender by the American government

during the War of Independence; and finally, the experiment with the

French _assignats_ carried out on a still larger scale. Most of the

English writers of that period confound the circulation of bank-notes,

which is governed by quite different laws, with the circulation of

tokens of value or government legal tender paper money; and while they

claim to explain the phenomena of this legal tender circulation by the

laws of metallic circulation, they proceed, as a matter of fact, just

the opposite way, viz., deducting laws for the latter from phenomena

observed in connection with the former. We omit all the numerous

writers of the period of 1800-1809 and turn directly to RICARDO, both

because he embodies the views of his predecessors, which he formulates

with greater precision, and because the shape he gave to the theory of

money governs English bank legislation until this moment. Ricardo, like

his predecessors, confounds the circulation of bank-notes, or credit

money, with the circulation of mere tokens of value. The fact which

impresses him most is the depreciation of paper currency accompanied by

the rise of prices of commodities. What the American mines had been to

Hume, the paper-bill presses in Threadneedle street were to Ricardo,

and he himself expressly identifies the two factors at some place in

his works. His first writings, which dealt exclusively with the money

question belong to the time of the most violent controversy between

the Bank of England, which had on its side the ministers and the war

party, and its opponents about whom were centered the parliamentary

opposition, the Whigs and the Peace party. They appeared as immediate

forerunners of the famous Report of the Bullion Committee of 1810, in

which Ricardo’s views were adopted.[133] The singular circumstance,

that Ricardo and his adherents, who held money to be merely a token

of value, are called bullionists, is due not only to the name of that

committee, but also to the nature of their theory. In his work on

political economy, Ricardo repeated and developed further the same

views, but nowhere has he investigated the nature of money as such, as

he had done in the case of exchange value, profit, rent, etc.

To begin with, Ricardo determines the value of gold and silver, like

that of all other commodities, by the quantity of labor-time embodied

in them.[134] By means of them, as commodities of a given value, the

values of all other commodities are measured.[135] The volume of the

circulating medium in a country is determined by the value of the

unit of measure of money on the one hand, and by the sum total of

the exchange values of commodities, on the other. This quantity is

modified by economy in the method of payment.[136] Since the quantity

of money, of a given value, which can be absorbed by circulation,

is thus determined and since the value of money within the sphere of

circulation manifests itself only in its quantity, it follows that

mere tokens of value, if issued in proportions determined by the value

of money, may replace it in circulation, and in fact, “a currency is

in its most perfect state when it consists wholly of paper money, but

of paper money of an equal value with the gold which it professes

to represent.”[137] So far Ricardo determines the volume of the

circulating medium by the prices of commodities, assuming the value of

money to be given; money as a token of value means with him a token of

a definite quantity of gold and not a mere worthless representative of

commodities as was the case with Hume.

When Ricardo suddenly gets off the straight path of his presentation

and takes the very opposite view, he does so to turn his attention

to the international circulation of precious metals and thus brings

confusion into the problem by introducing considerations that are

foreign to the subject. Let us follow his own course of reasoning, and,

in order to remove everything that is artificial and incidental, let

us assume that the gold and silver mines are located in the interior

of the countries in which the precious metals circulate as money.

The only inference which follows from Ricardo’s reasoning as so far

developed, is that, the value of gold being given, the quantity of

money in circulation will be determined by the prices of commodities.

Thus, at a given moment, the quantity of gold in circulation in a

country is simply determined by the exchange value of the commodities

in circulation. Let us suppose now that the sum total of these exchange

values has declined either because there are less commodities produced

at the old exchange values, or because, in consequence of an increased

productivity of labor, the same quantity of commodities has a smaller

value. Or, we may assume on the contrary that the sum total of exchange

values has increased, either because the quantity of commodities

has increased while the cost of their production has remained the

same, or because the value of the same or of a smaller quantity of

commodities has risen in consequence of a diminished productivity of

labor. What becomes in either case of the _given_ quantity of metal

in circulation? If gold is money merely because it is current as a

medium of circulation; if it is compelled to remain in circulation

like government legal tender paper money (and that is what Ricardo has

in mind), then the quantity of money in circulation will rise above

the normal level, as determined by the exchange value of the metal,

in the former case, and fall below that level in the latter. Although

possessing a value of its own, gold will become in the former case

a token of a metal of lower exchange value than its own, and in the

latter, a token of a metal of higher value. In the former case it will

remain as a token of value less than its own, in the latter greater

than its own (again an abstract deduction from legal tender paper

money). In the former case it is the same as though commodities were

estimated in a metal of lower value than gold, in the latter, as though

they were estimated in a metal of higher value. In the former case,

prices of commodities would rise therefore, in the latter they would

fall. In either case the movement of prices, their rise or fall, would

appear as the effect of a relative expansion or contraction of the

volume of gold in circulation above or below the level corresponding

to its own value, i. e. above or below the normal quantity which is

determined by the proportion between its own value and that of the

commodities in circulation.

The same process would take place if the sum total of the prices of

the commodities in circulation remained unchanged, while the volume

of gold in circulation came to be below or above the right level: the

former in case the gold coin worn out in the course of circulation

were not replaced by the production of a corresponding quantity of

gold in the mines; the latter, if the output of the mines exceeded the

requirements of circulation. In either case it is assumed that the cost

of production of gold or its value remain the same.

To sum up: the money in circulation is at its normal level, when its

volume is determined by its own bullion value, the exchange value of

commodities being given. It rises above that level, bringing about a

fall in the value of gold below its own bullion value and a rise of

prices of commodities, whenever the sum total of the exchange values of

commodities declines, or the output of gold from the mines increases.

It sinks below its right level, leading to a rise of gold above its

own bullion value and to a fall of prices of commodities, whenever the

sum total of the exchange values of the commodities or the gold output

of the mines is not sufficient to replace the quantity of outworn

gold. In either case the gold in circulation becomes a token of value

greater or smaller than that it really possesses. It may become an

appreciated or depreciated token of itself. As soon as all commodities

would come to be estimated in gold of this new value and the general

price level would accordingly rise or fall, the quantity of current

gold would again answer the requirements of circulation (a consequence

which Ricardo emphasizes with great pleasure), but would be at variance

with the cost of production of the precious metals and, therefore,

with their relation as commodities to all other commodities. According

to the general Ricardian theory of exchange value, the rise of gold

above its exchange value, i. e., above the value as determined by the

labor-time contained in it, would cause an increase in the production

of gold until the increased output of it would reduce its value to

the proper magnitude. And in the same manner, a fall of gold below

its value would cause a decline in its production until its value

rose again to its proper magnitude. By these opposite movements the

discrepancy between the bullion value of gold and its value as a medium

of circulation would disappear, the normal level of the volume of gold

in circulation would be restored, and the price level would again

correspond to the measure of value. These fluctuations in the value of

gold in circulation would to the same extent affect gold in the form

of bullion, because by assumption, all gold that is not utilized as an

article of luxury, is supposed to be in circulation. Since gold itself

may become, both as coin and bullion, a token of value of greater

or smaller magnitude than its bullion value, it is self understood

that convertible bank-notes in circulation have to share the same

fate. Although bank-notes are convertible, i. e. their real value and

nominal value agree, “the aggregate currency consisting of metal and of

convertible notes” may appreciate or depreciate according as to whether

it rises or falls, for reasons already stated, above or below the level

determined by the exchange value of the commodities in circulation

and the bullion value of gold. Inconvertible paper money, has, from

this point of view, only that advantage as against convertible paper

money, that it may depreciate in a twofold manner. It may fall below

the value of the metal which it is supposed to represent, because it

has been issued in too great quantity, or it may depreciate because

the metal it represents has itself fallen in value. This depreciation,

not of paper as compared with gold, but of gold and paper together,

or of the aggregate currency of a country, is one of the principal

discoveries of Ricardo, which Lord Overstone and Co. pressed into their

service and made a fundamental principle of Sir Robert Peele’s Bank

legislation of 1844 and 1845.

What should have been proven was that the price of commodities or the

value of gold depends on the quantity of gold in circulation. The

proof consists in the assumption of what is to be proven, viz. that

any quantity of the precious metal employed as money must become a

medium of circulation or coin, and thereby a token of value for the

commodities in circulation, no matter in what proportion to its own

intrinsic value and no matter what the total value of those commodities

may be. To put it differently, the proof consists in overlooking all

the other functions which money performs besides its function of a

medium of circulation. When hard pressed, as in his controversy with

Bosanquet, Ricardo, completely under the influence of the phenomenon of

depreciated tokens of value caused by their quality, takes recourse to

dogmatic assurances.[138]

If Ricardo had built up this theory by abstract reasoning, as we

have done it here, without introducing concrete facts and incidental

matters which only distract his attention from the main question, its

hollowness would be striking. But he takes up the entire subject in its

_international_ aspect. It will be easy to prove, however, that the

apparent magnitude of scale does not make his fundamental ideas less

diminutive.

His first proposition was as follows: the volume of metallic currency

is normal when it is determined by the total value of the commodities

in circulation estimated in its bullion value. Expressed so as to

apply to international conditions, it reads thus: in a normal state of

circulation every country possesses a quantity of money “according to

the state of its commerce and wealth.” Money circulates at a value

corresponding to its real value or to its cost of production, i. e.

it has the same value _in all countries_.[139] That being the case,

“there could be no temptation offered to either for their importation

or exportation.”[140] There would thus be established a balance of

currencies between the different countries. The normal level of a

national currency is now expressed in terms of an international

balance of currencies, which practically amounts to the statement that

nationality does not change anything in a universal economic law. We

have reached again the same fatal point as before. How is the normal

level disturbed? Or, speaking in terms of the new terminology, how is

the international balance of currencies disturbed? Or, how does money

cease to have the same value in all countries? Or, finally, how does

it cease to pass at its own value in every country? We have seen that

the normal level was disturbed by an increase or decrease of the volume

of money in circulation while the total value of commodities remained

the same; or, because the quantity of money in circulation remained

the same while the exchange values of commodities rose or fell. In the

same manner, the international level, determined by the value of the

metal itself, is disturbed by an increase in the quantity of gold in a

country brought about by the discovery of new gold mines,[141] or by

an increase or decrease of the total exchange-value of the circulating

commodities in any particular country. Just as in the former case the

output of the precious metals decreased or increased according as

to whether it was necessary to contract or expand the currency and

thereby to lower or raise prices, so are the same effects produced

now by export and import from one country to another. In the country

in which prices would rise or the value of gold would fall below the

bullion value in consequence of a redundant currency, gold would be

depreciated, and the prices of commodities would rise as compared with

other countries. Gold would, therefore, be exported, while commodities

would be imported, and vice versa. Just as in the former case the

output of gold, so now the import or export of gold and, with it, the

rise or fall of prices of commodities would continue until, as we would

have said before, the right value relation would be restored between

the metal and commodities, or as we shall say now, the international

balance of currencies would be restored. Just as in the former case

the production of gold increased or decreased because gold stood

above or below its value, so now the international migration of gold

would take place for the same reason. Just as in the former case,

every change in the production of the circulating metal affected its

quantity and, thereby, prices, so would the same effect be produced

now by international import and export. As soon as the relative values

of gold and commodities or the normal quantity of currency would be

restored, no further production would take place in the former case,

and no further export or import in the latter, except in so far as

would be necessary to replace outworn coin and to meet the demand of

manufacturers of articles of luxury. It follows “that the temptation to

export money in exchange for goods, or what is termed an unfavorable

balance of trade, never arises but from a redundant currency.”[142]

“The exportation of the coin is caused by its cheapness, and is not

the effect, but the cause of an unfavourable balance.”[143] Since the

increase or decrease in the production of gold in the former case and

the importation or exportation of gold in the latter, take place only

whenever its volume rises above or sinks below its normal level, i.

e. whenever gold appreciates or depreciates in comparison with its

bullion value, or whenever prices of commodities are too high or too

low; it follows that every such movement works as a corrective,[144]

since, through the resultant expansion or contraction of the currency,

prices are restored to their true level: in the former case this level

represents the balance between the respective values of gold and of

commodities; in the latter, the international balance of currencies. To

put it in other words: money circulates in different countries only in

so far as it circulates as coin in every country. Money is but coin and

all the gold existing in a country must therefore enter circulation,

i. e. it can rise above or fall below its value as a token of value.

Thus we safely land again, by the round-about way of this international

complication, at the simple dogma which constituted our starting point.

With what violence to actual facts Ricardo has to explain them in

the sense of his abstract theory, a few illustrations will suffice

to show. He maintains, e. g. that in years of poor crops, which

happened frequently in England during 1800-1820, gold is exported not

because corn is needed and gold as money is at all times an effectual

means of purchase in the world market, but because gold is in such

cases depreciated in its value as compared with other commodities

and, therefore, the currency of the country in which there has been

a failure of crops is depreciated with respect to other national

currencies. “In consequence of a bad harvest, a country having been

deprived of a part of its commodities ... the currency which was

before at its just level ... become(s) redundant,” and prices of all

commodities rise in consequence.[145] Contrary to this paradoxical

interpretation it has been proven statistically that from 1793 to

the present time, whenever England had a bad harvest the available

supply of currency not only did not become superabundant, but became

inadequate and that, therefore, more money circulated and had to

circulate on such occasions.[146]

In the same manner, Ricardo maintained, with reference to Napoleon’s

Continental System and the English Blockade Decree, that the English

exported gold instead of commodities to the Continent, because their

money was depreciated with respect to the money on the Continent, that

their commodities were, therefore, more high priced, which made it

a more profitable commercial speculation to export gold than goods.

According to him England was a market in which commodities were dear

and money was cheap, while on the Continent commodities were cheap

and money was dear. The trouble, according to an English writer, was

“the ruinously low prices of our manufactures and of our colonial

productions under the operation ... of the ‘Continental System’ during

the last six years of the war.... The prices of sugar and coffee,

for instance, on the Continent, computed in gold, were four or five

times higher than their prices in England, computed in bank-notes. I

am speaking ... of the times in which the French chemists discovered

sugar in beet-root, and a substitute for coffee in chicory; and when

the English grazier tried experiments upon fattening oxen with treacle

and molasses―of the times when we took possession of the island of

Heligoland, in order to form there a depot of goods to facilitate, if

possible, the smuggling of them into the north of Europe; and when

the lighter descriptions of British manufactures found their way into

Germany through Turkey.... Almost all the merchandise of the world

accumulated in our warehouses, where they became impounded, except when

some small quantity was released by a French License, for which the

merchants at Hamburgh and Amsterdam had, perhaps, given Napoleon such

a sum as forty or fifty thousand pounds. They must have been strange

merchants ... to have paid so large a sum for liberty to carry a cargo

of goods from a dear market to a cheap one. What was the ostensible

alternative the merchant had?... Either to buy coffee at 6d. a pound

in bank-notes, and send it to a place where it would instantly sell at

3s. or 4s. a pound in gold, or to buy gold with bank-notes at £5 an

ounce, and send it to a place where it would be received at £3 17s.

10-1/2d. an ounce.... It is too absurd, of course, to say ... that the

gold was remitted instead of the coffee, as a preferable mercantile

operation.... There was not a country in the world in which so large a

quantity of desirable goods could be obtained, in return for an ounce

of gold, as in England.... Bonaparte ... was constantly examining the

English Price Current.... So long as he saw that gold was dear and

coffee was cheap in England, he was satisfied that his ‘Continental

System’ worked well.”[147]

At the very time when Ricardo first formulated his theory of money,

and the Bullion Committee embodied it in its parliamentary report,

namely in 1810, a ruinous fall of prices of all English commodities

as compared with those of 1808 and 1809 took place, while gold rose

in value accordingly. Only agricultural products formed an exception,

because their importation from abroad met with obstacles and their

domestic supply was decimated by unfavorable crop conditions.[148]

Ricardo so utterly failed to comprehend the rôle of precious metals as

an international means of payment, that in his testimony before the

Committee of the House of Lords in 1819 he could say “that drains for

exportation would cease altogether so soon as cash payments should be

resumed, and the currency be restored to its metallic level.” He died

just in time, on the very eve of the crisis of 1825, which belied his

prophesies.

The time when Ricardo wrote was generally little adapted for the

observation of the function of precious metals as world money. Before

the introduction of the Continental System, the balance of trade

had almost always been in favor of England, and while that system

lasted, the commercial intercourse with the European continent was

too insignificant to affect the English rate of exchange. The money

transmissions were mostly of a political nature and Ricardo seems to

have utterly failed to grasp the part which subsidy payments played at

that time in English gold exports.[149]

Among the contemporaries of Ricardo who formed the school which

adopted his economic principles, JAMES MILL was the most important

one. He attempted to work out Ricardo’s theory of money on the basis

of simple metallic circulation, without the irrelevant international

complications which served Ricardo to hide the inadequacy of his

theory, and without any controversial regard for the operations of the

Bank of England. His main arguments are as follows:

“By value of money, is here to be understood the proportion in which

it exchanges for other commodities, or the quantity of it which

exchanges for a certain quantity of other things.... It is the total

quantity of the money in any country, which determines what portion of

that quantity shall exchange for a certain portion of the goods or

commodities of that country. If we suppose that all the goods of the

country are on one side, all the money on the other, and that they are

exchanged at once against one another, it is evident ... that the value

of money would depend wholly upon the quantity of it. It will appear

that the case is precisely the same in the actual state of the facts.

The whole of the goods of a country are not exchanged at once against

the whole of the money; the goods are exchanged in portions, often

in very small portions, and at different times, during the course of

the whole year. The same piece of money which is paid in one exchange

to-day, may be paid in another exchange tomorrow. Some of the pieces

will be employed in a great many exchanges, some in very few, and

some, which happen to be hoarded, in none at all. There will, amid all

these varieties, be a certain average number of exchanges, the same

which, if all the pieces had performed an equal number, would have been

performed by each; that average we may suppose to be any number we

please; say, for example, ten. If each of the pieces of the money in

the country perform ten purchases, that is exactly the same thing as if

all the pieces were multiplied by ten, and performed only one purchase

each. The value of all the goods in the country is equal to ten times

the value of all the money.... If the quantity of money instead of

performing ten exchanges in the year, were ten times as great, and

performed only one exchange in the year, it is evident that whatever

addition were made to the whole quantity, would produce a proportional

diminution of value, in each of the minor quantities taken separately.

As the quantity of goods, against which the money is all exchanged at

once, is supposed to be the same, the value of all the money is no

more, after the quantity is augmented, than before it was augmented.

If it is supposed to be augmented one-tenth, the value of every part,

that of an ounce for example, must be diminished one-tenth.... In

whatever degree, therefore, the quantity of money is increased or

diminished, other things remaining the same, in that same proportion,

the value of the whole, and of every part, is reciprocally diminished

or increased. This, it is evident, is a proposition universally true.

Whenever the value of money has either risen or fallen (the quantity

of goods against which it is exchanged and the rapidity of circulation

remaining the same), the change must be owing to a corresponding

diminution or increase of the quantity; and can be owing to nothing

else. If the quantity of goods diminish, while the quantity of money

remains the same, it is the same thing as if the quantity of money

had been increased;” and vice versa.... “Similar changes are produced

by any alteration in the rapidity of circulation.... An increase in

the number of these purchases has the same effect as an increase in

the quantity of money; a diminution the reverse.... If there is any

portion of the annual produce which is not exchanged at all, as what

is consumed by the producer; or which is not exchanged for money;

that is not taken into the account, because what is not exchanged for

money is in the same state with respect to the money, as if it did not

exist.... Whenever the coining of money ... is free, its quantity is

regulated by the value of the metal.... Gold and silver are in reality

commodities.... It is cost of production ... which determines the value

of these, as of other ordinary productions.”[150]

The whole wisdom of Mill resolves itself into a series of arbitrary and

absurd assumptions. He wishes to prove that the price of commodities or

the value of money is determined by “the total quantity of the money

in any country.” _Assuming_ that the quantity and the exchange value

of the commodities in circulation remain unchanged and that the same

be true of the rapidity of circulation and of the value of precious

metals as determined by the cost of production, and _assuming_ at

the same time that the quantity of the metallic currency increases

or decreases in proportion to the quantity of money _existing_ in a

country, it becomes really “evident” that what was to have been proven

has been assumed. Mill falls, moreover, into the same error as Hume

by assuming that use-values and not commodities with a given exchange

value are in circulation, and that vitiates his statement, even if we

grant all of his “assumptions.” The rapidity of circulation may remain

the same; this may also be true of the value of the precious metals

and of the _quantity_ of commodities in circulation; and yet a change

in the exchange value of the latter may require now a larger and now

a smaller quantity of money for their circulation. Mill sees that a

part of the money in a country is in circulation, while another is

idle. With the aid of a most absurd average calculation he _assumes_

that, although it really appears to be different, yet all the gold in

a country does circulate. Assuming that ten million silver thalers

circulate in a country twice a year, there could be twenty million such

coins in circulation, if each circulated but once. And if the entire

quantity of silver to be found in a country in any form amounts to

one hundred million thalers, it may be supposed that the entire one

hundred million can enter circulation, if each piece of money should

circulate once in five years. One could as well assume that all the

money of the world circulate in Hempstead, but that each piece of

money instead of being employed three times a year, is employed once

in 3,000,000 years. The one assumption is as relevant as the other for

the purpose of determining the relation between the sum total of prices

of commodities and the volume of currency. Mill feels that it is a

matter of decisive importance to him to bring the commodities in direct

contact not with the money in circulation, but with the entire supply

of money existing in a country. He admits that “the whole of the goods

of a country are not exchanged at once against the whole of the money,”

but that the goods are exchanged in different portions and at different

times of the year for different portions of money. To do away with this

difficulty he _assumes_ that it does not exist. Moreover, this entire

idea of direct contact of commodities and money and direct exchange is

a mere abstraction from the movement of simple purchase and sale or

the function of money as a means of purchase. Already in the movement

of money as a means of payment, commodity and money cease to appear

simultaneously.

The commercial crises of the nineteenth century, namely, the great

crises of 1825 and 1836, did not result in any new developments in

the Ricardian theory of money, but they did furnish new applications

for it. They were no longer isolated economic phenomena, such as the

depreciation of the precious metals in the sixteenth and seventeenth

centuries which interested Hume, or the depreciation of paper money

in the eighteenth and early nineteenth centuries which confronted

Ricardo; they were the great storms of the world market in which the

conflict of all the elements of the capitalist process of production

discharge themselves, and whose origin and remedy were sought in the

most superficial and abstract sphere of this process, the sphere of

money circulation. The theoretical assumption from which the school

of economic weather prophets proceeds, comes down in the end to the

illusion that Ricardo discovered the laws governing the circulation of

purely metallic currency. The only thing that remained for them to do

was to subject to the same laws the circulation of credit and bank-note

currency.

The most general and most palpable phenomenon in commercial crises is

the sudden, general decline of prices following a prolonged general

rise. The general decline of prices of commodities may be expressed as

a rise in the relative value of money with respect to all commodities,

and the general rise of prices as a decline of the relative value

of money. In either expression the phenomenon is described but not

explained. Whether I put the question thus: explain the general

periodic rise of prices followed by a general decline of the same, or

formulate the same problem by saying: explain the periodic decline and

rise of the relative value of money with respect to commodities; the

different wording leaves the problem as little changed as would its

translation from German into English. Ricardo’s theory of money was

exceedingly convenient, because it lends a tautology the semblance of

a statement of causal connection. Whence comes the periodic general

fall of prices? From the periodic rise of the relative value of

money. Whence the general periodic rise of prices? From the periodic

decline of the relative value of money. It might have been stated

with equal truth that the periodic rise and fall of prices is due

to their periodic rise and fall. The problem itself is stated under

the assumption that the intrinsic value of money, i. e., its value

as determined by the cost of production of precious metals remains

_unchanged_. If it is more than a tautology then it is based on a

misconception of the most elementary principles. If the exchange value

of A measured in terms of B, declines, we know that this may be caused

by a decline of the value of A as much as by a rise of the value of

B; the same being true of the case of a rise of the exchange value of

A measured in terms of B. The tautology once admitted as a statement

of cause, the rest follows easily. A rise of prices of commodities is

caused by a decline of the value of money and a decline of the value

of money is caused, as we know from Ricardo, by a redundant currency,

i. e., by a rise of the volume of currency over the level determined

by its own intrinsic value and the intrinsic value of the commodities.

In the same manner, the general decline of prices of commodities is

explained by the rise of the value of money above its intrinsic value

in consequence of an inadequate currency. Thus, prices rise and fall

periodically, because there is periodically too much or too little

money in circulation. Should a rise of prices happen to coincide

with a contracted currency, and a fall of prices with an expanded

one, it may be asserted in spite of those facts that in consequence

of a contraction or expansion of the volume of commodities in the

market, which can not be proven statistically, the quantity of money

in circulation has, although not absolutely, yet relatively increased

or declined. We have seen that according to Ricardo these universal

fluctuations must take place even with a purely metallic currency, but

that they balance each other through their alternations; thus, e. g.,

an inadequate currency causes a fall of prices, the fall of prices

leads to the export of commodities abroad, this export causes again an

import of gold from abroad, which, in its turn, brings about a rise

of prices; the opposite movement taking place in case of a redundant

currency, when commodities are imported and money is exported. But,

since in spite of these universal fluctuations of prices which are in

perfect accord with Ricardo’s theory of metallic currency, their acute

and violent form, their crisis-form, belongs to the period of advanced

credit, it is perfectly clear that the issue of bank-notes is not

exactly regulated by the laws of metallic currency. Metallic currency

has its remedy in the import and export of precious metals which

immediately enter circulation and thus, by their influx or efflux,

cause the prices of commodities to fall or rise. The same effect on

prices must now be exerted by banks by the artificial imitation of the

laws of metallic currency. If gold is coming in from abroad it proves

that the currency is inadequate, that the value of money is too high

and the prices of commodities too low, and, consequently, that bank

notes must be put in circulation in proportion to the newly imported

gold. On the contrary, notes have to be withdrawn from circulation in

proportion to the export of gold from the country. That is to say,

the issue of bank notes must be regulated by the import and export

of the precious metals or by the rate of exchange. Ricardo’s false

assumption that gold is only coin, and that therefore all imported gold

swells the currency, causing prices to rise, while all exported gold

reduces the currency leading to a fall of prices, this theoretical

assumption is turned into a practical experiment of putting in every

case an amount of currency in circulation equal to the amount of gold

in existence. Lord Overstone (the banker Jones Loyd), Colonel Torrens,

Norman, Clay, Arbuthnot and a host of other writers, known in England

as the adherents of the “currency principle,” not only preached this

doctrine, but with the aid of Sir Robert Peel succeeded in 1844 and

1845 in making it the basis of the present English and Scotch bank

legislation. Its ignominous failure, theoretical as well as practical,

following upon experiments on the largest national scale, can be

treated only after we take up the theory of credit.[151] So much can be

seen, however, that the theory of Ricardo which isolates money in its

fluent form of currency, ends by ascribing to the ebbs and tides in the

supply of precious metals an influence on bourgeois economy such as the

believers in the superstitions of the monetary system had never dreamt

of. Thus did Ricardo, who proclaimed paper currency as the most perfect

form of money, become the prophet of the bullionists.

After Hume’s theory or the abstract opposition to the monetary system

was thus developed to its ultimate conclusions, Steuart’s concrete

conception of money was finally restored to its rights by THOMAS

TOOKE.[152] Tooke arrives at his principles not from any theory, but

by a conscientious analysis of the history of prices of commodities

from 1793 to 1856. In the first edition of his History of Prices which

appeared in 1823, Tooke is still under the complete influence of the

Ricardian theory, and vainly tries to reconcile it with actual facts.

His pamphlet “On the Currency,” which appeared after the crisis of

1825 might even be considered as the first consistent presentation

of the views which were later given the force of law by Overstone.

Continued studies in the history of prices forced him, however, to the

conclusion that the direct connection between prices and the volume of

currency, as it is pictured by the theory, is a mere illusion; that

the expansion and contraction of currency which takes place while the

value of the precious metals remains unchanged, is always the effect

but never the cause of price fluctuations; that the circulation of

money is in any event but a secondary movement; and that money assumes

quite different forms in the actual process of production in addition

to that of a circulating medium. His detailed investigations belong

to a sphere outside of that of simple metallic circulation and can be

discussed here as little as the investigations of WILSON and FULLARTON

which belong to the same class.[153] None of these writers takes a

one-sided view of money, but treat it in its various aspects; the

treatment, however, is mechanical, without an attempt to establish an

organic connection either between these various aspects themselves,

or between them and the combined system of economic categories. They

fall, therefore, into the error of confusing _money_ as distinguished

from _medium of circulation_ with _capital_ or even with commodity,

although they are forced elsewhere to differentiate it from both.[154]

When gold, e. g., is shipped abroad, it practically means that capital

is sent abroad, but the same thing takes place when iron, cotton,

grain, or any other commodity is exported. Both are capital and are

distinguished not as capital, but as money and commodity. The function

of gold as the international medium of exchange springs, therefore,

not from its being capital, but from its specific character of money.

Similarly, when gold, or bank notes in its place, circulate in the home

trade as means of payment, they constitute capital at the same time.

But they could not be replaced by capital in the form of commodities,

as has been demonstrated very palpably by crises, for instance. That

is to say, it is the fact that gold is distinguished from commodities

in its capacity of money and not in that of capital, that makes it the

means of payment. Even when capital is exported directly as capital,

as, e. g., when it is done for the purpose of lending abroad a certain

amount on interest, it depends on circumstances, whether it will be

exported in the form of commodities or in that of gold, and if in the

latter form, it is due to the specific destination of the precious

metals as distinguished from commodities to serve as money. In general,

these writers do not consider money in its abstract form, as it is

developed within the sphere of simple circulation of commodities,

and as it spontaneously grows out of the relation of the circulating

commodities. As a result, they constantly vacillate between the

abstract forms of money which distinguish it from commodity and those

forms of it beneath which are concealed concrete relations, such as

capital, revenue, etc.[155]

Introduction

to the

Critique of Political Economy.[156]

1. PRODUCTION IN GENERAL.

The subject of our discussion is first of all _material_ production

by individuals as determined by society, naturally constitutes the

starting point. The individual and isolated hunter or fisher who forms

the starting point with Smith and Ricardo, belongs to the insipid

illusions of the eighteenth century. They are Robinsonades which do

not by any means represent, as students of the history of civilization

imagine, a reaction against over-refinement and a return to a

misunderstood natural life. They are no more based on such a naturalism

than is Rosseau’s “contrat social,” which makes naturally independent

individuals come in contact and have mutual intercourse by contract.

They are the fiction and only the aesthetic fiction of the small and

great Robinsonades. They are, moreover, the anticipation of “bourgeois

society,” which had been in course of development since the sixteenth

century and made gigantic strides towards maturity in the eighteenth.

In this society of free competition the individual appears free from

the bonds of nature, etc., which in former epochs of history made him

a part of a definite, limited human conglomeration. To the prophets of

the eighteenth century, on whose shoulders Smith and Ricardo are still

standing, this eighteenth century individual, constituting the joint

product of the dissolution of the feudal form of society and of the new

forces of production which had developed since the sixteenth century,

appears as an ideal whose existence belongs to the past; not as a

result of history, but as its starting point.

Since that individual appeared to be in conformity with nature and

[corresponded] to their conception of human nature, [he was regarded]

not as a product of history, but of nature. This illusion has been

characteristic of every new epoch in the past. Steuart, who, as an

aristocrat, stood more firmly on historical ground, contrary to

the spirit of the eighteenth century, escaped this simplicity of

view. The further back we go into history, the more the individual

and, therefore, the producing individual seems to depend on and

constitute a part of a larger whole: at first it is, quite naturally,

the family and the clan, which is but an enlarged family; later on,

it is the community growing up in its different forms out of the

clash and the amalgamation of clans. It is but in the eighteenth

century, in “bourgeois society,” that the different forms of social

union confront the individual as a mere means to his private ends,

as an outward necessity. But the period in which this view of the

isolated individual becomes prevalent, is the very one in which the

interrelations of society (general from this point of view) have

reached the highest state of development. Man is in the most literal

sense of the word a _zoon politikon_, not only a social animal, but

an animal which can develop into an individual only in society.

Production by isolated individuals outside of society―something which

might happen as an exception to a civilized man who by accident

got into the wilderness and already dynamically possessed within

himself the forces of society―is as great an absurdity as the idea

of the development of language without individuals living together

and talking to one another. We need not dwell on this any longer.

It would not be necessary to touch upon this point at all, were not

the vagary which had its justification and sense with the people of

the eighteenth century transplanted in all earnest into the field of

political economy by Bastiat, Carey, Proudhon and others. Proudhon

and others naturally find it very pleasant, when they do not know the

historical origin of a certain economic phenomenon, to give it a quasi

historico-philosopohical explanation by going into mythology. Adam or

Prometheus hit upon the scheme cut and dried, whereupon it was adopted,

etc. Nothing is more tediously dry than the dreaming _locus communis_.

Whenever we speak, therefore, of production, we always have in mind

production at a certain stage of social development, or production

by social individuals. Hence, it might seem that in order to speak

of production at all, we must either trace the historical process of

development through its various phases, or declare at the outset that

we are dealing with a certain historical period, as, e. g., with modern

capitalistic production which, as a matter of fact, constitutes the

subject proper of this work. But all stages of production have certain

landmarks in common, common purposes. _Production in general_ is an

abstraction, but it is a rational abstraction, in so far as it singles

out and fixes the common features, thereby saving us repetition. Yet

these general or common features discovered by comparison constitute

something very complex, whose constituent elements have different

destinations. Some of these elements belong to all epochs, others are

common to a few. Some of them are common to the most modern as well

as to the most ancient epochs. No production is conceivable without

them; but while even the most completely developed languages have

laws and conditions in common with the least developed ones, what

is characteristic of their development are the points of departure

from the general and common. The conditions which generally govern

production must be differentiated in order that the essential points

of difference be not lost sight of in view of the general uniformity

which is due to the fact that the subject, mankind, and the object,

nature, remain the same. The failure to remember this one fact is the

source of all the wisdom of modern economists who are trying to prove

the eternal nature and harmony of existing social conditions. Thus they

say, e. g., that no production is possible without some instrument of

production, let that instrument be only the hand; that none is possible

without past accumulated labor, even if that labor consist of mere

skill which has been accumulated and concentrated in the hand of the

savage by repeated exercise. Capital is, among other things, also an

instrument of production, also past impersonal labor. Hence capital is

a universal, eternal natural phenomenon; which is true if we disregard

the specific properties which turn an “instrument of production” and

“stored up labor” into capital. The entire history of production

appears to a man like Carey, e. g., as a malicious perversion on the

part of governments.

If there is no production in general, there is also no general

production. Production is always some special branch of production or

an aggregate, as, e. g., agriculture, stock raising, manufactures,

etc. But political economy is not technology. The connection between

the general destinations of production at a given stage of social

development and the particular forms of production, is to be developed

elsewhere (later on).

Finally, production is not only of a special kind. It is always a

certain body politic, a social personality that is engaged on a larger

or smaller aggregate of branches of production. The connection between

the real process and its scientific presentation also falls outside

of the scope of this treatise. [We must thus distinguish between]

production in general, special branches of production and production as

a whole.

It is the fashion with economists to open their works with a general

introduction, which is entitled “production” (see, e. g., John Stuart

Mill) and deals with the general “requisites of production.”

This general introductory part treats or is supposed to treat:

1. Of the conditions without which production is impossible, i. e.,

of the most essential conditions of production. As a matter of fact,

however, it dwindles down, as we shall see, to a few very simple

definitions, which flatten out into shallow tautologies;

2. Of conditions which further production more or less, as, e. g., Adam

Smith’s [discussion of] a progressive and stagnant state of society.

In order to give scientific value to what serves with him as a mere

summary, it would be necessary to study the _degree of productivity_ by

periods in the development of individual nations; such a study falls

outside of the scope of the present subject, and in so far as it does

belong here is to be brought out in connection with the discussion

of competition, accumulation, etc. The commonly accepted view of the

matter gives a general answer to the effect that an industrial nation

is at the height of its production at the moment when it reaches its

historical climax in all respects. Or, that certain races, climates,

natural conditions, such as distance from the sea, fertility of

the soil, etc., are more favorable to production than others. That

again comes down to the tautology that the facility of creating

wealth depends on the extent to which its elements are present both

subjectively and objectively. As a matter of fact a nation is at its

industrial height so long as its main object is not gain, but the

process of gaining. In that respect the Yankees stand above the English.

But all that is not what the economists are really after in the general

introductory part. Their object is rather to represent production

in contradistinction to distribution―see Mill, e. g.―as subject to

eternal laws independent of history, and then to substitute bourgeois

relations, in an underhand way, as immutable natural laws of society

_in abstracto_. This is the more or less conscious aim of the entire

proceeding. On the contrary, when it comes to distribution, mankind

is supposed to have indulged in all sorts of arbitrary action. Quite

apart from the fact that they violently break the ties which bind

production and distribution together, so much must be clear from the

outset: that, no matter how greatly the systems of distribution may

vary at different stages of society, it should be possible here, as

in the case of production, to discover the common features and to

confound and eliminate all historical differences in formulating

_general human_ laws. E. g., the slave, the serf, the wage-worker―all

receive a quantity of food, which enables them to exist as slave,

serf, and wage-worker. The conqueror, the official, the landlord, the

monk, or the levite, who respectively live on tribute, taxes, rent,

alms, and the tithe,―all receive [a part] of the social product which

is determined by laws different from those which determine the part

received by the slave, etc. The two main points which all economists

place under this head, are: first, property; second, the protection

of the latter by the administration of justice, police, etc. The

objections to these two points can be stated very briefly.

1. All production is appropriation of nature by the individual within

and through a definite form of society. In that sense it is a tautology

to say that property (appropriation) is a condition of production. But

it becomes ridiculous, when from that one jumps at once to a definite

form of property, e. g. private property (which implies, besides, as

a prerequisite the existence of an opposite form, viz. absence of

property). History points rather to common property (e. g. among the

Hindoos, Slavs, ancient Celts, etc.) as the primitive form, which still

plays an important part at a much later period as communal property.

The question as to whether wealth grows more rapidly under this or that

form of property, is not even raised here as yet. But that there can

be no such a thing as production, nor, consequently, society, where

property does not exist in any form, is a tautology. Appropriation

which does not appropriate is a _contradictio in subjecto_.

2. Protection of property, etc. Reduced to their real meaning, these

commonplaces express more than what their preachers know, namely, that

every form of production creates its own legal relations, forms of

government, etc. The crudity and the shortcomings of the conception

lie in the tendency to see but an accidental reflective connection in

what constitutes an organic union. The bourgeois economists have a

vague notion that it is better to carry on production under the modern

police, than it was, e. g. under club-law. They forget that club law

is also law, and that the right of the stronger continues to exist in

other forms even under their “government of law.”

When the social conditions corresponding to a certain stage of

production are in a state of formation or disappearance, disturbances

of production naturally arise, although differing in extent and effect.

To sum up: all the stages of production have certain destinations in

common, which we generalize in thought; but the so-called general

conditions of all production are nothing but abstract conceptions which

do not go to make up any real stage in the history of production.

2. THE GENERAL RELATION OF PRODUCTION TO DISTRIBUTION, EXCHANGE, AND

CONSUMPTION.

Before going into a further analysis of production, it is necessary

to look at the various divisions which economists put side by side

with it. The most shallow conception is as follows: By production, the

members of society appropriate (produce and shape) the products of

nature to human wants; distribution determines the proportion in which

the individual participates in this production; exchange brings him the

particular products into which he wishes to turn the quantity secured

by him through distribution; finally, through consumption the products

become objects of use and enjoyment, of individual appropriation.

Production yields goods adopted to our needs; distribution distributes

them according to social laws; exchange distributes further what has

already been distributed, according to individual wants; finally, in

consumption the product drops out of the social movement, becoming the

direct object of the individual want which it serves and satisfies in

use. Production thus appears as the starting point; consumption as the

final end; and distribution and exchange as the middle; the latter

has a double aspect, distribution being defined as a process carried

on by society, while exchange, as one proceeding from the individual.

In production the person is embodied in things, in [consumption[157]]

things are embodied in persons; in distribution, society assumes

the part of go-between of production and consumption in the form of

generally prevailing rules; in exchange this is accomplished by the

accidental make-up of the individual.

Distribution determines what proportion (quantity) of the products the

individual is to receive; exchange determines the products in which the

individual desires to receive his share allotted to him by distribution.

Production, distribution, exchange, and consumption thus form a

perfect connection, production standing for the general, distribution

and exchange for the special, and consumption for the individual, in

which all are joined together. To be sure this is a connection, but

it does not go very deep. Production is determined [according to the

economists] by universal natural laws, while distribution depends

on social chance: distribution can, therefore, have a more or less

stimulating effect on production: exchange lies between the two as a

formal (?) social movement, and the final act of consumption which is

considered not only as a final purpose, but also as a final aim, falls,

properly, outside of the scope of economics, except in so far as it

reacts on the starting point and causes the entire process to begin all

over again.

The opponents of the economists―whether economists themselves or

not―who reproach them with tearing apart, like barbarians, what is an

organic whole, either stand on common ground with them or are _below_

them. Nothing is more common than the charge that the economists

have been considering production as an end in itself, too much to

the exclusion of everything else. The same has been said with regard

to distribution. This accusation is itself based on the economic

conception that distribution exists side by side with production as

a self-contained, independent sphere. Or [they are accused] that the

various factors are not treated by them in their connection as a

whole. As though it were the text books that impress this separation

upon life and not life upon the text books; and the subject at issue

were a dialectic balancing of conceptions and not an analysis of real

conditions.

_a. Production is at the same time also consumption._ Twofold

consumption, subjective and objective. The individual who develops his

faculties in production, is also expending them, consuming them in the

act of production, just as procreation is in its way a consumption

of vital powers. In the second place, production is consumption of

means of production which are used and used up and partly (as e. g. in

burning) reduced to their natural elements. The same is true of the

consumption of raw materials which do not remain in their natural form

and state, being greatly absorbed in the process. The act of production

is, therefore, in all its aspects an act of consumption as well. But

this is admitted by economists. Production as directly identical with

consumption, consumption as directly coincident with production,

they call productive consumption. This identity of production

and consumption finds its expression in Spinoza’s proposition,

_Determinatio est negatio_. But this definition of productive

consumption is resorted to just for the purpose of distinguishing

between consumption as identical with production and consumption

proper, which is defined as its destructive counterpart. Let us then

consider consumption proper.

Consumption is directly also production, just as in nature the

consumption of the elements and of chemical matter constitutes

production of plants. It is clear, that in nutrition, e. g., which

is but one form of consumption, man produces his own body; but it is

equally true of every kind of consumption, which goes to produce the

human being in one way or another. [It is] consumptive production.

But, say the economists, this production which is identical with

consumption, is a second production resulting from the destruction

of the product of the first. In the first, the producer transforms

himself into things; in the second, things are transformed into human

beings. Consequently, this consumptive production―although constituting

a direct unity of production and consumption―differs essentially from

production proper. The direct unity in which production coincides with

consumption and consumption with production, does not interfere with

their direct duality.

Production is thus at the same time consumption, and consumption is at

the same time production. Each is directly its own counterpart. But

at the same time an intermediary movement goes on between the two.

Production furthers consumption by creating material for the latter

which otherwise would lack its object. But consumption in its turn

furthers production, by providing for the products the individual

for whom they are products. The product receives its last finishing

touches in consumption. A railroad on which no one rides, which is,

consequently not used up, not consumed, is but a potential railroad,

and not a real one. Without production, no consumption; but, on the

other hand, without consumption, no production; since production would

then be without a purpose. Consumption produces production in two ways.

In the first place, in that the product first becomes a real product

in consumption; e. g., a garment becomes a real garment only through

the act of being worn; a dwelling which is not inhabited, is really no

dwelling; consequently, a product as distinguished from a mere natural

object, proves to be such, first _becomes_ a product in consumption.

Consumption gives the product the finishing touch by annihilating it,

since a product is the [result] of production not only as the material

embodiment of activity, but also as a mere object for the active

subject.

In the second place, consumption produces production by creating the

necessity for new production, i. e. by providing the ideal, inward,

impelling cause which constitutes the prerequisite of production.

Consumption furnishes the impulse for production as well as its object,

which plays in production the part of its guiding aim. It is clear

that while production furnishes the material object of consumption,

consumption provides the ideal object of production, as its image,

its want, its impulse and its purpose. It furnishes the object of

production in its subjective form. No wants, no production. But

consumption reproduces the want.

In its turn, production:

First, furnishes consumption[158] with its material, its object.

Consumption without an object is no consumption, hence production works

in this direction by producing consumption.

Second. But it is not only the object that production provides for

consumption. It gives consumption its definite outline, its character,

its finish. Just as consumption gives the product its finishing touch

as a product, production puts the finishing touch on consumption. For

the object is not simply an object in general, but a definite object,

which is consumed in a certain definite manner prescribed in its turn

by production. Hunger is hunger; but the hunger that is satisfied with

cooked meat eaten with fork and knife is a different kind of hunger

from the one that devours raw meat with the aid of hands, nails, and

teeth. Not only the object of consumption, but also the manner of

consumption is produced by production; that is to say, consumption is

created by production not only objectively, but also subjectively.

Production thus creates the consumers.

Third. Production not only supplies the want with material, but

supplies the material with a want. When consumption emerges from its

first stage of natural crudeness and directness―and its continuation

in that state would in itself be the result of a production still

remaining in a state of natural crudeness―it is itself furthered by its

object as a moving spring. The want of it which consumption experiences

is created by its appreciation of the product. The object of art, as

well as any other product, creates an artistic and beauty-enjoying

public. Production thus produces not only an object for the individual,

but also an individual for the object.

Production thus produces consumption: first, by furnishing the latter

with material; second, by determining the manner of consumption;

third, by creating in consumers a want for its products as objects of

consumption. It thus produces the object, the manner, and the moving

spring of consumption. In the same manner, consumption [creates] the

_disposition_ of the producer by setting (?) him up as an aim and by

stimulating wants. The identity of consumption and production thus

appears to be a three fold one.

First, direct identity: production is consumption; consumption is

production. Consumptive production. Productive consumption. Economists

call both productive consumption, but make one distinction by calling

the former reproduction, and the latter productive consumption. All

inquiries into the former deal with productive and unproductive labor;

those into the latter treat of productive and unproductive consumption.

Second. Each appears as the means of the other and as being brought

about by the other, which is expressed as their mutual interdependence;

a relation, by virtue of which they appear as mutually connected and

indispensable, yet remaining outside of each other.

Production creates the material as the outward object of consumption;

consumption creates the want as the inward object, the purpose of

production. Without production, no consumption; without consumption, no

production; this maxim figures (?) in political economy in many forms.

Third. Production is not only directly consumption and consumption

directly production; nor is production merely a means of consumption

and consumption the purpose of production. In other words, not only

does each furnish the other with its object; production, the material

object of consumption; consumption, the ideal object of production. On

the contrary, either one is not only directly the other, not (?) only

a means of furthering the other, but while it is taking place, creates

the other as such for itself (?). Consumption completes the act of

production by giving the finishing touch to the product as such, by

destroying the latter, by breaking up its independent material form; by

bringing to a state of readiness, through the necessity of repetition,

the disposition to produce developed in the first act of production;

that is to say, it is not only the concluding act through which the

product becomes a product, but also [the one] through which the

producer becomes a producer. On the other hand, production produces

consumption, by determining the manner of consumption, and further, by

creating the incentive for consumption, the very ability to consume, in

the form of want. This latter identity mentioned under point 3, is much

discussed in political economy in connection with the treatment of the

relations of demand and supply, of objects and wants, of natural wants

and those created by society.

Hence, it is the simplest matter with a Hegelian to treat production

and consumption as identical. And this has been done not only by

socialist writers of fiction but even by economists, e. g. Say; the

latter maintained that if we consider a nation as a whole, or mankind

_in abstracto_―her production is at the same time her consumption.

Storch pointed out Say’s error by calling attention to the fact that

a nation does not entirely consume her product, but also creates

means of production, fixed capital, etc. To consider society as a

single individual is moreover a false mode of speculative reasoning.

With an individual, production and consumption appear as different

aspects of one act. The important point to be emphasized here is that

if production and consumption be considered as activities of one

individual or of separate individuals, they appear at any rate as

aspects of one process in which production forms the actual starting

point and is, therefore, the predominating factor. Consumption,

as a natural necessity, as a want, constitutes an internal factor

of productive activity, but the latter is the starting point of

realization and, therefore, its predominating factor, the act into

which the entire process resolves itself in the end. The individual

produces a certain article and turns again into himself by consuming

it; but he returns as a productive and a self-reproducing individual.

Consumption thus appears as a factor of production.

In society, however, the relation of the producer to his product,

as soon as it is completed, is an outward one, and the return of

the product to the individual depends on his relations to other

individuals. He does not take immediate possession of it. Nor does the

direct appropriation of the product constitute his purpose, when he

produces in society. Between the producer and the product distribution

steps in, which determines by social laws his share in the world of

products; that is to say, distribution steps in between production and

consumption.

Does distribution form an independent sphere standing side by side with

and outside of production?

_b. Production and Distribution._ In perusing the common treatises on

economics one can not help being struck with the fact that everything

is treated there twice; e. g., under distribution, there figure rent,

wages, interest, and profit; while under production we find land,

labor, and capital as agents of production. As regards capital, it

is at once clear that it is counted twice: first, as an agent of

production; second, as a source of income; as determining factors and

definite forms of distribution, interest and profit figure as such also

in production, since they are forms, in which capital increases and

grows, and are consequently factors of its own production. Interest and

profit, as forms of distribution, imply the existence of capital as

an agent of production. They are forms of distribution which have for

their prerequisite capital as an agent of production. They are also

forms of reproduction of capital.

In the same manner, wages is wage-labor when considered under another

head; the definite character which labor has in one case as an agent

of production, appears in the other as a form of distribution. If

labor were not fixed as wage-labor, its manner of participation in

distribution[159] would not appear as wages, as is the case e. g. under

slavery. Finally, rent―to take at once the most developed form of

distribution―by means of which landed property receives its share of

the products, implies the existence of large landed property (properly

speaking, agriculture on a large scale) as an agent of production,

and not simply land, no more than wages represents simply labor.

The relations and methods of distribution appear, therefore, merely

as the reverse sides of the agents of production. An individual who

participates in production as a wage laborer, receives his share of the

products, i. e. of the results of production, in the form of wages. The

subdivisions and organization of distribution are determined by the

subdivisions and organization of production. Distribution is itself a

product of production, not only in so far as the material goods are

concerned, since only the results of production can be distributed; but

also as regards its form, since the definite manner of participation

in production determines the particular form of distribution, the form

under which participation in distribution takes place. It is quite an

illusion to place land under production, rent under distribution, etc.

Economists, like Ricardo, who are accused above all of having paid

exclusive attention to production, define distribution, therefore,

as the exclusive subject of political economy, because they

instinctively[160] regard the forms of distribution as the clearest

forms in which the agents of production find expression in a given

society.

To the single individual distribution naturally appears as a law

established by society determining his position in the sphere of

production, within which he produces, and thus antedating production.

At the outset the individual has no capital, no landed property.

From his birth he is assigned to wage-labor by the social process of

distribution. But this very condition of being assigned to wage-labor

is the result of the existence of capital and landed property as

independent agents of production.

From the point of view of society as a whole, distribution seems to

antedate and to determine production in another way as well, as a

pre-economic fact, so to say. A conquering people divides the land

among the conquerors establishing thereby a certain division and

form of landed property and determining the character of production;

or, it turns the conquered people into slaves and thus makes slave

labor the basis of production. Or, a nation, by revolution, breaks up

large estates into small parcels of land and by this new distribution

imparts to production a new character. Or, legislation perpetuates

land ownership in large families or distributes labor as an hereditary

privilege and thus fixes it in castes.

In all of these cases, and they are all historic, it is not

distribution that seems to be organized and determined by production,

but on the contrary, production by distribution.

In the most shallow conception of distribution, the latter appears as

a distribution of products and to that extent as further removed from

and quasi-independent of production. But before distribution means

distribution of products, it is first, a distribution of the means of

production, and second, what is practically another wording of the

same fact, it is a distribution of the members of society among the

various kinds of production (the subjection of individuals to certain

conditions of production). The distribution of products is manifestly

a result of this distribution, which is bound up with the process of

production and determines the very organization of the latter. To

treat of production apart from the distribution which is comprised in

it, is plainly an idle abstraction. Conversely, we know the character

of the distribution of products the moment we are given the nature of

that other distribution which forms originally a factor of production.

Ricardo, who was concerned with the analysis of production as it is

organized in modern society and who was the economist of production

_par excellence_, for that very reason declares _not_ production

but distribution as the subject proper of modern economics. We have

here another evidence of the insipidity of the economists who treat

production as an eternal truth, and banish history to the domain of

distribution.

What relation to production this distribution, which has a determining

influence on production itself, assumes, is plainly a question which

falls within the province of production. Should it be maintained

that at least to the extent that production depends on a certain

distribution of the instruments of production, distribution in that

sense precedes production and constitutes its prerequisite; it may

be replied that production has in fact its prerequisite conditions,

which form factors of it. These may appear at first to have a natural

origin. By the very process of production they are changed from natural

to historical, and if they appear during one period as a natural

prerequisite of production, they formed at other periods its historical

result. Within the sphere of production itself they are undergoing a

constant change. E. g., the application of machinery produces a change

in the distribution of the instruments of production as well as in that

of products, and modern land ownership on a large scale is as much the

result of modern trade and modern industry, as that of the application

of the latter to agriculture.

All of these questions resolve themselves in the last instance to this:

How do general historical conditions affect production and what part

does it play at all in the course of history? It is evident that this

question can be taken up only in connection with the discussion and

analysis of production.

Yet in the trivial form in which these questions are raised above,

they can be answered just as briefly. In the case of all conquests

three ways lie open. The conquering people may impose its own methods

of production upon the conquered (e. g. the English in Ireland in the

nineteenth century, partly also in India); or, it may allow everything

to remain as it was contenting itself with tribute (e. g. the Turks

and the Romans); or, the two systems by mutually modifying each other

may result in something new, a synthesis (which partly resulted

from the Germanic conquests). In all of these conquests the method

of production, be it of the conquerors, the conquered, or the one

resulting from a combination of both, determines the nature of the new

distribution which comes into play. Although the latter appears now

as the prerequisite condition of the new period of production, it is

in itself but a product of production, not of production belonging to

history in general, but of production relating to a definite historical

period. The Mongols with their devastations in Russia e. g. acted

in accordance with their system of production, for which sufficient

pastures on large uninhabited stretches of country are the main

prerequisite. The Germanic barbarians, with whom agriculture carried

on with the aid of serfs was the traditional system of production and

who were accustomed to lonely life in the country, could introduce

the same conditions in the Roman provinces so much easier since the

concentration of landed property which had taken place there, died away

completely with the older systems of agriculture. There is a prevalent

tradition that in certain periods robbery constituted the only source

of living. But in order to be able to plunder, there must be something

to plunder, i. e. there must be production.[161] And even the method

of plunder is determined by the method of production. A stockjobbing

nation[162] e. g. can not be robbed in the same manner as a nation of

shepherds.

In the case of the slave the instrument of production is robbed

directly. But then the production of the country in whose interest he

is robbed, must be so organized as to admit of slave labor, or (as in

South America, etc.) a system of production must be introduced adapted

to slavery.

Laws may perpetuate an instrument of production, e. g. land, in certain

families. These laws assume an economic importance if large landed

property is in harmony with the system of production prevailing in

society, as is the case e. g. in England. In France agriculture had

been carried on on a small scale in spite of the large estates, and

the latter were, therefore, broken up by the Revolution. But how about

the legislative attempt to perpetuate the minute subdivision of the

land? In spite of these laws land ownership is concentrating again. The

effect of legislation on the maintenance of a system of distribution

and its resultant influence on production are to be determined

elsewhere.

_c. Exchange and Circulation._ Circulation is but a certain aspect

of exchange, or it may be defined as exchange considered as a whole.

Since _exchange_ is an intermediary factor between production and its

dependent, distribution, on the one hand, and consumption, on the

other; and since the latter appears but as a constituent of production,

exchange is manifestly also a constituent part of production.

In the first place, it is clear that the exchange of activities and

abilities which takes place in the sphere of production falls directly

within the latter and constitutes one of its essential elements. In

the second place, the same is true of the exchange of products, in

so far as it is a means of completing a certain product, designed

for immediate consumption. To that extent exchange constitutes an

act included in production. Thirdly, the so-called exchange between

dealers and dealers[163] is by virtue of its organization determined by

production, and is itself a species of productive activity. Exchange

appears to be independent of and indifferent to production only in the

last stage when products are exchanged directly for consumption. But

in the first place, there is no exchange without a division of labor,

whether natural or as a result of historical development; secondly,

private exchange implies the existence of private production; thirdly,

the intensity of exchange, as well as its extent and character are

determined by the degree of development and organization of production,

as e. g. exchange between city and country, exchange in the country, in

the city, etc. Exchange thus appears in all its aspects to be directly

included in or determined by production.

The result we arrive at is not that production, distribution, exchange,

and consumption are identical, but that they are all members of one

entity, different sides of one unit. Production predominates not only

over production itself in the opposite sense of that term, but over

the other elements as well. With it the process constantly starts over

again. That exchange and consumption can not be the predominating

elements is self evident. The same is true of distribution in the

narrow sense of distribution of products; as for distribution in the

sense of distribution of the agents of production, it is itself but a

factor of production. A definite [form of] production thus determines

the [forms of] consumption, distribution, exchange, and _also the

mutual relations between these various elements_. Of course, production

_in its one-sided form_ is in its turn influenced by other elements; e.

g. with the expansion of the market, i. e. of the sphere of exchange,

production grows in volume and is subdivided to a greater extent.

With a change in distribution, production undergoes a change; as

e. g. in the case of concentration of capital, of a change in the

distribution of population in city and country, etc. Finally, the

demands of consumption also influence production. A mutual interaction

takes place between the various elements. Such is the case with every

organic body.

3. THE METHOD OF POLITICAL ECONOMY.

When we consider a given country from a politico-economic standpoint,

we begin with its population, then analyze the latter according to

its subdivision into classes, location in city, country, or by the

sea, occupation in different branches of production; then we study

its exports and imports, annual production and consumption, prices of

commodities, etc. It seems to be the correct procedure to commence

with the real and concrete aspect of conditions as they are; in the

case of political economy, to commence with population which is the

basis and the author of the entire productive activity of society.

Yet, on closer consideration it proves to be wrong. Population is an

abstraction, if we leave out e. g. the classes of which it consists.

These classes, again, are but an empty word, unless we know what are

the elements on which they are based, such as wage-labor, capital,

etc. Those imply, in their turn, exchange, division of labor, prices,

etc. Capital, e. g. does not mean anything without wage-labor, value,

money, price, etc. If we start out, therefore, with population, we do

so with a chaotic conception of the whole, and by closer analysis we

will gradually arrive at simpler ideas; thus we shall proceed from the

imaginary concrete to loss and less complex abstractions, until we

get at the simplest conception. This once attained, we might start

on our return journey until we would finally come back to population,

but this time not as a chaotic notion of an integral whole, but as a

rich aggregate of many conceptions and relations. The former method

is the one which political economy had adopted in the past at its

inception. The economists of the seventeenth century, e. g., always

started out with the living aggregate: population, nation, state,

several states, etc., but in the end they invariably arrived, by means

of analysis, at certain leading, abstract general principles, such

as division of labor, money, value, etc. As soon as these separate

elements had been more or less established by abstract reasoning,

there arose the systems of political economy which start from simple

conceptions, such as labor, division of labor, demand, exchange value,

and conclude with state, international exchange and world market. The

latter is manifestly the scientifically correct method. The concrete is

concrete, because it is a combination of many objects with different

destinations, i. e. a unity of diverse elements. In our thought, it

therefore appears as a process of synthesis, as a result, and not as a

starting point, although it is the real starting point and, therefore,

also the starting point of observation and conception. By the former

method the complete conception passes into an abstract definition; by

the latter, the abstract definitions lead to the reproduction of the

concrete subject in the course of reasoning. Hegel fell into the error,

therefore, of considering the real as the result of self-coordinating,

self-absorbed, and spontaneously operating thought, while the method of

advancing from the abstract to the concrete is but a way of thinking

by which the concrete is grasped and is reproduced in our mind as

a concrete. It is by no means, however, the process which itself

generates the concrete. The simplest economic category, say, exchange

value, implies the existence of population, population that is engaged

in production under certain conditions; it also implies the existence

of certain types of family, clan, or state, etc. It can have no other

existence except as an abstract one-sided relation of an already given

concrete and living aggregate.

As a category, however, exchange value leads an antediluvian existence.

And since our philosophic consciousness is so arranged that only the

image of the man that it conceives appears to it as the real man

and the world as it conceives it, as the real world; it mistakes

the movement of categories for the real act of production (which

unfortunately (?) receives only its impetus from outside) whose

result is the world; that is true―here we have, however, again a

tautology―in so far as the concrete aggregate is a thought aggregate,

in so far as the concrete subject of our thought is in fact a product

of thought, of comprehension; not, however, in the sense of a product

of a self-emanating conception which works outside of and stands

above observation and imagination, but of a mental consummation of

observation and imagination. The whole, as it appears in our heads as

a thought-aggregate, is the product of a thinking mind which grasps

the world in the only way open to it, a way which differs from the one

employed by the artistic, religious, or practical mind. The concrete

subject continues to lead an independent existence after it has been

grasped, as it did before, outside of the head, so long as the head

contemplates it only speculatively, theoretically. So that in the

employment of the theoretical method [in political economy], the

subject, society, must constantly be kept in mind as the premise from

which we start.

But have these simple categories no independent historical or natural

existence antedating the more concrete ones? _Ça depend._ For instance,

in his Philosophy of Law Hegel rightly starts out with possession,

as the simplest legal relation of individuals. But there is no such

thing as possession before the family or the relations of lord and

serf, which are a great deal more concrete relations, have come into

existence. On the other hand, one would be right in saying that there

are families and clans which only _possess_, but do not _own_ things.

The simpler category thus appears as a relation of simple family and

clan communities with respect to property. In earlier society the

category appears as a simple relation of a developed organism, but the

concrete substratum from which springs the relation of possession, is

always implied. One can imagine an isolated savage in possession of

things. But in that case possession is no legal relation. It is not

true that the family came as the result of the historical evolution of

possession. On the contrary, the latter always implies the existence

of this “more concrete category of law.” Yet so much may be said, that

the simple categories are the expression of relations in which the

less developed concrete entity may have been realized without entering

into the manifold relations and bearings which are mentally expressed

in the concrete category; but when the concrete entity attains fuller

development it will retain the same category as a subordinate relation.

Money may exist and actually had existed in history before capital, or

banks, or wage-labor came into existence. With that in mind, it may be

said that the more simple category can serve as an expression of the

predominant relations of an undeveloped whole or of the subordinate

relations of a more developed whole, [relations] which had historically

existed before the whole developed in the direction expressed in the

more concrete category. In so far, the laws of abstract reasoning which

ascends from the most simple to the complex, correspond to the actual

process of history.

On the other hand, it may be said that there are highly developed but

historically unripe forms of society in which the highest economic

forms are to be found, such as co-operation, advanced division of

labor, etc., and yet there is no money in existence, e. g. Peru.

In Slavic communities also, money, as well as exchange to which it

owes its existence, does not appear at all or very little within the

separate communities, but it appears on their boundaries in their

inter-communal traffic; in general, it is erroneous to consider

exchange as a constituent element originating within the community.

It appears at first more in the mutual relations between different

communities, than in those between the members of the same community.

Furthermore, although money begins to play its part everywhere at an

early stage, it plays in antiquity the part of a predominant element

only in one-sidedly developed nations, viz. trading nations, and even

in most cultured antiquity, in Greece and Rome, it attains its full

development, which constitutes the prerequisite of modern bourgeois

society, only in the period of their decay. Thus, this quite simple

category attained its culmination in the past only at the most advanced

stages of society. Even then it did not pervade (?) all economic

relations; in Rome e. g. at the time of its highest development taxes

and payments in kind remained the basis. As a matter of fact, the money

system was fully developed there only so far as the army was concerned;

it never came to dominate the entire system of labor.

Thus, although the simple category may have existed historically before

the more concrete one, it can attain its complete internal and external

development only in complex (?) forms of society, while the more

concrete category has reached its full development in a less advanced

form of society.

Labor is quite a simple category. The idea of labor in that sense, as

labor in general, is also very old. Yet, “labor” thus simply defined

by political economy is as much a modern category, as the conditions

which have given rise to this simple abstraction. The monetary system,

e. g. defines wealth quite objectively, as a thing (?)[164] in money.

Compared with this point of view, it was a great step forward, when

the industrial or commercial system came to see the source of wealth

not in the object but in the activity of persons, viz. in commercial

and industrial labor. But even the latter was thus considered only

in the limited sense of a money producing activity. The physiocratic

system [marks still further progress] in that it considers a certain

form of labor, viz. agriculture, as the source of wealth, and wealth

itself not in the disguise of money, but as a product in general, as

the general result of labor. But corresponding to the limitations of

the activity, this product is still only a natural product. Agriculture

is productive, land is the source of production _par excellence_. It

was a tremendous advance on the part of Adam Smith to throw aside all

limitations which mark wealth-producing activity and [to define it] as

labor in general, neither industrial, nor commercial, nor agricultural,

or one as much as the other. Along with the universal character of

wealth-creating activity we have now the universal character of the

object defined as wealth, viz. product in general, or labor in general,

but as past incorporated labor. How difficult and great was the

transition, is evident from the way Adam Smith himself falls back from

time to time into the physiocratic system. Now, it might seem as though

this amounted simply to finding an abstract expression for the simplest

relation into which men have been mutually entering as producers from

times of yore, no matter under what form of society. In one sense this

is true. In another it is not.

The indifference as to the particular kind of labor implies the

existence of a highly developed aggregate of different species of

concrete labor, none of which is any longer the predominant one. So

do the most general abstractions commonly arise only where there is

the highest concrete development, where one feature appears to be

jointly possessed by many, and to be common to all. Then it can not

be thought of any longer in one particular form. On the other hand,

this abstraction of labor is but the result of a concrete aggregate of

different kinds of labor. The indifference to the particular kind of

labor corresponds to a form of society in which individuals pass with

ease from one kind of work to another, which makes it immaterial to

them what particular kind of work may fall to their share. Labor has

become here, not only categorically but really, a means of creating

wealth in general and is no longer grown together with the individual

into one particular destination. This state of affairs has found its

highest development in the most modern of bourgeois societies, the

United States. It is only here that the abstraction of the category

“labor,” “labor in general,” labor _sans phrase_, the starting point

of modern political economy, becomes realized in practice. Thus,

the simplest abstraction which modern political economy sets up as

its starting point, and which expresses a relation dating back to

antiquity and prevalent under all forms of society, appears in this

abstraction truly realized only as a category of the most modern

society. It might be said that what appears in the United States as an

historical product,―viz. the indifference as to the particular kind of

labor―appears among the Russians e. g. as a natural disposition. But it

makes all the difference in the world whether barbarians have a natural

predisposition which makes them applicable alike to everything, or

whether civilized people apply themselves to everything. And, besides,

this indifference of the Russians as to the kind of work they do,

corresponds to their traditional practice of remaining in the rut of a

quite definite occupation until they are thrown out of it by external

influences.

This example of labor strikingly shows how even the most abstract

categories, in spite of their applicability to all epochs―just because

of their abstract character―are by the very definiteness of the

abstraction a product of historical conditions as well, and are fully

applicable only to and under those conditions.

The bourgeois society is the most highly developed and most highly

differentiated historical organization of production. The categories

which serve as the expression of its conditions and the comprehension

of its own organization enable it at the same time to gain an insight

into the organization and the conditions of production which had

prevailed under all the past forms of society, on the ruins and

constituent elements of which it has arisen, and of which it still

drags along some unsurmounted remnants, while what had formerly been

mere intimation has now developed to complete significance. The anatomy

of the human being is the key to the anatomy of the ape. But the

intimations of a higher animal in lower ones can be understood only if

the animal of the higher order is already known. The bourgeois economy

furnishes a key to ancient economy, etc. This is, however, by no means

true of the method of those economists who blot out all historical

differences and see the bourgeois form in all forms of society. One can

understand the nature of tribute, tithes, etc., after one has learned

the nature of rent. But they must not be considered identical.

Since, furthermore, bourgeois society is but a form resulting from

the development of antagonistic elements, some relations belonging

to earlier forms of society are frequently to be found in it but in

a crippled state or as a travesty of their former self, as e. g.

communal property. While it may be said, therefore, that the categories

of bourgeois economy contain what is true of all other forms of

society, the statement is to be taken _cum grano salis_. They may

contain these in a developed, or crippled, or caricatured form, but

always essentially different. The so-called historical development

amounts in the last analysis to this, that the last form considers its

predecessors as stages leading up to itself and perceives them always

one-sidedly, since it is very seldom and only under certain conditions

that it is capable of self-criticism; of course, we do not speak here

of such historical periods which appear to their own contemporaries as

periods of decay. The Christian religion became capable to assist us

to an objective view of past mythologies as soon as it was ready for

self-criticism to a certain extent, _dynamei_ so-to-say. In the same

way bourgeois political economy first came to understand the feudal,

the ancient, and the oriental societies as soon as the self-criticism

of the bourgeois society had commenced. So far as bourgeois political

economy has not gone into the mythology of purely (?) identifying the

bourgeois system with the past, its criticism of the feudal system

against which it still had to wage war resembled Christian criticism

of the heathen religions or Protestant criticism of Catholicism.

In the study of economic categories, as in the case of every historical

and social science, it must be borne in mind that as in reality so

in our mind the subject, in this case modern bourgeois society, is

given and that the categories are therefore but forms of expression,

manifestations of existence, and frequently but one-sided aspects of

this subject, this definite society; and that, therefore, the origin of

[political economy] _as a science_ does not by any means date from the

time to which it is referred _as such_. This is to be firmly held in

mind because it has an immediate and important bearing on the matter of

the subdivisions of the science.

For instance, nothing seems more natural than to start with rent, with

landed property, since it is bound up with land, the source of all

production and all existence, and with the first form of production in

all more or less settled communities, viz. agriculture. But nothing

would be more erroneous. Under all forms of society there is a certain

industry which predominates over all the rest and whose condition

therefore determines the rank and influence of all the rest.

It is the universal light with which all the other colors are tinged

and are modified through its peculiarity. It is a special ether which

determines the specific gravity of everything that appears in it.

Let us take for example pastoral nations (mere hunting and fishing

tribes are not as yet at the point from which real development

commences). They engage in a certain form of agriculture, sporadically.

The nature of land-ownership is determined thereby. It is held in

common and retains this form more or less according to the extent to

which these nations hold on to traditions; such e. g. is land-ownership

among the Slavs. Among nations whose agriculture is carried on by a

settled population―the settled state constituting a great advance―where

agriculture is the predominant industry, such as in ancient and feudal

societies, even the manufacturing industry and its organization, as

well as the forms of property which pertain to it, have more or less

the characteristic features of the prevailing system of land ownership;

[society] is then either entirely dependent upon agriculture, as in the

case of ancient Rome, or, as in the middle ages, it imitates in its

city relations the forms of organization prevailing in the country.

Even capital, with the exception of pure money capital, has, in the

form of the traditional working tool, the characteristics of land

ownership in the Middle Ages.

The reverse is true of bourgeois society. Agriculture comes to be more

and more merely a branch of industry and is completely dominated by

capital. The same is true of rent. In all the forms of society in which

land ownership is the prevalent form, the influence of the natural

element is the predominant one. In those where capital predominates the

prevailing element is the one historically created by society. Rent

can not be understood without capital, nor can capital, without rent.

Capital is the all dominating economic power of bourgeois society. It

must form the starting point as well as the end and be developed before

land-ownership is. After each has been considered separately, their

mutual relation must be analyzed.

It would thus be impractical and wrong to arrange the economic

categories in the order in which they were the determining factors in

the course of history. Their order of sequence is rather determined

by the relation which they bear to one another in modern bourgeois

society, and which is the exact opposite of what seems to be their

natural order or the order of their historical development. What we are

interested in is not the place which economic relations occupy in the

historical succession of different forms of society. Still less are we

interested in the order of their succession “in idea” (_Proudhon_),

which is but a hazy (?) conception of the course of history. We are

interested in their organic connection within modern bourgeois society.

The sharp line of demarkation (abstract precision) which so clearly

distinguished the trading nations of antiquity, such as the

Phenicians and the Carthagenians, was due to that very predominance

of agriculture. Capital as trading or money capital appears in that

abstraction, where capital does not constitute as yet the predominating

element of society. The Lombardians and the Jews occupied the same

position among the agricultural nations of the middle ages.

As a further illustration of the fact that the same category plays

different parts at different stages of society, we may mention the

following: one of the latest forms of bourgeois society, viz. stock

companies, appear also at its beginning in the form of the great

chartered monopolistic trading companies. The conception of national

wealth which is imperceptibly formed in the minds of the economists of

the seventeenth century, and which partly continues to be entertained

by those of the eighteenth century, is that wealth is produced solely

for the state, but that the power of the latter is proportional to that

wealth. It was as yet an unconsciously hypocritical way in which wealth

announced itself and its own production as the aim of modern states

considering the latter merely as a means to the production of wealth.

The order of treatment must manifestly be as follows: first, the

general abstract definitions which are more or less applicable to

all forms of society, but in the sense indicated above. Second, the

categories which go to make up the inner organization of bourgeois

society and constitute the foundations of the principal classes;

capital, wage-labor, landed property; their mutual relations; city and

country; the three great social classes, the exchange between them;

circulation, credit (private). Third, the organization of bourgeois

society in the form of a state, considered in relation to itself; the

“unproductive” classes; taxes; public debts; public credit; population;

colonies; emigration. Fourth, the international organization of

production; international division of labor; international exchange;

import and export; rate of exchange. Fifth, the world market and

crises.

4. PRODUCTION, MEANS OF PRODUCTION, AND CONDITIONS OF PRODUCTION,

THE RELATIONS OF PRODUCTION AND DISTRIBUTION.[165] THE CONNECTION

BETWEEN FORM OF STATE AND PROPERTY ON THE ONE HAND AND RELATIONS

OF PRODUCTION AND DISTRIBUTION(1) ON THE OTHER. LEGAL RELATIONS.

FAMILY RELATIONS.

Notes on the points to be mentioned here and not to be omitted:[166]

1. _War_ attains complete development before peace; how certain

economic phenomena, such as wage-labor, machinery, etc., are developed

at an earlier date through war and in armies than within bourgeois

society. The connection between productive force and the means of

communication is made especially plain in the case of the army.

2. The relation between the idealistic and realistic methods of writing

history; namely, the so-called history of civilization which is all a

history of religion and states.

In this connection something may be said of the different methods

hitherto employed in writing history. The so-called objective [method].

The subjective. (The moral and others). The philosophic.

3. _Secondary and tertiary._ Conditions of production which have been

taken over or transplanted; in general, those that are not original.

Here [is to be treated] the effect of international relations.

4. Objections to the materialistic character of this view. Its relation

to naturalistic materialism.

5. The dialectics of the conceptions productive force (means of

production) and relation of production, dialectics whose limits are to

be determined and which does not do away with the concrete difference.

6. The unequal relation between the development of material production

and art, for instance. In general, the conception of progress is not

to be taken in the sense of the usual abstraction. In the case of

art, etc., it is not so important and difficult to understand this

disproportion as in that of practical social relations, e. g. the

relation between education in the United States and Europe. The really

difficult point, however, that is to be discussed here is that of the

unequal (?) development of relations of production as legal relations.

As, e. g., the connection between Roman civil law (this is less true of

criminal and public law) and modern production.

7. This conception of development appears to imply necessity. On the

other hand, justification of accident. Varia. (Freedom and other

points). (The effect of means of communication). World history does not

always appear in history as the result of world history.