THE CONTROVERSY BETWEEN RODBERTUS
AND VON KIRCHMANN
_CHAPTER XV_
v. KIRCHMANN'S THEORY OF REPRODUCTION
The second theoretical polemics about the problem of accumulation was
also started by current events. If the first English crisis and its
attendant misery of the working class had stimulated Sismondi's
opposition against the classical school, it was the revolutionary
working-class movement arisen since which, almost twenty-five years
later, provided the incentive for Rodbertus' critique of capitalist
production. The risings of the Lyons silk weavers and the Chartist
movement in England were vastly different from the shadowy spectres
raised by the first crisis, and the ears of the bourgeoisie were made to
ring with their criticism of the most wonderful of all forms of society.
The first socio-economic work of Rodbertus, probably written for the
_Augsburger Allgemeine Zeitung_ in the late thirties but not published
by that paper, bears the significant title, _The Demands of the Working
Classes_,[230] and begins as follows:
'What do the working classes want? Will the others be able to keep it
from them? Will what they want be the grave of modern civilisation?
Thoughtful people have long realised that a time must come when history
would put this question with great urgency. Now, the man in the street
has learned it too, from the Chartist meetings and the Birmingham
scenes.'
During the forties, the leaven of revolutionary ideas was most
vigorously at work in France in the formation of the various secret
societies and socialist schools of the followers of Proudhon, Blanqui,
Cabet, Louis Blanc, etc. The February revolution and the June
proclamation of the 'right to work' led to a first head-on clash between
the two worlds of capitalist society--an epoch-making eruption of the
contradictions latent in capitalism. As regards the other, visible form
of those contradictions--the crises--the available data for observation
at the time of the second controversy were far more comprehensive than
in the early twenties of the century. The dispute between Rodbertus and
v. Kirchmann took place under the immediate impact of the crises in
1837, 1839, 1847, and even of the first world crisis in 1857--Rodbertus
writing his interesting pamphlet _On Commercial Crises and the Mortgage
Problem of the Landowners_[231] in 1858. Thus the inherent
contradictions of capitalist society meeting his eyes were in strident
discord with the doctrine of harmony held by the English classics and
their vulgarisers both in England and on the Continent, quite unlike any
critique in the times when Sismondi had raised his voice in warning.
Incidentally, a quotation from Sismondi in Rodbertus' first writing
proves that the former's strictures immediately influenced Rodbertus. He
was thus familiar with contemporary French writings against the
classical school, though perhaps less so with the far more numerous
English literature. There is no more than this flimsy support for the
myth of the German professors about the so-called 'priority' of
Rodbertus over Marx in the 'foundation of socialism'. Accordingly,
Professor Diehl writes in his article on Rodbertus in _Handwörterbuch
der Staatswissenschaften_: 'Rodbertus must be considered the real
founder of scientific socialism in Germany, since in his writings
between 1839 and 1842, even before Marx and Lassalle, he provided a
comprehensive socialist system, a critique of Adam Smith's doctrine, new
theoretical foundations and proposals for social reform.'
This piece of god-fearing, pious righteousness comes from the second
edition of 1901, after all that had been written by Engels, Kautsky and
Mehring to destroy this learned legend, and in spite of it. Quite
inevitably, of course, and proof against any evidence to the contrary,
however weighty, it was only right in the eyes of all the learned German
economists that the palm of 'priority' should be wrested from Marx, the
revolutionary anarchist, by Rodbertus, the 'socialist' with monarchist,
Prussian and nationalist leanings, the man who believed in communism
five hundred years from now, but for the present supported a steady
exploitation rate of 200 per cent. However, we are interested in another
aspect of Rodbertus' analysis. The same Professor Diehl continues his
eulogy as follows: 'Rodbertus was not only a pioneer of socialism;
political economy as a whole owes much stimulation and furtherance to
him; economic theory in particular is indebted to him for the critique
of classical economics, for the new theory of the distribution of
income, for the distinction between the logical and historical
categories of capital, and so on.'
Here we shall deal with these latter achievements of Rodbertus,
especially with the 'and so on'.
Rodbertus' decisive treatise, _Towards the Understanding of Our
Politico-Economic Conditions_[232] of 1842, set the ball rolling.
v. Kirchmann replied in _Demokratische Blätter_ with two essays--_On
the Social Aspects of Ground Rent_[233] and _The Society of
Barter_[234]--and Rodbertus parried in 1850 with his _Letters on Social
Problems_.[235] Thus the discussion entered the same theoretical arena
where Malthus-Sismondi and Say-Ricardo-MacCulloch had fought out their
differences thirty years earlier. In his earliest writings, Rodbertus
had already expressed the thought that the wages of labour present an
ever diminishing part of the national product in modern society where
the productivity of labour is increasing. He claimed this to be an
original idea, and from that moment until his death thirty years later
he did nothing but reiterate it and formulate it in various ways. This
'declining wage rate' is for him the root of all evils to be found in
modern society, in particular of pauperism and the crises, whose
combination he calls 'the social problem of our times'.
v. Kirchmann does not agree with this explanation. He traces pauperism
back to the effects of a rising ground rent; crises, on the other hand,
to a lack of markets. About the latter especially he says: 'The greatest
part of social ills is caused not by defects of production but by a lack
of markets for the products ... the more a country can produce, the more
means it has for satisfying every need, the more it is exposed to the
danger of misery and want.'--The labour-problem is here included as
well, for 'the notorious right to work ultimately reduces to the
question of markets'. 'We see', he concludes, 'that the social problem
is almost identical with the problem of markets. Even the ills of
much-abused competition will vanish, once markets are secure; its
advantages alone will remain. There will remain a spirit of rivalry to
supply good and cheap commodities, but the life-and-death struggle will
disappear which is caused only by insufficient markets.'[236]
The difference between the points of view of Rodbertus and v. Kirchmann
is evident. Rodbertus sees the root of the evil in a faulty distribution
of the national product, and v. Kirchmann in the limitations of the
markets for capitalist production. Notwithstanding all the confusion in
his expositions, especially in his idealist vision of a capitalist
competition content with a laudable rivalry for better and cheaper
commodities, and also in his conception of the 'notorious right to work'
as a problem of markets, v. Kirchmann up to a point still shows more
understanding for the sore spot of capitalist production, i.e. the
limitations of its market, than Rodbertus who clings to distribution.
Thus it is v. Kirchmann who now takes up the problem which Sismondi had
originally put on the agenda. Nevertheless, he by no means agrees with
Sismondi's elucidation and solution of the problem, siding rather with
the opponents of the latter. Not only does he accept Ricardo's theory of
ground rent, and Adam Smith's dogma that 'the price of the commodity is
composed of two parts only, of the interests on capital and the wages of
labour' (v. Kirchmann transforms the surplus value into 'interest on
capital'); he also subscribes to the thesis of Say and Ricardo that
products are only bought with other products and that production creates
its own demand, so that if one side appears to have produced too much,
it only means there was not enough production on the other. v.
Kirchmann, we see, faithfully follows the classics, if in a somewhat
'German edition'. He begins by arguing, e.g., that Say's law of a
natural balance between production and demand 'still does not give a
comprehensive picture of reality', and adds:
'Commerce involves yet further hidden laws which prevent this postulated
order from obtaining in complete purity. They must be discovered if we
are to explain the present flooding of the market, and their discovery
might perhaps also show us the way to avoid this great evil. We believe
that there are three relations in the modern system of society which
cause these conflicts between Say's indubitable law and reality.'
These relations are (1) 'too inequitable a distribution of the
products'--here, as we see, v. Kirchmann somewhat approximates to
Sismondi's point of view; (2) the difficulties which nature puts in the
way of human labour engaged in production; and (3) finally, the defects
of commerce as a mediator between production and consumption.
Disregarding the last two obstacles to Say's law, we shall now consider
v. Kirchmann's reasoning of his first point.
'The first relation', he explains, 'can be put more briefly as too low a
wage of labour, which is thus the cause of a slump. Those who know that
the price of commodities is composed of two parts only, of the interest
on capital and the wage of labour, might consider this a startling
statement; if the wage of labour is low, prices are low as well, and if
one is high, so is the other.'
(We see v. Kirchmann accepts Smith's dogma even in its most misleading
form: the price is not _resolved_ into wage of labour and surplus value,
but is _composed_ of them as a mere sum--a view in which Adam Smith
strayed furthest from his own theory of the value of labour.)
'Wage and price thus are directly related, they balance each other.
England only abolished her corn laws, her tariffs on meat and other
victuals, in order to cause wages to fall and thus to enable her
manufacturers to oust all other competitors from the world markets by
means of still cheaper commodities. This, however, only holds good up to
a point and does not affect the ratio in which the product is
distributed among the workers and the capitalists. Too inequitable a
distribution among these two is the primary and most important cause why
Say's law is not fulfilled in real life, why the markets are flooded
although there is production in all branches.'
v. Kirchmann gives a detailed illustration of this statement. Using the
classical method, he takes us, of course, to an imaginary isolated
society which makes an unresisting, if thankless, object for the
experiments of political economy. v. Kirchmann suggests we should
imagine a place (_Ort_) which comprises 903 inhabitants, no more, no
less, _viz._ three entrepreneurs with 300 workers each. _Ort_ is to be
able to satisfy all needs by its own production--in three
establishments, that is to say, one for clothing, a second for food,
lighting, fuel and raw materials, and a third for housing, furniture and
tools. In each of these three departments, the 'capital together with
the raw materials' is to be provided by the entrepreneur, and the
remuneration of the workers is to be so arranged that the workers obtain
as their wage one half of the annual produce, the entrepreneur retaining
the other half 'as interest on capital and profits of the enterprise'.
Every business is to produce just enough to satisfy all the needs of the
903 inhabitants. _Ort_ accordingly has 'all the conditions necessary for
general well-being', and everybody can therefore tackle his work with
courage and vigour. After a few days, however, joy and delight turn into
a universal misery and gnashing of teeth: something has happened on v.
Kirchmann's Island of the Blessed which was no more to be expected than
for the skies to fall: an industrial and commercial crisis according to
all modern specifications has broken out! Only the most essential
clothing, food and housing for the 900 workers has been produced, yet
the warehouses of the three entrepreneurs are full of clothes and raw
materials, and their houses stand empty: they complain of a lack of
demand, while the workers in turn complain that their wants are not
fully satisfied. What has gone wrong? Could it be that there is too much
of one kind of produce and too little of another, as Say and Ricardo
would have it? Not at all, answers v. Kirchmann. Everything available in
_Ort_ in well-balanced quantities, just enough to satisfy all the wants
of the community. What, then, has thrown a spanner into the works, why
the crisis? The obstruction caused by distribution alone--but this must
be savoured in v. Kirchmann's own words:
'The obstacle, why nevertheless no smooth exchange takes place, lies
solely and exclusively in the distribution of these products. They are
not distributed equitably among all, but the entrepreneurs retain half
of them for themselves as interest and profit, and only give half to the
workers. It is clear that the worker in the clothing department can
exchange, against half of his product, only half of the food, lodging,
etc., that has been produced, and it is clear that the entrepreneur
cannot get rid of the other half since no worker has any more products
to give in exchange. The entrepreneurs do not know what to do with
their stocks, the workers do not know what to do for hunger and
nakedness.'
Nor does the reader, we might add, know what to do with v. Kirchmann's
constructions. His model is so childish that every advance leads deeper
into the maze.
First of all, there seems to be no reason whatever why, and to what
purpose, v. Kirchmann should devise this splitting-up of production into
three parts. If analogous examples by Ricardo and MacCulloch usually
confront tenant farmers and manufacturers, that is presumably only
inspired by the antiquated Physiocrat conception of social reproduction
which Ricardo had adopted, although his own theory of value as against
the Physiocrats deprived it of all meaning, and although Adam Smith had
already made a good start in considering the real material foundations
of the social reproductive process. Still, we have seen that the
tradition of distinguishing between agriculture and industry as the
foundation of reproduction was kept up in economic theory until Marx
introduced his epoch-making distinction of the two productive
departments in society for producer and consumer goods. v. Kirchmann's
three departments, however, have no real significance at all. Obviously,
no material consideration of reproduction can have been responsible for
this supremely arbitrary division which jumbles up tools and furniture,
raw materials and food, but makes clothing a department in its own
right. One might as well postulate one department for food, clothing and
housing, another for medicines and a third for tooth brushes. v.
Kirchmann's primary concern, no doubt, is with the social division of
labour; hence the assumption of as nearly equal quantities of products
as possible in the transactions of exchange. Yet this exchange, on which
the argument turns, plays no part at all in v. Kirchmann's example since
it is not the value which is distributed but the quantities of products,
the bulk of use-values as such. In this intriguing _Ort_ of v.
Kirchmann's imagining, again, the products are distributed first, and
only afterwards, when the distribution is accomplished, is there to be
universal exchange, whereas on the solid ground of capitalist production
it is, as we know, the exchange which inaugurates the distribution of
the product and serves as its agent. Besides, the queerest things happen
in v. Kirchmann's distributive system: 'As we all know', the prices of
the products, i.e. the price of the aggregate product of society,
consist of _v + s_, of wage and capital interest alone--so that the
aggregate product must be distributed entirely among workers and
entrepreneurs; but then unhappily v. Kirchmann dimly remembers the fact
that production needs things like raw materials and tools. So _Ort_ is
provided with raw materials furtively introduced among the food, and
with tools among the furniture. But now the question arises: who is to
get these indigestible items in the course of general distribution? the
workers as wages, or the capitalists as profits of enterprise? They
could hardly expect a warm welcome from either. And on such feeble
premises the star turn of the performance is to take place: the exchange
between workers and entrepreneurs. The fundamental transaction of
exchange in capitalist production, the exchange between workers and
capitalists, is transformed by v. Kirchmann from an exchange between
living labour and capital into an exchange of products. Not the first
act, that of exchanging labour power for variable capital, but the
second, the realisation of the wage received from the variable capital
is put at the centre of the whole machinery, the entire commodity
exchange of capitalist society being in turn reduced to this realisation
of the labour-wage. And the crowning glory is that this exchange between
workers and entrepreneurs, the king-pin of all economic life, dissolves
into nothing on a closer scrutiny--it does not take place at all. For as
soon as all workers have received their natural wages in the form of
half their product, an exchange will be possible only among the workers
themselves; every worker will only keep one-third of his wage consisting
exclusively of either clothing, food or furniture, as the case may be,
and realise the remainder to equal parts in the two other
product-groups. The entrepreneurs no longer come into this at all; the
three of them are left high and dry with their surplus value: half the
clothing, furniture and food that has been produced by the society; and
they have no idea what to do with the stuff. In this calamity of v.
Kirchmann's creation, even the most generous distribution of the product
would be of no use. On the contrary, if larger quantities of the social
product were allotted to the workers, they would have even less to do
with the entrepreneurs in this transaction: all that would happen is
that the exchange of the workers among themselves would increase in
volume. The surplus product which the entrepreneurs have on their hands
would then contract, it is true, though not indeed because the exchange
of the surplus product would be facilitated, but merely because there
would be less surplus value altogether. Now as before, an exchange of
the social product between workers and entrepreneurs is out of the
question. One must confess that the puerile and absurd economics here
crammed into comparatively little space exceed the bounds even of what
might be put up with from a Prussian Public Prosecutor--such having been
v. Kirchmann's profession, though he must be credited with having
incurred disciplinary censure on two occasions. Nevertheless, after
these unpromising preliminaries, v. Kirchmann goes right to the root of
the matter. He admits that his assuming the surplus product in a
concrete use-form is the reason why the surplus value cannot be usefully
employed. As a remedy he now allows the entrepreneurs to devote half of
the social labour appropriated as surplus value to the production not of
common goods but of luxuries. The 'essence of luxury-goods being that
they enable the consumer to use up more capital and labour power than in
the case of ordinary goods', the three entrepreneurs manage to consume
by themselves in the form of laces, fashionable carriages and the like,
their entire half-share in all the labour performed by the society. Now
nothing unsaleable is left, and the crisis is happily avoided;
over-production is made impossible once and for all, capitalists and
workers alike are safe; the name of v. Kirchmann's magic cure which has
brought all these benefits to pass, and which re-establishes the balance
between production and consumption, being: luxury. In other words, the
capitalists who do not know what to do with their surplus value which
they cannot realise, are advised by the dear fellow--to eat it up! As it
happens, luxury is in fact an old familiar invention of capitalist
society, and still there are recurrent crises. Why is this? v. Kirchmann
enlightens us: 'The answer can only be that in real life sluggish
markets are entirely due to the fact that there are still _not enough_
luxuries, or, in other words, that the capitalists, i.e. those who can
afford to consume, still consume too little.'
This misguided abstinence of the capitalists, however, results from a
bad habit which political economists have been ill-advised to
encourage: the desire to save for purposes of 'productive consumption'.
In other words: crises are caused by accumulation. This is v.
Kirchmann's principal thesis. He proves it again by means of a
touchingly simple example: 'Let us assume conditions which economists
praise as more favourable,' he says, 'where the entrepreneurs say: we do
not want to spend our income to the last penny in splendour and luxury,
but will re-invest it productively. What does this mean? Nothing but the
setting-up of all sorts of productive enterprises for delivering new
goods of such a kind that their sale can yield interest (v. Kirchmann
means profits) on a capital saved and invested by the three
entrepreneurs from their unconsumed revenues. Accordingly, the three
entrepreneurs decide to consume only the produce of a hundred workers,
that is to say to restrict their luxury considerably, and to employ the
labour power of the remaining 350 workers together with the capital they
use for setting up new productive enterprises. The question now arises
in what kind of productive enterprises these funds are to be used.'
Since, according to v. Kirchmann's assumption, constant capital is not
reproduced, and the entire social product consists entirely of consumer
goods, 'the three entrepreneurs can only choose again between
enterprises for the manufacture of ordinary goods or for that of
luxuries'.
In this way, however, the three entrepreneurs will be faced with the
already familiar dilemma: if they turn out 'common goods', there will be
a crisis, since the workers lack means to purchase these additional
provisions, having been bought off with half the value of their produce.
If they go in for luxuries, they will have to consume them alone. There
is no other possibility. The dilemma is not even affected by foreign
trade which would 'only increase the range of commodities on the home
market' or increase productivity.
'These foreign commodities are therefore either common goods--then the
capitalist will not, and the worker, lacking the means, cannot buy them,
or they are luxuries, in which case the worker, of course, is even less
able to buy them, and the capitalist will not want them either because
of his efforts to save.'
This argument, however primitive, yet shows quite nicely and clearly the
fundamental conception of v. Kirchmann and the nightmare of all
economic theory: in a society consisting exclusively of workers and
capitalists, accumulation will be impossible. v. Kirchmann is therefore
frankly hostile to accumulation, 'saving', 'productive consumption' of
the surplus value, and strongly attacks these errors advocated by
classical economics. His gospel is increasing luxury together with the
productivity of labour as the specific against crises. We see that v.
Kirchmann, if he grotesquely aped Ricardo and Say in his theoretical
assumptions, is a caricature of Sismondi in his final conclusions. Yet
it is imperative to get v. Kirchmann's approach to the problem perfectly
clear, if we are to understand the import of Rodbertus' criticism and
the outcome of the whole controversy.