Rodbertus digs deeper than v. Kirchmann. He looks for the roots of evil
in the very foundations of social organisation and declares bitter war
on the predominant Free Trade school--not against a system of
unrestricted commodity circulation or the freedom of trade which he
fully accepts, but against the Manchester doctrine of _laissez-faire_
within the internal social relations of economy. At that time, after the
period of storm and stress of classical economics, a system of
unscrupulous apologetics was already in full sway which found its most
perfect expression in the 'doctrine of harmony' of M. Frédéric Bastiat,
the famous vulgarian and idol of all Philistines, and quite soon the
various Schultzes were to flourish as commonplace, German imitations of
the French prophet of harmony. Rodbertus' strictures are aimed at these
unscrupulous 'peddlers of free trade'. In his first _Letter on Social
Problems_[237] he exclaims:
'Because of their paltry incomes, five-sixths of the population are not
only deprived of most of the benefits of civilisation, but are in
constant danger of the most terrible outbreaks of real distress to which
they sometimes succumb. Yet they are the creators of all the wealth of
the society. Their labours begin at dawn and end at dusk, continuing
even after night has fallen--but no exertion can change this fate; they
cannot raise their income, and only lose that little leisure which ought
to remain nowadays for the improvement of their minds. Hitherto it might
have seemed as if all this suffering were necessary to the progress of
civilisation, but now that a series of the most wonderful discoveries
and inventions have increased human labour power more than a
hundredfold, new prospects of changing these grim conditions are
suddenly revealed. As a result, the wealth and assets of a nation
increase at a growing rate as compared with the population. Could
anything be more natural, I ask, or more justly demanded, than that this
increase should also somehow benefit the creators of this old and new
wealth? that their incomes should be raised or their working-hours
shortened, or that they might join in increasing numbers the ranks of
the lucky ones, privileged to reap the fruits of labour? Yet state
economy, or better, national economy has only achieved the opposite
result. Increasing poverty of these classes goes together with
increasing wealth of the nation, there is even need of special
legislation, lest the working day become longer, and finally, the
working classes swell in number out of proportion with the others. Even
that is not enough! The hundredfold increase of labour efficiency which
was powerless to relieve five-sixths of the population, even threatens
periodically the remaining sixth of the nation and thus society as a
whole.'
'What contradictions in the economic sphere in particular! And what
contradictions in the social sphere in general! The wealth of society is
growing, and this growth is accompanied by a growth of poverty.--The
creative efficiency of the means of production is increasing, and the
consequence is that they are scrapped. Social conditions demand that the
material position of the working classes should be raised to the level
of their political status, and economic conditions, by way of answer,
depress them further. Society needs the unrestricted growth of wealth,
and contemporary leaders of production must create restrictions, in
order to discourage poverty. In a single respect alone is there harmony:
just as wrong as the conditions is the authoritative section of the
society with its inclination to look for the root of the evil everywhere
except in the right place. This egotism, which only too often dons the
scholar's gown, also accuses the vices of the workers of being the cause
of poverty. The responsibility for the crimes committed against them by
all-powerful facts is ascribed to their alleged discontent and
shiftlessness, and where even such egotism cannot close its eyes to
their innocence, it makes an elaborate dogma of the "necessity of
poverty". Unremittingly, it exhorts the workers only to work and to
pray, impresses upon them the duty of abstinence and economy, and at
best infringes upon their rights by the institution of compulsory
saving, adding to the misery of the workers. It does not see that a
blind force of commerce has transformed the prayer for work into the
curse of enforced unemployment, that ... abstinence is impossible or
cruel, and that, lastly, morals always remain ineffective if commended
by those of whom the poet says that they drink wine in secret but preach
water in public.'[238]
Thirty years after Sismondi and Owen, twenty years after the indictment
made by the English socialists, the followers of Ricardo, and last but
not least, after the publication of the Communist Manifesto, such bold
words alone cannot claim to break new ground. What matters above all now
is the theoretical foundation of this indictment. Rodbertus here
proposed a complete system which can be reduced to the following simple
statements.
Owing to the laws of an economy left to its own devices, the high level
of labour productivity achieved by history, together with the
institutions of positive law, that is to say the right of private
ownership, a whole series of wrong and unethical phenomena had emerged:
(1) In the place of 'normal', 'constituted' value we have exchange
value, and accordingly coined money instead of a proper 'paper' or
'labour' currency which would genuinely correspond to the concept of
money. The first principle is that all economic goods are products of
labour, or, as we might put it, that labour alone is creative. This
statement, however, does not imply that the value of the product must
always equal the cost of labour, or that, in other words, value is even
now measured in terms of labour. The truth is rather 'that this still
has not become a _fact_, but is only an _idea_ of political
economy'.[239]
'If the value could be constituted in accordance with the labour
expended on the product, we might imagine a kind of money which would
be, as it were, a leaf torn from the public account-book, a receipt
written on the most rubbishy material, on rags, which everyone would
receive for the value he has produced, and which he would realise as a
voucher for an equivalent part of the national product subsequently
under distribution.... If, however, for some reason or another, it is
_impossible_ or _not yet possible_ to establish this value, money as
such must still retain the value it is designed to liquidate; made of
an intrinsically valuable commodity like gold or silver, it has to
represent a pledge or pawn of the same value.'[240] 'As soon as
capitalist commodity production has come into existence, everything is
turned upside down: there can no longer be a constituted value, since it
can only be exchange value',[241] and, 'since the value cannot be
constituted, money cannot be _purely_ money, it cannot fully conform to
its concept'.[242] In an equitable exchange, the exchange value of the
products would have to equal the quantity of labour needed for producing
them, and an exchange of products would always mean an exchange of equal
quantities of labour. Even assuming, however, that everybody produced
just those use-values which another person requires, yet, 'since we are
here concerned with human discernment and human volition, there must
always be for a start a correct calculation, adjustment and allocation
of the labour quantities contained in the products for exchange, there
must be a _law_ to which the facts will conform'.[243]
It is well-known that Rodbertus, in his discovery of 'constituted
value', laid great stress on his priority to Proudhon which we shall
gladly concede him. Marx, in his _Poverty of Philosophy_, and Engels in
his preface to it, have comprehensively shown that this 'concept' is a
mere phantom, still used in theory but in practice buried already in
England well before Rodbertus' time, that it is but a Utopian distortion
of Ricardo's doctrine of value. We therefore need not deal further with
this 'music of the future, performed on a toy trumpet'.
(2) The 'economy of exchange' resulted in the 'degradation' of labour to
a commodity, the labour wage being determined as an item of expenditure
(_Eichmann's der Arbeit_) instead of representing a fixed rate of the
national product. By a daring jump in history, Rodbertus derives his
wages law indirectly from slavery and regards the specific traits which
a capitalist production of commodities imposes on exploitation as no
more than a lying deception against which he fulminates from a moral
point of view.
'So long as the producers themselves remained the property of those who
were not producing, so long as slavery was in existence, it was the
advantage of the "masters" alone which unilaterally determined the
volume of this share (of the workers). With the producers attaining full
liberty of person, if nothing more as yet, both parties agree on the
wage in advance. The wage, in modern terminology, is the object of a
"free contract", that is to say, an object of competition. Labour is
therefore as a matter of course subjected to the same laws of exchange
as its products: labour itself acquires exchange value; the size of the
wage depends on the effects of supply and demand.'
Rodbertus, after having thus turned everything upside down, after
deriving the exchange value of labour from competition, now immediately
derives its value from its exchange value.
'Under the laws of exchange value, labour, like produced goods, comes to
have a kind of "cost value" which exercises some magnetic effects upon
its exchange value, the amount of the labour wage. It is that particular
amount of payment which is necessary for the "maintenance" of labour, in
other words, which enables labour to continue, if only in the persons of
its progeny--it is the so-called "minimum of subsistence".'
For Rodbertus, however, this is not a statement of objective economic
laws, but merely an object for moral indignation. He calls the thesis of
the classical school, that labour is worth no more than the wages it can
command, a 'cynical' statement, and he is determined to expose the
'string of lies' leading to this 'crude and unethical' conclusion.[244]
'It was a degrading view to estimate the wages of labour in accordance
with the "necessary subsistence", like so many machines to be kept in
repair. Now that labour, the fountainhead of all commodities, has itself
become a commodity of exchange, it is no less degrading to speak of its
"natural price", of its "costs", just as we speak of the natural price
and costs of its product, and to include this natural price, these
costs, in the amount of goods that is necessary to call forth a
continuous flow of labour on the market.'
This commodity character of labour power, however, and the corresponding
determination of its value, are nothing but a malicious
misrepresentation of the Free Trade school. Like the good Prussian he
was, Rodbertus put capitalist commodity production as a whole in the
dock, as offending against the obtaining constitutional law, instead of
pointing out its inherent contradiction, the conflict between
determining the value of labour and determining the value _created by_
labour, as the English disciples of Ricardo had done.
'Stupid beyond words', he exclaims, 'is the dualist conception of those
economists who would have the workers, as far as their legal status is
concerned, join in deciding the fate of society, and would for all that,
have these same workers from an economic point of view, always treated
as mere commodities!'[245]
Now it only remains to find out why the workers put up with such stupid
and blatant injustice--an objection which Hermann for instance raised
against Ricardo's theory of value. Rodbertus is ready with this answer:
'What were the workers to do after their emancipation other than to
agree to these regulations? Imagine their position: when the workers
were freed, they were naked or in rags, they had nothing but their
labour power. The abolition of slavery or serfdom, moreover, rescinded
the master's legal or moral obligation to feed them and care for their
needs. Yet these needs remained, they still had to live. How, then,
could their labour power provide them with a living? Were they simply to
grab some of the capital existing in the society for their maintenance?
The capital of society was already in the hands of other people, and the
organs of the "law" would not have tolerated such a step. What, then,
could the workers have done? Only these alternatives were before them:
either to overthrow the law of society or to return, under roughly the
same conditions as before, to their former masters, the owners of the
land and of capital, and to receive as wages what was formerly doled out
to them to keep them fed.'[246]
It was fortunate for mankind and the Prussian state that the workers
were 'wise' enough not to overthrow civilisation and preferred to submit
to the 'base demands' of their 'former masters'. This, then, is the
origin of the capitalist wage system, of the wages law as 'a kind of
slavery' resulting from an abuse of power on the part of the
capitalists, and from the precarious position and the meek acquiescence
on the part of the proletariat--if we are to believe the highly original
explanations of that very Rodbertus whose theories Marx is reputed to
have 'plagiarised'. Let Rodbertus claim 'priority' in this particular
theory of value without challenge, seeing that English socialists and
other social critics had already given far less crude and primitive
analyses of the wage-system. The singular point about it all is that
Rodbertus' display of moral indignation about the origin and the
economic laws of the wages system does not lead up to the demand for
doing away with this abominable injustice, the 'dualism stupid beyond
words'. Far from it! He frequently reassures his fellow-men that he does
not really mean anything very serious by roaring--he is no lion fell,
only one Snug the joiner. Indeed, an ethical theory of the wages law is
necessary only to achieve a further conclusion:
(3) Since the 'laws of exchange value' determine the wage, an advance in
labour productivity must bring about an ever declining share in the
product for the workers. Here we have arrived at the Archimedean fulcrum
of Rodbertus' system. This 'declining wage rate' is his most important
'original' discovery on which he harps from his first writings on social
problems (probably in 1839) until his death, and which he 'claims' as
his very own. This conception, for all that, was but a simple corollary
of Ricardo's theory of value and is contained implicit in the wages fund
theory which dominated bourgeois economics up to the publication of
Marx's _Capital_. Rodbertus nevertheless believed that this 'discovery'
made him a kind of Galileo in economics, and he refers to his 'declining
wage rate' as explaining every evil and contradiction in capitalist
economy. Above all, he derives from the declining wage rate the
phenomenon of pauperism which, together with the crises, in his opinion
constitutes the social question. It would be as well to draw the
attention of contemporaries, 'out for Marx's blood', to the fact that it
was not Marx but Rodbertus, a man much nearer their own heart, who set
up a whole theory of progressive poverty in a very crude form, and that
he, unlike Marx, made it the very pivot, not just a symptom, of the
entire social problem. Compare for instance his argument in his first
_Letter on Social Problems_ to v. Kirchmann on the absolute
impoverishment of the working class. The 'declining wage rate' must
serve in addition to explain the other fundamental phenomena of the
social problem--the crises. In this connection Rodbertus tackles the
problem of balancing consumption with production, touching upon the
whole lot of cognate controversial issues which had already been fought
out between the schools of Sismondi and Ricardo.
Rodbertus' knowledge of crises was of course based upon far more
material evidence than that of Sismondi. In his first _Letter on Social
Problems_ he already gives a detailed description of the four crises in
1818-19, 1825, 1837-9 and 1847. Since his observations covered a much
longer period, Rodbertus could by and large gain a much deeper insight
into the essential character of crises than his predecessors. As early
as 1850 he formulated the periodical character of the crises which recur
at ever shorter intervals and at the same time with ever increasing
severity:
'Time after time, these crises have become more terrible in proportion
with the increase in wealth, engulfing an ever greater number of
victims. The crisis of 1818-19, although even this caused panic in
commerce and inspired misgivings in economics, was of small importance
compared to that of 1825-6. The first crisis had made such inroads on
the capital assets of England that the most famous economists doubted
whether complete recovery could ever be made. Yet it was eclipsed by the
crisis of 1836-7. The crises of 1839-40 and 1846-7 wrought even greater
havoc than previous ones.'--'According to recent experiences, however,
the crises recur at ever shorter intervals. There was a lapse of 18
years between the first and the third crisis, of 14 years between the
second and the fourth, and of only 12 years between the third and the
fifth. Already the signs are multiplying that a new disaster is
imminent, though no doubt the events of 1848 put off the
catastrophe.'[247]
Rodbertus remarks that an extraordinary boom in production and great
progress in industrial technique always are the heralds of a crisis.
'Every one of them [of the crises] followed upon a period of outstanding
industrial prosperity.'[248]
From the crises in history he demonstrates that 'they occur only after a
considerable increase of productivity'.[249] Rodbertus opposes what he
terms the vulgar view which conceives of crises as mere disturbances in
the monetary and credit system, and he criticises the whole of Peel's
currency legislation as an error of judgment, arguing the point in
detail in his essay _On Commercial Crises and the Mortgage Problem_.
There he makes the following comment among others: 'We would therefore
deceive ourselves if we were to regard commercial crises merely as
crises of the monetary, banking, or credit system. This is only their
outer semblance when they first emerge.'[250]
Rodbertus also shows a remarkably acute grasp of the part played by
foreign trade in the problem of crises. Just like Sismondi, he states
the necessity of expansion for capitalist production, but he
simultaneously emphasises the fact that the periodical crises are bound
to grow in volume.
'Foreign trade', he says, 'is related to slumps only as charity is
related to poverty. They ultimately only enhance one another.'[251] And
further: 'The only possible means of warding off further outbreaks of
crises is the application of the two-edged knife of expanding foreign
markets. The violent urge towards such expansion is largely no more but
a morbid irritation caused by a sickly organ. Since one factor on the
home market, productivity, is ever increasing, and the other factor,
purchasing power, remains constant for the overwhelming majority of the
population, commerce must endeavour to conjure up a similarly unlimited
amount of purchasing power on the foreign market.'[252] In this way, the
irritation may be soothed to some extent so that at least there will not
be a new outbreak of the calamity right away. Every foreign market
opened defers the social problem in a like manner. Colonisation of
primitive countries would have similar effects: Europe rears a market
for herself in places where none had been before. Yet such a medicine
would essentially do no more than appease the ill. As soon as the new
markets are supplied, the problem will revert to its former state--a
conflict between the two factors: limited purchasing power versus
unlimited productivity. The new attack would be warded off the small
market only to re-appear, in even wider dimensions and with even more
violent incidents, on a larger one. And since the earth is finite and
the acquisition of new markets must some time come to an end, the time
will come when the question can no longer be simply adjourned. Sooner
or later, a definite solution will have to be found.'[253]
Rodbertus also recognises the anarchical character of capitalist
private enterprise to be conducive to crises, but only as one factor
among many, seeing it as the source of a particular type of crises, not
as the real cause of crises in general. About the crises at v.
Kirchmann's _Ort_, e.g., he says: 'I maintain that a slump of this kind
does not occur in real life. The market of to-day is large, there are
countless wants and many branches of production, productivity is
considerable and the data of commerce are obscure and misleading. The
individual entrepreneur does not know how much others are producing, and
so it may easily happen that he over-estimates the demand for a certain
commodity with which he will then overstock the market.'
Rodbertus says outright that the only remedy for these crises is the
'complete reversal' of contemporary property-relations or a planned
economy, concentrating all means of production 'in the hands of a single
social authority'. To set troubled minds at rest, however, he is quick
to add that he reserves judgment as to whether there can actually be
such a state of affairs--'yet this would be the only possible way to
prevent slumps of this kind'. Thus he expressly regards anarchy in the
modern mode of production as responsible for only a specific and partial
manifestation of crises.
Rodbertus scornfully rejects Say-Ricardo's axiom of a natural
equilibrium between consumption and production; just like Sismondi, he
emphasises that everything turns on the purchasing power of society, and
also takes it to be dependent upon the distribution of income. All the
same, he does not endorse Sismondi's theory of crises and disagrees
sharply with the conclusions drawn from it. If Sismondi saw the source
of all evil in the unlimited expansion of production without regard to
the limitations of incomes, and advocated a restriction of production,
Rodbertus, quite on the contrary, champions the most powerful and
unrestricted expansion of production, of wealth and of the productive
forces, believing this to be a social necessity. Whoever rejects the
wealth of society, rejects at the same time its power, its progress,
and, with its progress, its virtues. Whoever stands in the way of
growing wealth, stands in the way of all social progress whatever. Every
increase in knowledge, resolve and capacity is conceived as bound up
with an increase in wealth.[254] From this point of view, Rodbertus is
strongly in favour of issuing houses which he regards as the
indispensable foundations for a rapid and unrestricted expansion of
company promoting. Both his essay of 1859 on the mortgage problem and
the treatise on the _Financial Crisis in Prussia_[255] are devoted to
this plea. He even polemises outright against the Sismondian type of
_caveat_, as usual broaching the matter first from his peculiar Utopian
ethics.
'The entrepreneurs', he holds forth, 'are essentially civil servants of
economy. By the institution of property, they are once and for all
entrusted with the nation's means of production. If they set them to
work and strain all their energies in the process, they do but their
duty, since capital--let me repeat--exists entirely for the sake of
production.' And a further, factual argument: 'Or would you have them
(the entrepreneurs) turn acute attacks of suffering into a chronic state
by working persistently and from the first with fewer forces than are
given by the means of production; are they to pay for a less severe form
of the evil with its permanent duration? Even if we were silly enough to
give them this advice, they would not be able to follow it. How could
the entrepreneurs of the world recognise the limits beyond which the
market would cease to be healthy? They engage in production without
knowing the one of the other, they are producing in the most distant
corners of the earth for a market hundreds of miles away, they
produce with such vast forces that a month's production may already
overstep the limit. How could production--so divided and yet so
powerful--conceivably estimate in good time what will be enough? Where,
for instance, are the organisations, the up-to-date statistical bureaux
and the like to help them in this task? What is worse, the price alone,
its rise and fall, indicates the position of the market, and this is not
like a barometer which predicts the temperature of the market, but more
like a thermometer which only registers it. If the price falls, the
limit has been passed already, and the evil is with us.'[256]
These thrusts, obviously aimed at Sismondi, exhibit quite fundamental
differences between the two opponents. If Engels then says in his
_Anti-Duehring_ that Sismondi first explained the crises as resulting
from under-consumption, and that Rodbertus borrowed this view from him,
he is not strictly accurate. All that Rodbertus and Sismondi have in
common is their opposition against the classical school and the general
explanation of crises as the result of the distribution of incomes. Even
in this connection Rodbertus mounts his own particular hobby horse:
over-production is not caused by the low level of working class incomes,
nor yet, as Sismondi maintains, by the capitalists' limited capacity for
consumption, but solely by the fact that with a growing productivity of
labour, the workers' income, in terms of value, represents an ever
smaller share of the product. Rodbertus takes pains to convince the
opposition that it is not the small volume of the workers' share which
causes the crises.
'Just imagine', he goes on to lecture v. Kirchmann, 'these shares to be
so small as to ensure only a bare subsistence for those who are entitled
to them. As long as you establish them as representing a proportion of
the national product, you will have a constant "vessel for value" which
can absorb ever increasing contents, and an ever increasing prosperity
of the working classes as well.... And now imagine on the contrary as
large a share for the working classes as you please, and let it become
an ever smaller fraction of the national product that grows with
increasing productivity. Then, provided it is not reduced to the present
pittance, this share will still protect the workers from undue
privations since the amount of products it represents will still be
considerably greater than it is to-day. Once this share begins to
decline, however, there will be spreading discontent, culminating in a
commercial crisis for which the capitalists are not to blame inasmuch
as they did no more than their duty in laying down the volume of
production according to the given magnitude of these shares.'
That is why the 'declining wage rate' is the real cause of crises. It
can only be counteracted by legal measures to ensure that the workers'
share represents a stable and unchanging rate of the national product.
This grotesque notion takes some understanding if we are to do justice
to its economic implications.