1940s >> 1943 >> no-471-november-1943

A Critic of Marx’s Economic Theories

Editorial Committee, Socialist Party of Great Britain.
Dear Sirs,
In the “Socialist Standard” for June 1943 I find the following explanation of how the worker is said to be exploited under capitalism : “The worker is not paid for the produce of his work for the whole duration of the day. In a working day of eight hours a worker may receive wages equivalent to, say, four hours’ produce of his work. The other four hours are given free to the capitalist. It is thus that the worker is exploited under capitalism. Were he paid for the full produce of his eight hours’ work there would be no profits for the capitalist class.”

It is surprising that a paper such as the “Socialist Standard,” which adopts such a scientific attitude to many of life’s problems, should be found in the year 1943 preaching this exploded and ridiculous fallacy of Marx. There is a case for Socialism—many will say a very strong case—but it is not to be found in the Marxian doctrines of value and surplus-value, the absurdities of which have been exposed by Socialists and non-Socialists alike.

Profit may, under certain circumstances, be robbery, but it is not robbery simply as profit. As Arnold Lunn has said, profit is merely a form of payment, and the fact that in certain cases there may be excessive profit is no more an argument against profit than the fact that in certain cases there may be excessive payment for labour would be an argument against wages. The illustration given in the “Socialist Standard” assumes that the only element entering into production is labour, and entirely ignores all other factors. But surely the contribution of capital and directive ability cannot be thus ignored. If I build a boat and lend it to a friend to go fishing, and if my friend catches ten fish and gives me five of them for the use of my capital (the boat), in what respect am I robbing him ? My capital was a necessary contribution to the final result. And if I am able to direct him to the place where he will catch the most fish because I have devoted lengthy study to the fishing ground, am I not to be rewarded for my contribution? Or let me use another illustration. The firm of Brown & Company print and publish a book, employing a certain number of men in doing so. Smith & Company in the next street do likewise, employing the same number of men. But the sales of the first book amount to 100,000 copies, while those of the second book reach several times that number. The profits in each case are different, but the labour employed is the same. Is it not clear that not labour alone, but the manner in which it is directed determines the difference ? The compositors on the first book no doubt worked as hard as those on the second. They put in the same number of hours. But in setting the type they formed different words. These were the words of the authors. And one was more successful than the other. Not labour alone, therefore, but how it is directed and the part that capital plays in the final result must be considered. Your contributor considers labour only.

I have said that Socialists and anti-Socialists alike have riddled the Marxian doctrine through and through. Permit me to append a few opinions.

“Upon Marx’s theory of value and surplus value it is not necessary to spend much time. It has not stood the test of criticism; it is out of harmony with the facts; and it is far from self-consistent.” “The Marxian theory of value seems clearly untenable not less on theoretic grounds than from an analysis of the facts of business.” (Prof. H. J. Laski : “Karl Marx.”)
“A mass of congealed fallacies.” (Prof. Flint : “Socialism.”)
“The greatest intellectual mare’s nest of the century which has just ended.” (W. H. Mallock : “A Critical Examination of Socialism.”)
“Rests upon superstition and upon a wholly superficial misconception of facts.” (Dr. A. Schaffle: “The Impossibility of Social Democracy.”)
“The widespread acceptance of it among the labouring classes is doubly mischievous. On the one hand, it makes their justified resentment at the working of the economic order take the form of denouncing one definite alleged injustice; and this gives heat rather than light to their examination of schemes of reform. On the other hand, it exasperates those whom they attack by the injustice of the particular allegation.” (“The Labour Theory of Value in Karl Marx,” H. W. B. Joseph.)
Dr. A. D. Lindsay describes the doctrine as “indefensible,” and Bertrand Russell describes it as “not a contribution to economic theory as much as a translation of hatred into abstract terms and mathematical formulae.” Sidney Webb (“The Decay of Capitalist Civilisation“) says that “the theoretic mistakes of Marx are as patent nowadays as the mistakes of Moses.”
Prof. Hearnshaw (“Survey of Socialism”) makes the following criticism : “The Labour theory of value involves two propositions, both of which are entirely untenable. Thu first is that the cost of production is the only determinant of value; the second that the only active element in production is labour, and that consequently the wage of labour is the only justifiable element in determining cost of production. The first proposition wholly ignores the vital factor of demand as a determinant of value; the second wholly ignore all the factors of production except labour. . . . And yet this fake and now abandoned and derelict theory has been made for more than a quarter of a century (1867-94) on the one hand the chief weapon of the Marxian attack upon capitalism, and on the other hand the corner-stone of the Marxian economic structure.”
Prof. Flint, in his instructive work “Socialism,” states that : “The view of Marx is undoubtedly erroneous. Profits are derivable from all the factors of production, and not merely from labour. . . . Profit and loss in business are not proportional to what Marx calls the variable capital but to the total capital employed in it. To maintain the reverse implies blindness to the most obvious and indubitable facts of industrial and commercial life.”
Finally (for I cannot claim too great a portion of your space), let me quote the words of the veteran European Socialist, Max Beer (“The Life and Teaching of Karl Marx”) : “It is impossible to set aside the view that Marx’s theory of value and surplus value has rather the significance of a political and social slogan than of an economic truth. It is for Marx the basis of the class struggle of the workers against the middle class, just as Ricardo’s theory of rent was the basis of the class struggle of the bourgeoisie against the aristocracy, or as the doctrines of the social contract and of the natural rights of man formed the basis of the struggle of the middle class against aristocracy and divine right. Such militant philosophies need not in themselves be true, only they must accord with the sentiments of the struggling mass. It is with such philosophical fictions that history works. Marx’s theory of value explains neither the vast and unparalleled accumulation of wealth nor the movement of prices during the last sixty years. Wealth, measured in values, has, in the last few decades, increased by many times the increase in living labour power. In this connection the old formula: Wealth increases in geometrical, living labour-power in arithmetical progression. The greatest difficulty in Marx is that the inventors and discoverers, the chemists and physicists, the pioneers and organisers of industry and agriculture, are not regarded by him as creators of surplus values. Thinkers, who by chemical researches or discoveries double the productive capacity of the soil and conjure forth values in millions from the waste products of industry; physicists who place new resources of power and new means of production at the disposal of mankind and multiply the productivity of labour; organisers who co-ordinate the forces of production and introduce new methods of working—all this creative and directive work demanding, as it often does, an infinite amount of intensive intellectual effort, is not considered to increase the total sum of exchange values of the nation.”

In this letter I have confined myself to Marx’s theories of value and surplus-value. For a devastating exposure of the fallacies underlying Marx’s dialectical materialism I refer your readers to Max Eastman’s interesting book, “Marxism : Is it Science ?”—where the author proves that it is not.
Yours faithfully,
H.W. Henderson


Our correspondent’s criticisms can be divided conveniently into two parts : (1) an appeal to authority; and (2) an attempt to show where Marx’s theories are wrong.

The appeal to authority calls to witness 13 individuals who have given it as their opinion that Marxian doctrines are absurd.

Let us say straight away that this kind of dispute cannot finally be settled by ail appeal to authority; if it could many economic theories once backed by distinguishes economists would not have had to be abandoned later—for example, the mid-nineteenth century economists who held that a reduction of hours of work or the prohibition of child labour would bankrupt the manufacturers, and were therefore impracticable. The logical structure of a theory may be examined to see if it contains flaws, but the final test lies in the realm of experience. Does the theory explain what it sets out to explain ? Is it found to be in accordance with the facts?

Now let us examine these quoted authorities and the basis of their authority.

Our critic, seeing that Marx is repudiated by 13 more or less well-known writers, regards the sum of their 13 opinions as being more weighty than the words of Marx. Is there justification for this? Who are these people? Out of the whole 13, apart from Schaffle, who once had a considerable reputation as an economist, none of them have standing as economists. They comprise historians, writers on philosophy and political science, a mathematician (Russell), authorities on public administration, and several distinguished literary men who have written on a wide range of political and social questions—e.g., Shaw, Mallock and Eastman.

If this economic question could be decided by an appeal to economic authority, then Marx’s opinion is worth more than the rest of them put together. He spent far more time on painstaking study of economic theories and the workings of capitalism than any of them. He had an advantage possessed by none, that of having as his close collaborator Frederick Engels, who was not only a distinguished student of economics in his own right, but was intimately acquainted with the working of capitalism through being first an employee, then director of his father’s Manchester textile business. If it is an appeal to authority that is needed, then Marx and Engels have every claim to be treated as vastly superior to most of the 13, and in some degree superior to all of them.

There are other weaknesses in the appeal. If the 13 speak as experts when they say Marx is wrong, why cannot they agree on where he is wrong and on what is right ? They not only disagree with each other, but some of them deny the right of others to be regarded as useful or reliable witnesses at all. Is Shaw plus Mallock any weightier than either of them alone ? Not if we recall what they said about each other. (For the evidence see “Socialism and Superior Brains,” by G. B. Shaw.) Shaw charged Mallock with “rustic ignorance” of economics; declared that “any Socialist over the age of six could knock Mr. Mallock into a cocked hat ; said that Mallock’s “practical ignorance of society” was so incredible that he found it difficult to persuade his fellow Fabians that Mallock really believed what he wrote; and held him up as proof that “even the cleverest man will believe anything he wishes to believe, in spite of all the facts and all the text-books in the world.”

Mallock retorted that Shaw had entirely misrepresented his views, had obviously not read his book, and that “Mr. Shaw writes about myself very much as a man would write who mistook the Book of Genesis for the Koran.”

Now see where the appeal to authority gets us. If Shaw is an authority then Mallock is a rustic ignoramus about economics, and if Mallock is an authority Shaw is incompetent and untrustworthy.

Other similar illustrations could be given, as, for example, the statement made by Laski when reviewing the Webbs’ “Soviet Communism,” that in this book they had “a mood of ecstatic acceptance which makes them blind to facts which it is simply not possible to deny” Manchester Guardian, November 4, 1941).

Another weakness is that the long list of 13 is largely a duplication. Laski (who is not an economist) acknowledged when he wrote “Communism” (Home University Press, 1927) that in his chapter on Marxian economics he was indebted to Lindsay. A. D. Lindsay (also not an economist) in his book “Karl Marx’s Capital” (Oxford University Press, 1925, p. 53) admitted that though he differed widely from H. W. B. Joseph, he had “been greatly helped by his demonstration … of the indefensibility of doctrines often ascribed to Marx.” So Lindsay stands on Joseph’s shoulders and Laski stands on Lindsay’s, and Joseph anyway is not an economist but primarily a writer and lecturer on philosophy.

Next it could be shown, if space permitted, that many of the 13 put themselves out of court by rejecting Marx’s theories without knowing what they are. Earlier this year Shaw, in an article “What would Marx say about Beveridge,” declared that “Marx’s attempt to measure value by abstract labour-power can lead only to nonsense and bankruptcy.” Now this is not what Marx attempted to do. He expressly and clearly showed that value is determined by the amount of labour socially necessary for its production. When Shaw’s attention was drawn to his error in confusing “labour” with “labour-power” he stuck to his error and claimed that Marx really meant labour-power (Plebs, July, 1943). It would be easy to demolish anyone’s theories if we are permitted to re-write them to suit ourselves.

Then let us glance at Laski. In his “Communism” (p. 95) he assures us that, according to the Marxian theory of value, “we can measure the amount of ‘labour power’ in each man’s effort and so determine scientifically how he ought to be paid” (our italics). This may be Laski’s theory; it certainly isn’t Marx’s.

Laski evidently borrowed it from Lindsay, who wrote : “The labour theory of value … is primarily interested in what a man ought to get in reward for his labour . . .” (Lindsay, “Karl Marx’s Capital,” p. 61.)

This is not true, as any serious student of Marx knows. Marx was not concerned with how a worker “ought to be paid,” but with explaining how, under capitalism, he is paid. Laski is equally wide of the mark when he says (p. 116) that for Marx “Commodities have also an inherent value, which is what they would obtain in exchange where society was properly organised.” Laski ought to know that for Marx the aim was Socialism, a system of society in which there would be neither commodity production nor the system of wage-labour.

Is it then seriously suggested that these gentlemen, who do not know what Marx’s theories are, shall be regarded as good judges of the soundness of these theories?

(To be continued.)


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