1940s >> 1944 >> no-475-march-1944

Marx’s Economic Theories

Editorial Committee, THE SOCIALIST STANDARD.
Dear Sirs,
In thanking you for your courtesy in publishing my letter on Marx, I would ask your permission to make the following answer to “H.’s” reply.
My critic states : (1) that the authorities I quoted are, with one exception, not economists, and (2) that they do not always agree with one another.
In reply to this I would say that they are all men who have devoted a lifetime to the study of political and economic questions, and that no one can expect them to agree with one another on every point.
In what branch of science are all the authorities agreed on everything?
As for the statement that they are not “political economists,” if by this term is meant those who are professors of the subject in our universities, I would ask what professor of political economy in any university in the world to-day, outside Russia, does endorse Marx’s theory of value? I have never been able to find the name of anyone who does, though I have questioned many of my Marxian friends on the subject. And it will not do to say that they refrain from doing so from fear of victimisation by the university authorities. In this revolutionary age anyone who came forward as an open champion of Marx would probably make a fortune from the sale of his books. The Dean of Canterbury was not put out of the Church for championing Russia, and his uncritical works (so thoroughly exposed in THE SOCIALIST STANDARD) are circulated by the million.
Moreover, the fact that one authority builds upon the theory of another (another point made by your contributor) does not invalidate his testimony. Sir Arthur Keith stood upon the shoulders of Darwin, but his testimony to the truth of evolution is no less valuable for that. Even Marx was indebted to his predecessors.
I scarcely think it necessary to dwell on Shaw’s remarks on Mallock. As a humorist, Shaw is at times superb, at others just a little tiresome. But surely no one takes him seriously on economic science. His criticism of Mallock is typical-—a man whose shoes, intellectually speaking, he was, in my opinion, never fit to clean.
The authorities I quoted gave reasons for their belief that Marx was wrong, but “H.” has not refuted them. In my opinion, their arguments cannot be disproved.
In his second article your contributor says, “Our critic obviously misunderstands the Marxian theory of value.” If this is so, I err in good company. After a careful, analysis of Marx’s teaching, Prof. Hearnshaw says : “The absurdity of the labour theory of value, stated thus succinctly, is so patent and so appalling that Marx himself was compelled to conceal its naked monstrosity by clouds of Hegelian vapour. He plays upon the word ‘commodity’ until it loses all recognisable features. He juggles with the word ‘labour’—abstract labour, concrete labour, skilled labour, unskilled labour, manual labour, mental labour, human labour, homogeneous labour, socially necessary labour, average labour, general labour, and so on indefinitely—-until the most devoted and most diligent Marxians (e.g,, Kautsky and Trotsky) tear one another to pieces in contradictory assertions as to what Marx means. ‘It is possible,’ said one despairing Socialist—and probably many more than one—’to prove anything from Marx.’ ”
I think my illustration of the fishing boat was quite appropriate, for if the Marxian teaching that rent, interest, and profit are three forms of robbery is true, it should apply not in certain cases but in all cases. The fact that modern industry is run on the joint stock principle does not alter the fact that capital so contributed is as necessary as labour in the production of wealth, and is entitled to an adequate (though not an excessive) return.
The way in which I see the matter is this : A ship requires £10,000 to build. I, as a worker, earn £200 per year—that is to say, I produce £200 worth of consumable goods and receive tickets in the form of money entitling me to draw upon the common store to that extent. I choose to spend only £100, however (that is to say, I draw upon the common store to the extent of only half of my contribution to it). The other half I hand to the directors or promoters of a joint stock company. This they pay, at least to the greater extent, in wages, which entitle the workers who receive them to draw upon, or consume, that half of the consumable goods I have produced but have refrained from claiming. The energy in these goods is converted into the energy of human labour, and the energy of human labour is converted eventually into a ship, since I am but one of 300 investors who act in a similar manner. My investment and the investment of my fellow-shareholders was as necessary as any other factor to the result. If we claim a share of the ship’s earnings (it may, to simplify the illustration, be regarded as a trawler), in what respect are we “robbing the workers?” It will not do to say that all transactions are not on such a clear cut basis. If the Marxian view is sound—if, as your contributor implied in his original article, labour is the only factor in production entitled to reward, it must be shown why this is so. And, as I have already said, this argument, should apply, not in one case, but in every ease.
My illustration of one book selling five times better than another—(I accept the amended version of your contributor, which puts the matter in an even clearer light)—I still consider valid, but considerations of space prevent my entering into a lengthy discussion of this. The example, however, serves to illustrate a further point brought out by almost every critic of Marx—namely, his disregard of demand as a determinant of value.
In conclusion; may I say just this : Quite by chance I came across a modern book by a political economist. “Capitalism, Socialism, and Democracy,” by J. A. Schumpeter, Professor of Economics in Harvard University (published by Allen & Unwin). Mindful of your contributor’s reproach that my authorities were not political economists (though some have spent as long as Marx in study of the subject), I looked up Professor Schumpeter’s view of the matter under discussion, and here it is : “Everybody knows that this theory of value is unsatisfactory” (page 23); “In any case it is dead and buried” (page 25).
But the theory forms the very cornerstone of the Marxian attack on capitalism. Without it, Marxism itself is dead !
Yours faithfully,
H. W. Henderson.


(Our critic’s first letter and our reply appeared in the November and December issues.)

The point has already been made that a dispute about economic theory cannot be settled by an appeal to authorities: if it could, Marx’s own statements are more weighty than those of his critics. The real test is that of experience. Our critic asks what professor of political economy in any university outside Russia endorses Marx’s theory of value. The arbitrary exclusion of Russian economists gives away our critic’s whole case. If economic authorities as such can decide the issue, then the Russian have as much authority as any others. It is a tacit admission by our critic that professors are liable to be influenced by those who control the universities and by the environment in which they make their living. Abundant evidence of this is given in Upton Sinclair’s ‘Goose-step,’ a study of the suppression of opinion in American universities. A typical incident among many is that of the professor who declined an invitation to address a student’s club on Marxian theories—he wanted to keep his job (p. 211). Incidentally, Sinclair quotes Laski on the way pressure makes university professors adopt reactionary ideas in order to get promotion, or makes them keep silent (p. 391). Quite recently (Daily Express, November 28, 1942) it was related how the late Sir Arnold Wilson found himself up against a conspiracy of silence at the universities about the ramifications of the insurance companies. Beveridge explained to him why the London School of Economics, “on grounds of expediency,” ignored the subject.

In addition to pressure, there are other reasons why economists reject Marx. One is that they pick up biased and incorrect views of what Marx’s theories actually are during their own training at universities. Another is that the atmosphere of social snobbery makes them reluctant to accept a theory which identifies their own “intellectual” labour with that of the working class.

Our critic, earlier quoted Laski against Marx. Since 1927, when Laski made that criticism, he has been moving more and more towards accepting Marx’s views, and in Reynolds News (March 7, 1943) he wrote:

“It is important to add that Marxism has never been more living than to-day; as the eminent American economist, Thorstein Veblen, said, his is the only socialism that really matters.”

Our critic says there is no branch of science in which all the authorities are agreed about everything. This may be true, but it follows that where they are disagreed the dispute cannot be settled by an appeal to authorities.

He quotes Sir Arthur Keith as one authority who builds upon the theory of another (Darwin). This has no bearing on our point about various anti-Marxian historians and others who simply passed on, parrot fashion, each other’s opinions about Marxian economics. Keith is himself an independent authority who claims that his anatomical experience and his original studies confirm Darwin’s main conclusions.

Our critic quotes Hearnshaw to show that if he errs he does so in good company. This may bring comfort to our critic, but if he persists in thinking that Marx claimed all labour as value-creating, despite Marx’s repeated statement that he was only referring to “socially necessary labour.” then fifty Hearnshaws won’t make it any different.

On the question of the operation of capitalist undertakings, our critic gives another example of what he thinks happens. We are asked to consider a worker who earns £200 a year (in return for his work which produces £200 worth of consumable goods), and who could draw the whole £200 from the common store,, but actually saves £100 and invests it. In support of Ins claim that “capital … is as necessary as labour in the production of wealth,” our critic says, “If we claim a share of the ship’s earnings … in what respect are we robbing the workers?”

Here in a nutshell is the fallacy of the whole argument. Labour and capital are claimed to be equally necessary, yet on the basis of this principle of equal treatment our critic claims that the worker who puts in £200 (through his work) is entitled to draw out £200 and no more; while the investor who puts in £100 is entitled, not only to continue owning his £100 investment, but in addition is to receive “an adequate return.”

It may be asked, too, whence comes the “adequate return,” since, according to our critic, the workers get back as wages all that they producer As the investor, as such, produces nothing but merely allows the workers to use the means of production, and as inanimate capital itself obviously cannot add more than its own value to the product, our critic is asking us to accept the theory that there is no surplus value, yet out of this non-existent surplus the investor receives his profit. Actually it can only come from the unpaid labour of the workers. The workers are working, say, half their time to produce their own cost of subsistence (the value of their labour power, their wages), and the rest of the time to produce the surplus value the capitalist takes.

It should be added that under capitalism as it really is the great bulk of existing capital is not the result of current savings, most of it being inherited; still less is it the result of savings by workers. All their savings together do not and could not amount to more than a trifling part of the whole capital.

The capitalists as such are not producers, nor are they “savers” except in the technical sense that their income is greatly in excess of what they need to spend, and can spend, on their own consumption. They are monopolists who, through their control of the machinery of government, are able to exact toll in the form of surplus value on the wealth produced by the workers who operate the capitalist-owned means of production.

As a late after-thought, our critic charges Marx with disregarding demand as a determinant of value. It is quite unnecessary to go into that charge here, for it will be noticed that our critic likewise disregarded demand. When he explained that a worker produces value by his labour (“£200 worth of consumable goods”), he did so without mentioning this after-thought that not the worker but the demand produced the value.

Last of all, our critic asks us to consider Schumpeter’s opinion that “everybody knows that this theory of value is unsatisfactory,” and that “in any case, it is dead and buried.” They both protest too much. If it is dead and buried, and everybody knows it is unsatisfactory, why are Schumpeter and our critic so anxious to kill it again?


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