All this is only further development of lines of thought Marx had been following since the early 1840s. It is important to remember that they are central throughout the whole of Capital. In Volume III, they culminate in the ‘Trinity Formula’ of capital, land, and labour. The text in which this formula is developed – Chapter 48 of 52 – is partially in draft form and was put together later by Engels. But the main theses there tally completely with the lines of thought on commodity fetishism from Volume I. Capital ‘is not a thing, but rather a definite social production relation’, Marx assured us.71 This thereby applies once again to the difference between nature and society. The means of production are definite objects; they consist of machines and raw materials and as such are no more capital than gold and silver are in themselves money. But in the same way as metals (or slips of paper or numbers in an account) are transformed into money, so are raw materials transformed into capital. Nature is transformed into the supernatural – that is, the social.
Land in itself creates no value, however fertile it is. Only through labour does it generate such products as can be sold on a market. Nor does labour produce any value outside society, however useful it may be. Society, in short, is the arena in which the trinity of capital, land, and labour emerge. Each of the three are historically determined. Their interaction and conflicts are bound up with a particular mode of production in a particular type of society: capitalism. Land and labour have a much older history, but appeared then in entirely different forms.
Humanity under capitalism is still not free. The forces of production have certainly developed splendidly, but necessity still governs it. As he did so many times, Marx held out the prospect of another society: a ‘realm of freedom’ that certainly assumed necessity but which still freed humanity from subjection under the dictates of other people.72 The reader is not allowed further details; the Grundrisse has more to give on this point.
Marx showed clearly how religious or pseudo-religious fantasies flourish under capitalism. But highly respectable ideas such as freedom and equality can also develop there. He had already taken up the basis of bourgeois freedom in the Grundrisse, but now he completed the picture. Purchases and sales in the sphere of circulation are ‘in fact a very Eden of the innate rights of man’. ‘Freedom, Equality, Property, and Bentham’ reigned supreme there.73 Jeremy Bentham, the English philosopher, here represents the entire sphere of ideas, even if for Marx himself it might have been more apt to associate it with the French Revolution. But Bentham was certainly quoted more often in the circles where capitalism is defended and where for every person it was only a question of looking after themselves.
The ideals in question, according to Marx, shoot forth out of the formal freedom and equality that prevails between those buying or selling a commodity, whether it be clothing, machinery, or labour power. Both buyer and seller are free to reject the offer; they seem completely equal before the commodity, and they bargain over a property that can legitimately migrate from the one to the other. The problem is that the defenders of these ideals in bourgeois society ignore the conditions in production. Neither freedom nor equality prevail there, and the worker is robbed of every property in their labour.
Marx’s analysis did not mean that he denied the ideals of freedom, equality, or justice. But he maintained that they could not be realized unless it was in a completely different type of society than a capitalist one.
Striving for Exactitude
So far, we have examined Marx’s method of using a conceptual apparatus from classical philosophy. It was without doubt central and important for him. Marx’s historical and philosophical depth of vision is impressive; he knew his Aristotle and other ancient philosophers well. As always, Hegel made up his closest background, but the relationship with him was ambivalent. Hegel’s dialectic was important, Marx argued, but the idealism it was interwoven with was untenable. The airiness of philosophy is unusable where the real world is concerned; Hegel was standing on his head, and it was a question of turning him right side up. In the first edition of Capital, this right-side-up Hegel is often present, or at least suggested. The construction of many conceptual investigations was obviously inspired by him. But in the afterword to the second edition, Marx inserted a reservation. Hegel mystified, and I objected to that almost thirty years ago, he pointed out. But today, in an educated Germany full of mediocre epigones, Hegel was being treated like ‘a dead dog’, he continued. Thus, in the first edition, Marx ‘openly avowed myself the pupil of that mighty thinker, and even here and there, in the chapter on the theory of value, coquetted with the modes of expression peculiar to him’.74 In the French translation, these portions of the afterword have been left out, because Marx did not find them of interest on the other side of the Rhine. In other editions down to our time, however, the entire text has been included.
We have already seen that Marx was upset by Dühring’s review, in which the author of Capital was painted as a pure Hegelian. He was in fact the opposite of Hegel. But the criticism nonetheless meant that Marx toned down the Hegelian elements in his analysis of the commodity and money. This also involved popularizing the content. The main point still remains: Capital without Hegel was unthinkable.
But Hegel is never alone. Marx also had other important sources of inspiration. Adam Smith and David Ricardo scarcely need to be mentioned in this context; it is their theories he both assumed and cudgelled in his critique. On the other hand, it is necessary to call attention to the ideals he sought in the various natural sciences. There was a tension that occasionally intensified into opposition between his philosophical inspiration and his striving after the exactitude he admired in the physics and chemistry of his time. To this must be added Charles Darwin’s 1859 book, The Origin of Species, which he read early on.
He expressed this ideal back in the famous foreword to A Contribution with the view that the upheaval of the base could be observed with ‘the precision of natural science’.75 An ambition of this kind would have been completely foreign to Hegel, and it also meant something new in Marx’s life.
The words are not repeated in Capital, but this does not mean they were no longer of interest to him. His imagery already bore elements of his fascination for the natural sciences of his time. Metaphors such as ‘crystal’ and ‘cell’ are legion, and one of the leading chemists of his day, Justus von Liebig, is assiduously cited. Marx’s interest in Liebig chiefly concerned agrarian chemistry and soil exhaustion in nature, but he was certainly also impressed by the precision with which chemists could analyse complex processes. Also to the point is that, via Engels, he came into personal contact with one of the era’s great figures in organic chemistry: Carl Schorlemmer, a German socialist living in Manchester. Schorlemmer’s direct – and above all indirect – influence on him and Engels will be dealt with in the next chapter. The same applies to Darwin’s influence.
Here, it is a question of how the striving after ‘the precision of natural science’ marked his own presentation. He happily worked with simple mathematical expressions. The most obvious example concerns the concepts of surplus labour and surplus value. The starting point is the length of the working day, and he asks how many hours of labour cover the capitalist’s costs for wages. Since the capitalist must make a profit in order to continue as a capitalist, the formula M–C–M’ (as we have seen) applies, where M’ means ‘more money’. The question is then how much of the working day does the worker have to work in order to create the value corresponding to their own wages.
A misunderstanding immediately presents itself here. Researchers who were worse than Marx are actually guilty of it. In Capital, there is a very funny section called ‘Senior’s “Last Hour”’. This was Nassau William Senior, who, considering the question of shortening the working day hinted that surplus value was created at the end of the day, so therefore that hour was necessary. Marx was full of sarcasm for such a faux pas. The worker, of course, works up their wages – as they do the capitalists’ surplus
value – throughout the entire working day.76
The example Marx deals with is entirely hypothetical. The day has twenty-four hours. If we start from a twelve-hour working day, perhaps only six hours are needed for the worker to create the value that covers the capitalist’s expenses. Over the remaining six hours, the worker thus creates surplus value for the capitalist. The capitalist’s ambition is to increase working time and reduce wages, but there is a limit to what is possible so that the worker can survive. The status quo threatens, and that means ruin for the capitalist. The productive forces must therefore constantly increase, and the relative costs for wages thereby decrease; more can be produced in a shorter time. Marx illustrated the process with more fictitious examples concerning what this increase means for necessary work time. One important concept is the rate of surplus value, or the relationship between constant capital, which the capitalist invests in raw materials and machinery, and variable capital, which the workers’ wages require. With the increase in the productive forces, according to Marx, this ratio has a tendency to fall – that is, the share that represents above all more advanced machinery increases in relation to the share that goes towards wages.77
At last, Marx had arrived at what he called a law. This involves the amount of surplus value produced being equal to the variable capital multiplied by the rate of surplus value.78 It sounds abstract at first glance, but the meaning is simply that this amount corresponds to the number of workers whose labour power the capitalist purchases multiplied by the degree of exploitation the individual worker is subjected to. The idea that the specific case – the specific workplace, the specific business – can be inferred from this law is reasonable, but it assumes not only devoting time to thought experiments of the kind Marx had done previously in Capital but also being able to work with exact numerical values for the degree of exploitation. Marx also seems to have assumed this when, on the same page, he said that variable capital is to be expressed in money; as we know, money is always a quantity.
We therefore seem to be faced with the notorious transformation problem: how to go from value to money. The problem arises through Marx speaking here about laws, and obviously meaning ‘law’ in the sense that occurs in the natural sciences. A law of this kind assumes that the variables in the predication of the law can be quantified.
It is, as we will remember in the third volume, as if Marx attempted to solve the transformation problem but immediately admits that he failed. The origin of the problem itself is interesting: from the beginning, Marx criticized Ricardo for confusing labour value with production prices, and the very concept of the transformation problem has its origins in this critique. But he would thus come to work on it himself, although only in passing. In the ninth chapter, he grappled with the task. At first, he seemed full of confidence: he presented a solution, but after a number of pages he said that it was not valid and satisfied himself by observing that ‘the cost price of a commodity is always smaller than its value’.79
Marx’s own original text, which Engels revised and in this case also shortened, shows more clearly than Engels’s version how Marx tested various hypothetical arguments in a manner reminiscent of natural scientists. He clearly marked the hypothetical level by breaking in with another argument that began ‘In der Wirklichkeit…’ (In reality…).80
We have already encountered Marx’s way of concluding fruitless investigations with the sentence: ‘Our present analysis does not necessitate a closer examination of this point.’ The meaning must be that it would be meaningful to look for a solution in a completely different investigation. Here, at least, Marx did not think (when he was writing his enormous manuscript in a terrific hurry) that the problem in itself was insoluble or meaningless.
The transformation problem has given rise to many controversies. The Polish-Russian economist Ladislaus von Bortkiewicz criticized Marx’s unfinished efforts as early as 1907. He maintained that the error was due to the foundations of Marx’s theory themselves. Namely, that Marx saw the various economic factors united in a causal chain in which the preceding moments marked the following (machinery and labour power are purchased for money, set into movement, and result in products that become commodities that are sold and yield more money), whereas, for his part, Bortkiewicz concurred with the marginalism that he above all associated with Léon Walras. According to this, the various factors mutually condition one another.
In addition, Bortkiewicz regarded values and prices as two entirely different systems, and it was therefore a mistake by Marx to generally ask the question of their relationship to each other. Value has to do with production costs, whereas price is ultimately determined by supply and demand on the market.81
Bortkiewicz wanted to show that Marx’s theory was fundamentally untenable, and it may therefore seem surprising that many adherents of Marx concurred with his critique. This applies, for example, to one of the most influential Marxist economists in the West – the aforementioned Paul Sweezy, who maintained that Bortkiewicz had provided a crucial defence of Marx’s doctrine of labour value. He also maintained that Marx’s theories thereby became compatible with modern economics, created by Walras and others, in which the question of supply and demand – and not the amount of labour – determines the price of commodities.82
Even Heinrich, in Die Wissenschaft vom Wert, expresses his great appreciation for Bortkiewicz’s efforts and – more precisely – enters upon the use the latter makes of Marx’s trisection in the second volume of Capital between means of production, wages, and luxury goods. Bortkiewicz created a system of three equations from this. But the system has four unknowns: the rate of profit, as well as the three already mentioned. This opens the way for a fourth equation in which it can be assumed that the sum total of prices is equal to the sum total of values. Other economists have expanded the system into an arbitrary number of spheres of production, and with that, Heinrich says, the transformation problem finally seems to have been solved.83
But what consequences does this solution have? Does it mean that the analysis of capital can be developed? Does it open the way for new insights? On this, Heinrich says nothing.
Another leading Marx interpreter of today, the aforementioned American economist Andrew Kliman, has a completely different interpretation strategy concerning Marx’s text. Kliman limits himself largely to the three volumes of Capital as they exist in traditional standard editions. He is of the opinion that anyone who maintains that Marx was really trying to solve the transformation problem in the third volume but failed is betraying the chief duty of the good interpreter (the ‘principle of rationality’), according to which finding the most favourable interpretation of a complex text is important.84
Heinrich, on the other hand, sees Capital as only a great unfinished project with a number of sometimes contradictory attempts. There is thus no one final text for people today to go back to, not even for Volume I in the condition it is found in the French translation. In December 1881, near the end of his life, Marx was ready to break the text up again. In a letter to his Russian translator, Danielson, he wrote that he wanted to ‘change the book in the way I should have done at present’. Only his fragile health prevented him. Whereas Kliman and the chiefly US school that he is the most renowned representative of are thus building a theory for the present that is ultimately based on Marx’s Capital, Heinrich sets himself and others an even more demanding task: to further develop the unfinished Marxian research programme in a way that it can capture the capitalism of our time.85
It can be added that Kliman and Heinrich do not seem to have concerned themselves with each other’s interpretations. Kliman’s book is equally as absent from Heinrich’s Die Wissenschaft vom Wert as Heinrich’s books are in Kliman’s Reclaiming Marx’s ‘Capital’.
The interpretation that Kliman represents is called the Temporal Single-System Interpretation, or TSSI; it aims chiefly at demonstrating the logical consistency in Marx’s theses on the tendency of the rate of profit to fall and o
n transformation. Their chosen main opponent is still Bortkiewicz’s solution and the critique associated with it that implies Marx’s theoretical construction is contradictory on one important point. But Bortkiewicz has also become the spokesman for the great majority of economists who are not Marxists (and, as we have seen, even for a number who are) and agree that there are internal contradictions in Marx’s presentation.
TSSI has two main components that even its designation hints at. For the first, its advocates maintain that investment and starting price can vary over time, and normally do. In Marx’s formula, P–V–P’, the relationship between P and P’ is not as obvious as it may seem. In general, Kliman and his fellow thinkers object to the ambition of mathematizing Marx’s theory more than Marx did. Marx developed a dynamic theory, they point out, whereas equilibrium is the precondition for the mathematics that prevailing economic theory works with. Heinrich, who himself has a background in mathematics, can criticize the equilibrium models but not the mathematical usage as such.
Second, Kliman maintains that values and prices constitute a single system, whereas Bortkiewicz on the other hand sees them as separate. In plain language, this means that Kliman believes that both values and prices are expressed in money.
There is thus a point here where Heinrich and Kliman approach each other. For both, as for most of the present-day Marx interpreters, money has a key role in Capital. Heinrich just goes a step further and develops a purely monetary theory. According to this, value does not belong to the individual commodity; only price does. Money appears exclusively at the societal level, and not in production itself.
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