Rudolf Hilferding

BHM-BAWERK'S CRITICISM OF MARX

SUMMARY
Rudolf Hilferding
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Bhm-Bawerk's Criticism of Marx.........................................................................................1
Summar.....................................................................................................................................!
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REFACE
,H# 5u6lication of the third 7olume of Capital has made hardl an im5ression u5on
6ourgeois economic science. 8e ha7e seen nothing of the 9:u6ilant hue and cr9 antici5ated 6
Som6art.
;1<
)o struggle of intellects has taken 5lace= there was no contest in majorem scientiae
gloriam. $or in the theoretical field 6ourgeois economics no longer engages in 6lithe and :oous
fights. %s s5okesman for the 6ourgeoisie> it enters the lists onl where the 6ourgeoisie has 5ractical
interests to defend. +n the economico-5olitical struggles of the da it faithfull reflects the conflict of
interests of the dominant cli?ues> 6ut it shuns the attem5t to consider the totalit of social
relationshi5s> for it rightl feels that an such consideration would 6e incom5ati6le with its continued
existence as 6ourgeois economics. #7en where the 6ourgeois economists> com5iling their 9sstems9 or
writing their 9sketches>9 must 5erforce s5eak of the relationshi5s of the whole> the onl whole the
succeed in 5resenting is la6oriousl 5ieced together out of its se5arate 5arts. ,he ha7e ceased to deal
with 5rinci5les= the ha7e ceased to 6e sstematic= the ha7e 6ecome eclectics and sncretists. 0iet@el>
author of Theoretische Sozialkonomie, is 5erfectl logical when> making the 6est of a 6ad 6usiness>
he raises eclecticism to the rank of a 5rinci5le.
,he onl exce5tion is the 5schological school of 5olitical econom. ,he adherents of this
school resem6le the classical economists and the Marxists in that the endea7or to a55rehend
economic 5henomena from a unitar outlook. *55osing Marxism with a circumscri6ed theor> their
criticism is sstematic in character> and their critical attitude is forced u5on them 6ecause the ha7e
started from totall different 5remises. %s earl as 1AAB> in his Capital and Interest, Bhm-Bawerk
:oined issue with the first 7olume of Capital, and soon after the 5u6lication of the third 7olume of that
work he issued a detailed criticism the su6stance of which was re5roduced in the second edition of his
Ca5ital and +nterest ;-erman edition 1C44<.
;!<
He 6elie7es he has 5ro7ed the untena6ilit of economic
Marxism> and confidentl announces that 9the 6eginning of the end of the la6or theor of 7alue9 has
6een inaugurated 6 the 5u6lication of the third 7olume of Capital.
Since his criticism deals with 5rinci5les> since he does not attack isolated and ar6itraril
selected 5oints or conclusions> 6ut ?uestions and reflects as untena6le the 7er foundation of the
Marxist sstem> 5ossi6ilit is afforded for a fruitful discussion. But since the Marxist sstem has to 6e
dealt with in its entiret> this discussion must 6e more detailed than that which is re?uisite to meet the
o6:ections of the eclectics> o6:ections 6ased u5on misunderstanding and concerned onl with
indi7idual details.
Foo!no!e"
#$ 8erner Som6art>9Dur 3ritik des konomischen Sstems 7on 3arl Marx>9 Archiv fr
Soziale Gesetzge!ng !nd Statistik, &ol. &++ E1ACBF> 55. 111-1CB.
%$ %ll Hilferding's su6se?uent references to this 6ook are from the second -erman edition
E1C44F> and it is therefore im5ossi6le for us to refer the reader to Smart's #nglish translation> made
from the first -erman edition E1AABF. % third -erman edition was 5u6lished in 1C1B. ;,ranslators<
#$ &A'UE AS A( ECO(OMIC CATE)ORY
,H# analsis of the commodit constitutes the starting 5oint of the Marxist sstem. Bhm-
Bawerk's criticism is 5rimaril le7eled against this analsis.
Bhm-Bawerk contends that Marx fails to adduce either an em5irical or a 5schological 5roof
of his thesis that the 5rinci5le of 7alue is to 6e sought in la6or. He 95refers another> and for such a
su6:ect somewhat singular line of e7idenceGthe method of a 5urel logical 5roof> a dialectic deduction
from the 7er nature of exchange.9
;1<

Marx had found in %ristotle the idea that exchange cannot exist without e?ualit> and e?ualit
cannot exist without commensura6ilit. Starting with this idea> he concei7es the exchange of two
commodities under the form of an e?uation> and from this infers that a common factor of the same
amount must exist in the things exchanged and there6 e?uated> and then 5roceeds to search for this
common factor to which the two e?uated things must> as exchange 7alues> 6e reduci6le. )ow
according to Bhm-Bawerk the most 7ulnera6le 5oint in the Marxist theor is to 6e found in the
logical and sstematic 5rocesses of distillation 6 means of which Marx o6tains the sought-for
9common factor9 in la6or. ,he exhi6it> he declares> almost as man cardinal errors as there are 5oints
in the argument. $rom the 6eginning Marx onl 5uts into the sie7e those exchangea6le ;should read>
9interchangea6le>9 R. H.< things which he desires finall to winnow out as 9the common factor>9 and
he lea7es all the others outside. ,hat is to sa> he limits from the outset the field of his search to
9commodities>9 considering these solel as the 5roducts of la6or contrasted with the gifts of nature.
)ow it stands to reason> continues Bhm-Bawerk> that if exchange reall means an e?uali@ation>
which assumes the existence of 9a common factor of the same amount>9 this common factor must 6e
sought and found in e7er s5ecies of goods which is 6rought into exchange> not onl in 5roducts of
la6or> 6ut also in gifts of nature> such as the soil> wood in trees> water 5ower> etc. ,o exclude these
exchangea6le goods is a gross error of method> and the exclusion of the gifts of nature is the less to 6e
:ustified 6ecause man natural gifts> such as the soil> are among the most im5ortant o6:ects of 5ro5ert
and commerce> and also 6ecause it is im5ossi6le to affirm that in nature's gifts exchange 7alues ;this
of course should 6e 95rices9H R. H.< are alwas esta6lished ar6itraril and 6 accident. Marx is
likewise careful to a7oid mentioning that he excludes from in7estigation a 5art of exchangea6le goods.
+n this case> as in so man others> he manages to glide with eel-like dialectic skill o7er the difficult
5oints of his argument. He omits to call his readers' attention to the fact that his idea of 9commodities9
is narrower than that of exchangea6le goods as a whole. )a> more> he continuall endea7ors to
o6literate the distinction. He is com5elled to take this course> for unless Marx had confined his
research> at the decisi7e 5oint> to 5roducts of la6or> if he had sought for the common factor in the
9exchangea6le9 gifts of nature as well> it would ha7e 6ecome o67ious that la6or cannot 6e the
common factor. Had he carried out this limitation ?uite clearl and o5enl> the gross fallac of method
would ine7ita6l ha7e struck 6oth himself and his readers. ,he trick could onl ha7e 6een 5erformed>
as Marx 5erformed it> with the aid of the mar7elous dialectic skill wherewith he glides swiftl and
lightl o7er the knott 5oint.
But 6 means of the artifice :ust descri6ed> 5roceeds our critic> Marx has merel succeeded in
con7incing us that la6or can in fact enter into the com5etition. ,he exclusion of other com5etitors is
effected 6 two arguments> each of a few words onl> 6ut each containing a 7er serious logical
fallac. +n the first of these Marx excludes all 9geometrical> 5hsical> chemical> or other natural
?ualities of the commodities>9 for 9their 5hsical ?ualities claim our attention onl in so far as the
affect the utilit of the commoditiesGmake them use 7alues. *n the other hand> the exchange relation
of commodities is e7identl characteri@ed 6 the a6straction of their use 7alues>9 6ecause 9within this
relation Ethe exchange relationF one use 7alue is as good as another 5ro7ided onl it 6e 5resent in the
5ro5er 5ro5ortion.9
Here> sas Bhm-Bawerk> Marx falls into a gra7e error. He confuses the disregarding of a
genus with the disregarding of the s5ecific forms in which this genus manifests itself. ,he s5ecial
forms under which use 7alue ma a55ear ma 6e disregarded> 6ut the use 7alue of the commodit in
general must ne7er 6e disregarded. Marx might ha7e seen that we do not a6solutel disregard use
7alue> from the fact that there can 6e no exchange 7alue where there is not a use 7alueGa fact which
Marx himself is re5eatedl forced to admit.
'et us for a moment interru5t our reca5itulation of Bhm-Bawerk's criticism 6 a 6rief
inter5olation calculated to throw light u5on the 5scholog no less than u5on the logic of the leader of
the 5schological school.
8hen + disregard the 9s5ecific forms in which use 7alue ma manifest itself>9 disregarding>
therefore> use 7alue in its concreteness> + ha7e> as far as + am concerned> disregarded use 7alue in
general> since> as far as + am concerned> use 7alue exists in its concreteness solel as a thus or thus
constituted use 7alue. Ha7ing ceased for me to 6e a use 7alue> it matters nothing to me that it has a use
7alue for others> 5ossesses utilit for this or that other 5erson. + do not exchange it until the moment
arri7es when it has ceased to 5ossess a use 7alue for me. ,his a55lies literall to the 5roduction of
commodities in its de7elo5ed form. Here the indi7idual 5roduces commodities of 6ut one kind>
commodities of which one s5ecimen at most can 5ossess a use 7alue for him> whereas in the mass the
commodities ha7e for him no such use 7alue. +t is a 5recondition to the exchangea6ilit of the
commodities that the should 5ossess utilit for others> 6ut since for me the are de7oid of utilit> the
use 7alue of m commodities is in no sense a measure e7en for m indi7idual estimate of 7alue> and
still less is it a measure of an o6:ecti7e estimate of 7alue. +t a7ails nothing to sa that the use 7alue
consists of the ca5acit of these commodities to 6e exchanged for other commodities> for this would
im5l that the extent of the 9use 7alue9 is now determined 6 the extent of the exchange 7alue> not the
extent of the exchange 7alue 6 the extent of the use 7alue.
%s long as goods are not 5roduced for the 5ur5ose of exchange> are not 5roduced as
commodities> as long> that is to sa> as exchange is no more than an occasional incident wherein
su5erfluities onl are exchanged> goods confront one another solel as use 7alues.
9,he 5ro5ortions in which the are exchangea6le are at first ?uite a matter of chance. 8hat
makes them exchangea6le is the mutual desire of their owners to alienate them. Meantime the need for
foreign o6:ects of utilit graduall esta6lishes itself. ,he constant re5etition of exchange makes it a
normal social act. +n the course of time> therefore> some 5ortion at least of the 5roducts of la6or must
6e 5roduced with a s5ecial 7iew to exchange. $rom that moment the distinction 6ecomes firml
esta6lished 6etween the utilit of an o6:ect for the 5ur5oses of consum5tion> and its utilit for the
5ur5oses of exchange. +ts use 7alue 6ecomes distinguished from its exchange 7alue. *n the other
hand> the ?uantitati7e 5ro5ortion in which the articles are exchangea6le 6ecomes de5endent on their
5roduction itself. Custom stam5s them as 7alues with definite magnitudes.9
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8e ha7e in fact nothing more than a disregard 6 Marx of the s5ecific forms in which the use
7alue manifests itself. $or the use 7alue remains the 96earer of 7alue.9 ,his is indeed self-e7ident> for
97alue9 is nothing more than an economic modification of use 7alue. +t is solel the anarch of the
contem5orar method of 5roduction> owing to which under certain conditions Ea glutF a use 7alue
6ecomes a non-use-7alue and conse?uentl 7alueless> which makes the recognition of this self-e7ident
truth a matter of considera6le im5ortance.
'et us return to Bhm-Bawerk. ,he second ste5 in the argument> he tells us> is still worse.
Marx contends that if the use 7alue of commodities 6e disregarded> there remains in them 6ut one
other ?ualit> that of 6eing 5roducts of la6or. But do there not remain a num6er of other ?ualitiesI
Such is Bhm-Bawerk's indignant in?uir. Ha7e the not the common ?ualit of 6eing scarce in
5ro5ortion to demandI +s it not common to them to 6e the o6:ects of demand and su55l> or that the
are a55ro5riated> or that the are natural 5roductsI +s it not common to them that the cause ex5ense
to their 5roducersGa ?ualit to which Marx draws attention in the third 7olume of Capital" 8h
should not the 5rinci5le of 7alue reside in an one of these ?ualities as well as in the ?ualit of 6eing
5roducts of la6orI $or in su55ort of this latter 5ro5osition Marx has not adduced a shred of 5ositi7e
e7idence. His sole argument is the negati7e one> that the use 7alue> thus ha55il disregarded and out of
the wa> is not the 5rinci5le of exchange 7alue. But does not this negati7e argument a55l with e?ual
force to all the other common ?ualities o7erlooked ;H< 6 MarxI ,his is not all. Marx writes as
followsJ 9%long with the useful ?ualities of the 5roducts ;of la6or< we 5ut out of sight 6oth the useful
character of the 7arious kinds of la6or em6odied in them> and the concrete forms of that la6or= there is
nothing left 6ut what is common to them all= the are reduced to one and the same sort of la6or>
human la6or in the a6stract.9
;/<
But in saing this he admits that for an exchange relationshi5> not onl
one use 7alue 6ut also an one kind of la6or 9is :ust as good as another> 5ro7ided onl it 6e 5resent in
the 5ro5er 5ro5ortion.9 +t follows that the identical e7idence on which Marx formulated his 7erdict of
exclusion in the case of use 7alue will hold good as regards la6or. 'a6or and use 7alue> sas Bhm-
Bawerk> ha7e a ?ualitati7e side and a ?uantitati7e side. 2ust as the use 7alue differs according as it is
manifested in a ta6le or in arn> so also does la6or differ as car5entr or s5inning. %nd :ust as we ma
com5are different kinds of la6or according to their ?uantit> so we ma com5are use 7alues of
different kinds according to the 7aring amount of use 7alue. +t is ?uite im5ossi6le to understand wh
the 7er same e7idence should result in the exclusion of one com5etitor and in the assigning of the
5ri@e to the other. Marx might :ust as well ha7e re7ersed his reasoning 5rocess and ha7e disregarded
la6or.
Such is Marx's logic> such his method of 5rocedure> as reflected in the mind of Bhm-Bawerk.
His 5rocedure> according to the latter> was 5erfectl ar6itrar. %lthough in an utterl un:ustified 6ut
extremel artful manner he has managed to secure that nothing 6ut the 5roducts of la6or shall 6e left to
6e exchanged> it was im5ossi6le for him to adduce e7en the slightest ground for the contention that the
common ?ualit which must 5resuma6l 6e 5resent in the commodities to 6e exchanged is to 6e
sought and found in la6or. *nl 6 willfull ignoring a num6er of other ?ualities> onl 6 his utterl
unwarranted disregard of use 7alue> did Marx attain the desired result. 2ust as little as the classical
economists was Marx in a 5osition to furnish an atom of 5roof on 6ehalf of the 5ro5osition that la6or
is the 5rinci5le of 7alue.
Bhm-Bawerk's critical ?uestion to which Marx is alleged to ha7e gi7en so fallacious an
answer is the ?uestionJ what right had Marx to 5roclaim la6or to 6e the sole creator of 7alueI *ur
counter-criticism must in the first instance consist of a demonstration that the analsis of the
commodit furnishes the desired answer.
,o Bhm-Bawerk> the Marxist analsis esta6lishes a contrast 6etween utilit and the 5roduct
of la6or. )ow we full agree with Bhm-Bawerk that no such contrast exists. 'a6or must 6e done on
most things in order to render them useful. *n the other hand> when we estimate the utilit of a thing>
it is a matter of indifference to us how much la6or has 6een ex5ended on it. % good does not 6ecome a
commodit merel in 7irtue of 6eing the 5roduct of la6or. But onl in so far as it is a commodit# does
a good exhi6it the contrasted ?ualities of use 7alue and 7alue. )ow a good 6ecomes a commodit
solel through entering into a relationshi5 with other goods> a relationshi5 which 6ecomes manifest in
the act of exchange> and which> ?uantitati7el regarded> a55ears as the exchange 7alue of the good.
,he ?ualit of functioning as an exchange 7alue thus determines the commodit character of the good.
But a commodit cannot of its own initiati7e enter into relationshi5s with other commodities= the
material relationshi5 6etween commodities is of necessit the ex5ression of a 5ersonal relationshi5
6etween their res5ecti7e owners. %s owners of commodities> these reci5rocall occu5 definite
relationshi5s of 5roduction. ,he are inde5endent and e?ual 5roducers of 5ri7ate 9la6ors.9 But these
5ri7ate 9la6ors9 are of a 5eculiar kind> inasmuch as the are effected> not for 5ersonal use 6ut for
exchange> in as much as the are intended for the satisfaction> not of indi7idual need> 6ut of social
need. ,hus whereas 5ri7ate ownershi5 and the di7ision of la6or reduces societ into its atoms> the
exchange of 5roducts restores to societ its social interconnections.
,he term commodit> therefore> is an economic term= it is the ex5ression of social
relationshi5s 6etween mutuall inde5endent 5roducers in so far as these relationshi5s are effected
through the instrumentalit of goods. ,he contrasted ?ualities of the commodit as use 7alue and as
7alue> the contrast 6etween its manifestation as a natural form or as a 7alue form> now a55ears to us to
6e a contrast 6etween the commodit manifesting itself on the one hand as a nat!ral thing and on the
other hand as a social thing. 8e ha7e> in fact> to do with a dichotom> wherein the gi7ing of the 5lace
of honor to one 6ranch excludes the other> and con7ersel. But the difference is merel one of 5oint of
7iew. ,he commodit is a unit of use 7alue and of 7alue> 6ut we can regard that unit from two
different as5ects. %s a natural thing> it is the o6:ect of a natural science= as a social thing> it is the
o6:ect of a social science> the o6:ect of 5olitical econom. ,he o6:ect of 5olitical econom is the social
as5ect of the commodit> of the good> in so far as it is a sm6ol of social interconnection. *n the other
hand> the natural as5ect of the commodit> its use 7alue> lies outside the domain of 5olitical econom.
;B<
% commodit> howe7er> can 6e the ex5ression of social relationshi5s onl in so far as it is
itself contem5lated as a 5roduct of societ> as a thing on which societ has stam5ed its im5rint. But for
societ> which exchanges nothing> the commodit is nothing more than a 5roduct of la6or. Moreo7er>
the mem6ers of societ can onl enter into economic relationshi5s one with another according as the
work one for another. ,his material relationshi5 a55ears in its historic form as the exchange of
commodities. ,he total 5roduct of la6or 5resents itself as a total 7alue> which in indi7idual
commodities manifests itself ?uantitati7el as exchange 7alue.
,he commodit 6eing> as far as societ is concerned> the 5roduct of la6or> this la6or there6
secures its s5ecific character as sociall necessar la6or= the commodit no longer exhi6its itself to us
as the 5roduct of the la6or of different su6:ects> for these must now rather 6e looked u5on as sim5le
9instruments of la6or.9 #conomicall regarded> therefore> the 5ri7ate 9la6ors9 manifest themsel7es as
their o55osites> as social 9la6ors.9 ,he condition which gi7es its 7alue-creating ?ualit to la6or is>
therefore> the social determination of the la6orGit is a ?ualit of social la6or.
,hus the 5rocess of a6straction where6 Marx 5asses from the conce5t of concrete 5ri7ate
la6or to the conce5t of a6stractl human social la6or> far from 6eing> as Bhm-Bawerk imagines>
identical with the 5rocess of a6straction where6 Marx excludes use 7alue from consideration> is in
fact the 7er o55osite of that 5rocess.
% use 7alue is an indi7idual relationshi5 6etween a thing and a human 6eing. +f + disregard its
concreteness Eand + am com5elled to do so as soon as + alienate the thing so that it ceases to 6e a use
7alue for meF + there6 destro this indi7idual relationshi5. But solel in its indi7idualit can a use
7alue 6e the measure of m 5ersonal estimate of 7alue. +f> on the other hand> + disregard the concrete
manner in which + ha7e ex5ended m la6or> it ne7ertheless remains a fact that la6or in general has
6een ex5ended in its uni7ersal human form> and this is an o6:ecti7e magnitude the measure of which is
furnished 6 the duration of the effort.
+t is 5recisel this o6:ecti7e magnitude with which Marx is concerned. He is endea7oring to
disco7er the social nexus 6etween the a55arentl isolated agents of 5roduction. Social 5roduction> and
therewith the actual material 6asis of societ> is> according to its nature> ?ualitati7el determined 6
the nature of the organi@ation of social la6or. ,his organi@ation> causall determined 6 economic
need> soon ac?uires a legal> a :uristic fixation. %n 9external regulation9 of this character constitutes a
logical 5remise of the economic sstem> and furnishes the framework within which the se5arate
elements of the societ> the elements which la6or and the elements which control la6or> mutuall
influence one another. +n a societ characteri@ed 6 the di7ision of 5ro5ert and 6 the di7ision of
la6or> this relationshi5 a55ears in the form of exchange> ex5resses itself as exchange 7alue. ,he social
nexus manifests itself as the outcome of 5ri7ate relationshi5s> the relationshi5s not of 5ri7ate
indi7iduals 6ut of 5ri7ate things. +t is 5recisel this which in7ol7es the whole 5ro6lem in mster.
+nasmuch> howe7er> as the things enter into mutual relations> the 5ri7ate la6or which has 5roduced
them ac?uires 7alidit solel in so far as it is an ex5enditure of its own antithesis> sociall necessar
la6or.
,he outcome of the social 5rocess of 5roduction thus ?ualitati7el determined is ?uantitati7el
determined 6 the sum total of the ex5ended social la6or. %s an ali?uot 5art of the social 5roduct of
la6or Eand as such onl does the commodit function in exchangeF> the indi7idual commodit is
?uantitati7el determined 6 the ?uota of social la6or time em6odied in it.
%s a 7alue> therefore> the commodit is sociall determined> is a social thing. %s such alone
can it 6e su6:ected to economic consideration. But when our task is to effect the economic analsis of
an social institution that we ma disco7er the intimate law of motion of the societ> and when we call
u5on the law of 7alue to render us this ser7ice> the 5rinci5le of 7alue cannot 6e an other than that to
whose 7ariations the changes in the social institution must in the last instance 6e referred.
#7er theor of 7alue which starts from use 7alue> that is to sa from the natural ?ualities of
the thing> whether from its finished form as a useful thing or from its function> the satisfaction of a
want> starts from the indi7idual relationshi5 6etween a thing and a human 6eing instead of starting
from the social relationshi5s of human 6eings one with another. ,his in7ol7es the error of attem5ting
from the su6:ecti7e indi7idual relationshi5> therefrom su6:ecti7e estimates of 7alue are 5ro5erl
deduci6le> to deduce an o6:ecti7e social measure. +nasmuch as this indi7idual relationshi5 is e?uall
5resent in all social conditions> inasmuch as it does not contain within itself an 5rinci5le of change
Efor the de7elo5ment of the wants and the 5ossi6ilit of their satisfaction are themsel7es likewise
determinedF> we must> if we ado5t such a 5rocedure> renounce the ho5e of disco7ering the laws of
motion and the e7olutionar tendencies of societ. Such an outlook is unhistorical and unsocial. +ts
categories are natural and eternal categories.
Marx> con7ersel> starts from la6or in its significance as the constituti7e element in human
societ> as the element whose de7elo5ment determines in the final analsis the de7elo5ment of
societ. +n his 5rinci5le of 7alue he thus gras5s the factor 6 whose ?ualit and ?uantit> 6 whose
organi@ation and 5roducti7e energ> social life is causall controlled. ,he fundamental economic idea
is conse?uentl identical with the fundamental idea of the materialist conce5tion of histor.
)ecessaril so> seeing that economic life is 6ut a 5art of historic life> so that conformit to law in
economics must 6e the same as conformit to law in histor. ,o the extent that la6or in its social form
6ecomes the measure of 7alue> economics is esta6lished as a social and historical science. ,herewith
the 5ur7iew of economic science is restricted to the definite e5och of social e7olution wherein the
good 6ecomes a commodit. +n other words> it is restricted to the e5och wherein la6or and the 5ower
which controls la6or ha7e not 6een consciousl ele7ated to the rank of a regulati7e 5rinci5le of social
meta6olism and social 5redominance> 6ut wherein this 5rinci5le unconsciousl and automaticall
esta6lishes itself as a material ?ualit of thingsGinasmuch as> as the outcome of the 5eculiar form
which social meta6olism has assumed in exchange> it results that 5ri7ate la6ors ac?uire 7alidit onl in
so far as the are social la6ors. Societ# has, as it $ere, assigned to each of its memers the %!ota of
laor necessar# to societ#& has specified to each individ!al ho$ m!ch laor he m!st e'pend. %nd
these indi7iduals ha7e forgotten what their ?uota was> and redisco7er it onl in the 5rocess of social
life.
+t is therefore 6ecause la6or is the social 6ond uniting an atomi@ed societ> and not 6ecause
la6or is the matter most technicall rele7ant> that la6or is the 5rinci5le of 7alue and that the law of
7alue is endowed with realit. +t is 5recisel 6ecause Marx takes sociall necessar la6or as his
starting 5oint that he is so well a6le to disco7er the inner working of a societ 6ased on 5ri7ate
5ro5ert and the di7ision of la6or. $or him the indi7idual relation 6etween human 6eing and good is a
5remise. 8hat he sees in exchange is not a difference of indi7idual estimates> 6ut the e?uation of a
historicall determined relationshi5 of 5roduction. *nl in this relationshi5 of 5roduction> as the
sm6ol> as the material ex5ression> of 5ersonal relationshi5s> as the 6earer of social la6or> does the
good 6ecome a commodit= and onl as the e'pression of derivative relationships of prod!ction can
things which are not the 5roducts of la6or assume the character of commodities.
8e thus reach Bhm-Bawerk's o6:ection as ex5ressed in his in?uir> How can the 5roducts of
nature ha7e 9exchange 7alue9I ,he natural conditions under which la6or is 5erformed are unaltera6l
gi7en to societ> and from these conditions therefore changes in social relationshi5s cannot 6e deri7ed.
,he onl thing that changes is the manner in which la6or is a55lied to these natural conditions. ,he
degree to which such a55lication is successful determines the 5roducti7it of la6or. ,he change in
5roducti7it is effected solel 6 the concrete la6or which creates use 7alue= 6ut according as the mass
of 5roducts wherein the 7alue-creating la6or is em6odied increases or diminishes> it results that more
or less la6or than 6efore is em6odied in the indi7idual s5ecimen. ,o the extent that natural energ is at
an indi7idual's dis5osal> so that he is there6 ena6led to la6or with a 5roducti7it exceeding the social
a7erage> that indi7idual is in a 5osition to reali@e an extra sur5lus 7alue. ,his extra sur5lus 7alue>
ca5itali@ed> then manifests itself as the 5rice of this natural energ Eit ma 6e of the soilF whose
a55urtenance it is. ,he soil is not a commodit> 6ut in a length historical 5rocess it ac?uires the
characteristics of a commodit as a condition re?uisite to the 5roduction of commodities. ,he
ex5ressions 97alue of land9 or 95rice of land9 are therefore nothing more than irrational formulas
6eneath which is concealed a real relationshi5 of 5roduction> that is to sa a relationshi5 of 7alue. ,he
ownershi5 of land does not create the 5ortion of 7alue which is transformed into sur5lus 5rofit= it
merel ena6les the landowner to transfer this sur5lus 5rofit from the manufacturer's 5ocket to his own.
But Bhm-Bawerk> who ascri6es to the gifts of nature a 7alue 5eculiar to themsel7es> is a 5re to the
5hsiocrats' illusion that rent is deri7ed from nature and not from societ.
,hus Bhm-Bawerk continuall confuses the natural and the social. ,his is 5lainl shown in
his enunciation of the additional ?ualities common to commodities. +t is a strange medleJ the fact of
a55ro5riation is the legal ex5ression of the historical relationshi5s which must 6e 5resu55osed in order
that goods ma 6e exchanged at all Eit is 95re-economic9 factFGthough how this should 6e a
?uantitati7e measure remains inex5lica6le. +t is a natural ?ualit of commodities to 6e natural
5roducts> 6ut in no wa does this render them ?uantitati7el com5ara6le. +nasmuch> further> as the
are the o6:ects of demand and ha7e a relationshi5 to demand> the ac?uire a use 7alue= for relati7e
scarcit renders them su6:ecti7el the o6:ects of esteem> whereas o6:ecti7el Efrom the stand5oint of
societF their scarcit is a function of the cost of la6or> securing therein its o6:ecti7e measure in the
magnitude or its cost.
2ust as in the foregoing Bhm-Bawerk fails to distinguish the natural ?ualities of commodities
from their social ?ualities> so in the further course of his criticism he confuses the outlook on la6or in
so far as it creates use 7alue with the outlook on la6or in so far as it creates 7alue= and he 5roceeds to
disco7er a new contradiction in the law of 7alueGthough Marx 9with a masterl dialectic ... seeks to
suggest9 that the facts 9do not contain a contradiction of his fundamental 5rinci5le> 6ut are onl a
slightl different reading of it.9
Marx declares that skilled la6or is e?ui7alent to a definite ?uantit of unskilled la6or. He has
howe7er taught us> sas Bhm-Bawerk> that things e?uated with one another 6 exchange 9contain
e?ual amounts of some common factor> and this common factor must 6e la6or and working time.9 But
the facts 6efore us> he sas> do not com5l at all with this demand. $or in skilled la6or> for exam5le in
the 5roduct of a scul5tor> there is no unskilled la6or at all> and still less can we sa that the unskilled
la6or e?ual to the fi7e das' la6or of the stone6reaker is em6odied in the scul5tor's 5roduct. 9,he 5lain
truth is ;7er 5lain indeedHGR. H.< that the two 5roducts em6od different 3inds of la6or in different
amounts> and e7er un5re:udiced 5erson will admit that this means a state of things exactl contrar to
the conditions which Marx demands and must affirm> namel> that the em6od la6or of the same
kind and of the same amo!nt.(
'et me 5arentheticall remark that there is no ?uestion here of the 9same amount>9 no ?uestion
of %!antitative e%!alit#. 8e are solel concerned with the com5ara6ilit of different kinds of la6or>
that is to sa with the 5ossi6ilit of ex5ressing them in terms of some common measure> with the
5ossi6ilit of their %!alitative e?uali@ation.
+t is true> continues Bhm-Bawerk> that Marx sasJ 9#x5erience shows that this reduction
;from skilled to unskilled la6or< is constantl 6eing made. % commodit ma 6e the 5roduct of the
most skilled la6or> 6ut its 7alue> 6 e?uating it to the 5roduct of sim5le unskilled la6or> re5resents a
definite ?uantit of the latter la6or alone. ,he different 5ro5ortions in which different sorts of la6or are
reduced to unskilled la6or as their standard are esta6lished 6 a social 5rocess that goes on 6ehind the
6acks of the 5roducers> and> conse?uentl> a55ear to 6e fixed 6 custom.9
;1<

Bhm-Bawerk> howe7er> in?uires> what is the meaning of the a55eal to 97alue9 and the 9social
5rocess9 as the determining factors of the standard of reductionI 9%5art from e7erthing else> it
sim5l means that Marx is arguing in a circle. ,he real su6:ect of in?uir is the exchange relations of
commodities>9 wh> for instance> the scul5tor's work is worth fi7e times as much as the unskilled la6or
of the stone-6reaker. 9Marx... sas that the exchange relation is this> and no otherG6ecause one da of
scul5tor's work is reduci6le exactl to fi7e das' unskilled work. %nd wh is it reduci6le to exactl
fi7e dasI Because ex5erience shows that it is so reduced 6 a social 5rocess.9 But it is this 7er
5rocess which re?uires ex5lanation. 8ere the exchange relationshi5 1J/ instead of 1J1> 9Marx would
e?uall 6id us acce5t the rate of reduction of 1J/ as the one deri7ed from ex5erience= ... in short> it is
clear that we shall ne7er learn in this wa the actual reasons wh 5roducts of different kinds of work
should 6e exchanged in this or that 5ro5ortion.9 +n this decisi7e 5oint> sas the critic> the law of 7alue
6reaks down.
8e ha7e here a statement of the familiar difficult> the difficult to which others 6esides
Bhm-Bawerk ha7e drawn attention. +n the 5reface to the first 7olume of Capital, Marx> with his well-
known 9social o5timism>9 5resu55oses 9a reader who is willing to learn something new> and therefore
to think for himself9G this 6eing + 6elie7e the onl unwarranted 5resu55osition Marx e7er made. But
e7er thoughtful reader will at the outset feel that there is a ga5 in the argument> and the 7oid has 6een
indicated 6 9more or less Marxist9 writers> as 6 Bernstein> C. Schmidt> and 3autsk.
'et us regard the matter more closel. $irst of all> Bhm-Bawerk himself tells us that the
difference consists onl in this> that in the one case we ha7e to do with skilled and in the other with
unskilled la6or. +t is o67ious> therefore> that the difference in 7alue of the res5ecti7e 5roducts must
de5end u5on a difference in the la6or. ,he same natural 5roduct is in one case the o6:ect u5on which
skilled la6or has 6een ex5ended> and in the other case the o6:ect u5on which unskilled la6or has 6een
ex5ended> and it ac?uires a different 7alue in the res5ecti7e cases. ,hus there is no logical o6:ection to
the law of 7alue. ,he onl ?uestion that arises is whether it is necessar to determine the ratio of 7alue
6etween the two kinds of la6or> and whether the difficult of effecting this determination ma not
5ro7e insu5era6le. $or> if we assume a knowledge of the ratio to 6e indis5ensa6le> in the a6sence of
such knowledge the conce5t of 7alue will 6e inca5a6le of furnishing the ex5lanation of economic
5rocesses.
'et us reconsider Marx's argument. +n the 5assage 5re7iousl ?uoted we readJ 9+ts 7alue ;that
is to sa the 7alue of the 5roduct of skilled la6or<> 6 e?uating it to the 5roduct of sim5le unskilled
la6or> re5resents a definite ?uantit of the latter la6or alone.9 $or this 5rocess to 6e com5rehensi6le>
howe7er> 7alue theor must regard the la6or a7aila6le for societ at an gi7en moment as com5osed of
homogeneous 5artsGindi7idual la6or> in so far as it creates 7alue> 6eing merel an ali?uot 5art of this
?uantitati7e whole. But onl if + am a6le to ex5ress this whole in terms of some common unit of
measurement can + regard it as ?ualitati7el homogeneous. ,he re?uired unit of measurement is
furnished 6 9sim5le a7erage la6or>9 and this 9is the ex5enditure of sim5le la6or 5ower> that is> of the
la6or 5ower which on the a7erage> a5art from an s5ecial de7elo5ment> exists in the organism of e7er
ordinar indi7idual.9
;K<
Skilled la6or counts as a multi5le of this unit of sim5le a7erage la6or. But
what multi5leI ,his> sas Marx> is esta6lished 6 a social 5rocess that goes on 6ehind the 6acks of the
5roducers. )ow Bhm-Bawerk will not admit that this a55eal to ex5erience is 7alid> and declares that
here the theor of 7alue 6reaks down utterl. $or 9in what 5ro5ortions skilled is to 6e translated into
terms of unskilled la6or in the 7aluation of their res5ecti7e 5roducts is not determined> nor can it 6e
determined> a 5riori> 6 an 5ro5ert inherent in the skilled la6or itself> 6ut it is the actual result alone
which decides the actual exchange relations.9
;L<
,hus Bhm-Bawerk demands that the ratio should
ena6le him to determine in ad7ance the a6solute height of 5rices> for in his 7iew> as he elsewhere tells
us> the essential task of economics is to ex5lain the 5henomenon of 5rice.
+s it reall true> howe7er> that in default of a knowledge of the ratio> the law of 7alue 6ecomes
unworka6leI +n striking contrast with Bhm-Bawerk> Marx looks u5on the theor of 7alue> not as the
means for ascertaining 5rices> 6ut as the means for disco7ering the laws of motion of ca5italist societ.
#x5erience teaches us that the asol!te height of 5rices is the starting 5oint of this mo7ement> 6ut> for
the rest> the a6solute height of 5rices remains a matter of secondar im5ortance> and we are concerned
merel with studing the law of their 7ariation. +t is a matter of indifference whether an s5ecific kind
of skilled la6or is to 6e reckoned the fourfold multi5le or the sixfold multi5le of unskilled la6or. ,he
im5ortant 5oint is that a dou6ling or tre6ling of 5roducti7e 5ower in the s5here of skilled la6or would
lower the 5roduct of skilled la6or twofold or threefold 7is-a-7is the 5roduct of unskilled la6or E6
h5othesis unchangedF.
,he asol!te height of 5rices is gi7en us 6 ex5erience= what interests us is the la$)aiding
variation that these 5rices undergo. 'ike all 7ariations> this 7ariation is 6rought a6out 6 a force= and
since we ha7e to do with changes in social 5henomena> these changes must 6e effected 6 7ariations in
the magnitude of a social force> the social 5ower of 5roduction.
Since> howe7er> the law of 7alue discloses to us that in the final analsis this de7elo5ment of
5roducti7e 5ower controls 7ariations in 5rices> it 6ecomes 5ossi6le for us to gras5 the laws of these
changes= and since all economic 5henomena manifest themsel7es 6 changes in 5rices> it is further
5ossi6le to attain to an understanding of economic 5henomena in general. Ricardo> aware of the
incom5leteness of his analsis of the law of 7alue> therefore declares in so man words that the
in7estigation to which he wishes to direct the reader's attention concerns 7ariations in the relati7e
7alue of commodities and not 7ariations in their a6solute 7alue.
+t follows that the lack of a knowledge of the ratio in ?uestion 6 no means restricts the
im5ortance of the law of 7alue as a means 6 which we are ena6led to recogni@e the conformit to law
dis5laed 6 the economic mechanism. +n another res5ect> howe7er> this lack would 6e serious. +f in
5ractice the a6solute height of 5rice had in the first instance to 6e esta6lished 6 the social 5rocess> the
conce5t of 7alue would ha7e to contain all the elements which theoreticall# allow us to a55rehend the
5rocess where6 societ effectuates the reduction of skilled la6or to unskilled. *therwise this 5rocess>
which exercises a decisi7e influence u5on the magnitude of 7alue> though it would indeed 5ositi7el
exist and would not in7ol7e an contradiction to the law of 7alue> would ne7ertheless afford an
ex5lanation of a 5art onl Eand that the most im5ortantF of economic 5henomena> 6ut would lea7e
unex5lained another 5art> namel the starting 5oint of these 7ariations.
8hen> howe7er> Bhm-Bawerk in?uires> what is the ?ualit inherent in skilled la6or which
gi7es that la6or its 5eculiar 5ower to create 7alue> the ?uestion is wrongl stated. ,he 7alue-creating
?ualit is not 5er se inherent in an la6or. Solel in con:unction with a definite mode of social
organi@ation of the 5rocess of 5roduction does la6or create 7alue. Hence> we cannot attain to the
conce5t of 7alue-creating la6or merel 6 contem5lating isolated la6or in its concreteness. Skilled
la6or> therefore> if + am to regard it as 7alue-creating> must not 6e contem5lated in isolation> 6ut as 5art
of social la6or.
,he ?uestion conse?uentl arises> what is skilled la6or from the social stand5ointI *nl when
we can answer this can we ex5ect to attain to a 5osition from which we shall 6e a6le to recogni@e the
5rinci5les according to which the aforesaid social reduction can 6e effected. Manifestl these
5rinci5les can 6e none other than those which are contained in the law of 7alue. But here we encounter
a difficult. ,he law of 7alue a55lies to commodities> whereas la6or is not a commodit e7en though it
a55ears as such when we s5eak of the wage of la6or. *nl la6or po$er is a commodit and 5ossesses
7alue= la6or creates 7alue 6ut does not itself 5ossess 7alue. +t is not difficult to calculate the 7alue of a
la6or po$er engaged on skilled work= like e7er other commodit it is e?ual to the la6or re?uisite for
its 5roduction and re5roduction> and this is com5osed of the cost of maintenance and the cost of
training. But here we are not concerned with the 7alue of a skilled la6or 5ower> 6ut with the ?uestion
how and in what ratio skilled la6or creates more 7alue than unskilled.
8e must not deduce the higher 7alue which skilled la6or creates from the higher wage of
skilled la6or 5ower> for this would 6e to deduce the 7alue of the 5roduct from the 97alue of la6or.9 +t is
true that Bernstein
;A<
5ro5oses to do this> and 6elie7es that he can :ustif himself 6 a ?uotation from
Marx. But if we read the sentence in the context from which Bernstein has torn it> we see that it
con7es the 5recise o55osite of that which Bernstein wishes to deduce from it. Marx writesJ 9+t has
5re7iousl 6een 5ointed out that> as far as the 5rocess of 5roducing sur5lus 7alue is concerned> it is a
matter of a6solutel no moment whether the la6or a55ro5riated 6 the ca5italist 6e a7erage unskilled
social la6or or com5arati7el skilled la6or> la6or of a higher s5ecific gra7it. ,he la6or which> when
contrasted with a7erage social la6or> counts as higher> com5arati7el skilled la6or> is the manifestation
of a la6or 5ower to the making of which higher formati7e costs ha7e gone> whose 5roduction has cost
more la6or time> and which conse?uentl has a higher 7alue than that 5ossessed 6 unskilled la6or
5ower. )ow whereas the 7alue of this 5ower is higher> it must also 6e remem6ered that it manifests
itself in higher work> and conse?uentl materiali@es> in e?ual s5aces of time> in com5arati7el higher
7alues. 8hate7er difference in skill there ma 6e 6etween the la6or of a s5inner and that of a :eweler>
the 5ortion of his la6or 6 which the :eweler merel re5laces the 7alue of his own la6or 5ower does
not in an wa differ in ?ualit from the additional 5ortion 6 which he creates sur5lus 7alue. +n the
making of :ewelr> :ust as in s5inning> the sur5lus 7alue results onl from a ?uantitati7e excess of
la6or> from a lengthening out of one and theM same la6or 5rocess> in the one case of the 5rocess of
making :ewels> in the other of the 5rocess of making arn.9 8e see that the ?uestion Marx here
discusses is how skilled la6or can create sur5lus 7alue des5ite the high wage> des5ite> that is to sa> the
magnitude of the necessar la6or. #x5ressed in fuller detail> the thoughts in the sentence ?uoted 6
Bernstein would read somewhat as followsJ 9#7en though the 7alue of this 5ower 6e higher> it can
none the less 5roduce more sur5lus 7alue> 6ecause it manifests itself in higher work9Gand so on.
Marx lea7es out the intermediate clause and introduces what follows with the word (aer(
;96ut9<>whereas> if Bernstein had 6een right> he would ha7e had to use the word (daher(
;9conse?uentl>9 or 9therefore9<. ,o deduce the 7alue of the 5roduct of la6or from the wage of la6or
conflicts grossl with the Marxist theor. ,he 7alue of la6or 5ower 6eing gi7en> + should onl 6e in a
5osition to deduce the 7alue which this la6or 5ower newl creates if + knew what had 6een the rate of
ex5loitation. But e7en if the rate of ex5loitation of unskilled la6or were known to me> + should ha7e no
right to assume that the identical rate of ex5loitation 5re7ailed for skilled la6or. $or the latter> the rate
of ex5loitation might 6e much lower. ,hus neither directl nor indirectl does the wage of a skilled
la6or 5ower gi7e me an information regarding the 7alue which this la6or 5ower newl creates. ,he
7isage which the Marxist theor would assume if Bernstein's inter5retation were to 6e acce5ted Eand
Bernstein himself tells us that in his 7iew the theor would assume an utterl different 7isageF would
5ossess ironical lineaments which could hardl 6e concealed. 8e must> therefore> endea7or to
a55roach the solution of the 5ro6lem in a different manner.
;C<

%7erage unskilled la6or is the ex5enditure of unskilled la6or 5ower> 6ut ?ualified or skilled
la6or is the ex5enditure of ?ualified la6or 5ower. $or the 5roduction of this skilled la6or 5ower>
howe7er> a num6er of unskilled la6ors were re?uisite. ,hese are stored u5 in the 5erson of the
?ualified la6orer> and not until he 6egins to work are these formati7e la6ors made fluid on ehalf of
societ#. ,he la6or of the technical educator thus transmits> not onl val!e Ewhich manifests itself in the
form of the higher wageF> 6ut in addition its own val!e)creating po$er. ,he formati7e la6ors are
therefore latent as far as societ# is concerned, and do not manifest themsel7es until the skilled la6or
5ower 6egins to work. +ts ex5enditure conse?uentl signifies the ex5enditure of all the different
unskilled la6ors which are simultaneousl condensed therein.
(nskilled la6or> if a55lied to the 5roduction of a ?ualified or skilled la6or 5ower> creates on
the one hand the 7alue of this la6or 5ower> which rea55ears in the wage of the ?ualified' la6or 5ower=
6ut on the other hand 6 the concrete method of its a55lication it creates a new use 7alue> which
consists in this> that there is now a7aila6le a la6or 5ower which can create 7alue with all those
5otentialities 5ossessed 6 the unskilled la6ors utili@ed in its formation. +nasmuch as unskilled la6or is
used in the formation of skilled la6or> it thus creates on the one hand new 7alue and transmits on the
other to its 5roduct its use 7alueGto 6e the source of new 7alue. Regarded from the stand5oint of
societ> unskilled la6or is latent as long as it is utili@ed for the formation of skilled la6or 5ower. +ts
working for societ does not 6egin until the skilled la6or 5ower it has hel5ed to 5roduce 6ecomes
acti7e. ,hus in this single act of the ex5enditure of skilled la6or a sum of unskilled la6ors is ex5ended>
and in this wa there is created a sum of 7alue and sur5lus 7alue corres5onding to the total 7alue
which would ha7e 6een created 6 the ex5enditure of all the unskilled la6ors which were re?uisite to
5roduce the skilled la6or 5ower and its function> the skilled la6or. $rom the stand5oint of societ>
therefore> and economicall regarded> skilled la6or a55ears as a multi5le of unskilled la6or> howe7er
di7erse skilled and unskilled la6or ma a55ear from some other outlook> 5hsiological> technical> or
aesthetic.
+n what it has to gi7e for the 5roduct of skilled la6or> societ conse?uentl 5as an e?ui7alent
for the 7alue which the unskilled la6ors would ha7e created had the 6een directl consumed 6
societ.
,he more unskilled la6or that skilled la6or em6odies> the more does the latter create higher
7alue> for in effect we ha7e numerous unskilled la6ors simultaneousl em5loed u5on the formation
of the same 5roduct. +n realit> therefore> skilled la6or is unskilled la6or multi5lied. %n exam5le ma
make the matter clearer. % man owns ten storage 6atteries wherewith he can dri7e ten different
machines. $or the manufacture of a new 5roduct he re?uires another machine for which a far greater
moti7e 5ower is re?uisite. He now em5los the ten 6atteries to charge a single accumulator> which is
ca5a6le of dri7ing the new machine. ,he 5owers of the indi7idual 6atteries thereu5on manifest
themsel7es as a unified force in the new 6atter> a unified force which is the tenfold multi5le of the
sim5le a7erage force.
% skilled la6or ma contain> not unskilled la6ors alone> 6ut in addition skilled la6ors of a
different kind> and these in their turn are reduci6le to unskilled la6or. ,he greater the extent to which
other skilled la6ors are incor5orated in a skilled la6or> the 6riefer will 6e its formati7e 5rocess.
,hus the Marxist theor of 7alue ena6les us to recogni@e the 5rinci5les in accordance with
which the social 5rocess of reducing skilled la6or to unskilled la6or is effected. +t therefore renders the
magnitude of 7alue theoreticall# meas!rale. But when Bhm-Bawerk insists that Marx ought to ha7e
furnished the em5irical 5roof of his theor> and when he contends that the re?uisite 5roof would ha7e
consisted in demonstrating the relationshi5 6etween exchange 7alues or 5rices and ?uantities of la6or>
he is confusing theoretical with practical measura6ilit. 8hat + am a6le to determine 6 ex5erience is
the concrete ex5enditure of la6or re?uisite for the 5roduction of a s5ecified good. How far this
concrete la6or is sociall necessar la6or> how far> that is to sa> it has a 6earing on the formation of
7alue> + am onl a6le to determine if + know the actual a7erage degree of 5roducti7it and intensit
which the 5roducti7e 5ower has re?uired> and if + also know what ?uantum of this good is demanded
6 societ. ,his means that we are asking from the indi7idual that which societ 5erforms. $or societ
is the onl accountant com5etent to calculate the height of 5rices> and the method which societ
em5los to this end is the method of com5etition. +nasmuch as> in free com5etition on the market>
societ treats as a unit the concrete la6or ex5ended 6 all 5roducers for the 5roduction of a good> and
inasmuch as societ onl 5as for la6or in so far as its ex5enditure was sociall necessar> it is societ
which first shows to what degree this concrete la6or has actuall colla6orated in the formation of 7alue
and fixes the 5rice accordingl. ,he uto5ia of 9la6or notes9 and 9constituted 7alue9 was 6ased u5on
this 7er illusion that the theoretical standard of measurement is at the same time an immediatel
5ractical standard of measurement. ,his is the conce5tion in accordance with which the theor of
7alue is regarded> not as a means 9for detecting the law of motion of contem5orar societ>9 6ut as a
means of securing a 5rice list that shall 6e as sta6le and as :ust as 5ossi6le.
,he search for such a 5rice list led 7on Buch
;14<
to a theor which> in order to determine 5rice>
needs nothing more than thisGa knowledge of the 5rice. But the 5schological theor of 97alue9 is in
no 6etter case.
,hat theor indicates the 7arious degrees of satisfaction of needs with definite 6ut ar6itraril
selected figures> and arranges that these figures shall signif the 5rices which 5eo5le are willing to 5a
for the means wherewith needs are satisfied. ,his more effectuall conceals the 5rocess where6 a
num6er of ar6itrar 5rices are assumed instead of a single ar6itrar 5rice.
,he em5irical 5roof of the accurac of the theor of 7alue lies in a 7er different direction
from that towards which Bhm-Bawerk directs his in?uiries. +f the theor of 7alue is to 6e the ke for
the understanding of the ca5italist mode of 5roduction> it must 6e a6le to ex5lain the 5henomena of
that mode of 5roduction in a manner free from contradictions. ,he actual 5rocesses of the ca5italist
world must not conflict with the theor 6ut must confirm it. %ccording to Bhm-Bawerk the theor
fails in this res5ect. ,he third 7olume of Capital, in which Marx has no longer 6een a6le to ignore the
actual 5rocesses> shows that these actual 5rocesses could not 6e harmoni@ed with the 5resu55ositions
of the theor of 7alue. ,he data of the third 7olume are in crass contradiction with those of the first
7olume. ,he theor is shi5wrecked on the rocks of realit. $or realit> sas Bhm-Bawerk> shows that
the law of 7alue has no 7alidit for the 5rocess of exchange> seeing that commodities are exchanged at
5rices which 5ermanentl di7erge from the 7alue of the commodities. +n the discussion of the 5ro6lem
of the a7erage rate of 5rofit the contradiction 6ecomes o67ious. Marx can sol7e this 5ro6lem onl 6
the sim5le a6andonment of his theor of 7alue. ,his re5roach of self-contradiction has 6ecome a
common5lace of 6ourgeois economics since it was made 6 Bhm-Bawerk. 8hen we are critici@ing
Bhm-Bawerk we are critici@ing the re5resentati7es of 6ourgeois criticism of the third 7olume of
Capital.
#$ Geschichte !nd *ritik der *apitalzins)Theorien, !nd ed.> 55. 111 ff. %6o7e> 55. KA ff.
%$ &ol. +> 5. 144.
*$ &ol. +> 5. B1.
+$ 9,hat is the reason wh -erman com5ilers are so fond of dwelling on use 7alue> calling it a
'good.'... $or intelligent information on 'goods' one must turn to treatises on commodities.9 Marx> A
Contri!tion to the Criti%!e of +olitical ,conom#, 3err ed.> 5. !1n.
,$ &ol. +> 55. 11-1!.
-$ &ol. +> 5. 11.
.$ %6o7e> 5. A/.
/$ #duard Bernstein> 9Dur ,heorie des %r6eitswerts>9 -ie .e!e /eit, &ol. N&+++ E1ACC-1C44F> "art +>
5. /1C.
0$ ,he translators had ho5ed to a7oid 6urdening Hilferding's text with an extended notes of their
own> 6ut the find it necessar to draw attention to a strange discre5anc 6etween the text of the
fourth E-ermanF edition of Capital, finall re7ised 6 #ngels in 1AC4> and the third edition> that of
1AA/> the one ?uoted a6o7e 6 Hilferding. +n the third edition> the sentence a6out which the trou6le
arises runs as follows E5. 1LAFJ (Ist der 0ert dieser *raft hher, so a!ssert sie sich aer a!ch in
hherer Areit !nd vergegenstandlicht sich daher, in denselen /eitra!men, in verhaltnissmassig
hheren 0ert.( *ur translation of this> which we 5refer to that found on 5age 1LC of Moore O
%7eling's 7ersion> runs as followsJ 9)ow whereas the 7alue of this 5ower is higher> it must also 6e
remem6ered that it manifests itself in higher work> and conse?uentl materiali@es> in e?ual s5aces of
time> in com5arati7el higher 7alues.9 ,he 5hrase 9it must 6e remem6ered that9 seems rather a length
rendering of the -erman 9a6er>9 6ut in this 5articular context that 5hrase effecti7el 5resents the
5recise shade of meaning.
)ext let us turn to Bernstein. ,his writer ?uotes from the second E-ermanF edition of Capital,
in which E5. 1AKF the 5assage cited is identical with that ?uoted from the third edition 6 Hilferding.
But Bernstein inter5olates an exclamation mark ex5ressi7e almost of derision> the 5assage thus
readingJ 9)ow whereas the 7alue of this 5ower is higher> it must also 6e remem6ered that it manifests
itself in higher work> and conse?uentl ;H< materiali@es in e?ual s5aces of time> in com5arati7el
higher 7alues.9 ,hereafter Ewriting in -ie .e!e /eit of 0ecem6er !/> 1ACCF Bernstein continuesJ
9Here the 7alue of the la6or 5ower which materiali@es in the wage of la6or a55ears to 6e decisi7e for
the 7alue of the 5roduct. 8ere we to acce5t this as uni7ersall 7alid> the Marxist theor of 7alue
would in m o5inion assume a 7isage utterl different from that which> as 5resented 6 all its
ex5ositors> it has hitherto assumed. +t would differ from the theor as ex5ounded 6 Marx himself> for
Marx> in his essa 1al!e, +rice, and +rofit ex5ressl declaresJ ',o determine the 7alues of
commodities 6 the relati7e ?uantities of la6or fixed in them> is> therefore> a thing ?uite different from
the tautological method of determining the 7alues of commodities 6 the 7alue of la6or> or 6 wages'
;+nternational "u6lishers' ed.> 5. /!<. Howe7er this ma 6e> here is a 5oint which still remains to 6e
cleared u5> unless it 6e imagined that the elucidation is to 6e found in the dis?uisitions of the third
7olume concerning cost 5rice and 5rice of 5roduction which> :ust like the fact of sur5lus 7alue> do not
re?uire for their esta6lishment the la6or theor of 7alue in its original form.9
8hat Hilferding has to sa of Bernstein we ha7e seen in the text. ,he reader will note more
5articularl Hilferding's contention that were Bernstein right> Marx would ha7e written 9daher9 in
5lace of 9a6er.9 )ow comes the 5oint :ustifing the introduction of the 5resent note. +n the fourth
E-ermanF edition of Capital E5. 1K4F the word 9a6er9 has 6een changed to 9daher>9 not in conse?uence
of what Bernstein wrote in -ie .e!e /eit in 1ACC> for #ngels' 5reface to the fourth edition is dated
2une !1> 1AC4. $urther> in this 5reface> #ngels gi7es a detailed s5ecification of the im5ortant
alterations in the text of the fourth edition> making no direct allusion to the change on 5age 1K4> 6ut
addingJ 9*ther trifling modifications are of a 5urel technical nature.9 8e take it this means trifling
im5ro7ements in literar stle. +n an case it would seem clear that #ngels did not regard this
5articular alteration as im5ortant. ,he re7ised sentence ma 6est 6e rendered as followsJ 9)ow if the
7alue of this 5ower 6e higher> the result is that it manifests itself in higher work> and conse?uentl it
materiali@es in e?ual s5aces of time> in com5arati7el higher 7alues.9
Marx and #ngels are 6eond our reach. $or the moment we are una6le to communicate with
Bernstein in Berlin or with Hilferding in &ienna. 8e must lea7e the 5ro6lems raised anent this
dis5uted text to the ingenuit of the #nglish-s5eaking Marxists. ,he must shar5en their wea5ons> and
make read to deal with 6oth the -erman and the %ustrian commentators when the foolish ca5italist
6ickering which at 5resent ham5ers communications shall at length ha7e drawn to a dose. %mong
other things> the will want to know wh Hilferding> writing in 1C4/> did not consult the definiti7e
fourth edition of Ca5ital> 5u6lished thirteen ears earlierHG#. O C. ".
#1$ -ie Intensitat der Areit, 'ei5@ig> 1ACK.
%$ &A'UE A(2 A&ERA)E ROFIT
,H# 5ro6lem with which we are now concerned is familiar. +n the 7arious s5heres of
5roduction the organic com5osition of ca5ital> the ratio 6etween c Econstant ca5ital> ex5ended on the
means of 5roductionF and v E7aria6le ca5ital> ex5ended in 5aing the wage of la6orF> 7aries. Since>
howe7er> onl 7aria6le ca5ital 5roduces new 7alue> and since> therefore> it alone 5roduces sur5lus
7alue> the amount of sur5lus 7alue 5roduced 6 two ca5itals of e?ual si@e 7aries in accordance with
the organic com5osition of these res5ecti7e ca5itals> 7aries> that is to sa> in accordance with
7ariations in the ratio 6etween the constant ca5ital and the 7aria6le ca5ital in the res5ecti7e
enter5rises. But> therewith> also> the rate of 5rofit> the ratio 6etween the sur5lus 7alue and the total
ca5ital> 7aries. ,hus according to the law of 7alue e?ual ca5itals ield different 5rofits 5ro5ortionate to
the magnitudes of the li7ing la6or which the set in motion. ,his conflicts with realit> for in the real
world e?ual ca5itals 6ring identical 5rofits> whate7er their com5osition. How can the 9contradiction9
6e ex5lainedI
'et us first hear what Marx has to sa.
9,he whole difficult arises from the fact that commodities are not exchanged sim5l as
commodities, 6ut as prod!cts of capital which claim e?ual shares of the total amount of sur5lus 7alue>
if the are of e?ual magnitude> or shares 5ro5ortional to their different magnitudes.9
;1<

,he ca5ital ad7anced for the 5roduction of a commodit constitutes the cost 5rice of this
commodit. 9,he cost 5rice ;P c Q &< does not show the distinction 6etween 7aria6le and constant
ca5ital to the ca5italist. % commodit> for which he must ad7ance R144 in 5roduction> costs him the
same amount whether he in7ests C4c Q 147> or 14c Q C47. He alwas s5ends R144 for it> no more no
less. ,he cost 5rices are the same for in7estment of the same amounts of ca5ital in different s5heres>
no matter how much the 5roduced 7alues and sur5lus 7alues ma differ. ,he e?ualit of cost 5rices is
the 6asis for the com5etition of the in7ested ca5itals> 6 which an a7erage rate of 5rofit is 6rought
a6out.9
;!<

,o elucidate the working of ca5italist com5etition Marx 5resents the following ta6le> wherein
the rates of sur5lus 7alue sS7 are assumed to 6e identical> while as regards the constant ca5ital 7aring
5ro5ortions are incor5orated into the 5roduct according as the wear and tear 7aries.

C34i!3l"
R3!e of
Sur4lu" &3lue5
er6en!
Sur4lu" &3lue
R3!e of rofi!5
er6en!
U"ed-u4
C
&3lue of
Co77odi!ie"
I A4c Q !4c 144 !4 !4 14 C4
II L4c Q /47 144 /4 /4 11 111
III K4c Q B47 144 B4 B4 11 1/1
I& A1c Q 117 144 11 11 B4 L4
& C1c Q 17 144 1 1 14 !4
+n this ta6le we see fi7e instances in which the total ca5ital is identical> and in which the
degree of ex5loitation of la6or is the same in e7er case> 6ut the rates of 5rofit 7ar widel> according
to the differing organic com5osition. 'et us now look u5on these ca5itals> in7ested in 7arious fields> as
a single ca5ital> of which num6ers + to & merel constitute com5onent 5arts Emore or less analogous to
the different de5artments of a cotton mill which has different 5ro5ortions of constant and of 7aria6le
ca5ital in its carding> 5re5arator s5inning> s5inning> and wea7ing rooms> on the 6asis of which the
a7erage 5ro5ortion for the whole factor is calculatedF> then we should ha7e a total ca5ital of 144> a
sur5lus 7alue of 114> and a total 7alue of commodities of K14. ,he a7erage com5osition of the ca5ital
would 6e 144> made u5 of /C4c and 1147> or in 5ercentages> LAc and !!7. +f each of the ca5itals of
144 were to 6e regarded sim5l as one fifth of the total ca5ital> the a7erage com5osition of each
5ortion would 6e LAc and !!7> and in like manner to each 144 of ca5ital would 6e allotted a mean
sur5lus 7alue of !!> so that the mean rate of 5rofit would 6e !! 5ercent. ,he commodities must> then>
6e sold as followsJ

C34i!3l"
Sur4lu"
&3lue
U"ed-u4 C
&3lue of
Co77odi!
ie"
Co"!
ri6e of
Co77odi
!ie"
ri6e of
Co77odi!ie"
R3!e of
rofi!5
er6en!
2e8i3!ion of
ri6e fro7
&3lue
I A4c Q !4c !4 14 C4 L4 C! !! Q !
II L4c Q /47 /4 11 111 A1 14/ !! - A
III K4c Q B47 B4 11 1/1 C1 11/ !! - 1A
I& A1c Q 117 11 B4 L4 11 LL !! Q L
& C1c Q 17 1 14 !4 11 /L !! Q 1L
,he commodities are thus sold at ! Q L Q 1L P !K a6o7e> and A Q 1A P !K 6elow> their 7alue> so
that the de7iations of 5rices from 7alues mutuall 6alance one another 6 the uniform distri6ution of
the sur5lus 7alue> or 6 the addition of the a7erage 5rofit of !! 5ercent of ad7anced ca5ital to the
res5ecti7e cost 5rices of the commodities of + to &. *ne 5ortion of the commodities is sold in the same
5ro5ortion a6o7e in which the other is sold 6elow 7alue. *nl the sale of the commodities at such
5rices renders it 5ossi6le that the rate of 5rofit for all fi7e ca5itals shall uniforml 6e !! 5ercent>
without regard to the organic com5osition of these ca5itals.
9Since the ca5itals in7ested in the 7arious lines of 5roduction are of a different organic
com5osition> and since the different 5ercentages of the 7aria6le 5ortions of these total ca5itals set in
motion 7er different ?uantities of la6or> it follows that these ca5itals a55ro5riate 7er different
?uantities of sur5lus la6or> or 5roduce 7er different ?uantities of sur5lus 7alue. Conse?uentl the
rates of 5rofit 5re7ailing in the 7arious lines of 5roduction are originall 7er different. ,hese different
rates of 5rofit are e?uali@ed 6 means of com5etition into a general rate of 5rofit> which is the a7erage
of all these s5ecial rates of 5rofit. ,he 5rofit allotted according to this a7erage rate of 5rofit to an
ca5ital> whate7er ma 6e its organic com5osition> is called the a7erage 5rofit. ,hat 5rice of an
commodit which is e?ual to its cost 5rice 5lus that share of a7erage 5rofit on the total ca5ital in7ested
Enot merel consumedF in its 5roduction which is allotted to it in 5ro5ortion to its conditions of
turno7er> is called its 5rice of 5roduction. ... 8hile the ca5italists in the 7arious s5heres of 5roduction
reco7er the 7alue of the ca5ital consumed in the 5roduction of their commodities through the sale of
these> the do not secure the sur5lus 7alue> and conse?uentl the 5rofit> created in their own s5here 6
the 5roduction of these commodities> 6ut onl as much sur5lus 7alue> and 5rofit> as falls to the share of
e7er ali?uot 5art of the total social ca5ital out of the total social sur5lus 7alue> or social 5rofit
5roduced 6 the total ca5ital of societ in all s5heres of 5roduction. #7er 144 of an in7ested ca5ital>
whate7er ma 6e its organic com5osition> draws as much 5rofit during one ear> or an other 5eriod of
time> as falls to the share of e7er 144 of the total social ca5ital during the same 5eriod. ,he 7arious
ca5italists> so far as 5rofits are concerned> are so man stockholders in a stock com5an in which the
shares of 5rofit are uniforml di7ided for e7er 144 shares of ca5ital> so that 5rofits differ in the case
of the indi7idual ca5italists onl according to the amount of ca5ital in7ested 6 each one of them in
the social enter5rise> according to his in7estment in social 5roduction as a whole> according to his
shares9 E+++> 1AK-1ALF. ,he a7erage 5rofit is nothing other than the 5rofit on the a7erage social ca5ital=
its total> like the total of the sur5lus 7alues> and like the 5rices determined 6 the addition of this
a7erage 5rofit to the cost 5rices> are nothing other than the 7alues transformed into 5rices of
5roduction. +n the sim5le 5roduction of commodities> 7alues are the center of gra7it round which
5rices fluctuate. But 9under ca5italist 5roduction it is not a ?uestion of merel throwing a certain mass
of 7alues into circulation and exchanging that mass for e?ual 7alues in some other form> whether of
mone or other commodities> 6ut it is also a ?uestion of ad7ancing ca5ital in 5roduction and reali@ing
on it as much sur5lus 7alue> or 5rofit> in 5ro5ortion to its magnitude> as an other ca5ital of the same
or of other magnitudes in whate7er line of 5roduction. +t is a ?uestion> then> of selling the commodities
at least at 5rices which will ield the a7erage 5rofit> in other words> at 5rices of 5roduction. Ca5ital
comes in this form to a reali@ation of the social nat!re of its po$er, in which e7er ca5italist
5artici5ates in 5ro5ortion to his share in the total social ca5ital....+f the commodities are sold at their
7alues...considera6l different rates of 5rofit arise in the 7arious s5heres of 5roduction...But ca5ital
withdraws from s5heres with low rates of 5rofit and in7ades others which ield a higher rate. B
means of this incessant emigration and immigration> in a word 6 its distri6ution among the 7arious
s5heres in res5onse to a rise in the rate of 5rofit here and its fall there> it 6rings a6out such a 5ro5ortion
of su55l to demand that the a7erage 5rofit in the 7arious s5heres of 5roduction 6ecomes the same> so
that 7alues are con7erted into 5rices of 5roduction9 E+++> !!C-!/4F.
+n what relationshi5 does this doctrine of the third 7olume stand to the cele6rated law of 7alue
of the first 7olumeI
+n Bhm-Bawerk's o5inion the third 7olume of Capital manifestl contains the statement of an
actual and irreconcila6le contradiction to the law of 7alue> and furnishes 5roof that the e?ual a7erage
rate of 5rofit can onl 6ecome esta6lished if and 6ecause the alleged law of 7alue does not hold good.
+n the first 7olume> declares Bhm-Bawerk>
;/<
it was maintained with the greatest em5hasis that all
7alue is 6ased on la6or and la6or alone= the 7alue was declared to 6e the common factor which a55ears
in the exchange relation of commodities. 8e were told> in the form and with the em5hasis of a
stringent sllogistic conclusion> allowing of no exce5tion> that to set down two commodities as
e?ui7alents in exchange im5lies that a common factor of the same magnitude exists in 6oth> to which
each of the two must 6e reduci6le. %5art> therefore> from tem5orar and occasional de7iations> which
are merel a55arent 6reaches of the law of exchange of commodities> commodities which em6od the
same amount of la6or must on 5rinci5le> in the long run> exchange for each other. %nd now> in the
third 7olume> we are told that what according to the teaching of the first 7olume must 6e> is not and
ne7er can 6e= that indi7idual commodities do and must exchange with each other in a 5ro5ortion
different from that of the la6or incor5orated in them> and this not accidentall and tem5oraril> 6ut of
necessit and 5ermanentl.
But this> sas Bhm-Bawerk> is no ex5lanation and reconciliation of a contradiction> it is the
naked contradiction itself. ,he theor of the a7erage rate of 5rofit and of the 5rices of 5roduction
cannot 6e reconciled with the theor of 7alue. Marx must himself ha7e foreseen that this re5roach
would 6e made> and to this 5re7ision is e7identl due an antici5ator self-defense which> if not in
form> et in 5oint of fact> is found in the Marxist sstem. He tries 6 a num6er of o6ser7ations to
render 5lausi6le the 7iew that in s5ite of exchange relations 6eing directl go7erned 6 5rices of
5roduction> which differ from the 7alues> all is ne7ertheless mo7ing within the framework of the law
of 7alue> and that this law> in the last resort at least> go7erns 5rices. *n this su6:ect> howe7er> Marx
does not make use of his customar method> a formal> circumscri6ed demonstration> 6ut gi7es onl a
num6er of :uxta5osed casual remarks> containing di7ers arguments which are summed u5 6 Bhm-
Bawerk under four heads.
Before we consider these 9arguments9 and the counter-arguments of Bhm-Bawerk> it is
necessar to sa a word or two concerning the 9contradiction9 or the 9withdrawal9 which Marx is
su55osed to ha7e 5er5etrated in the third 7olume. %s regards the alleged withdrawal> those who use
this term ha7e forgotten that the first 7olume was not 5u6lished until the tenth cha5ter of the third
7olume> which forms the 6one of contention> had alread 6een com5osed. $or the draft of the last two
6ooks of Capital was com5osed 6 Marx during the ears 1AK/ to 1AKL> and from a note 6 #ngels
E+++> !4CnF we learn that the tenth cha5ter of the third 7olume> the one containing the solution of the
riddle> was written in 1AK1. ,o s5eak of a withdrawal in this connection is tantamount to saing that
Marx> in order to remain at a definite 5oint> first mo7ed a mile forward and then a mile 6ackward.
Such is> ne7ertheless> the 7iew which the 7ulgar economists ha7e formed of the essence of the
dialectic method> 6ecause the ne7er see the 5rocess 6ut onl the com5leted result> so that the method
alwas seems to them a mstical 9hocus-5ocus.9 )or is there an 6etter :ustification for the accusation
of contradiction than for the accusation of withdrawal.
+n Bhm-Bawerk's 7iew> the contradiction is found in this> that> according to the first 7olume>
onl commodities em6oding e?ui7alent amounts of la6or are exchanged each for the other> whereas
in the third 7olume we are told that the indi7idual commodities are exchanged one for another in ratios
which do not corres5ond to the ratios 6etween the amounts of la6or res5ecti7el incor5orated in them.
8ho denies itI +f Marx had reall maintained that> a5art from irregular oscillations> commodities
could onl 6e exchanged one for another 6ecause e?ui7alent ?uantities of la6or are incor5orated in
them> or onl in the ratios corres5onding to the amounts of la6or incor5orated in them> Bhm-Bawerk
would 6e 5erfectl right. But in the first 7olume Marx is onl discussing exchange relationshi5s as
the manifest themsel7es when commodities are exchanged for their val!es& and solel on this
su55osition do the commodities em6od e?ui7alent ?uantities of la6or. But exchange for their 7alues
is not a condition of exchange in general> e7en though> under certain s5ecific historical conditions>
exchange for corres5onding 7alues is indis5ensa6le> if these historical conditions are to 6e 5er5etuall
re5roduced 6 the mechanism of social life. (nder changed historical conditions> modifications of
exchange ensue> and the onl ?uestion is whether these modifications are to 6e regarded as taking
5lace according to law> and whether the can 6e re5resented as modifications of the law of 7alue. +f
this 6e so> the law of 7alue> though in modified form> continues to control exchange and the course of
5rices. %ll that is necessar is that we should understand the course of 5rices to 6e a modification of
the 5re-existing course of 5rices> which was under direct control of the law of 7alue.
Bhm-Bawerk's mistake is that he confuses 7alue with 5rice> 6eing led into this confusion 6
his own theor. *nl if 7alue Edisregarding chance de7iations> which ma 6e neglected 6ecause the
are mutuall com5ensatorF were identical with 5rice> would a 5ermanent de7iation of the 5rices of
indi7idual commodities from their 7alues 6e a contradiction to the law of 7alue. +n the first 7olume>
Marx alread refers to the di7ergence of 7alues from 5rices. ,hus> he asksJ 9How can we account for
the origin of ca5ital on the su55osition that 5rices are regulated 6 the a7erage 5rice> that is> ultimatel
6 the 7alue of the commoditiesI9 %nd he addsJ 9+ sa 'ultimatel>' 6ecause a7erage 5rices do not
directl coincide with the 7alues of commodities> as %dam Smith> Ricardo> and others 6elie7e9 E+>
1A1nF. %gainJ 98e ha7e assumed that 5rices P 7alues. 8e shall> howe7er> see in &olume +++> that e7en
in the case of a7erage 5rices the assum5tion cannot 6e made in this 7er sim5le manner9 E+> !BBnF.
8e thus see that the Marxist law of 7alue is not canceled 6 the data of the third 7olume> 6ut
is merel modified in a definite wa. 8e shall make closer ac?uaintance with these modifications and
gras5 their significance 6etter after we ha7e further considered the course of Bhm-Bawerk's
ex5osition.
,he first 9argument9 adduced 6 Marx in fa7or of his 7iew is summari@ed 6 Bhm-Bawerk
as followsJ
;B<
#7en if the se5arate commodities are 6eing sold either a6o7e or 6elow their 7alues> these
reci5rocal fluctuations cancel each other> and in the communit itselfGtaking into account all the
6ranches of 5roductionGthe total of the 5rices of 5roduction of the commodities 5roduced still remains
e?ual to the sum of their 7alues.
,he first thing that strikes us here Eand the o6ser7ation ma 6e re5eated with regard to all that
followsF is that Bhm-Bawerk denotes as an 9argument9 that which for Marx was no more than a
logical deduction from his 5remises. +t is then> of course> eas to demonstrate that what Marx sas
does not amount to an argument.
Bhm-Bawerk tells us that it is admitted 6 Marx that individ!al commodities do not
exchange for one another at their 7alues. Stress is laid on the fact that these indi7idual de7iations
com5ensate or cancel each other. How much of the law of 7alue is leftI asks Bhm-Bawerk. ,he
o6:ect of the law of 7alue is to elucidate the actual exchange relations of commodities. 8e wish to
know> for instance> wh a coat should 6e worth as much in exchange as twent ards of linen. ,here
can clearl 6e a ?uestion of an exchange relationshi5 onl 6etween individ!al commodities among
each other. %s soon> howe7er> as we look at all commodities as a $hole and sum u5 their 5rices> we
must studiousl and 5erforce a7oid looking at the relations existing within this whole. ,he relati7e
differences of 5rice com5ensate each other in the sum total. +t is> therefore> no answer to our ?uestion
concerning the exchange relationshi5s of the commodities to 6e told the total 5rice which the 6ring
when taken together. ,he state of the case is thisJ to the ?uestion of the 5ro6lem of 7alue> the Marxists
first re5l with their law of 7alue> telling us that commodities exchange in 5ro5ortion to the la6or time
em6odied in them. ,he then re7oke this answer as far as it concerns the domain of the exchange of
indi7idual commodities> the one domain in which the 5ro6lem has an meaning> while the maintain it
in full force onl for the aggregate national 5roduct> for a domain therefore in which the 5ro6lem>
6eing without o6:ect> cannot 5ro5erl 6e 5ut at all. %s an answer to the strict ?uestion of the 5ro6lem
of 7alue> the law of 7alue is a7owedl contradicted 6 the facts= and in the onl a55lication in which it
is not contradicted 6 them> it is no longer an answer to the ?uestion which demanded a solution. +t is
no answer at all> it is mere tautolog. 8hen one 5enetrates the disguises due to the use of mone>
commodities do e7entuall exchange for commodities. ,he aggregate of commodities is thus identical
with the aggregate of the 5rices 5aid for them= or the 5rice of the entire national 5roduct is nothing else
than the national 5roduct itself. +n these circumstances> therefore> it is ?uite true that the total 5rice
5aid for the entire national 5roduct coincides 5recisel with the total amount of 7alue or la6or
crstalli@ed therein. But this tautological utterance denotes no increase of true knowledge> neither does
it 5ro7e the correctness of the law that commodities exchange in 5ro5ortion to the la6or em6odied in
them. ,hus Bhm-Bawerk.
,he entire train of reasoning is utterl 6eside the 5oint. Marx is in?uiring a6out the total 7alue>
and his critic com5lains 6ecause he is not in?uiring a6out the 7alue of the indi7idual commodit.
Bhm-Bawerk fails to see what Marx is aiming at in this demonstration. +t is im5ortant to show that
the sum total of the 5rices of 5roduction is identical with the sum total of the 7alues> 6ecause there6>
first of all> it is shown that the total 5rice of 5roduction cannot 6e greater than the total 7alue= 6ut>
inasmuch as the 5rocess of the 5roduction of 7alue is effected solel within the s5here of 5roduction>
this signifies that all 5rofit originates from 5roduction and not from circulation> not from an addition
to the finished 5roduct su6se?uentl effected 6 the ca5italist. Secondl> we learn that> since the total
5rice is e?ual to the total 7alue> the total 5rofit cannot 6e anthing else than the total sur5lus 7alue.
,he total 5rofit is there6 ?uantitati7el determined> and solel on the 6asis of this determination does
it 6ecome 5ossi6le to calculate the magnitude of the rate of 5rofit.
But can we> without la5sing into a6surdit> 7enture to s5eak of a total 7alue at allI Bhm-
Bawerk confounds the exchange 7alue with the 7alue. &alue manifests itself as exchange 7alue> as a
?uantitati7el determined relationshi5> in 7irtue of the fact that one commodit can 6e exchanged for
another. But whether> for exam5le> a coat can 6e exchanged for twent ards of linen cloth or for fort
ards is not a matter of chance> 6ut de5ends u5on o6:ecti7e conditions> u5on the amount of sociall
necessar la6or time contained in the coat and in the linen res5ecti7el. ,hese conditions must make
themsel7es felt in the 5rocess of exchange> the must su6stantiall control that 5rocess> and the must
ha7e an inde5endent existence ?uite a5art from exchange> if we are to 6e entitled to s5eak of the total
7alue of commodities.
;1<

Bhm-Bawerk o7erlooks the fact that 7alue in the Marxist sense is an o6:ecti7e> ?uantitati7el
determined magnitude. He o7erlooks it 6ecause in realit the conce5t of 7alue as determined 6 the
marginal utilit theor lacks this ?uantitati7e definiteness. #7en su55osing that the 7alue as e?ui7alent
to the marginal utilit of each unit in an aggregate of goods is known to me> this 7alue 6eing
determined 6 the utilit of the last unit in this store of goods> this does not ena6le me to calculate the
magnitude of the 7alue of the total store. But if the 7alue> in the Marxist sense> of a single unit 6e
known to me> the 7alue of the aggregate of these units is likewise known.
+n the transition from the sim5le to the ca5italist 5roduction of commodities> the distri6ution
of the social 5roduct is what undergoes change. ,he distri6ution of the sur5lus 7alue is now no longer
effected in accordance with the measure of the la6or 5ower which the indi7idual 5roducer has in his
5articular s5here ex5ended for the 5roduction of sur5lus 7alue> 6ut is regulated 6 the magnitude of
the ca5ital it has 6een necessar to ad7ance in order to set in motion the la6or that creates the sur5lus
7alue. +t is o67ious that the change in the distri6ution makes no difference in the total amount of
sur5lus 7alue undergoing distri6ution> that the social relationshi5 is unaltered> and that the change in
the distri6ution comes to 5ass solel through a modification in the 5rice of the indi7idual commodities.
+t is further o67ious that if we are to determine the amount of di7ergence> we must know> not onl the
magnitude of the sur5lus 7alue> 6ut also the magnitude and indeed the val!e magnitude of the
ad7anced ca5ital. ,he law of 7alue ena6les us to determine this magnitude. + can thus readil ascertain
the de7iations as soon as the 7alue magnitudes are known to me. &alue is conse?uentl the necessar
theoretical starting 5oint whence we can elucidate the 5eculiar 5henomenon of 5rices resulting from
ca5italist com5etition.
Bhm-Bawerk's entire 5olemic is therefore all the more fallacious inasmuch as Marx> when he
in?uires a6out the total 7alue> does this solel in order to distinguish> within the total 7alue> the
indi7idual 5arts which are im5ortant to the ca5italist 5rocess of distri6ution. Marx's concern is with the
7alue newl created within a 5eriod of 5roduction> and with the ratio in which this newl created 7alue
is distri6uted 6etween the working class and the ca5italist class> thus furnishing the re7enues of the
two great classes. +t is therefore utterl false to sa that Marx re7okes the law of 7alue as far as
indi7idual commodities are concerned> and maintains it in force solel for the aggregate of these
commodities. Bhm-Bawerk is led to make this contention onl 6ecause he fails to distinguish
6etween 7alue and 5rice. ,he truth is> rather> that the law of 7alue> directl 7alid for the social 5roduct
and its 5arts> enforces itself onl inasmuch as certain definite modifications> conforma6le to law> occur
in the 5rices of the indi7idual ca5italisticall-5roduced commoditiesG6ut these modifications can onl
6e made com5rehensi6le 6 the disco7er of the social nexus> and the law of 7alue renders us this
ser7ice. $inall> it is 5ure gi66erish for Bhm-Bawerk to sa> as he does> that the aggregate of
commodities is identical with the aggregate of the 5rices 5aid for them. %ggregate of commodities and
aggregate of 5rices are incommensura6le magnitudes. Marx sas that the sum total of the 7alues Enot
of the commoditiesF is e?ual to the sum total of the 5rices of 5roduction.+n this case we ha7e
commensura6ilit> inasmuch as 5rices and 7alues are 6oth ex5ressions for different ?uantities of la6or.
$or the total 5rice of 5roduction can 6e com5ared with the total 7alue onl if> though ?uantitati7el
different> the are ?ualitati7el homogeneous> 6oth 6eing the ex5ression of materiali@ed la6or.
+t is true that Bhm-Bawerk considers that in the ultimate analsis commodities exchange for
commodities> and that this is wh the aggregate of 5rices is identical with the aggregate of
commodities. But here he disregards not onl the 5rice 6ut also the 7alue of the commodities. ,he
?uestion is> gi7en an aggregate of commodities> 6 the 5iece> 6 weight> etc.> how great is their 7alue>
or what is their 5rice> since for the social 5roduct these are coincident. ,his 7alue or 5rice is the
magnitude of a definite ?uantit of mone>and is something com5letel different from the aggregate of
commodities> Marx's in?uir relates to this magnitude> which must according to his theor incor5orate
an e?ual ex5enditure of la6or with the aggregate of commodities.
,he first 9argument>9 like those that follow> is merel designed to indicate how far the law of
7alue holds good directl> without modifications. )aturall> it is eas for Bhm-Bawerk to show that
the modification of the law of 7alue which Marx had 5re7iousl indicated as a necessar outcome of
the nature of ca5italist com5etition> and which he here in7aria6l 5resu55oses> is not 5ro7ed.
+n his criticism of the second argument> Bhm-Bawerk 5roceeds as follows. Marx> he sas>
claims for the law of 7alue that it go7erns the 7ariation of 5rices> inasmuch as> if the la6or time
re?uired for the 5roduction of commodities 6e reduced> 5rices fall= if it 6e increased> 5rices rise E+++>
!4A> !11F. But Bhm-Bawerk has omitted the condition which Marx attaches to this 5ro5osition> for
Marx 6egins 6 saingJ 98hate7er ma 6e the wa in which the 5rices of the 7arious commodities are
first fixed or mutuall regulated> the law of 7alue alwas dominates their mo7ements.9 Bhm-Bawerk
o7erlooks this> and re5roaches Marx with ignoring the fact that la6or> while it is one of the
determinants of 5rice> is not the sole determinant> as Marx's theor demands. ,his conclusion> sas
Bhm-Bawerk> rests on an o7ersight so o67ious that it is ama@ing Marx failed to 5ercei7e it. But what
Marx said> and the onl thing he wanted to sa> was that changes in the ex5enditure of la6or entail
changes in 5rices> that is to sa that> the 5rices 6eing gi7en> the 7ariation in 5rices is determined 6 the
7ariation in the 5roducti7it of la6or. ,he o7ersight is here committed 6 Bhm-Bawerk> who could
not ha7e raised the o6:ection he does had he ?uoted the 5assage in full.
More im5ortant> howe7er> are Bhm-Bawerk's su6se?uent o6:ections to the Marxist
ex5osition. Marx concei7es the transformation of 7alue into 5rice of 5roduction as an historical
5rocess> which is summari@ed 6 Bhm-Bawerk as the 9third argument9 in the following termsJ 9,he
law of 7alue> Marx affirms> go7erns with undiminished authorit the exchange of commodities in
certain 5rimar stages in which the change of 7alues into 5rices of 5roduction has not et 6een
accom5lished.9 ,he argument> we are told> has not 6een de7elo5ed 6 Marx with 5recision and
clearness> 6ut the su6stance of it has 6een interwo7en into his other dis?uisitions.
,he conditions which are re?uisite in order that commodities shall 6e exchanged for their
7alues are de7elo5ed 6 Marx as followsJ He assumes that the workers themsel7es own their
res5ecti7e means of 5roduction> that the la6or on the a7erage for an e?ual time with e?ual intensit>
and that the exchange their commodities directl. ,hen two workmen in an one da will 6 their
la6or ha7e added to their 5roduct e?ual amounts of new 7alue> 6ut the res5ecti7e 5roducts will 7ar in
7alue in accordance with 7ariations in the amount of la6or 5re7iousl incor5orated in the means of
5roduction. ,his latter 5ortion of 7alue will corres5ond to the constant ca5ital of the ca5italist
econom= the 5ortion of the new 7alue ex5ended u5on the workers' means of su6sistence will
corres5ond to the 7aria6le ca5ital= while the 5ortion of the new 7alue which remains will corres5ond to
the sur5lus 7alue> which will accrue to the la6orer. ,hus 6oth the la6orers recei7e e?ual 7alues after
the 7alue of the in7ested 9constant9 ca5ital has 6een deducted= 6ut the relationshi5 6etween the 5ortion
of 7alue re5resenting sur5lus 7alue and the 7alue of the means of 5roductionGthat which corres5onds
to the ca5italist rate of 5rofitGwill differ in the res5ecti7e cases. Since> howe7er> each of them has the
7alue of the means of 5roduction made good to him in exchange> the circumstance is com5letel
immaterial. 9,he exchange of commodities at their 7alues> or a55roximatel at their 7alues> re?uires>
therefore> a much lower stage than their exchange at their 5rices of 5roduction> which re?uires a
relati7el high de7elo5ment of ca5italist 5roduction....%side from the fact that 5rices and their
mo7ements are dominated 6 the law of 7alue> it is ?uite a55ro5riate> under these circumstances> to
regard the 7alue of commodities> not onl theoreticall> 6ut also historicall> as existing 5rior to the
5rices of 5roduction. ,his a55lies to conditions in which the la6orer owns his means of 5roduction>
and this is the condition of the land-owning farmer and of the craftsman in the old world as well as the
modern world. ,his agrees also with the 7iew formerl ex5ressed 6 me that the de7elo5ment of
5roduct into commodities arises through the exchange 6etween different communes> not through that
6etween the mem6ers of the same commune. +t a55lies not onl to this 5rimiti7e condition> 6ut also to
su6se?uent conditions 6ased on sla7er or serfdom> and to the guild organi@ation of handicrafts> so
long as the means of 5roduction installed in one line of 5roduction cannot 6e transferred to another
line exce5t under difficulties> so that the 7arious lines of 5roduction maintain> to a certain degree> the
same mutual relations as foreign countries or communistic grou5s9 E+++> !4K-!4CF.
%gainst this reasoning> Bhm-Bawerk tells us> 9the gra7est dou6ts arise> whether we regard it
from within or without.9 +t is inherentl im5ro6a6le> and ex5erience also is against it. ,o demonstrate
the im5ro6a6ilit> Bhm-Bawerk illustrates Marx's exam5le arithmeticall. 'a6orer +> he sas>
re5resents a 6ranch of 5roduction which re?uires technicall a relati7el large and costl 5re5arator
means of 5roduction> for the installation of which he has re?uired fi7e ears' la6or> while the
formation of the finished 5roduct needs an additional ear. 'et us assume that the la6orer furnishes the
means of 5roduction. +n that case it will 6e six ears 6efore he secures a return for the 7alue of his
la6or. 'a6orer ++> on the other hand> can 5ro7ide the necessar means of 5roduction and com5lete the
finished 5roduct in a single month> and will therefore secure his ield after one month. But in the
Marxist h5othesis a6solutel no attention is 5aid to this difference in 5oint of time as regards the
recei5t of 5ament> whereas a ear's 5ost5onement of the remuneration of la6or is assuredl a
circumstance demanding com5ensation. (n?uestiona6l> sas Bhm-Bawerk> the different 6ranches
of 5roduction are not e?uall accessi6le to all 5roducers. ,hose 6ranches which demand an extensi7e
outla of ca5ital are accessi6le onl to a dwindling minorit. Hence> in these latter 6ranches> there
ensues a certain restriction in su55l> and this ultimatel forces the 5rice of their 5roducts a6o7e the
le7el of those 6ranches which can 6e carried on without 7exatious delas. Marx himself recogni@es
that in such cases exchange for 7alues would lead to a dis5ro5ortion. He records the admission 6
saing that the e?ui7alent sur5lus 7alues re5resent une?ual rates of 5rofit. But the ?uestion naturall
arises> wh this ine?ualit should not 6e neutrali@ed 6 com5etition :ust as it is in ca5italist societ.
Marx answers the ?uestion 6 saing that the onl thing which matters to the two la6orers is that for
e?ual la6or time the shall> when the 7alues of the in7ested constant elements ha7e 6een deducted>
recei7e e?ual 7alues> whereas the difference in the rates of 5rofit is a matter of no moment to them>
:ust as the modern wage earner is indifferent as to what rate of 5rofit the ?uantum of sur5lus 7alue
extorted out of him ma re5resent.
But the com5arison is fallacious. $or> sas Bhm-Bawerk> the la6orers of our da do not
recei7e the sur5lus 7alue> whereas in the su55osed case the two la6orers do recei7e it. +t is therefore
not an indifferent matter whether it 6e allotted to them 6 one measure or 6 another> 6 the measure
of the work done or 6 the measure of the in7ested means of 5roduction. Conse?uentl the ine?ualit
in the rates of 5rofit cannot de5end on the fact that the magnitude of the rate of 5rofit is of no moment
to the 5ersons concerned.
,hese last sentences are a salient exam5le of Bhm-Bawerk's 5olemic method. He com5letel
ignores his o55onent's actual line of argument> and ?uotes an illustrati7e exam5le Ewhich he 5roceeds
to inter5ret falselF as if it had 6een alleged to 6e a 5roof= he then trium5hantl announces that an
exam5le is not a 5roof. ,he difference with which we ha7e to do is the difference 6etween 5re-
ca5italist and ca5italist com5etition. +n the local market which it dominates> 5re-ca5italist com5etition
effectuates the e?uali@ation of the different indi7idual 7alues to 5roduce a single market 7alue=
ca5italist com5etition effectuates the transformation of 7alue into 5rice of 5roduction. ,his> howe7er>
is onl 5ossi6le 6ecause ca5ital and la6or can remo7e at will from one s5here of 5roduction to another=
this remo7al cannot take 5lace freel until all legal and material o6stacles to the transfer ha7e ceased
to exist> cannot take 5lace until Edisregarding minor considerationsF there exists a6solute li6ert of
mo7ement for ca5ital and for la6or. But in 5re-ca5italist conditions this competition for spheres of
investment is im5ossi6le> and conse?uentl the e?uali@ation of the different rates of 5rofit is
im5ossi6le. Since this is so> since the la6orer who 5roduces on his own account cannot change his
s5here of 5roduction at will> the difference in the 5rofit rates con:oined with e?ual masses of 5rofit EP
sur5lus 7alueF> is indifferent to him> :ust as to the wage la6orer it is of no moment what rate of 5rofit is
re5resented 6 the amount of sur5lus 7alue extorted from him. ,he terti!m comparationis ;the third
term in the com5arison< is in 6oth cases that the la6orers' chief concern is with the amount of sur5lus
7alue. $or whether the get the sur5lus 7alue or not> in 6oth cases the ha7e to do the work which
5roduces it. +t de5ends strictl u5on the duration of their la6or. ,he matter ma 6e ex5ressed in
arithmetical terms as follows. 'et us su55ose that there are two 5roducers each of whom works on his
own account> that one of them makes use of means of 5roduction amounting to 14 shillings dail> and
that the other makes use of means of 5roduction amounting to !4 shillings dail. 'et us further
su55ose that each of them dail 5roduces new 7alue to the amount of !4 shillings. ,he first la6orer
will recei7e B4 shillings for his 5roduct> the second will recei7e /4 shillings= of the B4 shillings !4> and
of the /4 shillings 14> will 6e recon7erted into means of 5roduction> so that there will remain for each
la6orer !4 shillings. Since the are not free to change the s5here of 5roduction at will> the ine?ualit of
the rates of 5rofit is of no conse?uence to them. *f the !4 shillings which remain at the dis5osal of
each> let 14 shillings re5resent the 5ortion used to 5ro7ide the la6orer's means of su6sistence> or Ein
ca5italist 5hraseologF let 14 shillings re5resent their 7aria6le ca5ital> then for each of them the
remaining 14 shillings will constitute sur5lus 7alue. $or a modern ca5italist the affair would assume a
7er different com5lexion. +n the first s5here he would ha7e to dis6urse ca5ital amounting to /4
shillings in the form of !4c P 147 in order to gain 14 shillings sur5lus 7alue= in the second s5here> if
he in7ested an e?ual amount of ca5ital> it would 6e in the form of 11c Q 117 and he would gain 11
shillings sur5lus 7alue in return for his outla. Since ca5ital is transfera6le at will there will 6e
com5etition 6etween the in7estments until the 5rofits are e?uali@ed> which will ensue when the 5rices
are no longer B4 shillings and /4 shillings res5ecti7el> 6ut /1 shillings in each case.
But Bhm-Bawerk's 5olemic secures its trium5h in the 9arithmetical ex5osition9 of the
exam5le gi7en 6 Marx. +n this ex5osition the sim5le 5roduction of commodities 5resu55osed 6
Marx is in the twinkling of an ee transformed into ca5italist 5roduction. $or with what else than
ca5italist 5roduction ha7e we to do when Bhm-Bawerk e?ui5s one of the la6orers with means of
5roduction re?uiring fi7e ears to furnish> while the means of 5roduction re?uired 6 the other la6orer
can 6e furnished in a time measured in dasI 0oes not this im5l differences in the organic
com5osition of ca5ital> differences which> when so extensi7e> can arise onl as the outcome of
ca5italist de7elo5mentI +n the case of the la6orer who works on his own account> such a la6orer as
Marx had in 7iew> the means of 5roduction are tools of a com5arati7el sim5le kind> and there is no
7er nota6le difference in 7alue 6etween the tools used in the different s5heres of 5roduction. 8here
tools of considera6le 7alue are em5loed Ea fulling mill> for instanceF these are usuall the 5ro5ert of
the guild or of the cit> and each guildsman's share therein is insignificant. S5eaking generall> in 5re-
ca5italist conditions dead la6or 5las a modest 5art as com5ared with li7ing la6or. %lthough> howe7er>
the differences in ?uestion are inconsidera6le> the do in fact suffice to determine certain differences
in the rates of 5rofit> differences whose e?uali@ation is hindered 6 the artificial 6arriers surrounding
e7er s5here of 5roduction. But where7er the means of 5roduction 6ulked largel in com5arison with
la6or> co-o5erati7e industr made its a55earance at an earl date> was s5eedil transformed into
ca5italist industr> and as a rule culminated in legali@ed or 7irtual mono5ol Eas in the mining
industrF.
Marx further assumes that the la6orers in his illustration mutuall exchange their res5ecti7e
5roducts. Bhm-Bawerk com5lains of the in:ustice in7ol7ed> in that one of the la6orers> after working
for six ears> should recei7e merel an e?ui7alent for his la6or time> and not 6e allotted in addition
some com5ensation for the time he has had to wait. But if one of them has had to wait six ears for the
return> the other has had to wait six ears for the 5roduct> has had to store u5 his own 5roducts for six
ears that he ma 6e a6le at last to exchange them for the former's 5roduct> now at length com5leted.
Hence there is no occasion for allotting a s5ecial com5ensation to one of the two. But in realit there is
no more historical warrant for the assum5tion of so great a di7ergence 6etween the times when returns
can 6e ex5ected> than there is for the similar assum5tion of an extensi7e 7ariation in the organic
com5osition of the 9ca5ital.9
Bhm-Bawerk> howe7er> is not content with the Middle %ges. +n the 9modern world>9 too>
relationshi5s exist which corres5ond to those of the Marxist h5othesis. ,he are found> sas our
critic> as Marx himself indicates> in the case of the land-owning 5easant farmer and of the
handicraftsman. ,hese ought to secure e?ual incomes whether the ca5ital the ha7e in7ested in means
of 5roduction amounts to +o shillings or to 14>444 shillings> a su55osition which manifestl conflicts
with the facts. Certainl it conflicts with the facts. But Marx ne7er maintained that in the 9modern9
world two distinct 5rices o6tain for an article according as it has 6een 5roduced 6 ca5italists or 6
handicraftsmen. %s far as the 9modern9 world is concerned> Marx is referring> not to ca5italist
conditions> 6ut to the medie7al sstem as contrasted with the classical. ,his is manifest from the
context> and it seems almost incredi6le that Bhm-Bawerk should ha7e misunderstood the 5assage as
he has done.
Howe7er> Bhm-Bawerk assures us that Marx's 7iews as to the e?uali@ation of the rates of
5rofit are historicall untena6le> and refers in this connection to an o6:ection raised 6 8erner
Som6art in the latter's criticism of Marx's third 7olume. But in actual fact Som6art makes no reference
to the ?uestion of the 7alidit of the law of 7alue in 5re-ca5italist conditions. %ll he does is to o55ose
the contention that during the transition from the medie7al to the ca5italist econom> the e?uali@ation
of the rates of 5rofit has 6een 6rought a6out 6 the le7eling of the originall une?ual rates of sur5lus
7alue. He holds> rather> that the starting 5oint of ca5italist com5etition is from the 7er outset to 6e
found in the 5re-existing commercial rate of 5rofit. Had sur5lus 7alue 6een the starting 5oint>
ca5italism would first ha7e sei@ed u5on the s5heres in which li7ing la6or 5redominated> and onl
graduall would it ha7e 5roceeded to ex5loit other s5heres of 5roduction> in 5ro5ortion as in those
s5heres 5rices had fallen owing to a great increase in 5roduction. +n truth 5roduction de7elo5s with
es5ecial 7igor in s5heres wherein there is much constant ca5ital> as for exam5le in the mining industr.
Ca5ital would ha7e had no reason to transfer itself from one s5here of 5roduction to another without a
5ros5ect of a 9customar 5rofit9 such as existed in commercial 5rofit. But> continues Som6art> the
error can 6e shown in et another wa. +f> at the outset of ca5italist 5roduction> exor6itant 5rofits had
6een o6taina6le in s5heres where 7aria6le ca5ital 5re5onderated> this would im5l that all at once
ca5ital had made use as wage earners of those who had hitherto 6een inde5endent 5roducers> had
em5loed them at half the amount which the had 5re7iousl earned for themsel7es> and had 5ocketed
all the difference reali@a6le 6 the sale of the commodities at 5rices corres5onding to their 7alues. +n
actual fact> sas Som6art> ca5italist 5roduction 6egan with the ex5loitation of declassed indi7iduals>
and in s5heres of 5roduction some of which were com5letel new creations= un?uestiona6l> therefore>
ca5italist 5roduction started from the fixing of 5rices directl in relation to the amount of ca5ital
in7ested.
;K<

+n o55osition to Som6art> m own o5inion is that e?uali@ation of the different rates of sur5lus
7alue to form a single rate of 5rofit was the outcome of a 5rocess long drawn out. +n Som6art's o5inion
it would 6e incom5rehensi6le that the ca5italist should ha7e trou6led to gain control of 5roduction
unless he had a 5ros5ect of securing as industrial ca5italist the same 5rofit which he had 6een in the
ha6it of securing as a merchant. +t seems to me> howe7er> that Som6art o7erlooks the consideration
that the merchant did not in the first instance cease to 6e a merchant when he 6ecame a manufacturer.
,he ca5ital he em5loed in ex5ort was still his main concern. But 6 em5loing his extra ca5ital Eand
in 7iew of the com5arati7el small amount of constant ca5ital then re?uisite> no considera6le sum
would 6e neededF for the 5roduction of commodities on his own account> he was ena6led to 5ro7ide
the necessar articles more regularl and in larger ?uantitiesGim5ortant considerations in a ra5idl
ex5anding market. +n the second 5lace> inasmuch as he a55ro5riated 5art of the sur5lus 7alue 5roduced
6 the handicraftsmen he transferred to the new industr> he reali@ed an extra 5rofit. #7en if the 5rofit
rate he could secure on the ca5ital in7ested in industr was lower than that o6taina6le on his
commercial ca5ital> ne7ertheless the total rate of 5rofit was henceforth greater. Howe7er> a ra5id
increase in his industrial 5rofit rate occurred when> through the utili@ation of new technical methods
Ethe association of la6or> and factor 5roductionF> he was ena6led to 5roduce articles more chea5l
than his com5etitors> who were still satisfing their demand with commodities 5roduced 6
inde5endent handicraftsmen. Com5etition then forced his ri7als to ado5t the new method of
5roduction and to disregard the 5roducts of the handicraftsmen's la6or. 8ith the further 5rogress of
ca5italism> when 5roduction no longer took 5lace mainl for the 5ur5oses of the mercantile ex5orter>
and when the ca5italist 6egan to effect a con?uest of the whole market> his 5rofit was chiefl
de5endent u5on the following factorsJ His technical methods of 5roduction were su5erior> so that he
could 5roduce more chea5l than the handicraftsmen. Since for the time 6eing the market 7alue of the
handicraftsman's 5roducts determined 5rices> the ca5italist was a6le to reali@e extra sur5lus 7alue or
extra 5rofit> which was greater in 5ro5ortion as his technical su5eriorit was more marked. $or the
most 5art> through s5ecial legal 5ri7ileges> the ex5loitation of su5erior technical methods was a
mono5ol of indi7idual ca5italists. )ot until the das of mono5ol were o7er> not until the restrictions
u5on the transfera6ilit of ca5ital had 6een a6olished> not until the shackles of the la6orer had 6een
remo7ed> was the e?uali@ation of the 7aring rates of 5rofit> originall so di7ergent> rendered 5ossi6le.
$irst of all> 6 the su55lanting of handicraftsmanshi5 and 6 the increase of com5etition
within the s5here of ca5italist 5roduction> the extra 5rofit reali@a6le 6 ca5ital was reduced= and
su6se?uentl freedom of transference from one s5here of 5roduction to another effectuated the
e?uali@ation of 5rofit to 6ecome a7erage 5rofit.
,he ex5ansion of the market creates a need for enhanced and more regular su55l> and this in
turn im5els commercial ca5ital to ac?uire control of 5roduction as well. ,he 5rofit which ca5ital thus
reali@es ma 6e less than commercial 5rofit. $or to ca5ital it assumes the form of extra 5rofit> which is
made 6ecause the commodities which ca5ital 5roduces are o6taina6le 6 it more chea5l than those
5urchasa6le from inde5endent handicraftsmen. +n the further course of economic e7olution> the extra
5rofit made with the aid of su5erior technical e?ui5ment 6 the ca5italist who is com5eting with the
handicraftsman for the home market 6ecomes the moti7e force for the exclusi7e sei@ure of a s5here of
5roduction 6 ca5ital. ,he organic com5osition of ca5ital 5las here a minor 5art= and in an case> as
far as 5reca5italist conditions are concerned> Bhm-Bawerk and Som6art o7erestimate the extent of
differences in the organic com5osition of ca5ital.
*nl where> as a matter of actual fact> the means of 5roduction 6ulk large in im5ortance> as is
the case in the mining industr> does the great 5re5onderance of constant ca5ital 6ecome a reason for
ca5itali@ation> for which co-o5eration constitutes a 5reliminar stage. $or the most 5art such industries
are likewise mono5olies> the ield of which has to 6e dealt with 6 s5ecial laws.
%s soon> howe7er> as ca5italist com5etition has definiti7el esta6lished the e?ual rate of 5rofit>
that rate 6ecomes the starting 5oint for the calculations of the ca5italists in the in7estment of ca5ital in
newl-created 6ranches of 5roduction. ,he 5rices here fluctuate on either side of that 5rice of
5roduction whose attainment makes the 5articular 6ranch of 5roduction a55ear 5rofita6le. %t the same
time> the ca5italist goes halfwa to meet com5etition> for he himself acce5ts a7erage 5rofit as a
regulati7e 5rinci5le> and the sole effect of com5etition is to 5re7ent his de7iating from the norm and
from securing an a6o7e-a7erage 5rofit for an considera6le 5eriod.
+t is o67ious> moreo7er> that the formation of 5rice in ca5italist societ must differ from the
formation of 5rice in social conditions 6ased u5on the sim5le 5roduction of commodities. 8e shall
now 5ursue our examination of the change in the character of the formation of 5rice 6 considering the
9fourth argument.9 Bhm-Bawerk tells us that> according to Marx> in a com5lex economic sstem the
law of 7alue regulates the 5rices of 5roduction> at least indirectl and in the last resort> since the total
7alue of the commodities determined 6 the law of 7alue determines the total sur5lus 7alue> while this
last regulates the amount of the a7erage 5rofit and therefore the general rate of 5rofit E+++> !11-!1!F.
,he a7erage 5rofit determines the 5rice of 5roduction. +n the sense of the Marxist doctrine> sas
Bhm-Bawerk> this is correct> 6ut the statement is incom5lete> and our critic attem5ts to 9com5lete9 it
as followsJ ,he 5rice of 5roduction is e?ual to cost 5rice 5lus a7erage 5rofit. ,he cost 5rice of the
means of 5roduction consists> again> of two com5onentsJ first the outla on wages= and secondl the
outla u5on means of 5roduction whose 7alues ha7e alread 6een transformed into 5rices of
5roduction. +f we continue this analsis we come at lastGas does %dam Smith in his 9natural 5rice>9
with which> indeed> Marx ex5ressl identifies his 5rice of 5roductionGto resol7e the 5rice of
5roduction into two com5onents or determinants ;H<J E+F the sum total of the wages 5aid during the
different stages of 5roduction> which taken together re5resent the actual cost 5rice of the commodities=
E!F the sum total of the 5rofits calculated on all these dis6ursements u5on wages. Conse?uentl one
determinant of the 5rice of a commodit is the a7erage 5rofit incidental to its 5roduction. *f the other
determinant> the wages 5aid> Marx s5eaks no further in this 5assage. But it is e7ident> sas Bhm-
Bawerk> that the total ex5ended outla u5on wages is a 5roduct of the ?uantit of la6or em5loed>
multi5lied 6 the a7erage rate of wages. Since> howe7er> according to the law of 7alue the exchange
relations must 6e determined solel 6 the %!antit# of la6or ex5ended> and since Marx denies that the
rate of wages has an influence u5on the 7alue of the commodities> it is also e7ident that> of the two
com5onents of the factor 9outla u5on wages>9 onl the amount of la6or ex5ended is in harmon with
the law of 7alue> while in the second com5onent> rate of wages> a determinant alien to the law of 7alue
enters among the determinants of the 5rices of 5roduction.
+t is almost incredi6le> the wa in which Bhm-Bawerk deduces as a self-e7ident inference
from Marx's train of thought the 7er conclusion which Marx has in so man words stigmati@ed as a
gross fallac. 'et Marx s5eak for himself. 9,he 7alue of the annual 5roduct in commodities> :ust like
the 7alue of the commodities 5roduced 6 some 5articular in7estment of ca5ital> and like the 7alue of
an indi7idual commodit> resol7es itself into two 5artsJ "art %> which re5laces the 7alue of the
ad7anced constant ca5ital> and "art B> which 5resents itself in the form of re7enue as wages> 5rofit>
and rent. ,his last 5art of 7alue> B> stands in o55osition to "art % to the extent that this "art %> under
otherwise e?ual circumstances> in the first 5lace ne7er assumes the form of re7enue> and in the second
5lace alwas flows 6ack in the form of ca5ital> and of constant ca5ital at that. ,he other 5ortion> B>
howe7er> carries within itself an antagonism. "rofit and rent ha7e this in common with wages that all
three of them are forms of re7enue. )e7ertheless> the differ essentiall from each other in that 5rofit
and rent are sur5lus 7alue> un5aid la6or> whereas wages are 5aid la6or.9
;L<

+n that he re5roduces as Marx's o5inion 9the incredi6le error in analsis which 5ermeates the
whole of 5olitical econom since %dam Smith>9 Bhm-Bawerk makes a dou6le mistake. $irst of all he
ignores constant ca5ital. %5art from all else> this is least 5ermissi6le in a 5lace in which we ha7e to do
with the transformation of 7alue into 5rice of 5roduction. $or what is decisi7e for this transformation
is the organic com5osition of the ca5ital> that is to sa> the ratio 6etween the constant and the 7aria6le
ca5ital. ,o disregard the constant ca5ital in this case is to disregard the most essential 5oint> is to
render it ?uite im5ossi6le to understand the formation of the 5rice of 5roduction. But gra7er> 5erha5s>
is the second mistake. +nasmuch as Bhm-Bawerk> in common with %dam Smith> makes 7aria6le
ca5ital and sur5lus 7alue 9com5onent 5arts>9 or as he 5uts it more stringentl> 9determinants>9 of
7alue> he 5er7erts Marx's doctrine into its 5recise o55osite. $or Marx> 7alue is the pri!s, the thing
gi7en> while 7 and s are no more than 5arts whose magnitude is limited 6 the new 7alue added to the
dead la6or EcF and determined in accordance with the ?uantit of la6or. How much of this new 7alue
Ewhich can 6e resol7ed into 7 Q s> 6ut does not originate from themF can 6e assigned to 7 and how
much to s> is determined 6 the 7alue of the la6or 5ower> which is e?ual to the 7alue of the means of
su6sistence necessar for its maintenance> the 6alance remaining a7aila6le for sur5lus 7alue. Bhm-
Bawerk is still entangled in the ca5italist illusion in accordance with which the cost 5rice is regarded
as a constituti7e factor of the 7alue or of the 5rice. "recisel 6ecause he ignores c> he makes it utterl
im5ossi6le for himself to gain insight into the 5rocess of the formation of 7alue. He does not see that
in the 5roduct the 5ortion of the cost 5rice which re5resents the constant ca5ital a55ears re5roduced
with its 7alue unchanged. +t is otherwise with the 5ortion re5resented 6 7. ,he 7alue of the 7aria6le
ca5ital 5resents itself in the form of the means of su6sistence consumed 6 the la6orer. ,he 7alue of
these means of su6sistence is annihilated in the 5rocess of consum5tion. But the new 7alue 5roduced
6 the la6orers 6elongs to the ca5italist= a 5ortion of this new 7alue is re-in7ested 6 him in 7aria6le
ca5ital> and seems to him to re5lace this again and again> :ust as another 5ortion of the 7alue which
flows 6ack to him re5laces the constant ca5ital whose 7alue is actuall transferred to the 5roduct. ,he
distinction 6etween c and 7 is there6 o6literated> and the 5rocess of the formation of 7alue is
en7elo5ed in mster. 'a6or no longer manifests itself as the source of 7alue> for 7alue a55ears to 6e
constituted out of the cost 5rice 5lus an excess o7er cost 5rice coming no matter whence. ,hus the
95rice of la6or9 seems to 6e the cause of the 5rice of the 5roduct> so that ultimatel the whole analsis
resol7es itself into the circular ex5lanation of 5rice 6 5rice. +nstead of concei7ing of 7alue as a
magnitude which> in accordance with definite laws> undergoes su6di7ison into two 5ortions> one of
which re5laces the constant ca5ital> while the other 6ecomes re7enue E7 Q sF> re7enue itself is made a
constituent of 5rice> and the constant ca5ital is forgotten. ,hus> Marx ex5ressl insists that 9it would
6e a mistake to sa that the 7alue of wages> the rate of 5rofit> and the rate of rent form inde5endent
constituent elements of 7alue> whose com5osition gi7es rise to the 7alue of commodities> lea7ing aside
the constant 5art= in other words> it mould 6e a mistake to sa that the are constituent elements of the
7alue of commodities> or of the 5rice of 5roduction9 E+++> CCBF.
+f> howe7er> the wage of la6or 6e not a constituent of 7alue> it naturall has no influence u5on
the magnitude of 7alue. How> then> is it 5ossi6le for Bhm-Bawerk to continue to 5roclaim that it has
an influence u5on 7alueI ,o demonstrate this influence> he gi7es us two ta6les. ,hree commodities> %>
B> and C> ha7e at the outset the same 5rice of 5roduction> namel 144> while the organic com5osition
of the ca5ital differs in each case. ,he dail wage is 1= the rate of sur5lus 7alue Es'F is 144 5ercent= the
total ca5ital 6eing 1>144> the a7erage rate of 5rofit E5F is 14 5ercent.

Co77odi!9 Wor:ing 239" W3ge"
C34i!3l
E74lo9ed
A8er3ge
rofi!
ri6e of
rodu6!ion
A 14 14 144 14 144
B K /4 L44 L4 144
C 1B L4 /44 /4 144
To!3l" /4 114 1>144 114 /44
)ow let us assume that wages rise from 1 to K= of the /44> 1A4 will now accrue to wages and
1!4 to 5rofit= 5' is now A 5ercent= the ta6le> therefore> must 6e modified as followsJ

Co77odi!9 Wor:ing 239" W3ge"
C34i!3l
E74lo9ed
A8er3ge
rofi!
ri6e of
rodu6!ion
A 14 K4 144 B4 144
B K /K L44 1K C!
C 1B AB /44 !B 14A
To!3l" /4 1A4 1>144 1!4 /44
,he ta6les exhi6it certain 5eculiarities. )amel> we are not told the magnitude of the constant
ca5ital em5loed in the 7arious 6ranches> nor do we learn how much of the constant ca5ital is
transferred to the 5roduct= thus onl is Bhm-Bawerk ena6led to draw the conclusion that although a
nota6le constant ca5ital is em5loed> it nowhere rea55ears in the 5roduct> and the 5rices of 5roduction
are identical. Still less are we a6le to understand how it ha55ens that higher wages can 6e 5aid with the
same ca5ital. +t is true that these errors make little difference to the final results> for Bhm-Bawerk
does in a sense allow for the organic com5osition> inasmuch as he calculates the 5rofit u5on 7aring
outlas of ca5ital= and his second sur7e alters onl the a6solute figures> not the relati7e ones> for the
rate of 5rofit undergoes a greater fall than Bhm-Bawerk declares> seeing that the total ca5ital is
increased. But the failure to take the constant ca5ital into account renders it im5ossi6le to secure an
insight into the actual 5rocess. +f we correct Bhm-Bawerk's ta6les> the read as followsJ

Co77odi!9
To!3l C34i!3l
6 ; 8
6 8 " 4 &3lue
ri6e of
rodu6!ion
A 144 B14 14 14 14 ,,1 ,,1
B L44 KL4 /4 /4 L4 .*1 ..1
C /44 !/4 L4 L4 /4 *.1 **1
To!3l" 1>144 1>/14 114 114 114 #5-,1
#5-,1 <
#5,11 ; #,1
,o a7oid com5licating the calculation needlessl> we ha7e assumed that c is entirel used u5.
+f the wage now rises from 1 to K> the total ca5ital is increased from 1>144 to 1>1/4> 6ecause 7
increases from 114 to 1A4= the sur5lus 7alue is reduced to 1!4> the rate of sur5lus 7alue to KK.K
5ercent> and the rate of 5rofit to a55roximatel L.A 5ercent. ,he new 7alue created 6 the la6orers
remains unchanged> and is /44. But the organic com5osition of the ca5ital has 6een modified> and
therewith has 6een modified the factor that is decisi7e in the transformation of 7alue into 5rice of
5roduction.

Co77odi!9
To!3l C34i!3l
6 ; 8
6 8 " 4 &3lue
ri6e of
rodu6!ion
A 114 B14 K4 B4 B4 ,,1 ,,1
B L4K KL4 /K !B 11 .*1 .-#
C /1B !/4 AB 1K !1 *.1 **0
To!3l" 1>1/4 1>/14 1A4 1!4 1!4 #5-,1 #5-,1
,he ta6le shows the 9effects of general fluctuations of wages on 5rices of 5roduction9 E+++>
Cha5. N+F. 8e o6tain the following laws
;A<
J E+F as far as a ca5ital of a7erage com5osition is
concerned> the 5rice of 5roduction of the commodities undergoes no change= E!F as far as a ca5ital of
lower com5osition is concerned> the 5rice of 5roduction of the commodities rises> 6ut not
5ro5ortionall to the fall in the 5rofits= E/F as far as a ca5ital of higher com5osition is concerned> the
5rice of 5roduction falls> 6ut not as much as the 5rofit E+++> !/KF. 8hat are we to deduce from thisI +f
we are to 6elie7e Bhm-Bawerk> it a55ears that a rise in wages Ethe ?uantit of la6or remaining
unchangedF 6rings a6out a material alteration in the originall e?ual 5rices of 5roduction. ,his
alteration can 6e ascri6ed in 5art onl to the change in the rate of 5rofit. )ot wholl> of course> seeing
that> for exam5le> the 5rice of 5roduction of commodit C has risen notwithstanding the fall in the rate
of 5rofit. ,his 5uts it 6eond dou6t that in the magnitude of wages we ha7e to do with a 5rice-
determinant whose efficac is not exhausted in the influencing of the magnitude of the 5rofit> 6ut
which rather exercises a direct infl!ence of its o$n. Bhm-Bawerk therefore 6elie7es that he has good
reason for undertaking an inde5endent examination of this link in the chain of determinants of 5rice
which Marx has 5assed o7er. EMarx has a s5ecial cha5ter on the su6:ectHF
8e ha7e alread seen that this 9inde5endence9 is 5ushed so far as to re5resent Marx as saing
the o55osite of what he reall thought. 8e now see how far Bhm-Bawerk's inde5endence transcends
the rules of logic. ,he same change in wages effects in the first case no change in the 5rice> in the
second case it causes a rise> and in the third case it causes a fall in the 5rice. %nd this is what he calls
ha7ing 9a direct influence of its own9 on 5riceH +n fact> howe7er> the ta6les show clearl that wages
can neither constitute com5onents nor determinants of 5rice= for> were it otherwise> an increase in
these com5onents must raise 5rice and a decrease in these com5onents must lower 5rice. )or can
a7erage 5rofit constitute a magnitude inde5endentl influencing 5rice> for if such an influence existed>
whene7er the 5rofit falls the 5rice must also fall. But 6 ignoring the constant 5ortion of ca5ital> and
6 thus lea7ing out of consideration the organic com5osition of ca5ital> Bhm-Bawerk de5ri7es
himself of the 5ossi6ilit of ex5laining the 5rocess.
S5eaking generall> we cannot gain an insight into the entire 5rocess from the stand5oint of
the indi7idual ca5ital> 6ut this is the outlook to which we are restricted when we concei7e the wage of
la6or to 6e an inde5endent com5onent of 5rice. $rom this outlook it is im5ossi6le to understand how
the ca5italist can fail to 6e indemnified in the 5rice for an increase in wages> for a greater outla of
ca5ital. )othing 6ut the social relationshi5s whose essence is disclosed 6 the law of 7alue suffices to
ex5lain how the same cause> an increase in wages> can exercise so di7ergent an effect u5on the
indi7idual ca5itals> the effect 7aring as the ratio 7aries in which the res5ecti7el 5artici5ate in the
s!rpl!s)val!e)creating process of the social capital. ,heir 5artici5ation in the social sur5lus-7alue-
creating 5rocess is> howe7er> indicated 6 their organic com5osition.
But the changed relationshi5 6etween the ca5itals consists in this> that their share in the
5roduction of the total sur5lus 7alue has 6een altered= the sur5lus 7alue has diminished= 6ut the
res5ecti7e ca5itals ha7e contri6uted in 7aring manners to this diminution> according to 7ariations in
the magnitude of the la6or the ha7e res5ecti7el set in motion. Since> howe7er> the reduced sur5lus
7alue is to 6e distri6uted among them in like manner> the modification of their res5ecti7e 5arts in the
5roduction of sur5lus 7alue must find ex5ression in a modification of the 5rices. ,he ca5itals>
therefore> must not 6e regarded indi7iduall> as Bhm-Bawerk regards them> 6ut must 6e a55rehended
in their social interconnections> as 5arts> that is to sa> of social ca5ital. But the 5art the res5ecti7el
5la in the creation of the total 7alue of the social 5roduct is onl to 6e recogni@ed 6 a knowledge of
their organic com5osition> 6 a knowledge of the relationshi5 in which the dead la6or> whose 7alue is
merel transferred> stands to the li7ing la6or which creates new 7alue and of which the 7aria6le ca5ital
is the index. ,o disregard this organic com5osition is tantamount to disregarding the social
relationshi5s of the indi7idual ca5ital. ,his renders it e?uall im5ossi6le to understand the 5rocess
where6 7alue is transformed into 5rice of 5roduction> and to understand the laws which regulate
7ariations in the 5rice of 5roductionGlaws different from those which regulate 7ariations in 7alue> 6ut
alwas tracea6le in the ultimate analsis to 7ariations in the relationshi5s of 7alue.
9Seeing that the 5rice of 5roduction in the second illustration rises> while it falls in the third> it
is e7ident from these o55osite effects 6rought a6out 6 a fall in the rate of sur5lus 7alue or 6 a
general rise of wages that there is no 5ros5ect of an com5ensation in the 5rice for the rise in wages>
since the fall of the 5rice of 5roduction in +++ cannot 7er well com5ensate the ca5italist for the fall in
the 5rofit> and since the rise of the 5rice in ++ does not 5re7ent a fall in 5rofit. *n the contrar> in either
case> whether the 5rice rises or falls> the 5rofit remains the same as that of the a7erage ca5ital whose
5rice remains unchanged.....+t follows from this> that if the 5rice did not rise in ++ and fall in +++> ++
would ha7e to sell 6elow and +++ a6o7e the new> recentl reduced> a7erage 5rofit. +t is ?uite e7ident
that a rise of wages must affect a ca5italist who has in7ested one tenth of his ca5ital in wages
differentl from one who has in7ested one fourth or one half> according to whether 14> !1> or 14
5ercent of ca5ital are ad7anced for wages. %n increase in the 5rice of 5roduction on one side> and a
fall on the other> according to whether a ca5ital is 6elow or a6o7e the a7erage social com5osition> is
effected onl 6 le7eling to the new reduced a7erage 5rofit. +t is clear that when> in conse?uence of the
esta6lishment of a general rate of 5rofit for the ca5itals of lower com5osition Ethose wherein 7 is
a6o7e the a7erageF> the 7alues are lowered on the occasion of their transformation into 5rices of
5roduction> for the ca5itals of higher com5osition the 7alues will 6e increased.9
;C<
,he 7ariation in the
5rice of 5roduction conse?uent u5on a change in wages manifests itself as a direct effect of the new
a7erage rate of 5rofit. %s we ha7e 5re7iousl seen> the esta6lishment of this rate is an outcome of
ca5italist com5etition. Bhm-Bawerk's 5olemic is therefore 5rimaril unfortunate in this> that it is not
directed against the decisi7e 5oint> 6ut against a 5henomenon which onl makes its a55earance as a
necessar conse?uence> as a se?uel> of the 5rimar condition> which is the formation of the 5rice of
5roduction u5on the 6asis of the e?ual rate of 5rofit.
+t makes no difference to the regulation of the 5rice of 5roduction 6 the law of 7alue> that in
the wage of la6or itself> that is to sa in the magnitude of the 7aria6le 5ortion of ca5ital which has to
6e ad7anced> the transformation of the 7alues of the la6orer's necessar means of su6sistence into
5rices of 5roduction has alread 6een com5leted. 8e must not attem5t to 5ro7e the contention that the
5rice of 5roduction of a commodit is not regulated 6 the law of 7alue> 6 maintaining the same thing
of another commodit> to wit> la6or 5ower. $or the de7iation of the 7aria6le 5ortion of ca5ital takes
5lace according to exactl the same laws as are o6ser7ed in the case of an other commodit= in this
res5ect there is no difference 6etween the 7aria6le and the constant 5ortion of ca5ital. *nl 6ecause
Bhm-Bawerk makes the 97alue of the la6or 5ower9 a determinant of the 7alue of the 5roduct> does he
fall into the error of looking u5on the de7iation in the 5rice of la6or 5ower from its 7alue as a
distur6ance of the law of 7alue. %gain> the magnitude of the total sur5lus 7alue is unaffected 6 this
de7iation. $or the total sur5lus 7alue> which is e?ual to the total 5rofit and regulates the rate of 5rofit>
is calculated for the social ca5ital> where the de7iations of the 5rices of 5roduction from 7alue 6alance
each other.
*ne more onl of Bhm-Bawerk's o6:ections remains to 6e considered. #7en if> as Marx
declares> the total sur5lus 7alue regulates the a7erage rate of 5rofit> this ne7ertheless constitutes 6ut
one determinant> while as a second determinant> com5letel inde5endent of the first> and like$ise
completel# independent of the la$ of val!e, there o5erates the magnitude of the ca5ital existing in
societ. )ow> a5art from the fact that the magnitude of the social ca5ital is here assumed 6 Bhm-
Bawerk to 6e known Ewhich 5resu55oses the law of 7alue> since we ha7e to do with the determination
of the magnitude of a 7alueF> the o6:ection has 6een ex5ressl refuted 6 Marx> who writesJ 9,he
5ro5ortion of the sum of a55ro5riated sur5lus 7alues to the ad7anced total ca5ital of societ 7aries.
Since the 7ariation in this case is not due to the rate of sur5lus 7alue> it must 6e due to the total ca5ital>
or rather to its constant 5art. ,he mass of this 5art> technicall s5eaking> increases or decreases in
5ro5ortion to the ?uantit of la6or 5ower 6ought 6 the 7aria6le ca5ital> and the mass of its 7alue
increases or decreases with the increase or decrease of its own mass. +ts mass of 7alue> then> increases
or decreases likewise in 5ro5ortion to the mass of the 7alue of the 7aria6le ca5ital. +f the same la6or
sets more constant ca5ital in motion> la6or has 6ecome more 5roducti7e. +f less> less 5roducti7e. ,here
has then 6een a change in the 5roducti7it of la6or> and a change must ha7e taken 5lace in the 7alue of
certain commodities. ,he following rule then a55lies.
+f the 5rice of 5roduction of a certain commodit changes in conse?uence of a change in the
a7erage rate of 5rofit> its own 7alue ma ha7e remained unchanged> 6ut a change must ha7e taken
5lace in the 7alue of other commodities9 E+++> !B4F.
#$ &ol +++> 5. !4K
%$ &ol +++> 5. 1A!
*$ %6o7e> 55. !C ff.
+$ %6o7e> 55. /! ff.
,$ See $riedrich #ngels> 9#rgan@ung und )achtrag @um dritten Buch des '3a5ital>'9 -ie .e!e /eit,
&ol. +> 5. L. ;Re5rinted in ,ngels on Capital E1C/LF> 5. CL.<
-$ Som6art> o5. cit.> 5. 1A1.
.$ &ol. +++> 5. CLL.
/$ Rise in wages is alone considered. )aturall a fall in wages would ha7e the contrar effect.
0$ &ol. +++> 5. !/L.

*$ THE SUB=ECTI&IST OUT'OOK
,H# 5henomenon of 7ariations in the 5rice of 5roduction has shown us that the 5henomena of
ca5italist societ can ne7er 6e understood if the commodit or ca5ital 6e considered in isolation. +t is
the social relationshi5 which these occu5> and changes in that relationshi5> which control and
elucidate the mo7ements of indi7idual ca5itals> themsel7es no more than 5ortions of the total social
ca5ital. But the re5resentati7e of the 5schological school of 5olitical econom fails to see this social
nexus> and he therefore necessaril misunderstands a theor which definitel aims at disclosing the
social determinism of economic 5henomena> a theor whose starting 5oint therefore is societ and not
the indi7idual. +n a55rehending and ex5ounding this theor he is e7er influenced 6 his own
indi7idualistic mentalit> and he thus arri7es at contradictions which he ascri6es to the theor> while
the are in truth ascri6a6le solel to his inter5retations of the theor.
,his confusion ma 6e traced in all the stages of Bhm-Bawerk's 5olemic. #7en the
fundamental conce5t of the Marxist sstem> the conce5t of 7alue-creating la6or> is a55rehended in a
5urel su6:ecti7e manner. ,o him 9la6or9 is identical with 9trou6le9 or 9effort9 ;9MThe9<.,o make this
indi7idual feeling of distaste the cause of 7alue naturall leads us to see in 7alue a 5urel
5schological fact> and to deduce the 7alue of commodities from our eval!ation of the laor the ha7e
cost. %s is well known> this is the foundation which %dam Smith ado5ts for his theor of 7alue> for he
is e7er inclined to a6andon the o6:ecti7e stand5oint for a su6:ecti7e. Smith writesJ 9#?ual ?uantities of
la6or must at all times and 5laces 6e of e?ual 7alue to the la6orer. +n his ordinar state of health>
strength> and s5irits= in the ordinar degree of his skill and dexterit> he must alwas la down the
same 5ortion of his ease> his li6ert> and his ha55iness.9
;1<
+f la6or regarded as 9trou6le9 6e the 6asis
of our 5ersonal estimate of 7alue> then the 97alue of the la6or9 is a constituent> or a 9determinant9 as
Bhm-Bawerk 5uts it> of the 7alue of commodities. But it need not 6e the onl one> for a num6er of
other factors which influence the su6:ecti7e estimates made 6 indi7iduals take their 5laces 6eside
la6or and ha7e an e?ual right to 6e regarded as determinants of 7alue. +f> therefore> we identif the
7alue of commodities with the 5ersonal estimate of the 7alue of these commodities made 6 this or
that indi7idual> it seems ?uite ar6itrar to select la6or as the sole 6asis for such an estimate.
$rom the su6:ecti7ist stand5oint> therefore> the stand5oint from which Bhm-Bawerk le7els
his criticism> the la6or theor of 7alue a55ears untena6le from the 7er outset. %nd it is 6ecause he
ado5ts this stand5oint that Bhm-Bawerk is una6le to 5ercei7e that Marx's conce5t of la6or is totall
o55osed to his own. %lread in A Contri!tion to the Criti%!e of +olitical ,conom# Marx had
em5hasi@ed his o55osition to %dam Smith's su6:ecti7ist outlook 6 writing 9;Smith< fails to see the
o6:ecti7e e?uali@ation of different kinds of la6or which the social 5rocess forci6l carries out>
mistaking it for the su6:ecti7e e?ualit of the la6ors of indi7iduals.9
;!<
+n truth> Marx is entirel
unconcerned with the indi7idual moti7ation of the estimate of 7alue. +n ca5italist societ it would 6e
a6surd to make 9trou6le9 the measure of 7alue> for s5eaking generall the owners of the 5roducts ha7e
taken no trou6le at all> whereas the trou6le has 6een taken 6 those who ha7e 5roduced 6ut do not own
them. 8ith Marx> in fact> e7er indi7idual relationshi5 is excluded from the conce5tion of 7alue-
creating la6or= la6or is regarded> not as something which arouses feelings of 5leasure or its o55osite>
6ut as an o6:ecti7e magnitude> inherent in the commodities> and determined 6 the degree of
de7elo5ment of social 5roducti7it. 8hereas for Bhm-Bawerk> la6or seems merel one of the
determinants in 5ersonal estimates of 7alue> in Marx's 7iew la6or is the 6asis and connecti7e tissue of
human societ> and in Marx's 7iew the degree of 5roducti7it of la6or and the method of organi@ation
of la6or determine the character of social life. Since la6or> 7iewed in its social function as the total
la6or of societ of which each indi7idual la6or forms merel an ali?uot 5art> is made the 5rinci5le of
7alue> economic 5henomena are su6ordinated to o6:ecti7e laws inde5endent of the indi7idual will and
controlled 6 social relationshi5s. Beneath the husk of economic categories we disco7er social
relationshi5s> relationshi5s of 5roduction> wherein commodities 5la the 5art of intermediaries> the
social relationshi5s 6eing re5roduced 6 these intermediate 5rocesses> or undergoing a gradual
transformation until the demand a new t5e of inter-mediation.
,hus the law of 7alue 6ecomes a law of motion for a definite t5e of social organi@ation 6ased
u5on the 5roduction of commodities> for in the last resort all change in social structure can 6e referred
to changes in the relationshi5s of 5roduction> that is to sa to changes in the e7olution of 5roducti7e
5ower and in the organi@ation of ;5roducti7e< la6or. 8e are there6 led> in the most striking contrast
to the outlook of the 5schological school> to regard 5olitical econom as a 5art of sociolog> and
sociolog itself as a historical science. Bhm-Bawerk has ne7er 6ecome aware of this contrast of
outlooks. ,he ?uestion whether the 9su6:ecti7ist method9 or the 9o6:ecti7ist method9 is the sound
method in economics he decides in a contro7ers with Som6art 6 saing that each method must
su55lement the otherGwhereas in truth we are not concerned at all with two different methods> 6ut
with contrasted and mutuall exclusi7e outlooks u5on the whole of social life. ,hus it ha55ens that
Bhm-Bawerk> unfailingl carring on the contro7ers from his su6:ecti7ist and 5schological
stand5oint> disco7ers contradictions in the Marxist theor which seem to him to 6e contradictions
solel 6ecause of his own su6:ecti7ist inter5retation of the theor.
But if la6or 6e the onl measure for the estimate of 7alue and therewith the onl measure of
7alue> it is as regards this su6:ecti7ist outlook onl logical that in that case commodities should
exchange solel 6 the measure of e?ual ?uantities of la6or em6odied in them> for otherwise it would
6e im5ossi6le to see what should induce the indi7iduals to de7iate from their 5ersonal estimates of
7alue. +f> howe7er> the facts do not conform to these 5remises> then the law of 7alue loses all
significance> e7en if la6or 6e no more than one determinant among se7eral. ,his is wh Bhm-Bawerk
las so much stress u5on the contention that commodities are not exchanged one for another 6 the
measure of e?ual ?uantities of la6or. ,his necessaril a55ears to 6e a contradiction when 7alue is
concei7ed> not as an o6:ecti7e ?uantit> 6ut as the outcome of indi7idual moti7ation. $or if la6or 6e
the measure for m 5ersonal estimate of 7alue> then + shall not 6e inclined to exchange m good for
another unless in that other + o6tain something which> if + had to 5roduce it for mself> would cost me
at least as much la6or as m own good has cost me. % 5ermanent de7iation of the exchange
relationshi5 is in fact> if the su6:ecti7ist conce5tion of the law of 7alue 6e once assumed> a
contradiction 5er se> a sus5ension of the meaning Ethat is to sa> of the su6:ecti7ist meaningF of the law
of 7alue> which here su55lies the indi7idual's moti7e for economic action.
&er different is Marx's outlook. +n his 7iew> that goods contain la6or is one of their intrinsic
?ualities= that the are exchangea6le is a distinct ?ualit> one solel de5endent on the will of the
5ossessor> and one which 5resu55oses that the are owned and aliena6le. ,he relationshi5 of the
?uantit of la6or to the 5rocess of exchange does not come into consideration until the are regularl
prod!ced as commodities> 5roduced that is to sa as goods s5ecificall destined for exchange= thus
this relationshi5 makes its a55earance onl in a definite 5hase of historic e7olution. ,he ?uantitati7e
ratio wherein the are now exchanged 6ecomes there6 de5endent u5on the time of 5roduction> which
is in its turn determined 6 the degree of social 5roducti7it. ,he exchange relationshi5 thus loses its
chance character> thus ceases to 6e de5endent u5on the ca5rice of the owner. ,he social conditions
im5osed u5on la6or 6ecome o6:ecti7e limitations for the indi7idual> and the social com5lex controls
the indi7idual's acti7ities.
)ow the mode of the social 5rocess of 5roduction determines the social 5rocess of
distri6ution> for this latter is no longer consciousl regulated> as if in a communist communit. (nder
ca5italism the 5rocess of distri6ution manifests itself as the outcome of the exchanges effected 6
inde5endent indi7idual 5roducers> exchanges controlled 6 the laws of com5etition.
,he Marxist law of 7alue starts from this> that commodities exchange at their 7alues> this
meaning that commodities exchange one for another when the em6od e?ual ?uantities of la6or. ,he
e?ualit of the ?uantities of la6or is solel a condition for the exchange of commodities at their 7alues.
Bhm-Bawerk> entangled in his su6:ecti7ist inter5retation> mistakes this condition for a condition of
exchange in general. But it is o67ious that the exchange of commodities at their 7alues> while on the
one hand it merel constitutes the theoretical starting 5oint for a su6se?uent analsis> on the other
hand directl controls a historic 5hase of the 5roduction of commodities> a 5hase to which a s5ecific
kind of com5etition corres5onds.
But the exchange relationshi5 of commodities is no more than the material ex5ression of the
social relationshi5s of 5ersons> and what in fact secures reali@ation in the exchange relationshi5 is the
e%!alit# of the agents of prod!ction. Because> in the sim5le 5roduction of commodities> e?ual and
inde5endent la6orers se7erall 5ossessed of their means of 5roduction confront one another> exchange
takes 5lace at 5rices which tend to corres5ond to the 7alues. ,hus onl can the mechanism of the
sim5le 5roduction of commodities 6e maintained= thus onl can the conditions re?uisite for the
re5roduction of the relationshi5s of 5roduction 6e fulfilled.
+n such a societ the 5roduct of la6or 6elongs to the la6orer. +f 6 5ermanent de7iation from
this rule Echance de7iations are mutuall com5ensatorF a 5ortion of the 5roduct of la6or 6e taken
awa from the la6orer and assigned to another 5erson> the foundations of the societ will 6e modified=
the former will 6ecome a wage la6orer Eengaged in home industrF> and the latter will 6ecome a
ca5italist. ,his is actuall one of the was in which the sim5le 5roduction of commodities comes to an
end. But it cannot come to an end unless there has occurred a modification in social relationshi5s>
carring with it a modification in exchange> the ex5ression of social relationshi5s.
+n the ca5italist 5rocess of exchange> whose 5ur5ose is the reali@ation of sur5lus 7alue> the
e?ualit of the economic units is once more reflected. ,hese> howe7er> are no longer inde5endentl
working 5roducers> 6ut owners of ca5ital. ,heir e?ualit secures ex5ression in that the exchange is
onl normal when the 5rofits are e?ual> when 6oth are a7erage 5rofit. ,he exchange which gi7es
ex5ression to the e?ualit of the owners of ca5ital is of course differentl determined from the
exchange that is 6ased u5on an e?ualit in the ex5enditure of the la6or. But :ust as 6oth societies ha7e
the same foundations> the di7ision of 5ro5ert and the di7ision of la6or= :ust as ca5italist societ can
6e concei7ed as merel a higher modification of the earlier t5e of societ= so also is the law of 7alue
unchanged in its foundation> for it has merel undergone certain modifications in its reali@ation. ,hese
are caused 6 the s5ecific mode of ca5italist com5etition> which effectuates the 5ro5ortional e?ualit
of ca5ital. ,he share in the total 5roduct> whose 7alue remains directl determined 6 the law of 7alue>
was formerl 5ro5ortional to the indi7idual's ex5enditure of la6or> 6ut now 6ecomes 5ro5ortional to
the ex5enditure of ca5ital re?uisite to set la6or in motion. ,hus the su6ordination of la6or to ca5ital
finds ex5ression. +t a55ears as social su6ordination> the whole societ 6eing su6di7ided into ca5italists
and la6orers> the former 6eing owners of the 5roduct of the latter> the total 5roduct> determined 6 the
law of 7alue> 6eing di7ided among the ca5italists. ,he ca5italists are free and e?ual= their e?ualit is
dis5laed in the 5rice of 5roduction P k Q 5> where 5 is 5ro5ortional to k. ,he de5endent 5osition of
the la6orer is shown 6 his a55earance as one of the constituents of k> side 6 side with machiner>
lu6ricating oil> and dum6 6easts= this is all he is worth to the ca5italist as soon as he has left the market
and has taken his 5lace in the factor to create sur5lus 7alue. $or a moment onl did he 5la his 5art in
the market> as a free man selling his la6or 5ower. ,he 6rief glor in the market and the 5rolonged
de6asement in the factorGhere we see the difference 6etween legal e?ualit and economic e?ualit>
6etween the e?ualit demanded 6 the 6ourgeoisie and the e?ualit demanded 6 the 5roletariat.
,he ca5italist mode of 5roduction Ethis is its historic significance> and this is wh we can
regard it as a 5reliminar stage on the wa to socialist societF sociali@es mankind to a greater extent
than did an 5re7ious mode of 5roduction> that is to sa> ca5italism makes the existence of the
indi7idual man de5endent u5on the social relationshi5s amid which he is 5laced. +t does so in an
antagonistic form> 6 the esta6lishment of the two great classes> making the 5erformance of social
la6or the function of one of these classes> and en:oment of the 5roducts of la6or the function of the
other.
,he indi7idual is not et an 9immediate9 of societ> that is> he does not et 5ossess a direct
relationshi5 to societ> for his economic 5osition is determined 6 his 5osition as mem6er of a class.
,he indi7idual can onl exist as a ca5italist 6ecause his class a55ro5riates the 5roduct of the other
class> and his own share is solel determined 6 the total sur5lus 7alue> not 6 the sur5lus 7alue
indi7iduall a55ro5riated 6 him.
,his significance of class gi7es ex5ression to the law of 7alue as a social law. ,o confute the
theor of 7alue it must 6e shown to lack confirmation in the social domain.
+n ca5italist societ the indi7idual a55ears as ruler or sla7e according as he is enrolled in one
or other of the two great classes. Socialist societ makes him free> inasmuch as it a6olishes the
antagonistic form of societ> inasmuch as it consciousl and directl installs sociali@ation. )o longer>
then> are the interrelationshi5s of societ concealed 6ehind enigmatic economic categories which seem
to 6e the natural ?ualities of things= these interrelationshi5s now manifest themsel7es as the freel
willed outcome of human co-o5eration. "olitical econom then ceases to exist in the form we ha7e
hitherto known> and is re5laced 6 a science of the 9wealth of nations.9
Com5etition is the 5ower that effects the transformation of 7alues into 5rices of 5roduction.
But the com5etition with which we ha7e to do here is ca5italist com5etition. Com5etition is further
necessar to secure a sale at 5rices which shall fluctuate round the 7alue. +n the sim5le 5roduction of
commodities> on the other hand> we are concerned with the reci5rocal com5etition of the finished
commodities= it is this which e?uates the indi7idual 7alues to constitute a market 7alue> thus
o6:ecti7el correcting the su6:ecti7e errors of indi7iduals. But here Ein ca5italist societF we ha7e to
do with the com5etition of ca5itals for different s5heres of in7estment> a com5etition which
esta6lishes e?ual rates of 5rofit> a com5etition which cannot 6ecome effecti7e until after the a6olition
of the legal and material shackles which had 5re7iousl 6een im5osed u5on the freedom of mo7ement
of ca5ital and la6or. 8hereas the continuall increasing di7ersit in the organic com5osition of
ca5ital> and the conse?uent greater and greater 7ariations in the masses of sur5lus 7alue directl
created in the indi7idual s5heres of 5roduction> are in the first instance the outcome of ca5italist
e7olutionGthis e7olution in turn creates the 5ossi6ilit and the need for extinguishing these differences
as far as ca5ital is concerned> and for thus reali@ing the e?ualit of human 6eings %!a owners of
ca5ital.
8e ha7e 5re7iousl seen what are the laws in accordance with which this e?uali@ation is
effected. 8e ha7e also seen that onl u5on the 6asis of the law of 7alue was it 5ossi6le to determine
the magnitude of the total 5rofit undergoing distri6ution as 6eing e?ual to the total sur5lus 7alue> and
thus to determine the extent of the de7iation of the 5rice of 5roduction from its 7alue. 8e ha7e further
seen how changes in the 5rices of 5roduction must alwas 6e referred to changes in 7alue> and can
onl 6e ex5lained with reference to such changes. %ll that we are interested in here is to note how> in
this res5ect also> the su6:ecti7ist outlook hinders insight into Marx's train of thought.
$or Bhm-Bawerk> com5etition is merel a collecti7e name for all the 5schical im5ulses and
moti7es 6 which the 5arties in the market are influenced> and which thus affect the formation of
5rices. +n relation to this 7iew he has therefore no occasion to s5eak in a 6ad sense of the e?uili6rium
6etween su55l and demand> seeing that a num6er of wants alwas remain unsatisfied= for what this
theor is concerned a6out is not the effecti7e demand> 6ut demand in general> so that certainl it
remains enigmatical how the o5inions and wishes of those who cannot 6u are to influence the
5urchasing 5rices. 0oes not Marx destro the 7alidit of his o6:ecti7e law of 7alue when he a55eals to
com5etition> a55eals> that is to sa> to these 5schical im5ulsesI
,he relationshi5 6etween su55l and demand determines the 5rice> 6ut the height of the 5rice
determines the relationshi5 6etween su55l and demand. +f the demand increases> the 5rice rises> 6ut if
the 5rice rises> the demand lessens> while if the 5rice falls the demand increases. $urther> if the
demand increases and conse?uentl the 5rice rises> su55l increases 6ecause 5roduction has 6ecome
more lucrati7e. ,hus 5rice determines su55l and demand> and su55l and demand determine 5rice=
moreo7er> su55l determines demand> and demand su55l. +n addition> all these fluctuations ha7e a
tendenc to neutrali@e one another. +f demand increases> so that 5rice rises a6o7e its normal le7el>
su55l increases= this increase readil 6ecomes greater than needful> and 5rice then falls 6elow the
normal. Can we find no fixed 5oint in all this confusionI
+n Bhm-Bawerk's o5inion> demand and su55l in7aria6l 6alance one another> whether
exchange 6e effected at a normal 5rice or at an irregular one. But what is this normal 5riceI *n the
6asis of ca5italist 5roduction the sur5lus-7alue-creating 5rocess of ca5ital is a 5recondition of
5roduction. +n order that the ca5italist ma continue to 5roduce> he must 6e a6le to sell the commodit
at a 5rice which is e?ual to its cost 5rice 5lus a7erage 5rofit. +f he is una6le to reali@e this 5rice Ethe
normal 5rice of the commodit 5roduced under ca5italismF> the 5rocess of re5roduction is arrested>
and the su55l is reduced to a 5oint at which the relationshi5 6etween su55l and demand renders it
5ossi6le to reali@e this 5rice. ,hus the relationshi5 6etween su55l and demand ceases to 6e a mere
matter of chance= we 5ercei7e that it is regulated 6 the 5rice of 5roduction> which constitutes the
center around which market 5rices fluctuate in directions which are 5er5etuall o55osed> so that the
fluctuations com5ensate one another in the long run. ,hus the 5rice of 5roduction is a condition of the
su55l> of the re5roduction> of commodities. %nd not of this alone. +t is necessar to secure such a
relationshi5 6etween su55l and demand that the normal 5rice> the 5rice of 5roduction> can 6e
reali@ed> for then onl can the course of the ca5italist mode of 5roduction continue undistur6ed> then
onl can occur the 5er5etual re5roduction> through the 7er course of the 5rocess of circulation> of the
social 5reconditions of a mode of 5roduction whose moti7e force is the need of ca5ital for the creation
of sur5lus 7alue.
+n the long run> therefore> the relationshi5 6etween su55l and demand must 6e of such a kind
that 5rice of 5roduction E6rought a6out inde5endentl of this relationshi5F ma 6e attained which shall
ield the ca5italist the cost 5rice 5lus the 5rofit for the sake of which he has undertaken the
5roduction. ,hen we s5eak of the e?uili6rium of su55l and demand.
+f> on the other hand> we consider demand> we find that it is 9essentiall conditioned on the
mutual relations of the different economic classes and their relati7e economic 5ositions> that is to sa>
first> on the 5ro5ortion of the total sur5lus 7alue to the wages> and secondl> on the 5ro5ortion of the
7arious 5arts into which sur5lus 7alue is di7ided E5rofit> interest> ground rent> taxes> etc.F. %nd this
shows once more that a6solutel nothing can 6e ex5lained 6 the relation of su55l and demand>
unless the 6asis has first 6een ascertained on which this relation rests9 E+++> !1BF. ,hus Marx su55lies
the o6:ecti7e laws which are reali@ed 6 and control the 95schical im5ulses9 of indi7iduals. ,he
5schological school can attem5t to elucidate 6ut one side of the ?uestion> demand. ,he mem6ers of
that school 6elie7e that the ha7e ex5lained the matter when the ha7e classified the indi7idual needs
which manifest themsel7es as demand. ,he fail to recogni@e that the fact that a need exists does not
con7e an im5lication of the 5ossi6ilit for satisfing this need. ,he 5ossi6ilit of satisfaction does
not de5end u5on the good will of the 5erson feeling the need= it de5ends u5on his economic 5ower>
u5on the share of the social 5roduct of which he is a6le to dis5ose> u5on the magnitude of the
e?ui7alent he is a6le to gi7e for 5roducts owned 6 other 5ersons.
+nasmuch as the 5roducti7e 5ower of human societ in the s5ecific form of organi@ation which
societ confers u5on that 5roducti7e 5ower is for Marx the fundamental idea of 5olitical econom>
Marx demonstrates economic 5henomena and their modifications as the manifest themsel7es in
conformit to law> and ca!sall# dominated 6 the modifications in 5roducti7e 5ower. +n this
demonstration> in accordance with the dialectic method> conce5tual e7olution runs 5arallel throughout
with historical e7olution> inasmuch as the de7elo5ment of the social 5ower of 5roduction a55ears in
the Marxist sstem> on the one side as a historical realit> and on the other side as a conce5tual reflex.
Moreo7er> this 5arallelism furnishes the strictest em5irical 5roof of the accurac of the theor. ,he
commodit form is necessaril the starting 5oint= the commodit form is the sim5lest form> and
6ecomes the o6:ect of economic contem5lation> as the o6:ect of a s5ecific scientific contem5lation.
$or in the commodit form there alread comes into 6eing that delusi7e a55earance which results
from the fact that the social relationshi5s of indi7iduals assume the as5ect of material ?ualities of
things. +t is this delusi7el material a55earance which so greatl confuses the issues of economics. ,he
social functions of indi7iduals mas?uerade as material ?ualities of things> :ust as time and s5ace> the
su6:ecti7e forms of 5erce5tion> mas?uerade as o6:ecti7e ?ualities of things. +nasmuch as Marx dis5els
this illusion> inasmuch as he discloses 5ersonal relationshi5s where 6efore him material relationshi5s
had 6een seen> and discloses social relationshi5s where 6efore him indi7idual relationshi5s had 6een
seen> he succeeds in furnishing a unified and consistent ex5lanation of the 5henomena which the
classical economists had 6een una6le to elucidate. ,he failure of the classical economists was
ine7ita6le> for the regarded 6ourgeois relationshi5s of 5roduction as natural and unaltera6le. Marx>
ha7ing demonstrated the historic conditioning of these relationshi5s of 5roduction> was a6le to take u5
the analsis at the 5oint where the in7estigations of the classical economists had 6een arrested.
But the demonstration of the historic transitoriness of 6ourgeois relationshi5s of 5roduction
signifies the close of 5olitical econom as a o!rgeois science and its foundation as a proletarian
science.
)o more than two was now remained o5en to the 6ourgeois cham5ions> if the desired to 6e
anthing more than mere a5ologists for whom an uncritical eclecticism would 5ro7ide the crum6ling
5illars of their sstems of harmon. ,he might> like the historical school in -erman> ignore theor>
and endea7or to fill its 5lace with a histor of economic science> 6ut would then 6e restricted> as the
-erman historical school has 6een restricted e7en within its own chosen field> 6 the lack of an
unified a55rehension of economic ha55enings. ,he 5schological school of economics has chosen the
other 5ath. ,he mem6ers of this school ha7e endea7ored to construct a theor of economic ha55enings
6 excluding economics itself from their 5ur7iew. +nstead of taking economic or social relationshi5s
as the starting 5oint of their sstem> the ha7e chosen for that starting 5oint the individ!al relationshi5
6etween men and things. ,he regard this relationshi5 from the 5schological outlook as one which is
su6:ect to natural and unaltera6le laws. ,he ignore the relationshi5s of 5roduction in their social
determinateness> and the idea of a law-a6iding e7olution of economic ha55enings is alien to their
minds. ,his economic theor signifies the re5udiation of economics. ,he last word in the re:oinder of
6ourgeois economics to scientific socialism is the s!icide of political econom#.
#$ 0ealth of .ations, Book +> Cha5. 1.
%$ 3err ed.> 5. KA.