Marx, Proudhon, and Alternatives to Capital

April 15, 2009 by MHI Alternatives to Capital, Philosophy/Organization

By Seth Weiss.
Marx’s critical dialogue with the work of the French anarchist thinker Pierre Joseph Proudhon
spanned several decades-from his youth haunting the cafes of Paris, where he had occasion to meet
Proudhon and discuss German philosophy, through the writing of the Grundrisse, Capital, and
theCritique of the Gotha Program. While largely ignored in the present, Marx’s critique of
Proudhon remains of real import for all of us struggling to break the hold of capital over our lives
and our world.
Three aspects of Marx’s critique will be explored here: (I) the limits of reforms in the sphere of
circulation; (II) economic laws and the possibilities which politics and consciousness offer for their
transcendence; and (III) Marx’s still largely uncharted concept of “directly social labor.”
‘Fair Trade’
In his 1846 Philosophy of Poverty, Proudhon locates a contradiction between use-value and
exchange-value-a contradiction which he holds as the basis of poverty, inequality, and economic
crises. With what he terms “constituted value” or “synthetic value,” Proudhon, drawing on the value
theory of classical political economy, endeavors a resolution of the contradiction. “Synthetic value,”
Proudhon maintains, is the ground for abolishing unequal exchange. (1) What Proudhon is
proposing, in practical terms is that one commodity which requires, for instance, four hours to
produce will exchange with any other commodity that requires four hours to produce. For Proudhon
this would be a situation of equality: equal contributions to society receiving equal rewards from
society.
A year later, in his 1847 Poverty of Philosophy, the only book that he wrote in French, Marx tears
this formulation to pieces. Proudhon, Marx argues, “give[s] as a ‘revolutionary theory of the future’
what Ricardo expounded scientifically as the theory of present-day society, of bourgeois society,
and…thus take[s] for the solution of the antinomy between utility and exchange value what Ricardo
and his school presented long before him as the scientific formula of one single side of this
antinomy, that of exchange value.” Moreover, says Marx, “relative value [or exchange-value],
measured by labor time, is inevitably the formula of the present enslavement of the worker, instead
of being, as M. Proudhon would have it, the ‘revolutionary theory’ of the emancipation of the
proletariat.”
Marx understood the law of value rather differently than Proudhon: not in terms of “equality” but in
terms of “inequality.” What appears as an equality is just that-an appearance-because it is not
individual, concrete labor that has a tendency to exchange in equal ratios, but only socially average,
abstract labor. In Capital, Marx shows that the value of a commodity is determined by the amount
of “socially necessary labor-time” required for its reproduction-any labor-time beyond that which is
socially necessary is simply wasted (i.e., labor-time during which no value is created). (2)
The fact that our labor doesn’t count equally is not because of unequal exchange, but because our
labor is not counted equally in the first place-in the process of production. The labor of some
workers counts more than the labor of other workers in production. One worker, for instance, may
be stronger or faster than another worker; one worker may be working with more modern
technology than another. Only socially necessary labor, labor which measures up to the social
average, is registered in our society.
Marx maintains that relations of exchange are rooted in the relations of production. Unequal
exchange, or rather what appears as unequal exchange, ultimately can’t be overcome without
uprooting present production relations and transcending value production.
Much of the Left today-including both anarchists and Marxists-continues to locate the roots of
poverty, inequality and economic crises in the realm of exchange and to prescribe remedies that
focus on exchange. This is particularly pronounced in the anti-globalization movement. Think about
campaigns for “Fair Trade” (rather than “Free Trade”) and the work of organizations like Global
Exchange and Trade Craft. Consider also the recent Life After Capitalism conference at the CUNY
Graduate Center, which featured panels promoting gift-exchange and barter as alternatives to
capitalism. The panel on the latter was called “The Barter System in Argentina: is it Possible in our
Town?”
Marx’s critique of Proudhon demands that we consider whether efforts at abolishing markets or
changing property relations can offer ground for real social transformation. In this, it also demands
that we rethink the experience of the Soviet Union, China, Cuba and the other so-called “socialist”
countries. The new global justice movements have largely rejected this experience as a model-they
have rejected the vanguard party, the seizure of state power, the five-year plan. This is plainly
sensible-but it is a partial critique: it is not sufficient to counterpose new decentralized and anti-
authoritarian movements to the old vanguardist movements. Like with Proudhon’s work, there is a
failure to look closely at the mode of production itself. To be sure, some property relations were
changed and some wealth was redistributed in the so-called “socialist” countries, but value
production was simply not overcome and labor remained alienated.
A second feature of Marx’s critique of Proudhon that deserves attention is his treatment of
economic laws and their transcendence.
Can Politics Break the Law of Value?
Proudhon argues that the contradiction he finds between “use-value” and “exchange-value” is also a
contradiction between “supply” and “demand.” Proudhon’s concerns are practical in nature. The
1840s, known as the “hungry forties,” witnessed severe economic crisis across the continent,
culminating in the revolutions of 1848. In a crisis demand drops off-things can’t be sold and prices
fall. Proudhon says that the contradiction between supply and demand can be overcome if
commodities are made to exchange directly in proportion to the amount of labor required for their
production. Set prices equal to values, so that supply and demand find equilibrium, and voila:
commodities will always be exchangeable and at a fair price.
Marx maintains, in the Poverty of Philosophy, that Proudhon “inverts the order of things.” For it is
when supply and demand come into balance that prices equal values. (3) Marx jokes that while
everyone else ventures outside for a walk when the weather is good, Proudhon would have us leave
the house to insure good weather!
In the course of his discussion of these issues in the Poverty of Philosophy, Marx draws an
important distinction between the role of a “legislator” and that of an “economist.” As a legislator,
Marx tells us, Proudhon is free to decree the abolition of the law of supply and demand. However,
says Marx, “[i]f…he [Proudhon] insists on justifying his theory, not as a legislator, but as an
economist [my emphasis], he will have to prove that the time needed to create a commodity
indicates exactly the degree of its utility and marks its proportional relation to the demand…” A
legislator-and for Marx’s legislator we could easily substitute a central committee, a workers’
council or a worker-run co-op-may be able to decree that one hour of labor is equal to another.
However, what will happen when demand for a product-as with typewriters in the advent of the
personal computer-drops off? The labor that went into the production of the typewriters will no
longer count -they simply won’t sell, their price will fall, workers will lose their jobs.
While Proudhon was content to remain a captive of the commodity-form, there are many of us
today who want to transcend commodity production and transcend capital. Can we legislate the
abolition of commodity production? Can politics break the law of value?
Too often we seem to be thinking like Marx’s “legislator.” Much of the Left today-from Stalinists to
social democrats to anarchists-seems to believe that politics are in command. Too often, regardless
of whether one’s program demands seizing state power or smashing state power, the problematic
remains limited to matters of political power, consciousness, and organizational form.
Proudhon’s interest in the equilibration of supply and demand led him to advocate the abolition of
money. In the course of his critique of this aspect of Proudhon’s thought, Marx elaborates a
crucially important notion-namely that of “directly social labor”-which is still not well understood.
Directly Social Labor
Marx develops the concept of “directly social labor” or “immediately social labor” in critical
dialogue with the work of Proudhon, the Ricardian socialists and later with the followers of
Ferdinand Lassalle. In endeavoring an equalitarian application of Ricardo’s theory, Proudhon and
left Ricardian thinkers like John Gray, advocated what we would today call monetary reform: they
sought to replace money with “time chits” or “labor money.” These “time chits” were designed to
directly reflect labor time. In other words, in exchange for a commodity that took, say, 12 hours to
produce, the producer would receive a certificate from a bank entitling her to any other commodity
that took 12 hours to produce. Proudhon and Gray wanted every commodity to be directly social,
directly exchangeable, with every other commodity in the same way that money is directly social.
Proudhon and the other “time-chitters,” as Marx calls them in the Grundrisse, thought the mediation
of money stood in the way. (4)
Marx, however, cautions us not to get caught up in money’s dazzle and sheen. Money, Marx argues
in Volume I of Capital, crystallizes out of a contradiction within the commodity itself: a
contradiction in the commodity between “use-value” on the one hand and “value” on the other
hand; a contradiction between “concrete labor” (labor which produces use-values) and “abstract
labor” (labor which produces value); and a contradiction between “private labor” (the labor of the
individual) and “directly social labor” (the labor that society counts). One can’t then abolish money
without abolishing the commodity-form.
Proudhon’s “pious wish” to abolish money without abolishing commodity production, Marx says
inCapital, is rooted in “the illusion…that all commodities can simultaneously be imprinted with the
stamp of direct exchangeability, in the same way that it might be imagined that all Catholics can be
popes.” In other words, as long as there are commodities, one commodity will necessarily take the
form of Pope ruling over all the other commodities.
In the 1875 Critique of the Gotha Program, Marx again returns to the issue of “directly social
labor.” Marx’s characterization here of a higher phase of communism in which society will inscribe
upon its banners “from each according to her ability, to each according to her needs” is well known.
His characterization of the lower phase of communism remains poorly understood. In this lower
phase, Marx says:
[T]he individual producer receives back from society…exactly what he gives to it…He receives a
certificate from society that he has furnished such-and-such an amount of labor…and with this
certificate he draws from the social stock of means of consumption as much as the same amount of
labor costs. The same amount of labor which he has given to society in one form, he receives back
in another.
This sounds very much like the proposals of Proudhon and other “time-chitters” that were the
subject of decades of invective from Marx. There is, however, a real difference between what Marx
is suggesting and the formulations of Proudhon-if we can get at this difference, we will have
understood not only Marx’s critique of Proudhon but also have discovered one of the real clues that
Marx has left us for figuring out how to transcend capital.
The difference is that, here, labor is “directly” or “immediately” social. Unlike in the formulations
of Proudhon and unlike in our own commodity-producing society, where the exchange of
equivalents exists only in the average, here there would actually be an exchange of equivalents in
the individual case. “[N]ow,” as Marx notes, “in contrast to capitalist society, individual labor no
longer exists in an indirect fashion but directly as a component part of total labor.” So here, right
from the beginning, Marx is telling us that the law of value will not hold. The labor, Marx says,
employed in the production of products will no longer take the form of a material quality possessed
by them; the products of our own hands will no longer have control over us.
While Proudhon is not well remembered today, the kinds of ideas that he advanced have become
conventional wisdom on the Left, particularly in the new global justice movements. A return to
Marx’s critique of Proudhon offers a salutary antidote to such conventional wisdom and, perhaps, a
path forward for all of us searching for real alternatives to capital.
Footnotes:
1. Ricardo’s Principles of Political Economy and Taxation, which posits labor as the source of value
and labor-time as its measure, had been translated into French more than a decade before
Proudhon’s Philosophy of Poverty was first published.
2. “Socially necessary labour-time is the labour-time required to produce any use-value under the
conditions of production normal for a given society and with the average degree of skill and
intensity of labour prevalent in that society” (Capital, p. 129, Penguin edition). In the Philosophy of
Poverty, Marx posits the labor-time required by the most productive workers (rather than “socially
necessary labor-time”) as determining the magnitude of value.
3. Strictly speaking, as Marx shows elsewhere, when supply equals demand, prices in the market
equal prices of production, not values.
4. Ideas of this kind still remain with us today -e.g., alternative currency schemes like “Ithaca
Dollars,” the “LETSystem” and “Burlington Bread” (which is denominated in “slices”).
(This essay originally published in News and Letters, July-August 2005)
7 Comments on “Marx, Proudhon, and alternatives to capital”

1. 1Nickglais said at 4:23 pm on May 5th, 2009:P. J Proudon’s The Philosophy of Misery,
or the System of Economical Contradictions (1846)strong contains a long section on
competition which attempts to show that because the aims of communism are hostile to
competition, communism is utopian, that it is merely a dream. (We quote from the English
Edition of 1888″ competition is as essential to labour as division, since it is division itself
returning in another form, or rather raised to its second power.. competition is in a word is
liberty in division and in all the divided parts (Page 223) Competition is a principle of social
economy, a decree of destiny, a necessity of the human soul.. (p229) ” Man rouses from his
idelness only when want fills him from anxiety; and the surest way to extinguish his
genius .. is to take away from him all hope of profit and of social distiction which results
from it (page 234) competition on its useful side should be universal and carried to its
maximum of intensity. (page 251).”Can competition in labour be abolished ? It would be as
well worth while to ask if personality, liberty, indivudual responsibility can be supressed
(page 258) there can be no question of destroying competition, as impossible as to destroy
liberty: the problem is to find its equilibrium,
I would willing say its police (page 261)
” They ( the communists) say : emulation is not competition. But emulation is nothing but
competition itself. There is no emulation without an object: just as there is no passional
initiative without an object, and as the object of every passion is analagous to the passion
itself, woman to the lover, gold to the miser, crown to the poet – so the object of industrial
emulation is profit. Why substitute for the immediate object of emulation, which is personal
welfare, that far away and almost metaphysical motive called general welfare, especially
when the latter is nothing without the former and can result only in the former.
“My sole reply to him ( the communist) shall be : In denying competition you abandon the
thesis: henceforth you have no place in the discussion.
The question is the solution of the problem of competition – that is the reconciliation of
egoism with socal necessities: spare your moralities (page 225-6)
But if they the ( the communists) now fall back upon the hypothesis of transformation of our
nature, unprecedented in history.. its is nothing more than a dream… a contradiction given to
the most certain economic sciences; and my only reply is to exclude it from the discussion
(page 228)
Man may love his fellow well enough to die for him; he does not love him well enough to
work for him”
Because of its hostility to competition ” Communism is the very denial of society in its
foundation” and the communists are “incessantly confounding matters of reason with those
of sentiment” (page 283)
The above may have been written by the great annd fearless revisionist Marxist Ota Sik
himself.
But let us see how the unrepentent Communist Karl Marx replied to the Philosophy of
Misery in the Misery of Philosophy (1848) and we will see the aptness of his reply to the
present day philosophers of misery, the solemn, long faced, mournful and miserable
ideologists of market socialism.
“M Proudhon begins by defending the eternal necessity of competition against those who
wish to replace it with emulation. Competition is emulation with a view to profit. Is
industrial emulation necessarily emulation with a view to profit, that is competition ? M
Proudhon proves it by affirming it. ( page 163)
“If the immediate object of a lover is a woman, the immediate object of industrial emulation
is the product and not the profit.”
“Competition is not industrial emultion it is commercial emulation.In our time industrial
emulation exists only with a view to commerce. There are even phases in the life of modern
nations when everybody is seized with a sort of craze for making profit without producing.
This speculation craze which recurrs periodically, lays bare the true character of
competition, which seeks to escape the need for industrial emulation (page 165).
The distinction between competition and emulation is of crucial importance. “Competition is
not industrial emulation, It is commercial emulation” ” The immediate object of industrial
emulation is the product and not the profit”.
This distinction between competition and emulation is blurred by all varities of opportunism.
It is easy to see why revisionists should wish to blurr it so as to make competition appear as
a category of production as such instead of being mere a category of the commercial system.
On the other hand there are some so called anti revisionists who represent Stakhanovism, for
example as a system of competition instead of industrial emulation. Thus revisionism and
petty bourgeois Utopianism blur this vital distinction.
Bu it is clear that industrial emulation, in which the object is the product, is entirely different
from , and of infinitely more significance in the development of the productive forces than,
competition, whose object is profit made on the sale of the product.
As for Proudhon’s good and bad sides of competition which recurrs in modern revisionism,
and the notion that what is required is to abolish the bad side of competition, while
maintaing and developing its good side;
” They all want competition without the lethal effects of competition. They all want the
impossible, namely the conditions of bourgeois existence without the necessary
consequences of those conditions (page 213)
The “bad side” is an integral part of the competitive relationship.Thee is no possibility of
retaining the competitive realtionship while eliminating is “bad side”.
Proudhon saw it as a necessity of thre human soul that only competitive struggle for profit
roused man from ihe innate tendency to idelness and stagnation.
This notion also recurs as a fundamental part of political economy of modern revisionism.
The effect of the bourgeois system is represented as the cause of the bourgeois ( or market
socialist ) system in human nature.
 Marx commented;
” the bourgeois man is to them the only possible basis of every society; they cannot imagine
a society where men have ceased to be bourgoeis (213).
“M. Proudhon does not know that all history is nothing but a continuous transformation of
human nature” (page 165)

2. 2Andrew Kliman said at 1:13 am on May 6th, 2009:Hi Nick,On your comment that
“Proudhon saw it as a necessity of the human soul that only competitive struggle for profit
roused man from the innate tendency to idleness and stagnation,” and Marx’s response.The
following year, in the _Communist Manifesto_, there’s also this response (which I really get
a kick out of):
“It has been objected that upon the abolition of private property, all work will cease, and
universal laziness will overtake us.
“According to this, bourgeois society ought long ago to have gone to the dogs through sheer
idleness; for those of its members who work, acquire nothing, and those who acquire
anything do not work. The whole of this objection is but another expression of the tautology:
that there can no longer be any wage-labour when there is no longer any capital.”
I’m also reminded of the engineer, a socialist, who worked for Edison (or maybe Bell) about
a hundred years ago, and attacked pretty hard the notions that profit is necessary for or even
conducive to invention. Does anyone remember/know more about this? My memory is shot.
In regard to “history is nothing but a continuous transformation of human nature”: if this is
consonant with Maoism, why did Mao think that the law of value would persist for hundreds
of years under socialism? (This is a genuine question I have, not a rhetorical one.)

3. 3Nickglais said at 5:13 am on May 6th, 2009:Andrew,Thanks for your comments, and
thanks for your innovative work recovering Marx’s Political Economy.I have attached a note
on Mao and the Law of Value for your critical consumption.
Mao on the Law of Value
The law of value serves as an instrument of planning. Good. But the law of value should not
be made the main basis of planning.
We did not carry through the Great Leap on the basis of the demands of the law of value but
on the basis of the fundamental economic laws of socialism and the need to expand
production. If things are narrowly regarded from the point of view of the law of value the
Great Leap would have to be judged not worth the losses and last year’s all-out effort to
produce steel and iron as wasted labor. The local steel produced was low in quantity and
quality, and the state had to make good many losses. The economic results were not
significant, etc.
The partial short-term view is that the campaign was a loss, but the overall long-term view is
that there was great value to the campaign because it opened wide a whole economic
construction phase. Throughout the country many new starts in steel and iron were made,
and many industrial centers were built. This enabled us to step up our pace greatly.
 In the winter of 1959 over 75 million people were working on water conservancy
nationwide. The method of organizing two large-scale campaigns could be used to solve our
basic water conservancy problems.
From the standpoint of one, two, or three years the value of the grain to pay for so much
labor was naturally quite high. But in the longer view the campaign could considerably
increase grain production and accelerate it too, and stabilize agricultural production, and so
the value of commodities per unit gains. All this then goes toward satisfying the people’s
need for grain. The continuing development of agriculture and light industry creates further
accumulation for heavy industry.
This too benefits people in the long run. So long as the peasants and the people of the entire
country understand what the state is doing, whether money is gained or lost, they are bound
to approve and not oppose. From among the peasants themselves the slogan of supporting
industry has been put forward.
There is the proof! Stalin as well as Lenin said, “In the period of socialist construction the
peasantry must pay tribute to the state.” The vast majority of China’s peasants is “sending
tribute” with a positive attitude. It is only among the prosperous peasants and the middle
peasants, some 15 percent of the peasantry, that there is any discontent. They oppose the
whole concept of the Great Leap and the people’s communes.
In sum, we put plans ahead of prices. Of course we cannot ignore prices. A few years ago we
raised the purchase price for live pigs, and this had a positive effect on pigbreeding. But for
the kind of large-scale, nationwide breeding we have today, planning remains the main thing
we rely on.
Page 521 refers to the problem of pricing in the markets of collective farms. Their collective
farm markets have too much freedom. It is not enough to use only state economic power to
adjust prices in such markets. Leadership and control are also necessary. In our markets,
during the first stage, prices were kept within certain bounds by the government. Thus small
liberties were kept from becoming big ones.
Page 522 says, “Thanks to our command of the law of value, the kind of anarchy in
production or waste of social labor power the law entails under capitalism is not found in a
socialist economy.”
This makes too much of the effects of the law of value. In socialist society crises do not
occur, mainly because of the ownership system: the basic laws of socialism, national
planning of production and distribution, the lack of free competition or anarchy, etc., and not
because we command the law of value. The economic crises of capitalism, it goes without
saying, are determined by the ownership system too.
This extract is from Mao – Critique of Soviet Economics

4. 4Joe said at 3:44 am on May 9th, 2009:You missed the biggest difference between
Marx’s labor vouchers and labor money. As Marx says in the second volume of Capital,
“The producers may eventually receive paper checks, by means of which they withdraw
from the social supply of means of consumption a share corresponding to their labor-time.
These checks are not money. They do not circulate. “
5. 5Andrew Kliman said at 12:06 pm on May 22nd, 2009:A reply to Nick and to Joe
==========================To Nick:
Hi! Thanks for the reply. I think the key issue here is Mao’s initial premise: “The law of
value serves as an instrument of planning.” Or in other words, “we command the law of
value.”
I don’t see how that can be, if one means socialist planning rather than capitalist planning. A
law is something that is in control, not something one controls. The continued operation of
the law of value thus implies that the direct producers are subject to economic imperatives
that they cannot control and to which they must submit.
There is a similar difference between Marx and Proudhon about this. As Seth notes in the
article, Marx wrote in _The Poverty of Philosophy_ that “relative value, measured by labor
time, is inevitably the formula of the present enslavement of the worker, instead of being, as
M. Proudhon would have it, the ‘revolutionary theory’ of the emancipation of the
proletariat.”
To Joe:
Okay, I’ll bite. Why is the fact that Marx’s labor vouchers don’t circulate “the biggest
difference” between them and “labor money”?
After all, there are potentially “black markets.” So there are economic relations that
determine whether or not, IN FACT, the labor vouchers circulate. Thus it seems to me that
the biggest differences are the differences that CAUSE the labor vouchers not to circulate.
So I think Seth has it right when he asks, “Can we legislate the abolition of commodity
production? Can politics break the law of value?” I don’t see that the non-circulation of
vouchers is something that can be instituted and sustained by decree.
Take the case that Seth presents: “what will happen when demand for a product-as with
typewriters in the advent of the personal computer-drops off?” Unless there are profound
changes in real economic relations that can enforce the non-circulation of the labor
vouchers, what is likely to happen, I think, is
(a) the typewriter workers don’t receive any vouchers-because their labor is not deemed
necessary by “society”; or
(b) facing imminent unemployment, they keep their jobs by “willingly” offering to accept a
1-hour voucher in exchange for a typewriter that took 2 or 3 or whatever labor-hours to
produce; or
(c) the economy breaks down because inefficiency is being rewarded and because labor and
other resources are being used to produce things for which there isn’t demand, and diverted
away from production of things for which there is strong demand.

6. 6nickglais said at 11:29 am on April 10th, 2010:Here is my book on Marxism against

Market Socialismhttp://democracyandclasstruggle.blogspot.com/2010/04/democracy-and-
class-struggle-publishes.htmlTake a look !
Nickglais
 7. 7bcooney said at 12:52 pm on August 19th, 2010:Andrew,I’ve read this essay multiple
times but it is just now that it occurs to me to ask this. When Marx says, “and with this
certificate he draws from the social stock of means of consumption as much as the same
amount of labor costs.”… how do we know how many items of consumption can be
withdrawn from this social stock without any measure of the average labor time it takes to
make a commodity? Are you saying that commodities in the social stock are worth whatever
the individual labor time went in to them, so that same commodity has a heterogeneous
measure of its labor time? Or are you suggesting that centralization of production is enough
that individual deviations in productivity are wiped out…. Or am I missing something
crucial?
Fonte: https://www.marxisthumanistinitiative.org/alternatives-to-capital/marx-proudhon-and-
alternatives-to-capital.html