Towards a theory of the development of the

world market and the world economy –

Isaak Dashkovskij
The first of three articles. Under the Banner of Marxism, 1927, no.1 , 86-117. See
part two and three.

1.
The most fundamental and dominant facts of modern economic life are
the world market and the world economy. This is observed in countless written
works, devoted to recent history of the economy and its modern situation. Even
those authors, who, like Sombart, tend to defend the paradoxical idea, that "the
single national economy increasingly is becoming a completed microcosmos,
and the internal market gradually outweighs for all industries the significance of
the foreign market"2, nevertheless have to recognise, that an essential
condition for the growth of the domestic market is a "permanent and continuous
extensive expansion of world economic relations."
The development of international economic relations is a kind of dialectical
process. As is known, exchange and trade historically occur "on the margins of
social organisms." International, intertribal trade is the starting point of the
development of exchange, with which also develops the capitalist
economy.3Later on capitalism gradually clears for itself a required "field of
exploitation" inside the country, disintegrating the remnants of the natural order,
paving the way of commodity economy throughout and transforming the latter
into capitalist economy. During this period there occurs an intensive "formation
of the internal market" for capitalism. When this work is done in enough depth
and breadth, there comes the turn again of international exchange, on no longer
primitive foundations, but on the basis of large-scale production and
manufacture technology. Capitalism "pulls" all nations one after the other into
the world economic orbit. The epoch of world economy arrives.
As troubadours of this international exchange act always the economists of
those countries, which occupy a dominant position in the world market. Since
the era of development of bourgeois political economy coincided with the
dominance of England in the world market, it is only natural that the theory of
the classics became the fighting banner of bourgeois "cosmopolitanism," which
essentially was the only adequate form of expression of the national interests of
British capital. In the development of the "cosmopolitan" theory one can mention
two stages: the first period associated with the names of Smith and Ricardo,
characterizing the predominance of the interests of international trade in the
strict sense, ie, in terms of export of goods. Praising the benefits of international
exchange both Smith and Ricardo refer negatively to the tendency to transfer
capital and entrepreneurship abroad.

But in relation to this already Mill takes a step forward, pointing out that the
export of capital is a powerful force for expanding the field of employment of
remaining capital. It is quite fair to say that the more, to a certain extent, we will
send capital out, the more we will have it and the greater the amount of it we will
be able to keep in the fatherland.4 This evolution of the classical theory was
closely related to changes in the economic environment. From export of goods
British capital turned, after the Napoleonic Wars, to the export of capital. The
pursuit of higher profits got the better over "attachment to the fatherland," and
Mill only registered a fait accompli. True, he has not yet completely done away
with the old ideology and proves the benefits of export of capital by the
consideration that the export contributes to increasing the amount of capital
remaining in the fatherland. But this was already a simple tribute to prejudices,
from which the later generation of economists managed to entirely escape.
In the theory of international economic relations as well as in all other matters of
political economy, the classics remained true to their main method - to issue the
specific laws of bourgeois economy to a natural order of things, to a pre-
established harmony. The moving force of the development of world trade they
saw in physical conditions of production, and not in the social form, which they
take under capitalism. International trade spreads the frame of the division of
labor, increasing its productivity. Growth of productivity is a simple consequence
of technical factors - the division of labor, which therefore is the
most natural order things. Natural laws inevitably must forge a way through the
artificial barriers created by the wrong policies of social organizations - the
state, etc. Therefore the development of international trade is inevitable.
From the natural order of things proceeded, incidentally, also a prominent
opponent of the classical school on the continent of Europe - Friedrich List. But
he, in contrast to the classics, argued that the greatest economic benefits are
obtained not from the division of labor between countries, but from the
conjunction of labor within the same country, in particular from the conjunction
of industrial and agricultural production. A clear case of how the meaning of
"natural laws" is modified when they need to express opposing interests of
different groups of bourgeoisie, in this case the bourgeoisie of England and
Germany in the first half of the 19th century. True, also List did not depart from
"cosmopolitanism" in relation to more or less distant future, when circumstances
permit "universal" struggle. He also considered it necessary to flirt with
"universal" considerations. "That the civilization of all nations, the culture of the
whole globe is the mission of mankind, is a consequence of those immutable
laws of nature, according to which civilized nations are driven by irresistible
power to carry over their productive forces to the less civilized countries.5"
"Natural laws" unconsciously for their interpreters spoke in the purest language
of bourgeois categories in those cases, for example, when the benefits of the
international exchange strengthened arguments on the profit rate or wages. But
since these categories in the representation of bourgeois economy had
"antediluvian existence", these same forces of development of the world market
appeared independent of any form of social organization. They were rooted in
the "immutable laws of nature."

In his comments on Ricardo Diehl correctly notes that "Ricardo's idea about
foreign trade policy is closely connected with his theory of distribution of
national income; he is in favor of free trade because it has the most favorable
influence upon the distribution of wealth within the national economy" (K. Diehl,
"Erläuterungen", Bd. III, II Theil, 326 p.).
Only Marx put the question of the world market on a real scientific ground. He
showed that the creation of the world market was not a function of "laws of
nature" as such, but a function of capital, and moved, in this way, study on the
ground of social laws, peculiar to a determined era. "What is free trade under
the present condition of society? - Marx asks. - Freedom of capital. When you
have overthrown the few national barriers which still restrict the progress of
capital, you will merely have given it complete freedom of action.6" And further,
revealing the essence of protectionism, Marx finds it in a strong growth, despite
the apparent contrast, with the system of free trade:
"The protectionist system is nothing but a means of establishing large-scale
industry in any given country, that is to say, of making it dependent upon the
world market, and from the moment that dependence upon the world market is
established, there is already more or less dependence upon free trade."

In this way, both seemingly mutually exclusive, systems of economic policy,

lead, according to Marx, to the same result: the expansion of the scope of
capital's activity, the expansion of world economic relations.

A theory of the world market had no fortune in Marxist literature. Marx himself
assumed to devote a significant part of his research to the analysis of foreign
trade, international market and international economy. He mentions this in the
first lines of his "Contribution to the critique of political economy": "I examine the
system of bourgeois economy in the following order: capital, landed property,
wage-labour; the State, foreign trade, world market." The incompleteness of
"Capital" is reflected precisely in the last three parts of Marx's plan. In particular
the theory of international economic relations is represented there only in the
form of passing remarks, which, however, are themselves of an enormous
scientific worth and allow in general outlines to build a system of Marx's views
on this question.

Regarding post-Marxian economic literature, although questions of world

economy also were and are paid a lot of attention, a general theory of
international exchange remained poorly developed. The dispute about the
importance of foreign markets for capitalism between Marxists and populists,
renewed in our days around the theory of Rose Luxemburg, revolves mainly
around the problem of realization, or the complication of specific questions of
modern imperialism, involving the highly advanced monopolisation of important
sectors of the world economy, the strong influence of "supra-economic" factors ,
etc., conditions interfering with the economic laws of capitalism "in its pure
form." Meanwhile, without a "pure theory" of the global market one cannot
understand the real binding of global economic phenomena, just as without a
"pure theory" of commodity and capitalist economy one cannot understand the
general course of economic life, relations, classes, etc. The theory of
"realization" is only a part of this pure theory. The question about realization of
surplus value cannot be separated from the question about prices, for it is only
through prices that potential surplus value is converted into real profit. The
formation of price in international exchange is impossible to understand, without
having a general theory of international exchange, and international exchange
is part of a wider field of international economic relations (including the
migration of capitals, the so-called "exchange of services," the movement of
labor forces, etc.). In short, here is an untouched region of theoretical research,
in which Marxist science has made only first steps.
The lack of a developed theory in this domain is shown primarily in the
insufficient research of the reasons for the emergence of the modern world
market and its development. Hitherto in the literature, which with some reserve
can be called Marxist, views figured according to which the development of
world economy is not a specific function of the capitalist forms of economy, but
a result of a "redistribution of productive forces" caused by "the law of
diminishing returns" (See Maslov "Science of national economy" [Наука о
народном хозяйстве, 1923]). In essence, this is a return to the classical
school.

Not found either hitherto is a definite attitude towards the existing classifications
- "single economy", "national economy", "world economy."

We begin therefore with an attempt to systematize on these questions Marx's

views, which provide rich material especially on the first question, so that on the
basis of the extracted results a more confident navigation in questions of
international exchange exists.

2.
First towards the formulation of the question. Analysis of the conditions of the
world market, properly speaking, is a matter of economic history, which must
take the question in all its concreteness. With this formulation the history of
world economy arises with the history of capitalism, which originated in a
particular historical soil, and not at all as the result of some kind of "self-
deployment of world reason." But we are interested here not in history, but
the theory of the problem, ie, we need to find the specific features of capitalist
economy, that prompted the world expansion, which led to the world economy.
With this we again, stay on the basis of "pure capitalism", not "defiled" by
monopolies, imperialism, etc. fruits of sinful reality. Of course, we regard this
only as a methodological approach, as a first approximation to the problem.
Speaking about the development of the world market and the world economy,
as one of the specific functions of capital, we do not at all oppose this statement
with another position, according to which the emergence of the world economy
is the result of the influence of material, technical, geographical or, generally
speaking, natural factors. In the final light also capitalism itself, if consistently
descend to its historical roots and origins, includes among its driving power
"natural" factors. But these factors affect social development only through
determined forms of social relations. The more significant works produced by
bourgeois economic thought, on issues of territorial location and territorial
connections of national economy - the works of Thünen in the domain of
agriculture and Alfred Weber in the domain of industry also just therefore gave
serious result, because they did not limit analysis to material elements of
economy. Thünen studies the dependence of agricultural culture in conditions
of market exchange. Weber emphasizes the impact of the capitalist form of
economy on production allocation, for example, in the domain of so-called
"worker orientated" businesses, the impact of rent relations etc. We already do
not mention that the very possibility of a statement of the problems of rational
allocation of sectors of the economy demands, as a precondition, the full
penetration in economic life of the law of value and commercial calculation,
characteristic only for a certain stage of development of social forms.
That is why we start with an analysis of the impact of these forms and their
respective economic categories. In this way we'll more truly reach also to
"natural" factors and be able to establish their rightful place in the economic
processes.

The most general "cause" is included already in the contradictions of the

commodity form of the product. Commodity production is based on the
bifurcation of products of labor on the line of use value and value, in which the
latter takes exclusive importance for capitalism. Capitalism first introduced on a
large scale in economic life the rational start, according to the definition of
Sombart, of the ability to count. But a comprehensive economic account is
conceivable only in abstract units, which must reduce to a common
denominator all the variety of commodities of the world. The ground for this was
prepared together with the advent of the abstract form of wealth - money, the
incarnation of the universal form of value. But value itself in its opposition to use
value, could develop only where the product of labor was finally turned in a
commodity sans phrase, in a comprehensively alienated thing, and this was
made possible only through the expansion of the foreign sphere of exchange. "It
is only in the markets of the world that money acquires to the full extent the
character of the commodity whose bodily form is also the immediate social
incarnation of human labour in the abstract. Its real mode of existence in this
sphere adequately corresponds to its ideal concept.7"
If to this expansion of foreign markets pushes already the simple fact of the split
of the commodity in use value and value, a fact common for simple commodity
and for capitalist economy, then all the more significance the trend to increase
must be given in a proper capitalist economy, where the specific problem arises
of production of surplus value, as an end in itself. In a simple commodity
economy the product of labor was still connected directly with the producers, to
which it belongs, and with the consumer, inasmuch as the latter gets it to meet
their need. The useful form of this product, its use value retains still its entire
meaning under exchange. In contrast, under capitalism, where the primary
purpose of buying and selling is a simple continuous production and increase of
value, as such, the form the product, its useful properties become indifferent.
For the industrial capitalist the use value of his commodities is only an inevitable
"evil", inasmuch as without these properties cannot be realized value and
surplus value. For the capitalist buyer inasmuch as he gets means of
production, the beneficial properties of purchased goods are again not
considered in terms of meeting needs, but in terms of their suitability for the
production of value. Only in this sense, the capitalist pays attention to quality
and properties. The dominance of the abstract form of wealth over particular,
the dominance of value over use value, surplus value over value, all these
characteristic features of capitalism can, however, get their full development, if
there continuously occurs a growth in the variety of commodities, traded on the
capitalist market. A peculiar contradiction has effect here in that that same
society, where needs are subordinated to the production of value and surplus
value, the most significance acquires the variety of goods, serving the goal of
satisfying the ever growing diversity of demands. "If surplus labour or surplus-
value were represented only in the national surplus product, then the increase
of value for the sake of value and therefore the exaction of surplus labour would
be restricted by the limited, narrow circle of use-values in which the value of the
(national) labour would be represented. But it is foreign trade which develops its
(the surplus product’s) real nature as value by developing the labour embodied
in it as social labour which manifests itself in an unlimited range of different use-
values, and this in fact gives meaning to abstract wealth.8"
The greatest uniformity of needs, the greatest uniformity of products served to
satisfy them, dominates, thus, there, where the principle to serve needs is the
basis of economic life in primitive natural economy. Conversely, there where
production ignores needs, the latter most loudly assert their rights and demand
a larger and larger dose of "differentiation" for increasing the strength of
sensation.

The growth of the diversity of demands and means to meet them may happen in
the extensive and intensive manner, which intertwine among themselves.
Usually, new demands appear first under the impact of contact with the foreign
environment, which delivers unknown or rare for such time products. The
development of capitalist technology, emerging precisely on the basis of
exchange with the foreign world, then increases the variety of products with the
help of the own resources. Here one can observe the intersection of the most
difficult interactions. The increasing diversity of consumer goods, going hand in
hand with intensification of needs, enhances the field of exchange and the
expansion of labor processes in all sorts of shapes and forms. Therewith, as
exchange proliferates in depth and breadth, ever greater masses of people are
pulled out from a situation of local restrictions, are involved in the leveling
circulation of capitalist production, which levels their habits, tastes, needs and
means to satisfy them. On this ground grows mass production, which assumes
a more rapid growth of technology and ever increasing frequency
of changes therein. But frequently changing technology by itself already creates
extremely fragile and fickle demand. (Most stable character of life existed only
in the Middle Ages, with its domination of tradition and guilds in craft
production). Thus grows the intensity of exchange within a given socio-
economic unit, operating at the same time an even more intense production of
commodities.
The necessity of their sale pushes in its turn to the search of foreign markets, to
the artificial introduction of products of the civilized world among backward
peoples.

In any case territorially different spheres of commodity economy represent, on

the one hand, a necessary condition for the emergence and development of
capitalism, and on the other its result. It finds its natural borders in the "limits of
earth." Still in 1858 Marx believed this process roughly finished, although
subsequent facts showed that it was the beginning and not the end. "The
particular task of bourgeois society is the establishment of the world market, at
least in outline, and of production based on it. Since the world is round, this
seems to have been completed by the colonisation of California and Australia
and the opening up of China and Japan.9"
Ever-growing variety of "wealth, seeking pleasures," variety of consumer values
assumes a variety of spheres of production and hence a comprehensive supply
of capitalist society's means of production. Hence the ever increasing demand
for raw materials, for old branches, requiring continuous increase in the number
of raw materials, as also for new types of industrial activity, for which the
necessary raw materials must be specially cultivated.

An expanding sphere of exchange resolves also this issue. Thanks to it

capitalist production and capitalist accumulation become completely
independent of the natural form of products of labor of a given country and is
transformed in pure production of value. That is why Marx considers it allowed,
when analyzing the circulation of social capital, to distract from foreign trade.
Thanks to foreign trade, capital accumulation in a country may occur in any
material form: the country can prosper exclusively on production of luxuries,
though in themselves these items not only cannot promote the growth of
production, but, on the contrary, in most cases represent a simple waste of
productive forces. This defining fact exists in many countries, which are
representatives of so-called monoculture. "It determines the whole social
pattern of backward nations—for example, the slave-holding states in the
United States of North America (see Cairnes) or Poland, etc. which are
associated with a world market based on capitalist production. No matter how
large the surplus product they extract from the surplus labour of their slaves in
the simple form of cotton or corn, they can adhere to this simple,
undifferentiated labour because foreign trade enables them [to convert] these
simple products into any kind of use-value.10"
Such "monoculture" is linked by its existence to capitalism not only in the sense
that it forms for it a sales market, but also in another respect. "By constantly
making a part of the hands “supernumerary,” modern industry, in all countries
where it has taken root, gives a spur to emigration and to the colonisation of
foreign lands, which are thereby converted into settlements for growing the raw
material of the mother country; just as Australia, for example, was converted
into a colony for growing wool. A new and international division of labour, a
division suited to the requirements of the chief centres of modern industry
springs up, and converts one part of the globe into a chiefly agricultural field of
production, for supplying the other part which remains a chiefly industrial field.
This revolution hangs together with radical changes in agriculture... The
economic development of the United States is itself a product of European,
more especially of English modern industry. In their present form (1866) the
States must still be considered a European colony.11"
True, it was a peculiar colony, against which in short time the European
metropolis had to defend with the introduction of a series of protective duties on
American products. To raise, in the expression of Parvus, a "rebellion" against
its colonies. Nevertheless, capitalist development of the US is a prime result of
European capitalism.

P. Maslov, following his idee fixe - the "law" of falling labor productivity in
agriculture, depicts this process in his own way:

"In the world economy redistribution of production forces occurs in such a way -
since under sparse population higher labor productivity is given, then from there
also begins the export of products of agriculture. There where there is more
dense population, there is lower labor productivity and there agricultural
products are imported. Since the productivity of labor determines the cost of
production, then there develops manufacturing industry. Meaning, under the
partition of the world economy, a redistribution of the productive forces on the
world market occurs, in which from sparesly populated areas bread begins to
come on the world market. Therewith a tendency is noticed that delivery on the
world market, mainly cereals and livestock, is increasingly moving away from
the world market.12" According to Maslov, the very emergence of
manufacturing industry in countries of a dense population is the result of the fall
of productivity of agricultural labor in them. The migration from these countries
into the colonies is influenced by absolute overpopulation, because the means
of existence grow slower then the number of workers employed in agriculture.
We do not have to dwell on the fact that this theory resembles as two peas
Malthus's theory, from which Maslov in the same book takes distance in words,
that it has nothing in common with Marx's theory of population. It's appropriate
to only ask the following question: if in countries with dense population a
decrease of labor productivity occurs, then from where is the capital there taken
to create and powerfully develop the manufacturing (as well as mining, eg.,
coal) industry? And why do these countries of "low productivity" find the
possibility to export their excess capital to where already without this the land
flows with milk and honey? Presuming to create on the basis of the notorious
"law" his theory of the world economy, Maslov completely ignores the existence,
eg., of such facts of the world economy, as the immigration in countries of high
population, labor forces for the work in industry, as the export of agricultural
products from highly populated agricultural countries (from India, for example),
etc. The theory of falling productivity, must inevitably lead Maslov to the
Ricardian viewpoint, according to which capital is exported from the country of
lesser labor productivity to the country of greater labor productivity, mixing the
law of the falling rate of profit with the fall of the "productivity of capital." This is
the inevitable result of the neglect of social forms in the analysis of social
phenomena. To these issues we hope to return in the following article.
In order to compensate its products with products of other material form
capitalism does not at all require that these latter were necessarily made by
capitalist methods. It finds and takes them in any sphere, under any socio-
economic formations. A huge mass of raw materials and other materials for
capitalist production still is delivered by the non-capitalist sphere, the "third
person." These products are converted into capital after its exclusion, in the
hands of the capitalist. Inasmuch as capitalist industry demands constant
renewal of these stocks, it thereby falls into the well-known dependence of the
non-capitalist sphere. "In this sense the capitalist mode of production is
conditional on modes of production lying outside of its own stage of
development. But it is the tendency of the capitalist mode of production to
transform all production as much as possible into commodity production. The
mainspring by which this is accomplished is precisely the involvement of all
production into the capitalist circulation process. And developed commodity
production itself is capitalist commodity production. The intervention of industrial
capital promotes this transformation everywhere, but with it also the
transformation of all direct producers into wage-labourers.13"
A brilliant illustration of this process by which the "introduction" of
underdeveloped countries to the benefits of capitalist civilization takes place
was given, as is known, by Rosa Luxemburg. However, the conclusions of Marx
are the direct opposite of the conclusions of Rosa Luxemburg. Liquidation of
non-capitalist environment should, according to Luxemburg, place capitalist
society in the impossibility to exist. In contrast, for Marx regarding the
sustenance of the capitalist production process by products of the non-capitalist
environment, the decomposition of the latter, its transformation into a capitalist
sphere provides a more regular reproduction of raw materials than available in
pre-capitalist forms of economy.
The inclusion of all countries in the network of world exchange assumes, of
course, an international division of labor. It's known what importance free-
traders attached to free exchange, which should give each country the
possibility to focus on the production of those goods for which it has most
favorable natural conditions.

As in other areas of the economy, also in the domain of division of labor

bourgeois economy sees, firstly, the natural expression of human nature, and
secondly, the intervention of absolute reason. Adam Smith, eg, the first to
systematically investigate the question of division of labor (in manufacture),
understood the connection which exists between the degree of division of labor
and the size of the market, but still as a final cause proposed "human nature,
which exhibits an irresistible propensity to (eg) exchange.14" The nature of
bourgeois society was declared thereby a model natural character. Not far from
Smith went also later economists, including Friedrich List, who, based on the
same general requirements of human nature, pointed to the particular
importance of the problems of conjugated labor, industrial and agricultural,
within one and the same country. Marx approached the issue of division of labor
from a historical perspective, linking it with the bases of the capitalist mode of
production. First, he pointed out that the division of labor does not constitute in
itself a sort of permanent, but a changing place together with altering economic
conditions. Craft division of labor does not resemble manufacture, manufacture
does not resemble the division of labor in the era of machine production. "The
development of the division of labour supposes the assemblage of workers in a
workshop.15" But such assemblage already assumes capitalist production.
Thus, the "progress" of the division of labor is not the result of the self-
deployment of natural reason, but a consequence of capitalism. "The foundation
of every division of labour that is well developed, and brought about by the
exchange of commodities, is the separation between town and country. It may
be said, that the whole economic history of society is summed up in the
movement of this antithesis. We pass it over, however, for the present.16" But
when then emerges this basic form of division of labor? Only with the
development of a mechanized production. "Only machinery, the lasting basis of
capitalistic agriculture, expropriates radically the enormous majority of the
agricultural population, and completes the separation between agriculture and
rural domestic industry, whose roots — spinning and weaving — it tears up. It
therefore also, for the first time, conquers for industrial capital the entire home
market.17" But the same methods conquer also the external market.
Destructive action of capital, armed with machine technology, affects far beyond
the country's borders. "The cheapness of the articles produced by machinery,
and the improved means of transport and communication furnish the weapons
for conquering foreign markets. By ruining handicraft production in other
countries, machinery forcibly converts them into fields for the supply of its raw
material. In this way East India was compelled to produce cotton, wool, hemp,
jute, and indigo for Great Britain.18"
Along with the development mechanic industry foreign trade generally starts to
take the advantage over domestic trade. "The invention of machinery brought
about the separation of manufacturing industry from agricultural industry. The
weaver and the spinner, united but lately in a single family, were separated by
the machine. Thanks to the machine, the spinner can live in England while the
weaver resides in the East Indies. Before the invention of machinery, the
industry of a country was carried on chiefly with raw materials that were the
products of its own soil; in England – wool, in Germany – flax, in France – silks
and flax, in the East Indies and the Levant – cottons, etc. Thanks to the
application of machinery and of steam, the division of labour was about to
assume such dimensions that large-scale industry, detached from the national
soil, depends entirely on the world market, on international exchange, on an
international division of labour.19" Such dependence very often carries the
heavy blows of industry, if it fails to decompose fast enough the pre-capitalist
relations in the colonial and backward countries. Thus Marx repeatedly stands
still on the efforts which British work costs to transform India and China into an
Hinterland of capitalist industry. "It exerted a revolutionary influence on these
communities and tore them apart only in so far as the low prices of its goods
served to destroy the spinning and weaving industries, which were an ancient
integrating element of this unity of industrial and agricultural production. And
even so this work of dissolution proceeds very gradually. And still more slowly in
China, where it is not reinforced by direct political power. The substantial
economy and saving in time afforded by the association of agriculture with
manufacture put up a stubborn resistance to the products of the big industries,
whose prices include the faux frais of the circulation process which pervades
them.20"
It's known with what methods capitalism overcomes these obstacles: they
entirely copy the first era of "primitive accumulation," which, thus, not only
precede the rise of the capitalist system, but are its constant satellite,
accompanying its victorious procession on the globe. Rosa Luxemburg devoted
brilliant pages of her work describing these methods, but she gave only an
additional illustration to the provisions, long before her formulated by Marx.
The division of labor between members of one and the same society - crafts,
manufacture etc. - has its original starting point in natural gender and age
differences in the limits of family and kinship. Arisen on a natural basis, it is in
its further evolution already entirely subordinate to laws of social development.

The same applies also to the system of international division of labor. Initially, it
exists as a natural difference in natural forms of production and the existence of
self-reliant communities, that depend on differences in the natural environment.
Exchange arising between communities, finds these differences, as ready
historical fact and only binds between itself these diverse areas of production,
thus turning each of them in a dependent part of the total social production. The
further fate of this intertribal, international division of labor depends already not
so much on natural environment, as on the conditions of economic
development. Attempts to reduce the diverse international division of labor in
the modern era to natural, geographical, racial, etc. conditions Marx cruelly
castigated and ridiculed, calling them flat tautologies and common places (see
"Introduction to the Critique of Political Economy").
"For instance, we are told that free trade would create an international division
of labor, and thereby give to each country the production which is most in
harmony with its natural advantage. You believe, perhaps, gentlemen, that the
production of coffee and sugar is the natural destiny of the West Indies.

Two centuries ago, nature, which does not trouble herself about commerce, had
planted neither sugar-cane nor coffee trees there. And it may be that in less
than half a century you will find there neither coffee nor sugar, for the East
Indies, by means of cheaper production, have already successfully combatted
this alleged natural destiny of the West Indies.21"
How true this prophecy proved, is shown by the clear fact of the changing role
of the United States - the most important part of the "West-Indies" - in the world
economy. As for sugar production, the "natural vocation" to this occupation was
revealed in Europe itself, after the prevalence beet got in agricultural culture,
which it had to defend by protective duties from competition of American cane,
itself summoned to life by the same Europe.

"In some respects Europe perfectly managed to throw off that dependence, in
which her colonies put her, inasmuch as it could only from them receive certain
products. If one once zealously searched for exotic products for the European
market and European industry; then now one is no less zealously trying to
create in Europe local surrogates of colonial products. Sugar cane is replaced
by beet, indigo replaced by chemical color; one is beginning to sow potatoes in
Europe, and it achieves here colossal distribution; although on a smaller scale,
but for all that one successfully begins to cultivate in Europe also tobacco.
Among this series, further, one begins consuming new products that are
brought from overseas. First place among them takes petroleum (kerosene). As
is known, it went extremely fast into general use throughout Europe. But with no
less speed and success gas and electricity started to compete with it. As object
of use at the end of the nineteenth century cocoa was fairly wide spread; as raw
material for industrial purposes jute and rubber began to spread. However
cocoa together with coffee already also now must lead an uphill battle against
the competition of various surrogates of coffee, and to the extent that rubber
finds more application in industry, industrial technology more zealously tries to
find surrogates for it. Such a situation is given: on the one hand, Europe no
longer needs the colonies, as suppliers of purely colonial goods, on the other
the foreign lands import more products, which Europe itself produces since
ancient times: cereal bread and wool.22"
Natural-historical, racial and other conditions, of course, have their importance
in the system of international division of labor. But a huge step forward, made
by Marxist economics, was to prove that the natural differences increasingly
land on the back burner compared to differences of a cultural-historical order.
The latter continuously are being smoothed out in the general course of
capitalist development, become just a function of capital, and at the same time
reappear due to uneven capitalist development in different countries. On this
basis there is a continuous movement and transfer of geographical centers of
production and exchange. The world market is a stronger determinant than
climate, soil, race, etc. In listing the conditions which determine the degree of
labor productivity, Marx assigns natural conditions last place:
"The productive power of labor is determined by many different circumstances
such as, amongst others, the average amount of skill of the workmen, the state
of science, and the degree of its practical application, the social organisation of
production, the extent and capabilities of the means of production, and by
physical conditions.23"
But therewith one must bare in mind that natural conditions also themselves do
not remain constant. "The man, who is engaged with social production, also
already changes nature (eg, forces of nature, converted into organs of his own
activity.24" But even then, when the natural conditions do not change,
their employment by man depends on the cultural development of the country,
"The external physical conditions fall into two great economic classes: natural
wealth in means of subsistence, i.e., a fruitful soil, waters teeming with fish, etc.,
and natural wealth in the instruments of labour, such as waterfalls, navigable
rivers, wood, metal, coal, etc. At the dawn of civilisation, it is the first class that
turns the scale; at a higher stage of development, it is the second.25" On the
other hand, those natural conditions which can be counted
as subjective elements of production - racial characteristics, also in most cases
are subordinated to social laws. "All people do not have the same predisposition
towards capitalist production. Some primitive peoples, such as the Turks, have
neither the temperament nor the inclination for it. But these are exceptions. The
development of capitalist production creates an average level of bourgeois
society and therefore an average level of temperament and disposition amongst
the most varied peoples. It is as truly cosmopolitan as Christianity.26"
The change of the natural sphere, of the inherited cultural-historical
particularities all the same are bound by conditions of space and time. People
"are not free to choose their productive forces—upon which their whole history
is based—for every productive force is an acquired force, the product of
previous activity. Thus the productive forces are the result of man's practical
energy, but that energy is in turn circumscribed by the conditions in which man
is placed by the productive forces already acquired, by the form of society which
exists before him, which he does not create, which is the product of the
preceding generation. The simple fact that every succeeding generation finds
productive forces acquired by the preceding generation and which serve it as
the raw material of further production, engenders a relatedness in the history of
man, engenders a history of mankind, which is all the more a history of mankind
as man's productive forces, and hence his social relations, have expanded.27"
The presented extract thus establishes those reasons, which cause a certain
hierarchy in position of different countries and nations. It is inheriting the
cultural-
historical sphere, which is based on a certain state of the productive forces. But
the more the accumulation of these forces unfolds, the more they contribute to
the convergence of different nations and countries, the more the history of the
nations is unified in a general history of man. In particular, as we found earlier,
this mission the capitalist system fulfills, revolutionizing all forms of economy,
destroying any historical hurdles. Very frequently the change of countries on the
stairs of the division of labor occurs, amongst others, under the influence of the
development of means of transport, completely changed dislocation of centers
of production and exchangedf). Of course, without a doubt the point is to
eliminate, or at any rate, to hugely weaken the opposition between industrial
and agrarian countries, in the sense of a convergence of economic types.
However, to expect that therewith the division of labor is reduced to the "natural
boundaries" is not necessary. Firstly, these natural conditions themselves are
continuously changing, partly by themselves, partly under the influence of
cultural alteration. And, secondly, even within the limits of a single type of
economy in any given period of time specialization is possible and inevitable in
one or more directions, emerging from its socio-economic, cultural, everyday
particularities. The content, direction, forms may change , the "attachment" of
individual countries to special branches disappears, but the "continuous"
specialization remains, because it is difficult to imagine a simultaneous and
synchronous everywhere similar rate also in one and the same forms of
economic development. "Needs of groups change, new needs cause new
tastes, new tastes change the distribution of productive energy and attach
importance to new parts of the earth" (Hobson). With regard to the specific
conditions of capitalism, then here acts a whole binding of contradictory trends,
from which one contributes to convergence of economic types, another creates
new oppositions. Most of them are related to the law of the tendency of the
falling rate of profit and its opposing factors, among which not in the last
instance counts the Weberian theory of "agglomeration" of industrial production.
However a consideration of all these issues relates to the following."
href="#footnote28_i38892c">28.
3.
We treated until now the processes of the development of the world market
from the viewpoint of those driving forces, that are due to the contradiction
between use value and exchange value of commodities. But in connection with
the contradiction, inherent to these basic categories of commodity economy,
also appears another contradiction between production and consumption, which
forms another group of forces, leading to the development of world exchange.
We regard this contrast between production and consumption not in the sense
which Rosa Luxemburg gave it. Luxemburg came to the conclusion that the
contrast absolutely excludes the possibility of accumulation in capitalist society,
and, hence, the possibility of existence of the latter - because without
accumulation capitalist economy is unthinkable. The saving zone for capitalism
should be the non-capitalist sphere. Thus, one of the main contradictions of
capitalism, that in Marx's system is the moving force of its development, in the
hands of Rosa Luxemburg is turned into a flat contradiction, making capitalism
simply impossible, ie appears devoid of any dialectical content.
Already in polemics with Proudhon, complaining that the distribution of social
wealth doesn't correspond, with what it needed to be "in theory" - with the size
of production, Marx wrote:

"In English society the working day thus acquired in 70 years a surplus of 2,700
per cent productivity; that is, in 1840 it produced 27 times as much as in 1770.
According to M. Proudhon, the following question should be raised: why was not
the English worker of 1840 27 times as rich as the one of 1770? In raising such
a question one would naturally be supposing that the English could have
produced this wealth without the historical conditions in which it was produced,
such as: private accumulation of capital, modern division of labour, automatic
workshops, anarchical competition, the wage system – in short, everything that
is based upon class antagonism. Now, these were precisely the necessary
conditions of existence for the development of productive forces and of surplus
labour. Therefore, to obtain this development of productive forces and this
surplus labour, there had to be classes which profited and classes which
decayed. ... Wipe out these relations and you annihilate all society, and your
Prometheus is nothing but a ghost without arms or legs; that is, without
automatic workshops, without division of labour – in a word, without everything
that you gave him to start with in order to make him obtain this surplus
labour.29"
Thus, the antagonism of production and consumption for Marx is
a contradiction, moving forward. For Rosa Luxemburg it is the deadlock of
capitalist economy. Marx says: destroy this antagonism and you destroy the
very existence of capitalist society. Rosa flipped this formula upside down:
the presence of this contradiction destroys the possibility of existence of
capitalist society. If it nevertheless exists, then only because it exists merely in
part, inasmuch as beside it there still is the availability of the "third person." The
viewpoint, of mutually excluding each other, of Rosa here has a clear bias
towards a metaphysical or formal-logical formulation of the question: yes-yes,
no-no.
We will not stand still here on the well-known controversy about the theory of
Rosa Luxemburg. Our task is to give the characteristics of the Marxist
understanding of the antagonism of production and consumption. For Marx the
contradiction lies not in the point that surplus value in conditions of extended
reproduction in general cannot be realized within the limits of the domestic
consumer market, but in the point that production has a constant tendency to
outrun even the expansion of consumption connected with it, because the goal
of capitalist production is not at all the meeting of needs. "It is a false
abstraction to regard a nation whose mode of production is based upon value,
and furthermore is capitalistically organised, as an aggregate body working
merely for the satisfaction of the national wants.30"
Capital is self-expanding value, value, which, firstly, is in constant motion,
secondly, completely "emancipated from the forces generating the value" - from
the labor forces, and consequently the needs of this workforce. Capitalism has
a constant tendency to expand production to the limits due to the size of
available productive forces: "to produce to the limit set by the productive forces,
that is to say, to exploit the maximum amount of labour with the given amount of
capital, without any consideration for the actual limits of the market or the needs
backed by the ability to pay.31" On the other hand it has a no less constant
tendency to reduce the demand of the working masses to only the necessary
minimum.
"The mass of the producers remain tied to the average level of needs, and must
remain tied to it according to the nature of capitalist production.32" The
evolution of the demands of these layers of the population consists, mainly, of
the fact that the increase of their versatility takes place with the growth of
diversity in production. But the general size of value, designed to meet these
needs, changes little, and all the greater dissatisfaction is felt.
The increase of productivity of labor, which is a constant companion of
capitalism, even more confronts these polar tendencies. "With the same amount
of products the country is richer, the lower its productive population in
comparison to the non-productive population. Therefore the relatively small
productive population would be only another expression of the relatively high
labor productivity.33" If the working population does not decrease, if it even
grows, then all the same the rate of production grows even faster, meanwhile as
"the average number of population can never consume more than the average
means of subsistence, hence, its consumption does not grow correspondingly
with the increase of productivity of labor." Here is given the general condition
of overproduction. However, this is not a chronic overproduction, because there
"are no permanent crises." It should accrue to a significant magnitude, in order
to break out, as crisis, after which comes a temporary underproduction.
The balance between production and consumption, arising from the objective
laws of economy, which must, in the final light, obeys also the capitalist form of
production, exists only, as a sort of abstract middle line, representing itself the
resultant continuous deviations, distortions, explosions and catastrophes.

Capitalist production periodically meets with the limitations of the market and
with the same frequency experiences the need to extent its geographical
boundaries. "The market is limited externally in the geographical sense, the
internal market is limited as compared with a market that is both internal and
external, the latter in turn is limited as compared with the world market, which
however is, in turn, limited at each moment of time, (though) in itself capable of
expansion. The admission that the market must expand if there is to be no over-
production, is therefore also an admission that there can be over-production.
For it is then possible—since market and production are two independent
factors—that the expansion of one does not correspond with the expansion of
the other; that the limits of the market are not extended rapidly enough for
production, or that new markets— new extensions of the market—may be
rapidly outpaced by production, so that the expanded market becomes just as
much a barrier as the narrower market was formerly. Ricardo is therefore
consistent in denying the necessity of an expansion of the market
simultaneously with the expansion of production and growth of capital.34"
In other words: if the market and production were, as Ricardo thinks, two sides
of the same whole, represented an exclusive moment of unity, then there would
be no need to expand the market. But, according to Marx, between "market"
and production a more complex relationship exists. Although they also
represent a unity in the sense that producers, meeting on the market, in the final
light, work for each other, but a unity, of formally torn into independent
moments: because producers operate independently of each other, and, in
addition, market exchange takes place with the help of money, and not in the
form of natural exchange. Consequently, the sum of purchases and sales of
one and the other of these participants of trade, which is mathematically
identical with the direct exchange (which also forms the moment of unity), under
monetary exchange does not match in every given moment. Unity here does
not exist under each act of exchange, but only as a statistical average of many
acts over a long period of time. Secondly, under capitalist commodity circulation
the independent movement of production and the market gets not only a
different character, movements not coinciding with themselves, but movements
of contradictions, of opposites: the production factually is unlimited, the market
(understood as a sales market of produced commodities) is bounded in every
given moment.
The resolution of this contradiction happens either by violent means of crisis, or
by means of geographical expansion of the market, which also in most cases
happens by force. And then the contradiction is reproduced on an enlarged
scale, on a wider territory.
An expansion of the market to the limits of the world market, helping to resolve
the contradiction arisen on the narrow base of national production, reproduces
these contradictions on a wider scale on the world arena for three reasons:

1. Overproduction arises on the basis of disproportions between various sides

of the process of social circulation of capital. This disparity is due to
the uneven development of various sectors of the economy, unevenness of
production and consumption, etc. But the expansion of the world market, places
countries in dependence on each other, found at different stages of economic
development, increasing tenfold this unevenness. Marx stressed this, ridiculing
Say's theory of the impossibility of general overproduction by the example of a
small "international" illustration.
"England has not over-produced but Italy has under-produced. There would
have been no over-production, if in the first place Italy had enough capital to
replace the English capital exported to Italy in the form of commodities; and
secondly if Italy had invested this capital in such a way that it produced those
particular articles which are required by English capital—partly in order to
replace itself and partly in order to replace the revenue yielded by it. Thus the
fact of the actually existing overproduction in England—in relation to
the actual production in Italy—would not have existed, but only the fact
of imaginary underproduction in Italy; imaginary because it presupposes a
capital in Italy and a development of the productive forces that do not exist
there, and secondly because it makes the equally utopian assumption, that this
capital which does not exist in Italy, has been employed in exactly the way
required to make English supply and Italian demand, English and Italian
production, complementary to each other. In other words, this means nothing
but: there would be no overproduction, if demand and supply corresponded to
each other,35" etc.
Such uniformity is utopian within the limits of one country, and doubly utopian in
the world market. The world market increases, thus, the scale of contradictions
tearing capitalist society apart, arising from uneven development.
2. The world market promotes enlargement of the scale of production, a further
specialization and division of labor, that would be impossible within the narrow
scale of the national market.

This fact by itself, not to mention the increased rate of profit and accumulation
due to foreign trade (on this topic in the following), even further enhances the
"scissors" between the scale of production and dimension of consumption. And
this even strengthens more the desire to expand beyond the limits of the
existing market, revolutionizing industry, strengthening its concentration and
specialization. And then industry revolutionizes trade. That's the reason why
dominance on the global market shifted from trading nation (Netherlands) to
industrial nation (England).

3. Confronted on the world market with pre-capitalist forms of economy,

peasant, etc., still in condition of subsistence existence, capitalism must first of
all solve the problem of creating a market, destroying the natural system and
turning it into a commodity, and then capitalist economy. But the path to this lies
through destruction of the peasantry.
"One of the necessary corollaries of grande industrie that it destroys its own
home market by the very process by which it creates it. It creates it by
destroying the basis of the domestic industry of the peasantry. But without
domestic industry the peasantry cannot live. They are ruined as peasants; their
purchasing power is reduced to a minimum; and until they, as proletarians, have
settled down into new conditions of existence, they will furnish a very poor
market for the newly-arisen factories.36" As is known, this was the main
argument of populists in favor of the theory of the inevitability of the non-
capitalist evolution of Russia, about the "artificiality" of the capitalism we have,
about the lack of a domestic market.
The populists were mistaken in the same sense as Rosa Luxemburg: they
"proved" more than necessary. From the certain fact of destruction of
peasantry, reducing the purchasing power of the population, etc. they
concluded the "impossibility" of capitalism, while in fact these symptoms
showed only growing throes of growth that accompanied everywhere the first
steps of the capitalist mode of production.

However there is no doubt that in those phenomena, that accompany the

penetration of capitalism in backward countries of the modern world, there exist
new elements, making crisis much more acute.

First, the initial development of capitalism in the old countries of capitalist

production began with manufacture, which, on the one hand, occurred as a very
slow process replacing craft and peasant forms of economy, and on the other
hand, itself operated on them. In addition, already in its character of
predominantly manual production, manufacture required more workers hands,
then is appropriate of the scale of mechanized production. Thus, the transition
from subsistence economy through ruin into the ranks of the proletariat, despite
tremendous disaster, which accompanied it for the masses, happened all the
same safely from the standpoint of social production in general. In contrast, in
modern countries of small production capitalism "screws" immediately with the
help of railroads and products of developed mechanized industry. The
"dissolving" effect of machines is something different from the effect of
manufacture. This is evidenced by at least the fact that history does not know
riots against manufacture, while workers' struggle with the machine is a
necessary step in the capitalist development of each country. The destructive
effect of modern industry on small production of backward countries is
immeasurably sharper. It plunges into horrifying poverty immediately tens of
millions.
Second, in European countries the change of craft to capitalist production, the
separation of industry from agriculture occurred in such a way that manufacture,
and then also machine production appeared in the same place, in the same
country, where the old forms of economy were breaking up. In contrast, the
penetration of capitalism in Asian countries, in countries of Eastern Europe, etc.
are not expressed in the form of organization of capitalist production there (at
least in the beginning), but in the form of organization of sales of capitalist
manufactured goods, whose centers of production were in Europe. China, India
and others received as their share all disasters of the initial period of
development of capitalism, without acquiring its positive results.
Third: European capitalism, even in the form of manufacture, received its first
impetus from world commerce and from the demands of the colonial markets.
They created for it a broad foundation for the expansion of
production, independent of the demands of the domestic market. "The demands
of the new colonial markets could not be satisfied owing to the relatively small
number of town operatives handed down from the middle ages, and the
manufactures proper opened out new fields of production to the rural
population, driven from the land by the dissolution of the feudal system.37" In
contrast, capitalist production, if it is even organized in new countries, not only
hasn't these perspectives in front of it, but is under tremendous competitive
pressure of the more advanced capitalist countries, taking over its domestic
market.
In countries of old capitalism the law operates of the relative reduction of
variable capital, employed in production, with an absolute growth of the number
of workers. This absolute growth is due to the expansion of capital, in particular
the expansion of branches producing means of production. But for those more
backward countries that are just getting involved in the process of capitalist
production, this growth of the magnitude of the proletariat is closed on half or
three quarters of the way. Initially they receive finished goods from highly
developed countries. Only gradually they move on to their own production of
goods. But the production of instruments is not found in their hands. Asian
countries until now still haven't come out of the Marxist second department of
capital: production of consumer goods. Heavy industry, which in higher degree
absorbs labor forces, doesn't take root here, but in the metropoles. "Like toy
trains and ships with motor serve as Christmas tree gifts in the present day, so
railways bring to Asia whole cotton-mills.38
All these factors determine the general character of the catastrophe,
accompanying the expanding capitalist market, but cannot, of course, either
suspend this extension, or prevent the development of capitalist relations and
capitalist production wherever these relations take root. Proof is the
development of Japan, China, India, etc. in our epoch. If the listed by us
condition opposes this process, then it is nevertheless a strongly active means,
of promoting it, and among them the most important is the export of capital,
about which, however, discussion will be elsewhere.
From our analysis it is clear that the market of sales of capitalist produced
goods, spreading more and more broadwise, in new territories, necessarily
must make the market smaller and smaller, decrease in its relative capacity.
This is a very important factor, which, I think, was insufficiently emphasized so
far in the literature, and the underestimation of which entails substantial gaps in
the analysis of the causes of imperialism, etc. Very often, for example, one
refers to the grandiosity of the spaces and the number of people, which provide,
supposedly, unlimited scope for further expansion of capitalism on a broader
base. Such indications are most often made by bourgeois apologists and their
helpers from the camp of the Second International. Indeed: India, China
accommodate nearly half the world's population, a population barely affected by
capitalist economy. What need is there to worry about markets, etc. We give on
this subject a somewhat long extract from the same letter of Engels to Nickolai -
the one that we already cited above:
"Capitalist production being a transitory economical phase, is full of internal
contradictions which develop and become evident in proportion as it develops.
This tendency to destroy its own market at the same time it creates it, is one of
them. Another one is the insoluble situation to which it leads, and which is
developed sooner in a country without a foreign market, like Russia, than in
countries which are more or less capable of competing on the open world
market. This situation without an apparent issue finds its issue, for the latter
countries, in commercial revulsions, in the forcible opening of new markets. But
even then the cul-de-sac stares one in the face. Look at England. The last new
market which could bring on a temporary revival of prosperity by its being
thrown open to English commerce is China. Therefore English capital insists
upon constructing Chinese railways. But Chinese railways mean the destruction
of the whole basis of Chinese small agriculture and domestic industry, and as
there will not even be the counterpoise of a Chinese grande industrie, hundreds
of millions of people will be placed in the impossibility of living. The
consequence will be a wholesale emigration such as the world has not yet
seen, a flooding of America, Asia and Europe by the hated Chinaman, a
competition for work with the American, Australian and European workman on
the basis of the Chinese standard of life, the lowest of all – and if the system of
production has not been changed in Europe before that time, it will have to be
changed then.39"
Here's the true source of the "catastrophe" of our epoch, insofar as it regards
the interrelations with the "third persons". It is precisely the huge number of
those masses that capitalism sets in motion, preventing their possibility of
life, bankrupting them, as peasants, and not being able to immediately turn
them into proletarians - precisely this is the main reason of the fact that
capitalism began to choke. The colossal Asian "reserves" - are not reserves of
capital, but reserves of its gravedigger - the proletariat.
Comrade Bukharin notes one side of the question 40, given by the "third
person:" surplus profits and its monopolistic capture by the strongest capitalist
powers, which generates mutual struggle for the limits, etc. This, undoubtedly,
is a circumstance of colossal significance, but taken alone, it is unable
to fully explain the modern epoch. It is necessary to add the contradiction, so
brightly noted by Engels and which, amongst others, in the best way explains
the reasons of the special revolutionizing of young countries of capitalism. It is
also entirely in harmony with the views of Lenin on the reasons, by which
capitalism "bursts" first of all in backward countries.
However we will yet return to this subject in another connection.

The role of world capitalist monopolies, having decisive significance for the fate
of capitalism, should not overshadow in our eyes the action of other destructive
forces, springing to life by the modern system of capitalism and independent
from this or the other forms of the latter. It must be remembered that in the
period of monopolies laws continue to operate, described by Marx in
capitalism's epoch of free competition.

On the other hand, the very fact of such exceptionally fast capture of the whole
earth, the division of the whole world by a few large imperialist countries, which
occurred in a period of around thirty odd years (from 1880 to 1914) must make
us search the reason of this historically unprecedented phenomenon in the
special conditions of the capitalism of our era. Such extraordinary extension
broadwise becomes necessary when there exists a special difficulty, preventing
the extension inland. Expansion replaces in this case the intensive dissociation
of old forms.
In many respects the modern epoch resembles on a global scale the period of
late 17th and early 19th century in Europe. Then capitalism broke the old forms
in Europe, causing on a smaller scale the same phenomenon, which now is
observed on the global scale. Also then "workers excluded from big industry
(manufacture and crafts, etc.) are placed by it in a still worse situation than the
workers in big industry itself.41" In the working class this period with a series of
outbreaks of the revolutionary movement, caused acute struggle against the
machine, and in bourgeois economy this epoch affected the flowering of
Malthusianism, seeing the source of all troubles in excessive procreation of
people. History repeats itself. The most prominent representatives of modern
bourgeois science, as, eg, Keynes, again are turning to Malthusianism for an
explanation of the reasons of modern disasters. Recently Keynes expressed in
that sense, that unemployment in England is caused by her excessive
population. But the same idea in a more general form he stated already in his
first book, devoted to the Versailles treaty. He pointed then to the
overpopulation of the whole of Europe, as the cause of her suffering. In the
same spirit he explained also the Russian revolution. "The great events of
history are often due to secular changes in the growth of population and other
fundamental economic causes, which, escaping by their gradual character the
notice of contemporary observers, are attributed to the follies of statesmen or
the fanaticism of atheists. Thus the extraordinary occurrences of the past two
years in Russia, that vast upheaval of Society, which has overturned what
seemed most stable—religion, the basis of property, the ownership of land, as
well as forms of government and the hierarchy of classes—may owe more to
the deep influences of expanding numbers than to Lenin or to Nicholas; and the
disruptive powers of excessive national fecundity may have played a greater
part in bursting the bonds of convention than either the power of ideas or the
errors of autocracy.42"
The appeal to "laws of population" indicates only the powerlessness of modern
capitalism to cope with its contradictions, that have become contradictions of a
global scale and cannot be eliminated by simple extension of the "external field
of exploitation" as it was in the nineteenth century.

4.
If the original soil on which originated the world market and international
economic relations, was different consumer goods, created on the premise of
this same exchange and value, then the driving forces of this process in its final
phase become the difference of value production of one and the same
commodities in different points of the globe and the resulting from it variety of
profit rates. The law of value as before remains the basic spring of the
movement. But the nature of its actions changed, originally it was expressed in
the contradictions inherent in the commodity form of economy, the contradiction
between use value and value. Later it turned into contradiction between
conditions of production of value and conditions for its realization under
capitalism. Then it turns into conflict between the level of development of
productive forces and the level of accumulation, resulting in a difference of
values and margins of profit in different countries. It goes without saying that the
domination of one of these forms does not override the others. There exists
tendency, binding complicates together with the growth of the world market. But
the era of color gives usually one of these forms of the law of value. The latest
period of capitalism, characterized by a predominance of export of capital is
nothing but the expression of dominance of the third form of contradiction,
which causes not only the movement of the mass of commodities, but also the
transfer of the very productive forces between countries.
We turn now to a more complex and less studied problem of the world economy
- to the analysis of value relations in international exchange.

However beforehand we need to clarify some concepts, with which we operated

until now like passing terms ("external market", "world economy", "national
economy", etc.), although different authors put a different content in them. We
need to resolve here two questions: 1. What should be understood by the terms
"external market" or "external sphere" in relation to the given economic system?
and 2. What meaning should be given to the classifications - "single economy","
national economy", "world economy"?

As is known, the concept of "external market" is used in economic literature in a

double meaning. Most often it is given a purely geographical or politico-
geographical interpretation. External market is the market, lying beyond the
borders of a given organic territory, the market of another country,
another state. Exclusively in this sense foreign markets are treated in bourgeois
literature. Insofar as we are talking about such international relations, which are
defined by a variety of products, produced in different countries, by a variety of
consumer goods, creating the foundation of exchange and value, - such a
definition of the external market is entirely enough. External market, is a market
delivering products of other consumer forms, than those that are delivered in a
given country. But also such a foreign market does not have to fully coincide
with political borders.
The other raises the question of the external market in terms of the problem of
the realization of surplus value. From the viewpoint of Rosa Luxemburg's
theory, this realization is only possible on the external markets, having a pre-
capitalist economic structure. It's impossible in pure capitalist society. From the
Marxist viewpoint such external market is not a theoretical necessity for
capitalism, but in practice it significantly eases the problem of realization. In any
case, the market from this viewpoint must be not simply external in the
geographical sense, but also in the economic sense, other in its organic-
economic structure, the market of the "third person." Geographical
understanding is replaced by economic.
However when we come to the question of value relations in the world
economy, it turns out, that the concept of the foreign market in terms of this
problem must be distinguished from the first two. The magnitude of value
changes from country to country not only in dependence on the different types
of economic structure, but primarily in dependence on the average level of labor
productivity in every country, on the level of productive forces. The degree of
development of productive force, may be different in countries belonging to the
same economic type. To this difference between countries Marx attached great
importance. We know that the basic premise of the labor theory of value is
similarity of producers and similarity of labor. "The total labour power of society,
which is embodied in the sum total of the values of all commodities produced by
that society, counts here as one homogeneous mass of human labour power,
composed though it be of innumerable individual units. Each of these units is
the same as any other, so far as it has the character of the average labour
power of society, and takes effect as such; that is, so far as it requires for
producing a commodity, no more time than is needed on an average, no more
than is socially necessary.43"
But this average labor represents itself a size, given only for a determined
society in determined conditions of time and place. "Simple average labour, it is
true, varies in character in different countries and at different times, but in a
particular society it is given.44"
Even more determined Marx speaks on this in the chapter on national
differences of wage.

Differences of this kind represent themselves, in our opinion, a decisive mark,

on which one has to make the economic split in internal and external, since the
in our epoch most potent factor of international relations is the difference of
value, due to the different situation of productive forces in different countries. An
external market is, thus, the market of a country, standing on another stage of
development of the productive forces. It is self-evident, that by determined
conditions of productive forces it can be a matter only about average statistical
observations.
When comparing the level of productivity in different countries some difficulty
may arise, which, however, is of minimal hindrance. Labor productivity is
a natural, and not a value indicator. It serves only as a basis for measuring
value. From this it follows that a comparison of labor productivity is possible
only within strictly homogeneous branches of production. Meanwhile the
economy of an entire country is a plexus of various branches of production.
What coefficient can express the relation of productivity in two or more
countries? Modern statistics easily cope with this task by bringing to a common
denominator diverse phenomena with the help of index averages. It is enough
to know the relationship by separate branches, in order with their help to
construct an abstract coefficient (total index), which expresses the ratio of
productivity of groups of branches of the economy in two or more countries. So
is measured, for example, the movement of productivity of a national
economy over time. This method is not applicable, however, in cases where a
particular branch is represented in one country and is not represented in the
other. We think that it is much more convenient to use another "total index,"
introduced in economic science by Marx, namely, the average organic
composition of social capital. The capital structure is in Marx a tool comparing
the relative productivity of labor, not only within homogeneous branches, but
also between different branches, for example, between industry and agriculture.
Of modern statisticians to this issue M. Smith pays great attention (see, eg, her
"Principles of statistical methodology" [Основы статистической методологии,
1923], "Economic principles of calculation" [Экономические основы
калькуляции, 1926], etc). It's necessary here to note in passing, that in this
method of comparison the concept of "organic composition of capital" bares
also on those forms of agriculture that are not capitalist in the strict sense
(peasant, artisan, etc.). This does not at all contradict Marxism. Marx says in
one place, under the domination of the capitalist economic system categories,
the features of the latter, get a reflection also in pre-capitalist forms, although
they here serve with other social content. This gives the right, with a certain
reserve, to extend the application of capitalist categories beyond the limits of
capitalist relations, inasmuch as the matter is limited to a narrow-special
question.
It can be argued that our proposed distinction of internal and external market in
terms of productivity represents a step backwards compared with the former
division by social-economic structure, because it replaces a social by a
technical approach. This admonition is wrong for two reasons. First, the division
by organic composition of social capital is an economic, and not a technical
division (ie, it includes it istelf an instant of social relations). Marx frequently
uses this feature, comparing advanced and colonial countries. Productivity of
labor itself is a function of social relations. Second, it is wrong to think that the
division of economic forms by structure is only possible in the type
of solid oppositions of "capitalism" "feudalism", "natural-patriarchal" system etc.
Inside each of these systems are in turn various stages and degrees,
characterized by a diverse nature of social relations. "Commercial", "industrial",
"financial" capital are profoundly different from each other forms of social
relations, within the same broad concept of "capitalism." Meanwhile, the old
division of the market along the line of "capitalist market" and "market of third
person" is clearly insufficient to cover the difference of this second order. The
interrelation between a modern country of financial capital and an "industrial" (in
the narrow sense of the word) country is almost as heterogeneous, as the
relation with the third person. That is why we believe, that the classification by
the level of development of productive forces is able to better embrace the
diversity of the phenomena of international economic relations, than a
classification by structural features. It goes without saying that the latter
classification hereby does not disappear. For some purposes it may be quite
suitable.
In this way we find the key to solve the question about the relations between the
single, national and world economy. In economic literature there is a tendency
to reduce this threefold division into a twofold. Some economists (mainly,
representatives of the German historical school - Bücher, Schmoller, Sombart,
etc.) simply obliterate world economy, not recognizing for it any right to exist.
They recognize the world exchange as a secondary thing from the perspective
of the national economy. The world market is called on only to fill "gaps" in the
national economic organism. "National economy" - that is the center, around
which the world turns... and the historical school of national economy. A
somewhat vaguer than the former point of view Richard Calwer defends. The
world economy, in his opinion, is not an "autonomous organism", existing
alongside national economic organisms, since it lacks existential features of an
organism: strict partition and closely interrelated parts. Individual national
economies are still too autonomous in order that they can be considered as
members of a world economic organism. Therefore one can more likely talk
about a "world market economy" (Weltmarktwirtschaft), than about a world
economy. That different countries are dissimilarly embroiled in world economic
circulation - this is true (this different degree of participation springs in the eye, if
one takes the percentage of external exchange of each country in relation to its
total commodity exchange). But after all also inside national economies there
are large differences in the "marketability", for example, between peasant and
factory production. Moreover a small percentage of internal exchange in respect
to all commodity circulation can prove to be very big for individual important
branches of industry, drawn into the world economy. On the other hand, the
larger the national-economic unit, the larger under any conditions will be the
share of its internal circulation, compared with external circulation. From this,
however, it does not at all follow, that the the stronger countries are the less
important members of the world economy. Finally, inasmuch as the world
market expands under the influence of increased production, it's always
necessary to remember, that also under expanded reproduction the greatest
part of products fits into the frame of simple reproduction. From this fact that
profit is a comparatively small share relative to the entire annual products, only
a crude ignoramus can make a conclusion about the negligible meaning of profit
in the system of capitalist economy. The same can be said about the argument,
denying the existence of the world economy on the basis that the share of
foreign trade is less than the share of domestic trade in national-economic
circulation. To recognize the existence of a world market, as an economic
necessity, and at the same time deny the existence of the world economy - is
doubly ridiculous.
Rosa Luxemburg exposed this, if one may say, "theory" to caustic and cruel, but
deserved ridicule in her "Introduction to political economy." However, she
herself also holds the standpoint of a twofold formula with the only difference
that instead of world economy she considers it necessary to cross out "national
economy." "Is there, we have to ask first of all, in fact that what we call a
national economy? Does every nation lead a sort of separate economy, a sort
of closed economic life," Rosa asks, and answers to both these questions in the
negative.

Finally, in Russian literature Bukharin reduces the threefold division to a twofold

by removing the single economy.

"Every one of the capitalistically advanced "national economies" has turned into
some kind of a "national" trust.45" Even more determinedly Bukharin speaks out
in his "Economics of the Transition Period."
"The units, constituting the system of the modern world economy, are not
individual enterprises, but complex sets, "state capitalist trusts." ... The capitalist
"national economy" has turned from an irrational system into a rational
organization; it went from an economy without subjects into an economic
subject. ... But neither the anarchy of capitalist production in general, nor the
competition of capitalist commodity-producers, has disappeared.
These phenomena are not only still present, but they have also deepened,
reproduced in the frame of the world economy. ... The commodity economy
here in no way disappears completely, although internally it either dies or
significantly is reduced, making room for an organized distribution. The
commodity market effectively becomes a world market, and ceases to be
"national.46"
In the bourgeois literature, recognizing the existence of world economy,
attempts are made to bring between national and world economy not an
economic, but a juridical border. To phenomena of the world economy relate
only those group relations which undergo regulation and are regulated on the
basis of international agreements, conventions etc. It's understood, that the
chief exponent of this position must be a German professor, who in general
cannot imagine any relation without sanction from above. This is Bernard
Harms. Here is his definition: "The world economy is the set of interrelations
and interactions between the individual economies of the globe, arising from
highly developed means of communication and regulated and uphold by
international agreements." About the general mindset of Harms this statement is
enough evidence: "We need to keep away of grounding the science of world
economy on the foundation of "capitalism," no matter how comprehensible it
may seem."

There is still another point of view in economic literature, which, recognizing the
existence of the world economy along with the national economy, denies
however therewith the existence of any specific features in the world economy,
which would require the creation of a special economic theory of international
relations. The problem of "international exchange," from this point of view,
exists only, inasmuch as questions of policy are mixed to economic issues,
inasmuch as "international" relations are at one and the same time also "inter-
governmental" relations. In Russian literature the advocate of these views is
Struve. The case is, however, "quite the contrary." Precisely when questions of
international economy are approached in terms of political borders, the very
problem disappears. From an economic point of view, resolutely nothing has
changed from the fact that, for example, the Ruhr and Lorraine, were included
before the war in one and the same political body, now are separated by a
border. A theory of economic relations between different economic organisms
acquires meaning only if these organisms represent different economic types or
different stages of economic development. We shall see later, that set on such
foundation, this theory, is not an opposition of the common theory of exchange
and value, requires, however, in order to agree with the latter, some extension,
refinement and modification of concepts, established in the economic literature.
it is correct to indicate that also inside one or other country, between different
territories there is a relation, resembling the so-called "international" relation.
We also count them as "international" (in the conventional sense, it is difficult to
pick up another term 47). The one is so little studied theoretically, as the other.
This circumstance does not narrow the frame of theory, but, on the contrary,
opens up for it a rich field.
Our brief overview shows what discordance exists in this matter. Risking to
multiply this discordance, we believe it is necessary to discard all previous
attempts to simplify the classification and stay with to the old division.

As concerns Rosa Luxemburg, she, in our opinion, was a little too quick to
abolish the "national economy" on the grounds that nations do not currently lead
a separate economy. This is insufficient evidence. After all in the same way one
can "prove," that also "single economies" have disappeared, inasmuch as they
are even less isolated from other economies.

True, the principal distinction between "national economy" taken in relation to

the world economy, and individual economies taken in relation to the national
economy, is that the first relation is a relation of two anarchic systems ("pseudo-
economies" in the terminology of Struve), and the second is a relation of
organized units to a non-organized whole.

But this distinction lies on another plane and in this connection is irrelevant.

It is important to state, that lack of distinction does not yet mean the elimination
of a given economic complex. Only in such case the economy would cease to
exist, when the development of world economic relations finally erased any
differences between countries, whether it is the differences in the structure of
economic relations, or in the situation of the productive forces. But both these
and other differences continue to exist, tho they have a tendency to weaken as
capitalism becomes the universal form of the economy (we have in mind here
the ascending line of development of capitalism, and not the epoch of its
decline), - but "in proportion as capitalist production is developed in a country, in
the same proportion do the national intensity and productivity of labour there
rise above the international level.48" For the present these differences exist, the
"national economy" exists, as a real aggregate, distinct from other economic
complexes and at the same time found with them in regular economic relations
of exchange, etc.

Original title: К теории развития мирового рынка и мирового хозяйств - И.

Дашковский. Под Знаменем Марксизма
 1.This article is part of a work ready for print. [It was also translated in La
Revue Marxiste, Mars 1929 - Numéro 2; J. Dachkowski: Contribution à la
théorie du marché mondial. In all likelihood the translator was Norbert
Guterman.]
 2.Werner Sombart Die deutsche Volkswirtschaft in neunzehnten
Jahrhundert und im Anfang des 20 Jahrhunderts, 4 Auflage, p.
387. http://www.archive.org/stream/diedeutschevolks00somb#page/387/mo
de/1up
 3."The modern history of capital dates from the creation in the 16th century
of a world-embracing commerce and a world-embracing market " Capital,
Vol 1, p. 116 (1920 edition
[Russian]) https://www.marxists.org/archive/marx/works/1867-c1/ch04.htm
 4.J.-S. Mill, Principles of Political Economy. 1898, p.
651. https://archive.org/stream/principlesofpoli05mill#page/650/mode/2up
 5.Fr. List, Das nationale System der Politische Oekonomie, Vierte Auflage,
p.
213. https://archive.org/stream/dasnationalesys00list#page/212/mode/1up
 6.Marx, Speech on Free Trade. http://libcom.org/library/on-free-trade-karl-
marx
 7.Marx. Capital, Vol 1, page 116, Vol.
1920 https://www.marxists.org/archive/marx/works/1867-c1/ch03.htm#S3c
 8.Marx. Theories of Surplus Value, part 3, p.
210. https://www.marxists.org/archive/marx/works/1863/theories-surplus-
value/ch21.htm
 9.K. Marx to F. Engels, letters, translation Adoratsky. State. Ed. p. 74. (8
October 1858)
 10.The theory of surplus value, part 1, p.
201. https://www.marxists.org/archive/marx/works/1863/theories-surplus-
value/ch21.htm
 11.Capital, Volume 1, p. 449-
460. https://www.marxists.org/archive/marx/works/1867-c1/ch15.htm
 12.P. Maslov (Пётр Павлович Маслов), Influence of distance on the
distribution of produces forces, 1926 Moscow, p. 19-20. (Влияние
расстояния на распределение производительных сил.)
 13.Capital, Volume 2, page
84. http://www.marxists.org/archive/marx/works/1885-c2/ch04.htm
 14.I quote from the German edition: Ad. smith, Wesen und Ursachen des
Volkswohlstandes, p 19.
 15.The Poverty of Philosophy, p
111. https://www.marxists.org/archive/marx/works/1847/poverty-
philosophy/ch02b.htm
 16.Capital, Vol 1, p 343. https://www.marxists.org/archive/marx/works/1867-
c1/ch14.htm
 17.Ibid, p. 772-773. https://www.marxists.org/archive/marx/works/1867-
c1/ch30.htm
 18.Ibid, p. 449. https://www.marxists.org/archive/marx/works/1867-
c1/ch15.htm
 19.The Poverty of Philosophy, p. 112-113.
 20.Capital vol 3 part 1, p.
318. https://www.marxists.org/archive/marx/works/1894-c3/ch20.htm
 21.Marx, Speech on Free Trade.
 22.Parvus, Colonial Policy and the collapse of the capitalist system, page
124. [Die Kolonialpolitik und der Zusammenbruch. Колониальная политика
и крушение капиталистического строя. Some sections were translated in
Discovering Imperialism (2011), p. 331: "Colonies and Capitalism in the
Twentieth Century."]
 23.Capital, volume 1. https://www.marxists.org/archive/marx/works/1867-
c1/ch01.htm
 24.Theories of Surplus Value, part 3, p. 245.
 25.Capital, vol 1. page
514. https://www.marxists.org/archive/marx/works/1867-c1/ch16.htm
 26.Ibid. page
351. https://www.marxists.org/archive/marx/works/1863/theories-surplus-
value/ch24.htm
 27.Marx, Letter to Annenkov, Letters, Marx and Engels, p.
7 https://marxists.anu.edu.au/archive/marx/works/1846/letters/46_12_28.ht
m
 28.Kautsky points out, that the modern division of labor among members of
the world market is based, on the one hand. on natural differences, on the
other emerges from socio-economic conditions. To exclusive influence of
capitalism should be attributed the separation countries in industrial and
agricultural types, although the natural conditions do not call forth the
necessity of such harmful specialization. But capitalism itself is preparing
the conditions conducive to the destruction of this division, industrializing
agrarian countries. Kautsky believes that the socialist system brings the
international division of labor to a frame due only to the natural-historical
 character of different countries (see his "Handelspolitik und
Sozialdemokratie" http://hdl.handle.net/10622/ARCH00712%2E2104?locatt
=view df). Of course, without a doubt the point is to eliminate, or at any
rate, to hugely weaken the opposition between industrial and agrarian
countries, in the sense of a convergence of economic types. However, to
expect that therewith the division of labor is reduced to the "natural
boundaries" is not necessary. Firstly, these natural conditions themselves
are continuously changing, partly by themselves, partly under the influence
of cultural alteration. And, secondly, even within the limits of a single type of
economy in any given period of time specialization is possible and
inevitable in one or more directions, emerging from its socio-economic,
cultural, everyday particularities. The content, direction, forms may change ,
the "attachment" of individual countries to special branches disappears, but
the "continuous" specialization remains, because it is difficult to imagine a
simultaneous and synchronous everywhere similar rate also in one and the
same forms of economic development. "Needs of groups change, new
needs cause new tastes, new tastes change the distribution of productive
energy and attach importance to new parts of the earth" (Hobson). With
regard to the specific conditions of capitalism, then here acts a whole
binding of contradictory trends, from which one contributes to convergence
of economic types, another creates new oppositions. Most of them are
related to the law of the tendency of the falling rate of profit and its opposing
factors, among which not in the last instance counts the Weberian theory of
"agglomeration" of industrial production. However a consideration of all
these issues relates to the following.
 29.The Poverty of Philosophy, page
86. https://www.marxists.org/archive/marx/works/1847/poverty-
philosophy/ch01c.htm
 30.Marx. Capital, Volume 3, part 2, p.
389. https://www.marxists.org/archive/marx/works/1894-c3/ch49.htm
 31.Theories of Surplus Value, Volume III, part 2, p.
199. https://www.marxists.org/archive/marx/works/1863/theories-surplus-
value/ch17.htm
 32.Ibid. p. 200.
 33.Theories of surplus value, part 1, p. 220.
 34.Theories, vol 2, 2, page
192. https://www.marxists.org/archive/marx/works/1863/theories-surplus-
value/ch17.htm
 35.Theory of surplus value, vol 2, 2, p. 197.
 36.Letter from Engels to Nikolai Danielson, Marx-Engels Letters, p.
300 https://www.marxists.org/archive/marx/works/1892/letters/92_09_22.ht
m
 37.Capital, Volume 1, p.
426. https://www.marxists.org/archive/marx/works/1867-c1/ch15.htm
 38.Parvus, Colonial policy and the collapse of the capitalist system, [1908
Russian] translation Е. Грау, p. 150.
 39.Letters Marx Engels, p. 301.
 40.Cf. N. Bukharin. Imperialism and capital accumulation, p. 124.
  41.Archives of Marx and Engels, Vol 1: Marx Engels on Feuerbach, page
241. https://www.marxists.org/archive/marx/works/1845/german-
ideology/ch01c.htm
 42.Keynes, The economic consequences of the Versailles
peace. http://www.gutenberg.org/files/15776/15776-h/15776-h.htm
 43.Capital, volume 1, p. 5.
 44.Ibid., p. 11.
 45.Bukharin, World Economy and imperialism, p.
68. https://www.marxists.org/archive/bukharin/works/1917/imperial/08.htm
 46.N. Bukharin, Economics of Transition, p.
14. http://www.marxists.org/francais/boukharine/works/1920/boukh_trans_0
1.htm
 47.In Russian "inter-regional" seems to be only a recent term:
межрегиональный or междурегиональный
 48.Capital, Vol 1, p.
566. https://www.marxists.org/archive/marx/works/1867-c1/ch22.htm
Posted By
Noa Rodman
Jul 12 2014 06:10

Comments

Noa Rodman
Jun 27 2016 19:43
The French translation (which is an abbreviated version) of this first part has been put online
here: http://revueperiode.net/contribution-a-la-theorie-du-marche-mondial/
 login or register to post comments

Noa Rodman
Oct 12 2017 07:14
This article-series will be part of a HM volume (with translations of Soviet essays) on
international trade and world economy. On board as editors are Guenther Sandleben (Unequal
Exchange? Marx’ Solution to the Value Problem on the World Market) and Jørgen
Sandemose (The Motley World of “International Values”: Modes of Production on the World
International exchange and the law of value -
Isaak Dashkovskij

Second part. Under the Banner of Marxism, p. 131-151, no. 4, 1927Also

see concluding third article.
The first part, titled 'On the theory of the development of the world market and world economy',
appeared in issue no. 1 of 1927, but is not available (at least for now).

1 The law of value in national and world economy.

The main thesis of classical theory reads as follows: if participants of
international commerce are countries situated on different stages of
development of productive forces (in the classics the matter, properly, is only
about different natural conditions), then exchange will inevitably take the form of
inequality: a greater amount of labor of the less productive country is
exchanged for a smaller amount of labor of the more productive country. The
proportions of the exchange are determined not by cost of production, but by an
equation of reciprocal demand. In other words, exchange happens not on
equivalent principles and is not determined by the laws of value. The viewpoint
of the classics enjoys very large distribution also in contemporary Marxist
literature, in particular under the formula of inequivalent exchange now
customarily is taken almost every exchange of unequal amounts of labor. The
classical theory in part was supported, as we later shall see, also by Marx. Far
from intending to deny the real facts of nonequivalent exchange between
countries, - these facts are so glaring that to negate them would be ridiculous, -
we believe, however, that here a mixing of concepts occurs.
1) That which is customarily regarded as inequivalent exchange, in fact is
normal exchange of equivalents, and does not violate the laws of value; 2)
actually inequivalent exchange derives not from those circumstances which
usually are taken as the causes of such exchange, not from differences in the
productivity level of various countries, but from specific conditions of the modern
epoch, connected, mainly, with migration of capital and labor forces.

Let us begin with the substantiation of the first position.2

There are three causes why workers in the course of identical time intervals
create different amounts of products, and under known conditions different
value. The first reason is a different organic composition of the "capital." (We
take this concept in a "material" sense, as aggregate of means of production
and labor force). The second - is a different productivity of the labor due
to natural and technical instances. The third - is a different intensity of the labor.
It goes without saying that we consider all these factors to operate provisionally
within one and the same branch of the economy, because only within this
bound can one compare the results of labor by direct calculation of the amount
of produced commodities. Under heterogeneous production [i.e. production of
different kinds of products] such calculation is not possible, consequently, it is
impossible also to directly compare productivity. In addition, with the transition
from homogeneous to heterogeneous branches in part also the meaning is
modified of the laws arising from the operation of named reasons.
Let's start with the first cause. In what sense does a different organic
composition of capital affect the results of the labor process? Different
composition, as is known, means, that equal-sized capitals are divided with
varying proportions into constant and variable capital. Each worker in an
enterprise, besides creating new value, transfers onto the product value equal
to the consumed part of constant capital. It's obvious, that this transferred value
will be greater the higher the organic composition of capital is. The higher this
transferred value, in the larger amount of finished products it should be
expressed - other conditions being equal. Consequently, one and the same
worker, under the same expenditure of force, creating in an unit of time equal
new value, transfers to the finished product an unequal value of constant
capital, in accordance with the specific mass of the latter in different enterprises.
And since in the manufactured product the part, corresponding to the newly
created value, externally does not differ from the other part, representing the
transferred value of constant capital, then overall it turns out that the result of
equal labor of workers in equal labor time is expressed by a different amount of
products and in a different value of these products.

Passing into the field of international economic relations, the law gets the
following expression: "An English and an Indian spinner, e.g., may work the
same number of hours with the same intensity; then they will both in a week
create equal values. But in spite of this equality, an immense difference will
obtain between the value of the week’s product of the Englishman, who works
with a mighty automaton, and that of the Indian, who has but a spinning-wheel.
In the same time the Englishman spins several hundreds of pounds more. But
also a sum of old values, many hundred times as great, swells the value of his
product, in which those re-appear in a new, useful form, and can thus function
anew as capital.3"
This law is valid not only within an homogeneous branch of production, but also
in the scale of the entire national economy. Constant capital, applied in
production, is the result of past labor, which, however, is able to realize its value
only through the accession to it of new labor. The more significant in a given
country the accumulation of past labor is, the greater the value and the greater
the mass of products national labor produces, even remaining unchanged in its
absolute magnitude. True, the part of annual production which corresponds to
the transferred part of constant capital, must go back again to its restoration, so
that the total sum of value produced by annual labor is increased compared to
value already found at the nation's disposal, only by the in the course of the
year newly created value, proportional to the labor expended. But, firstly,
constant capital can be reproduced in more productive form, though it is also
past value (better machines, etc.). Previous value, past accumulated labor will
represent itself a more significant productive force. Secondly, even with
provided reproduction of constant capital in past natural form and past
productivity, it nevertheless will come out so, that the English spinner will again
reproduce his "mighty automaton," and the Indian spinner - his "manual
spinning-wheel:" the inequality of England and India is reproduced continuously,
just as the continuous reproduction of the class relation between capitalist and
wage worker. Thirdly, it can easily happen that on reproduction of old constant
capital now less labor is expended due to increased productivity, and with the
value (or, rather, with the price) of the produced product will be realized - under
favorable conditions of competition on the world market - a magnitude,
corresponding to the old, higher value of constant capital. As the whole of
industrial history shows, such opportunities are more likely to be had by the
owner of the "mighty automaton," than the owner of the "spinning-wheel," for
whom it is not always possible even to restore his old spinning wheel with the
product's price.
Higher value and greater number of products, created in equal units of time,
most frequently go hand in hand with lower prices of these products, especially
in industry. "In the case of factory-made commodities, it is known that 1 million
workers in England produce not only a much greater product but also a product
of much greater value than in Russia for example, although the individual [/unit]
commodity is much cheaper. In the case of agriculture, however, the same
relation between capitalistically developed and relatively undeveloped nations
does not appear to exist. The product of the more backward nation is cheaper
than that of the capitalistically developed nation, in terms of its money price.
And yet the product of the developed nation appears to be produced by much
less (annual) labour than that of the backward one. In England, for example,
less than one-third of the workers are employed in agriculture, while in Russia it
is four-fifths. 4 (Marx further stipulates that these numbers need to be amended
by adding to the agricultural workers the part of industrial workers who
manufacture instruments of agriculture, but nevertheless the difference
remains I.D.). The reason for the different rapport of industrial and agricultural
prices is due partly to the influence of natural factors, stronger in agriculture,
partly to the particular economic system of agriculture in backward countries.
Thus, the conditions of reproduction of constant capital due to a difference in
organic composition of capital are extremely important, characterizing the
economic interrelation between countries, although they do not entail itself any
declination from the general law of value and have influence likewise in the
internal economy (e.g., in the rapport of price for industrial and agricultural
products).

"If this portion (of constant capital. I.D.) grows, not only does the annual mass of
products grow, but also their value, even if the annual labour remains the same.
This growth is one form of the accumulation of capital, which it is essential to
understand.5" It is not less important in connection with this remind as well
about the role of fixed capital, which grows both relatively and absolutely
together with the growth of constant capital, as part of the latter. "Hence where
much constant capital, and therefore also much fixed capital, is employed, that
part of the value of the product which replaces the wear and tear of the fixed
capital, provides an accumulation fund, which can be invested by the person
controlling it, as new fixed capital (or also circulating capital), without any
deduction whatsoever having to be made from the surplus-value for this part of
the accumulation. This accumulation fund does not exist at levels of production
and in nations where there is not much fixed capital. This is an important point.
It is a fund for the continuous introduction of improvements, expansions,
etc.fn]Ibid., p. 156."
This happens, as is known, because in reality it seldom occurs that annual
restoration is exactly similar to the part of fixed capital which is worn out, that "in
part the wear and tear merely exists nominally, and in reality it only has to be
replaced in kind after a certain number of years.[Theories]" Depreciation funds
are, thus, temporarily free to be used to expand production.
The significance of the depreciation fund specially in the field of international
relations, Marx also emphasizes in one of the letters to Engels. "Now, what
becomes of this fund, which yearly replaces 1/12 of the machinery? Is it not, in
fact, an accumulation fund to extend reproduction aside from any conversion of
revenue into capital? Does not the existence of this fund partly account for the
very different rate at which capital accumulates in nations with advanced
capitalist production and hence a great deal of fixed capital, and those where
this is not the case?6"
The second reason of unequal "labor-exchange," is a difference in the very
character of labor that creates value. Countries and nations differ among
themselves in the qualities of their typical average labor: qualification, skill,
agility, endurance, exertion, etc. All these properties can conditionally be
combined under the common name of intensity of national labor (which is not
identical in this case with the concept of exertion (напряжения) of labor). The
difference of labor in its intensity creates in equal intervals of time unequal
value. This is in the same degree relates to various nations, as to various
individuals of one and the same nation. An hour of labor of a country which
possesses higher quality labor, will exchange in the world market for 2, 3 and
more hours of labor of other countries, characterized by lesser intensity of labor.
In other words: commodities, produced by different countries, will have in the
world one price, but as the first country produces twice as much per hour, then
it also gains a correspondingly large sum of money. In essence here there is not
any inequality in the exchange: if provisionally an inventory is made of more
intensive labor at units of less intensive labor, then it also will form more labor
time: an equal measure, attached to unequal magnitudes, gives unequal
results. Despite the complete conformity of the conditions of exchange with the
law of value, such exchange still forms an economic base, allowing the more
developed country to consolidate for itself and even systematically strengthen
its dominant position, "perpetuating" the benefits of its labor. The higher value,
realized on the world market in the form of a bigger amount of material goods,
allows this country to spend more means on the qualification of the younger
generations of workers, than a backward country is able to do. Here is repeated
the same pattern that we have already noted, analyzing the conditions of
reproduction of fixed capital. Similar to how as a result of international exchange
the backward country recovers only - with the greatest difficulty - its spinning-
wheel, while an advanced - a mighty automaton, a same reproduction of
poverty and power takes place also in respect to the quality of the labor forces.
Intensity of labor, in the sense that we in this case attach to that term, is the
result of general economic, cultural, etc. conditions. In particular it is found in
close dependence on the level of technological development. But it would be a
mistake to think that a complete parallelism exists. Not to mention the fact that a
high level of technology time and again leads to deskilling of labor forces,
physical exhaustion of nations, proceeding in parallel with the economic
"progress," leads to it that "often lower forms of labour are considered as more
skilled" (Marx). Besides, in the view of Marx, very often the difference between
complex and simple labor is based on illusions and prejudices. Thus, the height
of economic development and the degree of intensification (qualification) of
labor may, at least in some branches, be found in inverse proportion. If,
nevertheless, an economically more developed country gets for this labor a
compensation, as for more intensive labor, then this happens because the price
level is determined by the size of the productivity of social labor, and labor
productivity is a social total, with which the difference is discharged between the
subjective and objective factors determining it. Therefore a country can,
according to Marx, issue more productive labor, for more intensive. However, as
we shall see later, this is not a specific property solely of international
exchange, and is no violation of the laws of value.
Intensity of labor not only depends on economic and technical conditions, but in
turn has an influence on them. Construction of one or other machine is often
adapted to the character of the labor force, serving this machine or laboring with
its help. So, e.g., with the construction of textile machines the national
peculiarities of labor are taken into account. For Russia spinning machines are
build of lesser speed, adapted to less intensive labor of the Russian worker; for
England, America, the speed of the spindle is higher. 7" Application of the
Fordist assembly line is also in dependence on the national particular qualities
of labor.
More intensive national labor may be realized as labor of a higher specific mass
(resp. less intensive labor, as labor of lower specific mass) only because on the
world market an average scale of intensity is formed[i/], just as inside a country
the diverse individual differences in intensity are also summarized in an average
magnitude. This average scale forms a general measure, which, when applied
to unequal magnitudes, gives unequal measurements. However, some of
Marx's formulations give reason to think that he saw some sort of principal
difference between the formation of the category of average labor in a national
and a world economy. He says:
"In every country there is a certain average intensity of labour below which the
labour for the production of a commodity requires more than the socially
necessary time, and therefore does not reckon as labour of normal quality. Only
a degree of intensity above the national average affects, in a given country, the
measure of value by the mere duration of the working-time. This is not the case
on the universal market, whose integral parts are the individual countries. The
average intensity of labour changes from country to country; here it is greater,
there less. These national averages form a scale, whose unit of measure is the
average unit of universal labour. The more intense national labour, therefore, as
compared with the less intense, produces in the same time more value, which
expresses itself in more money. .8"
The sole difference, which, actually, should be established, is the fact that each
individual country represents itself an [i]integral part of the whole" in the world
economy, whereas an individual worker in the national economy is only a
negligibly-small fraction of the whole. Therefore the concept of "average
national labor" from a statistical point of view represents itself a much more
tangible reality, than the concept of "world average labor."

In the first case we are dealing with an average, derived from huge amounts of
facts, that with the law of large numbers the necessary reliability is provided. In
the second case, the "average" is built on the basis of some units or some
dozen of "national averages" and represents itself an elevated abstraction.
Inside a country the "average" unites around itself a compact mass of labor,
really homogeneous and equal in intensity, from which only on the "periphery"
deviations are formed in either direction. "Average intensity" of world labor
exists only as an average in an arithmetic sense, among the constituting
component parts of which cannot be found either two approximately identical
elements. Therefore it also is distributed on a ladder by steps.

Such may be the considerations which encourage the drawing of a theoretical

dividing line between national and international exchange. But inasmuch as we
all the same introduce the concept of "average world labor" and operate with it,
as with some reality, here come into force the same laws that apply also in a
national scale. In fact: why in the frame of this "average," which brings weavers
in Moscow and Petersburg together in the same group, should other laws
operate, than in the world average, uniting Moscow and Lancashire. Here the
difference is in degree, but not of essence.
The third factor, causing unequal labor-exchange, is a difference in the labor
productivity of different countries, inasmuch as they arise not from subjective,
but from objective factors of production: natural and technical conditions. It is
this situation which actually also carries the name of inequivalent exchange. It
was, mainly, also what the classical school had in mind, though they confined
themselves almost exclusively to the influence of natural conditions on
productivity. Yes also Marx himself often distinguishes unequal labor-exchange
which arises out of differences in objective conditions of production from
inequality which occurs when there is a difference in intensity of labor, and
tends, evidently, to read the first case as a violation of equivalence. So, in one
place he says: "The law of value in its international application is yet more
modified by the fact that on the world-market the more productive national
labour reckons also as the more intense, so long as the more productive nation
is not compelled by competition to lower the selling price of its commodities to
the level of their value.9" In another place he refers to the consideration of Mill
on foreign trade, with which he, apparently, fully agrees: "Say, in his notes to
Ricardo’s book translated by Constancio, makes only one correct remark about
foreign trade. Profit can also be made by cheating, one person gaining what the
other loses. Loss and gain within a single country cancel each other out. But not
so with trade between different countries. And even according to Ricardo’s
theory, three days of labour of one country can be exchanged against one of
another country—a point not noted by Say. Here the law of value undergoes
essential modification. The relationship between labour days of different
countries may be similar to that existing between skilled, complex labour and
unskilled, simple labour within a country. In this case, the richer country exploits
the poorer one, even where the latter gains by the exchange, as John Stuart
Mill explains in his Some Unsettled Questions.10" Thus it is entirely clear that
Marx considered unequal exchange a "modification" of the law of value in
international trade. It seems to us that this view of Marx is not consistent with
the understanding of the law of value, with which we are accustomed to operate
precisely as with Marxist laws. Let's begin with some elementary
considerations. What is value? - The amount of labor confined in a commodity.
The category labor, forming value, we expose by a "chemical treatment" of
every concrete, individual, accidental: we take into account labor, as abstract
expenditure of the energy of muscles and nerves, as average labor, in the
sense of average intensity, etc. But if the amount of this labor, expended in the
production of two products is equal, then does it follow that also the value of
these commodities is equal? No, it does not follow. For full equality of value,
above equality of labor expenditure one more technical condition is necessary:
the expended labor should be produced at average objective conditions of
production, at average technology (we ignore here the exceptional, though also
very important circumstance, when value is defined by worst (крайними)
conditions of production). Only such labor will be socially-necessary labor. "The
labour time socially necessary is that required to produce an use-value under
the normal conditions of production (italics mine. I.D.) and with the average
degree of skill and intensity prevalent at the time.11 Consequently, an equal
amount of labor expended under different conditions of production in one and
the same branch (one cannot directly compare technical, etc. conditions
in different branches, because also the category of socially necessary labor
time makes sense only in application to concrete branches of the economy, and
not to society as a whole) - an equal amount of labor of the same intensity
creates different value, comes in the market appraisal with a different mass, as
if it were a different amount of labor or an equal amount of labor
of different intensity. Conversely, a bad worker, working under the best
objective conditions, and a good worker, working at worst conditions, can create
a similar value, although the quality of their labor is deeply different. Technical
and natural conditions are, thus, among the factors that determine the
magnitude of value. It may seem, that we go astray here on the vulgar theory of
productivity or the theory of "imputation" according to which the manufactured
product must attributed not only to labor, but also to land, capital, etc. We are
the farthest of all from these, if we are permitted to say, "theories."
One must distinguish value of the whole product of a given sector, valuecreated
by a separate enterprise of this sector or by a separate individual in a defined
labor time and, finally, value of commodity units. We call the second type of
category of value the specific or partial value (удельной или частичной).
Value of the whole product of a given sector, taken in the scale of the social
whole, is equal to the sum of labor, confined in this sector, and only in it. It does
not depend on any technological, or on any natural factors. The latter determine
only what amount of labor society should expend in the given sphere of
production, in order to get the necessary result. The value of the product of
textile industry will be, for example, entirely the same, whether here is labored
primarily by machines or manual spinning-wheels and tools, if only the amount
of labor remains the same.

Further: the value of commodity units likewise is equal to the amount of labor
time, processed on them at the average of this industry. On technique, etc. this
value depends only indirectly, inasmuch as technical factors determine what
amount of products are developed in units of time. But the measure of value
remains labor time and it alone.
Finally, specific value, created by separate enterprises in a given sector. Here
the question is more complicated. Let's suppose, that in this company are
employed one hundredth part of all textile workers, that the quality of their labor
corresponds to the average level of textile workers and they work out the
common rate of labor time. Do they create under these conditions value equal
to 1% of the value of all textile products? Ça depend! If they work out
by physical volume one hundredth of the whole product, then also the value
created by them consists of the same share. But when by reason of
backwardness of the company, bad quality of the raw materials, etc. they work
out only 0.5 % of the entire textile mass generated by the whole given industry,
then also the value created by the labor of the workers of this company, will be
only 0.5% in relation to the aggregate value of the whole commodity mass. In
other words, the labor expended in this enterprise, will be appraised with a rate
only half the mass, although in its subjective qualities it is not inferior to the
average requirements. Thus, specific value is determined not only by the
amount of labor expenditure, but also the objective conditions of production.
One must, however, correctly understand the role of these technical factors in
determining specific value. The latter does not depend on the absolute quality of
the technology of the given enterprise or the natural conditions, not on the good
or bad machines, etc., but only on the relation of the technical level of the given
enterprise to the average technical level of the whole sector. This ratio
determines the share of participation of the given enterprise in the creation
of total value, which, as said above, does not at all depend on any technique.
This share may be low even with excellent equipment, if the average level of
technology was above the level of the given enterprise. Conversely, the value
share may be high also with bad equipment, if only it is above the average for
the sector.12
For these same reasons individual value of commodity units, i.e. the amount of
labor, which is actually spent on them, can differ to one or another side of their
market value. If an enterprise labors under objective conditions above average
level, the labor, expended in them, creates an higher specific value, and the
individual value of commodity units, issued to the market, will be, on the
contrary, below the market value of this unit. The reverse occurs with backward
production techniques. These considerations, which essentially are the alphabet
of the theory of value, can be illustrated with the simplest mathematical
calculation. Let a, b, c ... l represent the amount of labor, expended in groups of
enterprises different in their productivity of one and the same sector; m, n, p...r -
the respective amount of products. Market value of commodity units (socially
necessary labor, expended on their production), leaving aside situations where
it is regulated by worst costs - is expressed through (a+b+c+...l)/(m+n+p+...r)
The specific value, created by each homogeneous group of companies will
respectively be equal to:
1. m. (a + b + c + ...l)/(m+n+p+...r)
2. n. (a + b + c + ...l)/(m+n+p+...r)
3. p. (a + b + c + ...l)/(m+n+p+...r)
..................
r. (a + b + c + ...l)/(m+n+p+...r)

It's easily seen that the specific value of the production of each group of
enterprises is proportional not with the expended labor in its group, but with the
size of production, determined under otherwise similar conditions by natural and
technical factors of production.

Summing up all specific values, we get:

[m. (a + b + c + ...l)/(m+n+p+...r)] + [n. (a + b + c + ...l)/(m+n+p+...r)] + [p. (a + b
+ c + ...l)/(m+n+p+...r)] +...+ [r. (a + b + c + ...l)/(m+n+p+...r)] = (a + b + c +
...l).(m+n+p+...r)/(m+n+p+...r) = a +b+c+...l

In other words, the sum of specific values gives the value of the whole
production of this branch, which is identical with the sum of labor spent in this
branch and does not depend in any sense on technical conditions of production.
Let productivity of labor in the first group of enterprises double, thanks to the
introduction of new machines, etc. the reserves of production and the level of
productivity also in the rest of the groups stays the same. Then the market
value of commodity units will be (a+b+c+...l)/(2m+n+p+...r), and the specific
value of the production of the first group 2m. (a+b+c+...l)/(2m+n+p+...r).
Numerator increased times two, the denominator only by magnitude "m," which
is in any case less than the expression "m+n+p+...r," that is, the denominator
increased, but not times two, but in a lesser degree. Consequently, the specific
value of the production of the first group increased, although the amount of
spent on it labor remained unchanged. She would again have fallen to the
previous magnitude, if productivity growth would have seized to the same extent
all the remaining groups. The growth of the specific value of the first group does
not increase, however, the general value of the production of the entire branch,
it is done on account of a reduction of the specific values, produced by the
remaining groups, which can be easily shown by the relevant calculations.
Growth of specific value is determined by a coefficient, which represents itself
the relation of the degrees of increase of productivity in a given group to the
degrees of the decrease of market value of commodity units.
All these patterns were a long time ago noted. On them are based all possible
methods to extract surplus-profits in the competition struggle. If we introduce
here instead of the terms surplus-profits, etc. the more general category of
specific value, then only because similar phenomena are possible also in such
economic system in which the category of profit, lacks, but market exchange is
preserved.

Thus, the objective factors of productivity can and must cause inequality of
labor-exchange even when we are dealing with labor of the same quality, and
this does not only not violate the laws of value, but on the contrary, entirely
follows out of them. The concept of non-equivalence of exchange in application
to such phenomena does not have any sense. Such "non-equivalence" wholly
emerges from the inevitable and unavoidable fact, that a single market price
and value opposes a multiplicity of costs of production in different enterprises
(which does not disappear immediately also in organized economy). "If costs of
production persist, then they persist with their inequality, and not with their
equality." "By the very existence of market commerce price is determined, as
a single - in given moment and in given time - magnitude for a multiplicity of
economic subjects, whereas costs of production are multiple, so to say by order
of the plurality of these economic subjects in the relativity of unity for their
market price.13"
Graphically this process is observed for the law of ground rent, and Marx
himself notes it. Pointing to the fact that agricultural products are produced with
less expenditure of labor on fertile areas, are sold at the price of products
produced in the worst areas, he says:

"We have before us a determination by market-value as it asserts itself on the

basis of capitalist production through competition; the latter creates a false
social value. (italics mine. I.D.). This arises from the law of market-value, to
which the products of the soil are subject. The determination of the market-
value of products, including therefore agricultural products, is a social act, albeit
a socially unconscious and unintentional one. It is based necessarily upon the
exchange-value of the product, not upon the soil and the differences in its
fertility. If we suppose the capitalist form of society to be abolished and society
organised as a conscious and planned association... society would not then buy
this agricultural product at two and a half times the actual labour-time embodied
in it...; while it is, therefore, true that, by retaining the present mode of
production, but assuming that the differential rent is paid to the state, prices of
agricultural products would, everything else being equal, remain the same, it is
equally wrong to say that the value of the products would remain the same if
capitalist production were superseded by association. The identity of the
market-price for commodities of the same kind is the manner whereby the social
character of value asserts itself on the basis of capitalist production and, in
general, any production based on the exchange of commodities between
individuals. What society overpays for agricultural products in its capacity of
consumer, what is a minus in the realisation of its labour-time in agricultural
production, is now a plus for a portion of society, for the landlords. (emphasis
added. I.D.).14
That which relates to agriculture, is also valid for all other domains of the
economy. So, in industrial production, before the price of products of different
branches lines up on the line of price of production, within each branch the
formation occurs of the market value of the commodities, produced by different
enterprises. "It is necessary - writes Marx, - to always distinguish the market-
value — of which later — from the individual value of particular commodities
produced by different producers. The individual value of some of these
commodities will be below their market-value (that is, less labour time is
required for their production than expressed in the market value) while that of
others will exceed the market-value. On the one hand, market-value is to be
viewed as the average value of commodities produced in a single sphere, and,
on the other, as the individual value of the commodities produced under
average conditions (emphasis mine. I.D.) of their respective sphere and forming
the bulk of the products of that sphere. It is only in extraordinary combinations
that commodities produced under the worst, or the most favourable, conditions
regulate the market-value, which, in turn, forms the centre of fluctuation for
market-prices. The latter, however, are the same for commodities of the same
kind. If the ordinary demand is satisfied by the supply of commodities of
average value, hence of a value midway between the two extremes, then the
commodities whose individual value is below the market-value realise an extra
surplus-value, or surplus-profit, while those, whose individual value exceeds the
market-value, are unable to realise a portion of the surplus-value contained in
them.15"
The difference between industry and agriculture consists only of the fact that
there rent, i.e. additional profit, is mainly associated with natural conditions,
here [in industry] - with technical [conditions]. It is, in the expression of
Bogdanov, "rent of technical improvements." In conformity with this, rent in
agriculture has a constant character, surplus-profit in industry - under free
competition - a temporary character, inasmuch as we are talking about a given
group of enterprises. However, this extra profit is kept also in industry constantly
in the sense, that in every given moment in every sector there is a group of
more productive enterprises, gaining more than normal profits, and another
group, more backward, forced by the law of market value to receive less. From
this point of view there is no difference between industry and agriculture.
Some expressions in the above passage about differential rent give reason to
think that Marx considered in such a way generated value as if unreal. He
speaks of false social value, created on the market. But false in relation to
what? False from the point of view of the "value" which will have to be counted
in socialist society, i.e. those real labor expenditures, which the production of
the given product cost, in given natural and technical conditions. Marx
approaches, thus, the law of value with the perspective of another economic
system - the socialist. But for the capitalist system these principles - do not hold.
It operates according to the capitalist law of value, which inevitably assumes a
single price of commodities, irrespective of the quantity of labor and under what
conditions they are produced. There is not any positive basis to single out in this
respect international exchange, where the same phenomenon allegedly
acquires the character of a "non-equivalent" exchange. One needs only to put in
place of the aforecited groups of enterprises countries or group of countries with
homogeneous conditions of production in the given sector, and take the latter in
the scale of world-economy as a whole, and the same relationship steps again
in front of us, but only in a world scale. Marx himself compares in one place the
position of a more productive country on the world market with the position of a
manufacturer, using a new invention before it came into general use (Capital,
Vol. III, 1, p. 218). Why did he then still consider exchange-trade on the world
market to be unequal, arising from the unequal objective conditions of
production, a modification of the law of value? It seems to us that the only
explanation can be the fact, that Marx, speaking on international exchange,
continues to operate exclusively with the concept of national value. From the
point of view of national value, i.e. the value which forms the normal scale of
market measure in a given country, exchange of unequal amounts of labor is
really non-equivalent exchange, just as an entrepreneur, working with backward
means of production, feels low market prices as "non-equivalent" compensation
of the individual value, produced in his enterprise. But what is "non-equivalent"
from the national point of view is quite equivalent in terms of world value, which
must necessarily exist, once there exists a world market and world economy.
This second category - world value - lacks in Marxist analysis; after all he in
general addresses the question of external trade in passing, inasmuch as it is
necessary for an abstract analysis of capitalist "society." But this society Marx
takes always within the borders of a determined country, within the frame of
defined territory. "Simple average labour, it is true, varies in character
in different countries (my italics. I.D.) and at different cultural eras, but in a
particular society it is given.16 It's clear that under the guise of "determined
society" Marx understands society of defined countries and eras. What relates
to the category of simple average labor, applies also to socially necessary labor
time. This - is the labor time, necessary for the production of commodities in a
given society, i.e. in a given country. Consequently, also the category of value is
limited in Marx to the frame of national economy. True, he sometimes refers to
"single average world labor" (in the chapter on national differences of wages),
but he does not employ this unit systematically in the study of international
exchange.
So, modification of the law of value in international exchange is, from our point
of view, only a modification of the national law of value. The world law of value
by unequal exchange is not violated, but, on the contrary, finds in this inequality
its implementation. Marx points out in one place, that an industrial country can
issue on the world market more productive labor for more intensive labor only
for as long as competition does not force it to reduce the price to the real value,
and thereby restore the equivalence of the exchange. But if there would not be
a decrease of prices, competition is powerless to equalize the conditions of
production in different countries, which "persist in their unequalness." If the
world price on a given commodity matches, for example, with the national price
of the most productive country, which will be forced thus to sell commodities "at
value," then the other countries producing the same product in less favorable
conditions, will be forced to sell it below the individual - national value and
inequality remains as before. Competition can never lead it that the national
product of each country is sold on the world market at prices that coincide with
its actual national value. It would be possible only under the absurd assumption,
that commodities of the same kind have on the world market different prices
determined by country origin and its national value. But in this situation the
coincidence of world prices with national values would be bought at the
expense of the declination of these prices from the uniform value of the world
market. "It's as broad as it's long."
Exploitation of some countries by others takes place under all circumstances -
regardless of whether the products of more productive countries are sold at
their real value or above value. The excess, which the country gets from foreign
trade is usually referred to as super profit or surplus value. But from the point of
view of the world market and world market value, this super-value is the usual
value, born from laws of exchange economy.
The theory, according to which obtained additional profit from international
exchange without additional expenditure of labor is a perversion of the law of
value, looks in appearance more revolutionary. In fact: one country exploits the
other, violating the elementary law of the exchange of equivalents. It is - direct
robbery and fraud. In order to stop exploitation, it is necessary to recover in full
degree the law of value in international relations. But the whole course of our
discussion leads to the point that exploitation happens not through a violation of
the law of value in the international scale, but on the basis of this law, similar to
how exploitation of labor force by the capitalist is founded on this same law, and
not on fraud or trickery.
What really is violated in international exchange, is the law, of "national value" -
precisely because value acquires a more universal character, and on the world
market it finds its natural completion. Of course, with this is not denied the
presence of other forms of exploitation, based on true equivalence.

Thus, when speaking of external commodity circulation, the double character of

value should always be borne in mind, which here has an immeasurably greater
significance than the dual character of value on the domestic market. An
individual enterprise within the country makes up only a negligibly small fraction
of the national economy, and here we have all the time the operation of
statistical averages and the law of large numbers. On the world market each
country is "an integral part of the whole," and quantity here is transformed into
quality. World value carries here a slightly abstract character, if among with it is
not taken into account national value, representing itself a direct reality (insofar
as the "native economy" continues to exist, as domain, delimited from the world
economy).

On the other hand, it is necessary to constantly remember, that the analogy

between the situation of highly productive enterprises inside a country and
highly productive nations in the world economy does not eliminate the "small"
difference, that nations cannot as quickly catch up and overtake each other, as
this happens with individual enterprises. In this relation com. Bukharin is quite
right, who in polemic with the German communist Boris wrote, "You need to
have a truly crazy fantasy, in order to think that "today" one country, but
tomorrow another would change places on the line of technical structure.17"
Here are established relations of long-term inequality and exploitation, which by
itself represents enough grounds for the allocation of international exchange
into a particular subject of study of theoretical economy, just as is done with the
theory of ground rent.
All our considerations relate to the issue of comparative productivity of different
countries in one and the same sphere of production. The question about
equivalence of exchange is reduced in this case to the question about what
amount of the universal equivalent - money - different countries get in exchange
for their national labor, expended in the production of a given kind of
commodity. But money in international trade, even more than in domestic, is an
intermediary in the exchange of commodity for commodity, and in the end the
question on equivalence of international exchange is reduced to the question
about proportions, with which commodities of different kinds are exchanged for
each other, though in modern commerce one and the same product serves
most often as subject of both export and import simultaneously. In this consists
an additional difficulty of analysis: there where different spheres of labor are
compared with each other, the category of comparative productivity
becomes irrational, is turned into an imaginary magnitude. It is absurd to try to
invest concrete content into formulas, comparing productivity of the labor of
industry and agriculture, of coal and textile branches, etc. Similarly also the
concept of the type "objective conditions of production," "socially necessary
labor time" etc. lose every content, when heterogeneous branches of labor are
compared.
In some sense the mutual relation between two or several countries,
exchanging different kinds of products, is built on formulas, directly contrary to
the formulas, expressing the relation of competition on the world market of
countries, i.e. countries, producing for exchange one and the same product.
There where the matter is about an homogeneous sphere of production, one
country wins the more, the lower the productivity level of the other country. To
the contrary, if countries act as the representatives of heterogeneous areas of
production, each of them wins from exchange the more, the higher the level of
productivity is of the other countries, because it gets in this case more products
in exchange for its own, though also not a greater value.
In the first case the struggle goes to elimination. The strongest competitor is
committed to the full exclusion of the weaker, less productive. In the second
case too there is a struggle for the proportion of the exchange (each side seeks
to take more and to give less), but this struggle cannot put itself the goal of
mutual elimination, inasmuch as both parties mutually cause their existence, as
commodity-producers.
In the first case the more productive country aims to make production
impossible for other countries in the given sector, and to this end, renders
pressure on prices, etc. In the second case, on the contrary, every party strives
to such a proportion of exchange, where production of a product less
advantageous qua local conditions would be entirely moved to the other party.
This is, obviously, achieved the easier, the more labor of a foreign country in the
form of its specific products can be obtained per unit of national labor. Thus, the
exchange of products of a diverse kind has the characters of a struggle, and not
an harmony of interests, but this struggle is not to destruction, but to
subjugation and exploitation, a struggle for the "equivalent."

In the first case the method of low prices is applied, "export dumping," etc. In
the second case, by contrast, the course stays on the high prices. Typical
examples of such policy are cases where a loan, provided by some country on
the local monetary market, is conditioned by the obligation to spend it on the
purchase of commodities of the local origin, which fleece at exorbitant prices.
This is - the direct opposite of the system of export dumping, and moreover
such a one that gets dominant significance in modern international relations.
But, regardless of this opposition, both the competitive and "counterpartive"
(контрагентная) struggle represent one and the same economic phenomena.
Both one and the other express the aim to get a bigger amount of the others'
labor (in the form of commodities or money) in exchange for a smaller number
of one's own labor. And though between heterogeneous sectors one cannot
"build a bridge" for direct comparison of productivity, such a comparison is fully
feasible for different countries. One can compare coefficients of productivity of
individual branches, and from them make a summary index. One can compare
for this purpose the average organic composition of capital of different
countries. One can, finally, if it is a matter of two sectors of production,
absolutely linked each to their national territory, compare the rate of exchange
of the products of these sectors to the product of a third sector, represented in
both countries, and get a common measure for comparison. Thus our analysis,
which is confined to one and the same sphere of labor, can easily be extended
to all national economic units (целое).
So, in terms of exchange proportions, established on the world market, the
influence of objective factors of productivity wholly coincides (совпадает) with
the influence of subjective factors. The inequality of labor-exchange, - whether it
follows from dissimilar national quality of labor or from dissimilar natural and
technical conditions, - are alike determined by the laws of world value.
Nevertheless, there are good grounds upon which subjective factors of
inequality should be principally differentiated from the objective.

Under unequal exchange, following from objective conditions of production, one

country really assigns itself the labor of another nation. The expended labor is
similar, and at the same time a greater amount of labor is given for less. This is
an obvious fact of exploitation, though it takes place without violation of the laws
of value.
The position can be formulated as follows: under different foreign conditions of
productivity equal value (world value) is exchanged, not unequal amounts
of labor. A lesser amount of labor exchanges for a greater amount.
With a difference, following from unequal intensity of labor, equality is not
violated, neither in respect to value, nor in respect to the amount of labor. Here
are exchanged equal values (again, from the perspective of world value). Here
are exchanged also equal amounts of labor, if one provisionally converts more
intensive labor into units of less intensive, or vice versa. An hour of labor is
exchanged for two hours, because it really includes in itself a double amount of
labor, compared with the hour of a less intensive worker. The relation of
exploitation here at first hand lacks. But it must be constantly kept in mind that
more intensive labor contains in itself, besides an amount, also the element
of qualification, and a country has opportunity to rise above the level of other
countries by the qualification of its labor to the extent that it is provided with
advantageous conditions in the world market, arising from actual relations of
exploitation. This notes also Bukharin in his polemic with Boris.
In addition to different objective conditions of productivity and intensity of labor,
inasmuch as the matter is about international exchange, we have a further
sense from the special viewpoint of capitalist economy. There where a country
sells the products of its production at higher relative prices, thanks to technical
or natural advantages, "the rate of profit rises, because labour which has not
been paid as being of a higher quality is sold as such.18" With differences in
intensity of labor this excess boosting the rate of profit disappears, because the
more qualified or intensive labor force, is paid above average level. It needs
however to be kept in mind, that value, created by more intense labor, is not
found in any necessary relation to the salary, received by wage workers.
Finally, the category of labor intensity differs from labor productivity, like
abstract and concrete labor. One can determine the average intensity of the
whole national or world labor without regard to determined branches of
production. The average productivity of labor is a concrete concept: it has sense
only in application to a determined sphere of labor and measured by a number
of commodity units, i.e. again by concrete numbers.19
Our proposed addition to the theory of international exchange (the inclusion of
the category of world value) is the necessary logical culmination of the Marxist
representation about value. As known, for the classics the law of value existed
primarily as a law of exchange proportions. Only Marx enclosed in this category
an internal content, independent of the quantitative proportions of exchange,
gave it an independent existence. With this was resolved a very important
theoretical problem. It turned out, for example, possible to give value expression
to the whole national product. If this value was only an exchange proportion,
then the expression "the value of social product" would sound meaningless.
"The social total of exchange-values loses its nature of being exchange-value in
the same degree as it becomes the total of exchange-values. A, B, C, D, E, F
have exchange-value in so far as they are exchanged for each other. When
they have been exchanged, they are then all products for their consumers, their
purchasers. By exchanging hands they have ceased to be exchange-value. And
thereby the wealth of society, which is composed of exchangeable values, has
disappeared. The value of A is relative; it is its exchange relation to B, C, etc.
A+B has less exchange-value, because its exchange-value now exists only in
relation to C, D, E, F. But the total of A, B, C, D, E, F has no exchange-value at
all, because it expresses no relation. The total of commodities is not exchanged
for other commodities. Therefore the wealth of society, which consists of
exchange-values, has no exchange-value and is consequently not wealth.20"
Ricardo, thus, undoubtedly contradicted himself, when he spoke about value of
national product and about the influence on it of foreign trade. The contradiction
is resolved only with the Marxist conception of value, as an independent
category. But Marx operated primarily with the category of national value.
Therefore in regard to international exchange, he was in the situation, in which
Ricardo et al. were in regard to domestic exchange. On the world
market exchange proportions exist. From this viewpoint the sum of the value of
commodities, formed on the world market, represents such an imaginary
magnitude, which value of national product was in the classics. Only the
introduction into usage of the category of world value expels the representation
about value, as an exchange proportion from its last refuge. This is fully in line
with the words of Marx, that only on the world market the commodity deploys all
its specific properties, and money receives its completion in the form of world
money.
The concept of "world value" is not a vacuous abstraction, but a perfectly
tangible regulator of the world market. Once there exist world prices, once there
is world money, then necessarily must exist also what is represented in money
and prices: value. The category world value in modern economists operates
very often unconsciously, in particular in representatives of the Austrian school,
- when they are engaged in calculation and comparison of the national assets
and national income of different countries. Such calculations get their meaning
only from the fact that there exists a common unit of measurement - the unit of
world value (no matter, whether expressed in rubles, dollars or pounds), and
national income of each country, expressed with the help of this unit, is nothing
other than specific value, created by the annual labor of the workers of this
country, a determined fraction of the value of the entire world's annual product.
So, when it is said, that the U. States, having around 6-7% of the population of
the globe, creates an annual production, equal to 40% of world production, it is
quite obvious, that this calculation is made with the help of world units.
Otherwise no comparisons would be possible to make. In a national scale the
labor of a 115-million population equals value created by this labor, and nothing
more. Whereas the figure 40% shows a specific mass of the labor of these 115
million in the world economy. From it can be concluded, how many hours of
non-American labor are equal to one hour of labor of an American worker. Such
overwhelming preponderance cannot be explained, of course, only by superior
intensity of American labor. A much greater role here play technical and natural
factors of production, obviously involved in the determination of the specific
(national) value of the U. States.
Inclusion of the category of world value gives a clear answer to another
question, in respect to which there is a lot of confusion. Is the value of the
national product changed, when the amount of dead to living labor expended on
its production remains unchanged, through improvement of natural and
technical conditions and increase of productivity?

The usually accepted reading is that in such cases only the value of the
commodity units change (inversely proportional to the growth in productivity),
but the value of the entire national product remains unchanged. This, of course,
is wrong. With the growth of productivity, rather the productive forces of national
labor grow as does the created by it value, even though the number of workers,
the number of labor days and the subjective quality of labor has remained
unchanged. The reason - is the changed specific mass of this labor in the world
scale. Hence is observed often rapid growth of the national income in a
developing industrial country, surpassing the growth of employed labor forces
and the growth of fixed capital of the country. This is the result of growth in labor
productivity. If, for example, in a country the share increases the fertile land in
treatment or land productivity increases, then inasmuch as the price of
agricultural products is defined by world conditions, the value of agricultural
products increases, even assuming a reduction in the number of worker hands
in agriculture. That which is true for particular branches, is also true for an entire
national-economy.21
With growth of national labor productivity the value of the national product,
expressed in units of world value increases in proportion to the fraction, whose
numerator will be the coefficient of growth of national labor productivity, and the
denominator - the coefficient of received world price. This fraction is turned in
units, or differently stated; both coefficients are equalized only, when the rise of
productivity is distributed over the whole world economy and ceases to be
considered, "as an extensive quantity." Inasmuch as foreign trade promotes
growth of national labor productivity (concentration of production in most
profitable industries, expanding the scale of production under the influence of
the extension of the market, which entails an increase in productivity of every
larger production units, etc.), to that extent it contributes directly to an increase
 in the value of national product. Ricardo's opinion in this regard is undoubtedly
erroneous.
(Conclusion follows). See http://libcom.org/library/international-exchange-law-
value-conclusion-isaak-dashkovskij
Original title: Международный обмен и закон стоимости - И. Дашковский,
Под Знаменем Марксизма
Although Dashkosvkij was expelled from the party in September (he was a
member of the democratic centralism group, see his letter to Sapronov), the
editors of PZM in the December issue of 1927 still published his review of
'Classes and masses in England in their attitude to foreign trade' (Классы и
массы в Англии в их отношении к внешней торговле: к постановке вопроса,
191 p.), by political economist Ignaty Granat (of encyclopedia fame). Other
reviews by Dashkovskij include Wilhelm Röpke's Die Konjunktur (1922) and
John Hobson's Imperialism. There is a translation of his critique of Isaak Rubin's
Essays. Some more information on his life and work
here.http://libcom.org/forums/theory/forgotten-great-theoreticians-
02042010?page=1#comment-396669 He made 500 scientific publications. In
1956 he was rehabilitated. He died in 1972. Besides the fact that he translated
Roy Harrod's 'Towards a Dynamic Economics' there is nothing known about
economic writings in this period.
 1.Editorial note. The editors do not share some of the positions of the article
of com. Dashkovskij. (In 1925 Dashkovskij had written a book 'on market and
price in the present economy', which apparently caused a stir. At the time he
was criticized by a certain Glushkov (Глушков). A Russian
Stalinist websiteattacks Dashkovskij as if he were an example of market
advocacy.)
 2.[The second point is discussed in more detail in the concluding article -
translator's note.]
 3.Capital, Vol. 1, p. 618.
 4.Marx,[url= http://www.marxists.org/archive/marx/works/1863/theories-
surplus-value/ch17.htm] Theories, vol. II, p. 151-152.[/url]
 5.Ibid., p. 149.
 6.Marx u. Engels, Briefwechsel, vol. III, p. 90.
 7.Mary Smith-Faulkner, Principles of statistical methodology, part II, p. 78
 8.Capital, Vol. 1, p. 566.
 9.Capital, Vol. I, p. 566.
 10.Theories of Surplus-Value, Vol. III, p. 195-196.
 11.Capital, v. I, p. 5-6.
 12.The interplay which exists between the character of labor and the
objective conditions of production in the sense of determining magnitude of
value, can be established also between individual elements with the same
objective conditions. Good machine with bad quality of raw materials,
excellent equipment for farming with bad soil, etc. call forth fluctuation of the
magnitude of specific value to one or another side under unchanged
expenditure of labor forces. Pluses and minuses may also mutually
equilibrate. So, for example, in separate branches of production, connected
with organic processes (e.g., agricultural) the low technique of a backward
country can be compensated by natural fertility of the soil.
 13.[...тогда как издержки производства множественны, так сказать, по
заданию, в силу множественности самих хозяйствующих суб'ектов при
 относительности единства для них рыночных цен] "Economic Journal,"
No. 1, 1923, Struve, Scientific map of the economic world and the concept of
equilibrium, p. 24. [Струве П.Б. Научная картина экономического мира и
понятие "равновесия"]
 14.Capital, vol. III, 2, p. 200-201.
 15.Capital, vol. III, 1, p. 156-157.
 16.Capital, vol.1, p.11.
 17.(менялись местами по линии технической структуры) "Bolshevik," no.
5-6, June 1924, p. 19.
 18.Capital, Vol. III, 1, p, 218.
 19.However, some authors consider as unreal also the category of average
labor, insofar as for the determination of this average magnitude it is first
necessary to perform a leveling of technical and natural conditions of labor
(see, for example, Lev [Leo von] Buch, Productivity and intensity of labor,
value and price of commodities, p. 164.). This objection, however, concerns
only practical difficulties of calculation and does not have principled
significance.
 20.Theories of Surplus Value, Vol. I, p. 205.
 21.With this is explained the sharply increased fluctuation of profitability of
agriculture in the process of expansion of world-economic ties. The
fluctuation of harvest, which in conditions of a limited national market is
compensated by internal fluctuation of grain prices, in conditions of the world
market is not compensated in a sufficient degree. Value of the whole
agricultural product, which in an "isolated country" remained a more or less
constant magnitude, becomes a variable magnitude, when the national
economy forms a component part of world economy.
International exchange and the law of value
(conclusion) - Isaak Dashkovskij

Dashkovskij wrote a 3-article series on international trade. The present article is the
conclusion. Under the Banner of Marxism, 59-91, no. 5, 1927. See also the translation
of the preceding part (no. 4, 1927).

1 Money and international commodity circulation.

The theory of international trade and world value contributes some additional
features also to the problem of money. To the degree that a product is turned
into a commodity, accidental equivalents are turned into an universal
equivalent, and the latter into money. And since a product gets full development
into the commodity form on the world market, where value gets its finished
expression in world value, so also developed monetary exchange finds its
natural scope there where money is turned into world money, dropping its
"national uniform." In domestic trade precious metals, having passed a number
of stages of development, function in a determined purely-local form, in the
quality of standard of price, coin and currency, as "token of value" by fulfilling
the function of means of circulation. Crossing the domestic sphere of trade,
taking on itself the role of world money, gold (and silver) returns to the starting
point of its development, coming out again, as a direct commodity, an
amorphous crude metal, the value of which is embodied in its weight.
We are here not interested in the details concerning the functions of precious
metals as world money. We view them here only in one function - in the quality
as universal measure of value or the material embodiment of labor time, with
the help of which commodity value is compared. We herewith leave aside also
the question about inter-currency courses and their fluctuations. "National
money discards its local character in the capacity of universal money; one
national currency is expressed in another, and thus all of them are reduced to
their content of gold or silver.2"
Consequently, we start from the assumption that the exchange ratio of the
various national currencies coincides exactly with the ratio of monetary parities,
or - what is the same - that in all world commodity circulation there figures only
one "currency" - gold in its immediate natural form or formlessness. The
question is reduced to the clarification of conditions determining the value of this
"currency" in the national and international scale. Let's add that we consider
gold here only in its role as universal equivalent - money.

The value of money is often understood in two different senses: as ratio of

money to commodities (or, in today's established terminology, - as the
purchasing power of money), and as value in the proper sense, taken without
relation to the value of any sort of other commodities, but solely as the
embodiment of the amount of socially necessary labor expended on the
production of money. Marx everywhere strictly distinguished these two
conceptions.
If money is considered by us, as world-money, it must represent itself,
obviously, also world value, as expression of universal world labor. This world
value of money, precisely because it is global, must be identical for all
countries. In the opposite case money could not serve as an universal measure.
With the help of world-money the product of every single country is subjected to
a social market account, and the labor spent on its production is brought to the
scale of world labor. Marx emphasizes this identical value of money in his
polemic with Ricardo, where he indicates the inability to explain the international
movement of price and the redistribution of precious metals in terms of the
quantity theory: "In what way is the appropriate level upset, i.e. in what way is
the international equilibrium of currencies upset, or in what way does money
cease to have the same value in all countries, or finally, in what way does it
cease to have its specific value in each country?3"
But the world market turns the variety of national values into world value, the
national expenditures of socially necessary labor into world socially necessary
labor - through the establishment among different countries of a peculiar
economic hierarchy. We have seen how a lower amount of labor of one country
can be exchanged for a larger amount of labor of another country. Which
expression does this process give the monetary form of exchange? Obviously,
an identical amount of labor, expended in different countries, should find its
expression in dissimilar amounts of world money, dissimilar in the degree to
which these equal national labor expenditures are considered
as unequalamounts of world labor. In other words, money, having a single world
value in the quality as embodiment of world labor, has at the same time
a dissimilar national value, as exponent of national labor expenditure. For the
attainment of one and the same sum of money in different countries a dissimilar
amount of labor must be expended.
"In proportion as capitalist production is developed in a country, in the same
proportion do the national intensity and productivity of labour there rise above
the international level... The different quantities of commodities of the same
kind, produced in different countries in the same working-time, have, therefore,
unequal international values, which are expressed in different prices, i.e., in
sums of money varying according to international values. The relative value of
money will, therefore, be less in the nation with more developed capitalist mode
of production than in the nation with less developed.4" Elsewhere, analyzing the
question of the causes of the high cost of agricultural products in the rich
industrial countries, Marx also mentions the dissimilar value of money. "The
lower value of money in the wealthier countries, i.e., the low relative production
costs of money in the wealthier countries, does not enter into it at all. For the
question is, why it does not affect their industrial products in competition with
poorer countries when it does affect their agricultural products.5"
The unequal value of money, therefore, has in that statement not any relation to
the phenomenon of a different purchasing power of money in various countries,
which is connected with the laws of fluctuation of the international level of price.
On the contrary, even assuming an absolutely identical level of commodity
prices worldwide, the value of money will be different from the viewpoint of the
labor expenditure which the extraction of money costs in each individual
country, from the viewpoint of national value. This inequality of the relative value
of money is derived precisely from the fact that money - is an identical measure,
applied to dissimilar types of labor. This can be understood with an analogy to
another form of inequality, which Marx describes in his "on the Gotha program."

"Equal right is still confined in the bourgeois frame. The right of the producers
is proportional to the labor they supply; the equality consists in the fact that
measurement is made with an equal standard - labor. But one man is superior
to another physically, or mentally, and supplies more labor in the same time, or
can labor for a longer time; and labor, to serve as a measure, must be defined
by its duration or intensity, otherwise it ceases to be a standard of
measurement. This equal right is an unequal right for unequal labor. It
recognizes no class differences, because everyone is only a worker like
everyone else; but it tacitly recognizes unequal individual endowment, and thus
productive capacity, as a natural privilege. It is therefore in its content a right of
inequality, like every right. Right, by its very nature, can consist only in the
application of an equal standard; but unequal individuals (and they would not be
different individuals if they were not unequal) are measurable only by an equal
standard insofar as they are brought under an equal point of view, are taken
from one definite side only, for instance, in the present case, are regarded [ionly
as workers and nothing more is seen in them, everything else being ignored.6"
It suffices to replace here "equal right" with the concept of "equal monetary
measure," and to put "national economy" in place of "individuals," - and we get
the exact formulation of the dialectical turn of a single world monetary value into
various relative or national values. In essence here happens the same which
daily and hourly can be observed within the national economy, where equal
labor of different individuals is realized in different sums of money only because
it proves to be unequal under its discount in units of socially necessary labor.
The single amendment which should be made in the provided Marx formulation
and which derives from our own preceding discussion, consists only of the point
that equal expenditure of individual labor may prove to be unequal not only in
intensity, but also in productivity: the results will in general and as a whole be
similar, insofar as there will be no possibility of all workers to produce in
completely similar technical and natural conditions of production. The same
applies to a national economy.7
The value of gold, national or international, exists independently from the level
of commodity prices. It is defined, like also the value of every commodity is, by
the labor time required for production. But some circumstances complicate the
matter. First of all, by far not everywhere gold-bearing land exists, not
everywhere, consequently, can one directly mine gold. Consequently, not
everywhere the possibility exists to determine the labor time required for the
production of gold. Secondly, in world trade the value of gold itself also cannot
be determined, it is known by implication through commodity prices, inasmuch
as gold acts as the universal equivalent, but prices always are relative figures:
they express the value of gold in relation to the value of commodities. Thus,
although we also aim under analysis of the value of money, to circumvent the
question of its purchasing power, as secondary for our question, practically we
only through this purchasing power can reach to the root of things - to the
nature of money itself.
Inasmuch as gold is the selected universal equivalent, the labor time, spent on
its production, itself is directly universal labor time. World value is expressed in
units of gold, which represents from itself the materialized labor time of gold
producers. The units of labor time of these manufacturers serve thus as the
scale of world values. The world value of gold is thus the amount of labor spent
on its actual production. Here, of course, is taken into account the socially
necessary labor with which in general the value of products of the mining
industry is measured. This labor or the corresponding to it labor time is the
world scale, which may perform its function with equal success entirely
regardless of its own actual magnitude. Whether an ounce of gold represents 1
hour or one day of labor - this does not at all hinder it from embodying the
universal measure. But what determines the value of gold in those countries
that do not have proper mines? Here only an account by implication is possible.
"It is evident..., that in countries where gold and silver are produced, a definite
amount of labour-time is directly incorporated in a definite quantity of gold and
silver, whereas countries which produce no gold and silver arrive at the same
result in a roundabout way, by direct or indirect exchange of their home
products, i.e., of a definite portion of their average national labour, for a definite
quantity of labour-time embodied in the gold and silver of countries that possess
mines. 8"
But here comes into force the law of value, according to which a lesser amount
of labor can be traded for a larger amount. Gold bullion, which on the site of its
production represents 5 hours of labor can be exchanged for a commodity
which is produced in another country for only 2 hours. It will in this latter country
be regarded precisely, as a product of two-hour labor, although it cost five
hours. Consequently, gold, depending on one or other proportion of the
exchange, will represent in different countries different labor times, although
actually it is produced in a determined time. It will have a dissimilar relative
value. But also its absolute value, expressed in units of world labor time, will not
coincide with the actually expended time of its production. If the average
national labor in countries that produce gold, is half below in its intensity
compared to world labor, then it will be considered only in half of its actual
magnitude, and, vice versa, consequently, the labor time, which gold represents
as world commodity or universal equivalent, is the time, actually spent on its
extraction, but accounted with world units of labor time. This accounting
happens "behind the back of the producers" on the basis of the exchange
proportions between commodities and gold, which are established at the place
of contact of mined gold with world commodity, and then also further, in world
commodity circulation. "At the place where gold is produced, it is a commodity
like any other commodity. Its relative value and that of iron or of any other
commodity is there reflected in the quantities in which they are exchanged for
one another. But this transaction is presupposed in the process of circulation;
the value of gold is already given in the prices of commodities.9"
"In addition to particular movements of world money which flows backwards and
forwards between national spheres of circulation, there is a general movement
of world money; the points of departure being the sources of production, from
which gold and silver flow in various directions to all the markets of the world.
Thus gold and silver as commodities enter the sphere of world circulation, and
in proportion to the labour-time contained in them they are exchanged for
commodity equivalents before reaching the area of domestic circulation. They
accordingly already have a definite value when they turn up in these areas.
Their relative value on the world market is therefore uniformly affected by every
fall or rise in their costs of production, and is quite independent of the degree to
which gold or silver is absorbed by the various national spheres of
circulation.10"
"Just as in theory gold and silver as money are universal commodities, so world
money is the appropriate form of existence of the universal commodity. In the
same proportion as all commodities are exchanged for gold and silver, these
become the transmuted form of all commodities and hence universally
exchangeable commodities. They are realised as embodiments of universal
labour-time in the degree of the development of the series of particular
equivalents, constituting their spheres of exchange. Because the exchange-
value of commodities is universally developed in international circulation, it
appears transformed into gold and silver as international money. 11"
"As for securing the money materials - gold and silver - from their sources of
production, this resolves itself into a direct exchange of commodities, an
exchange of gold and silver as commodities for other commodities. Hence, it is
itself as much a phase of the exchange of commodities as the securing of iron
or other metals. However, so far as the movement of precious metals on the
world-market is concerned (we here leave aside movements expressing the
transfer of capital by loans - a type of transfer which also obtains in the shape of
commodity-capital), it is quite as much determined by the international
exchange of commodities, as the movement of money as a national means of
purchase and payment is determined by the exchange of commodities in the
home market. The inflow and outflow of precious metals from one national
sphere of circulation to another, inasmuch as this is caused merely by a
depreciation of the national currency, or by a double standard, are alien to
money circulation as such and merely represent corrections of deviations
brought about arbitrarily by state decrees.12
These statements allow the establishment of a general position, concerning
money circulation in international trade. Gold in world trade has two lines of
movement (not counting the movement of gold under the influence of
fluctuations of exchange courses). In the location of extraction, it exchanges
directly for other commodities. Hereafter it is distributed to various countries and
participates in international trade, as ordinary means of circulation, i.e. as the
result of the movement of commodities. In this second movement gold
participates already with previously given prices, because before direct
exchange of gold for a commodity there already exists a price of the commodity
and in the price of commodities the value of gold is presented. Where is the
original value of gold established? At its source where the quantitative
proportion first is set of the direct exchange of commodities for gold, which in
this case is not yet money, but a simple commodity like any other metal.
Countries that do not have their own sources of production of gold can only
through these proportions set its value, which will not be equal to the labor time
spent in mining gold, but the labor time spent on production of the commodities
exchanged for gold at its source. Since these commodities are already found
with a determined value relation to the rest of the commodities, circulating on
the world market, gold thereby becomes the universal measure and enters
further trade with a definite value, of a determined initial proportion, in which it is
exchanged for commodities. The problem lies in the establishment of this initial
proportion. If gold is mined only in country A and nowhere else, if the
exchanged for it commodity is produced in country B and again nowhere else,
then it's obvious that the comparative production costs of one and the other
cannot be established, because it is unknown, what the relation of labor time A
and B is. The latter can be set only from the very proportion of exchange, which,
obviously, is determined not by equality of labor time, but by other conditions:
namely, by the reciprocal demand for gold and commodity. If country A has the
ability to produce along with gold also other commodities, then the correlating
time of production of one and the other gives already a foothold for the
establishment of the limit below which cannot fall the awarded commodity value
of gold. In the other situation it refrains from exchange and itself begins to
produce the for itself necessary commodities. The upper limit on the foundation
of these data cannot be established. It depends entirely on the intensity of
demand for gold from the side of other nations. But competition of several gold-
mining countries establishes also an upper limit.
In any case it is clear that the labor time actually spent on gold mining in a given
country must be turned into world socially necessary time, determined by the
conditions of gold production in all countries, and it can become the universal
measure and representative of world labor, only by entering into contact with
the diverse world of commodities, with the result that it begins to represent not
its own "gold" labor time, but labor time in general, deprived of any concretely
shaped particular spheres of production. Here occurs not only a qualitative but
also a quantitative transformation: the same sum of gold begins to represent
an other amount of world labor time, not that which was directly expended on it.
Thus, one can establish, at least, four different meanings of the expression:
gold is the incarnation of universal labor:
1. A pound of gold represents the labor time actually spent on its extraction
under average technical conditions in a given country, i.e., "national" socially
necessary labor time (let's recall that gold belongs to the category of
commodities whose value is determined by the worst conditions of production.
But this does not mean - under the worst mining technology. The technology
must meet general requirements).
2. A pound of gold itself represents the world labor time actually spent on its
extraction, i.e., world socially necessary labor time, expended in all countries
where gold in general can be mined. It's completely obvious, that these two
figures - national and the world labor time - do not coincide.
3. A pound of gold itself represents a determined amount of world labor time in
general, without regard to the areas where it is expended. It itself is this general
labor time also in those countries which do not produce gold at all. Again it is
completely obvious that this last magnitude does not imperatively have to
coincide with the magnitude appearing in the 2nd point. Let's suppose that
world socially necessary labor time for the extraction of one pound of gold is a
month of labor. But if for some or other reason a proportion is established in the
market in which a pound of gold at an average is exchanged for goods, worth
20 days of labor, it is evident that in global trade gold, as the universal
equivalent, will represent the second rather than the first magnitude. True, such
a variation would mean that the exchange of commodities for gold in world trade
does not happen on equivalent principles. However such non-equivalence in
relation to gold is quite possible, although not for the reason that annual gold
production, in relation to which socially necessary labor time is set, constitutes a
smaller magnitude compared to the world stock of gold, mined in earlier ages.
It's understood, that an indefinitely prolonged time of this non-equivalence
cannot exist. If the annual production of gold is compared to the stock, then the
production of ten years for example already is impressive enough to have a
corresponding impact, not to mention that proportions of trade may experience
the strongest fluctuations, even under small changes of the amounts of
commodities, entering into trade. In any case, it was important for us to note
that the magnitude of world labor time, taken in the sense of the 2nd and 3rd
point, might not coincide.
4. Finally, the same pound of gold, in contact with the commodity world in each
country, will itself again depict different amounts of national labor time for the
reasons stated above. It can in the U. States, itself represent 10 days of labor,
in England - 20, in China - 100, etc., entirely apart from national differences in
commodity prices and from the fluctuation of exchange courses, but solely by
virtue of differences in productivity of national labor.
On mobility and transfer of productive forces.
The mobility of capital and labor, in general the productive forces in the world
economy, as was said earlier, is a function of the development of these
productive forces, a function of the development of capitalism. One must
distinguish between mobility in the technical and the economic sense. Means of
production or labor forces can be very easily transferred in space, but if there
are no economic incentives to transfer them, they will remain in place, will be
"immobile." On the other hand, the means of production may in their material
form prove little mobile, but if economic considerations make their movement
profitable, then technical obstacles recede into the background. The choice of
place, of "standard" in different historical ages is determined by different
circumstances, of a technical as well as of an economic order. In the epoch of
capitalism the "rational standard" (Sombart's terminology) dominates, which
focuses either on qualitative advantages of a given space before others, or on
advantages in the economic sense of production costs.13 The latter orientation
is the most universal under capitalism. It was subjected to detailed investigation
in the well-known works of Al. Weber and his school on the industrial standard.
In it is expressed most clearly the domination of economic over technical
principles.
But it would be wrong to assert that the development of capitalism in all its
aspects contributes to the growth of the mobility of productive forces. It raises
also new obstacles to such movement, which, however, are unable to prevent
the deployment of the main trends. So, the concentration of production, the
increasing organic composition of capital, the growth of the share of fixed
capital compared with circulating, etc. - all this seems to increase the material
mass of productive forces, which is attached to place and possesses a very
large inertia. In particular for rail transport, i.e. exactly for that industry sector
whose whole purpose consists in movement, the huge influence of fixed capital
is characteristic, making absolutely impossible its transfer from place to place.
One can even establish such a law: the less mobile the capital of transport, the
greater mobility it imparts to the national-economic whole.14 Now then, does
not this increase in fixed capital erect such obstacles, which, despite the
convergence of the levels of capitalist development in different countries, still
impede the international transfer of productive forces, giving thereby a special
color to international exchange? This question must be answered in the
negative. First, the large inertia of fixed capital makes it immobile not only in the
international, but also in the domestic economy. There exists no difference
between the movement of capitals from one branch to another within a country
and their movement from one country to another - from the point of view of
bulkiness of the object of transfer. Secondly, the mere fact of an increase of the
share of fixed capital in the structure of the undertakings' productive resources
is not yet indicative of an increasing inertia of the productive forces of society.
After all, trans-located must not be those means of production, which already
appear in the form of factories, railways, etc., but the newly produced means of
production. The movement of capital is not a movement of finished businesses,
but the movement of products of the production of these businesses having a
form suitable for the organization of new production. Thus, the question boils
down to whether the mass of fixed capital increases by comparison with the
annual volume of production or not. An exaggeration of the role of this fixed
portion of capital has led economists of an earlier capitalist age to the
conclusion that capital of a country in general cannot be exported independently
from the movement of people. Here is what in his time, for example, Hodgskin
wrote. "It must be quite plain that the greater part of the commodities
constituting the capital of a country, cannot, be removed. The most common
instruments and tools are useless without the skillful hands, and many of them
are connected with fixed spots or buildings, nearly as immovable as the soil
itself. They may be destroyed - not carried away. The improvements of the soil,
the draining and manuring of it have already been made. Other labourers may
make them useless, but neither they nor the benefit that confer on us, can be
transported to France or America. Bridges, roads, and canals, may be
neglected or suffered to fall into ruin, or they may be broken up; but no one will
be at the trouble of shipping the materials off to Spain or to Brazile... Except the
acquired and useful abilities of the labourers of a society, and what they can
carry with them - for there are some instruments, such as ships, easily
transportable - no part of the capital of a country can be either driven or sent
away. 15
The considerations of Hodgskin bear the stamp of his era - the era when the
export of capital had not yet acquired decisive significance in the economy of
the advanced countries. His error is completely obvious. First of all, he confuses
the material form of fixed capital with its value. The first, of course, cannot be
exported from the country (equally like the movement of any significant mass
inside the country), but if the value of fixed capital is not repaid in the form of
regular expenditure for the conservation of it in good condition, if the
depreciation funds take an other material form, more transportable and easily
exportable abroad, then this in essence also is export of capital abroad,
moreover precisely that capital, which seemed stuck at home and "intertwined"
with the native soil.
But, in addition, Hodgskin does not take into account net production, which a
country produces each year and which for a greater degree consists of
productive resources, the greater the dimension of fixed capital is, figuring in the
shape of the finished productive apparatus of the country. And these resources
of production stick already with nothing to the ground, and their movement is
much more due to economic than to physical laws. This net production in the
course of a short period provides material values that exceed the whole vast
mechanism of production accumulated by society from past centuries. Apropos
this, Marx, evidently, with full sympathy quotes the following excerpt from
Thompson: "It is little thought, by most persons not at all suspected, how very
small a proportion, either in extent or influence, the actual accumulations of
society bear to human productive powers, even to the ordinary consumption of
a few years of a single generation. The reason is obvious; but the effect very
pernicious. The wealth that is annually consumed, disappearing with its
consumption, is seen but for a moment, and makes no impression but during
the act of enjoyment or use. But that part of wealth which is of slow
consumption, furniture, machinery, buildings, from childhood to old age stand
out before the eye, the durable monuments of human exertion. By means of the
possession of this fixed, permanent, or slowly consumed, part of national
wealth, of the land and materials to work upon, the tools to work with, the
houses to shelter whilst working, the holders of these articles command for their
own benefit the yearly productive powers of all the really efficient productive
labourers of society, though these articles may bear ever so small a proportion
to the recurring products of that labour.16"
Of course, at the time of Thompson, these "durable monuments of human
exertion" were many times smaller than in our time. And indeed also the
annually created new values were insignificant compared with the current
dimension. The ratio of annual production to accumulated capital in our time is
at the least not lower, than 50-100 years ago, though the exact statistics in this
area are not available for past periods. Annual production of the most important
countries makes up in our time 15-20% relative to the value of the national
property of each country. But in the sum of this property goes land. Excluding
land, annual production makes up relative to property not less than 35-45%. If
we take the ratio of these products only to fixed capital, then it in any case will
not be a lower percentage. In other words: annual production amounts to a
magnitude equal in value of the whole productive apparatus of society. Just in
industry, for example, products exceed the value of fixed capital on average
1.5-1.6 times. This is the ratio - in value. The ratio in physical volumes is even
more, because value of fixed capital is calculated under old rates of labor
productivity, which progresses each year.17 How quickly "monuments of human
exertion" lose significance and with what an incredible pace of change the
tempo of development of productive forces alters the economic rapport of
wealthy countries, is shown by the fact of the change of roles of America and
Europe in the world economy, which occurred in the length of some one and a
half - two decades.
Similar rearrangements occurred between the most important countries also
before the war. So, according to R. Liefmann's testimony, "the increase of
wealth in the last decade before the war happened in Germany faster than
those nations that had previously had a significant advantage in wealth - in
England, France, Holland, and the same - within the limits of their productive
capacity - is true in relation of Italy, Switzerland, Scandinavian countries. 18"
We will not dwell here on the ground of these rearrangements, - to this subject
we will return, - but confine here to an observation of facts. The wealth of
modern nations - from the point of view of its material volume - has no, in Marx's
expression - "old date." "It has always been since yesterday." («старой даты».
«Оно всегда со вчерашнего дня») But thence also the astonishing growth of
its mobility, despite the heaviness and bulkiness of its modern form. The
progress of transport overcomes any mass and form, and makes it possible to
move whole "factories," like "toys for a Christmas tree." The cheapened traffic in
much greater degree is favorable to the movement of productive resources,
than finished goods. Thus, for example, transportation of raw materials with the
advent of railroads roads, is facilitated to a greater degree than the transport of
fabricates.19
Generally speaking, if one takes the concept of "capital" in its technical
sense(which, in terms of the problem of material transfer is quite allowable), -
then for the contemporary stage in the development of international relations
the contrast of commodity circulation and capital circulation appears conditional
in the highest degree. What is the kind of trade of commodities, if the majority of
these commodities are classified in the category of means of production? It is
the reallocation of productive forces. If England exports machines to India, then
even in the case when the value of these machines is fully bought with money
or commodities, i.e., even in the case when in the economic sense England
does not export capital to India, machines all the same are moved to a new
place and moved with them a part of the productive forces to an alien country. It
promotes industrialization of the backward country regardless of whether it is
sold with credit or paid hard cash, of whether with its help is organized
production of the undertaking capitalist, who lives in England or of the native
industrialist. All these differences become, it's understood, of enormous
importance from other points of view, that we here leave aside. From the point
of view, which specifically interests us here - the mobility, the transfer of means
of production, - they are inessential.
Not all commodity export is export of capital. But all capital export must take the
form of commodity circulation; even when exported capital figures in the form
of money, it is imported in the country of destination in the form of commodities,
purchased at different locations of the world market, decreasing in
corresponding magnitude commodity import of countries which export capital.
Every capital, imported to any sort of country, is beholden in its origin
to commodity trade 20. Therefore it is entirely absurd to imagine, as was
sometimes done by the classics, the interaction between two countries as a
relation between two with each other trading "economic bodies" ("trading body",
to use the terminology of Jevons), whose production relations don't undergo
change. Where there exists trade, where objects of trade include means of
production, in particular instruments of production, there will inevitably occur
also transfer of productive forces, even when not any migration of capital
occurs.
However, foreign trade inevitably generates also capital export in the true sense
of the word. Between one and the other form of economic relation there exist a
close interaction. Schilder showed with the example of England, with what
regularity there the rise and fall of commodity export alternates with the fall and
rise of capital export. Any hitch in the sale of commodities abroad causes a
growth of capital export, in other words, increases the mass of commodities
sold with credit, either as monetary loans provided to foreign countries, with the
help of which they acquire British goods, or, finally, the exportation abroad of
equipment, etc. for the direct organization of industrial enterprises of British
undertakers. Purchase of securities is itself an externally similar economic
phenomena. In general "the interdependence of exported commerce and
invested capital abroad constitutes a regulatory mechanism, that works like the
mechanism based on the interdependence of exchange course and foreign
commerce, though also slower. 21" Another form of interdependence between
trade of commodities and capital O. Bauer notes. "Capitalist economic policy, -
he writes, - seeks areas of investing capital and markets for the sale of its
commodities. But we must understand that these are not different objectives,
but basically one and the same objective. When I with idle capital open a new
area of investment..., I create with this a market for commodities: because it is
not idle money capital, but productive capital which buys commodities... And
vice versa. If I open a new sales market for commodities, the turnover time of
capital is reduced, profits increase, a strong demand for capital arises, idle
capital pours into production. When I open a new market for goods, I deliver
with this as well for capital a new investment area. 22"
We left aside here the question about what kind of impact on the export capital,
etc. the different rate of profit in different countries has, - i.e. the most influential
reason of capital export. To this theme we come back later. But it is all the more
conclusive that, even apart from the rate of profit, we inevitable arrive to the
conclusion about the necessity of the turn of commodity trade into migration of
capital, about the transfer of productive forces between countries as a result of
simple commodity trade between them. The fantasy about countries, whose
productive forces are attached to location, and which communicate with each
other only through trade in commodities, has no sense even as a fantasy,
because the lack of an inner logic.
Transfer of productive forces includes itself not only the migration of idle capital,
but also of people. It would be, however, a gross mistake to think, that between
export of capital and people there must exist an exact correspondence, as
Hodgskin thought. This is unthinkable already for the simple reason that things
and people possess completely different transportability. Differences of
language, culture, political institution, etc. have especially relation to people, but
not to things. That is why there is such a paradoxical at first sight phenomenon
that "a man is of all sorts of luggage the most difficult to be transported" (Ad.
Smith), although he at the same time possesses the greatest mobility, as living
organism. In relation to capitalists the case is more simple. Export of capital, in
the sense, which to it is usually given, is such an exportation of capital, in which
the capitalist himself remains in his own homeland. If together with capital also
the capitalist moves, then this capital is entirely lost to the country where he
departs, and then usually is spoken already not about export, but the relocation
of capital. Although between these two forms the difference is not so great in
essence, as may appear, although the flexible system of funds of capitalism has
created a whole series of transitions between them, nevertheless this distinction
suggests that the capitalists, exporting capital, usually do not follow it on its
heels. This is particularly characteristic, inasmuch as the case is about pre-war
times - for French and English forms of export. The Germans for the most part
accompanied their capital in its wanderings.
As for the labor forces, which are an integral part of the productive forces, then
also here not any correspondence between export of capital and emigration of
workers can be established. For the present one can establish sooner
the opposite tendency. Countries, exporting capital, together with
this import labor forces (U. States - the most prominent example). And,
conversely, labor forces emigrate from countries into which foreign capital pours
(heavily populated countries, India, China, etc. in pre-war time Russia and in
general the countries of Eastern Europe were consumers of foreign capital and
together with this suppliers of labor forces on the world market). Worker
emigration from the advanced industrial countries, exporting capital, took place
only in the course of the first three quarters of the 19th century, and since then
sharply declined. But also then there didn't existed any proportion between the
import of workers and export of capital. "English additional capital, - Marx writes,
- annually transported abroad to be put out at interest is in much greater
proportion to the annual accumulation than the yearly emigration is to the yearly
increase of population... the greater part of the yearly accruing surplus-product,
embezzled, because abstracted without return of an equivalent, from the
English labourer, is thus used as capital, not in England, but in foreign
countries. 23
We noted that the most characteristic for the contemporary period is the
movement of capital and labor forces not in one and the same, but in opposite
directions. Capital seeks the places of conglomeration of labor force, labor force
seeks places of conglomeration of capital. The labor force goes to the place
from where capital is exported, because, despite the outflow of capital, in the
country of export the manpower lacks to set in motion the remaining capital.
Capital goes to the place from where labor force is emigrating, because, despite
that emigration, in the country there remains an huge surplus of workers, for
who the means of production lack, i.e. capital. Of course, here is sketched only
a scheme, that in reality is modified under the influence of a variety of
circumstances. Thus, for example, export of capital to a sparsely populated
countries (Canada, Australia, etc.) is accompanied simultaneously also by labor
emigration to these countries.

On the other hand, excessive abundance in the country of labor forces and the
resulting extreme cheapness of workers may become an obstacle to import into
this country capital in the form of technical means of modern large industry.
Machines, applied, for example, in European and American industry, can by far
not always enter in China or India. The cheapness of workers makes for
capitalists unprofitable the mechanization of production. In such cases, sooner
is spoken of import of capitalism than of import of capital into these backward
countries. The function of the bourgeoisie of ruling countries consists in that it
organizes capitalist production in colonies on the basis of those means of
production, that it finds in ready form, and not with the help of the productive
forces of the more developed industrial countries. This happens not only with
machines. The same reason prevents, e.g., the penetration of artificial fertilizers
in Chinese agriculture, which with much more success uses human excrement,
though at the same time also absorbs with this a countless amount of human
labor 24.
With this counter (встречном) movement the means of production (capital)
exhibit much greater mobility than labor forces, which in a more strong degree
are localized. This raises the so called "worker orientation" in modern industry in
the terminology of Al. Weber, i.e., the tendency of production to concentrate in
places of a conglomeration of labor forces, the tendency, to overcome the raw
material as well as the fuel and consumer orientation. Thus, the considerations
of the classical school have much more foundation in relation to labor than
to capital (which was also noted by Edgeworth).
There is no doubt that also the mobility of labor force is dependent on the level
of cultural and economic development. But here it is much more difficult to
reveal the basic tendency. In the analysis of the conditions of capital mobility we
have shown that the development of capitalism, destroying some obstacles of
movement, simultaneously erects other obstacles, under which the first
tendency invariably prevails. As for labor forces, then here such undisputed
conclusions cannot be obtained. Inasmuch as labor force experiences attraction
to the side of industrial centers, the strength of attraction should be proportional
to the magnitude of the attraction of the centers. Concentration and
centralization of industry should therefore cause a more animated movement of
workers from the periphery - an inflow from village to city, from agrarian to
industrial countries is a clear illustration of this pattern. In the same direction
operates the improvement of means of transport, the improvement of forms of
communication (telegraph, telephone, radio, etc.), creating the famous "unity of
the workers' markets" like the unity of the capital market or exchange courses,
although in incomparably lesser degree, inasmuch as the value of labor forces
yields a far less degree of unification and leveling, than the rate of profit or the
course of exchange. Finally, the progressive automation and mechanization of
production, accompanied by deskilling of many professions, likewise facilitates
the movement of labor forces from one to another sector on the international, as
well as national scale. Here a curious analogy is worth noting. The degree of
qualification of the worker is fully analogous to the relative mass of fixed capital
in the structure of means of production. In the process of growth both increase
inertia, restrict movement. But at the same time, as fixed capital has the
tendency to grow with the development of capitalism, the qualification of the
workers en masse finds the reverse tendency toward descent, precisely by
virtue of the increasing relative mass of fixed capital in production. One and the
same reason, reducing the mobility of means of production, increases the
mobility of labor. (Automation creates, true, a demand in highly skilled labor of
technicians, mechanics, etc., but the latter constitute a relatively small
percentage in the total mass of unskilled labor.) Such, in most general terms,
are the reasons which contribute to the growth of labor force mobility in modern
capitalist economy.25
But there is a tendency, operating in the opposite direction. The tendency is so
perceptible, that some authoritative bourgeois researchers come to a
conclusion about an increasing settlement of humanity, with the growth of
capitalism. Here is what, for example, Bücher says: "To all factual material
which can be adduced in favor of the position that humanity in the history of its
development became increasingly settled, are joined two more considerations
of a general character. With the development of culture fixed capital increases:
the producer is immobilized, thanks to the instruments of production. The
wandering South Slavic blacksmith and Westphalian steel mills, the pack-horse
of the medieval merchant and the universal department stores of modern cities,
the wandering tomfoolery and the permanent theater -represent the initial and
final points of this process of development. Further, modern means of
communications in a much greater degree facilitate the transportation of
commodities than of people. Because of this, not rarely the distribution on
location of the labor forces has greater importance, than natural means of
production, since the latter follow after the first; previously the relation was the
reverse."
Further, he points out that "all the latest development of the industry leads to the
formation of a sedentary worker caste, which already now, thanks to early
marriage, has become less mobile than the old craftsmen, and which in the
future no doubt will be as firmly attached to factory, as a farmer of a large
medieval manor to the land.26"
Bücher's considerations relate to the issue of internal displacement of the
workforce, but they also have a general significance. To what extent can they
be accepted? Inasmuch as we are talking about the factual side of the case,
Bücher himself brings figures which refute his constructed conception. Thus, for
example, according to his information, "the number of residents in Europe,
beholden to their place of residence not by birth, but resettlement, exceeds
hundreds of million," - this was the end of the last century. On the other hand,
he himself emphasizes the strong movement of labor forces from the
countryside into the city, characteristic precisely for the capitalist era. But this
movement, he believes to be the result of the fact that we are still "in the
transition period, in which the transformation of city territorial into national
economy has not yet been completed, leading constantly to the displacement of
the boundaries of division of labor and to changes of the centers of various
industrial sectors, and in connection with this to the mobility of labor forces."
Another reason is the fact that "most large companies have not yet reached
their complete development and, expanding, are forced to cover the demand for
new workers by the attraction of excessive rural population.27" It is easy to
recognize the affinity of these arguments with the famous theory of Bücher
about the stages of national-economic development: the closed (domestic)
economy, the urban, the national economy. Strange sounds the claim of Bücher
that we (in Germany) "have not ended the process of turning the city into the
national economy." He "didn't notice" that the German national-economy long
ago managed to become part of the world 'economy.
If one considers the movement of labor forces from countryside to city a
"transitory" phenomenon, then, from this point of view also capitalism is a
transition to another system, and to it, perhaps, an end will come sooner, than
in a world scale the transfer workers from the countryside in the city will end. It
won't do to criticize in the same way Bücher's statement, that growth of fixed
capital causes immobility of manufacturers. We substantiated above the direct
contrary conclusion. Growth of fixed capital is an increase of the immobility
of material elements of this capital, but not of people, never mind that the
capital, produced with the help of this fixed capital, possesses full mobility also
in our time. Of all Bücher's considerations true is only, - and we already noted
this, - that the development of means of transport facilitates more the transport
of commodities than of people, and therefore means of production increasingly
are moved in the direction of the labor force, rather than vice versa. This is the
actual real reason of the increasing "sedentariness" of the labor force. It is only
necessary to note that the greater ease of transport of commodities, than
people, follows not so much from physical but economic conditions. Since the
rate of profit is conditioned by the rate of surplus value, and the latter - other
things being equal - is determined by the height of wages, which is the lowest in
areas of dense working population, then it is understandable why capital
"easier" moves towards the direction of the working force, than the contrary, the
transfer of workers to the means of production. But this relates already to the
discourse about the rate of profit.
There is no doubt also that the population, already concentrated in large cities
and in industrial centers, shows bigger inertia than the population, found in the
phase of movement from the countryside into the city, or from small towns to
large towns. At least this is the case in the epoch of the ascending line of
development of capitalism. Modern capitalist Europe, carrying a heavy load of a
few million "stabilized" unemployed, for whom there is no place in industrial
economy, is another picture. The reason for the greater "sedentariness" of the
urban population arises not from the reasons, about which Bücher speaks, not
from the growth of fixed capital, etc., but from the simple fact that the difference
in living conditions between large cities in one and the same country or in
different countries is smaller than the difference in living conditions of the
countryside and the city. Be that as it may, one can observe here a
phenomenon directly contrary to what the classical school stated: the closer the
different countries fit together in the level of culture, material conditions of life,
etc., - the weaker the tendency towards transfer of labor between them. The
migration of labor between Germany, England, France, is much weaker than
the migration of workers from Eastern to Western Europe, from Asia to the U.
States, etc. 28). Launhardt, Mathematische Begründung der
Volkswirtschaftslehre, 1898, p. 213..
In essence, the same can be said also about the transfer of capital. The traction
toward movement is weaker, the closer the rates of profit go to each other in
different places, i.e., the more homogeneous their economic structure. We
arrived, thus, to a very paradoxical conclusion: the mobility of capital and labor
decreases to the degree of the development of conditions, facilitating the
movement of means of transport, communication, the communion of the
cultural, political and social system, etc. The paradox disappears, however, if
we give words their true meaning. It's necessary to distinguish capacity to
movement and actual movement. Furthermore, movement itself can be one-
sided and multi-sided. Capacity for movement is without a doubt higher the
more developed the capitalist system is. But it is precisely for this reason,
precisely thanks to the increasing ease of movement, the incentive to
movement is reduced, inasmuch as the difference in conditions of life or return
of capital investment cannot be significant. The smallest difference immediately
is equalized by a corresponding transfer of funds and force, similar to how the
slightest oscillation of the exchange course with any point of the world money
market causes an immediate reaction of other points that eliminates this
oscillation (course or currency arbitrage). The high mobility of capital and labor
in most developed capitalist countries is reflected in the point that this
movement takes a multi-sided character, - a character of ceaseless fluctuations,
the tides and ebbs, in which each country alternately stands now in the role of
exporter, then in the role of importer of labor and capital. More precisely
speaking, it simultaneously acts in both roles. The same thing, the same
fluctuation occurs also between the larger industrial centers of one and the
same country. A main role in these incessant transferring of the productive
forces plays the local oscillation of the conjuncture, not coinciding over time in
different places or in different industrial sectors. This constant "change of
motion," the incessant changing direction of the alternating current gives the
impression of a relative stability and immobility of the whole, because the
counter oscillations mutually cancel each other.
An entirely different character carries the transfer occurring between countries
and regions, representing different economic types. Here the transfer carries a
strong one-sided character, occurs, usually, in one direction only. Capital, as a
general rule, is exported in one direction only - from advanced industrial to
backward countries, labor force, as a general rule, moves in the opposite
direction (although it may take also the other direction, depending on concrete
conditions). Such mobility is a lower form of mobility, since it is not multi-sided, it
cannot be compared with the free movement of an autonomous body, but with
the forced movement of different parts of a machine mechanism, whose
direction once and for all is prescribed by the interrelation of the device, the
interrelation of parts, etc.
All the confusion as to the conditions and forms of transfer of productive forces
arises from the mixture of different economic types of movement. Meanwhile an
exact delineation in this area was set by Marx with full clarity. He establishes
three forms of the movement of capital (to which is ranked also labor force): 1.
Transfer of capital within each individual sphere of production, as a result of
which on the market is developed an ordinary market value of the products of
this sector. Usually this transfer takes place in the direction from less productive
to more productive units. But if the transfer is limited only in this form, then in
the different branches inevitably different rates of return are set, due to
differences in the organic composition of capital. Hence arises the second form
of movement of capital between sectors in the direction of the higher rate of
profit. The second movement happens as a general rule in reverse direction:
from advanced to backward sectors. As a result of the movement of the second
kind on the market a general rate of profit is formed and market value is turned
into price of production. 3. Finally, after the average rate of profit gained a quite
stable quantitative shape and became an objective fact, the movement of
capital from one sphere to another is determined by fluctuations of individual
rates of profit around the average level, as a result of which the movement itself
takes an oscillatory character, in contradiction to the one-sidedness of its
direction in the period when the general rate of profit did not yet exist at all.
Each subsequent type of transfer supposes an higher requirement of mobility of
capital and labor. Movement of the last type requires together with this an
higher development of the capitalist mode of production than the movement of
the first type.

"The incessant equilibration of constant divergences ("oscillating

movement" I.D.) is accomplished so much more quickly, 1) the more mobile the
capital, i.e., the more easily it can be shifted from one sphere and from one
place to another; 2) the more quickly labour-power can be transferred from one
sphere to another and from one production locality to another. The first
condition implies complete freedom of trade within the society and the removal
of all monopolies with the exception of the natural ones, those, that is, which
naturally arise out of the capitalist mode of production. It implies, furthermore,
the development of the credit system, which concentrates the inorganic mass of
the disposable social capital vis-a-vis the individual capitalist. Finally, it implies
the subordination of the various spheres of production to the control of
capitalists.
This last implication is included in our premises, since we assumed that it was a
matter of converting values into prices of production in all capitalistically
exploited spheres of production. But this equilibration itself runs into greater
obstacles, whenever numerous and large spheres of production not operated
on a capitalist basis (such as soil cultivation by small farmers), filter in between
the capitalist enterprises and become linked with them. A great density of
population is another requirement. - The second condition implies the abolition
of all laws preventing the labourers from transferring from one sphere of
production to another and from one local centre of production to another;
indifference of the labourer to the nature of his labour; the greatest possible
reduction of labour in all spheres of production to simple labour; the elimination
of all vocational prejudices among labourers; and last but not least, a
subjugation of the labourer to the capitalist mode of production.29" All the listed
conditions evolve along with the development of capitalism and in the highest
degree exist in the most advanced industrial countries.30.
The question on the forms and on the possibility of transferring values from one
country to another acquired in recent years an actual interest in connection with
German reparations, the Dawes Plan and the so-called "transfer problem."

In attempts to recover in the benefit of the Entente huge sums of reparations the
victors encountered an "unexpected" obstacle: the inability to take the billions
which the German government agreed to give. Closely studying this question,
the American economist Moulton characterizes the created situation in the
following way:
"Whereas an individual may receive his income in money and can transfer this
money directly to his creditor, a nation's income, although it may be expressed
in money values, cannot be transferred in the form of money values to a foreign
nation. When a nation's annual production exceeds its annual consumption by
10 billion dollars, that amount is not stowed away somewhere in national vaults.
It's impossible to transfer this wealth to a foreign country simply by writing and
delivering a check for 10 billion dollars. There have merely been created within
the country various forms of wealth valued at 10 billion dollars in excess of the
wealth that has been consumed during the year. This wealth is not necessarily
in a form that could be transferred beyond the nation's border. It may consist of
factories, equipment, railroads, highways, enriched soil, etc., - in short, fixed
capital goods, which can be used for the future expansion of production but
which cannot be turned over to foreign lands in payment of debts. Only such
portion of the annual production can be turned over to a foreign nation as is in
exportable form. It may be observed here, however, that a nation might
deliberately seek to avoid having an excess of exports over imports, and then
plead inability to pay 31."
Moulton's reasoning is correct, but it does not refute our findings. The whole
point is that a country could convert a greater or lesser part of the surplus of its
products into a form suitable for export, depending on how much it would
be economically advantageous, on how much this will foster international
economic relations. Meanwhile in conditions of a reparation burden the question
in general acquires a non-economic character, which not at all favors the
creation of incentives to move values abroad, all the more, as also foreign
countries are not very willing to accept this export. Therefore, Germany will, for
example, accumulate the surplus of its production not in the form of railroads,
suitable for export, but in the form of railroads, built using the same rails, but
impossible to transfer abroad.
To this should be added that in general all the arguments about the possibility
or impossibility of transferring values in their immediate material form mutatis
mutandis relate also to the field of internal economic circulation. Roads or
tunnels cannot only not be moved from one country to another, but in general
not from one place to another, in whatever distance.

The influence of capitalist relations on the character of international trade

and on the distribution of productive forces.
We analyzed until now questions of international trade, abstracting from its
capitalist form. But capitalism and international trade are inextricably linked. At
the same time the capitalist form of trade and economic relations brings a lot of
new elements into the problem, which were completely ignored by classical
theory and only fragmentarily investigated by Marx. That theme deserves a
detailed independent consideration. Here we are confined only to a conspectus
of the most important features, which, in our opinion, should in the first line be
selected for analysis.

We define international trade as the trade among countries, found at different

stages of economic development, thereby assuming that in the world economy
there is not yet established a single average rate of profit. Indeed for the
existence of this a full and comprehensive mobility of capital and labor is
necessary. There, where this mobility puts up with interference, is the inevitable
formation of more or less delineated from one another economic territories
with independent average rates of profit, interest, etc. Differences in countries
are found between one another approximately in such a relation in which are
found to one another different sectors of production, between which on different
stages of development of capitalism the movement of capital and labor would
be hampered. According to Marx that is such a stage of development, which is
characterized by the formation of a single market value, but lacking an average
rate of profit and price of production. This very picture we have in the scale of
the world economy: Single world value, single world market price, at least, on
the most important objects of international trade, and lack of prices of
production in a world scale, lack of a world average rate of profit. The world
price, even apart from any additional influences, represents, thus, a category of
a very complex structure. It is not the world value of a given commodity.
Inasmuch as on the domestic market of each individual country the price of a
commodity deflects in one or another direction from the value by operation of
the law aligning around the average rate of profit, the world market price on this
commodity, being the resultant of national prices, likewise doesn't coincide with
its value either: it deflects from both the national and the world value. From
national value it deflects for the reasons stated above. From world value -
because of the fact that the given sphere of production has a lot of different
connecting channels through which it communicates with other spheres of
production, but where there exists such a "diffusion", there the match of market
price with value already is impossible. The world market price is not at the same
time the price of production either, because there doesn't exist in the world
economy a single average rate of profit. Each country, or rather, the
entrepreneurs of each country fetch with this price a rate of profit different in
magnitude, since they have different costs for the production of the given
commodity, and these rates gravitate to the national average, and not to the
world average. Of course, one can "abstract" from the actual differences in
national rates of profit and try to construct a global norm, as a kind of ideal
medium, which determines the international movement of capitals. In fact! After
all, capital is moved among countries in search of higher profits, as likewise this
happens inside countries. Why not generalize the internal and external
movements with the help of one scheme, as we did with the law of value? For
the simple reason that the international movement of capital is fundamentally
different from the internal one - and we have already found out elsewhere: the
movement of capital within a country carries an oscillatory character, and the
average profit rate plays the role of the real center of oscillation. To the
contrary, in an international scale the movement carries a one-sided character
and no center of the movement exists. This is the movement of
capital towards the formation of an average profit rate, but not around this rate.
With world value the matter is essentially otherwise: for the formation of a single
price and value developed commodity trade is sufficient, which is possible also
at undeveloped forms of movement of capital.
Thus, world price is itself a peculiar market phenomenon, which does not
coincide with any of the existing Marxist categories and still awaits its
investigation.

Now about the impact of capitalism on the equivalence of international

exchange. Arguing in the abstract, one could admit that the laws of trade, as
described in the previous chapter, completely continue to operate also in
conditions of capitalism. Capitalists, considered, as representatives of the
national economy, would receive on their share all those advantages which is
achieved by a more productive nation at the expense of the less productive one.
In the first country the rate of profit - insofar as it arises from advantages of
foreign trade - would have been higher than the second. Everything that we said
earlier about nations, would be "forwarded" on the name of capitalists of every
nation (of course, with the necessary modifications, such as that capitalists do
not exchange their own labor, but the labor of their workers, etc.) - with the rest
all would have to have been as before. Higher profits of capitalists of advanced
nations would have two sources. On the one hand, capital, directly engaged in
foreign trade, gives more profit, which, proceeding "in partition" between
capitalists of the given nation, improves the average rate. On the other hand,
external trade, contributing to cheapening many products, obtained from
countries with the most favorable conditions for their production, allows to
correspondingly reduce wages, and thus improve, other conditions being equal,
capitalist profit. A reservation is needed here. In the more developed capitalist
countries the rate of profit, as a general rule, is lower than backward ones for
the well-known reasons (higher organic composition of capital, etc.). But the
more favorable position of this country on the world market may to some extent
counteract the tendency of the rate of profit to fall. Here we see a curious
phenomenon: two counteracting economic tendencies arise directly from one
common economic cause. The common cause - is the growth of the organic
composition of capital and growth of national labor productivity. It conditions on
the one hand, a lowering rate of profit, on the other - its rise, inasmuch as more
productive national labor acts on the world market as labor of a higher relative
mass. The total movement of the rate of profit is determined as the resultant of
these two, as well as many other tendencies of capitalist development.
Thus, an equivalent international exchange could take place freely also in a
capitalist frame, executing, so to speak, the legal methods of exploitation of
other countries. But we proceeded from an assumption to which a "small"
correction needs to be made. We depicted the capitalists as simple
"representatives" of the national labor, who besides this "representative"
function do not have any other function and by their participation bring not at all
any changes to the national-economic structure. In reality relations unfold "a
little" different. The issue is that capitalists "represent" the working masses not
like the latter themselves would do (Marx). The distribution of productive forces
in the national economy also is essentially modified with the intervention of
capitalism. One and the other arises from a simple fact: what a product costs
producers, and what it costs capitalists - these are two different things. A nation,
represented by the workers themselves, would exchange its labor. Would it be
represented by capitalists, they are exchanging commodities, the prices of
which the capitalist does not measure with expended labor, but with production
costs.
Does capitalism fulfill such a distribution of productive forces - in a national or
international scale - by which the forces of the nation really are spent in more
beneficial areas, in terms of labor expended and received effect? This does not
at all emerge with necessity from capitalist relations. Let's take the well-known
law of transformation of value into price of production. If this law is translated
into the language of distribution of productive forces, then it reads as follows:
Since industries with low organic composition of capital (i.e., in most cases the
more backward sectors) provide a rate of profit above the average, there is
poured capital from other industries for as long as the individual rate of profit in
this industry is not equal to the average rate. Conversely, from advanced
industries with a high organic composition, capital pours out. Such capital
mobility has its positive and negative side. The positive is that the movement of
capital contributes to a certain degree of technical re-equipment of the
backward industries, fitting them to the level of the more advanced sectors of
the economy. (Rural backwardness of agriculture, for example, is caused
precisely by the existence of a variety of obstacles, preventing the tide of new
capital). But, on the other hand, the influx of capital in the backward sector,
caused by high rates of return, insofar as it does not lead to an increase in the
organic composition of capital already existing, but to the creation of new
enterprises of the same backward type (why improve the technology, when
profit is high also without that?) - has, undoubtedly, harmful consequences for
the economy as a whole. It promotes the growth of production in less productive
branches, instead of to use to the limit the benefits of production in technically
perfected branches. Not being a capitalist form of economy, being an economy
of "associated producers," the distribution of productive forces would be
substantially different. More "capital" would work in the most advanced
branches, less - in the backward. Of course, the flow of means would go also
then in the direction of the latter. But it would have then only one
purpose: technical re-equipment of enterprises, not just their multiplication.
These additional means for the upgrading of the backward sectors would sort of
have been obtained from the change in value relations. Under capitalism
commodities, produced in branches of low organic composition, have a price of
production which is below the value. The elimination of capitalist relations
eliminates also price of production, and the price of commodities of that
category would have to rise to the level of their value. This would up to a certain
extent compensate the weakening flow of new capital into these sectors. This,
of course, is only a scheme, which is very far from the diverse real relations, but
it gives a representation on the general tendencies of redistribution of the
productive forces.
In any case one thing is certain: capitalism, contributing on one side of its
relation to technical progress and growth of labor productivity, encourages on
the other side a disadvantage in terms of the balance of the national labor
distribution of production force, coercing above required limits the production of
backward industries that - significant coincidence! - to a considerable extent are
industries that supply objects of consumption of the ruling classes. More than
that: precisely technical progress under conditions of capitalism feeds the
backward economic form in many industries. The faster the organic composition
of capital grows in the advanced industries, the more extensively the machine
replaces human labor (directly in the companies themselves, indirectly, by
competition with backward forms of small "independent" production), - the
thicker the ranks become of the reserve army of labor, providing so much
cheaper worker hands, that it is unprofitable for the capitalists to substitute them
with machines, and they serve the basis of technical backwardness, appearing
together with this an attractive force for capital seeking quick turnover and high
profits. There is no doubt that such a distribution of productive forces is least of
all similar to the implementation of the notorious law of maximal benefit for the
national-economic whole.
Further. Although in each country there exists a theoretical average wage level
and average rate of exploitation (m/v), both of these "averages" oscillate in very
wide limits. There exist such fields of the economy, in which more favorable
conditions are formed for an unbearable exploitation of labor. These are
primarily the industries consuming non-qualified labor force, where the most
competition rages of worker hands, ejected from petty production, from villages,
etc. There is no need to dwell on the fact that conditions of labor here are worse
than anywhere else, so that, despite the low productivity (which could be higher
under other organizations of production) the capitalist obtains here extremely
high profits. But in addition it is important to note the following. The labor force
supplied to these sectors, grows up in petty production. The capitalist finds
it finished and doesn't have to pay for the value of its reproduction and
education. A determined sum of labor, spent on maintenance and education of
the labor force, does not at all take part in the formation of value: the capitalist
after all interests in the end not the value of commodities, but profit, and in this
case he has the possibility to sell his commodities well below the value and still
with vast profits. Marx notes this same phenomenon in relation to the conditions
of petty peasant production, located in a capitalist environment. As is known,
the small peasant who after the populist view is "not interested" in receiving
profits and rent with the price of his products, actually is forced to sell them at
such prices that barely give him an existence, i.e. a "wage", although the
product contains in itself an amount of labor appropriate to a share of the profit
and rent in prices of capitalistically manufactured products. "This is one of the
reasons why grain prices are lower in countries with predominant small peasant
land proprietorship than in countries with a capitalist mode of production. One
portion of the surplus-labour of the peasants, who work under the least
favourable conditions, is bestowed gratis upon society and does not at all enter
into the regulation of price of production or into the creation of value in general.
This lower price is consequently a result of the producers’ poverty and by no
means of their labour productivity 32." As we have already noted, this
phenomenon is not only characteristic for small producers, who "represent
themselves" on the market, but also for the mass of forced producers, who are
"represented" by capital. Disregarding that the latter "is interested" also in profit,
and rent, and all other earthly goods, he receives in the structure of his profit
such an amount of flesh and blood of his slaves, that he can afford himself the
"luxury" to discount with the real value of the product, bringing it to market for
sale. Thus, a very impressive share of national labor factually is not involved in
trade, although also alienated first by the capitalist-entrepreneur, through the
purchase-sale of labor forces, and through mediation of capitalist-consumers,
domestic and foreign, through the purchase-sale of produced commodities. This
is the main form of inequivalent exchange. S. and B. Webb, analyzing the
influence of capitalist free trade on the distribution and use of national labor,
therefore, could rightly say: "Under free trade the international pressure for
cheapness is always tending to select, as the speciality of each nation in the
world market, those of its industries in which employers can produce most
cheaply... Instead of a world in which each county devoted itself to what it could
do best we should get, with the "sweat trades," a world in which every county
did that which reduced its people to the lowest degradation. Hence the
Protectionist is right when he asserts that, assuming unfettered individual
competition within each county, international free trade may easily tend, not to a
good, but to an exceedingly vicious international division of labor.33"
It is evidently not the sum of human efforts and sacrifices involved in the
production that affects the import and export trade, but simply the expenses that
production involves to the capitalist.34"
International trade under capitalist "representatives'' less than anything recalls,
thus, the vaunted harmony, so idyllically described by the classical school. Far
from always countries concentrate their forces in the backward production
where their work can be most effective. On the contrary, time and again,
capitalism leads to an unsightly form of international division of labor, under
which both sides lose. Suffice to recall the types of one-sided industrial and
one-sided agrarian country. Harmony lacks not only in the domain
of concretelabor. It lacks likewise in respect of the balance of abstract labor.
Equivalent trade is lacking (which does not at all mean that an equivalent
exchange would be good: we have shown that national exploitation operates in
both forms).
Meanwhile with the foreign side the matter takes the most ugly appearance.
Whether exploitation operates in non-equivalent or equivalent form, capitalism
has for one and the other a plausible cover in the form of the trade and payment
balance, a cover so reliable, that time and again even astute observers pass by
it. So, in our Marxist literature, despite the frequent mention of inequivalent
exchange, every time, when attempts are made to concrete analysis of the
forms of oppression of the colonial countries, they don't go beyond matching
assets and liabilities in the balance of payment. As a rule, the colonial countries
export more, metropolises, on the contrary, import more. (With young colonies
and metropolises the situation, most often, is the opposite.) Tribute of colonies
to metropolises is portrayed as a surplus of export from the colonies. But it is in
fact much more also the not received pick up in value magnitude. Here it is
required to draw the investigation to the physical volume of export and import,
the distribution of it by group and type of commodities and establish price
equivalents. Then, undoubtedly, it is found that even under an equilibrium of the
balance of payment colonial countries factually give more than they receive,
because they export their products at lower prices than corresponds to the
value, while the products of metropolises gain upon more expensive prices.
More precisely, the matter occurs like this: a young colonial country which first
imports to itself capital from the metropolis (and has an overbalance of imports
on exports), is overcharged usually on imported goods. It is sometimes provided
with loans even at the lowest interest, but is forced to make purchases in the
creditor country and is assigned at the same time, using the monopoly of the
seller, such prices, which more than cover the "concession" in relation to the
interest. To the contrary, old colonial countries, to which there comes the time to
pay at the course, and which must export more than import, pay, in addition to
this surplus export, a tribute in the form of excessively low prices for the
exported goods. And forcing them to do so is again this monopoly of the buyer,
which together with this is the lender. The interest must be paid, but as the
payment can be paid only with produced commodities, and since the seller has
to sell, then it's clear, that it is not he who is in the best position. Who is familiar
with our prewar trade balance and our international relations before the
revolution in general, these things are sufficiently known. Let's recall only that
even if trade happens according to equivalence, then it all the same continues
to be exchange of unequal amounts of labor, which subjectively cannot be
perceived, just as equivalent trade cannot.
Capitalism within each country prepares the ground for international
exploitation, which is then carried out, mainly, with the assistance of relations
arising from the export and import of capital. Capital turns the producers of the
specific country into its slaves, and itself turns into the agent of the ruling
capitalism of other countries.
Migration of capital is not the only reason causing unequal or exploitative
exchange. Predatory trade exists, as is known, since trade exists. But migration
of capital creates for systematic plunder the most solid foundation, provides it,
so to say, constant reproduction.

On the other hand, the benefits, accruing to the share of the ruling countries,
i.e., countries, exporting capital, do not accrue to the share of its people. It
would be a very considerable deviation from the topic, if we engaged here
questions about the redistribution of national revenue under the influence of
imperialism, etc. It suffices to say that a country, exporting capital, in the end
falls in the line of state-rentier, with all the features of stagnation and decay,
which guarantee to it a more or less rapid "disablement," as this happened
before our eyes with England. The redistribution of productive forces of the
country happens in a direction, less conducive to their genuine development,
increases the mass of non-productive elements of society, etc. A stagnation
ensues in the vast wealth, and already Smith noted that the payment for labor is
highest not in the richest countries, but in extensively developing countries.

Under the influence of the capitalist form of international exchange a backward

country can be reduced to such status, that the value of the product of its
annual production will decrease instead of grow. This happens in cases when
commodities, produced at higher technology, penetrate into a backward
country, destroying its own production of these commodities, by which the
workers thrown out of the given sphere cannot find an application of their labor
power in other spheres. The country absolutely grows poorer from foreign trade,
instead of prosper, in accordance with the classical theory seeing in foreign
trade only an harmony of interests. In similar cases international exploitation is
expressed not only in the fact that an advanced country trades a lesser amount
of its labor for a larger amount of labor of the other country, but also in the fact
that the labor of the population of the advanced country substitutes the labor of
the backward, and in capitalist conditions exemption from labor goes together
with exemption from means of livelihood.
Analyzing the conditions of international exchange, we all the time revolved in
the sphere of value relations. But a nation does not consume the value of
commodities, but the commodities themselves, as consumer goods (or
production goods, when the matter is about means of production). Therefore the
study of the form of international exploitation necessarily must include the
question of what is imported in the country and what is exported out of it,
for whom is exported and from whom are products taken for export. If the
country exploits, for example, mineral wealth or products of its soil, and imports
goods such as alcohol, cocaine, all possible counterfeit products of the
"civilized" countries, then entirely independent of the value relations the country
grows poorer from such trade. If a country exports production of petty producers
or workers, due to the malnutrition of both of them, and imports consumer
objects of the ruling classes by preference (as for example, in India or before
the war in Russia), it is also quite obvious, who in the "country" gets the benefits
from international exchange. The international division of labor, which under the
influence of these circumstances capitalism realizes, has nothing in common
with the distribution of productive forces in the world economy, which must
emerge "the next day" after the overthrow of the capitalist system.
International exchange internationalizes the products of national labor. Only in
the world market they turn in commodities "sans phrase." But the same occurs
with capital. It deploys all its "quality" only when finally released from the local
boundedness, when it is internationalized. And the driving force here is the
same, as also with the internationalization of the product: to strive to the
abstract form of wealth and to its unlimited increase. Without dwelling here on
this vast subject, we would like to stress only the following point. From the point
of view of the classics, capital would have had to emigrate from the less
productive countries into more productive countries. To this conclusion they
inevitably came, inasmuch as they explained a fall of the rate of profit with the
law of falling consecutive expenditure of labor and capital, i.e. with falling labor
productivity. From this point of view the classics could not explain the whole
subsequent course of development of capitalism, characterized by the
continuous movement of capital just in the opposite direction - in backward
countries, in countries of low labor productivity (this, of course, was not the only
direction, but we take the question in its broad features). True, Ricardo, and
others proceeded from a representation of "natural conditions" of productivity,
as if it would be already not so contrary to the facts. But we showed the whole
inadequacy and ahistoricity of such a scheme. One of the biggest achievements
of Marx was to resolve this contradiction. Marx showed that precisely low labor
productivity most often goes along with high rate of profit, and vice versa.
Thereby was revealed the "mystery of capital's movement" in the direction of
backward countries. The transfer of capital between spheres of production, and
especially between different countries is due, however, not only to the high rate
of profit, taken in a general way (i.e., as the ratio of total surplus value to
capital), but also to the proportion in which the surplus value is distributed
among the land owners, the representatives of loan capital, the industrial
capitalists. In other words, the movement of capital is determined not only by
wages, but also the magnitude of rent and interest, which are different in
different localities: and sometimes also in different sectors of the economy. This
circumstance is often dropped out of sight, although it is completely obvious that
the rate of profit about which usually is spoken, analyzing the causes of
outflows and inflows of capital, is first of all the industrial or
rather entrepreneurial rate of profit, which forms only part of the surplus value.
Under one and the same organic composition of capital the profit rate can,
therefore, be more or less, depending on how one measures the magnitudes of
interest and rent (about the wage we have already talked), which, it's
understood, also are due to the organic composition of the social capital, but
only in the final light, through a whole number of intermediary links. This
circumstance also Marx underlines: "In the competition of individual capitalists
among themselves as well as in the competition on the world-market, it is the
given and assumed magnitudes of wages, interest and rent which enter into the
calculation as constant and regulating magnitudes; constant not in the sense of
being unalterable magnitudes, but in the sense that they are given in each
individual case and constitute the constant limit for the continually fluctuating
market-prices.
In competition on the world-market it is solely a question of whether
commodities can be sold advantageously with existing wages, interest and rent
at, or below, existing general market-prices, i.e., realising a corresponding profit
of enterprise. If wages and the price of land are low in one country, while
interest on capital is high, whereas in another country wages and the price of
land are nominally high, while interest on capital is low, then the capitalist
employs more labour and land in the one country, and in the other relatively
more capital ("Capital," III, last part)."
These multilateral influences explain why the transfer of capital is committed
very often not at all in a direction predestined by the difference in the organic
composition of capital of different countries, but in the most diverse directions.
Thus, for example, in an highly industrialized country the organic composition of
capital is high, the general rate of profit is low, but with low interest on invested
capital entrepreneurial profits may prove to be higher than in a backward
country, and industrial capital will not have an incentive to move abroad. On the
contrary, rent acts in the opposite direction: it is higher, the lower the interest on
capital, and it promotes the of entrepreneurial profit in those countries where
low interest causes a rise of this profit.
Mystically inclined minds could see in all this a kind of pre-established harmony.
In fact! How else could culture spread over the terrestrial sphere, if capital,
drawn to unknown shores by the thirst of accumulation, did not take on itself the
civilizing mission. And can there not be together with this exist the concern, how
with the "premature" liquidation of capitalism the reverse tendency would not
prevail, - the tendency to autarky, to an "exodus" of capital from the colonies, or
rather, to a stop of the flow of new capital towards there, etc.

That capitalism fulfilled "with blood and iron" a determined mission both in a
world, and in the national scale - this is entirely indisputable. It would be
pointless to engage predictions on how the matter would have turned without
capital. The fact is that the world market and the world economy was created by
it. Can one fear that with the elimination of capitalism a disintegration happens
of this world economy? A monstrous idea! It sounds as wild and "persuasive,"
as the claim that with the death of capitalism modern culture and technology
comes to an end. On the contrary! Doom could threaten, if the existence of
capitalism would be delayed for a long time, and it could manage to exhaust
itself in all respects, including in its world-economic mission. Precisely
capitalism becomes now an obstacle on the road of the industrialization of such
colossal countries, like the USSR, which it tries to block economically, like
China, where it instead of capital sends now troops and munitions.
A world economy is needed now with higher unity, with unity of an higher type,
than the world market, whereas post-war capitalism is powerless to arrange
even the market on any tolerable basis. We are even not talking about the fact
that the contradictions permeating the capitalist system have shown also in the
methods, by which it established a world division of labor, which in its present
form less than ever meets a rationalistic use of the labor forces of humanity.
The elimination of capitalism cannot eliminate world-economic unity, cannot
stop the genuine cultural mission of advanced countries, for the simple reason,
that the existence of the latter is entirely inconceivable outside the
intimate bond with backward countries, helping them in the matter of economic
and technological reorganization. That which capitalism began, chasing after
profit, the socialist revolution finishes through consciously directed effort,
eliminating together with the category of capital all forms of exploitative trade
and fraud, gradually eliminating also international trade in its present form.
 Perhaps, matters also will not come to the formation of a world average rate of
profit and price of production. These categories thus also will remain unfinished.
Original title: Международный обмен и закон стоимости - И. Дашковский,
Под Знаменем Марксизма
 1.Editorial note. The editors do not share some of the positions of the article
of c. Dashkovskij.
 2.Capital, III, part 4, p. 302.
 3."Critique of...", page 174, "Moskovskij Rabochij" edition.
 4.Capital, vol. I, p.566.
 5.Theories II, p. 125.
 6.Critique of the Gotha Program
 7.In a sense this "inequality" is analogous to the so called "consumers rent,"
with which the psychological school assiduously potters. This rent, as known,
is derived as a result of the oneness of the market price under a dissimilar
financial position of the buyers-consumers. For the rich as for the poor
consumer, a pound of bread for example, has one and the same price,
although the marginal utility of the paid sum of money is many times lower for
the first than for the second. Whence the consumers rent of the rich
consumer. It could be destroyed only in case everyone would pay for the
commodity a price which is proportional to one's financial position (more
precisely, inversely proportional to the marginal utility of money for the buyer,
as the psychological school formulates it). But then the unity of market prices
would have disappeared, and together with it, also the market.
It's completely obvious that "consumers rent" is an empty word game and
that the issue here lies not in psychological evaluations, but in the objective
fact of financial inequality. But the analogy consists of the point that
an equalmeasure - a single market price - applied to unequal figures - gives
unequal results. The same thing happens with the scale of a single world
value - with world money - when it becomes the measure of national value.
One and the same sum of gold expresses different amounts of national labor
time depending on the place which is occupied by a given country or nation
on the ladder of labor productivity, while at the same time being a
representative of a determined amount of average world labor.
 8."Critique of..., p.77.
 9.Ibid, p. 99.
 10.Ibid, p. 152.
 11.Ibid, p. 153.
 12.Capital III, part 4, p. 305.
 13.See Sombart, Der moderne Kapitalismus, vol. II, 2, p. 901. Ed. 1924.
 14.Another transportation paradox: the more perfect the means of
communication, the cheaper the cost of transport, the greater degree the
economy is exempt from territorial boundaries, but at the same time and for
this same reason the meaning increases of any local feature, any, although
insignificant, local advantage and the territorial division of labor deepens all
the more. The ideal state of transport does not lead to the fact that all will
produce everywhere (this "ubiquity" describes precisely the era of extreme
backwardness of means of transfer), but, on the contrary, to the fact that
every particular kind of production will be concentrated in special to it
favorable places. Industrial differentiation of individual regions and territories
increases with the development of transport, although this enhancement
 derives not only of the transport conditions, as such, but also of the fact of the
transition from the "ubiquitous" raw materials and fabrics of production to
localized raw materials and fabrics.
 15.Th. Hodgskin, Popular political Economy, London 1827, pp. 252 - 253,
Cited in "Theories of surplus value," vol. III, p. 262.
 16."Capital," vol.II, page 295.
 17.Contemporary economists, like, for example, Schumpeter use this
insignificant relative mass of available (наличных) fixed funds compared to
the mass of products in order to prove that the capitalist form of economy has
its basis not at all in the ownership of the means of production, but in the
personal creativity of the capitalist, organizing the production (See J.
Schumpeter, Theorie d. Wirtschaftlichen Entwicklung, ed. 1912, S. 630 and
ff.).
Schumpeter prudently leaves the fact out of sight that the basis of this
praised capitalist initiative forms precisely the production apparatus, which is
owned by the capitalist.

 18.R. Lieffmann, Vom Reichtum der Nationen, 1925, S. 23. In all this, of
course, the duration of economic domination of these or other countries on
the world market is much greater than the period of domination of advanced
enterprises inside a country.
 19.See E. Sax, Die Verkehrsmittel in Volks- und Staatswirtschaft, vol. II,
1879.
 20.See Sartorius v. Waltershausen, Das Volkswirtschaftliche System der
Kapitalanlage im Ausland, ed. 1907, p. 15.
 21.S. Schilder, Entwicklungstendenzen der Weltwirtschaft, vol. II, p. 377.
 22.Otto Bauer, Die Nationalitätenfrage u. die Sozialdemokratie, 2-te Auflage,
1924, S. 464.
 23."Capital," Volume I, page 625.
 24.See Aereboe, Die Bevölkerungskapazität der Landwirtschaft, Berlin, 1927,
p. 20.
 25.How much the movement of the labor force is subject to the impact of
economic factors, shows the pre-war data on immigration to the S. States.
Here is what the researcher of this issue I. Gurvich says: "Comparative
statistics of industry and population of the U. States show that immigration is
determined in general by the opportunity to get a job. At the time of industrial
expansion immigrants arrive in increasing numbers; during depression their
number decreases. Further, immigration movement balances the emigration
from the U. States. As a general rule the same reasons, which stall
immigration into the country, accelerate at the same time the reverse
movement away (I. Hourwich, Immigration and Labor, New York, 1912, p.
3)."
 26.K. Bücher, Industrial Evolution, Petrograd, 1923, p. 228 and 239.
 27.Ibid., p. 239.
 28.In addition to the difference in standard of living between rural and urban,
and also many other reasons, a significant role plays likewise the large
steadiness of life in cities (and in industrialized countries), compared with the
countryside (and agrarian countries). In previous times "with undeveloped
means of communication, the urban population suffered from severe local
oscillation in food prices due to fluctuation of crops, while the rural population
 experienced relatively weak fluctuations in their income: with crop failures
prices rose, with yields they dropped, and whence the weak growth of the
urban population...
With the improvement of means of transport the converse relationship
between village and city is established. Independence from local fluctuations
in the prices of agricultural products provides the urban population with a
stable standard of living, while the welfare of the rural population becomes
dependent on the harvest "(because prices are determined on the world
market I.D.
 29.Marx, Kapital, III, p. 176, II ed., 1919 (ed. by F. Engels).
 30.The growth of the mobility of capital and labor, going hand in hand with
the weakening tendency towards actual movement between points, achieving
the highest maturity of conditions of movement, represents one of the forms
of the "unity of opposites," which are generally characteristic of the capitalist
system. On these assumptions, among others, are based numerous in our
times attempts of the theoretical mathematical school of political economy to
build a model of a stationary economy, possessing absolute mobility of all its
elements and at the same time devoid of incentives to transfer, found in a
state of absolute equilibrium. The so called "maximum theorem" articulates
this state of equilibrium as a state in which the greatest efficiency is achieved
from the perspective of society as a whole, and which therefore lacks
incentives to further change once the situation is reached. The achievement
of a general equal rate of profit - in terms of capitalism - also is the
implementation of such a condition under which incentives disappear to
further movements etc., although the implementation of this abstraction
implies at the same time the greatest mobility of all elements of the economy
(see in this regard the considerations in Schumpeter, "Das Wesen u. der
Hauptinhalt der theoretischen Nationalökonomie, 1908, p. 196-212).
 31.H. Moulton and McGuire, Germany's Capacity to Pay, p. 11 [15-16].
 32.Marx, Capital, Vol III, p. 343.
 33.S. and B. Webb, Industrial democracy, Newed. 1902. Appendix. II, p. 864.
 34.Ibid., p. 865.

Comments

Noa Rodman
Jul 17 2012 18:07
Most references are hyperlinked (instead of the Russian/German source I put the English
version of course). Just in case the link to the preceding part was overlooked, here it
is: http://libcom.org/library/international-exchange-law-value-isaak-dashkovskij
For unclear passages; it's probably my translation, so I'll try to improve them if there are issues
with. More in general, what other texts from Under the Banner of Marxism would be good to
translate (perhaps first part of this series, or not)?
Letter to Sapronov - Isaak Dashkovskij
Dashkovskij was a member of the democratic centralist group. This letter is part of a
recent publication.
Letter from Dashkovskij to Sapronov

Octobre 9th 1929

Dear Timofei,

I intended, in connection with the nigh thaw, to bring up in a large letter a

number of political outcomes, linking them to the present moment, but your last
writings force me to preliminarily dwell on some questions of a semi-personal
nature. You're trying in your last letters, not only to "marry" me with Emelyanov*,
not only to blame me in general of all possible "reformist" sins but, especially, to
depict my spring proposal to the Trotskyists as the basic reason for the increase
in capitulationist sentiment in our group. I cannot leave all this without response.
I'll begin with the latter. A defeatist wave captures our ranks, this is a fact that
you tried to deny at first, despite its obviousness. Where is the root of these
sentiments? In my opinion where the root of the crisis of the opposition as a
whole is. We are part of the opposition movement and, therefore, subject to the
laws of development to which this movement is subjected as a whole. Trying to
come up with recipes that could isolate us from the impact of general processes
– it's equal, to what alchemy engages. Therefore, your assertion that the crisis
has affected us "thanks" to my proposal to the Trotskyists is simply ridiculous.
This is nonsense, here there is the same connection as between an elderberry
in a garden and the uncle in Kiev. The roots of the crisis of the opposition lies in
the fact that the country as well as the party and the opposition are at a turning
point, and when an abrupt moment comes, social and political rearrangements
are unavoidable at each new stage of struggle, changing the composition of the
contending forces; it would seem necessary to remember the aggravation of
class struggle in the country, the zigzag of the general course of the apparatus,
plus the repression, plus a variety of personal moments - all these things are far
more substantial "in terms of their impact on cadres" than this or that proposal,
which Ivanov made to Petrov. A couple of facts are enough, to break up your
"theory". You probably know the story of the surrender of the Trotskyist
Valentinov. This was a few months ago. This type wrote the theses in which the
current regime was declared Bonapartism of the 96th kind. But three days later
he himself moved to "Bonaparte". Or here is a more close example - Ustimchik
and Ostroumov, you, probably, already know that these two barnstormers
escaped from exile, arrived on August 10th in Leningrad, the 13th filed a
statement in which they write, that in three days they were convinced of the
correct lines, etc. And yet they were all the time a terrible "Left" in our ranks,
piously professed the theory of petit-bourgeois State and last year "encircled"
me for my supposed enthusiasm for the left-course. Finally, take the same
Emelyanov – the next candidate for "heroes of our time". The man, until now
develops "Bonapartist" arguments, and it does not prevent him to dream of
"peaceful revolt" and to design all sorts of formulas for the passage to
Yaroslavl*; as you see, in nature there are no such policy positions that would
have saved the people from the clingy disease - defeatism. There are only
relative guarantees, but they all ultimately boil down to the fact that the political
position must be right, and the people who defend it, - are consistent and
combat-ready. This is, of course, little, but more I cannot think of.
Turning to your charges in their essence, I must first express complete
bewilderment at your notations about "reformism". It must be said, that I had
sufficient time to tire of empty conversations about reformism and revolution in
general, as well as the nature of the state in general, which were the subject of
rather tedious discussions in the kolpashevsky colonies. But in this case you
simply put the blame on others. About reformism in our ranks, I had just last
year to raise the issue in connection with the to you known letter of comrade K.,
in connection with “the letter to Misha”, wherein the theory of rearguard combat
was preached, warnings trotted out against adventurism, and as the latest word
of tactical wisdom put forward the minimum program, and restoration of councils
and struggle for proletarian dictatorship were postponed until the peasantry
finally decomposes into the bourgeoisie and the proletariat. Here was a
complete reformist setup, to give words their actual meaning, ??omission??
from these positions you until now articulatly have not refused. What value have
your thunders and lightnings against reformism? None. For me, the essence of
"reformism" and "revolutionism" is exhausted by the question about the goals of
today's struggle. Fighting for the proletarian dictatorship is a revolutionary
struggle, the struggle for a “program"-"minimum” - a reformist struggle. If you
will object to me that you mean not the goals but the methods of struggle, in this
respect you are not in a very "favorable" position. As methods cannot be
divorced from the goal, once at this stage the struggle for dictatorship is
impossible, then there is of course nothing to try, it's not necessary to engage in
"adventurism" and so on. In any case, regarding the methods of struggle you
have proposed nothing different instead of what there is in my offer to the
Trotskyists: organization of mass action, including hence strikes, under the
slogans of the opposition, or perhaps you suggest barricades and armed
insurrection. It would be very interesting and resembles much the idea of ".......
reactionary reform", which at one time was popular among the kolpashevsky
Trotskyists.
Your third accusation carries a more concrete character. You reproach me that
in my unifying project, I listed utopian conditions under which it might be
possible for the opposition to merge with the VKP and this sowed illusions about
the nature of the party and state. I in this case must strongly respond to these
reproaches and remind you in this connection to one fact directly relevant to the
matter. Last year, during the notorious "left course" you in one of your letters
wrote as follows (quote from memory): If Stalin began seriously to fight with the
Right, then we would suggest him an honest block. When one of the Trotskyists
asked you, how this position differs from the Trotskyists, you answered: its
difference is that you do not believe in the possibility of the fight of Stalin against
the right. This episode is quite signifcant in terms of our present-day disputes.
You were doubly mistaken. Firstly, the fight against right-wing has become a
fact (another question, how long it will last). Secondly, even with the presence
of this fight against the right we do not propose the block (and we do well),
because experience has shown, to which it leads. If we now compare what you
have suggested last year and what I proposed in the present, it is possible to
come to the "unexpected" conclusion that you were an incomparably greater
compromiser, than I now, never mind the fact that the current situation differs
from last year's approximately, as the 12th party congress does from the
famous July plenum. Thus, with you in this case recollection has changed. What
remains of my mortal sins? Nothing but the bare fact of trying to come to terms
with the Trotskyists on the general platform. I however, by no means can
consider this attempt a sin on my part. More than that: I think that if the current
crisis of the opposition will not be fatal for it, then subsequently we again have
to talk with the Trotskyists, on this score I am incorrigible. To hope that we will
on our own forces perform the enormous tasks that lie before the opposition
movement - this means having an absolutely fantastic idea of its strengths, and
in the struggle, even if such a difficult one, with which we are faced, fantasies
and illusions are the surest guarantee of defeat. We represent only a tiny part of
that revolutionary proletarian movement, which gradually crystallized in further
deployment of the class struggle, further regrouping of forces both in the
opposition and the VKP. So I see nothing "shameful" in an attempt to negotiate
with other groups with whom we will sooner or later have to talk; of course if one
does not set for oneselve the task of fighting for the dictatorship, if one puts the
revolutionary tasks aside to a distant field, then it will be almost indifferent, in
how many groups, circles and sects the general movement is split; in periods of
reaction the abundance of circles to some extent even helps the moment of
transfusion with the sieve. But however fierce the atmosphere is now, we still
live in the era of wars and revolutions, and it's unlikely we'll have to deal with
such useful business.

Since I moved, so to speak, from defense to attack, I cannot bypass in silence

another characteristic which you and Voldemar feature, namely that
combination of reformism with adventurism which you are accustomed to
accuse Trotsky and the Trotskyists of. In his "Letter to Misha”, Vladimir
Mikhailovich* put forward the idea that we must try to lead any movement of
discontent in the working class, even though the springs of this movement were
Menshevist and so on. I think that if this plan was realized in practice, it would
be the worst kind of adventurism. In your postcard you write like this: "The
workers have terrorist moods. If we will precipitate with reform and do not
capture the workers movement, the tendencies of anarchism, syndicalism, will
get the best, and the movement will pass by us, like by a stinking reformist pile
of manure – and only". About reformism I just wrote – you're simply playing with
words. Essentially it is necessary, first of all, to remember that anarchism as
well as syndicalism – are also rather stinking piles, and the movement will not
go far, if it goes there. Secondly, without a doubt, if the opposition cannot head
the movement, it will pass into the embrace of terrorism, anarchism or, which
you forget to mention, the arms of the right Mensheviks and so forth. But it is no
less clear that we cannot lead this movement at a cost of letting us turn into
anarchists, Mensheviks or representatives of the right opposition, because that
would be fighting hell with the aid of the devil, we must head it, remaining
Bolsheviks. But that means we need to struggle not only against the
counterrevolution on top, although this struggle is our main task, but we must
fight against counter-revolution from below in the person of this anarchism or
Mensheviks. The methods of fighting, it is understood, differ here and there. On
the other hand, it means that we must have a clear Bolshevik program, and not
simply the voice of the desire of "heading", yes head hunters there are many
without us, but when it comes to a positive program, both from you and from
Vladimir Mikhailovich what you hear on this subject are such wild things, that it's
necessary to just raise eyebrows. You [together with Vladimir Mikhailovich] see
in this requirement "reformism", which from your letters is dismissed with a
general phrase, that if the proletariat had the possibility to seize power, it easily
would think up then a program of action. Such if one may say "stand" indicates
one of two things........ You both proceed from the theory of "rearguard battle"
and set aside revolutionary tasks until the second coming. Or we have here to
deal with belching adventurism, say lead a general discontent, and there'll be,
what will be. I strongly reject the one and the other. Heading the movement,
without having a program, anyway, beheads it; if we declare the pretention of
leadership of the working class, it at least has the right to ask us where we are
going to lead it, and if we restrict ourselves to answer that we are going to
create a party, that will fight for wages and working conditions, then here only it
will start to interrogate us with predilection, why exactly it should go to us, and
not to the right opposition, not to the syndicalists, not to the Mensheviks, who
offer it the same. There was a time when we felt to some extent a monopoly in
the labor question and could ignore the competitors. Now times are different,
now all political currents which are not in power flirt with the labor question, and
the need to dissociate from these currents becomes every day more and more
acute. We must hence solve the labor question in the Bolshevik way i.e. based
on the general political and economic program bequeathed by October. I will
explain this with the most simple example. Take, for instance, the question of
wages. Let us assume that in the coming collective bargaining campaign we put
forward the demand: to improve salary at least in those sizes in which this was
promised by the five-year plan. If one takes into account that the first year of the
Five-Year Plan gave a reduction, and not a wage increase (only such a "stone
ass" like Molotov can deny this), even if we recollect, that the five-year plan
promised to increase the real wage with 71%, then it comes out, that in 29/30,
wages should rise no less than 25-30%, which would cease the decline of last
year and would provide the promised growth rate. The number of workers
needs to increase in 29/30 at 5-6%, therefore the total wage fund should
increase by at least 35%. In other words, by about 1/3 should increase the
consumption of bread*, meat, butter, sugar, textiles, respectively, must be
improved housing conditions, etc. (for different products, differences in growth),
consequently, this growth poses problems of labor supply, which are connected
to all the fundamental issues of domestic and even foreign policy, and
especially the relationship with the peasantry. If judged by Narkom calculations,
then this year, in the best case, bread will not be more, than in the last, less
meat, less sugar, housing conditions will likely deteriorate, since the rate of
housing construction lags, manufactured goods for labor supply, if we consider
the increasing transfer of goods to the countryside and a sharp deterioration in
quality, also will apparently not increase and so forth. Such are the prospects in
terms of dominating policy, which turn even the official promises about 14%
growth of wages into deception and lies. Are we obliged in the present agitation
and propaganda to consider all these trifles? I believe - yes: one bare increase
of wages not only not solves the problem, but rather with the retention of all
other conditions, as they are, it will cause such a sharp attack [financial-
economic crisis] that after two or three months the economic situation will prove
to be ten times worse for the workers; to reason from the point of view of the
formula "the worse, the better" here is unlikely needed, because it would
become "better" not for us, but for someone else. In this way, the question of
wages directly runs into the question of bread, but bread is the countryside.
From the workers movement – to the peasant question, which is impossible to
escape by one shrug of the shoulders. In the village already now knots of great
events are tied around grain, gradually turning into "small" civil wars, like that
"small" war which goes on now on the Chinese border. This is evidenced by
daily newspaper chronicles, which report of course one 100th of the facts. For
me there is no doubt which answer we must give to this question: we are
obliged to take the kulak with hands on throat and knee on chest, if we do not
want him to do the same with us, the proletariat, but he has already stretched
his hands to the throat. The crime of the present regime lies in the fact that it
one-handly fights with the kulak, and with the other helps the kulak to knuckle
the proletariat, by its policy of increasing bread prices, reduction in the taxes, by
the disarmament of the proletariat and rural poor; but mobilising the working
class around the slogans of struggle with the kulak and with Stalin's regime, not
able to organize the fight at present, we have no right and no need to reject
what, for better or for worse, goes along the line of this fight, i.e., collective state
farm construction, the forced withdrawal of surpluses etcetera, on the contrary,
this it is necessary to hold on to (instead of slander with a contemptuous phrase
about convulsions) and make an expansion of the front of the struggle,
converting it on to political rails; so for example there is not any doubt that the
present condition of the countryside gives a corresponding reflection in the
“Red” army, in which “strong middle peasant” have enough imposing cadres. In
the presence of Chinese history these moods can acquire especially ominous
nature, and, from their side “push” further the course of events. Therefore to me
it seems that precisily now among the most urgent tasks proposed in the sphere
of military policy is the demand of the armament of the workers and rural poor.
In connection with this I must touch on one essential issue in our
correspondence. I do not know from where you took, that I want to link the
interests of workers with the interests of the peasantry for the general struggle
against the regime, and demanded of me slogans, that are suitable for this
purpose. This is a monstous idea. In my letters I stated that all classes of the
country are opposed to Stalin's regime, not finding in it their own interests. But
each class is unhappy in its own way. The idea of uniting the workers and
peasants to struggle against the regime is counter-revolutionary, rather than
revolutionary, because in this struggle, "the peasantry" would have been such
an ally, which is a hundred times worse than the enemy. My dispute with
Vladimir Mikhailovich on the question of the State had a completely different
meaning. It's not so important for me to baptize the bureaucracy a class or not,
it is important to establish that the current State does not express a dictatorship
of the peasantry over the proletariat, i.e. lacks not only the support of the city
but also of the village. It is this intermediate situation, as is noted in our
platform, which makes our struggle not hopeless. The opposite point of view is
at odds with the facts. About the "theory" of Emelyanov it is hardly worth to
speak seriously of. Peasant State, terrified of bourgeois restoration, begins
feverishly build statefarms and heavyindustrialising plans - it's chickens' laugh,
but not theory. And indeed all the arguments about the petty-bourgeois, i.e.
peasant, nature of the current state is in its logic reminiscent of an Armenian
riddle - green, hangs on the wall, it squeaks, and on checking there turns out a
herring. About the same correspondence exists between the peasant interests
and Stalin's policy, despite the fact that the village decently heated its hands
around the economic crisis of recent years. With regard to the countryside, we
must remember that there is a peasant and a peasant. Against the prosperous
part of the village, which strangles the city with the bony hand of hunger, we
must act together, even with the current state: "march separately, strike
together", dragging it along or pushing back, according to circumstances. Who
in this "triangle" prefers a block with the kulaks against the state, is not with our
way. Rural poor must be involved at our side. It is said that they have kulak
sentiment. But here we must proceed not from sentiment which may be present
with kulaks and certain parts of workers, but the economic situation of the poor,
which determines their enduring interests, this position requires a cheap and not
expensive price of bread, a high, rather than low taxation of the wealthy (with
use of part of the tax for economic help to production cooperatives of the poor)
and so forth. Yes, the sentiments of the poor are not, as they may appear to
some; as for the middle peasants, the situation is far more complex and difficult.
His bond with the kulak - fact. It's hardly possible to expect to draw them in as
allies, in the course of that sharp period of struggle for grain. To me it seems
that to the extent that in the countryside something is repeated like the situation
of 1918 (with the "small" difference that the kulak is the advancing side), then
for the middle peasants the problem should rather be of neutralization,
concentrating all efforts on the organization of the poor; concerning the middle
peasants, I must, among other things, remind you that even in the period of
15th congress, I absolutly proved his existence in one of our meetings in
Moscow. The majority, including you and Waldemar, then decided the issue in
the sense that the middle peasant is "indistinct", but the middle peasant
remained in spite of this decision and, in the opinion of Vladimir Mikhailovich,
now even holds the power in his hands, is it not strange, that now the same
middle peasant, whom you in 1927 hastely buried without much discussion,
mainly serves you and others as a scarecrow.

I have touched upon only one corner of the economic issues, which with we
have to deal, if we finally come close to a concrete analysis of the situation,
from which we are all the time distracted by factional bickering with Trotskyites.
I don't intend in this letter to throw in the platform, I only will touch in general
characteristics on some other problems. The attitude developed in our group, I
think, is that it is necessary to win again for ourself the old platform, not in order
to uncritically repeat all the previous slogans, but proceeding from it, to
understand the new situation. We joined the opposition struggle in 1927 with the
demands of accelerating the rate of industrialization and the creation of large
socialized economy in agriculture. As far as I remember, in our theses on the
five-year plan, we wrote: "The need to create at the end of the fifth year plan
such an array of socialized economy in agriculture, which would replace the old
landlord economy in supplying cities and exports." On this we certainly stand
now. About the rate of industrial development, we wrote: one must ensure such
a growth of industry, which would be superior to the rate of industrial
development of the capitalist countries during their ascent. These provisions
remain entirely true to this day. It would be absurd to invent something else just
because these demands are included in the the official program of the
apparatus. After all, we are not building opposition for the sake of opposition,
and don't indulge in politicking, on the other hand, we have rather enough
grounds for irreconcilable struggle with the apparatus in every other directions,
to still need to invent any new bases. On the contrary, as far as the matter on
the rate goes, one must even somewhat soothe the wild bureaucratic
imagination, which nowadays is recklessly bold. But agreeing with the
apparatus on pace, we disagree about methods, i.e. fundamentally on:
contruction of state and collective farms without the poor, construction of
industry without the proletariat - that could hit upon only the narrow foreheads of
Stalinist officials, constituting really the very "bottleneck" in the entire system.
Concerning the construction of industry our differences now are sharper than
ever before, because Stalin builts it on the bones of the workers. Concerning
the construction of collective and state farms, we will fight administrative
enthusiasm, which replaces the initiative of the poor, with falsified complete
collectivization, which in actual fact completely and continuously shows
complete lies and swindle. These state farms which have grown by the pike's
wish*, have already shown themselve in the current grain procurement
campaign. We will fight against this shameful and unscrupulous policy, because
of which the USSR has appeared ahead of all other capitalist countries in the
degree of deterioration of the situation of workers, in the degree of manual
labor, we are struggling with this policy not only because it is class-hostile to the
proletariat, not only because it discredited in the eyes of the workers the very
idea of socialized economy and destroyed the work of many generations of
socialists, but also because it serves as a sure way to catastrophic failure of all
the industrial plans and programs and prepares in the near future a new triumph
of the right reaction. We are against socialist competition, because in the
conditions and methods of conduct it is the direct antithesis of socialist
demands. We stand for continious production, but against the deterioration of
working conditions, which very often occur under the pretext of continuous
production, against the bureaucratic resolution of the question, which affects the
daily interests of millions. Needless to say, we oppose the latest decree "one
man management"*, which constitutes a direct provocation in relation to the
workers and a brutal challenge to the whole opposition movement. It's easy to
imagine the rise in "enthusiasm" of the workers after this decree. This product of
the creativity of the enraged Stalinist apparatchik, the Central Committee seeks
to reinforce with references to Lenin. But in 1918, when Lenin put forward one
man management, the issue was about necessity introducing a strand in the
wide democracy of the first months of the revolution, whereas in 1928 only an
idiot or scoundrel can come up with the idea, that our economy suffers from an
excess of democracy. One could think, that after several years of continuous
crackdown the masters and directors still haven't enough rights; this decree
expresses, however, not only an extreme degree of administrative arbitrariness,
but an extreme degree of bureaucratic stupidity. What a brilliant idea! First, to
show to the working class, to the entire world the amazing picture of the
corruption, decay, decomposition, degeneration of the apparatus as a whole
and the economic apparatus in particular, and then to entrust to this all-union
abscess the reins of one man management, give it uncontrolled despotism over
the fate of industry and working class. Doesn't there hide behind this the
thought: one man management in the economy to pave the path to one man
management (one man dictatorship) also in politics? In case of necessity
possible corresponding quotes from Lenin might reinforce this, and even from
that same article, to which the decree of one man management refers. True,
Lenin had revolutionary dictatorship in mind, and in this case the speech can
only go to counter-revolutionary dictatorship, but since then, like the devil
learned to calculate with holy scripture, for the new Cavaignacs it's no trouble to
refer to the interests of the revolution.

Disrupting the order a bit, I again return to economic issues. If we stand for the
high rate of industrialization and the struggle against the exploitative methods of
its implementation, it is quite obvious as a counterweight to it one must
nominate other channels and other methods. Our platform's main emphasis lies
on price policy. But the question of pricing will now be different than it was in
1927 when there were the notorious campaign of lower prices for industrial
goods. Although now, compared with the agricultural price index, industrial
prices remain stable, and hence private squandering of industry continues,
nevertheless, significant price increases may at this stage completely push the
currency off the cliff and open the floodgates for runaway inflation. In my
opinion, while maintaining our position on prices, emphasis must now move to
direct enforcement measures on withdrawal of cash surplus in the village and
the city, either by extraordinary one-time tax, or by forced loans* to village and
to town. The publication now of materials about the activities of Narkomfin
illustrate clearly the orgy of appeasement, which was going on the tax front.
Why not make up the loss in a revolutionary way?
Another source must be a relentless cost reduction of the apparatus. Only the
organs of the party, the profunion and GPU costs 600-700 million rubles, which
could be reduced by half. Here generally the financial side of things is covered
in thick fog. In any case, it is clear that at least the problem of improving the
material conditions of workers can not be solved without revolutionary
incursions into the area of unproductive expenditures. Even the bourgeois
government of Germany made surgery on its machine with much greater
determination in its time (1925) than the USSR government. I don't speak about
the fact yet, that this cut is dictated by the need to trim the material base of the
bureaucratic system. Beside other things its useful to recall as well the policy of
stateloans, which factually turned into a weapon of wage reduction. With regard
to loans, we need to push the requirement of a progressive-income method in
allocations with complete exemption on our [workers'] earnings. The
abomination of the current system is not only that, under the guise of loans part
of salary is confiscated, but also that the subscription to the same loan is
obligatory at the same percentage (monthly salary) for all groups and
categories. Gentlemen officials of higher categories would not hurt to show
correspondingly greater "enthusiasm" and subscribe for example to 3 monthly
earnings, and the most earnings estimated on the whole set of their income, i.e.
including any grants, health resort funds, natural privileges and so forth. I
already said that I was not going in this letter to cover all the issues, which must
enter into our assessment of the current moment. Along with the economic
course today the most important and relevant of the momentary issues of
Comintern and international policy is where now the blade cuts Sino-Soviet
conflict. Unfortunately, I do not have at present the opportunity to speak on
these issues, since I postponed study pertaining to this material for a period of
thaw. Yes and the materials I have are such, that the cat cried. The Chinese
story, as far as I can judge (and partly based on the surviving foreign
newspapers), is undoubtedly one of links in the imperialist plan concerning the
USSR. But the complexity of the issue is that the USSR itself here is in the role
of capitalist with respect to China, because the dispute is about the Chinese
Eastern Railway, to which China has all rights from the point of view of the
principles of proletarian international politics. Therin lies the "dexterity" of the
imperialist backers of China. They beat the USSR with the same weapon that
the USSR in 1926-27 sent against them when supporting the national
movement against foreigners. The piquancy of the situation furthermore is that
the Soviet Union and China signed the Kellogg pact, therefor both are in the
environment of influence of American imperialism, and about political
dependence of the USSR on the United States the European press speaks
quite definitely. What should be our position in this conflict? It's my
understanding that we must continue to stand on the point of view of protecting
the USSR against intervention, support them in their struggle against the White
Guard provocations and the rest, but at the same time, demand the transfer of
the CER to China. This, in particular, would be the best means to disarm the
imperialists. With this I'm done and limit my excursion in the domain of
international relations.

In my unifying proposal to the Trotskyists I tried in the most general schematic

form to outline our line in relation to State and Party. I set myself the question in
this way: if we wanted in the most general form express in one slogan our
attitude to the current State, then what should that slogan be? I replied. Our
goal is not destruction of this state, but to achieve proletarian democracy in it. It
goes without saying that the proletariat must not break the state apparatus, but
must seize it. But that does not all mean that in her everything has to be left in
place. After all, even Stalin was forced under pressure from below to reduce
now 8-10% ???? of the state composition, replacing them with new nominees,
who under the existing system quickly turn into the same heroes of
astrachanschini. The more authentic task of renovating the apparatus from top
to bottom stands before us. The mastery of the State from the side of the
proletariat must consist in the fact that the proletariat in the first place, produces
a massive "revision" of the personnel composition of the state apparatus, and
secondly, put their new nominees in such conditions that offer the greatest
guarantee from a recurrence of the Stalinist regime. But no matter how deep
and wide these changes would be, they would not mean the destruction of the
current state. The destruction, "the smashing" of the state is an indissoluble part
of such a social revolution, which fundamentally alters the economic
foundations of society. But we do not want to alter these foundations. On the
contrary we want to strengthen them. In fact, what sort of tasks confront the
opposition "on the day after the overthrow of the Politburo". Overthrow the
landlords and capitalists is impossible for the reason that they have already
been overthrown, and to deal with the remnants of these classes within the
country it is unlikely necessary to trot out the heavy artillery. The land is
nationalized, meaning to nationalize it again makes no sense; industry,
transport, trade and credit are nationalized and monopolized, in some places
maybe even more than necessary, so there is nothing to do there, what remains
only is to confirm the existing decrees. Hence from those tasks that in general
are advanced by social revolutionaries of modern times, here drop out such
important things as the abolition of the socio-economic system of bourgeois
private property and socialization of the means of production and exchange.
What remains to be done in this direction in the countryside can not be done
except on those routes which are already practically laid in the form of state
farms, collective farms, machine-tractor stations, etc., and here, as far as this
discourse is about purely economic activities, from our part, can propose only
amendments and not another general line. Therefore it remains only a struggle
for the policy of this state, in which of course concentrate all the nodes of class
relations. And since the policy makes the apparatus, the struggle for the
apparatus in the widest sense of the word is the basis of all bases. Fighting for
the apparatus from the point view of the proletariat is a struggle for proletarian
democracy which is the only means to subordinate the state to the working
class. But for the implementation of this democracy it's not enough that a
"happy confluence of events put the opposition in power" and give her the
opportunity to release a pair or two decrees, whereafter winning democracy
would go step by step, as turned out in the hands of the opposition. If the
process of ousting the workers from power stretched 7-8 years (counting from
1921), then the reverse process may take as much time. You're as if inclined to
consider the slogan advanced by me as reformist, but have not offered anything
else in exchange. Yes and inventing something else is impossible, without
embarking on any foibles. A general phrase on reform and revolution in the face
of such tasks, before which has not yet stood one party in the world, costs little.
From this viewpoint also Boris' statements are absurd, that anything goes
"among family", by peaceful means, and the opposite view, which necessarily
involves barricades and thirsts blood. The latter is only more likely, because the
struggle for the apparatus is at the same time class struggle, that in a country,
which has gone through October and civil war, could easily take military form.
But that in any case is not a historical law. We conduct struggle, this we know
firmly. We can establish its specific form at this stage. But a prophesy about
what these forms are at the next stage, is quite unnecessary, because to do this
one must know in advance, how the present stage of struggle ends.

When I say that it is "only" the conquest of proletarian democracy, I put quotes
deliberately, because that slogan does not deminish the scope of our struggles.
On the contrary, here is concentrated in one point the whole class program of
the proletariat, all of its demands to the existing state. Proletarian democracy is
not only politics, but economy, i.e. it includes the question about the share of
the proletariat of the national income, in national culture, struggle against the
apparatus; the struggle for the apparatus should meanwhile not overshadow the
immediate struggle against those classes, which from the opposite side strive
for power and, as a variety of affairs and excesses show, have already
managed to seize the apparatus not for 2/3, not for 3/4, but here and there for
the full 100%. If we proceed from the surface impressions, then the current
situation is reminiscent of the Kronstadt days. Then, as now, "Soviet power"
was in the air, bearing against itelf city as well as village. Product shortage, food
crisis, etc. in both cases constitute the basic background of the situation. The
crisis of the party and revolution, all sorts of "excesses", purges, etc. - all these
had some similarities in the time of Kronstadt. If at that time the fighting in the
country was often conducted in the language of cannons and machine guns, it's
simply because the Kronstadt period is directly related to the completion of the
civil war against old classes. And in hands were carried weapons. Finally, then
and now, at the heart of the crisis - the relation with the rural peasant question.
These are the lines of similarity. It is not surprising that under the influence of
these first impressions frequently tend to hasty conclusions about possible
outcomes of this crisis. If after Kronstadt NEP followed, then a present crisis
should end neo-NEP, this conclusion is with many and many in mind, not only in
the party but the opposition, not only among the right and centrists, but also
among leftists. To overcome this mood, it is useful take a closer look at this
Kronstadt analogy. And here some thoughts and observations are enough, for
the surface impressions ???? situation.

*B. Emelyanov (Kalin) was a member of the Bolshevik Party since 1910. In
1922 - Secretary of the Cherepovets party committee. From July 1923 - party
secretary of the Communist University Y.M. Sverdlov. Together with
Dashkovskij, one of the 15 signatories of the 1927 platform. Excluded in
December 1927, exiled to Yeniseysk. Further fate unknown. Possibly also
referred to in this text as comrade K. and/or Boris.
*Stalingrad
*Smirnov
*grain, crops
*fairytale
*unity of command
*bonds
Abstract labour and the economic categories
of Marx - Isaak Dashkovskij
This article of Dashkovskij which appeared in Under the Banner of
Marxism 1926 nr. 6, is a critique of the theory of his namesake Isaak Rubin.
Abstract labour and the economic categories of Marx1.
The detailed elaboration of Marxist economic theory, which already several
years is conducted in the Soviet Union, gave in many directions fruitful results:
larger clarity of understanding, more exact formulation of the laws and positions
on a series of new problems, not touched upon in pre-revolutionary Marxist
literature. But every silver lining has its cloud. So too it happens, that the new
attempts of "deepening" theory lead to "splitting empty abstractions into four
empty parts." To their number should be, in our opinion, counted the attempt of
I. Rubin to "sociologize" the concept of abstract labour, which in the latest times
is repeated, slightly diluting the formulations of Rubin in an eclectic soup, by
A. Voznesenskii (see his article in the journal "Pod Znamenem Marksizma", No.
12 of 1925). To subject to critique the new-found theory is all the more
necessary as "Essays on the theory of value" by I. Rubin enjoys the well
deserved reputation of one of the very best works on Marxism, and this leads
many to the temptation to take as true the there given interpretation of the
category of abstract labour and the conclusions from it, although they clearly
are at variance with the formulations and views of Marx. With the present note I
have in mind, with the help of the minimum necessary literature references, to
prove the incompatibility of Rubin's theory, not only with the letter, but also with
the spirit of the Marxist analysis of bourgeois economy, leaving for myself the
right to return, if it is required, to this theme in more full "armament."
The fundamental definition of Marx, concerning the two-fold character of labour,
reads: "On the one hand all labour is, speaking physiologically, an expenditure
of human labour power, and in its character of identical or abstract human
labour, it creates and forms the value of commodities. On the other hand, all
labour is the expenditure of human labour power in a special form and with a
definite aim, and in this, its character of concrete useful labour, it produces use
values" 2. The new commentators consider it necessary to change or
complement this definition of Marx on the basis that in its present form it
contains only "physiologically defined abstract labour, valid for all forms of
economy" 3. They proceed from the point that all categories of Marxist political
economy, among this number also the category of abstract labour, must be,
firstly, social, and secondly - historical concepts. Let's approach the question
beginning with the "historical" point of view.
The fundamental economic categories in Marx carry a historical character - this
is true. Not true, however, is the claim, that Marx operates in his
study exclusively with such categories. In addition, the epithet "historical" has a
distinct meaning in Marx, although this distinctiveness very often is ignored
even by very attentive researchers. To clarify this statement we turn to Marx's
"Outline of the critique of political economy", taking from it a formulation, which,
on first sight, would even seem to directly contradict our point of view. At the
end of the first chapter "On production" Marx writes:
"To summarize: There are characteristics (/determinations) which all stages of
production have in common, and which are established as general ones by the
mind; but the so-called general preconditions of all production are nothing more
than abstract moments with which no real historical stage of production can be
grasped" 4. Not much before Marx points out, that "the elements which are not
general and common, must be separated out from the determinations valid for
production as such, so that in their unity – which arises already from the identity
of the subject, humanity, and of the object, nature – their essential difference is
not forgotten."
So, for the specific understanding, for the understanding of the form of every
economic epoch the general determinations are not valid precisely because
they relate equally to all epochs. But does this mean that they are completely
not needed to us? What does it mean to understand the specificity of any
phenomenon? It means - to show in which specific form, in which concrete
configuration operate the social laws, characteristic of the given genus of
phenomena. Strip, for instance, "the specifically capitalist character of both
wages and surplus-value", and "before us will appear already not these forms,
but merely their rudiments, which are common to all social modes of
production" 5. To boil down the specific form to its common rudiments in
theoretical form also is the task of every science, for which there would be no
place, if "the form of appearance and the essence of things coincided."
Historical epochs are not separated from one another by a Chinese wall of full
discriminating dissociation. They have a common ground - the production and
reproduction of material life. The ignoring of this common ground Marx ridiculed,
for instance, in one of his letters to Kugelmann. "The chatter about the need to
prove the concept of value arises only from complete ignorance both of the
subject under discussion and of the method of science. Every child knows that
any nation that stopped working, not for a year, but let us say, just for a few
weeks, would perish. And every child knows, too, that the amounts of products
corresponding to the differing amounts of needs demand differing and
quantitatively determined amounts of society’s aggregate labour. It is self-
evident that this necessity of the distribution of social labour in specific
proportions is certainly not abolished by the specific form of social production; it
can only change its form of manifestation. Natural laws cannot be abolished at
all. The only thing that can change, under historically differing conditions, is the
form in which those laws assert themselves. And the form in which this
proportional distribution of labour asserts itself in a state of society in which the
interconnection of social labour expresses itself as the private exchange of the
individual products of labour, is precisely the exchange value of these
products." 6
Political economy is the science of the specific social forms, in which is realized
the "exchange of matter between man and nature." To understand these forms
knowledge is necessary of the basis of every economic system, common to all
epochs of human history. The categories and laws, which relate to it, will carry a
"super-historical" character, and, nevertheless, they are a mandatory
introduction in the study of a historical economic form - for instance, capitalist
production. This will be, if anything, an universal sociological determination,
which forms the fundament of economic study, not the entrance in the system of
political economy in the precise sense of the word. To such common
determinations relates, for instance, the teaching on the production forces. That
chapter of Marx's "Outline" which investigates the common rapport of
production, distribution, exchange and consumption, can in this way serve as a
sample of such "super-historical" analysis. To this same type relates the chapter
in volume 1 of "Capital", describing the process of labour. Very clearly Marx
moves on this "material-technical" point of view for more graphic depiction of
the specific capitalist forms of production. Such pages, devoted to the
conditions of reproduction of the basis of capital or the study of its ground,
invoke the different duration of turnovers of capital. Marx notes, for instance,
that also under socialist forms of economy the difference in duration of turnover
- or period of production - will have great significance for the whole social
system. "Under socialized as well as capitalist production, the labourers in
branches of business with shorter working periods will as before withdraw
products only for a short time without giving any products in return; while
branches of business with long working periods continually withdraw products
for a longer time before they return anything. This circumstance, then, arises
from the material character of the particular labour-process, not from its social
form."
In general, in "Capital" and in "Theories of surplus value" are scattered many
valuable thoughts, relating, so to say, to the domain of "super-historical
economy", to the domain which makes up the favorite subject of study of
bourgeois economy, not able, however, of surpassing trifle banalities. Precisely
bourgeois economy compromised in the eyes of Marxists this necessary
constituent element of economic theory, concentrating all attention on the
general laws and erasing every border between different economic social forms
of production. For this it consciously or unconsciously transfers to all epochs the
categories and laws of bourgeois economy. Marxist theory set science a limiting
frame, made the forms of economic relations the center of study. But Marxist
literature after Marx very often turned to the reverse absurdity - to the full
disregard of the common laws of economic life which hide behind one or other
of the "forms of appearance."
It may seem, that our reasoning goes along the line of Bogdanovist theory,
according to which the task of economic study begins only then when with the
help of abstract analysis the external shell of phenomena can be overcome,
releasing them from the particularity and "appearance" hiding the in them
common economic bases (see Bogdanov's introduction to the new edition of his
"General theory of capitalist economy", 4th edition of the "Course" of Bogdanov
and Stepanov (1925, 306), and also the discussion on the subject of pol.
economy in the pages of "Vestnik Kommunisticheskoj Akademii"). But this is
only an apparent similarity. We consider, that economic theory in the real sense
of the word begins precisely then when from the common laws the study moves
to the analysis of the "form", and not the other way. The viewpoint of Bogdanov
is the viewpoint of all bourgeois economy, making the "highest laws" the center
of science. We consider it, however, from the other side, a mistake to desire to
limit economic science exclusively to the domain of form and even the one
specific form of capitalist-commodity production. How can one boil down the
"form of appearance" of things to their rudiments, if these rudiments are
unknown? 7.
Let's turn now to the historical categories in the real sense of the word. Don't we
deal here with an actually similar sum of concepts? Can we not, for instance,
consider the category of "profit", "capital", "rent", "wage labour", "commodity",
etc. - to be similar to the concept of "abstract labour", "labour power"?
On this account we already find a fairly clear and exhaustive consideration in
the "Outline". Every concrete economic epoch includes in it "many
determinations", playing in relation to it the role of "simplest abstraction" or
"category." These categories must be found by means of abstract(/generalizing)
analysis, dissecting reality into its elements. When the categories are found and
determined, begins the reconstruction in thought of the concrete reality from
which they were first obtained 8. Looked at in such connection, these abstract
determinations have full meaning only in such concrete situation, which
represents the starting point of analysis, and must be situated in the the
sequence which answers to their position in the real phenomena. However here
the case is possible where a few of these categories develop not in the
historical succession which conforms with their place in abstract theory. They
can, for instance, precede that historical epoch in which they get more fully
developed. Thus, for example, money gets its all-round meaning only in
conditions of capitalism, but historically exists long before the capitalist era. To
the contrary, other categories get their definition exclusively in the frame of
determined social formations, like, for example, surplus value, capital, wage
labour, wages, etc. "Bourgeois society is the most developed and the most
complex historic organization of production. The categories which express its
relations, the comprehension of its structure, thereby also allows insights into
the structure and the relations of production of all the vanished social formations
out of whose ruins and elements it built itself up, whose partly still unconquered
remnants are carried along within it, whose mere nuances have developed
explicit significance within it, etc. Human anatomy contains a key to the
anatomy of the ape. The intimations of higher development among the
subordinate animal species, however, can be understood only after the higher
development is already known. The bourgeois economy thus supplies the key
to the ancient, etc. But not at all in the manner of those economists who
smudge over all historical differences and see bourgeois relations in all forms of
society... Further, since bourgeois society is itself only a contradictory form of
development, relations derived from earlier forms will often be found within it
only in an entirely stunted form, or even travestied. For example, communal
property. Although it is true, therefore, that the categories of bourgeois
economics possess a truth for all other forms of society, this is to be taken only
cum grano salis. They can contain them in a developed, or stunted, or
caricatured form etc., but always with an essential difference" 9.
In this way, an enrollment of the basic categories of political economy,
appraising commodity production, with historical disregard, does not yet solve
the question about the character, about the physiognomy of every of them.
Further study is necessary. One must establish, whether a given category is a
new formation, is characteristic exclusively to the given social system, distorted
remnants of previous epochs, or further developed elements, laying already in
the preceding period. Herewith it could happen, that the historical sense of a
given category will consists only in the fact that its proper economic content,
having a common character for different or even for all epochs, could only in the
most full image be manifested in the given situation. Below we'll see, that
precisely to this last group the concept of abstract labour relates, which Marx in
detail analyses in set out connections. Standing still at the plan of setting out the
subject of political economy, Marx writes:
"The order obviously has to be, firstly the general, abstract determinants which
obtain in more or less all forms of society, but in the above-explained sense,
secondly the categories which make up the inner structure of bourgeois society
and on which the fundamental classes rest" 10. And the enumeration goes
further of elements of bourgeois society in the actual sense of the word.
These common abstract determinations are, on the one side, super-historical,
relating to all epochs, on the other, - historical, in that only at a particular
historical stage they get fully developed, appearing in comprehensive form.
Marx relates the category of abstract labour precisely to this group. Abstract
labour is not a category, constituting the internal structure of bourgeois society.
It relates to all epochs, in so far as it is taken as a concept, but it becomes a
"practical truth" only on a particular stage of historical development. Such
category could be called conditional-historical(/условно-историческим).
Rubin considers it necessary to give the concept of abstract labour another
meaning. "The expenditure of human energy as such, in a physiological sense,
is still not abstract labor, labor which creates value, even though this is its
premise. Abstraction from the concrete forms of labor, the basic social relation
among separate commodity producers, is what characterizes abstract labor" 11.
This abstraction happens on the market, where products of labour are
exchanged for others and thereby turn private into social, and concrete into
abstract labour. The latter arises not in production, but in the act of exchange.
The conversion of concrete into abstract labour is not a mere logical
abstraction, for finding a common unit of measure, but is a spontaneous social
act, really happening on the market. Where there is no market and exchange,
there is also not this conversion. Then the social character of labour is
expressed directly in natural or concrete form, in as much as different labours
are performed by members of the aggregate social organism in the manner of a
conscious distributive function. If abstract labour is considered merely as
physiological expenditure of energy and thus given a super-historical character
to it, then it's not understandable, in what way the non-historical category -
abstract labour - can create such an historical category, as value.
So in broad terms goes the thought of Rubin, from whom Voznesenskij borrows
the basic arguments, adding to them dubious props. Thus, for Voznesenskij,
abstract labour, although both including in itself historical and social moments,
does not stop at the same time to be physiological labour and, as such, exists
already in the process of production.

It should be remarked, that the general form of Rubin's viewpoint can be met in
the much earlier work of T. Grigorovich "Theory of value in Marx and Lassale",
where the conception of abstract labour is given the same sense... "Labour,
creating exchange value, i.e. abstract-general labour, is a product of such an
economic regime, under which production is not for oneself, but for other
consumers, and under which production is not only for consumption, but also for
the benefit of exchange" (p. 77)12.
And so, the two-fold character of labour and the category of abstract labour -
are forms, inherent exclusively to commodity production. All other systems of
production know only labour in its natural concrete form. Abstract labour - is an
historical category.

First of all, in these expositions clarity is absent on the question of what should
be understood in this case under historical category. But from the whole course
of analysis it is clear that the concept "historical" bares here the narrowest
meaning, i.e. abstract labour, in Rubin's opinion, is a category of commodity
economy in the same sense, as money, value, commodity, capital, etc. Here we
must note the direct break from Marx, who in his "Outline" in detailed image
analyses this question. Marx describes, what complex evolution the conception
of labour undertook in the mercantilists, monetarists, physiocrats, classics,
when from separate aspects of labour, like commercial or agricultural, the
classics went to the abstract universal conception of activity, creating wealth, or
labour in general. "It might seem that all that had been achieved thereby was to
discover the abstract expression for the simplest and most ancient relation in
which human beings – in whatever form of society – play the role of producers.
This is correct in one respect. Not in another" 13. And further he shows, that this
simple abstraction, "which expresses an immeasurably ancient relation valid in
all forms of society, nevertheless achieves practical truth as an abstraction only
as a category of the most modern society" (p.28). In other words, Marx relates
abstract labour to the conditional-historical categories, to use the above-given
terms. Abstract labour, labour in general, labour as physiological expenditure of
muscles, nerves and so on - is a concept, going back far outside the internal
organization of commodity production, a general concept. But in practice it can
apply fully only under specific conditions. What are these conditions? Firstly, the
possibility to generalize from concrete forms of labour, an indifferent relation to
them is conceivable only on such a stage of economic development, when not
one form of labour is dominant. Secondly, this presupposes such an economic
order, where with the most ease individuals move from one type of labour to
another, where specific labour "is a matter of chance for them, hence of
indifference. Not only the category, labour, but labour in reality has here
become the means of creating wealth in general, and has ceased to be
organically linked with particular individuals in any specific form."
"This example of labour shows strikingly how even the most abstract categories,
despite their validity – precisely because of their abstractness – for all epochs,
are nevertheless, in the specific character of this abstraction, themselves
likewise a product of historic relations, and possess their full validity only for and
within these relations" (p. 28) 14.
The conception of abstract labour developed fully only with commodity
production, but by itself it relates to all epochs. What must be its internal
content, in order to be able, though it would be only in this limited sense, to
relate to all epochs? Precisely this, which Marx gives: labour, as expenditure of
physiological energy in indifferent form. The definition, which Rubin gives, does
not allow to transfer the category of abstract labour outside of commodity
production.

If abstract labour, exists, so to say, ideally in previous to commodity production

epochs, finding only in the commodity world ground for its practical
manifestation, then what is its fate in the circumstance of transition from
commodity to organized socialist production? Does this category disappear
under socialism? The answer to this question is given by the analysis of those
conditions, under which, for Marx, abstract labour gets the significance of
practical truth. We enumerated them above. Among them there is not one,
which would be "abolished" in socialism. On the contrary, in socialist society
they get further developed.
The absence of any specific dominant type of labour, easy transfer from one
type of labour to another, loss of the connection of the labour process with
determined individuals - all this occurs under socialism in its highest
development. It is arrant nonsense - the "position" of A. Voznesenskij, that
under socialism specialization stops. "If we take family for a society, then we
say: here the labour of individual members of production becomes labour
general directly in its concrete form. It does not cease being connected to
determined individuality (personhood) and determined speciality." This is a fully
distorted perspective of development. Let's recall, how apropos this Engels
derided Duhring. "It is true that, to the mode of thought of the educated classes
which Herr Dühring has inherited, it must seem monstrous that in time to come
there will no longer be any professional porters or architects, and that the man
who for half an hour gives instructions as an architect will also act as a porter
for a period, until his activity as an architect is once again required. A fine sort of
socialism that would be—perpetuating professional porters."
In this same spirit Marx and Engels state in their work "German ideology",
published in the first volume of Ryazanov's "Archiv"... "In communist society...
society regulates the general production and thus makes it possible for me to do
one thing today and another tomorrow, to hunt in the morning, fish in the
afternoon, rear cattle in the evening, criticise after dinner, just as I have in mind,
without ever becoming hunter, fisherman, herdsman or critic." 15
Of course, if Marx and Engels would voice these thoughts in our day, they
would illustrate with more modern examples. But it does not change the
substance of the matter.
Capitalist technique led to the point that not only for the worker the concrete
content of his labour becomes indifferent, but that the very manifestations of
labour in their concreteness (labour in the economic sense, as "life necessities")
increasingly draw closer to one another, in as much as one after another
function of human organs is substituted by the work of automates. This process
gets an even more gigantic development under socialism. Hence, those
economic relations, which created the soil for the separation of concrete from
abstract labour under capitalism, will develop even more after its downfall. The
weakening of the duality of labour will then happen not in the sense of a return
to patriachism, to the attachment of people by determined specialities, but in the
sense of drawing more and more close the forms of concrete labour,
transforming them in an uniform process of expenditure of energy under the
supervision on the working machine. Outside this process labour changes into a
simple "play of life forces", to which economic categories in the true sense
already do not relate. "Labor has become not only a means of life but life's
prime want" 16.
Rubin utilizes for the proof of his theory the chapter on commodity fetishism,
where Marx, counter-poses commodity production to other forms of production,
to clarify the characteristic particularity of the organization of labour in the epoch
of commodity production. From this chapter he endeavors to make the following
conclusion: under all other economic forms (in patriarchal order, in feudalism, in
society of free associated producers), every determined work, every concrete
form of labour is at the same time also directly social labour, but in commodity
production labour can find its social character, only by taking the form of its
opposite - abstract labour. Abstract labour is there the fundamental specific
category of commodity production. Let's verify.
In every consciously organized social economy labour is social already in its
direct concrete form. That is true. In commodity production it becomes social
through turning in abstract labour. That is also true. But is it true, that for this
reason the category of abstract labour becomes superfluous in all other forms of
production, besides a commodity one? That would be so if abstract labour
would only have such an assignment, which is imputed to it, if its whole role
would boil down to give determined forms of labour the character of social
labour, in conditions of commodity production. But the issue is that even in
those economic forms, where concrete labour emerges directly in social quality,
where it does not need the curved mirror of reified relations and abstract
categories, the function of abstract labour is absolutely necessary, in as much
as the issue is about the calculation of social labour energy. The calculation can
happen only with indifferent, i.e. abstract counting units. In the same chapter on
commodity fetishism Marx with full determination shows, that all mystifications
of commodity production happen not at all from the change of concrete in
abstract labour, but from the reified expression of this abstraction. About what is
the issue in that chapter? About commodity fetishism. Marx clearly and distinctly
shows, that neither in concrete labour, nor in abstract labour, as such, there is
any mystique, any mysteriousness at all. "So far as it (a commodity) is a value
in use, there is nothing mysterious about it, whether we consider it from the
point of view that by its properties it is capable of satisfying human wants, or
from the point that those properties are the product of human labour... The
mystical character of commodities does not originate, therefore, in their use
value. Just as little does it proceed from the nature of the determining factors of
value (i.e. abstract labour. I.D.). For, in the first place, however varied the useful
kinds of labour, or productive activities, may be, it is a physiological fact, that
they are functions of the human organism, and that each such function,
whatever may be its nature or form, is essentially the expenditure of human
brain, nerves, muscles, etc. Secondly, with regard to that which forms the
ground-work for the quantitative determination of value, namely, the duration of
that expenditure, or the quantity of labour, it is quite clear that there is a
palpable difference between its quantity and quality. In all states of society, the
labour time that it costs to produce the means of subsistence, must necessarily
be an object of interest to mankind, though not of equal interest in different
stages of development. And lastly, from the moment that men in any way work
for one another, their labour assumes a social form."
Whence, then, arises the enigmatical character of the product of labour, so
soon as it assumes the form of commodities? Clearly from this form itself. The
equality of all sorts of human labour is expressed objectively by their products
all being equally values; the measure of the expenditure of labour power by the
duration of that expenditure, takes the form of the quantity of value of the
products of labour; and finally the mutual relations of the producers, within
which the social character of their labour affirms itself, take the form of a social
relation between the products 17.
So, not in abstract labour, which makes up the "content determining value",
must one search the particularity of commodity production, not in the equality or
equalization of different human work and not in the measurement of these
works's labour time, nor is it the very social connection of producers, but
exclusively in this, that all these definitions get a reified expression. Other social
forms do not have the need for this roundabout, "there is no necessity for labour
and its products to assume a fantastic form different from their reality. They take
the shape, in the transactions of society, of services in kind and payments in
kind. Here the particular and natural form of labour, and not, as in a society
based on production of commodities, its general abstract form is the immediate
social form of labour. Compulsory labour is just as properly measured by time,
as commodity-producing labour; but every serf knows that what he expends in
the service of his lord, is a definite quantity of his own personal labour power."

In commodity production the private labour of independent producers turns

social on the market, firstly, because, its products take the form of commodities,
and, secondly, because thanks to this mutual equating of commodities and only
through equating takes place this generalization(/abstraction) from concrete
particular labour, changing concrete in abstract labour. Through abstraction
from the concrete form through the mediation of the category of abstract labour
there exists the social connection. In organized forms of production the social
connection exists, as a pre-given fact. Labour in the very beginning emerges as
social, and not private labour, the product must not transform into a commodity
in order to get a social claim; it is a social product with the first moment of its
existence. Therefore also labour is here social labour already in its particular
concrete forms, not needing for this any sort of transformation and
generalization. From this would follow such a chain of conclusions: in organized
society there are no commodities, but only products. There is no private labour,
but only social labour, the work of the conscious organs of the social whole.
There is no abstract labour, but only concrete labour.
However this erected scheme could be adopted as a whole only in the case that
the real concepts of "commodity", "private", "abstract" were located in an
uniform symmetrical position to the other series of definitions, "product",
"social", "concrete". Meanwhile, these antitheses are not equivalent. That the
categories "commodity", "private" labour disappear, once only the market
production ceases - this is understood by itself. This follows from the very
definitions. We name commodities products of labour, going for exchange.
Once there is no exchange, there are no commodities. We name private labour
the labour of independent, autonomous producers. If we liquidate their
autonomy, if they turn into direct subordinate organs of the whole, then thereby
disappears the category of private labour. To the concept of abstract labour now
likewise is tried to give such a meaning, which would lead to the destruction of
this category with the transition to other forms of production. This follows from
the point that the social character of labour, which in market production is
expressed with the help of abstraction, in organized society emerges directly.
Such a mechanical exposition about symmetric laws represents, however, the
purely arbitrary construction of the new commentators. In Marx it is not. In his
polemics with Gray on the question of the direct measurement of the value of
commodities without the help of money, Marx wrote: "Commodities are the
direct products of isolated independent individual kinds of labour, and through
their alienation in the course of individual exchange they must prove that they
are general social labour, in other words, on the basis of commodity production,
labour becomes social labour only as a result of the universal alienation of
individual kinds of labour. But as Gray presupposes that the labour-time
contained in commodities is immediately social labour-time, he presupposes
that it is communal labour-time or labour-time of directly associated individuals.
In that case, it would indeed be impossible for a specific commodity, such as
gold or silver, to confront other commodities as the incarnation of universal
labour and exchange-value would not be turned into price; but neither would
use-value be turned into exchange-value and the product into a commodity, and
thus the very basis of bourgeois production would be abolished.18" It's easy to
note, that in this in brief but clear counter-position of commodity and socialist
production, is missing exactly that link, to which Rubin clung: the antithesis of
concrete and abstract labour, although it is emphasized that in socialist society
labour needs no intermediary links of exchange and alienation, to become
social labour.
Abstraction in relation to labour is necessary not only to turn private forms of
labour into the qualitatively indifferent category of social labour. It's necessary
also both for the summation and for the accounting of the labour process in any
society, which, as Marx underlines, always is interested in the amount of
expended labour time. Rubin himself in another chapter of his work speaks of
the equalization of different forms of labour to one another as well as of
equalization of things, for instance, from the point of view of their relative utility
(in socialist production). The difference between socialist and commodity
production consists only in this, that in commodity society the equalization of
labour is possible exclusively through masked forms of comparison of products
of labour, like commodities, whereas in socialist society these two acts are
completely independent from one another. This is the aptly captured difference.
But in what form must this equalization of labour happen? The comparison of
labour, expressed in various concrete forms, is possible only through their
reduction to one standard. A. Voznesenksij says, that "concrete labour can
magnificently be measured precisely in its concrete form. In relation to this was
not left any doubt by the observation of Marx in § 4, ch.1, vol. 1 of "Capital",
when he investigates feudal production, in particular, family peasant
production." In these notes of Marx there is not what A. Voznesenskij found
there, who simply doesn't understand about what the issue is. "Concrete labour
can be measured in concrete form." But what, in substance does such
measurement mean? To measure - means count an amount. The amount of
labour must be expressed in determined units. If Voznesenskij takes for such
unit any concrete thing, like the product of concrete labour, then in the count it
will play not the role of a thing, as such, but of an index of the determined
amount of labour energy 19. The very attempt to measure with the help of given
things the amount of labour of other industries would result in comrade A.
Voznesenskij's complete unawareness of the fetishism of the money form, of
bringing it in this completely unexpected way into socialist society. The attempt
to turn away from abstract labour leads... to commodity fetishism, such is the
fate of excessive "deepening" of concepts. The measure of labour in any
production system exists for Marx in nothing other than labour time, under the
help of which must happen also for Rubin the equalization of different forms of
labour to one another. Here is what Marx says about socialist production. "After
the abolition of the capitalist mode of production, but still retaining social
production, the determination of value continues to prevail in the sense that the
regulation of labour-time and the distribution of social labour among the various
production groups, ultimately the book-keeping encompassing all this, become
more essential than ever" 20. Characterizing the social relations in the first
phase of communist society, Marx writes: "the social working day consists of the
sum of the individual hours of work; the individual labor time of the individual
producer is the part of the social working day contributed by him, his share in it.
He receives a certificate from society that he has furnished such-and-such an
amount of labor (after deducting his labor for the common funds); and with this
certificate, he draws from the social stock of means of consumption as much as
the same amount of labor cost! The same amount of labor which he has given
to society in one form, he receives back in another. Here, obviously, the same
principle prevails as that which regulates the exchange of commodities, as far
as this is exchange of equal values. Content and form are changed, because
under the altered circumstances no one can give anything except his labor, and
because, on the other hand, nothing can pass to the ownership of individuals,
except individual means of consumption. But as far as the distribution of the
latter among the individual producers is concerned, the same principle prevails
as in the exchange of commodity equivalents: a given amount of labor in one
form is exchanged for an equal amount of labor in another form 21."
In the second phase of communism these "birthmarks" disappear, and
communist society leaves the womb of capitalism, in as much as the issue is
about principles of distribution. But there remains, however, another necessity -
the correct distribution of labour between different branches and comparison of
costs and results inside every factory. Without quantitative account of labour
here organized production is not possible. But which labour here is being
accounted? Labour in general, as determined form of productive energy,
regardless of the form of its manifestation. If Rubin and Voznesenskij consider
this labour abstract labour, they must make a special third category for it,
because it is inconceivable to account concrete labour with abstract units. The
very concept of accounting means generalizing from any quality. Arithmetic is
the abstract science of numbers.

But to us will be replied so: the fact that concrete labour can be considered from
the quantitative side, does not yet make it abstract labour. The process of
accounting is a generalizing operation. But the generalizing here exists only in
contemplated form. Real life is not concerned with these abstractions, but with
the concrete forms of labour and the determinations of consumption goods. On
the contrary, in commodity production the process of generalization from the
concrete property of labour and things is a real act, of everyday and every hour
taking place on the market. Here is that abstraction, laying in the very objective
nature of exchange, and which generates the category of abstract labour.

What, however, role is fulfilled by this "objectivized" abstraction? The role of

regulator of social production. Does this economic necessity disappear under
socialism? No, on the contrary, regulation only under socialism gets an all-sided
character. Regulation assumes the accounting of labour, the calculation
abstracting from concrete property and quality. If the regulation of labour - is an
economic necessity under socialism (and under every other form of production,
in as much people always were interested in the amount spent of existing
labour on production resources), then in such a system of measuring the
necessity continues of generalizing from concrete labour. Abstraction in those
conditions - is not a luxury, not an empty game of fantasy, but a life
requirement. In commodity society it takes place spontaneously and through the
mediation of things, in organized society - consciously. But from this its
qualitative nature does not derive. The difference is only in this, that under
socialism "principle and practice are no longer at loggerheads, while the
exchange of equivalents in commodity exchange exists only on the average and
not in the individual case" (Critique of the Gotha Programme).

In this way, not only labour in the epoch of commodity economy, but also all
labour of people, producing in society, "all socially determined individual
production" characterizes, for Marx, the dual character of labour. The distinction
consists only in the following. In commodity production this duality of labour
acquires practical demonstration in the process of exchange. On the other side,
in commodity society concrete useful labour emerges directly, as private labour.
Social labour it becomes only through things, through commodity exchange,
which simultaneously converts concrete labour in its opposite. On the contrary,
in all other economic forms both concrete and abstract labour are only two sides
of the same social labour. Concrete labour is social labour in the sense that it
satisfies in particular form a particular social requirement in the quality of a
specific division of social labour. Abstract labour is social labour in the sense
that with it is expressed the social character of equated heterogeneous work.
Further, from the objective point of view concrete labour also in conditions of
commodity economy likewise is social labour. This is expressed in the point that
the product of labour must be useful, must satisfy a social demand. "The twofold
social character of the labour of the individual appears to him, when singularly
reflected in his brain, (only) under those forms which it (this social character)
takes on in every-day practice by the exchange of products. In this way, the
character that his own labour possesses of being socially useful takes the form
of the condition, that the product must be not only useful, but useful for others,
and the social character that his particular labour has of being the equal of all
other particular kinds of labour, takes the form that all the physically different
articles that are the products of labour - have one common quality, viz., that of
having value" 22. Here we have the reply as well to the second reproach which
was directed at the address of the physiological definition of abstract labour, -
the reproach that such definition does not give the social character of labour. In
the opinion of Rubin, the counter-position of concrete and abstract labour is not
a counter-position of genus and species concepts, but the analysis of "labor
from two standpoints: the material-technical and the social. The concept of
abstract labor expresses the characteristics of the social organization of labor in
a commodity-capitalist society" 23.
Such an approach to the question is, in our opinion, incorrect. Both definitions of
labour, as concrete, and as abstract, already contain the preceding social
character of labour. In the beginning of his "Outline" Marx writes: "To begin with,
the question under discussion is material production. Individuals producing in a
society, and hence the socially determined production of individuals, is of
course the point of departure." Concrete labour is not at all only a material-
techinical category. Rubin himself, in another place says, referring to Marx, that
in every other society, but a commodity one, the social character of labour is
expressed in its directly natural form. Therefore it, in those conditions, becomes
a category with social content. But also in commodity production concrete
labour only in appearance, only subjectively for the producer is a material-
technical category, of private labour. From the point of view of the whole
process of reproduction it emerges as socially determined labour, because on
society depends the character and direction of private useful work. In as much
as concrete labour splits into forms and subforms together with the progress of
the social division of labour, and in as much the latter is a social fact, then also
concrete labour thereby acquires a social character. Yes otherwise it also could
not be, because the concepts of "concrete" and "abstract" relate not to different
things, but to one and the same thing, to social labour, which is given, as the
primary matter of production life.
Together with this is resolved also the question about the social character of
abstract labour. Abstract labour is social labour, taken from the point of view
simple, homogeneous human energy, taken not in the diversity of its function,
manifestations and results, but in the uniformity of its physiological process. But
society is not an organism in the deep physiological sense of the word. The
expenditure of physiological energy can happen socially not directly, but
through individuals, as its members, emerging consciously (in organized
society), or unconsciously (in a commodity one), as organs of the social whole.
The reduction of abstract labour to a simple, impersonal, though also carried out
by individual persons, expenditure of physiological energy - that also is the
highest expression of the social character of labour, regardless of the fact that
in appearance it represents to oneself a naturalistic category. "Physiology" in
the given case is a pseudonym of depersonalized, absolute equality of all forms
of human labour, the equality of all producers, taken, as such, i.e. in the simple
quality of conductors of social energy. What more social content can one
demand from economic categories? 24
But, perhaps, here abstract labour is charged with another requirement?
Perhaps, here under social content is understood a content, adequate for any
specific social relations and varying together with them?
This brings us to the question about the historical character of abstract labour,
and here remains only to repeat our consideration about the historical
categories in general.
Let's stand now before the third objection against the physiological conception
of abstract labour. "It is not possible to reconcile a physiological concept of
abstract labor with the historical character of the value which it creates. The
physiological expenditure of energy as such is the same for all epochs and, one
might say, this energy created value in all epochs. We arrive at the crudest
interpretation of the theory of value, one which sharply contradicts Marx's
theory." 25 And in another place: "The accepted conception of abstract labor as
labour expenditure in the physiological sense of the word, inevitably is a
naturalistic interpretation of Marx's theory of value." 26
First of all, absolutly nothing justifies the argument, that a historical category
needs to arise only from another historical category. After all in the final light
every historical form of production has its fundament in the eternal relation
between man and nature, the forces of production, given by nature, and labour,
"which itself is only the manifestation of a force of nature - human labor power"
(Critique of the Gotha Programme). This labour and this labour power are the
sources of every development and, hence, every historical category. He who
claims, that historical categories can be generated only by other likewise
historical categories, leaves out of sight, that a category is in general only the
form of appearance of ahistorical laws, as Marx recalled in the by us cited letter
to Kugelmann. Concerning the special question on the correlation between
value and abstract labour, then the argument here basically is about a simple
misunderstanding of the word "create", to which is attached a deep materialist
sense. Thus, Rubin writes: "Only by the firm establishment of this concept of
abstract labour, we correctly understand the fundamental position of the marxist
theory of value, stating, that labour "creates" value. On first sight this position
prompts a whole series of questions and problems. Labour, labour activity is
nothing phsyicial, belonging to the world of phenomena of nature. If this labour
creates value, it's clear, the latter represents a sort of property of a thing as
such, as an object of nature" 27. All these problems stem not from taking
abstract labour in the physiological sense, but from taking the word "create" in
the vulgar physical sense. Meanwhile, Rubin himself puts this word in quotes,
feeling, that this term must be understood differently. Value is created by
abstract labour in the sense, that it assumes the form of value of a product of
labour. "Exchange value is a definite social manner of expressing the amount of
labour bestowed upon an object" (Marx) - and that is all. It's clear, that the mode
of expression can and must carry a historical character, whereas that which
serves as the subject expressed, does not depend on the evolution of social
form. There is not any difficulty or contradiction here, if we only give things their
real meaning.
Meanwhile, if we hold on to the defintion of Rubin - and here we move to the
positive part of his theory - then it's necessary to come inevitably to the
conclusion, that not abstract labour creates value, but, on the contrary, the
category of value creates the category of abstract labour. In Rubin there are
several different and almost always muddled definitions of abstract labour. Let's
give some of them. "Abstraction from the concrete forms of labor, as the basic
social relation among separate commodity producers, is what characterizes
abstract labor" (p. 102). (Abstraction... is abstract labour - not an entirely
intelligible definition). "Abstract labour emerges only in the real act of market
exchange. Physiological equability(/equalization) of different forms of human
labour exist always and by itself represent a fact, indifferent for the social forms
of production. But the equability of different forms of labour, created in
commodity production by the process of exchange, the equability between
labours, spent in different branches of production, the flowing of labour from one
branch to another branch, so to say, the aspiration of all labour reservoirs of
society toward an equal level, - this is a social phenomenon, inherent to
commodity production and finds its expression with the concept of abstract
labour" (p. 103).

This definition too is awkward ("the striving of reservoirs toward an equal level").
But it is above all patently erroneous. To begin with: to say, that "the
equalization of different forms of labour, created in commodity production in the
process of exhange", is a phenomenon, inherent only to commodity economy -
means to say nothing. By itself it's understood, that there, where there's no
exchange, there's no commodity production. The other affirmation, that the
aspiration of labour to equal levels, the striving to equalization etc. is typical only
of commodity production, obviously is untrue. Among other things, Rubin uses
here the term "social" in the sense, analogous with the term "market" or
"commodity" production. Such usage of the term is far from accepted.

Finally, it should be noted here, that for Rubin abstract labour emerges only "in
the act of market exchange", and, hence, before exchange does not exist.
Further on Rubin even more emphasizes this position, indicating, that the
equalization of labour in commodity society happens not directly, "but through
exchange, not in the process of production. The concept of abstract labor
expresses the specific historical form of equalization of labor."

Rubin thinks, that, "only by the firm establishment of this conception of abstract
labour, we can correctly understand the fundamental position of the marxist
theory of value." In what consists this correct understanding? In this: ..."If
abstract labour is understood socially, the expression of the social form of
organisation of labour in commodity production," then "this abstract labour, in
other words the commodity form of production, also creates the value of the
products of labour, i.e. that property of them, which is the result of the given
social (commodity) form of production, but attributed to the things... Not labour
as such, but only the organisation in the given social (commodity) form creates
value. Thus, and only thus, should be understood the position, that abstract
labour creates value" (p. 109). However, if in this consists the whole result of
the lenghty exposition, then in vain our author has spent so much effort. That,
what he here "proved", is also not at all the required proof. Indeed: we here
arrived to the point that the concept of abstract labour is completely blurred in
mist, being identified with the concept of commodity produciton as a whole, after
which it doesn't take any trouble to prove, that precisely commodity production
creates value. Who did not know this? The theoretical excursus turned out to be
in the full sense fruitless. Further attempts of the author to get out of the
difficulties only increase the confusion. The interrelation between abstract
labour and value he further develops in the following way: "The relations
between abstract labor and value cannot be thought of as relations between
physical causes and physical effects. Labour - that is abstract labour, is the
production relation between private commodity-owners, connected through
exchange. Value - is the material expression of that production relation. Labour
and value are connected between each other like the production relation of
people and its material(/reified) form... Such precise sense, as was already
shown, has the expression of Marx that value is "reified," "materialized",
"congealed" labour. Value is the reified expression of the specific social
properties of labour, and precisely, the organisation of it on the basis of the
independently operating production of private commodity-owners and their
connections in exchange." (p. 110).
The more words, the less sense. To say "labour... is a production relation" - is
the same as to say "production - that is production relation", i.e. nonsense.
Labour is then the ground, on which is build the relation, but labour and labour
relation - are the same thing. That value is "reified" labour - this is true, but this
must be understood in the same sense like the expression "labour creates
value", i.e. not in the physical, but in the figurative sense, namely: labour gets its
material(/reified) expression in things, representing the labour relation.
But worst of all is that all the by us cited defintions of abstract labour lead to the
inevitable conclusion: not labour creates value, but on the contrary. In fact:
abstract labour emerges only in exchange. But exchange is before all else an
exchange of things, equalizing one to another. The process of this exchange
also is the process deriving value, as the relation between producers. The
category of abstract labour in the rubinist conception is the result of the whole
process, and not its starting point. Things, in this way, get in the scheme of
Rubin a rather peculiar sequence, and the whole labour theory of value gets a
metaphysical character.
The content of all the by us cited attempts at defining abstract labour - if only
there was any content in them - leads in Rubin to splitting empty abstractions
into four. This is not only a generalization from the concrete properties of labour,
this - is an abstraction from labour, as impersonal physiological activity, an
abstraction from an abstract concept. For Rubin physiologically universal labour
- is only a prerequisite of abstract labour, but not the same labour, just as the
concrete form of labour - is a prerequisite for the deduction of physiological
labour. In this way, not only value, but also abstract labour does not include in
itself a single atom of matter. The concept of labour is finally lost and replaced
by a perfectly sterile, vague and confused social-economic excursus at the end
of which we arrive at the conclusion, that abstact labour - is not labour, but only
the known form of its organisation. For what is this Haarspalterei necessary?
We already above dismantled its "social-historical" motives. But Rubin
underpins the necessity of such definition with two more arguments. He
believes, that only the by him given definition of abstract labour gives the
possibility, firstly, to install an exact distinction of the concepts "labour" and
"labour power", and, secondly, to grasp the meaning of the marxist position, that
labour by itself does not have value.
"Only from this viewpoint, - Rubin says, - we elucidate the sharp difference
which Marx installed between labour, as creator of value, and labour power. It
would be completely useless to construe these two concepts, as two real
objects, distinguished by their natural properties. This is precisely the treatment
of Buch: "Labour - is the process of the transformation of potential energy of our
body into mechanical work... Labour power - is the stock of potential energy of
our organism, not yet transformed into mechanical labour". Such mechanical
position completely distorts Marx. "Labour" and "labour power" are not different
objects of the external world, but different social characteristics of labour,
different "Formbestimmtheiten." Abstract labour, creating value, - this is the
expression of commodity society, as the aggregate of autonomous private
housefolds, connecting production relations by exchange. Wage labour or
labour power - this is the expression of labour, separated from the means of
production, opposed to it and incorporated with them in the form of an employee
contract between capitalists and workers" (p. 111). We gave these lines amply
in order to show in all clarity the inevitable distortion of marxist categories, if
they are forcibly squeezed in the rubinist "social-historical scheme." Rubin
effectively erases here every border between "labour" and "labour power",
taken, as phenomena of the external world. The attempt to separate them he
beforehand announces hopeless, though he justifies with nothing his
unappealable verdict. Meanwhile, the formulation, which we find in Marx, does
not leave any doubt on this account: "That which it (political economy. I.D.) calls
value of labour, is in fact the value of labour-power, as it exists in the personality
of the labourer, which is as different from its function, labour, as a machine is
from the work it performs" (Capital. vol. 1, ch. on wage). It seems that a clearer
expression is not possible. For Marx, the distinction between labour power and
labour lays exactly in the real world and in the conditions of capitalist
production, where all phenomena take perverse form. In Rubin there is the
diametrically contrary view: in the external world labour power and labour - are
one and the same. They exclusively become distinct viewed under the angle of
commodity-capitalist production. Here is an irreconcilable contradiction with
Marx 28.
But not for this reason, of course, should Rubin's viewpoint be rejected. The
point is that the theory of Rubin leads straightly to a depiction of the value of
labour power, as the pay for labour, i.e. to the confusion of the nature of the
worker's wage with its outward false appearance, against which Marx sent the
sharpest arrows of his critique. If the worker's wage is the pay for labour, then
the entire theory of exploitation is suspended in the air. The viewpoint of Rubin
is a return to classical economy, which in fact did not differentiate the concepts
"labour" and "labour power" and precisely therefore could not go beyond the
range of bourgeois ideology. "The social-historical specificity" of abstract labour
leads us, in this way, further and further away from genuine marxism. We
already don't speak about the point that the attempt to give a "social"
characteristic to the concept of labour power belongs to the same type of
inventions, as the many definitions of abstract labour, which we cited above.
Labour power without further ado is renamed hired labour, now then, and wage
labour without specific difficulty(/labour) can be defined, as a social historical
category, inherent to capitalist production. That which would have to be shown,
namely - whether "labour power" and "wage labour" are synonyms, Rubin
leaves without any proof. With such logic of course anything can be proven.
Meanwhile, labour power, for marx, is the power which "exists in the personality
of the labourer." In another place Marx says: "Labor - is itself the manifestation
of one of the forces of nature, human labor power" (Critique of the Gotha
programme). The concept of labour power Marx applies in connection with the
characteristics of corvee labour: "Every serf knows that what he expends in the
service of his lord, is a definite quantity of his own personal labour power."
The definition of labour power which Rubin gives, relates to labour
power, turned into commodity, i.e. to the specific social form of its existence in
the frame of capitalist society. But in that case this definition is a simple
tautology. When labour power takes on the quality "commodity", it thus already
represents capitalist relations of production.
Little more fortunate is the other definition of labour power, which Rubin gives a
few lines beneath (he is not at all stingy on definitions). "Labour power
expresses the production relation between workers and capitalists, connecting
them through the exchange of things" (exchange of money for labour power) (p.
112). Hence, here again labour power is not considered in general, but in the
determined form of commodity.
But in order to become commodity, labour power first of all must be a "thing",
i.e. an object of the external world. Precisely this fact also permits it to
have value, because value is an inherent "thing" in social exchange. And from
this same point of view "labour" has no value, because it is not a object of
exchange, is not a thing, but only a function of a "thing" - labour power.
The same also Rubin says, though he pierces the correct definition through a
heap of by himself piled obstacles and contradictions. "Labour, as social-
production connection, finds its expression in the reified form of value, but is not
itself a "thing", "value". From this it is understandable, that "labour" (more exact
socially organised labour in commodity form) creates value, but itself has no
value. Wage labour or labour power (more exact, labour in its classic contrast to
capital) emerges in commodity form, has value, but doesn't create it" (p. 112).
Here again the incorrect formulation: "labour= production relation", labour
power= wage labour, that leads to the ridiculous and putrid position - wage
labour doesn't create value (?!). But if this shagginess is dropped, then remains
the correct conclusion: labour is not a "thing", labour power is a "thing." From
this comes their different relation to value. But from this already follows, that
between labour and labour power there is a fundamental distinction, laying in
their objective nature. Why was it necessary to make a fuss, erasing between
them every border, in order then to rebuild it again? The effort(/labour), spent on
this research, not only has not any value, but, very likely, also does not create it.
The "theory" of Voznesenskij, which combines Rubin with Marx, cramming into
the category of abstract labour all possible definitions, is not worth specially
standing still before. In Rubin the attempt to "sociologize" the concept of
abstract labour has the character of internal consistency, that brings it to the
absurd. In Voznesenskii - ordinary eclecticism, representing not any theoretical
interest.
We showed, that the position of Rubin does not ensue from the character of the
marxist categories and in substance of its parts contradicts, both in letter and in
spirit, the content which Marx put into his defintions. Before us now remains in
conclusion to resolve the last question: is not the theory of Rubin correct in
substance next to marxist theory? Perhaps there is enough ground in order to
build the basic definitions of political economy on the scheme, laid out by Rubin,
disregarding the point that it does not accord with Marx. To this question could
be given a positive answer only on one condition: if the categories of Rubin
would help us better to understand reality than the categories of Marx, to better
understand the mechanism of commodity-capitalist production. But the point is
that exactly this demand they do not fulfill.

To what lead the attempts of Rubin? Briefly said, they lead to the
commitment to drive out from the subject of political economy every living
matter, to deprive the theoretical system of marxism of its material fundament. If
abstract labour - is not labour in the physiological sense, if labour power - is not
an object of the real external world, if all this - is an incorporeal "sociologized"
abstraction, an impalpable "relation" of "commodity society" - at best, then, it
follows, these categories place in the same series the remaining categories of
bourgeois economy, like profit, interest, capital, classes etc. But indeed then
disappears every objective support for scientific study of bourgeois society. In
fact: the task of economic science must consists in reducing the specific
capitalist forms of appearance of the laws of social "production life" to these
same laws, in order to let "appear" through abstract analysis, the inner side of
the economic fabric, blurred, masked by contradictory forms of capitalist
production. The basic categories of this economy, like capital, profit, etc.
represent economic phenomena in a false form, in a curved mirror. In order to
expose this fetishism of superficial phenomena, study itself must in all cases
possess the tools and categories not in fetishised order, it must in its abstract
analysis place itself outside the categories of bourgeois production. Otherwise it
itself will be in their captivity, as this also happened with the classical school, to
the best of its representatives - Ricardo. But where lays that ground, leading us
from the border of the bourgeois worldview? This - is the viewpoint of labour in
its universal sense. To what boils down the marxist analysis of bourgeois
society? It shows, that profit does not grow from capital, or rent or land, that
capital and value - are not the property of things, as such, that money too is not
 the shining appearance, for which it is held, that all this - are only forms of
appearance of universal abstract labour, the primary matter, from which is
forged social production, classes and their numerous relations. On this
fundament is build the whole theory of surplus value, the whole theory of
exploitation. Only the condensation of all social-economic relations to labour
can expose the mystification of bourgeois economic form, and that is the merit
Marx attributed before all else to the classical school, although it could not
realize the whole theoretical task to its necessary end. "It is the great merit of
classical economy to have destroyed this false appearance and illusion, this
mutual independence and ossification of the various social elements of wealth,
this personification of things and conversion of production relations into entities,
this religion of everyday life. It did so by reducing interest to a portion of profit,
and rent to the surplus above average profit, so that both of them converge in
surplus-value; and by representing the process of circulation as a mere
metamorphosis of forms, and finally reducing value and surplus-value of
commodities to labour in the direct production process." ("Capital", vol. 3, part
2). If to us now is replied, that also that "labour", to which we boil down, as to a
cornerstone, all phenomena of commodity-capitalist production, is also not
labour in the actual sense of the word, but only the form of the same commodity
production, then the structure hangs in space, and theory rotates in a closed
circle of "social-historical" categories, like a squirrel in a wheel. The whole
scheme gets the character of the famous explanation: the earth on whales, the
whales on water, the water on earth. To this inevitably must lead the exorbitant
zeal in sociologizing concepts, the "expulsion of matter" from economic study.
This is a step back from the materialist method of Marx to the side of that
fetishism of economic relations, which Rubin very succesfully debunks in other
parts of his book.
 1.The name of the article discussed. Ed. (Chapter 14 in the Essays on Marx's
Theory of Value. Some passages which Dashkovskij quotes and criticizes
were apparently dropped or altered by Rubin in subsequent editions. The
third edition of Rubin's Essays, on which the English translation was based,
appeared in 1928. The 4th edition dates from 1930. In appendix nr. 2 (p. 240-
54) Rubin gave a reply to Dashkovskij's critique. Translator's note)
 2.Capital, vol.1, Bazarov-Stepanov translation, p. 13.
 3.If the definition of abstract labour consists only in this, then why did both
Marx and Engels give this category such a big significance? - asks
Voznesenskij. That labour produces, on the one side, useful things, and, on
the other side, is an expenditure of human energy - could such a truism be
considered a scientific discovery? We answer this perplexed question, with
another question. Every economy assumes, on the one side, means of
production, and on the other - labour power. This is also a truism. Does it
follow from this, that the teaching of Marx about the organic composition of
capital is not worth a button? The whole question at issue is what usage Marx
made from these "truisms", which were known still in ancient times and,
nevertheless, remained out of the field of sight of the most perspective
theoreticians of the classical school.
 4.K. Marx, Outline of the critique of political economy (p.13 in the 1923
"Moskovskij Rabochij"
publication) http://www.marxists.org/archive/marx/works/1857/grundrisse/ch0
1.htm
 5.Capital, vol.3, part 2 (p. 415 of Bazarov-Stepanov,
1923) http://www.marxists.org/archive/marx/works/1894-c3/ch50.htm
 6.Letters of K. Marx and F. Engels, (p.176-7, 1923 "Moskovskij
Rabochij") http://www.marxists.org/archive/marx/works/1868/letters/68_07_1
1.htm
 7.An interesting consideration apropos this we find in one of Engels's letters.
"By economic relations, - Engels writes, - ... we understand the way in which
human beings in a definite society produce their necessities of life and
exchange the products among themselves (in so far as division of labor
exists). Consequently the whole technique of production and transportation is
therein included. ... Under economic relations are included further, the
geographical foundations upon which they develop and exist" etc. (Engels to
Borgius) http://www.marxists.org/archive/marx/works/1894/letters/94_01_25a
.htm In order to understand these words it's necessary, however, to keep in
mind, that Engels here replied in a broad way to a question about the "basis"
and "superstructure" of every society. From this point of view the economic
basis must include in itself all these elements. Furthermore, Engels at the
end of the letter stipulates, that he does not consider all of his formulations
sufficiently clear. For all that the importance of these "super-historical"
elements of economic study are not subject to doubt.
 8.The classical school of political economy carried out fundamentally the first
part of theoretical work, selecting from concrete reality the simplest concepts.
Marx could therefore begin his analysis directly with this point, to which his
forerunners brought theory - with the simplest determinations of "commodity",
"labour" etc. From this certain of the modern Marxists draw the conclusion,
that in general there is no need in scientific study to proceed from concrete
reality.
 9."Outline of", p.28-29
 10."Outline of", p.-29.
 11.I. Rubin. Essays on Marx's theory of value, second edition, p.
102 http://www.marxists.org/archive/rubin/value/ch14.htm
 12.Published together with Hilferding's first version of Finance capital in
"Marx-Studien. Band 3": Die Wertlehre bei Marx und Lassalle von Tatiyana
Grigorovich, Wien 1910, the history of a scientific misunderstanding (Russian
edition 1923). (Tatiana Pisterman)
 13."Outline of", p. 28
 14.Z. Tseitlin makes an interesting note drawing together the method of Marx
with the method of natural science, making a parallel between Marx's
teaching on abstract labour and the teaching on the atom. The concept
"atom" relates to all epochs of scientific history, just like the concept "labour" -
to all periods of social history. The atom, like labour has a "double
substance." Nevertheless, science could develop until the discovery of the
atom only to a definite stage of scientific history, through the analysis of
"complex concrete phenomena in which the atom represents a general
evenly distributed category. In the primitive nebula, as also in primitive
society the atom and labour although both were general categories, but, on
the other side, stipulated this or that individual configuration." With the further
development of the solar system the diversity augments of the combinations,
of chemical connections, in which the atom emerges, as a general category.
The atom more and more de-individualizes "in practice." Scientific activity of
 man from its side contributes to the multiplication of the number of
combinations of chemical elements." "Without a doubt the power of man over
the forces of nature reaches such a degree, that the atom, like labour,
becomes "indifferent," i.e. can obtain any combination for any goals." The
atom is an historical category in the sense that only in that stadium of
scientific development, when matter changes into a complex concreteness,
the general character of this category emerges most clearly. See more
detailed consideration in Z. Tseitlin. Science and hypothesis. p. 171-73.
 15.Archiv K. Marx and F. Engels, book 1, p. 223.
http://www.marxists.org/archive/marx/works/1845/german-
ideology/ch01a.htm
 16.Marx, Critique of the Gotha programme.
 17.Capital, vol.1, p. 39.
 18."Outline of", p.
94. http://www.marxists.org/archive/marx/works/1859/critique-pol-
economy/ch02b.htm
 19.This is how Marx characterizes the count of labour through the amount of
produced commodities: "It is not, therefore, a question of measuring the
value of the piece by the working-time incorporated in it, but on the contrary,
of measuring the working-time the labourer has expended by the number of
pieces he has produced. In time-wages, the labour is measured by its
immediate duration; in piece wages, by the quantity of products in which the
labour has embodied itself during a given time." (Capital, vol.1, p.
534). http://www.marxists.org/archive/marx/works/1867-c1/ch21.htm
 20.Capital, vol. 3, p. 389 http://www.marxists.org/archive/marx/works/1894-
c3/ch49.htm
 21.Marx, Critique of the Gotha
programme http://www.marxists.org/archive/marx/works/1875/gotha/ch01.ht
m
 22.Capital, vol.1, p. 41.
 23.I. Rubin, Essays, p. 100.
 24.In A. Voznesenskij this thought is expressed in vulgar-materialist form. He
writes: "Abstract labour - that is not individual labour, but social labour. That
is not labour of any individual, any person; it represents by itself social
energy, the energy of society as a whole." Unfortunately nobody has yet
discovered in society, as such, muscles and a nervous system, with which it
could expend "without individuals" its energy.
 25.Rubin, Essays, p. 100.
 26.Ibid., p. 108.
 27.Ibid., p. 107.
 28.Here are more extracts,
evidence of the fact that Marx distinguished labour power and labour, as
objects of the external world.
Quote:

"The actual movement of wages presents phenomena which seem to prove

that not the value of labour-power is paid, but the value of its function, of
labour itself... 1.) Change of wages with the changing length of the working-
day. One might as well conclude that not the value of a machine is paid, but
 that of its working, because it costs more to hire a machine for a week than
for a day." (Capital, vol. 1, ch. 18). (ch.19 in English on MIA)
[p]

Quote:

"Creation of value is transformation of labour-power into labour. Labour-

power itself is energy transferred to a human organism by means of
nourishing matter." (Capital, vol. 1, ch.7). (ch.9 in English on MIA)

Comments

Noa Rodman
Mar 6 2012 23:46
I forgot a word in the sentence;

Quote:

For Marx, the distinction between labour power and labour lays exactly in the real world and is
erased (стираются) in the conditions of capitalist production, where all phenomena take
perverse form.
Apologies for the far from perfect translation.

Note that in some quotes I traced the source and added a link in the final quotation mark "
(when coloured light blue, hover over it with mouse). So for instance the quote about "splitting
empty abstractions into four empty parts" given in the beginning is taken from The Curve of
Capitalist Development:

Trotsky wrote:

Conquests that may be attained on this road can be determined only as the result of such an
investigation itself, which must be more systematic, more orderly than those historical
materialist excursions hitherto undertaken. In any case, such an approach to modern history
promises to enrich the theory of historical materialism with conquests far more precious than the
extremely dubious speculative juggling with the concepts and terms of the materialist method
that has, under the pens of some of our Marxists, transplanted the methods of formalism into
the domain of the materialist dialectic, and has led to reducing the task to rendering definitions
and classifications more precise and to splitting empty abstractions into four equally empty
parts; it has, in short, adulterated Marxism by means of the indecently elegant mannerisms of
Kantian epigones. It is a silly thing indeed endlessly to sharpen and resharpen an instrument to
chip away Marxist steel, when the task is to apply the instrument in working over the raw
material!