Strachey versus Marx

[p029] Strachey versus Marx Tom Mercer and Peter Reed IN AN IMPORTANT new work by John Strachey, the author sets out to prove several propositions. They are:- 1) that the “Labour Theory of Value” is one-sided, outworn and disproved by the facts of the econo- mic development of society over the past 100 years, and particularly since 1939; 2) that Marx’s political errors were even greater than his economic errors; 3) that “Marginal Utility” is not a theory of value at all (He does this conclusively and with an economy of effort and a directness which shows his consider- able knowledge and ability); 4) that Keynes, despite his “eccentric genius”, was just as wrong as Marx, although for different reasons. This is the method he has chosen to justify the politics and economics of “Democratic Capitalism”. We are concerned in this review, primarily, with his attack upon Marxism. The main difference between Mr. Strachey’s book and that of dozens of similar books in the past that have attempted to refute Marx’s theories, is that Mr. Strachey is much better informed than his predecessors. He knows and understands more clearly his subject mat- ter. This makes his vulgarization of Marx’s views all the more indefensible. THE TWO OBJECTIONS TO THE THEORY OF VALUE Mr. Strachey has two main objections to the lab- our theory of value. His first objection is that if we use “socially-necessary labour time as our unit of value, we shall have no way of expressing changes in the pro- ductivity of labour ... with a given working population and given hours of work that total (the total value of the product of society) must always be the same...” Page 63. It is difficult to take this objection seriously. True the total value will be the same irrespective of the in- crease in productivity but to say that because of this we cannot measure changes in productivity is nonsense. If 10°, more commodities produced by the same num- ber of workers in a given time, this year as against, say, last year, then the increase in the productivity of a unit of “socially necessary labour time” is 10%. Furthermore the statistical indices necessary to measure such changes could be easily developed as re- quired. The fact that no such indices have been de- veloped is not a proof that they could not be produced, but merely that the capitalists have found no use for such indices. Mr. Strachey’s second objection to the labour the- ory of value is the important one. It is the old, old objection, however, that Marx’s general law of capi- talist accumulation has been disproved by the facts of history. In order to maintain this objection he has to dis- 26 tort Marx’s views. He does this first, by linking them much too directly with Ricardo, and second, by giving a series of carefully selected quotations from “The Communist Manifesto” and “Capital”. Mr. Strachey writes on page 64 as follows: “For the commodity which the labourer has to sell (his labour power as Marx was to call it) must also sell at its value, that is in proportion to the number of man hours taken to produce it, and that number must be the minimum needed to produce the wage goods (as we should call them now) necessary to sustain the labourer and his family, that is, subsistence. Therefore a subsist- ence theory of wages has always been, implicitly for Ricardo, explicitly for Marx, an essential part of the theory of value. But wages have not remained at sub- sistence, therefore one vitally important commodity, namely labour power, has not even tended to sell at its value... .” Over and over, Mr. Strachey returns to this point of subsistence level of wages. He insists that it is the main error in the Labour Theory of Value. It is true, of course, that the value of labour power is the cost of replacing it. Like every other commodity, its cost of production is the value of all the goods used up in replacing it after it has been used up—in other words, the food, clothing and shelter required to main- tain not only the worker himself but also his family as well, in good physical condition. He has not only to present himself each day re- freshed and able to work as he did the day before, but, when he is worn out like any other piece of factory equipment, he has to be replaced by a fresh labourer, just as an old worn out machine has to be replaced by a new one. Therefore the value of labour power in- cludes the maintenance of the labourer’s family as well as the labourer himself. But the value of labour power differs from coun- try to country and within each country it varies at different periods according to the historically recognised standard of living of the time. Even in 1867, when “Capital” was first published, the standard of living was not the same in England, Germany, Belgium, India, or the U.S. The value in England in 1815 was not the same as the value in 1835 and it had altered again by 1866. It would be absurd to suppose that Marx who was al- ways so thorough in his collection of facts was ignor- ant of these facts. To establish that Marx did hold the view that the workers would only get a “constant amount per head”, a bare subsistence or “in fact even less than that,” Mr. Strachey quotes from the Communist Manifesto and from Vol. 1 of Capital. The quotation from the Manifesto may be ignored because that work did not express Marx’s mature opinions. It was written in 1848, several years before he started his long detailed studies in the leld of economics. On the other hand the

[p030] quotations Mr. Strachey gives from Vol. 1 of Capital obviously distort Marx’s views. Marx’s real opinion was that the value of Labour Power was variable. This can be shown from Capital and from Value, Price and Profit, a speech to the General Council of the First International in 1865, only two years before the publication of the Ist Volume of Capital. In the section of Capital dealing with the Gen- eral Law of Capitalist Accumulation, from which Mr. Strachey quotes, Marx continues: “This is the abso- lute general law of capital accumulation. Like all other laws it is modified in its working by many cir- cumstances, the analysis of which does not concern us here.” (Capital, Vol. 1, page 660, Kerr Edition.) Mr. Strachey omits this qualification from his quotation, since it obviously suits his purpose to do so. Again in Value, Price and Profit, Marx says: «. the value of labour is in every country deter- mined by a traditional standard of life. It is not mere physical life, but it is the satisfaction of certain wants springing from the social conditions, in which people are placed and reared. “_. By comparing the standard of wages, or values of labour in different countries and by comparing them in different historical epochs of the same country, you will find that the value of labour itself is not a fixed, but a variable magnitude, even supposing the values of all other commodities to remain constant....” (Pages 86 and 87). In short, Marx is arguing that.the value of labour power is not a constant but a variable quantity. But only once does Mr. Strachey show that he is aware of it. That is when he states on page 88. “ . Marx... fixed the law . . . that the level of wages would be determined by what it cost to ‘pro- duce’ the workers . . . this is the statement that wages will in all capitalist countries tend towards what is for that time and place a subsistence level . . .” (Note: Reviewer’s emphasis). Here Mr. Strachey has left himself a way out against his Marxist opponents. He uses the phrase which we have italicised in order to be free to argue that he did not distort Marx’s views. But it won’t do! His argu- ments and conclusions flow from the large number of distortions, not from the one statement that could be interpreted as a correct exposition of Marx’s ideas. Either Mr. Strachey is aware of Marx’s views on the value of labour power and bases his attack on the labour theory of value on a distortion of them, or he is ignorant of Marx’s real opinions. In either event the criticism of the Labour Theory of Value by Mr. Stra- chey is valueless. MARXIST METHOD IN POLITICAL ECONOMY Since this particular misunderstanding of Marx’s views seems widespread, and deeply rooted, it would be useful here to re-examine the methods which Marx used in investigating the laws of capitalism in order to assess the importance of the law of capitalist accumulation. The scientific method used by Marx in his re- searches on political economy are in sharp contrast with the methods used by modern bourgeois econo- mists. Bourgeois economists divide knowledge into nar- 27 row, separate compartments. There is a minute division of intellectual labour among scholars, each working in his own special field. For instance, those modern econo- mists who subscribe to the subjective theory of value, declare that they have nothing to say about politics or sociology or about any matter related to economics. They declare themselves to be unconcerned with the ends to which economic theory is put. Any such ‘peri- pheral’ influences are simply assumed to be irrelevant and unimportant. Economists qua economists have no right to pronounce on such ‘external’ matters as, for example, politics. They are purely and simply in- terested in the technicalities of price formation, in the cost-curves of a particular firm or in the subjective behaviour of consumers. Usually they have no intrinsic interest in the historical evolution of economic problems, no conception of the fact that present day economic problems are essentially historical problems. Having no theory of history, they attempt to lay down a series of general laws applicable to all times and places, laws which are equally applicable to Robinson Crusoe’s island economy and the Sixth Soviet Five Year Plan. The aims and methods of Marx are entirely dif- ferent. Marx’s aim is not the prediction of the conse- quences of allocating scarce resources in various alter- nate ways.* Nor did Marx busy himself constructing beautiful, intricate and quite useless diagrams showing consumers’ ‘indifference’ to various goods. His object was, like the Newton of economics, to lay bare the eco- nomic laws of motion of capitalism. Marx asked what makes the system go, where has it come from and where is it going? Questions like these cannot be answered without penetrating below mere surface forms. Marx saw what was needed was an examination of the social relationships arising from the capitalist method of pro- duction. In other words, Marx was conscious that pro- duction affects the whole of social life and cannot be studied scientifically in a social vacuum. This means that the boundaries of ‘pure’ economics have had to be crossed. Therefore, Marx, in his investigations into poli- tical economy felt bound to deal with all the social sci- ences. What he succeeded in doing was no less than to construct a new, unified, social science, with political economy as its keystone. Faced with enormous masses of factual material, Marx used the methods of investigation used by natural scientists: abstraction, induction and deduction followed by the progressive removal of initial, qualify- ing assumptions so bringing the theoretical model more and more into line with concrete reality. The natural scientist can always conduct carefully controlled labo- ratory experiments in which he consciously varies the experimental conditions, holding first one and then another variable constant. But in applying the meth- ods of natural science to economics, Marx comes up against a major obstacle. He writes: “When you come to the analysis of economic forms, we have neither microscope nor chemical reagents to help us out. The power of abstraction has to replace both these expedi- ents.” * Recently, Mr. R .W. Meek has attempted to show that Marx was conscious of this ‘scarcity’ problem—as it is known to modern academic economists. See his article in ‘Oxford Eco- nomic Papers’ for October, 1955, ‘Some ts on Marx- ism, Scarcity and Gosplan’. See also the comment on Meek’s paper by P. J. Wiles, in the February (1956) issue.

[p031] The method developed by Marx was to isolate, for the purposes of investigation, the most characteristic and general features of the capitalist economic system and then reduce these features to their purest form, in order to study their development, free from all extra- neous and irrelevanf* disturbances. He came, on the basis of a searching study, to the conclusion that eco- nomic relations are fundamental. Marx then con- structed a theoretical ‘model’ of capitalism. This model was not static but a moving model mirroring the most important tendencies within society and enabling pre- dictions concerning the probable evolution of these ‘purified’ tendencies to be made, it being assumed, of course, that no other tendencies needed to be taken into account. This scientific method, applicable to the whole science of history itself, was a valuable contri- bution to knowledge. The bourgeois economists, by contrast, having made their static abstractions, proceed to develop them far beyond any possible hope of empirical verification. This, as is now widely recognised, inevitably leads to barren conclusions. The most fruitful step the bourgeois economist could take would be to remove some of the over-simplifying assumptions, which are basic to his scheme and by this means to bring his analysis more into line with actual reality. Thus, step by step, the initial assumptions should be removed leaving a final result which accounts for all the important facts at the lowest possible level of abstraction. This is the method employed by Marx in Capital. Marx at the first stage of the analysis simplifies his argument by excluding from consideration all social relationships except that between capitalists and pro- letarians, ie. the relationship expressed in terms of the production and distribution of commodities by and between the two social classes, workers and capitalists. In addition, he reduces the relationship between capi- tal and labour to its most significant form. Then, in Capital, Marx shows that the form of the capital- labour relationship arising from ‘machinofacture’ is the most significant relationship in modern capitalist soci- ety. Individual differences and characteristics of work- ers and capitalists are, for the most part, ignored at this stage. Workers and capitalists are considered only ‘in so far as they are personifications of economic categories, representatives of special class relations and interests’. Marx also assumes in this first stage that he has to deal with a stage of ‘perfect competition’ such as that described by the laisser faire economists. He assumes everywhere a “free market” in which prices are fluc- tuating according to supply and demand. This “free market” is the mechanism by which prices come to be, on the average and in the long run, equated with values. The state of affairs in the Lancashire cotton industry during the Victorian era was, possibly, the closest approximation to these ‘ideal’ conditions. This industry was also the most fully developed form of capitalism in Marx’s time. Almost the whole of Volume I of Capital is con- cerned with studying the mode of operation of this highly abstract model of capitalism.* Of course the pro- positions derived from a study of a simple and abstract model then have to be extensively modified at a later stage, when one comes to deal with reality at a lower level of abstraction. The validity of these elementary propositions is obviously related to the level of abstrac- tion of the model upon which they are based. The de- gree of modification to which they have to be subjected increases as the analysis approaches the concrete. The “absolute general law of capitalist accumulation” is de- rived on a high level of abstraction. The word “abso- lute” is used here in the Hegelian sense of “abstract” thus makes plain that Marx is not making firm predic- tions about the future. “The truth,” said Lenin, “is always concrete.” The imposition of rigid, unalterable laws upon nature or society is completely alien to dialectical materialism. Marx would have been behaving completely out of character if he had really drawn up a detailed blueprint of the “Rise and Fall of the Capitalist Empire”. Pre- cisely because he was a good social scientist, Marx permitted himself the luxury of making only the most general type of forecast. It is still amazing how many of these have been or are being triumphantly justified. The general system known as Marxism is one of the greatest achievements of the human mind. It has become almost a truism to say that that achievement is still unfinished and must not be allowed to harden into dogma. In the sphere of political economy this means that a serious study of such problems as are presented by the most recent phase of monopoly capitalism needs to be made. The role of the state in modern bourgeois economy needs to be investigated. There is also a need for a scientific appraisal of such modern schools of thought and economic technique as Key- nesianism, and the recent revisionist Communist Party treatises such as that of Sam Aaronovitch on “Mono- poly” which purports to bring Lenin “up to date”. THE POLITICAL ATTACK ON MARXISM “There was nothing basically wrong with Marx’s economic insight. It was his political judgment which was at fault. He failed to see that other, essentially political forces would arise in the advanced capitalist societies which would balance, and, in the end, even begin to outweigh the inherent tendencies of the sys- tem....” (Strachey, op. cit. p. 151) “... it is most un- likely . . . that the democratic counter pressure uno Capitalism will get too strong....” (op. cit. 189) *... Can democracy sustain such a role? Is it realistic to believe that the mere exercise of the franchise every 3 or 4 years can modify the very structure of the eco- nomy in such a way that it will cease to be ‘so formed’ that it drives blindly towards maximum accumulation, cost what it may. Put that way the proposition seems most unlikely. But this is too narrow a definition of democracy. Contemporary democracy . .. includes... solidly organised and genuinely ‘democratic trade unionism, also such things as the statutory buttressing of the agriculturalists, deeply entrenched traditions of free speech, free assembly and personal liberty...” “When we see it whole, in this way, its capacity to modify the economic structure of society does not seem so incredible. Its action may seem weak indeed * Some readers may here object that Vol. I of ‘Capital’ con- tains masses of factual material. This is true, nor is it in- compatible with the use of the method of abstraction. The important thing is to ensure that the theoretical models are not completely divorced from reality but mirror as closely as possible the essential features of reality. In Capital these essential aspects of capitalist reality are illustrated by Marx with factual data collected after much painstaking research.

[p032] in comparison with the iron compulsions of capitalism. But, like a living thing, so long as life is in it, demo- cracy is immensely persistent and persuasive, and it may yet save the day.” (op. cit. p. 185). In these passages Mr. Strachey poses his main criticism of Marx and states his own credo unequi- vocally. He denounces Marx for his revolutionary theories and incidentally he is denouncing Mr. Stra- chey’s own past. What he is trying to tell us is just that socialism can be achieved by a parliamentary majority, without revolutionary struggle. In order to “negate” the labour theory of value he had to vulgarise and distort it. Like so many people before him, Mr. Strachey is good at knocking down his own Aunt Sallies. To refute Marx’s politics, he has to make out that Marx did not realise the political strength of the working class, the enormous power of organised mass trades unionism in capitalist society and the ability of the working class to force concessions from capitalism. This is, of course, just plain nonsense. Marx appreciated the power right at the beginning of his political life. Marx not only realised this power; he also considered that the working class could not help itself by arguing with the capitalists but by organising and learning in the course of struggle what the struggle is really about. If Marx believed that the workers could eventually become so strong as to wrest state power out of the hands of the capitalists, how could he have failed to believe that the working class was powerful enough to win concessions? But he also saw what Mr. Strachey has “forgotten”, that all concessions and re- forms are, in a sense, merely by-products of the work-