How Eleanor Marx understood her Father’s Wage Determination Theory

From Eleanor Marx Aveling’s essay “The Woman Question” (1886):

“They forget that by capitalist employers this very sex-helplessness of woman is only taken into account with the view of lowering the general rate of wages. Again, there is no more a natural calling of woman than there is a natural law of capitalistic production, or a natural limit to the amount of the labourer’s product that goes to him for means of subsistence. That in the first case, woman’s calling is supposed to be only the tending of children, the maintenance of household conditions, and a general obedience to her lord; that, in the second, the production of surplus value is a necessary preliminary to the production of capital; that, in the third, the amount the labourer receives for his means of subsistence is so much as will keep him only just above starvation point: these are not natural laws in the same sense as are the laws of motion. They are only certain temporary conventions of society, like the convention that French is the language of diplomacy.”
Aveling, Edward and Eleanor Marx Aveling. 1886. “The Woman Question,” Westminister Review
https://www.marxists.org/archive/eleanor-marx/works/womanq.htm

That is very concise.

In Chapter 28 of Capital, Marx gives his view of wages in capitalism:

“The constant generation of a relative surplus population keeps the law of the supply and demand of labour, and therefore wages, within narrow limits which correspond to capital’s valorization requirements.” (Marx 1990: 899).

The narrow limits, as Marx explains in Chapter 25 and elsewhere, are around the subsistence wage, the value of the maintenance and reproduction of labour power.

In Chapter 25, Marx also argues that the “general movements of wages are exclusively regulated by the expansion and contraction of the industrial reserve army” (Marx 1906: 699).

In Chapter 19, Marx endorsed the Classical view that wages fluctuate above and below an equilibrium value: the “necessary price” or “natural price” of labour, which for Marx is the value of the maintenance and reproduction of labour-power, a subsistence wage. This is, more or less, how Friedrich Engels understood Marx’s theory in Herr Eugen Dühring’s Revolution in Science (1894; first published in 1878), where Engels argued (admittedly, with a bit of exaggeration) that industrial capitalism, driven by means of automation and use of machines, “restricts the consumption of the masses at home to a famine minimum and thereby undermines its own internal market” (Engels [1894]: 308).

But this central aspect of Marx’s theory is wrong, as can be seen here.

BIBLIOGRAPHY
Aveling, Edward and Eleanor Marx Aveling. 1886. “The Woman Question: From a Socialist Point of View,” Westminister Review 125 (January): 207–222.
https://www.marxists.org/archive/eleanor-marx/works/womanq.htm

Engels, Friedrich. [1894]. Herr Eugen Dühring’s Revolution in Science (trans. Emile Burns from 1894 edn.). International Publishers, New York.

Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; rev. trans. by Ernest Untermann from 4th German edn.). The Modern Library, New York.

Marx, Karl. 1990. Capital. A Critique of Political Economy. Volume One (trans. Ben Fowkes). Penguin Books, London.

Marx’s Dishonesty in his Quotation of Gladstone

In volume 1 of Capital in Chapter 25, Marx reproduces a selective quotation from William Gladstone on the condition of the working classes in England from a speech Gladstone gave in the House of Commons on 16 April 1863:

“On April 16th, 1863, 20 years later, in the speech in which he introduced his Budget [sc. Gladstone said]: ‘From 1842 to 1852 the taxable income of the country increased by 6 per cent In the 8 years from 1853 to 1861 it had increased from the basis taken in 1853 by 20 per cent! The fact is so astonishing as to be almost incredible .... this intoxicating augmentation of wealth and power .... entirely confined to classes of property .... must be of indirect benefit to the labouring population, because it cheapens the commodities of general consumption. While the rich have been growing richer, the poor have been growing less poor. At any-rate, whether the extremes of poverty are less, I do not presume to say.’ How lame an anti-climax! If the working-class has remained ‘poor,’ only ‘less poor’ in proportion as it produces for the wealthy class ‘an intoxicating augmentation of wealth and power,’ then it has remained relatively just as poor. If the extremes of poverty have not lessened, they have increased, because the extremes of wealth have.” (Marx 1906: 715–716).

In this subsection of section 5 of Chapter 25 of volume 1 of Capital, Marx attempts to prove by various statistics that the British working classes remained in poverty down to 1867 despite the soaring wealth produced by capitalism. This is the whole point of his quotation of Gladstone.

The full text of what Gladstone said has been preserved in newspaper reports of the time and in the parliamentary Hansard (which would have been edited by Gladstone to some extent).

Here is one account of what Gladstone actually said in full:

“The Income tax at 7d. in the pound, in 1842, attaching to Great Britain only, and only to incomes above £150, was assessed upon an amount of income reaching £156,000,000.— Upon the very same area, with the same limitations, in 1861, the amount of assessed income was £221,000,000, the difference amounts to no less than £65,000,000 of annual income, or two sevenths of the whole taxable income of the country in the same area described.* That is a most remarkable result, but there is a feature of that result, which when carefully examined is yet more remarkable; and that is the accelerated rate of increase in the in the last year. I compare the two periods before 1853 and since 1853, when the basis was altered. In ten years from 1842 to 1852 inclusive, the taxable income of the country increased by 6 per cent, but in eight years from 1853 to 1861 the increase of the country increased from the basis taken, by 20 per cent.

That is a fact so strange, as to be almost incredible. If I may presume to suggest a cause, I would suggest two—first of all, the enormous constant rapid development of mechanical power, saving human labour, and the extention of machinery; but that has been in operation for the last hundred years, extending on all hands the economy of labour, the real and new cause that has been in operation, has been the legislation of Parliament setting free the industry and intelligence of the British people, I must say for one, I should look almost with apprehension and with pain upon this intoxicating augmentation of wealth and power, if it were my belief that it was confined to the classes who are in easy circumstances. This takes no cognizance at all of the condition of the labouring population. The augmentation I have described, and which is founded, I think, upon accurate returns, is an augmentation entirely confined to the classes possessed of property. Now the augmentation of capital is of indirect benefit to the labourers, because it cheapens the commodity which, in the business of production, comes into direct competition with labour. But we have the profound, and I must say, the inestimable consolation, that while the rich are growing richer, the poor have been growing less poor. Whether the extremes of poverty are less extreme than they were, I do not presume to say, but the average condition of the British labourer we have the happiness to know, has improved during the last twenty years in a degree we know to be extraordinary, and which we may almost pronounce to be unexampled in the history of any country in any age. That is a result upon which we are entitled to look with the greatest satisfaction, and with the greatest happiness; because, after all let us recollect that when we speak of the expenditure of Governments, we speak of that which is taken out of the earnings of the people; and there is hardly any country and hardly any period in which their earnings have extended to give to the labouring community a sufficiency — much less a general abundance—even of the prime necessaries of food, of clothing, and of fuel.” (William Gladstone, speech Gladstone gave in the House of Commons on 16 April 1863, quoted in Enderby 1872: 82–84).

Now here is Gladstone’s speech from the Hansard:

“The Income Tax, at 7d. in the pound, in the year 1842 3, attaching to Great Britain only, and in Great Britain only to incomes of £150 and upwards, was assessed upon an aggregate amount of income in the schedules I have named reaching £156,000,000. Upon the very same area, with the same limitations, in 1860–1 the amount of assessed income was £221,000,000. Further, I am not aware that there has been any change in the machinery of the tax, or any improvement in the powers of levying the tax, as compared with the powers of escaping it, that will in any way account for the difference. On the contrary, certain concessions and relaxations have from time to time been enacted by the Legislature, which, as far as they go, would rather tell in the opposite direction. The difference, however, amounts to no less than £65,000,000 of annual income, or two sevenths of the whole annual taxable income of the country within the area described. That is a most remarkable result; but there is a certain feature of that result which, when carefully examined, is yet more remarkable; and that is the accelerated rate of increase in the latter portion of that period. I again invite the attention of the Committee for a few minutes. I compare two periods—one of them before 1853, and the other since 1853, the year when the basis was altered. In ten years from 1842 to 1852 inclusive, the taxable income of the country, as nearly as we can make out, increased by 6 per cent; but in eight years, from 1853 to 1861, the income of the country again increased upon the basis taken by 20 per cent. That is a fact so singular and striking as to seem almost incredible. [Sir John Pakington: Australia!] Australia! Oh, no; I must not at this hour offer to the Committee a dissertation on the true effect of the discoveries of gold; but in passing I may say I grieve to see that in regard to that matter my right hon Friend is evidently lost in the depths of heresy.

If I may presume, Sir, to refer to the causes of this vast increase of wealth, I would suggest two in particular. First of all the enormous, constant, rapid, and diversified development of mechanical power, and the consequent saving of labour in so many forms, and to so vast an extent, by the extension of machinery; in this, I of course include the modern means of locomotion. But the extension of machinery by steam power and otherwise has, speaking generally, been in active operation, together with the economy of labour it begets, for the last hundred years. There is another cause which has been actively at work during the lifetime of our generation, and which especially belongs to the history of the last twenty years. I mean the wise legislation of Parliament, which has sought for every opportunity of abolishing restrictions upon the application of capital, and the exercise of industry and skill; and has made it a capital object of its policy to give full and free scope to the energies of the British nation. To this special cause appears especially to belong most of what is peculiar in the experience of the period I have named, so far as regards the increase of the national wealth.

Such, Sir, is the state of the case as regards the general progress of accumulation; but, for one, I must say that I should look with some degree of pain, and with much apprehension, upon this extraordinary and almost intoxicating growth, if it were my belief that it is confined to the class of persons who may be described as in easy circumstances. The figures which I have quoted take little or no cognizance of the condition of those who do not pay income tax; or, in other words, sufficiently accurate for general truth, they do not take cognizance of the property of the labouring population, or of the increase of its income. Indirectly, indeed, the mere augmentation of capital is of the utmost advantage to the labouring class, because that augmentation cheapens the commodity which in the whole business of production comes into direct competition with labour. But, besides this, a more direct and a larger benefit has, it may safely be asserted, been conferred upon the mass of the people of the country. It is matter of profound and inestimable consolation to reflect, that while the rich have been growing richer, the poor have become less poor. I will not presume to determine whether the wide interval which separates the extremes of wealth and poverty is less or more wide than it has been in former times. But if we look to the average condition of the British labourer, whether peasant, or miner, or operative, or artisan, we know from varied and indubitable evidence that during the last twenty years such an addition has been made to his means of subsistence as we may almost pronounce to be without example in the history of any country and of any age. And this, Sir, is a result of the causes I have described, upon which it is impossible to look without feelings of the liveliest satisfaction. For it must always be borne in mind, that when we speak of the expenditure of the Government, we speak of that which is taken in great measure out of the earnings of the people, and which forms in no small degree a deduction from the store which is necessary to secure to them a sufficiency, I do not say of the comforts of life, but even of the prime necessaries of food, of clothing, of shelter, and of fuel. Scarcely in any country, scarcely in any period, have the earnings of the labouring community availed to secure to them in these primary respects even sufficiency, much less general abundance.”
Gladstone, William Ewart. “The Budget – Financial Statement,” April 16, 1863, in Hansard’s Parliamentary Debates, Third Series (vol. 170, March to May 1863). Cornelius Buck, London. 243–245.

First, one should note that at this time the British income tax only taxed people with incomes of £150 pounds and above, and that those earning less than this did not pay income tax.

It is clear what Gladstone is saying here: the incomes of the rich have increased, as have the tax revenues from them, but at the same time there has been an “extraordinary” improvement in the “condition of the British labourer” over the past twenty years which, Gladstone maintained, was “unexampled in the history of any country in any age.”

Marx selectively quoted Gladstone and suppressed parts of the passages in yellow highlighting, because they showed that Gladstone did think that the working classes had seen their real wages substantially improve.

So the proper sense of what Gladstone said is different from the sense of the brief quotation Marx provides in Capital.

All the data we have now shows that Gladstone was correct in his belief that real wages were rising for the workers.

The data from Wood (1909: 102–103, Appendix) on UK real wages from 1850 to 1902, constructed from the wage data for working people in a whole range of industries, which can be seen in the graph below.

As we see, there was a soaring real wage and living standards for working people in England. The rising real wage trend began in the 1840s and even in 1863 was visible, and can also be seen here.

But Marx could have none of this, because it discredited his tendentious communist propaganda that real wages in capitalism have a tendency to be held down to the subsistence level. All Marx could do was to attack the idea that relative inequality had fallen, and ignore the evidence of the rising real wage, which badly contradicted his theory.

Marx was attacked by Lujo Brentano (1844–1931) in the German publication Concordia (Brentano 1872) for his dishonesty and a debate ensued with Marx (Marx 1872a; Brentano 1872b; Marx 1872b; Brentano 1872c), and Engels in 1890 even attempted a defence of Marx in the preface to the 4th edition of Capital (Marx 1990: 115–119) on this very issue, but Engels simply evaded the most serious charge: that Marx deliberatively omitted Gladstone’s actual opinion of the improvement in the living standards of the working class.

Marx was even more dishonest in his selective quotation from Gladstone’s speech in his Inaugural Address of the International Working Men’s Association of the First International which he had delivered in 1864 (which can be read here).

If one examined Capital carefully, one could find many examples of Marx’s selective and dishonest quotation, mishandling of his sources and suppression of evidence that contradicted his theory.

And this was well known and proved even in the Victorian age. For example, Joseph Robson Tanner and F. S. Carey – two scholars at Cambridge University – were interested in some of Marx’s facts in volume 1 of Capital and his sources.

They examined a chapter and published a short paper call “Comments on the Use of the Blue Books made by Karl Marx in Chapter XV of Le Capital.”

They concluded that Marx’s use of the official British government reports called the “Blue Books” in chapter 15 – just one chapter! – were marked by incredible misquotation, misrepresentation, and omission of contradictory evidence. Even worse, Marx was guilty of “an almost criminal recklessness in the use of authorities” (quoted in Page 1987: 48).

In 1890, Engels stated that he only “heard of only one case, in which the genuineness of a quotation by Marx was questioned” (Marx 1906: 33–34), namely, the Gladstone case, but had he only read Tanner and Carey’s paper of 1885 he could have easily found numerous other examples.

BIBLIOGRAPHY
Brentano, Lujo. 1872a. “Wie Karl Marx zitiert” [How Karl Marx Quotes], Concordia no. 10 (7th March).

Brentano, Lujo. 1872b. [Retort by Brentano to Marx], Concordia no. 27 (July 4).

Brentano, Lujo. 1872c. [More on the Character of Karl Marx], Concordia no. 54, (August 22).

Brentano, Lujo. 1890. Meine Polemik mit Karl Marx. Zugleich em Beitrag zur Frage des Fortschritts der Arbeiterkiasse und seiner Ursachen. Berlin.

Enderby, Charles. 1872. A Treatise on Capital, Money, and Riches. E. Wilson, London.

Marx, Karl. 1872a. [Karl Marx’s first reply to Brentano], Der Volksstaat no. 44 (June 1).

Marx, Karl. 1872b. [Marx’s Second Reply to Brentano], Der Volksstaat no. 55 (August 7, 1872).

Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; rev. trans. by Ernest Untermann from 4th German edn.). The Modern Library, New York.

Marx, Karl. 1990. Capital. A Critique of Political Economy. Volume One (trans. Ben Fowkes). Penguin Books, London.

Page, Leslie R. 1987. Karl Marx and the Critical Examination of his Works. Freedom Association, London.

Tanner, J. R. and F. S. Carey. 1885. Comments on the use of the Blue Books made by Karl Marx in Chapter XV of Capital. Cambridge Economic Club, May Term 1885.

Wood, George H. 1909. “Real Wages and the Standard of Comfort since 1850,” Journal of the Royal Statistical Society 72: 91–103.

My Critical Summaries of Volume 1 of Marx’s Capital

Marx published volume 1 of Capital in German in 1867 (by the publisher Meissner of Hamburg), but this was the only volume of Capital, which was a proposed 4 volume work on economics, to be published in Marx’s lifetime. Volumes 2 and 3 were edited and published by Engels after the death of Marx. No English translation of volume 1 appeared in Marx’s lifetime either.

In the summaries below, I have used these two translations of volume 1:

Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; rev. trans. by Ernest Untermann from 4th German edn.). The Modern Library, New York.

Marx, Karl. 1990. Capital. A Critique of Political Economy. Volume One (trans. Ben Fowkes). Penguin Books, London.

For an overview of the origin of Capital and its relation to Marx’s other writings, as well as study guides to Capital, see below:

(1) “Study Guides to and Overviews of Marx’s Capital,” June 10, 2015.

(2) “Prolegomena to the Study of Marx’s Capital (Updated),” June 2, 2015.

The chapter by chapter critical summaries are below:

(1) “Prolegomena to the Study of Marx’s Capital (Updated),” June 2, 2015.

(2) “Marx’s Capital, Volume 1, Chapter 1: A Critical Summary, Part 1 (Updated),” June 21, 2015.

(3) “Marx’s Capital, Volume 1, Chapter 1: A Critical Summary, Part 2,” June 26, 2015.

(4) “Marx’s Capital, Volume 1, Chapter 2: A Critical Summary,” June 4, 2015.

(5) “Marx’s Capital, Volume 1, Chapter 3: A Critical Summary,” June 12, 2015.

(6) “Marx’s Capital, Volume 1, Chapter 4: A Critical Summary,” July 4, 2015.

(7) “Marx’s Capital, Volume 1, Chapter 5: A Critical Summary,” July 6, 2015.

(8) “Marx’s Capital, Volume 1, Chapter 6: A Critical Summary,” July 13, 2015.

(9) “Marx’s Capital, Volume 1, Chapter 7: A Critical Summary,” July 31, 2015.

(10) “Marx’s Capital, Volume 1, Chapter 8: A Critical Summary,” August 2, 2015.

(11) “Marx’s Capital, Volume 1, Chapter 9: A Critical Summary,” December 19, 2015.

(12) “Marx’s Capital, Volume 1, Chapter 10: A Critical Summary,” February 3, 2016.

(13) “Marx’s Capital, Volume 1, Chapter 11: A Critical Summary,” February 7, 2016.

(14) “Marx’s Capital, Volume 1, Chapter 12: A Critical Summary,” February 11, 2016.

(15) “Marx’s Capital, Volume 1, Chapter 13: A Critical Summary,” February 12, 2016.

(16) “Marx’s Capital, Volume 1, Chapter 14: A Critical Summary,” March 9, 2016.

(17) “Marx’s Capital, Volume 1, Chapter 15: A Critical Summary, Part 1,” March 17, 2016.

(18) “Marx’s Capital, Volume 1, Chapter 15: A Critical Summary, Part 2,” March 18, 2016.

(19) “Marx’s Capital, Volume 1, Chapter 16: A Critical Summary,” March 20, 2016.

(20) “Marx’s Capital, Volume 1, Chapter 17: A Critical Summary,” March 21, 2016.

(21) “Marx’s Capital, Volume 1, Chapter 18: A Critical Summary,” March 23, 2016.

(22) “Marx’s Capital, Volume 1, Chapter 19: A Critical Summary,” March 24, 2016.

(23) “Marx’s Capital, Volume 1, Chapter 20: A Critical Summary,” March 26, 2016.

(24) “Marx’s Capital, Volume 1, Chapter 21: A Critical Summary,” March 28, 2016.

(25) “Marx’s Capital, Volume 1, Chapter 22: A Critical Summary,” April 4, 2016.

(26) “Marx’s Capital, Volume 1, Chapter 23: A Critical Summary,” April 10, 2016.

(27) “Marx’s Capital, Volume 1, Chapter 24: A Critical Summary,” April 14, 2016.

(28) “Marx’s Capital, Volume 1, Chapter 25: A Critical Summary,” April 16, 2016.

(29) “Marx’s Capital, Volume 1, Chapter 26: A Critical Summary,” April 17, 2016.

(30) “Marx’s Capital, Volume 1, Chapter 27: A Critical Summary,” April 18, 2016.

(31) “Marx’s Capital, Volume 1, Chapter 28: A Critical Summary,” April 19, 2016.

(32) “Marx’s Capital, Volume 1, Chapter 29: A Critical Summary,” April 20, 2016.

(33) “Marx’s Capital, Volume 1, Chapter 30: A Critical Summary,” April 20, 2016.

(34) “Marx’s Capital, Volume 1, Chapter 31: A Critical Summary,” April 20, 2016.

(35) “Marx’s Capital, Volume 1, Chapter 32: A Critical Summary,” April 21, 2016.

(36) “Marx’s Capital, Volume 1, Chapter 33: A Critical Summary,” April 22, 2016.

Marx’s Capital, Volume 1, Chapter 33: A Critical Summary

Chapter 33 of volume 1 of Capital is called “The Modern Theory of Colonisation” and examines how capitalism is established in European colonies. This is the final chapter of volume 1 of Capital.

By colonies, Marx means those countries with “virgin soils, colonised by free immigrants” (Marx 1906: 838, n. 1), such as America or Australia.

Marx is concerned with the theory of Edward Gibbon Wakefield (1796–1862), an Englishman who helped to colonise New Zealand, and the author of England and America (1834) and A View of the Art of Colonization (1849).

Marx describes Wakefield’s theory:

“It is the great merit of E. G. Wakefield to have discovered, not anything new about the Colonies, 1 but to have discovered in the Colonies the truth as to the conditions of capitalist production in the mother-country. As the system of protection at its origin attempted to manufacture capitalists artificially in the mother-country, so Wakefield's colonisation theory, which England tried for a time to enforce by Acts of Parliament, attempted to effect the manufacture of wage-workers in the Colonies. This he calls ‘systematic colonisation.’

First of all, Wakefield discovered that in the Colonies property in money, means of subsistence, machines and other means of production, does not as yet stamp a man as a capitalist if there be wanting the correlative—the wage-worker, the other man who is compelled to sell himself of his own free-will. He discovered that capital is not a thing, but a social relation between persons, established by the instrumentality of things.” (Marx 1906: 839).

In colonies, free settlers often have plenty of land to settle on which provides them with an independent means of subsistence and means of production (Marx 1990: 933), and so this inhibits the development of a class of property-less workers:

“‘If,’ says Wakefield, ‘all the members of the society are supposed to possess equal portions of capital ... no man would have a motive for accumulating more capital than he could use with his own hands. This is to some extent the case in new American settlements, where a passion for owning land prevents the existence of a class of labourers for hire.’ So long, therefore, as the labourer can accumulate for himself—and this he can do so long as he remains possessor of his means of production—capitalist accumulation and the capitalistic mode of production are impossible. The class of wage-labourers, essential to these, is wanting.” (Marx 1906: 840).

“We have seen that the expropriation of the mass of the people from the soil forms the basis of the capitalist mode of production. The essence of a free colony, on the contrary, consists in this — that the bulk of the soil is still public property, and every settler on it therefore can turn part of it into his private property and individual means of production, without hindering the later settlers in the same operation. This is the secret both of the prosperity of the colonies and of their inveterate vice—opposition to the establishment of capital. ‘Where land is very cheap and all men are free, where one who so pleases can easily obtain a piece of land for himself, not only is labour very dear, as respects the labourer’s share of the produce, but the difficulty is to obtain combined labour at any price.’” (Marx 1906: 841–842).

For Marx, the essence of capitalism production is as follows:

“The great beauty of capitalist production consists in this—that it not only constantly reproduces the wage-worker as wage-worker, but produces always, in proportion to the accumulation of capital, a relative surplus population of wageworkers. Thus the law of supply and demand of labour is kept in the right rut, the oscillation of wages is penned within limits satisfactory to capitalist exploitation, and lastly, the social dependence of the labourer on the capitalist, that indispensable requisite, is secured; an unmistakeable relation of dependence, which the smug political economist, at home, in the mother country, can transmogrify into one of free contract between buyer and seller, between equally independent owners of commodities, the owner of the commodity capital and the owner of the commodity labour. But in the colonies this pretty fancy is torn asunder. The absolute population here increases much more quickly than in the mother-country, because many labourers enter this world as ready-made adults, and yet the labour market is always understocked. The law of the supply and demand of labour falls to pieces. On the one hand, the old world constantly throws in capital, thirsting after exploitation and ‘abstinence;’ on the other, the regular reproduction of the wage-labourer as wage-labourer comes into collision with impediments the most impertinent and in part invincible. What becomes of the production of wage-labourers, supernumerary in proportion to the accumulation of capital? The wage-worker of to-day is- to-morrow an independent peasant, or artisan, working for himself. He vanishes from the labour-market, but not into the workhouse. This constant transformation of the wage-labourers into independent producers, who work for themselves instead of for capital, and enrich themselves instead of the capitalist gentry, reacts in its turn very perversely on the conditions of the labour-market. Not only does the degree of exploitation of the wage-labourer remain indecently low. The wage-labourer loses into the bargain, along with the relation of dependence, also the sentiment of dependence on the abstemious capitalist.” (Marx 1906: 842–843).

So the dependence of workers on capitalists “must be created by artificial means” (Marx 1906: 844).

Marx thinks the solution was this:

“How, then, to heal the anti-capitalistic cancer of the colonies? If men were willing, at a blow, to turn all the soil from public into private property, they would destroy certainly the root of the evil, but also—the colonies. The trick is how to kill two birds with one stone. Let the Government put upon the virgin soil an artificial price, independent of the law of supply and demand, a price that compels the immigrant to work a long time for wages before he can earn enough money to buy land, and turn himself into an independent peasant. The funds resulting from the sale of land at a price relatively prohibitory for the wage-workers, this fund of money extorted from the wages of labour by violation of the sacred law of supply and demand, the Government is to employ, on the other hand, in proportion as it grows, to import have-nothings from Europe into the colonies, and thus keep the wage-labour market full for the capitalists. Under these circumstances, tout sera pour le mieux dans le meilleur des mondes possibles. This is the great secret of ‘systematic colonisation.’ By this plan, Wakefield cries in triumph, ‘the supply of labour must be constant and regular, because, first, as no labourer would be able to procure land until he had worked for money, all immigrant labourers, working for a time for wages and in combination, would produce capital for the employment of more labourers; secondly, because every labourer who left off working for wages and became a landowner, would, by purchasing land, provide a fund for bringing fresh labour to the colony.’ The price of the soil imposed by the State must, of course, be a ‘sufficient price’—i.e., so high ‘as to prevent the labourers from becoming independent landowners until others had followed to take their place.’ This ‘sufficient price for the land’ is nothing but a euphemistic circumlocution for the ransom which the labourer pays to the capitalist for leave to retire from the wage-labour market to the land.” (Marx 1906: 846).

Marx thinks this was put into effect by England:

“It is very characteristic that the English Government for years practised this method of ‘primitive accumulation,’ prescribed by Mr. Wakefield expressly for the use of the colonies. The fiasco was, of course, as complete as that of Sir Robert Peel’s Bank Act. The stream of emigration was only diverted from the English colonies to the United States. Meanwhile, the advance of capitalistic production in Europe, accompanied by increasing Government pressure, has rendered Wakefield’s recipe superfluous. On the one hand, the enormous and ceaseless stream of men, year after year driven upon America, leaves behind a stationary sediment in the east of the United States, the wave of immigration from Europe throwing men on the labour market there more rapidly than the wave of emigration westwards can wash them away. On the other hand, the American Civil War brought in its train a colossal national debt, and, with it, pressure of taxes, the rise of the vilest financial aristocracy, the squandering of a huge part of the public land on speculative companies for the exploitation of railways, mines, &c, in brief, the most rapid centralisation of capital. The great republic has, therefore, ceased to be the promised land for emigrant labourers. Capitalistic production advances there with giant strides, even though the lowering of wages and the dependence of the wage-worker are yet far from being brought down to the normal European level. The shameless lavishing of uncultivated colonial land on aristocrats and capitalists by the Government, so loudly denounced even by Wakefield, has produced, especially in Australia, in conjunction with the stream of men that the gold-diggings attract, and with the competition that the importation of English commodities causes even to the smallest artisan, an ample ‘relative surplus labouring population,’ so that almost every mail brings the Job’s news of a ‘glut of the Australian labour-market,’ and prostitution in some places there flourishes as wantonly as in the London Haymarket.

However, we are not concerned here with the condition of the colonies. The only thing that interests us is the secret discovered in the new world by the political economy of the old world, and proclaimed on the house-tops: that the capitalist mode of production and accumulation, and therefore capitalist private property, have for their fundamental condition the annihilation of self-earned private property; in other words, the expropriation of the labourer.” (Marx 1906: 847–848).

This ends the final chapter of Capital.

Marx’s passage above verges on conspiracy theory. For example, consider the idea that the “English Government for years practised this method of ‘primitive accumulation,’ prescribed by Mr. Wakefield expressly for the use of the colonies” (Marx 1906: 847).

Wakefield’s colonial theories seem to have been most influential in the private-sector New Zealand Company, but not in British government circles.

When Wakefield went to New Zealand in 1853, he discovered that the governor George Grey did not agree with his colonial theories as pursued by the New Zealand Company:

“Wakefield went on the attack almost as soon as he landed [sc. in Wellington, New Zealand]. He took issue with George Grey on his policy on land sales. Grey was in favour of selling land very cheaply to encourage the flow of settlers. Wakefield wanted to keep the price of land high so that the growth of the colony could be financed by land sales, it was a fundamental tenet of his colonial theory. He and Sewell applied for an injunction to prevent the Commissioner of Crown Lands selling any further lands under Governor Grey’s regulations.”
https://en.wikipedia.org/wiki/Edward_Gibbon_Wakefield#Wakefield_in_New_Zealand

But George Grey prevailed against Wakefield. So the British government policy in New Zealand was contrary to Marx’s theory (as taken from Wakefield), and the reduction in land prices had been directed from the government in London by Earl Grey (Stuart 1971: 28). Nevertheless, capitalist agriculture and capitalism generally proceeded to develop in New Zealand, and so much so that New Zealand had a very high real per capita GDP by the early 20th century.

Finally, the idea that America “ceased to be the promised land for emigrant labourers” by 1867 is absurd, given the opening up and settlement of the West from the 1870s to the 1890s.

BIBLIOGRAPHY
Brewer, Anthony. 1984. A Guide to Marx’s Capital. Cambridge University Press, Cambridge.

Harvey, David. 2010. A Companion to Marx’s Capital. Verso, London and New York.

Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; rev. trans. by Ernest Untermann from 4th German edn.). The Modern Library, New York.

Marx, Karl. 1990. Capital. A Critique of Political Economy. Volume One (trans. Ben Fowkes). Penguin Books, London.

Stuart, Peter A. 1971. Edward Gibbon Wakefield in New Zealand: His Political Career 1853–4. Price Milburn, Wellington.

Wakefield, Edward Gibbon. 1834. England and America. A Comparison of the Social and Political State of Both Nations. Harper & Brothers, New York.
https://archive.org/details/englandamericaco00wake

Wakefield, Edward Gibbon. 1849. A View of the Art of Colonization, with Present Reference to the British Empire; In letters between a Statesman and a Colonist. J. W. Parker, London.
https://archive.org/details/viewofartofcolon00wakerich

Marx’s Capital, Volume 1, Chapter 32: A Critical Summary

Chapter 32 of volume 1 of Capital is called the “Historical Tendency of Capitalist Accumulation” and is essentially Marx’s conclusion to Capital, since Chapter 33 is more of an appendix and addendum to the volume (Brewer 1984: 83).

Chapter 32 is therefore Marx’s summing up of his vision of the past and future of capitalism, and contains a famous – and discredited – doomsday prediction of the collapse of capitalism.

The tendency of “primitive accumulation of capital” which Marx has described in Part 8 is fundamentally to destroy independent farmers and artisans who own their own means of production:

“The private property of the labourer in his means of production is the foundation of petty industry, whether agricultural, manufacturing or both; petty industry, again, is an essential condition for the development of social production and of the free individuality of the labourer himself. Of course, this petty mode of production exists also under slavery, serfdom, and other states of dependence. But it flourishes, it lets loose its whole energy, it attains its adequate classical form, only where the labourer is the private owner of his own means of labour set in action by himself: the peasant of the land which he cultivates, the artizan of the tool which he handles as a virtuoso. This mode of production pre-supposes parcelling of the soil, and scattering of the other means of production. As it excludes the concentration of these means of production, so also it excludes cooperation, division of labour within each separate process of production, the control over, and the productive application of the forces of Nature by society, and the free development of the social productive powers. It is compatible only with a system of production, and a society, moving within narrow and more or less primitive bounds.” (Marx 1906: 834–835).

But forces within this society destroy it:

“At a certain stage of development it brings forth the material agencies for its own dissolution. From that moment new forces and new passions spring up in the bosom of society; but the old social organization fetters them and keeps them down. It must be annihilated; it is annihilated. Its annihilation, the transformation of the individualised and scattered means of production into socially concentrated ones, of the pigmy property of the many into the huge property of the few, the expropriation of the great mass of the people from the soil, from the means of subsistence, and from the means of labour, this fearful and painful expropriation of the mass of the people forms the prelude to the history of capital. It comprises a series of forcible methods, of which we have passed in review only those that have been epoch-making as methods of the primitive accumulation of capital. The expropriation of the immediate producers was accomplished with merciless Vandalism, and under the stimulus of passions the most infamous, the most sordid, the pettiest, the most meanly odious. Self-earned private property, that is based, so to say, on the fusing together of the isolated, independent labouring-individual with the conditions of his labour, is supplanted by capitalistic private property, which rests on exploitation of the nominally free labour of others, i.e., on wages-labour.” (Marx 1906: 835–836).

Marx now makes his famous doomsday prediction of the collapse of capitalism:

“As soon as this process of transformation has sufficiently decomposed the old society from top to bottom, as soon as the labourers are turned into proletarians, their means of labour into capital, as soon as the capitalist mode of production stands on its own feet, then the further socialisation of labour and further transformation of the land and other means of production into socially exploited and, therefore, common means of production, as well as the further expropriation of private proprietors, takes a new form. That which is now to be expropriated is no longer the labourer working for himself, but the capitalist exploiting many labourers. This expropriation is accomplished by the action of the immanent laws of capitalistic production itself, by the centralisation of capital. One capitalist always kills many. Hand in hand with this centralisation, or this expropriation of many capitalists by few, develop, on an ever extending scale, the co-operative form of the labour-process, the conscious technical application of science, the methodical cultivation of the soil, the transformation of the instruments of labour into instruments of labour only usable in common, the economising of all means of production by their use as the means of production of combined, socialised labour, the entanglement of all peoples in the net of the world-market, and this, the international character of the capitalistic regime. Along with the constantly diminishing number of the magnates of capital, who usurp and monopolise all advantages of this process of transformation, grows the mass of misery, oppression, slavery, degradation, exploitation; but with this too grows the revolt of the working-class, a class always increasing in numbers, and disciplined, united, organised by the very mechanism of the process of capitalist production itself. The monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with, and under it. Centralisation of the means of production and socialisation of labour at last reach a point where they become incompatible with their capitalist integument. This integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated.”

The capitalist mode of appropriation, the result of the capitalist mode of production, produces capitalist private property. This is the first negation of individual private property, as founded on the labour of the proprietor. But capitalist production begets, with the inexorability of a law of Nature, its own negation. It is the negation of negation. This does not re-establish private property for the producer, but gives him individual property based on the acquisitions of the capitalist era: i.e., on co-operation and the possession in common of the land and of the means of production.

The transformation of scattered private property, arising from individual labour, into capitalist private property is, naturally, a process, incomparably more protracted, violent, and difficult, than the transformation of capitalistic private property, already practically resting on socialised production, into socialised property. In the former case, we had the expropriation
of the mass of the people by a few usurpers; in the latter, we have the expropriation of a few usurpers by the mass of the people.” (Marx 1906: 836–837).

In a final footnote, Marx quotes with approval this passage from Engels:

“The development of Modern Industry, therefore, cuts from under its feet, the very foundation on which the bourgeoisie produces and appropriates products. What the bourgeoisie therefore, produces, above all, are its own grave-diggers. Its fall and the victory of the proletariat are equally inevitable. … Of all the classes, that stand face to face with the bourgeoisie to-day, the proletariat alone is a really revolutionary class. The other classes perish and disappear in the face of Modern Industry, the proletariat is its special and essential product. … The lower middle-classes, the small manufacturers, the shop keepers, the artisan, the peasant, all these fight against the bourgeoisie, to save from extinction their existence as fractions of the middle-class … they are reactionary, for they try to roll back the wheel of history.” (Marx 1906: 837, n. 1).

So here and throughout Capital Marx envisages the historical tendency of capitalism as follows:

(1) capitalism tends to increase the (1) accumulation, (2) concentration (accumulation over time) and (3) centralisation of capital. Capitalism will therefore have a tremendous tendency towards monopoly.

(2) following from (1), capitalism will tend to destroy more and more capitalists and result in huge centralisation of capital (or monopoly) and reduce even capitalists to the proletarian class;

(3) capitalism will tend to use more and more machines and automation in production resulting in a huge body of unemployed people.

(4) following from (3), the industrial reserve army of labour (the unemployed) grows and grows, and helps to hold real wages in check (see Chapter 25). Even more, Marx thought that a large and growing industrial reserve army is a necessary condition of capitalism: it was a “condition of existence of the capitalist mode of production” (Marx 1906: 646).

(5) the tendency of capitalism is to keep the real wage at a subsistence level, which is the value of the maintenance and reproduction of labour-power (on this, see Chapter 25 and here). Wages rise and fall around this subsistence level as an equilibrium process;

(6) machines will only increase the intensity, speed and arduousness of work for the proletarians and their misery (see Chapter 15 of volume 1), and also increase the employment of women and children who are paid a lower wage than adult men (although government laws might counter this latter trend to some extent). The adult men are then increasing thrown out of work by machines and women and children replace them with lower wages;

(7) volume 3 of Capital adds to this the tendency of the profit rate to fall, but this mechanism is not invoked in volume 1 as one of the causes of the collapse, and some modern Marxists now dispute just how important the tendency of the falling rate of profit was for the final collapse of capitalism in Marx’s theory, as the emphasis given to this may be more the result of Engels’ tendentious editing of volume 3 of Capital.

(8) eventually almost the whole of society is reduced to the proletarian class with only a tiny handful of monopoly capitalists, who according to Marx “usurp and monopolise all advantages of this process of transformation” (Marx 1906: 836).

(9) the huge and constantly growing class of proletarians, who are kept in poverty with a subsistence wage, are subject to an increasing “mass of misery, oppression, slavery, degradation, [and] exploitation” (Marx 1906: 836). As in the passage of Engels quoted by Marx, the “other classes perish and disappear in the face of Modern Industry” (Marx 1906: 837, n. 1).

(10) finally, the proletarians eventually organise and rebel against capitalism, overthrowing the system.

Now these predictions judged in their totality were not the long-run tendency of capitalism.

Even if a few elements are true (e.g., the increasing use of machines), nevertheless Marx’s vision is a delusional Marxist caricature of capitalism which has been falsified by history.

We can run through the failed predictions as follows:

(1) the tendency to monopoly has its limits even in capitalism, and the extreme and increasing degree of monopoly as predicted by Marx goes well beyond anything observed in real world capitalism;

(2) the size of the working class eventually stabilised and society was swelled by a growing and prosperous middle class and social mobility. Unemployment rates in capitalism are simply a cyclical result of the business cycle: even in the 19th century, unemployment rates did not grow and grow in the long run, as Marx’s theory predicts, but normally simply moved around a point somewhat above full employment, as John Maynard Keynes pointed out:

“our actual experience … [sc. is] that we oscillate, avoiding the gravest extremes of fluctuation in employment and in prices in both directions, round an intermediate position appreciably below full employment and appreciably above the minimum employment a decline below which would endanger life.”
Keynes, J. M. 1936. General Theory of Employment, Interest, and Money , Chapter 18.
https://www.marxists.org/reference/subject/economics/keynes/general-theory/ch18.htm

(3) Marx thought that the large industrial reserve army is a necessary consequence and necessary condition of capitalism, but this is incorrect. In the Keynesian era of full employment, where there was very low unemployment and indeed labour scarcity in the advanced capitalist world, capitalism continued and thrived – indeed we now call it the “Golden Age” of capitalism.

(4) the long-run tendency of capitalism, even in the 19th century, was to massively increase the real wage, which has soared above subsistence level, even for workers (see here and here).

(5) the growing real wage and rising disposable income even of workers in capitalism also allowed a massive capacity for production of new commodities and new opportunities for employment (e.g., especially in services and middle class employment), which in turn has helped to overcome technological unemployment.

(6) Marx’s claim that machines, generally speaking, are an unmitigated evil in capitalism whose primary effect to increase the intensity and speed of work by labourers is an outrageous falsehood – a perversion of history and reality. In reality, machines have, generally speaking, tended to decrease the intensity, difficulty and monotony of human labour and often reduced to human labour to lighter work of visual inspection and overseeing of machine work, not physical labour. On this, see here and here. Advanced capitalist nations have also virtually eliminated child labour as well, and in our time have tended to pay women the same hourly wage for the same type of work as men.

(7) highly developed and advanced Western capitalist states like Britain and the US proved the most resistant to communism and Marxism (contrary to Marx’s theory), and when communist revolutions broke out it was in backward Russia and China. Even the communist outbreaks in Germany and Italy at the end of the First World War were more the result of the collapse of those nations under the strain of war, and not in line with the vision Marx had predicted (as I noted here).

BIBLIOGRAPHY
Brewer, Anthony. 1984. A Guide to Marx’s Capital. Cambridge University Press, Cambridge.

Harvey, David. 2010. A Companion to Marx’s Capital. Verso, London and New York.

Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; rev. trans. by Ernest Untermann from 4th German edn.). The Modern Library, New York.

Marx, Karl. 1990. Capital. A Critique of Political Economy. Volume One (trans. Ben Fowkes). Penguin Books, London.

Marx’s Capital, Volume 1, Chapter 31: A Critical Summary

Chapter 31 of volume 1 of Capital is called the “Genesis of the Industrial Capitalist.”

This chapter contains Marx’s views on the relationship between imperialism and colonialism and early capitalist development in Europe, which some modern Marxists have used to argue that imperialist looting and theft of wealth was a necessary precondition for Western capitalism (Brewer 1984: 82; Harvey 2010: 297). And Marx indeed does seem to think that the many aspects of the imperialist exploitation of the Americas were “the chief momenta of primitive accumulation” in Europe (Marx 1906: 823).

Already this argument runs into difficulties, because even though the Spanish were often the chief beneficiaries of the imperialist conquest of the New World, modern industrial capitalism did not develop in Spain.

At any rate, there is much that is of interest and even insightful in this chapter, but mixed up with Marxist myths and propaganda.

Marx begins with this historical sketch:

“The genesis of the industrial capitalist did not proceed in such a gradual way as that of the farmer. Doubtless many small guild-masters, and yet more independent small artisans, or even wage-labourers, transformed themselves into small capitalists, and (by gradually extending exploitation of wage-labour and corresponding accumulation) into full-blown capitalists. In the infancy of capitalist production, things often happened as in the infancy of mediaeval towns, where the question, which of the escaped serfs should be master and which servant, was in great part decided by the earlier or later date of their flight. The snail’s-pace of this method corresponded in no wise with the commercial requirements of the new world-market that the great discoveries of the end of the 15th century created. But the middle age had handed down two distinct forms of capital, which mature in the most different economic social formations, and which, before the era of the capitalist mode of production, are considered as capital quand même [sc. nevertheless]—usurer’s capital and merchant’s capital.” (Marx 1906: 822).

“The money capital formed by means of usury and commerce was prevented from turning into industrial capital, in the country by the feudal constitution, in the towns by the guild organization. These fetters vanished with the dissolution of feudal society, with the expropriation and partial eviction of the country population. The new manufacturers were established at sea-ports, or in inland points beyond the control of the old municipalities and their guilds. Hence in England an embittered struggle of the corporate towns against these new industrial nurseries.” (Marx 1906: 823).

In other passages in Capital, however, Marx does not regard early merchants and usurers as proper capitalists (Marx 1906: 182–183, 559–560), so there is some inconsistency here.

Marx thinks that imperialism was a crucial part of “primitive accumulation”:

“The discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the aboriginal population, the beginning of the conquest and looting of the East Indies, the turning of Africa into a warren for the commercial hunting of black-skins, signalised the rosy dawn of the era of capitalist production. These idyllic proceedings are the chief momenta of primitive accumulation. On their heels treads the commercial war of the European nations, with the globe for a theatre. It begins with the revolt of the Netherlands from Spain, assumes giant dimensions in England’s anti-Jacobin war, and is still going on in the opium wars against China, &c.

The different momenta of primitive accumulation distribute themselves now, more or less in chronological order, particularly over Spain, Portugal, Holland, France, and England. In England at the end of the 17th century, they arrive at a systematical combination, embracing the colonies, the national debt, the modern mode of taxation, and the protectionist system. These methods depend in part on brute force, e.g., the colonial system. But they all employ the power of the State, the concentrated and organised force of society, to hasten, hothouse fashion, the process of transformation of the feudal mode of production into the capitalist mode, and to shorten the transition. Force is the midwife of every old society pregnant with a new one. It is itself an economic power.” (Marx 1906: 823–824).

Marx lists various examples of European colonial theft and plundering as an important source of primitive accumulation (Marx 1990: 916–917).

He states:

“The colonial system ripened, like a hot-house, trade and navigation. The ‘societies Monopolia’ of Luther were powerful levers for concentration of capital. The colonies secured a market for the budding manufactures, and, through the monopoly of the market, an increased accumulation. The treasures captured outside Europe by undisguised looting, enslavement, and murder, floated back to the mother-country and were there turned into capital. Holland, which first fully developed the colonial system, in 1648 stood already in the acme of its commercial greatness. It was ‘in almost exclusive possession of the East Indian trade and the commerce between the south-east and north-west of Europe. Its fisheries, marine, manufactures, surpassed those of any other country. The total capital of the Republic was probably more important than that of all the rest of Europe put together.’ Gülich forgets to add that by 1648, the people of Holland were more overworked, poorer and more brutally oppressed than those of all the rest of Europe put together.

To-day industrial supremacy implies commercial supremacy. In the period of manufacture properly so-called, it is, on the other hand, the commercial supremacy that gives industrial predominance. Hence the preponderant role that the colonial system plays at that time. It was ‘the strange God’ who perched himself on the altar cheek by jowl with the old Gods of Europe, and one fine day with a shove and a kick chucked them all of a heap. It proclaimed surplus-value making as the sole end and aim of humanity.” (Marx 1906: 826–827).

There is a great deal of Marxist myth-making here.

It is summed up with Marx’s statement that

“The colonial system ripened, like a hot-house, trade and navigation. The ‘societies Monopolia’ of Luther were powerful levers for concentration of capital. The colonies secured a market for the budding manufactures, and, through the monopoly of the market, an increased accumulation. The treasures captured outside Europe by undisguised looting, enslavement, and murder, floated back to the mother-country and were there turned into capital.” (Marx 1906: 826).

That these things were really the “chief momenta of primitive accumulation” in Western capitalism that drove the industrial revolution can be seriously questioned, however.

Modern historical research by Paul Bairoch puts all this into doubt, which can be seen here and here.

The British industrial revolution had its origins in the agricultural revolution of 1680–1700 which accelerated from 1720–1760 and resulted in a large grain surplus even by the 1730s (Bairoch 1993: 80). But that arose from internal progress in the yields of crops and agricultural productivity (Bairoch 1993: 80), not imperial conquests. Many of the necessary technological innovations existed by 1750, but these had nothing to do with British imperialism.

Did non-European markets in the colonies provide a necessary condition for the British industrial revolution? Bairoch argues cogently that they did not.

The role of colonial trade in spurring industry in England seems minor. In the 18th century as the first phase of the industrial revolution gathered pace, the total export sector of the UK accounted for between 4–8% of Britain’s GDP, and of this only 33–39% of exports were bound for the Third World. But, crucially, only 2–3% of total national output was exported to the Third World (Bairoch 1993: 82). It was what Marx called the “home market” that largely provided the demand-side inducement to industrialisation in Britain.

Even in individual sectors where the importance of exports to the Third World was somewhat higher such as textiles and iron, the contribution of this colonial or Third world demand was not decisive for industrial development (Bairoch 1993: 84).

There was one sector in the 19th century in Britain which was oriented largely towards colonial markets: the cotton textile industry (Bairoch 1993: 84–85). By 1819/1821 cotton textile exports accounted for about 53% of production and a significant proportion of these went to colonies and the Third World (Bairoch 1993: 85). But this was only one industry amongst many in the industrial revolution, and even if colonial trade markets had been unavailable the sector would still have developed but just at a lower level of production.

Importantly, Bairoch (1993: 59) has demonstrated that right up until the post-WWII era the West was almost completely self-sufficient in energy, and as late as the 1930s much of the developed world had an export surplus in products used to create energy, such as coal (Bairoch 1993: 59). It follows therefore that the imperialist exploitation of the Third World was not necessary to provide the energy needs of early industrial capitalism.

With respect to other important factor inputs, Bairoch first notes that the West was almost wholly self-sufficient in iron ore: most production occurred in Europe where around 1914 Europe produced 28 million of the 32 million tons in global production (Bairoch 1993: 63). In 1914, the West only depended for 2% of its total metal ore consumption on Third World production – an extraordinarily low figure which means that 98% of metal ores were produced domestically (Bairoch 1993: 65).

In production of glass, cement, paper and clay products the West was almost completely independent and not reliant on imports (Bairoch 1993: 68).

Bairoch (1993: 68) estimates that in terms of value the West was about 94–96% self-sufficient in raw materials as late as 1913.

It is also extremely doubtful that the West needed some captive Third World or colonial market to achieve the industrial revolution.

As late as the early 20th century, the export sector accounted for only about 8–9% of GNP of most developed nations, and total exports to the Third World were as low as 1.3 to 1.7% of the total volume of production. Exports to actual Western colonial territories accounted for as little as 0.6 to 0.9% of the total volume of production (Bairoch 1993: 73).

Great Britain – the colonialist superpower of the 19th century – exported only about 4–6% of its total production (Bairoch 1993: 73), and not all of that to its colonies, a figure which remains a low percentage. At most, Bairoch notes, exports to the Third World might have helped certain given UK sectors for limited periods of time (such as textiles), but this hardly vindicates Marxism, since it does not follow at all that this was a necessary condition for the British industrial revolution nor that British imperialism had a fundamental and underlying economic motive.

A final point is that the Spanish and Portuguese had richer, larger colonial empires than Britain did in the early modern period, but why didn’t the Spanish and Portuguese undergo an industrial revolution? As late as the 1700s, the Spanish and Portuguese empires even had an export trade five to seven times larger than that of Britain’s empire (Bairoch 1993: 82).

Clearly, the possession of a colonial empire was not a sufficient condition for industrialisation, and, as we will see below, nor was it a necessary condition of the British industrial revolution. Rather, as Bairoch argues, the European conquest of the world occurred more as a consequence of the superior technology and wealth of Europeans (and power politics) which was in turn a result of industrialisation, not a condition for it (Bairoch 1993: 82, 85–86).

To return to Marx’s analysis, the system of public debt and central banks is seen by him as vital in the process of primitive accumulation:

“The system of public credit, i.e. of national debts, whose origin we discover in Genoa and Venice as early as the middle ages, took possession of Europe generally during the manufacturing period. The colonial system with its maritime trade and commercial wars served as a forcing-house for it. Thus it first took root in Holland. National debts, i.e., the alienation of the state—whether despotic, constitutional or republican—marked with its stamp the capitalistic era. The only part of the so-called national wealth that actually enters into the collective possessions of modern peoples is—their national debt. Hence, as a necessary consequence, the modern doctrine that a nation becomes the richer the more deeply it is in debt. Public credit becomes the credo of capital. And with the rise of national debt-making, want of faith in the national debt takes the place of the blasphemy against the Holy Ghost, which may not be forgiven.

The public debt becomes one of the most powerful levers of primitive accumulation. As with the stroke of an enchanter’s wand, it endows barren money with the power of breeding and thus turns it into capital, without the necessity of its exposing itself to the troubles and risks inseparable from its employment in industry or even in usury. The state-creditors actually give nothing away, for the sum lent is transformed into public bonds, easily negotiable, which go on functioning in their hands just as so much hard cash would. But further, apart from the class of lazy annuitants thus created, and from the improvised wealth of the financiers, middlemen between the government and the nation—as also apart from the tax-farmers, merchants, private manufacturers, to whom a good part of every national loan renders the service of a capital fallen from heaven—the national debt has given rise to joint-stock companies, to dealings in negotiable effects of all kinds, and to agiotage, in a word to stock-exchange gambling and the modern bankocracy.

At their birth the great banks, decorated with national titles, were only associations of private speculators, who placed themselves by the side of governments, and, thanks to the privileges they received, were in a position to advance money to the state. Hence the accumulation of the national debt has no more infallible measure than the successive rise in the stock of these banks, whose full development dates from the founding of the Bank of England in 1694. The Bank of England began with lending its money to the Government at 8%; at the same time it was empowered by Parliament to coin money out of the same capital, by lending it again to the public in the form of bank-notes. It was allowed to use these notes for discounting bills, making advances on commodities, and for buying the precious metals. It was not long ere this credit-money, made by the bank itself, became the coin in which the Bank of England made its loans to the state, and paid, on account of the state, the interest on the public debt. It was not enough that the bank gave with one hand and took back more with the other; it remained, even whilst receiving, the eternal creditor of the nation down to the last shilling advanced. Gradually it became inevitably the receptacle of the metallic hoard of the country, and the centre of gravity of all commercial credit. What effect was produced on their contemporaries by the sudden uprising of this brood of bankocrats, financiers, rentiers, brokers, stock-jobbers, &c, is proved by the writings of that time, e.g., by Bolingbroke’s.

With the national debt arose an international credit system, which often conceals one of the sources of primitive accumulation in this or that people. Thus the villanies of the Venetian thieving system formed one of the secret bases of the capital-wealth of Holland to whom Venice in her decadence lent large sums of money. So also was it with Holland and England. By the beginning of the 18th century the Dutch manufactures were far outstripped. Holland had ceased to be the nation preponderant in commerce and industry. One of its main lines of business, therefore, from 1701–1776, is the lending out of enormous amounts of capital, especially to its great rival England. The same thing is going on to-day between England and the United States. A great deal of capital, which appears to-day in the United States without any certificate of birth, was yesterday, in England, the capitalised blood of children.” (Marx 1906: 827–829).

Marx makes better remarks here, and his analysis of the origins of the financial system is not far from historical truth, as discussed in this post.

Marx sees the regressive taxes of the early modern period and 19th century as hitting the poor:

“As the national debt finds its support in the public revenue, which must cover the yearly payments for interest, &c, the modern system of taxation was the necessary complement of the system of national loans. The loans enable the government to meet extraordinary expenses, without the tax-payers feeling it immediately, but they necessitate, as a consequence, increased taxes. On the other hand, the raising of taxation caused by the accumulation of debts contracted one after another, compels the government always to have recourse to new loans for new extraordinary expenses. Modern fiscality, whose pivot is formed by taxes on the most necessary means of subsistence (thereby increasing their price), thus contains within itself the germ of automatic progression. Over-taxation is not an incident, but rather a principle. In Holland, therefore, where this system was first inaugurated, the great patriot, De Witt, has in his ‘Maxims’ extolled it as the best system for making the wage-labourer submissive, frugal, industrious, and overburdened with labour. The destructive influence that it exercises on the condition of the wage-labourer concerns us less however, here, than the forcible expropriation resulting from it, of peasants, artisans, and in a word, all elements of the lower middle-class. On this there are not two opinions, even among the bourgeois economists. Its expropriating efficacy is still further heightened by the system of protection, which forms one of its integral parts.” (Marx 1906: 829).

Protectionism is seen by Marx as crucial too:

“The system of protection was an artificial means of manufacturing manufacturers, of expropriating independent labourers, of capitalising the national means of production and subsistence, of forcibly abbreviating the transition from the mediaeval to the modern mode of production. The European states tore one another to pieces about the patent of this invention, and, once entered into the service of the surplus-value makers, did not merely lay under contribution in the pursuit of this purpose their own people, indirectly through protective duties, directly through export premiums. They also forcibly rooted out, in their dependent countries, all industry, as, e.g., England did with the Irish woollen manufacture. ….

Colonial system, public debts, heavy taxes, protection, commercial wars, &c, these children of the true manufacturing period, increase gigantically during the infancy of Modern Industry.” (Marx 1906: 830).

Marx goes on to point out how the developing cotton textile industry in England, even with increasing use of machines, needed to conscript pauper children as labour in the factories (Marx 1990: 922–924).

Marx points to the trans-Atlantic slave trade as yet another method by which the British accumulated capital (Marx 1990: 924–925).

But once again, in contrast to Marx’s anti-capitalist views, modern research has shown that the profits from slavery barely rose from 1% of national income in the late 17th century to 1.5% by 1770, and – even if this had been totally eliminated – there were vast amounts of money capital awash in the British economy in the 1700s which could have been used to finance industrial investment (Harley 2004: 197).

The contribution of the actual slave trade itself to Britain’s economy was trivial, and a significant volume of the trade occurred after the industrial take-off anyway (Eltis and Engerman 2000: 129). Moreover, the Spanish and Portuguese earned far more from the slave trade than the UK did in terms of a percentage of national income, but in neither case did profits from slavery lead to industrialisation in Spain or Portugal (Eltis and Engerman 2000: 131). On this issue, see here.

Nor is it true that industrial capitalism in England required slave-based production in the New World (Eltis and Engerman 2000: 134–135).

The reality is that the actual capital costs of the investment needed for the industrial revolution were not large at all compared to Britain’s GDP or the incomes of property owners (Harley 2004: 197).

Marx seems to imply that all these factors – colonialism, imperialism and slavery – were causally necessary for the industrial revolution in Europe:

“Tantae molis erat [sc. “so great was the effort”], to establish the ‘eternal laws of Nature’ of the capitalist mode of production, to complete the process of separation between labourers and conditions of labour, to transform, at one pole, the social means of production and subsistence into capital, at the opposite pole, the mass of the population into wage-labourers, into ‘free labouring poor,’ that artificial product of modern society. If money, according to Augier, ‘comes into the world with a congenital blood-stain on one cheek,’ capital comes dripping from head to foot, from every pore, with blood and dirt.” (Marx 1906: 833–834).

But, as we have seen, the historical evidence suggests otherwise and Marx was incorrect in attempting to see European imperialism as a necessary factor in capitalist development.

This is confirmed today by the way in which highly successful, state-led industrial revolutions have been carried out in South Korea and Taiwan, but we can see clearly that neither state had, nor required, colonies or imperial expansion or theft to effect this capitalist revolution.

Moreover, when the West itself gave up its colonial empires in the 1940s and 1950s and these former empires adopted a protectionist and state-led model of import substitution industrialisation, this did not stop massive economic growth and prosperity in the Western world.

Marx was, however, correct to note the role of protectionism and the state in early capitalist development and the crucial role of the credit system, with its emerging system of endogenous credit money.

A final point is that the non-Western world also has a long and horrific history of slavery, imperialism and colonialism. On the Marxist left and far left, there is an almost pathologically dishonest unwillingness to recognise that what the West did from 1500 to c. 1950 (in the period of its direct imperialism) was in essence what non-Western empire after empire has done through the ages, and in some respects not as bad as other empires. To blame capitalism per se for Western imperialism is short-sighted and the worst kind of Marxist mythology.

BIBLIOGRAPHY
Bairoch, Paul. 1993. Economics and World History: Myths and Paradoxes. Harvester Wheatsheaf, New York and London.

Brewer, Anthony. 1984. A Guide to Marx’s Capital. Cambridge University Press, Cambridge.

Eltis, David and Stanley L. Engerman. 2000. “The Importance of Slavery and the Slave Trade to Industrializing Britain,” The Journal of Economic History 60.1: 123–144.

Harley, C. Knick, 2004. “Trade: Discovery, Mercantilism and Technology,” in Roderick Floud and Paul Johnson (eds.), The Cambridge Economic History of Modern Britain. Volume 1: Industrialisation, 1700–1860. Cambridge University Press, Cambridge. 175–203.

Harvey, David. 2010. A Companion to Marx’s Capital. Verso, London and New York.

Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; rev. trans. by Ernest Untermann from 4th German edn.). The Modern Library, New York.

Marx, Karl. 1990. Capital. A Critique of Political Economy. Volume One (trans. Ben Fowkes). Penguin Books, London.

Marx’s Capital, Volume 1, Chapter 30: A Critical Summary

Chapter 30 of volume 1 of Capital is called the “Impact of the Agricultural Revolution on Industry. Creation of the Home Market for Industrial Capital.”

Independent self-producing peasants in England were gradually driven off the land and into the cities to become an urban proletariat (Marx 1990: 908):

“With the setting free of a part of the agricultural population, therefore, their former means of nourishment were also set free. They were now transformed into material elements of variable capital. The peasant, expropriated and cast adrift, must buy their value in the form of wages, from his new master, the industrial capitalist. That which holds good of the means of subsistence holds with the raw materials of industry dependent upon home agriculture. They were transformed into an element of constant capital.” (Marx 1906: 817–818).

So the new factories came to produce what was once produced by “many small independent producers” (Marx 1906: 818).

The broad historical process was as follows:

“The expropriation and eviction of a part of the agricultural population not only set free for industrial capital, the labourers, their means of subsistence, and material for labour; it also created the home market.

In fact, the events that transformed the small peasants into wage-labourers, and their means of subsistence and of labour into material elements of capital, created, at the same time, a home-market for the latter. Formerly, the peasant family produced the means of subsistence and the raw materials, which they themselves, for the most part, consumed. These raw materials and means of subsistence have now become commodities; the large farmer sells them, he finds his market in manufactures. Yarn, linen, coarse woollen stuffs—things whose raw materials had been within the reach of every peasant family, had been spun and woven by it for its own use—were now transformed into articles of manufacture, to which the country districts at once served for markets. The many scattered customers, whom stray artizans until now had found in the numerous small producers working on their own account, concentrate themselves now into one great market provided for by industrial capital. Thus, hand in hand with the expropriation of the self-supporting peasants, with their separation from their means of production, goes the destruction of rural domestic industry, the process of separation between manufacture and agriculture. And only the destruction of rural domestic industry can give the internal market of a country that extension and consistence which the capitalist mode of production requires.” (Marx 1906: 819–820).

During the earlier “period of manufacture,” which for Marx was the period from the mid-16th to the late 18th centuries (Brewer 1984: 51), the transformation was only slow and incomplete (Marx 1990: 911).

It was large-scale industry which completed the process:

“Modern Industry alone, and finally, supplies, in 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.” (Marx 1906: 821).

So the creation of a large, property-less proletariat was a precondition for the development of capitalism (Brewer 1984: 81).

The destruction of the independent self-producing peasants turned them into workers who therefore needed to sell their labour-power as a commodity. At the same time, agricultural raw materials became commodities for capitalist production, and the food supply was now increasingly produced as capitalist commodities too, and the old household production was destroyed. Goods like textiles were now produced in a capitalist mode of production as well. A further important result of the whole process was the growth of domestic demand for commodities, which Marx calls the “home market” (Harvey 2010: 297).

As a minor point of interest, Marx mentions in a footnote the protectionist views of Henry Charles Carey against free-trade:

“But now comes Carey, and cries out upon England, surely not with unreason, that it is trying to turn every other country into a mere agricultural nation, whose manufacturer is to be England.” (Marx 1906: 821, n. 2).

BIBLIOGRAPHY
Brewer, Anthony. 1984. A Guide to Marx’s Capital. Cambridge University Press, Cambridge.

Harvey, David. 2010. A Companion to Marx’s Capital. Verso, London and New York.

Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; rev. trans. by Ernest Untermann from 4th German edn.). The Modern Library, New York.

Marx, Karl. 1990. Capital. A Critique of Political Economy. Volume One (trans. Ben Fowkes). Penguin Books, London.

Marx’s Capital, Volume 1, Chapter 29: A Critical Summary

Chapter 29 of volume 1 of Capital is called “Genesis of the Capitalist Farmer” and argues that the true capitalist class in England emerged with the tenant capitalist farmers.

Marx explains the process:

“ … whence came the [sc. English] capitalists originally? For the expropriation of the agricultural population creates, directly, none by great landed proprietors. As far, however, as concerns the genesis of the farmer, we can, so to say, put our hand on it, because it is a slow process evolving through many centuries. The serfs, as well as the free small proprietors, held land under very different tenures, and were therefore emancipated under very different economic conditions. In England the first form of the farmer is the bailiff, himself a serf. His position is similar to that of the old Roman villicus, only in a more limited sphere of action. During the second half of the 14th century he is replaced by a farmer, whom the landlord provides with seed, cattle and implements. His condition is not very different from that of the peasant. Only he exploits more wage-labour. Soon he becomes a metayer, a half-farmer. He advances one part of the agricultural stock, the landlord the other. The two divide the total product in proportions determined by contract. This form quickly disappears in England, to give place to the farmer proper, who makes his own capital breed by employing wage-labourers, and pays a part of the surplus product, in money or in kind, to the landlord as rent. So long, during the 15th century, as the independent peasant and the farm-labourer working for himself as well as for wages, enriched themselves by their own labour, the circumstances of the farmer, and his field of production, were equally mediocre. The agricultural revolution which commenced in the last third of the 15th century, and continued during almost the whole of the 16th (excepting, however, its last decade), enriched him just as speedily as it impoverished the mass of the agricultural people.

The usurpation of the common lands allowed him to augment greatly his stock of cattle, almost without cost, whilst they yielded him a richer supply of manure for the tillage of the soil. To this, was added in the 16th century, a very important element. At that time the contracts for farms ran for a long time, often for 99 years. The progressive fall in the value of the precious metals, and therefore of money, brought the farmers golden fruit. Apart from all the other circumstances discussed above, it lowered wages. A portion of the latter was now added to the profits of the farm. The continuous rise in the price of corn, wool, meat, in a word of all agricultural produce, swelled the money capital of the farmer without any action on his part, whilst the rent he paid, (being calculated on the old value of money) diminished in reality. Thus they grew rich at the expense both of their labourers and their landlords. No wonder therefore, that England, at the end of the 16th century, had a class of capitalist farmers, rich, considering the circumstances of the time.” (Marx 1906: 814–816).

So this process, and the process described in Chapter 27, tended to destroy more and more free peasants and yeomanry, and created three great classes in the country-side as follows:

(1) the landlords (who were rentiers);

(2) the tenant farmers who were capitalists (and paying ground rent to their landlords), and

(3) the wage labourers.

The tenant-farmer capitalists emerged from the bailiffs or more successful peasants (Brewer 1984: 81).

Because of the price inflation of the 16th century, the real income of the tenant-farmer capitalists rose, so that they became a rich and more powerful class.

BIBLIOGRAPHY
Brewer, Anthony. 1984. A Guide to Marx’s Capital. Cambridge University Press, Cambridge.

Harvey, David. 2010. A Companion to Marx’s Capital. Verso, London and New York.

Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; rev. trans. by Ernest Untermann from 4th German edn.). The Modern Library, New York.

Marx, Karl. 1990. Capital. A Critique of Political Economy. Volume One (trans. Ben Fowkes). Penguin Books, London.

Marx’s Capital, Volume 1, Chapter 28: A Critical Summary

Chapter 28 of volume 1 of Capital is called “Bloody Legislation against the Expropriated, from the End of the 15th Century. Forcing Down of Wages by Acts of Parliament.”

The creation of a vast new class of property-less proletarians as described in Chapter 27 presented immediate difficulties because there was not enough wage-labour to employ so many people (Marx 1990: 898):

“On the other hand, these men, suddenly dragged from their wanted mode of life, could not as suddenly adapt themselves to the discipline of their new condition. They were turned en masse into beggars, robbers, vagabonds, partly from inclination, in most cases from stress of circumstances. Hence at the end of the 15th and during the whole of the 16th century, throughout Western Europe a bloody legislation against vagabondage. The fathers of the present working-class were chastised for their enforced transformation into vagabonds and paupers. Legislation treated them as ‘voluntary’ criminals, and assumed that it depended on their own goodwill to go on working under the old conditions that no longer existed.” (Marx 1906: 806).

Marx surveys this legislation in England as follows:

(1) “Henry VIII. 1530: Beggars old and unable to work receive a beggar’s licence. On the other hand, whipping and imprisonment for sturdy vagabonds. They are to be tied to the cart-tail and whipped until the blood streams from their bodies, then to swear an oath to go back to their birthplace or to where they have lived the last three years and to ‘put themselves to labour.’ … In 27 Henry VIII. the former statute is repeated, but strengthened with new clauses. For the second arrest for vagabondage the whipping is to be repeated and half the ear sliced off ; but for the third relapse the offender is to be executed as a hardened criminal and enemy of the common weal” (Marx 1906: 806).

(2) “Edward VI.: A statute of the first year of his reign, 1547, ordains that if anyone refuses to work, he shall be condemned as a slave to the person who has denounced him as an idler. The master shall feed his slave on bread and water, weak broth and such refuse meat as he thinks fit He has the right to force him to do any work, no matter how disgusting, with whip and chains. If the slave is absent a fortnight, he is condemned to slavery for life and is to be branded on forehead or back with the letter S; if he runs away thrice, he is to be executed as a felon” (Marx 1906: 806).

(3) “Elizabeth, 1572: Unlicensed beggars above 14 years of age are to be severely flogged and branded on the left ear unless some one will take them into service for two years; in case of a repetition of the offence, if they are over 18, they are to be executed, unless some one will take them into service for two years; but for the third offence they are to be executed without mercy as felons.” (Marx 1906: 807).

(4) “James I: Any one wandering about and begging is declared a rogue and a vagabond. Justices of the peace in petty sessions are authorised to have them publicly whipped and for the first offence to imprison them for 6 months, for the second for 2 years. Whilst in prison they are to be whipped as much and as often as the justices of the peace think fit . . . Incorrigible and dangerous rogues are to be branded with an E, on the left shoulder and set to hard labour, and if they are caught begging again, to be executed without mercy. These statutes, legally binding until the beginning of the 18th century, were only repealed by 12 Ann, c. 23.” (Marx 1906: 807–808).

The process proceeded as follows:

“Thus were the agricultural people, first forcibly expropriated from the soil, driven from their homes, turned into vagabonds, and then whipped, branded, tortured by laws grotesquely terrible, into the discipline necessary for the wage system.

It is not enough that the conditions of labour are concentrated in a mass, in the shape of capital, at the one pole of society, while at the other are grouped masses of men, who have nothing to sell but their labour-power. Neither is it enough that they are compelled to sell it voluntarily. The advance of capitalist production develops a working-class, which by education, tradition, habit, looks upon the conditions of that mode of production as self-evident laws of nature. The organization of the capitalist process of production, once fully developed, breaks down all resistance. The constant generation of a relative surplus-population keeps the law of supply and demand of labour, and therefore keeps wages, in a rut that corresponds with the wants of capital. The dull compulsion of economic relations completes the subjection of the labourer to the capitalist. Direct force, outside economic conditions, is of course still used, but only exceptionally. In the ordinary run of things, the labourer can be left to the ‘natural laws of production,’ i.e., to his dependence on capital, a dependence springing from, and guaranteed in perpetuity by, the conditions of production themselves.” (Marx 1906: 808–809).

It is interesting here to note Marx’s view of wages in capitalism:

“The constant generation of a relative surplus population keeps the law of the supply and demand of labour, and therefore wages, within narrow limits which correspond to capital’s valorization requirements.” (Marx 1990: 899).

The narrow limits, as Marx explains in Chapter 25 and elsewhere, are around the subsistence wage, the value of the maintenance and reproduction of labour power.

But, in the early stages of capitalism, there was no such equilibrium process to control wages and workers, and so capitalists needed state power to do so:

“It is otherwise during the historic genesis of capitalist production. The bourgeoisie, at its rise, wants and uses the power of the state to ‘regulate’ wages, i.e., to force them within the limits suitable for surplus-value making, to lengthen the working-day and to keep the labourer himself in the normal degree of dependence. This is an essential element of the so-called primitive accumulation.

The class of wage-labourers, which arose in the latter half of the 14th century, formed then and in the following century only a very small part of the population, well protected in its position by the independent peasant proprietary in the country and the guild-organization in the town. In country and town master and workman stood close together socially. The subordination of labour to capital was only formal—i.e., the mode of production itself had as yet no specific capitalistic character. Variable capital preponderated greatly over constant. The demand for wage-labour grew, therefore, rapidly with every accumulation of capital, whilst the supply of wage-labour followed but slowly. A large part of the national product, changed later into a fund of capitalist accumulation, then still entered into the consumption fund of the labourer.

Legislation on wage-labour, (from the first, aimed at the exploitation of the labourer and, as it advanced, always equally hostile to him), is started in England by the Statute of Labourers, of Edward III., 1349. The ordinance of 1350 in France, issued in the name of King John, corresponds with it. English and French legislation run parallel and are identical in purport. So far as the labour-statutes aim at compulsory extension of the working-day … .” (Marx 1906: 809–810).

These laws fixed a scale of wages and punished the payment of wages higher than the legal limit (Marx 1990: 901).

Organised labour was also made illegal:

“All combinations, contracts, oaths, &c., by which masons and carpenters reciprocally bound themselves, were declared null and void. Coalition of the labourers is treated as a heinous crime from the 14th century to 1825, the year of the repeal of the laws against Trades' Unions. The spirit of the Statute of Labourers of 1349 and of its offshoots, comes out clearly in the fact, that indeed a maximum of wages is dictated by the State, but on no account a minimum.” (Marx 1906: 810–811).

Such laws to regulate wages and to forbid workers’ combinations were re-issued in the 16th and 18th centuries (Marx 1990: 901–902).

Eventually, some of these laws were repealed, but Marx thought that even in the late 19th century British law still inhibited trade union activity:

“Finally, in 1813, the laws for the regulation of wages were repealed. They were an absurd anomaly, since the capitalist regulated his factory by his private legislation, and could by the poor-rates make up the wage of die agricultural labourer to the indispensable minimum. The provisions of the labour statutes as to contracts between master and workman, as to giving notice and the like, which only allows of a civil action against the contract-breaking master, but on the contrary permit a criminal action against the contract-breaking workman, are to this hour (1873) in full force. The barbarous laws against Trades’ Unions fell in 1825 before the threatening bearing of the proletariat. Despite this, they fell only in part. Certain beautiful fragments of the old statute vanished only in 1859. Finally, the act of Parliament of June 29, 1871, made a pretence of removing the last traces of this class of legislation by legal recognition of Trades Unions. But an act of Parliament of the same date (an act to amend the criminal law relating to violence, threats, and molestation), re-established, in point of fact, the former state of things in a new shape. By this Parliamentary escamotage the means which the labourers could use in a strike or lock-out were withdrawn from the laws common to all citizens, and placed under exceptional penal legislation, the interpretation of which fell to the masters themselves in their capacity as justices of the peace. Two years earlier, the same House of Commons and the same Mr. Gladstone in the well-known straightforward fashion brought in a bill for the abolition of all exceptional penal legislation against the working-class. But this was never allowed to go beyond the second reading, and the matter was thus protracted until at last the ‘great Liberal party,’ by an alliance with the Tories, found courage to turn against the very proletariat that had carried it into power. Not content with this treachery, the ‘great Liberal party’ allowed the English judges, ever complaisant in the service of the ruling classes, to dig up again the earlier laws against ‘conspiracy,’ and to apply them to coalitions of labourers. We see that only against its will and under the pressure of the masses did the English Parliament give up the laws against Strikes and Trades’ Unions, after it had itself, for 500 years, held, with shameless egoism, the position of a permanent Trades’ Union of the capitalists against the labourers.” (Marx 1906: 812–813).

Despite Marx’s negative views on the ability of trade unions to organise under 19th century laws, the fact remains that organised labour became more and more powerful under capitalism.

A major economic phenomenon that Marx badly missed was the increasing downwards nominal wage rigidity in the later 19th century.

For example, Hanes (1993) concludes that 19th century American nominal wages had already become relatively inflexible by the 1890s (Hanes 1993: 733–734).

This development was not so much the consequence of organised, formal trade union activity, because, generally speaking, US trade unions were weak in the late 19th century in terms of numbers and membership, and they faced hostility from the courts and government, and even when they existed they could not generally create binding legal employment contracts with employers, because the courts did not recognise them (Hanes 1993: 750–751).

But the informal organised labour activity still had a powerful effect. Hanes (1993: 751) contends that strikes were still a widespread phenomenon amongst non-unionised workers, and that the spread of large-scale manufacturing firms with large masses of workers was, paradoxically, a major factor that allowed informal labour organisation and industrial strife: eventually industrial capitalists decided it was too costly to regularly reduce money wages in recessions, and so increasing money wage rigidity was accepted by private firms (Hanes 1993: 733–734). A similar phenomenon probably happened in Britain.

But, once again, Marx missed this trend and the reality of rising real wages in 19th century capitalism.

BIBLIOGRAPHY
Brewer, Anthony. 1984. A Guide to Marx’s Capital. Cambridge University Press, Cambridge.

Hanes, Christopher. 1993. “The Development of Nominal Wage Rigidity in the Late 19th Century,” The American Economic Review 83.4: 732–756.

Harvey, David. 2010. A Companion to Marx’s Capital. Verso, London and New York.

Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; rev. trans. by Ernest Untermann from 4th German edn.). The Modern Library, New York.

Marx, Karl. 1990. Capital. A Critique of Political Economy. Volume One (trans. Ben Fowkes). Penguin Books, London.