Marx's ‘Capital’, Philosophy and Political Economy by Geoffrey Pilling 1980

1. Introduction

After more than thirty post-war years, during which time most commentators believed that the outstanding questions in economic theory had been resolved, considerable doubt once again pervades the subject. In the opinion of increasing numbers, economics has singularly failed to find any coherent answers to the mounting problems facing capitalist economy throughout the world. Our purpose is not to examine this crisis in conventional economic theory, but we can certainly note the growing scepticism about the ability of Keynesianism to provide the basis for a viable economic policy in the capitalist world. After years during which it was complacently taken as read that ‘Keynes had answered Marx’ many now see in Keynesian deficit financing the source of the inflationary pressures currently threatening the stability of the western monetary system. Apart from this question of Keynesianism, of equal significance has been the attack launched against several of the principal tenets of neo-classical theory. It has been argued, for instance, that attempts to relate the return to capital to its ‘contribution’ are based upon circular reasoning, since it is impossible to conceive this return independently of the rate of profit. Other serious blows have also been struck at the marginal productivity theory of distribution in so far as it has been demonstrated that no unique relationship holds between the degree of capital intensity and the distribution of income. One effect of this work (for a selection see Hunt and Schwartz, 1972) has been seriously to undermine one traditional neo-classical justification for the existing pattern of income distribution by reference to technology.

This new crisis in economic theory, stimulating as it has a return to the preoccupations of nineteenth-century political economy, has led to a revived interest in Marxian economics. This new interest has in part been reflected in the emergence of bodies such as the Conference of Socialist Economists. It is within such bodies that several aspects of Marxist political economy have been debated. But it must be acknowledged at the outset that little, if anything, has been settled in the course of these debates. The arguments have been heated, acrimonious, often abusive, but quite inconclusive. (Fine and Harris, 1976, provide a useful survey of some of these debates.) The fact that these controversies have often ended with a mere reassertion of previously-held positions is no doubt a reflection of political and ideological differences which can only be resolved in practice. But another important aspect of many of these disputes has been the relative neglect of the fundamental questions of Marxist method. Thus discussion has been interminable about the nature of Marx’s value theory and its true relationship to the more ‘concrete’ categories such as prices, wages, rate of profit, etc. Yet in most cases these aspects of Marx’s work have been considered apart from Capital as a whole. Marx’s work cannot be reduced to a series of results, to be tested against the ‘facts’ of capitalist development. What is involved here is nothing less than the struggle between the Marxist method and the method of empiricism. It was this empiricism which Marx had to overcome in his critique of political economy. And it is this same empiricist tradition which has dominated much Marxism in Britain. Until this tradition is faced up to and overcome, then the disputes in Marxian economics will remain unresolved.

As an instance of the impact of empirical methods of thought on these questions of political economy, let us take the example of the post-war boom. It was, of course, during this boom that Keynesianism came to prominence in the field of economic policy. But it must be recognized that this same Keynesianism also left its imprint upon Marxism. Many writers on Capital concluded that capitalism had indeed entered a new phase in its history. Special terms were coined to designate this new phase – ‘neo-capitalism’ and ‘permanent arms economy’ being amongst the most prominent. And from such notions definite political conclusions were drawn – by some that the major struggles in the world had passed from the metropolitan capitalist centres and had found a new epicentre in the colonial and semi-colonial world. Others concluded that in this new phase the working class no longer constituted a revolutionary force – the responsibility for carrying forward the revolution now fell to the students and other layers increasingly alienated by capitalism (Marcuse’s view was prominent in this area).

Now nobody would seek to deny that capitalism did indeed experience a significant period of extended reproduction after 1945. Indeed, far from denying this phenomenon, the task of Marxism is to explain its significance. But it Is here that we run up directly against the problem of empiricism in its conflict with the method of Marxism. For if we wish to form an adequate conception of this period we must get to the essence of this boom, to its real contradictory nature. And this we cannot do simply by ‘reading off’ a series of surface phenomena (indices of production, of living standards, etc). In the historical development of capitalism there have been booms and there have been booms. There was the long secular boom from 1850 onwards, and there was the boom which preceded (and in several respects precipitated) the 1929 Wall Street Crash. As Lenin insisted, Marxism demands a ‘concrete analysis of a concrete situation’. The period of relative expansion after 1945 cannot be taken as a thing-in-itself, to be judged against some abstract criteria. This has always been the essential feature of those works seeking to ‘revise’ Marx. A series of empirical data is advanced as evidence that Marx was either wrong or in need of updating. As against this method a real analysis of the post-war expansion has to be posited on to the whole line of capitalist development. For Marxism, the twentieth century represents the epoch not of capitalism as such, but of imperialism, the highest stage of capitalist development, the epoch when the productive forces find themselves in a historically irreconcilable conflict with the existing property relations. It is against this background that the nature of the post-war boom must be evaluated and it is not without significance to note in this connection that many who saw in the post-war boom period an entirely new phase of capitalist development also sought to reject Lenin’s notion of imperialism. To deal with any phenomenon concretely means to treat all aspects of the phenomenon concerned in their origin and development. Specifically, in connection with the post-war period, it must be stressed that capitalism emerged after 1945 considerably weakened, weakened by a loss of territory in eastern Europe and China and having to face a working class which was quite different from the class defeated in the struggles of the 1930s. It is this weakness which must be the starting point for any investigation of post-war economy, a weakness which was relatively hidden by the movement of those indices to which conventional economic theory confines its attention. It was out of weakness that capitalism was obliged to abandon the old gold standard and revert to a Keynesianism which in practice involved a controlled expansion of money and credit. One is reminded of what Trotsky said in this connection:

During the nineteenth century, gold as a universal means of value became the foundation of all monetary systems worthy of the name. Departures from the gold standard tear world economy apart even more successfully than do tariff walls. Inflation, itself an expression of disordered economic ties between nations, intensifies the disorder and helps to turn it from a functional into an organic one. (Trotsky, 1978)

Without at this point going into the question in detail, it is clear that the Bretton Woods monetary arrangements (from which followed the establishment of the International Monetary Fund and other bodies) gave to capitalism a strength which was entirely superficial, but a ‘strength’ to which many Marxists none the less fell victim. The restoration of post-war Europe rested upon the strength of the dollar. But this strength was not absolute, it was relative – relative, that is, to the strength of world economy as a whole. The convertibility of the dollar into gold at a fixed rate (initially 35 dollars to an ounce of gold) could continue only within certain limits. By 1971 – after years of accumulating American payments deficits with the rest of the world – these limits were transgressed. From that time onwards the Bretton Woods arrangements were effectively ended, with capitalist economy now facing its most severe recession since the 1930s and its worst inflationary pressures since the end of the war.

It must be remembered that in studying the vast literature of nineteenth-century political economy, Marx enjoyed one enormous advantage over his contemporaries. He came to the study of political economy having already worked over and mastered the highest achievements of classical German philosophy, and in particular the achievements of Hegel. Marx brought to bear on his reading of economic literature certain definite philosophical conquests, and these must always be kept in mind when considering his treatment of political economy. Here Marx’s experience contrasts most sharply with those brought up in the Anglo-Saxon world. The problem has been particularly acute in so far as the work of Marxists has tended to reflect the intellectual division of labour found in academic circles. Thus those who have in the past taken an interest in the economic ‘side’ of Marx’s writings have paid scant, if any, attention to this philosophical heritage. Marx’s conclusions in Capital were taken as given, and erected into dogma to be defended against opponents. This, of course, was the Marxism which dominated the Second International, a ‘Marxism’ which concentrated almost exclusively on secondary, episodic, questions and ended up in abject capitulation to neo-Kantianism in the philosophical field and to opportunism in politics.

This indifference to the basic questions of Marxist method still predominates amongst many of those writing on Capital. In what is undoubtedly one of the most significant commentaries on Capital ever to appear, Roman Rosdolsky in his The Making of Marx’s Capital is absolutely correct in his observation that,

Of all the problems in Marx’s economic theory the most neglected has been that of his method, both in general and specifically, in its relation to Hegel. Recent works contain for the most part platitudes which to echo Marx’s own words betray the authors’ own ‘crude obsession with the material’ and total indifference to Marx’s method. (p. xii)

And this same author goes on to say, with equal justice:

What would one make of a psychologist who was interested only in Freud’s results, but rejected the question of the manner in which Freud obtained those results as being irrelevant or even ‘metaphysical'? One could only shrug one’s shoulders. But this is precisely how most present day critics of, and experts’ on, Marx judge his economic system. Either they totally refuse to discuss his dialectical method because they are opposed to ‘metaphysics’ ... or the critique is restricted to a few platitudes better left unsaid. (p. xii)

The significance of Rosdolsky’s book cannot be reduced to a series of topics which he takes up – such as the important distinction between ‘capital in general’ and ‘many capitals’. It lies deeper than this: it consists in the fact that Rosdolsky has consciously aimed to re-introduce a proper consideration of Hegel into the study of Marx’s Capital. And in so doing, his book promises to reverse a long period during which Hegel was consciously or otherwise driven out of examinations of this work. If, as Marx tells us, the dialectic in its rational (materialist) form became a scandal and an abomination for bourgeois professors, the same is true equally of those who dominated the working-class movement from the 1930s onwards. Under Stalin, Marxism was transformed into a crude mechanical caricature of the materialism of Marx and Engels, a caricature used to justify the current political line of a parasitic bureaucracy in the USSR. This theoretical degeneration certainly left its stamp on studies of Capital. (It is significant to note that Rosdolsky’s book is a product of a tradition which fought against this degeneration. And the same point must be made about those advances in Marxist political economy of the 1920s, associated with Marxists such as Preobrazhensky and Rubin.)

Rosdolsky quite rightly refers to the dialectic as the ‘soul’ of Capital. There is no doubt that his work as a whole was directly inspired by Lenin’s own comments on the relation of Marx’s Capital to Hegel’s Logic. We shall return to this theme. But it is important to recall that in his analysis of the degeneration of the Second International Lenin was never content merely to trace its roots to the emergence of a new stage of capitalism at the end of the last century (imperialism): he sought always to probe the theoretical and philosophical method employed by Kautsky and others. Lenin’s major philosophical works of this period, Materialism and Empirio-Criticism (LCW, Vol. 14) and above all the Philosophical Notebooks (LCW, Vol. 38), have great importance for any attempt to understand the methodological basis of Marx’s Capital. In these works, Lenin takes up a struggle against the baleful influence of neo-Kantianism. And in the course of this struggle Lenin was obliged to return to Hegel. It is this ‘return’ which must be stressed. For Lenin was not content merely to read Hegel through the eyes of Marx and Engels. He went back to Hegel bringing to this study all the richness of his theoretical and practical activity in the Marxist movement. In his philosophical work in this period Lenin had one major aim: to establish the irreconcilable opposition between the philosophy of Marxism (dialectical materialism) on the one hand and the ‘latest trends’ in bourgeois philosophy which he reveals as in essence involving a return to Kantian dualism. As is now well known this critical re-examination of Hegel culminates in a sharp renunciation of the former ‘Marxism’ which had first compromised and then capitulated to this new form of Kantianism: ‘It is impossible to understand Marx’s Capital and especially its first chapters without having thoroughly studied and understood the whole of Hegel’s Logic. Consequently half a century later, none of the Marxists understand Marx’ (LCW, vol. 38, p. 180). Many are now happy to repeat Lenin’s aphorism, but few seem bothered to have thought out its many implications.

It is our contention that Lenin’s statement means the following: it is necessary to re-work Capital thoroughly, always keeping Hegel in mind. Further, this must be carried out as part of a struggle against the shallow empiricism which has passed for good coin in most studies of Marx’s Capital. What follows can only be the start of such an attempt. This must not be taken as the usual disclaimer aimed at excusing any weaknesses. For more than sixty years Lenin’s advice has for the most part been either ignored or in some cases consciously opposed. A considerable and conscious theoretical effort will now be needed to repair this damage. This should, not, however, be read in a pessimistic light. The degeneration of Marxism – of which the distortion of the true nature of Marx’s Capital was a part – was a product of the defeat of the working class at the hands of Stalinism and its accomplices.[1] Without dealing with the matter in detail, it can be said that we have now entered a quite new period in which capitalism is facing more and more acute problems throughout the world. It is in the context of this new situation that this contribution to the development of Marxist theory is made.

The plan of the work is as follows: first, as a means of highlighting the significance of Capital, Marx’s critique of political economy is examined at some length. The aim here is to bring out Marx’s attitude to the achievements of political economy taken as a whole. If Marx’s own work cannot be broken up into unconnected bits to be ‘used’ at will, this is equally true of the work of political economy. The philosophical method which underpinned Marx’s review of the work of Smith, Ricardo, Mill, etc. is here stressed. This leads us to a consideration of the nature of Marx’s concepts which we find in Capital. It need hardly be said that nearly all opponents of Capital from Böhm-Bawerk onwards have aimed at disproving the key concepts of this work – the nature of value, surplus value, money etc. Here again, however, we should be careful not to get drawn into a defence of these aspects of Marx’s work taken in isolation from the rest. Hence we attempt to discuss the nature of Marx’s concepts, to show that in elaborating his concepts Marx was operating on a philosophical plane quite different from that accepted by most who read Capital. This leads us to a detailed examination of the opening chapters of Capital. Marx stressed that it was the beginning of any science that constituted its real difficulty. This, together with Lenin’s emphasis upon the need to consider Hegel in connection with the first chapter of Capital, provides the starting point for this aspect of the work. Finally, Marx’s notion of fetishism, often looked upon as incidental to his work, but in fact a central category which in many ways lies at the basis of his entire critique of political economy, is examined. It is clear that the emphasis is placed on the opening sections of Capital, although these are treated in relation to the work as a whole. This emphasis is quite deliberate. For the aim has been to establish the philosophical method of Capital. It is only in this light that the so-called ‘concrete’ questions which have so exercised the attentions of most writers on Capital can be properly considered. In this sense, the following lays no claims to completion. It should be regarded, in this respect, as an attempt to clarify some methodological questions and provide a more adequate basis on which further work can be constructed.


1 We cannot here go into all the details of this degeneration. But it was Stalin’s now notorious Dialectical and Historical Materialism, first published in 1938, which controlled all philosophical activity in the USSR for almost twenty years. Printed in over 200 million copies, this pamphlet stultified all creative work in the field of philosophy and did much to discredit Marxism. What is important to note about Stalin’s pamphlet is that it attempted rigidly to separate out the Marxist ‘method’ from philosophical materialism. Thus Stalin writes about dialectical materialism as follows: ‘It is called dialectical materialism because its approach to the phenomena of nature, its method of studying and apprehending them, is dialectical, while its interpretation of the phenomena of nature, its conception of these phenomena, its theory, is materialistic’ (Stalin, 1950, p. 5). Stalin went on, in the next paragraph, to speak of historical materialism as an ‘application’ of the principles of dialectical materialism to the study of society and its history. Stalin’s position is a direct repudiation of Lenin’s position in the Philosophical Notebooks, where he insists throughout on the unity of dialectics, logic and epistemology and where he continually stresses that concepts are not applied to nature and society but on the contrary must be abstracted from reality. Under Stalin all serious work on the elaboration of the categories of materialist dialectics ceased and Hegel’s philosophy was largely ignored or in extreme cases condemned as an aristocratic reaction to the French Revolution and to French materialism. Once more this was a direct negation of Lenin’s stance. In his essay ‘On the Significance of Militant Materialism’ (LCW, Vol. 33) written in connection with the launching of the journal Under the Banner of Marxism in 1922, Lenin had proposed that those associated with the journal should constitute themselves into a kind of ‘Society of Militant Friends of the Hegelian Dialectics’.