Socialist Studies Socialist Studies

No.3 Marx, Modern History and Economics


Readers will note in the text that we establish a connection between history and economics.


Also, that the contrasting philosophical views of Marx and Hegel in relation to social development are illustrated by the emergence of the capitalist and his system.

This is the third chapter in our series QUESTION OF THE DAY. Taken together they should form a little text book on the structure of the case for Socialism.


August 1992


With the collapse of the Berlin Wall in 1989 we were told that a great revolution had taken place. For the anti-socialists, Adam Smith had won and Marx had lost. Lord-Rees Mogg, former editor of the TIMES announced with great pomposity that “Marx is dead as a prophet. He is kaput”, (INDEPENDENT, 5th February, 1990). THE NEW YORK TIMES also wrote that “capitalism has won” (quoted in J. Slovo, HAS SOCIALISM FAILED? London, 1990 p.7). And on the 5th March 1992 the Hegelian philosopher Francis Fukuyama promised us “continuous peace and prosperity” and trumpeted THE END OF HISTORY. Liberal capitalism; the capitalism of the US had seen off any alternative. Or so they thought.

Marx’s revolutionary ideas were assumed to have been buried under the rubble of the Berlin Wall. This was wrong. They weren’t. Marx not Hegel has had the last laugh. Not only did US capitalism experience 9/11 but the terrorist attacks on New York and Washington set in train two wars, one in Iraq and the other in Afghanistan, which have begun to shift world power and influence away from the US towards emerging capitalist countries like China.

One war has left Iraq in anarchy –with assassinations, car bombs, suicide bombers and political instability the norm. For example, over a hundred people were killed and hundreds more injured in a series of explosions carried out by terrorists during on the 3rd of November 2010. The oil fields may have been secured for US consumption but the country remains politically unstable necessitating some 50,000 American troops being stationed there as an insurance policy until way beyond 2011.

The second war in Afghanistan, now in its eleventh year, goes on unabated sucking in Pakistan where terrorist attacks are common place -45 deaths at a Mosque one Friday in November 2010. The war has also seen the US government’s use of un-manned “drones” to kill men, women and children in an act of barbarism matched only by the Taliban insurgents and their supporters in Al Qaida. Socialists do not take sides in capitalism’s wars.

Unfortunately for Mr Fukuyama’s mis-placed optimism there has never been continuous peace since the fall of the Berlin Wall. Former Prime Minister Tony Blair, at the Iraq Inquiry, London, in 2010 and again in January 2011wanted a war with Iran although he would no longer be involved in the blood-letting since he now spends most of his time amassing a fortune by giving lucrative after-dinner speeches and lectures. For a lucky minority, like Mr Blair, war does pay. And of course the conflict in the Middle-East between Israel and Palestine goes on and on. There is, conflict, too, between North and South Korea and between Pakistan and India three of whom have nuclear weapon capability. State and individual terrorism exist all over the globe.

Fukuyama was a participant in what was known as The Project for the New American Century (PNAC) in which the model of US capitalism was to be imposed on the rest of the world. Their first project was war with Iraq and the removal of Saddam Hussein bringing in its wake torture, humiliation of prisoners and concentration camps.

Vice President Dick Cheney was a founding member of PNAC, along with Defence Secretary Donald Rumsfeld and Defence Policy Board chairman Richard Perle. Deputy Defence Secretary Paul Wolfowitz was the ideological father of the group. Bruce Jackson, a PNAC director, served as a Pentagon official for Ronald Reagan before leaving government service to take a leading position with the weapons manufacturer Lockheed Martin.

PNAC was staffed by men who previously served with groups like Friends of the Democratic Center in Central America, which supported America's violent involvement in Nicaragua and El Salvador, and with groups like The Committee for the Present Danger, which spent years advocating that a nuclear war with the Soviet Union was "winnable." An unlikely cabal of peace-loving “Hegelians”!!!

Nor has there been continuous prosperity for all. In 2007 world capitalism experienced a global economic crisis which has left a deep depression, bankruptcies, austerity and millions of workers unemployed, 21.4 million in the EC (EUROSTAT October 2010). Major US institutions had to be bankrolled by the State under a deeply conservative and Republican President Bush. Free market economics with its promise of limitless growth and prosperity for everyone turned out to be an illusion no more successful than the Keynesianism it replaced. Marx was read again his works never more popular while Hegel and his latter-day supporters were quickly forgotten.

History did not end with the collapse of the Berlin Wall. In fact, history by itself does nothing. Real men and women change history but only under certain circumstances. There is still a world to win and the political agency for revolutionary social change still remains with the world’s working class: “The proletarian movement is the self-conscious, independent movement of the immense majority, in the interest of the immense majority” (Marx, COMMUNIST MANIFESTO).

And this brings us on to Marx’s critics who have tried in vain to demonstrate mistakes in his analysis of capitalism. It is testimony to the validity and soundness of the method used by Marx in CAPITAL that his opponents have had to rest their case on the discredited works of the Austrian economist, Eugene Bohm-Bawerk and in particular his book KARL MARX AND THE CLOSE OF HIS SYSTEM. The Ludwig von Mises website –von Mises was a student of Bohm Bawerk – populated by free market fanatics who spend a large amount of their time and energy attacking Socialism and Karl Marx. The Institute holds Bohm-Bawerk in pride of place in their on-line book shop as having “refuted” Marx’s argument on the origin of value and price in CAPITAL.

What these naive critics fail to understand is that Marx had written the third volume of CAPITAL in note form before the first volume was published. Marx also started with social systems, social relations, classes and class struggle not the fictional individual of academic economists. Marx was also careful to explain to his readers when he was making assumptions he would later drop by noting the fact in footnotes which Bohm-Bawerk conveniently missed. Unlike his critics, Marx took the trouble to read and understand his opponents. For the Mises Institute to have to rely on the poor arguments of a little read late 19th century economist says a lot for the power and relevance of Marx’s work in the 21st century.

We have to ask the pertinent question: “Did Bohm-Bawerk actually read Marx’s CAPITAL carefully?” Obviously not, because his book is strewn with quotations from Marx’s writings taken at random and out of context. At the very best Bohm-Bawerk can be accused of is poor scholarship; at worse the creation of a straw Marx to easily knock down.

What of von Mises himself. His so-called Rational Economic Calculation arguments (COLLECTIVIST ECONOMIC PLANNING ch3 Economic Calculation in the Socialist Commonwealth ed. F.A. Hayek, 1935) has been seen as a knock down response to the Socialism of Marx. But we are not obliged to accept either the method employed by von Mises or the marginal utility theory on which it rests.

In any case “Economics” will play no role in Socialism. Production and distribution in Socialism will be a technical matter not an economic one. Economics pertains to commodity production and exchange for profit. Socialism entails no buying and selling and no wages system but instead a conscious democratic plan for producing goods to directly meet human need.

So what of Marx’s contribution to the understanding of Capitalism?

Marx’s scientific method derived, in part, from his theory of history, known as the materialist conception of history, his political concept of class struggle and a labour theory of value used to study the commodity, money, wages, capital and other economic categories. All three theories form a coherent whole and cannot be treated independently one from the other.

Marx’s ultimate aim is summed up in one of his letters of 1864, before the first volume of CAPITAL appeared, when he wrote:

…I have been ill for the whole of this year (carbuncles and furuncles) – Without that, my work, CAPITAL, on political economy, would have been published already. Now I hope to finish it in a couple of months and to deal a theoretical blow to the bourgeoisie from which they will never recover. Farewell and rely on it that the working class will always find a loyal champion in me
(Marx to Klugman October 4th 1864 p. 93)

And in a letter to Becker he said:

“It is (CAPITAL) assuredly the most frightening missile which has ever been launched at the heads of the bourgeoisie (including landowners)”. April 17th 1867 p.100

These remarks find an echo in the Preface to CAPITAL where he stated that his aim was “to lay bare, the law of motion of modern society

Did Marx “lay bare the law of motion of modern society”? Yes he did. He showed that:

* capitalism had a origin and termination in the class struggle

* social wealth was the product of class exploitation in the peculiar way labour-power became a commodity under capitalism producing what Marx called “surplus value”.

* capital was created, concentrated and accumulated as an anti-social force, where capital accumulation was the sole aim of commodity production and not the meeting of human need.

* total profit equaled total surplus value, total prices equaled total value and the aggregate “price” rate of profit equaled the aggregate “value” rate of profit thereby demonstrating the existence of class exploitation

* capitalism could never be run in the interest of the working class because the means of production were owned by the capitalist class and protected by the employers’ State.

* the trade cycle was a result of the contradictions of commodity production and exchange for profit and that capitalism was not harmonious but deeply unpredictable and destructive.

* the working class and only the working class had the interest and the potential to consciously and politically replace capitalism with socialism.

Marx’s study of political economy and his criticism of it were not as an academic but as a socialist revolutionary. You cannot separate Marx the Socialist from his writings. CAPITAL was written as part of the class struggle to which Marx devoted much of his adult life; a struggle which centred upon a class conscious working class taking political action to abolish capitalism and establish socialism.

We should not forget the tragic conditions under which Marx wrote CAPITAL.

In a letter to S. Meyer he wrote:

I was continually hovering between life and death. So I had to use every moment available for work in order that I could finish the work for which I have sacrificed health, happiness and family…The so-called “practical” men and their wisdom make me laugh,.. If one wished to be an ox, then one could naturally turn one’s back on the horrors of humanity and only look after one’s own interests, But I would have considered myself really unpractical if I had snuffed it without completing my book, at least in manuscript” (MARX-ENGELS CORRESPONDENCE April 30, 1867 p.101-102 Moscow 1977).

Marx wrote much of CAPITAL in poverty; subsidized by Engels, forced to write newspaper articles; to study in the British Museum by day and write the manuscripts for CAPITAL by night. Of course there was his family life. There is a lovely image painted by Francis Wheen (KARL MARX 1999) of Marx writing CAPITAL at his desk while his daughters used him as an imaginary horse.

Finally, we should recall the words of Lothair (795-855), emperor to the Holy Roman Empire, which was to run on for another 1000 years; “All things change and we change with them”. The feudal remnants of the Holy Roman Empire perished with the First World War nevertheless Lothair’s observation is applicable to Empires as it is to social systems like capitalism. There is an alternative to capitalism: Socialism and there is a class who have the revolutionary potential to make history: the workers of the world.

November 2010

Introduction: Marx – Modern History and Economics

The break-up of Russia and Yugoslavia and the declared intention of the succession-states to abandon their inefficient state-capitalist dictatorships and adopt the marketing and governmental systems of the West have had repercussions n the political parties in this country, one result being a renewal of attacks on Marx’s Materialist Conception of History and his Labour Theory of Value.

The attack on the Materialist Conception of History comes from modern followers of the German philosopher, Frederich Hegel. They see the fall of the dictatorships as the triumph of Hegel’s idealistic explanation of the evolution of society, proving Marx to have been wrong. We have, they say, reached “the end of history” and are about to enter an era of peace and prosperity.

The new round of criticism of the Labour Theory of Value is inspired by the belief that capitalism’s industrial troubles and anti-capitalist movements are the result of workers’ conviction that they are exploited, which in turn, arises out of Marx’s labour theory of value. If, they say, workers can be persuaded that the theory is wrong, class struggle will be replaced with harmony and all will be well.

A side-effect of the collapse of Russia’s state-capitalism (nationalisation0 is a new twist in the way British political parties use the words socialism and nationalisation in their propaganda. To illustrate the long and confused record we need only to pick a few examples. In November 1895, in a Mansion House speech, the Prince of Wales (later Edward VII) copied his friend Sir William Harcourt, the Liberal leader, and told his audience “We are all Socialists nowadays”. If his audience didn’t know what he meant it is probable that the Prince didn’t know either.

Next, look at the 1940’s, during the war. Hitler had the word Socialism in the name of his Nazi party and Stalin had it in the official designation of Russia, the U.S.S.R. In Britain, the Labour Party and Tory Party were preparing their policies for the coming general election. In the labour programme LET US FACE THE FUTURE it came out as “The labour Party is a Socialist Party, and proud of it” Its ultimate purpose at home is the establishment of the Socialist Commonwealth of Great Britain”. What this meant was the nationalisation of a large part of British Industry. But the Labour Party was not alone in wanting nationalisation. Winston Churchill, leader of the Tory Party and Prime Minister, was also going to nationalise. In a radio broadcast outlining the policy his government would follow if they won the election, he said:

There is a broadening field for State ownership and enterprise, especially in relation to monopolies of all kinds” (THE TIMES 5 April 1943).

This had long been Tory policy. It was a Tory government which, in 1844, pushed through an Act of parliament giving the government power to take over the Railways if they exploited their monopoly of transport.

Herbert Morrison, a minister in the war-time government and, later on, deputy leader of the Labour Party, added his comment when he told the boys of Malvern College: “more Socialism was done by the Conservative Party, which opposed it, than by the Labour Party which was in favour of it” (THE TIMES 12. Feb. 1944).

Forty years later all is changed. Politically, “Socialism” and “nationalisation” are now words to be shunned. A new Tory government, that of Margaret Thatcher, privatised most of the nationalised industries, though against the wishes of an influential section of the Tory Party; and there was nothing about nationalisation in the Labour Party’s Programme at the 1992 election.

Where does The Socialist Party of Great Britain stand in this? It is our propaganda that is hindered by it. Before we can get workers to take an interest in Socialism as we define it in our OBJECT AND DECLARATION OF PRINCIPLES we have to explain that we are not talking about nationalisation or any of the other odds and ends that supporters of capitalism advocate. We ask readers to not that we are totally opposed to nationalisation; and that none of the supporters of nationalisation have ever supported us.


With his Materialist Conception of History, Marx showed why and how society changes, as for example how capitalism replaced feudalism and how capitalism will in turn give place to Socialism. He outlined it in the Introduction to his “CRITIQUE OF POLITICAL ECONOMY”, which the SPGB reproduced with other explanatory information in the pamphlet “Historical Materialism” (1975).

According to this conception what moves society forward are changes and developments in the material productive forces which, with their appropriate social relationships, form the economic structure of a given social system and to which correspond what Marx called the legal and political superstructure.

As Marx put it:-

The mode of production in material life determines the general character of the social, political and spiritual processes of life. It is not the consciousness of men that determines their existence, but, on the contrary, their social existence determines their consciousness”.

At a certain stage those associated with developments of the new productive forces, for example the capitalists, came into conflict with the restrictions imposed under feudalism and struggled, first to resist them, and eventually to replace feudalism with capitalism.


Marx had been influenced by the writings of Hegel but in the matter of the evolution of society he and Hegel came into direct conflict. In Marx’s words, he stood Hegel on his head, for Hegel saw history as a process of change in the basis of society brought about by spontaneous changes in men’s ideas, in the direction of increasing liberty.

For Hegel the first stage was oriental despotism in which no-one had liberty except presumably the despot. Then came Greece and Rome in which citizens had liberty but the slaves had not.

His next stage was Christianity which he saw as a big step forward. Then came the French Revolution and another big increase in the number of people with liberty.

We are bought up to date by Francis Fukuyama, an American of Japanese origin, in his book “THE END OF HISTORY”.

Fukuyama and his fellow Hegelians interpret the collapse of dictatorship in Russia as the final answer to Marx’s Materialist Conception of History.

The following is from a report in THE TIMES (6th March 1992) of a meeting on March 5th attended by 900 people, at which Fukuyama spoke:-

The political upheaval which shook the world in 1889-90, the demise of Communism and the arrival of a global consumer market meant nothing less than the end point of man’s political evolution and the emergence of Western liberal democracy as the final form of human government”.

The wagon train of history would soon grind to a halt. Hegel…had been proved right…History ends not in communism but in Liberal democracy

Fukuyama promised us “continuous peace and prosperity” in his new world order and suggested that all we would suffer from was boredom.

It is not difficult to answer Fukuyama. There never has been communism in Russia or in any other country. Communism/Socialism involves the abolition of production for sale; the abolition of buying and selling. It didn’t exist in Russia and was never even attempted. Society still needs to take the step forward into Socialism.

How can Fukuyama and his Hegelian followers look around the world today and see unbroken peace and prosperity.

A different, long-standing misconception of the materialist conception of history was recently published in the anarchist journal “IDEOLOGICAL COMMENTARY” (May 1992). Under the heading: “MORRISITES? MARXISTS?” the writer argued that William Morris, Karl Marx and Frederick Engels were betraying their beliefs because while they declared themselves in favour of a system of society in which there would be no exploitation of the workers by the capitalists they were all prepared to be beneficiaries of that exploitation; Morris through inherited wealth, Engels as a partner in his father’s textile business and Marx “who lived partly on the subsidies from Engels”. We are not concerned with Morris, who was a Utopian Reformist and advocate of policies to which we are opposed.

As regards Marx and Engels the writer of the criticism is assuming that they were making some moralistic judgement of capitalism and were therefore bound to oppose it as a social system. They were not. In accordance with the materialist conception of history they held capitalism to be a necessary and progressive stage in social development and that in establishing capitalism the capitalists were performing a social function. In the COMMUNIST MANIFESTO Marx and Engels paid high tribute to capitalism for the way it had expanded powers of production and broken down the isolation of large parts of the world, thus clearing the way for eventual socialism.

Marx classified people according to the way they get their living, the workers by selling their labour-power and the capitalists by property incomes based on exploitation; but that does not automatically determine whether they are supporters of capitalism or supporters of socialism. Marx and Engels pointed out in the COMMUNIST MANIFESTO that, just as in the French revolution, some of the nobility went over to the side of the capitalists: “so now a portion of the bourgeoisie goes over to the proletariat, and in particular, a portion of the bourgeois ideologues, who have raised themselves to the level of comprehending theoretically the historical movement as a whole”.

Until the working class: “have raised themselves to the level of comprehending theoretically the historical movement of the whole” they too will remain supporters of capitalism. (Incidentally, has the writer of the criticism, thought of applying the same criterion to anarchists such as Bakunin and Kropotkin?).

This ill-founded criticism of Marx and Engels does however raise an issue that has puzzled those who have not properly understood the Materialist Conception of History. Why, they asked, was it necessary to go through capitalism with its exploitation of one class by another? Why couldn’t society have skipped a stage? As the workers were exploited why could they not have established socialism at once?

The answer to the question is that at the start of capitalism there was no “working class” properly speaking. In the words of the COMMUNIST MANIFESTO: “At this stage the labourers still form an incoherent mass scattered over the whole country, and broken by their mutual competition”.

It took years of capitalist development to concentrate workers in large groups in factories and thus to prepare them for organised action. Also workers could not then have replaced the capitalists who, in addition to providing the capital also provided technical knowledge and management. It was only when the capitalists ceased to perform these social functions that the idea of socialism could develop. As Engels put it in SOCIALISM, UTOPIAN AND SCIENTIFIC, it needed long development for capitalism to make the capitalist class redundant and produce the situation in which “all the social functions of the capitalist are now performed by salaried employees”.


It is characteristic of the new attacks on the labour theory of value, as it was of the older ones, that few of the critics have understood what the theory is. For example the latest of them, in THE TIMES (2nd June 1992) charges Marxism with having said:

Workers were being cheated of the value of their labour by conniving profiteers. Only when theory turned to practice did it become clear that the value of people’s labour was a pure abstraction that did not exist outside of the conspiracy to rob them of it”.

No-one reading this will appreciate that it was Marx who showed that:-

…the value of people’s labour was a pure abstraction”.

For it was Marx who realised that his predecessors had been wrong in supposing that wages are paid for the “workers’ labour”. He put forward the quite different explanation that what the capitalist buys is the “workers’ labour power”.

With his labour theory of value Marx showed that commodities that is articles and services produced for sale, have values proportionate to the amount of labour socially necessary to produce them; one needing ten hours having twice the value of one needing only five hours. He showed that Adam Smith and others who regarded wages as what the employer pays for the hours of labour the worker puts in were wrong. What the employer buys is the use of the workers’ mental and physical energies for the day or the week. This Marx called the workers’ “labour power” or “labouring-power”.

Like other commodities the value of labour power is determined by the hours of labour required to produce it, that is to say, the amount of labour needed to provide for the maintenance of the worker and his family and to provide him with the skill appropriate to his occupation.

The employer is able to make profit because the workers he employs create more value than the value equivalent to their wages. If, say, the workers create in three days of a five day week the equivalent of these, the remaining two days of unpaid labour yield to the employer what Marx called surplus value. Out of surplus value payment is made to the landlord for rented land and interest to the money-lending capitalist (Bankers) for borrowed money, leaving the remainder as industrial or commercial profit for the employer.

Marx emphasised that the capitalist makes profit though he pays for labour power at its value.

Marx also dealt with the relationship of value and price and in the text of Volume I of CAPITAL, price and value are treated as being equal (more about this later). In earlier times, including the beginning of capitalist production, price and value were approximately the same, but with the development of techniques of production a new factor had to be taken into account, called by Marx changes in the composition of capital. Capitalists had to devote relatively less and less of their capital to buying labour-power (employing workers0 called by Marx “variable capital” because it is value creating, and more and more to plant and machinery, called “constant capital” because it merely transfers its value, the labour embodied in it, to the commodity; it does not add additional value, as does “variable capital”.

Marx, in CAPITAL Volume I (page 355 in the Kerr edition) gave an example relating to two businesses: a bakery, which, at that time, needed little plant and machinery and a relatively large number of workers compared with a textile business needing much plant and machinery and relatively few of workers. The bakery workers being more numerous than the textile workers would create more value.

If the total capital of the two businesses were the same when their respective commodities each sold at value, then we would be in the impossible situation where, in Marx’s words, the textile company would “pocket less profit or surplus value than the bakery”. Marx was reminding readers that commodities do not sell at their value. In the real world the bakery’s commodities sold below value and the textile commodities sold above value.

We come now to what is known as the “Great Contradiction”.

After Marx’s death, Engels published CAPITAL VOL. III with its lengthy and detailed demonstration that in the developed capitalism of Marx’s day, commodities did not sell at value but at what Marx called “Price of Production”, so that some commodities sell permanently above value and the rest permanently below value. Price of Production (not to be confused with what the capitalists call their costs of production) was defined by Marx as being “equal to its cost price plus the average rate of profit” (CAPITAL VOL. III Page 186). “Cost price” here means the value in Marx’s terms of the different ingredients which go into the production, i.e. the amount of socially necessary labour required. Marx showed that, taking into account the changed composition of capital, his “Price of Production” is strictly in accordance with his labour theory of value.

But Marx’s critics, failing to understand Marx’s argument, would have none of it. Bohm-Bawerk declared “Marx’s third volume contradicts the first”. Bohm-Bawerk’s case against Marx was answered by, among others, Engels in his 1894 Preface to CAPITAL VOL. III, by L. Boudin in his THEORETICAL SYSTEMS OF KARL MARX and by Kautsky in his ECONOMIC DOCTRINES OF KARL MARX.

In addition to dealing with the arguments, Boudin neatly answered the charge that, between Volume I and Volume III of CAPITAL, Marx changed his mind. Boudin pointed out (p. 133) that:

…most of the third volume, and particularly those portions of it which are supposed to modify the first volume, were actually written down by Marx in its present form before the publication of the first volume”.

Politicians and economists have continued to attack Marx’s theory giving a variety of reasons for doing so. Some have gone on using the argument about the alleged “Great Contradiction”. One critic, Harold Laski, in his book COMMUNISM (Home University, 1926, pages 112 and 95) argued that the labour theory of value was “erroneous” and that what Marx was really trying to do was to “determine scientifically” how the workers “ought to be paid”. It is impossible to reconcile this with the fact that Marx stood for the abolition of the wages system.

Professor F. W. Paish in BENHAMS ECONOMICS (Pitman’s Paperback 1967, page 289) uses the following argument against Marx:

…how do we measure the quantity of labour? A Carot can dash off in a few hours a picture which will sell for much more than a picture that has taken a mediocre artist several months to produce. A working jeweller can earn two or three times as much in an hour as an unskilled worker. Why, simply because the products of a Corot or a working jeweller are more valuable”.

Paish appears to have been unaware that Marx took the degree or skill into account. Marx wrote (CAPITAL VOL. 1. Page 51):

…it is the expenditure of simple labour-power, i.e. of the labour power, which, on average, apart from any special development exists in the organism of every ordinary individual…Skilled labour counts only as simple labour intensified, or rather, as multiplied simple labour, a given quantity of skilled labour being considered equal to a greater quantity of simple labour”.

In 1981 an attack on Marx’s labour theory of value was made by the Clapham-based Socialist Party. Their annual conference in that year passed a resolution which, against some protests, endorsed a statement which had appeared in their journal, the SOCIALIST STUDIES for May 1980, reading:-

“Commodities generally sell at around their value”.

The people who voted for this resolution were declaring, in effect, that when Marx showed in VOL. III of CAPITAL in detail and at length that commodities do not sell at value but at “Price of Production” some above and the rest below value, he, Marx didn’t know what he was talking about.

They were also disregarding what Marx wrote in CAPITAL VOLUME 1. In that volume he had several times warned his readers that price and value diverge and that readers had to await Volume III for the complete picture because he wrote in Volume I about price and value was only provisional (see for example Pagers 115, 244 and 355 in CAPITAL VOLUME I Kerr edition).

On page 244 Marx made some calculations of the amounts of surplus value: “assuming that the price of the product is the same as its value”. But in a footnote he added:

the calculations given in the text are intended merely as illustrations. We have in fact assumed that prices equal values. We shall see in Volume III that even in the case of average prices the assumption cannot be made in this very simple manner”.

The Clapham organisation (if any of their members actually read Volume 1) apparently decided not to take any notice of Marx’s warning quoted above.

The Conference of the Socialist Party which carried that resolution repudiating Marx relied for support on statements made by Marx in his pamphlet WAGES, PRICE AND PROFIT originally published as VALUE, PRICE AND PROFIT). That pamphlet was a lecture in which Marx tried to explain briefly and as simply as possible a wide range of economic theory. It was not possible for Marx, within the time available, to go into the detailed explanation made in CAPITAL. Even so, those members of the Socialist Party failed to realise the significance of what they quoted. Marx had written: “you must start from the theorem that, on average, commodities are sold at their real value”. That is exactly what he meant. “You must start” from that thermo (which was true of undeveloped capitalism) but then go on to the different situation after changes had taken place in the “composition of capital”. Nor had they taken note of the other qualification Marx had added in his statement about price and value, namely:

…apart from the effect of monopolies and some other modifications I must now pass by…” This would of course cover the material in Volume III that he could not go into within the limits of the lecture.

A word in conclusion about Marx and his works; we are not blind supporters of everything Marx wrote and advocated. With experience of all the events since Marx’s death in 1883 to guide us, there are issues on which we disagree with Marx, but his Materialist Conception of History and his Labour Theory of Value are not among them.

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