Marx’ economic theories have been praised and crushed with equal passion in so many discussions marked by a common theme: critics claim proponents invent coherence where there is none, while proponents claim critics find contradictions where there are actually none. Here follows a brief history to the reactions to Das Kapital.
The two main criticisms of Das Kapital have been Marx’ inability to conclusively formulate his labor-value theory (or even to clearly define “value”); and the assumption that the accumulation of capital leads to lower profit rates. It should be noted that these are the two pillars that form the basis of Marx’ economic theories, the latter once considered “proof” of capitalism’s inevitable decline.
Das Kapital’s dialectical approach not only impressed, but also confused many. Socialist and economist Robert Wilbrandt said the Marxian theory of value was “not only the most difficult to understand, but also the weakest,” going as far as to concede that “it looks like a proof, but is none.”[i] The book was intended as the first of a trilogy, and as such, loose ends were somewhat excusable – they would be cleared up in a later volume, Marx promised. But he never produced a follow-up in the remaining 16 years of his life, despite relentless toil on his part.
Engels was convinced that Marx’ notes contained the missing pieces of the puzzle, but what he ultimately compiled in Das Kapital Vol.II (1885) and Vol.III (1894) initially confused more than it clarified. A point many objected to was that in Vol.I Marx kept talking about “value” as determining “price,” but Vol.III made it very clear that this was not so. Achille Loria, and Italian economist who worshipped Marx, called the book a “scientific suicide,” a “most explicit surrender of his own teaching.” Werner Sombart, a leading social scientists of the early 20th century – himself an outspoken critic of capitalism’s “creative destruction” – conceded that Engels’ solution to “the puzzle of the average rate of profit” was in such shambles that it would most probably be met by “general head shaking.”[ii]
In 1896, Eugen von Böhm-Bawerk published his damning but technically sound critique of Marxian economy, Karl Marx and the Close of his System (A poor translation of the original German title: “On the Conclusion of the Marxian System”), a book that had a lasting impact among economists, including academics. Böhm-Bawerk questioned, among other things, Marx's labor-value theory; accused him of lacking logical rigor; and argued that his dialectical method obscured the fundamental contradictions within his system. The only robust response from the Marxian camp came from Rudolf Hilferding, with his Böhm-Bawerk's Criticism of Marx (1902). Hilferding claimed that Böhm-Bawerk had been too methodological and had failed to understand Marx's dialectical approach at a fundamental level: Böhm-Bawerk's individualist view ignored the social and historical dimensions Marx considered; he had mistaken illustrative examples for defining aspects of the theory, etc. Consequently, the contradictions Böhm-Bawerk perceived were “in truth ascribable solely to his interpretation of the theory.”[iii] Hilferding’s take inspired a variety of books, such as G.D.H. Cole’s What Marx Really Meant, all of them efforts to reframe, reinterpret, or redefine Marx’ theories.
In 1913, Rosa Luxemburg, a Polish revolutionary (and one of the first women in the world with a doctorate in economy), published The Accumulation of Capital. In her famous critique of the last chapter of Das Kapital, Vol.II, she claimed not only that Marx had ended his analysis of the accumulation of capital in the midst of his own argument, she stated that the master had made a colossal mistake: the proletariat would simply not be able to purchase the goods they produced if the capitalist system indeed operated by the criteria that Marx had established, namely a continuous immiseration of the worker, “be his payment high or low.” Thus, she begged the unbeggable question: how is it that despite everything, the workers in capitalist societies have been able to increase the variety and quantity of their commodities – their standard of living? Luxemburg’s conclusion that “the society to which the [Marxist] hypotheses ... relate exists nowhere in the world of reality”[iv] promptly got her branded a heretic by the Marxist camp.
But hers was a valid question. A year later, Benedetto Croce provided the solution when he asserted that Das Kapital was “an abstract investigation” not of any modern or historically existing society, but rather of an “abstract and formal” one, “which could indeed never have occurred as actual facts in the course of history.”[v] One might be inclined to question whether reframing Das Kapital as a mental exercise distinct from reality would have brought a smile on Marx’ face. As to the confusion regarding “value,” Sandy Lindsay reasoned Marx must have been talking about it “in two senses” – firstly, “in the sense of price,” but also “in a peculiar sense of his own,”[vi] which remains anyone’s guess to this day. Given that Marx published nothing more after the first volume, it’s safe to assume that even he wasn’t quite sure.
Jerrold Seigel examined the differences between Marx’ notes and what Engels ultimately published in Volumes II and III of Das Kapital. Marx was stuck on his own “Law of the Tendency of the Rate of Profit to Fall.” According to the historian, Marx’ attempts to forge the theory into a solid whole “suggest a man painstakingly sifting through a haystack, convinced that a small but priceless nugget lay hidden within it.” Marx “came dangerously close to admitting what he was struggling so hard to deny, that the profit law could not survive its inner contradictions.”[vii] In 2013, historian of philosophy Michael Heinrich basically declared the theory heresy: Marx’ mathematical notes suggest he’d verified its erroneous nature and would therefore never have agreed to its publication. Instead, Marx published nothing.
This is a good moment to reiterate that Marx's efforts were devoted to a singular goal: to validate the inevitability of a future he’d predicted as early as 1848. And he was intent on finding a scientific basis to demonstrate that his prediction – the “necessary” coming of communism – was right (Social events that occurred throughout his life repeatedly led Marx to declare that the revolution was right around the corner). For sure, his passion to prove himself right amplified the conviction that reverberates throughout his analysis, but a strange phenomenon appeared: the more he progressed with his research, the farther off solid proof appeared to become. What Marx failed to understand was that his dialectic is a method of classification and interpretation – a narrative construct – and not the sort of scientific method that allows for accurate predictions, much less proves the future. To quote Croce: “It does not appear that the author himself always realised fully the peculiar character of his investigation.” Marx’ failure to resolve any of the existing issues with Das Kapital in the remaining 16 years of his life was really not a question of diligence. The main feature of his dialectical method is that it reveals an ever-increasing complexity of contrasting social, political, and economic elements the more it is pursued, while formulating laws that allow for reliable predictions rather requires a more reductionist approach.
Today, many Marxists have acknowledged that Marx’ labor-value theory and falling profits theory are deficient, either largely or in part, while others have reframed Das Kapital by means of elaborate reasoning in order to extract internal coherence from it. Of course, they don't see it that way: they believe that they have truly understood Marx, even if he often spoke only in very opaque terms about what he, according to them, really meant to say.
The argument that the typical economist is looking at economics too much within the confines of its own function certainly has merit; navel-gazing and neglecting to consider the broader impact on society of any system has never yielded very good results. The dialectic provides ample framework for these sorts of discussions (even ad infinitum, one may add), but it would be a mistake to attribute great scientific truth to Marx’ economic theories: they exhibit too many discrepancies with reality and even their axioms vibrate with uncertainty. Marx’ radical antagonism towards capitalism overrode his intellectual honesty and profoundly undermined the scientificity of his research.
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[i] Robert Wilbrandt, Karl Marx: Versuch einer Würdigung, B.G. Teubner, 1919, p.98, 100
[ii] Eugen von Böhm-Bawerk, Karl Marx and the Close of His System, A.M. Kelley, New York, 1949, pp.30-31
[iii] Böhm-Bawerk, p.184
[iv] Rosa Luxemburg, Die Akkumulation des Kapitals, Vereinigung internationaler VerlagsAnstalten, Berlin, 1923, p.400
[v] Benedetto Croce, Historical materialism and the economics of Karl Marx, The Macmillan Co., New York, 1914, p.48, 50
[vi] Ibid, p.xviii
[vii] Jerrold Siegel, Marx’ Fate, Pennsylvania State University Press, 1993, pp.346-47
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