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Karl Marx: Critique of Political Economy

A. Historical Notes on the Analysis of

Commodities
The decisive outcome of the research carried on for over a century and a half by classical
political economy, beginning with William Petty in Britain and Boisguillebert [1] in France,
and ending with Ricardo in Britain and Sismondi in France, is an analysis of the aspects of
the commodity into two forms of labour use-value is reduced to concrete labour or
purposive productive activity, exchange-value to labour-time or homogeneous social
labour.
Petty reduces use-value to labour without deceiving himself about the dependence of its
creative power on natural factors. He immediately perceives concrete labour in its entire
social aspect as division of labour. [2] This conception of the source of material wealth
does not remain more or less sterile as with his contemporary Hobbes, but leads to the
political arithmetic, the first form in which political economy is treated as a separate
science. But he accepts exchange-value as it appears in the exchange of commodities, i.e.,
as money, and money itself as an existing commodity, as gold and silver. Caught up in the
ideas of the Monetary System, he asserts that the labour which determines exchange-value
is the particular kind of concrete labour by which gold and silver is extracted. What he
really has in mind is that in bourgeois economy labour does not directly produce use-values
but commodities, use-values which, in consequence of their alienation in exchange, are
capable of assuming the form of gold and silver, i.e., of money, i.e., of exchange-value, i.e.,
of materialised universal labour. His case is a striking proof that recognition of labour as the
source of material wealth by no means precludes misapprehension of the specific social
form in which labour constitutes the source of exchange-value.
Boisguillebert for his part, in fact, although he may not be aware of it, reduces the
exchange-value of commodities to labour-time, by determining the true value (la juste
valeur) according to the correct proportion in which the labour-time of the individual
producers is divided between the different branches of industry, and declaring that free
competition is the social process by which this correct proportion is established. But
simultaneously, and in contrast with Petty, Boisguillebert wages a fanatical struggle against
money, whose intervention, he alleges, disturbs the natural equilibrium or the harmony of

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the exchange of commodities and, like a fantastic Moloch, demands all physical wealth
as a sacrifice. This polemic against money is, on the one hand, connected with definite
historical conditions, for Boisguillebert fights against the blindly destructive greed for gold
which possessed the court of Louis XIV, his tax-farmers and the aristocracy; [3] whereas
Petty acclaims the greed for gold as a vigorous force which spurs a nation to industrial
progress and to the conquest of the world market; at the same time however it throws into
bold relief more profound fundamental differences which recur as a perpetual contrast
between typically English and typically French [4] political economy. Boisguillebert,
indeed, sees only the material substance of wealth, its use-value, enjoyment of it, [5] and
regards the bourgeois form of labour, the production of use-values as commodities and the
exchange of commodities, as the appropriate social form in which individual labour
accomplishes this object. Where, as in money, he encounters the specific features of
bourgeois wealth, he therefore speaks of the intrusion of usurping alien factors, and
inveighs against one of the forms of labour in bourgeois society, while simultaneously
pronouncing utopian eulogies on it in another form. [6] Boisguilleberts work proves that it
is possible to regard labour-time as the measure of the value of commodities, while
confusing the labour which is materialised in the exchange-value of commodities and
measured in time units with the direct physical activity of individuals.
It is a man of the New World where bourgeois relations of production imported
together with their representatives sprouted rapidly in a soil in which the superabundance of
humus made up for the lack of historical tradition who for the first time deliberately and
clearly (so clearly as to be almost trite) reduces exchange-value to labour-time. This man
was Benjamin Franklin, who formulated the basic law of modern political economy in an
early work, which was written in 1729 and published in 1731. [7] He declares it necessary to
seek another measure of value than the precious metals, and that this measure is labour.
"By labour may the value of silver be measured as well as other things. As, suppose one
man is employed to raise corn, while another is digging and refining silver; at the years
end, or at any other period of time, the complete produce of corn, and that of silver, are the
natural price of each other; and if one be twenty bushels, and the other twenty ounces, then
an ounce of that silver is worth the labour of raising a bushel of that corn. Now if by the
discovery of some nearer, more easy or plentiful mines, a man may get forty ounces of
silver as easily as formerly he did twenty, and the same labour is still required to raise
twenty bushels of corn, then two ounces of silver will be worth no more than the same
labour of raising one bushel of corn, and that bushel of corn will be as cheap at two ounces,
as it was before at one, caeteris paribus [other things being equal]. Thus the riches of a
country are to be valued by the quantity of labour its inhabitants are able to purchase" (op.

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cit., p. 265).
From the outset Franklin regards labour-time from a restricted economic standpoint as
the measure of value. The transformation of actual products into exchange-values is taken
for granted, and it is therefore only a question of discovering a measure of their value.
To quote Franklin again: Trade in general being nothing else but the exchange of labour
for labour, the value of all things is, as I have said before, most justly measured by
labour (op. cit., p. 267).
If in this sentence the term labour is replaced by concrete labour, it is at once obvious that
labour in one form is being confused with labour in another form. Because trade may, for
example, consist in the exchange of the labour of a shoemaker, miner, spinner, painter and
so on, is therefore the labour of the painter the best measure of the value of shoes? Franklin,
on the contrary, considers that the value of shoes, minerals, yarn, paintings, etc., is
determined by abstract labour which has no particular quality and can thus be measured
only in terms of quantity. [8] But since he does not explain that the labour contained in
exchange value is abstract universal social labour, which is brought about by the universal
alienation of individual labour, he is bound to mistake money for the direct embodiment of
this alienated labour. He therefore fails to see the intrinsic connection between money and
labour which posits exchange-value, but on the contrary regards money as a convenient
technical device which has been introduced into the sphere of exchange from outside. [9]
Franklins analysis of exchange-value had no direct influence on the general course of the
science, because he dealt only with special problems of political economy for definite
practical purposes.
The difference between concrete useful labour and labour which creates exchange-value
aroused considerable interest in Europe during the eighteenth century in the following form:
what particular kind of concrete labour is the source of bourgeois wealth? It was thus
assumed that not every kind of labour which is materialised in use-values or yields products
must thereby directly create wealth. But for both the Physiocrats and their opponents the
crucial issue was not what kind of labour creates value but what kind of labour creates
surplus value. They were thus discussing a complex form of the problem before having
solved its elementary form; just as the historical progress of all sciences leads only through
a multitude of contradictory moves to the real point of departure. Science, unlike other
architects, builds not only castles in the air, but may construct separate habitable storeys of
the building before laying the foundation stone. We shall now leave the Physiocrats and
disregard a whole series of Italian economists, whose more or less pertinent ideas come

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close to a correct analysis of the commodity, [10] in order to turn at once to Sir James
Steuart, [11] the first Briton to expound a general system of bourgeois economy. The
concept of exchange-value like the other abstract categories of political economy are in his
work still in process of differentiation from their material content and therefore appear to be
blurred and ambiguous. In one passage he determines real value by labour-time ("what a
workman can perform in a day"), but beside it he introduces wages and raw material in a
rather confusing way. [12] His struggle with the material content is brought out even more
strikingly in another passage. He calls the physical element contained in a commodity, e.g.,
the silver in silver filigree, its intrinsic worth, and the labour-time contained in it its
useful value.
The first is according to him something real in itself, whereas the value of the second
must be estimated according to the labour it has cost to produce it.... The labour employed
in the modification represents a portion of a mans time. [13]
His clear differentiation between specifically social labour which manifests itself in
exchange-value and concrete labour which yields use-values distinguishes Steuart from his
predecessors and his successors.
"Labour, he says, which through its alienation creates a universal equivalent, I call
industry.
He distinguishes labour as industry not only from concrete labour but also from other
social forms of labour. He sees in it the bourgeois form of labour as distinct from its antique
and mediaeval forms. He is particularly interested in the difference between bourgeois and
feudal labour, having observed the latter in the stage of its decline both in Scotland and
during his extensive journeys on the continent. Steuart knew very well that in pre-bourgeois
eras also products assumed the form of commodities and commodities that of money; but he
shows in great detail that the commodity as the elementary and primary unit of wealth and
alienation as the predominant form of appropriation are characteristic only of the bourgeois
period of production, and that accordingly labour which creates exchange-value is a
specifically bourgeois feature. [14]
Various kinds of concrete labour, such as agriculture, manufacture, shipping and
commerce, had each in turn been claimed to constitute the real source of wealth, before
Adam Smith declared that the sole source of material wealth or of use-values is labour in
general, that is the entire social aspect of labour as it appears in the division of labour.
Whereas in this context he completely overlooks the natural factor, he is pursued by it when
he examines the sphere of purely social wealth, exchange-value. Although Adam Smith

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determines the value of commodities by the labour-time contained in them, he then

nevertheless transfers this determination of value in actual fact to pre-Smithian times. In
other words, what he regards as true when considering simple commodities becomes
confused as soon as he examines the higher and more complex forms of capital, wagelabour, rent, etc. He expresses this in the following way: the value of commodities was
measured by labour-time in the paradise lost of the bourgeoisie, where people did not
confront one another as capitalists, wage-labourers, landowners, tenant farmers, usurers,
and so on, but simply as persons who produced commodities and exchanged them. Adam
Smith constantly confuses the determination of the value of commodities by the labour-time
contained in them with the determination of their value by the value of labour; he is often
inconsistent in the details of his exposition and he mistakes the objective equalisation of
unequal quantities of labour forcibly brought about by the social process for the subjective
equality of the labours of individuals. [15] He tries to accomplish the transition from
concrete labour to labour which produces exchange-value, i.e., the basic form of bourgeois
labour, by means of the division of labour. But though it is correct to say that individual
exchange presupposes division of labour, it is wrong to maintain that division of labour
presupposes individual exchange. For example, division of labour had reached an
exceptionally high degree of development among the Peruvians, although no individual
exchange, no exchange of products in the form of commodities, took place.
David Ricardo, unlike Adam Smith, neatly sets forth the determination of the value of
commodities by labour-time, and demonstrates that this law governs even those bourgeois
relations of production which apparently contradict it most decisively. Ricardos
investigations are concerned exclusively with the magnitude of value, and regarding this he
is at least aware that the operation of the law depends on definite historical pre-conditions.
He says that the determination of value by labour-time applies to
such commodities only as can be increased in quantity by the exertion of human
industry, and on the production of which competition operates without restraint. [16]
This in fact means that the full development of the law of value presupposes a society in
which large-scale industrial production and free competition obtain, in other words modern
bourgeois society. For the rest, the bourgeois form of labour is regarded by Ricardo as the
eternal natural form of social labour. Ricardos primitive fisherman and primitive hunter are
from the outset owners of commodities who exchange their fish and game in proportion to
the labour-time which is materialised in these exchange-values. On this occasion he slips
into the anachronism of allowing the primitive fisherman and hunter to calculate the value
of their implements in accordance with the annuity tables used on the London Stock

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Exchange in 1817. Apart from bourgeois society, the only social system with which
Ricardo was acquainted seems to have been the parallelograms of Mr. Owen. Although
encompassed by this bourgeois horizon, Ricardo analyses bourgeois economy, whose
deeper layers differ essentially from its surface appearance, with such theoretical acumen
that Lord Brougham could say of him:
"Mr. Ricardo seemed as if he had dropped from another planet.
Arguing directly with Ricardo, Sismondi not only emphasises the specifically social
character of labour which creates exchange-value, [17] but states also that it is a
characteristic feature of our economic progress to reduce value to necessary labour-time,
to
"the relation between the needs of the whole society and the quantity- of labour which is
sufficient to satisfy these needs. [18]
Sismondi is no longer preoccupied with Boisguilleberts notion that labour which creates
exchange-value is distorted by money, but just as Boisguillebert denounced money so does
Sismondi denounce large industrial capital. Whereas Ricardos political economy ruthlessly
draws its final conclusion and therewith ends, Sismondi supplements this ending by
expressing doubt in political economy itself.
Since the determination of exchange-value by labour-time has been formulated and
expounded in the clearest manner by Ricardo, who gave to classical political economy its
final shape, it is quite natural that the arguments raised by economists should be primarily
directed against him. If this polemic is stripped of its mainly trivial [19] form it can be
summarised as follows:
One. Labour itself has exchange-value and different types of labour have different
exchange-values. If one makes exchange-value the measure of exchange-value, one is
caught up in a vicious circle, for the exchange-value used as a measure requires in turn a
measure. This objection merges into the following problem: given labour-time as the
intrinsic measure of value, how are wages to be determined on this basis. The theory of
wage-labour provides the answer to this.
Two. If the exchange-value of a product equals the labour-time contained in the product,
then the exchange-value of a working day is equal to the product it yields, in other words,
wages must be equal to the product of labour. [20] But in fact the opposite is true. Ergo, this
objection amounts to the problem, how does production on the basis of exchange-value

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solely determined by labour-time lead to the result that the exchange-value of labour is
less than the exchange-value of its product? This problem is solved in our analysis of
capital.
Three. In accordance with the changing conditions of demand and supply, the marketprice of commodities falls below or rises above their exchange-value. The exchange-value
of commodities is, consequently, determined not by the labour-time contained in them, but
by the relation of demand and supply. In fact, this strange conclusion only raises the
question how on the basis of exchange-value a market-price differing from this exchangevalue comes into being, or rather, how the law of exchange-value asserts itself only in its
antithesis. This problem is solved in the theory of competition.
Four. The last and apparently the decisive objection, unless it is advanced as commonly
happens in the form of curious examples, is this: if exchange-value is nothing but the
labour-time contained in a commodity, how does it come about that commodities which
contain no labour possess exchange-value, in other words, how does the exchange-value of
natural forces arise? The problem is solved in the theory of rent.

FOOTNOTES
1.

A comparative study of Pettys and Boisguilleberts writings and characters apart

from illuminating the social divergence between Britain and France at the close of the
seventeenth century and the beginning of the eighteenth would explain the origins of
those national contrasts that exist between British and French political economy. The
same contrast reappears in Ricardo and Sismondi.

2.

Petty treats the division of labour also as a productive force, and he does so on a
much grander scale than Adam Smith. See An Essay Concerning the Multiplicetion of
Mankind, Third Edition, 1686, pp. 35-36. In this essay he shows the advantages which
division of labour has for production not only with the example of the manufacture of a
watch as Adam Smith did later with the example of the manufacture of a pin but
considers also a town and a whole country as large- scale industrial establishments. The
Spectator of November 26, 1711,refers to this illustration of the admirable Sir William
Petty. McCullochs conjecture that the Spectator confused Petty with a writer forty
years his junior is therefore wrong. (See McCulloch, The Literature of Political
Economy, a Classified Catalogue, London, 1845, p.102.) Pctty regards himself as the
founder of a new science. He says that his method is not yet very usual, for instead
of using only comparative and superlative Words, and intellectual Arguments, he
proposes to speak in Terms of Number, Weight or Measure; to use only Arguments
of Sense, and to consider only such Causes, as have visible Foundations in Nature;
leaving those that depend upon the mutable Minds, Opinions, Appetites, and Passions
of particular Men, to the Consideration of others (Political Arithmetick, etc., London,

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1699, Preface). His audacious genius becomes evident for instance in his proposal to
transport all the movables and People of Ireland, and of the Highlands of Scotland ...
into the rest of Great Britain. This would result in the saving of labour-time, in
increasing productivity of labour, and the King and his Subjects would thereby
become more Rich and Strong (Political Aritlmetick, Chapter 4 [p. 225]). Also in the
chapter of his Political Arithmetick in which at a time when Holland was still the
predominant trading nation and France seemed to be on the way to becoming the
principal trading power he proves that England is destined to conquer the world
market: That the King of Englands Subjects, have Stock competent and convenient, to
drive the Trade of the whole Commercial World (op. cit., Chapter 10 [p. 272]). 'That
the Impediments of Englands greatness, are but contingent and removable (p. 247 et
seq.). A highly original sense of humour pervades all his writings. Thus he shows for
example that the conquest of the world market by Holland, which was then regarded as
the model country by English economists just as Britain is now regarded as the model
country by continental economists, was brought about by perfectly natural causes
without such Angelical Wits and Judgments, as some attribute to the Hollanders (op.
cit., pp. 175-16). He champions freedom of conscience as a condition of trade, because
the poor are diligent and believe that Labour and Industry is their Duty towards God
so long as they are permitted to think they have the more Wit and Understanding,
especially of the things of God, which they think chiefly belong to the Poor. From
whence it follows that Trade is not fixt to any Species of Religion as such; but rather ...
to the Heterodox part of the whole (op. cit., pp. 183-86). He recommends special
public contribution for rogues, since it would be better for the general public to impose
a tax on themselves for the benefit of the rogues than to be taxed by them (op. cit., p.
199). On the other hand, he rejects taxes which transfer wealth from industrious people
to those who do nothing at all, but Eat and Drink, Sing, Play, and Dance: nay such as
Study the Metaphysicks [op. cit., p. 198]. Pettys writings have almost become
bibliographical curiosities and are only available in old inferior editions. This is the
more surprising since William Petty is not only the father of English political economy
but also an ancestor of Henry Petty, alias Marquis of Lansdowne, the Nestor of the
English Whigs. But the Lansdowne family could hardly prepare a complete edition of
Pettys works without prefacing it with his biography, and what is true with regard to
the origin of most of the big Whig families, applies also in this case the less said of it
the better. The army surgeon, who was a bold thinker but quite unscrupulous and just as
apt to plunder in Ireland under the aegis of Cromwell as to fawn upon Charles II to
obtain the title of baronet to embellish his trash, is not a suitable image of an ancestor
for public display. In most of the writings published during his lifetime, moreover,
Petty seeks to prove that Englands golden age was the reign of Charles II, a rather
heterodox view for hereditary exploiters of the glorious revolution.
3.

As against the black art of finance of his time, Boisguillebert says: The science of
finance consists of nothing but a thorough knowledge of the interests of agriculture and
commerce (Le dtail de la France, 1697. In Eugene Dalres edition of Economistes
financiers du XVIII sicle, Paris, 1843, Vol. I, p. 241).

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4.

But not Romance political economy, since the contrast of English and French
economists is repeated by the Italians in their two schools one at Naples and the other at
Milan; whereas the Spaniards of the earlier period are either simply Mercantilists and
modified Mercantilists like Ustariz, or follow Adam Smith in observing the happy
mean like Jovellanos (see his Obras, Barcelona, 1839-40)

5.

True wealth ... is the complete enjoyment not only of the necessaries of life but also
of all the superfluities and of everything that can give pleasure to the
senses (Boisguillebert, Dissertation sur la nature de la richesse, etc., p. 403). But
whereas Petty was just a frivolous, grasping, unprincipled adventurer, Boisguillebert,
although he was one of the intendants of Louis XIV, stood up for the interests of the
oppressed classes with both great intellectual force and courage.

6.

French socialism as represented by Proudhon suffers from the same national failing.

7.

Benjamin Franklin, A Modest Inquiry into the Nature and Necessity of a Paper
Currency, in The Works of Benjamin Franklin, edit. by J. Sparks, Vol. II, Boston, 1836.

8.

Remarks and Facts relative to the American Paper Money, 1764 (l.c.).

9.

See Papers on American Politics, and Remarks and Facts relative to the American
Paper Money, 1764 (l.c.).

10.

See for instance Galiani, Della Moneta, Vol. III, in Scrittori classici Italiani di
Economia Politica (published by Custodi), Parte Moderna, Milano, 1803. He says: It
is only toil (fatica) which gives value to things, p. 74. The term fatica for labour is
characteristic of the southerner.

11.

Steuarts work An Inquiry into the Principles of Political Economy, Being an Essay
on the Science of Domestic Policy in Free Nations was first published in London in
1767, in two quarto volumes, ten years earlier than Adam Smiths Wealth of Nations. I
quote from the Dublin edition of 1770.

12.

Steuart, op. cit., Vol. I, pp. 181-83.

13.

Ibid., pp. 361-62.

14.

Steuart therefore declares that the patriarchal form of agriculture, whose direct aim
is the production of use-values for the owner of the land, is an abuse, although not in
Sparta or Rome or even in Athens, but certainly in the industrial countries of the
eighteenth century. This abusive agriculture is not trade but a mere means of
subsistence. Just as bourgeois agriculture clears the land of superfluous mouths, so
bourgeois manufacture clears the factory of superfluous hands.

15.

Adam Smith writes for instance Equal quantities of labour, at all times and
places, may be said to be of equal value to the labourer. In his ordinary state of health,

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strength, and spirits; in the ordinary degree of his skill and dexterity, he must always
lay down the same portion of his ease, his liberty, and his happiness. The price which
he pays must always be the same, whatever may be the quantity of goods which he
receives in return for it. Of these, indeed, it may sometimes purchase a greater and
sometimes a smaller quantity, but it is their value which varies, not that of the labour
which purchases them.... Labour alone, therefore, never varying in its own value, is
alone the ultimate and real standard by which the value of all commodities can ... be
estimated.... It is their real price...." [Wealth of Nations. Book I, Chapter V.]
16.

David Ricardo, On the Principles of Political Economy, and Taxation, Third

Edition, London, 1821, p. 3.

17.

Sismondi, Etudes sur lconomie politique, tome II, Bruxelles, 1838. Trade has
reduced the whole matter to the antithesis of use-value and exchange-value. P. 162.

18.

Ibid., pp. 163-66 et seq.

19.

It probably assumes the most trivial form in J. B. Says annotations to the French
translation prepared by Constancio of Ricardos work, and the most pedantic and
presumptuous in Mr. Macleods recently published Theory of Exchange, London, 1858.

20.

This objection, which was advanced against Ricardo by bourgeois economists, was
later taken up by socialists. Assuming that the formula was theoretically sound, they
alleged that practice stood in conflict with the theory and demanded that bourgeois
society should draw the practical conclusions supposedly arising from its theoretical
principles. In this way at least English socialists turned Ricardos formula of exchangevalue against political economy. The feat of declaring not only that the basic principle
of the old society was to be the principle of the new society, but also that he was the
inventor of the formula used by Ricardo to summarise the final result of English
classical economics, was reserved to M. Proudhon. It has been shown that the utopian
interpretation of Ricardos formula was already completely forgotten in England, when
M. Proudhon discovered it on the other side of the Channel. (Cf. the section on la
valeur constitue, in my Misere de la philosophie..., Paris, 1847.a) [See Karl Marx, The
Poverty of Philosophy, Moscow, 1962, pp. 43-49 Ed.]

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