The Economic Role of Inequality

2. The Economic Role of Inequality

I turn now to the strictly economic objection to egalitarian reform outlined in Poverty of Philosophy (1847) and touched on in Chapter 7. There we found that Marx rejected Proudhon’s egalitarianism partly because it was based on a confusion of labor embodied with labor commanded: “All the ‘equalitarian’ consequences which M. Proudhon deduces from Ricardo’s doctrine are based on a fundamental error. He confounds the value of commodities measured by the quantity of labour embodied in them with the value of commodities measured by ‘the value of labour’”(MECW

6: 127, cited Chapter 7, p. 199; see also p. 209). The confusion in fact implied that labor was the sole factor – an error compounded by the further notion that labor was of uniform quality – and could also be seen in the invalid identification of production costs with wage costs.

Beyond this there is the principle of Historical Materialism – that “the mode of production” corresponding to each particular form of class antagonism governed the mode of exchange (including products and factors) rather than the reverse. Consider from this perspective the economic role of income inequality insisted on in reaction to Proudhon’s observation in 1846 that “with the progress of collective industry, every day’s individual labour produces a greater and greater product, and whereas therefore by a necessary consequence, the worker with the same wage ought to become richer every day, there actually exists estates in society which

profit and others which decay” (cited 158). 4 Proudhon’s question “why was not the English worker of 1840 twenty-seven times as rich as the one of 1770” – assuming

a corresponding productivity increase – implied a failure to appreciate the positive necessity in a class-organized private-property society of “classes which profited

4 A copy with Marx’s handwritten corrections has “with the same wage” underlined, and “Nota” in the margin (editorial note, MECW 6: 158n).

Economic Organization and the Equality Issue

and classes which decayed” – the economic role of income inequality – such decay or “d´ep´erissement” being a condition for “the development of productive forces” and the corresponding “surplus left by labour”:

In raising such a question one would naturally be supposing that the English could have produced this wealth without the historical conditions in which it was produced, such as: private accumulation of capital, modern division of labour, automatic workshops, anarchical competition, the wage system – in short, everything that is based upon class antagonism. Now, these were precisely the necessary conditions of existence for the development of productive forces and of the surplus left by labour. Therefore, to obtain this development of productive forces and this surplus left by labour there had to be classes which profited and classes which decayed (159). 5

Moreover, Proudhon’s model, designed to explain the source of surplus in terms of a “person society” (see Chapter 7, p. 210) missed the point entirely (152–6). The true “Prometheus” was class based; and any program of redistribution in the class-based society implied the undermining of productive capacity and the ability to produce a surplus: “What then, ultimately, is this Prometheus resuscitated by M. Proudhon? It is society, social relations based on class antagonism. These relations are not relations between individual and individual but between worker and capitalist, between farmer and landlord, etc. Wipe out these relations and you annihilate all society, and your Prometheus is nothing but a ghost without arms or legs; that is, without automatic workshops, without division of labour – in a word, without everything that you gave him to start with in order to make him obtain this surplus left by labour” (159). Of this consequence, Proudhon seemed unaware: “If then, in theory, it sufficed to interpret, as M. Proudhon does, the formula of the surplus left by labour in the equalitarian sense, without taking into account the actual conditions of production, it should suffice, in practice, to share out equally among the workers all the wealth at present acquired, without changing in any way

the present conditions of production” – which was inconceivable. 6 In any event, “[s]uch a distribution,” Marx estimated, “would certainly not assure a high degree of comfort to the individual participants,” an estimate often made to this day by modern conservative commentators.

Marx’s criticisms of Bray’s proposed “equality of exchange” (see Chapter 7, p. 210), parallel the objections to Proudhon, though the tone, significantly, is

far more friendly. 7 In essence, Marx reiterated that if an exchange mechanism is 5 Marx implicitly assumes differential savings propensities between classes.

6 In his “Wages,” at this same period, Marx had written of the “crazy relationship” between capital and labour, in the light of which “all Fourierist and other attempts at mediation” – an

obvious allusion to redistribution measures – “appear in their true absurdity” (MECW 6:429). 7 That the real challenge was perceived to be from Proudhon, the socialist, rather than from Bray

the bourgeois reformer is apparent: “Mr. Bray . . . without us and in spite of us has managed to supplant M. Proudhon, except that Mr. Bray, far from claiming the last word on behalf of humanity, proposes merely measures which he thinks good for a period of transition between

B. Objections to Egalitarian Reform 389 retained as an institutional device it cannot be arbitrarily interfered with. Thus to

impose exchange according to labor contribution is shown to imply some of the worst features of contemporary society, namely “[o]verproduction, depreciation, excess of labour followed by unemployment, in short, economic relations such as we see in present-day society, minus the competition of labour” (MECW 6: 143). These consequences could only be avoided by a wholesale retreat from individ- ual exchange by the imposition of legal restriction on the hours provided by each individual: “Thus, if all the members of society are supposed to be immediate workers, the exchange of equal quantities of hours of labour is possible only on condition that the number of hours to be spent on material production is agreed

on beforehand. But such an agreement negates individual exchange.” 8 Marx here points out that a similar outcome followed within large-scale industry where each worker had little choice over the number of hours he provided: “It is in the nature of large-scale industry that working hours should be equal for all. What is today the result of capital and the competition of workers among themselves will be tomor- row, if you sever the relation between labour and capital” – as Bray proposed – “an actual agreement based upon the relation between the sum of productive forces

and the sum of existing needs. 9 But such an agreement is a condemnation of indi- vidual exchange, and we are back again at our first conclusion!” The general moral is that Bray – like so many honest bourgeois – failed to recognize that the mode of production governed the mode of exchange rather than the reverse. In the present case, individual exchange resulted from class antagonism, whereas for the bourgeois observer, however honest, it was possible for individual exchange to exist after its abolition:

In principle, there is no exchange of products – but there is the exchange of the labour which co-operates in production. The mode of exchange of products depends upon the mode of exchange of the productive forces. In general, the form of exchange of products corresponds to the form of production. Change the latter, and the former will change in consequence. Thus in the history of society we see that the mode of exchanging products is regulated by the mode of producing them. Individual exchange corresponds also to a definite mode of production which itself corresponds to class antagonism. There is thus no individual exchange without the antagonism of classes.

But the honest conscience refuses to see this obvious fact. So long as one is a bourgeois, one cannot but see in this relation of antagonism a relation of harmony and eternal justice, which allows no one to gain at the expense of another. For the bourgeois, individual exchange can exist without any antagonism of classes. For him, these are two quite unconnected things (143–4).

8 Rubel points out: “C’est exactement ce que Marx proposera en 1875” – in discussing the Gotha Programme – “lorsqu’il dressera le plan de la soci´et´e communiste dans sa premi`ere

phase” (Rubel 1963: 1551). That there would be no markets or individual exchange under communism is elaborated below. 9 Rubel observes correctly that “Marx r´ep`ete ice ce qu’Engels a ecrit dans son Esquisse d’une

Economic Organization and the Equality Issue

Bray, runs the conclusion, “turns the illusion of the respectable bourgeois into an ideal he would like to attain. In a purified individual exchange, freed from all the elements of antagonism he finds in it, he sees an ‘equalitarian’ relation which

he would like society to adopt” (144). A later note by Marx himself (see above note 4), refers to subsequent experience – and gives a “warning” to Proudhon: “Mr. Bray’s theory, like all theories, has found supporters who have allowed them- selves to be deluded by appearances. Equitable-labour-exchange bazaars have been set up in London, Sheffield, Leeds and many other towns in England. These bazaars have all ended in scandalous failures after having absorbed considerable capital. The taste for them has gone for ever. You are warned, M. Proudhon!” (144n). 10