Labor and Free Trade: On Marx’s Ricardian bonˆa fides

J. Labor and Free Trade: On Marx’s Ricardian bonˆa fides

Marx treated the labor market in a speech on Free Trade delivered in Brussels on

9 January 1848. 45 As in the case of “Wages,” his technical propositions must be extracted from an exercise in persuasion. The speech allows us to evaluate Marx’s Ricardian bonˆa fides in the late 1840s.

The case against agricultural protection that Marx attributed to manufactur- ers in addressing their workers is the orthodox case based on land scarcity and

45 Delivered at the Association D´emocratique de Bruxelles. See editorial note, MECW 6: 695–6; also Rubel 1963: 139–40.

The workers were aware that the empirical record regarding real wages did not favor the employers’ case: “The workers . . . asked of the manufacturers, – ‘How is it that in the course of the last thirty years, while our industry [1888: commerce and manufacture] has immensely increased, our wages have fallen far more rapidly, in proportion, than the price of corn has

225 the desirable prospect of national specialization – in an extreme version total spe-

J. Labor and Free Trade: On Marx’s Ricardian bonˆa fides

cialization (MECW 6: 453). One consequence of the proposal (not admitted by employers to their workers) would be lower money wages (454). The effect of free trade in diminishing differential rent with the abandonment of marginal tracts is spelled out more fully in a paraphrase of the position of W. R. Greg, a Prize Essayist in a competition organized by the National Anti-Corn Law League in 1842 (455).

To how much of this did Marx himself subscribe? Greg’s position as recounted by Marx is wholly Ricardian. That Marx represents the anti-Corn Law arguments as “cant” creates no difficulty, because he specifically intended thereby the allegedly

hypocritical pretense by employers that Free Trade would benefit labor. 46 That labor was not fooled is spelled out in a passage emphasizing the effect of a lower money wage in raising the profit rate, not appearing in the representation of Greg (457). And here Ricardo’s inverse wage-profit relation, to which Marx had subscribed in the Poverty of Philosophy, is explicitly cited: “Ricardo, the apostle of the English Free Traders, the leading economist of our century, entirely agrees with the workers upon this point. In his celebrated work upon Political Economy he says: ‘If, instead of growing our own corn . . . we discover a new market from which we can supply ourselves . . . at a cheaper price, wages will fall and profits rise’ ” (Ricardo 1951–73

1: 132). To this Marx rightly adds: “The fall in the price of agricultural produce reduces the wages, not only of the labourer employed in cultivating the soil, but also of all those employed in commerce or manufacture.”

Yet notwithstanding the appeal to Ricardo regarding Free Trade, Marx evidently diverged in key respects. First, he proceeds to argue that a low corn price is actually to labor’s disadvantage, an argument supposing that the corn price governs the money wage, while – it is implied – industrial prices remain unchanged or at least do not fall in proportion to that of corn: “So long as the price of corn was higher and wages were also higher, a small saving in the consumption of bread sufficed to procure him other enjoyments. But as soon as bread is cheap, and wages are therefore low, he can save almost nothing on bread, for the purchase of other articles” (MECW 6: 457). This sort of argument is to be found in the Physiocratic literature and in Malthus (see Hollander 1997: 831).

Strangely, Marx himself goes on to allow that “if the price of all commodities falls – and this is the necessary consequence of Free Trade – I can buy far more for a franc than before” (MECW 6: 458). Now Ricardo had, of course, denied that general prices would be affected by a free corn trade at least as far as concerns the impact of the lower money wage. The assertion can still be said to be in line

46 In a letter to Lassalle dated 23 January 1855, Marx refers to the consequences of free trade 1849–52, namely an increase in the purchasing power of (given) money wages, but a fall in

relative wages: “What did show a relative increase . . . was profits. Hence relative wages, i.e. wages in relation to profits, have in fact fallen – a result which I showed to be inevitable in a pamphlet (French) written as long ago as 1847” (MECW 39: 513). Marx neglects to mention that he had predicted a fall in the real wage, on the presumption that the money wage falls

A “First Draft” of Capital 1847–1849 with Ricardo, if Marx intended the welfare implications of free trade – we cannot

be sure (see below, p. 227) – a general increase in output reflecting efficiency advantages implying (given the aggregate money supply) a lower general price level. But there is no Ricardian counterpart to the next stage of his argument, whereby labor’s money-income falls more than general prices in consequence of free trade: “If all commodities are cheaper, labor, which is a commodity too, will also fall in price, and . . . this commodity, labor, will fall far lower in proportion than all other commodities.” The case is elaborated in the course of Marx’s rejection of the orthodox position that the effect of a free corn trade is rather to raise real wages by stimulating net accumulation (459). To the contrary, labor necessarily suffers, notwithstanding any such stimulus, considering the sort of argument encountered in “Wage Labour and Capital” and “Wages,” that while “[t]he most favorable condition for the workingman is the growth of capital . . . [he] will go to the wall just the same. The growth of capital implies the accumulation and the concentration of capital. This centralization involves a greater division of labor and a greater use of machinery. The greater division of labor destroys the especial skill of the laborer; and by putting in the place of this skilled work labor which any one can perform it increases competition among the workers.”

Now when elaborating this argument in 1848 Marx refers to a falling interest rate “in proportion as capital accumulates,” despite an assumed free corn trade, suggesting that the Ricardian land-scarcity case to which he had apparently appealed earlier in his speech which predicts a rising return on capital on this assumption was not in fact one to which he himself subscribed (459–60). Alternatively, we might be justified in concluding that Marx subscribed unwittingly to conflicting paradigms.

We turn to Marx’s general conclusion – that Free Trade will necessarily be detri- mental to labor by allowing free rein to capital, a matter that will prove of high relevance in Chapter 15. Specifically, “[a]ll the laws formulated by the political economists from Quesnay to Ricardo” – the first of which “is that competition reduces the price of every commodity to the minimum cost of production” – have been based upon the hypothesis that the trammels which still interfere with com- mercial freedom have disappeared” (462). Applying this principle to labor: “the minimum of wages is the natural price of labor. And what is the minimum of wages? Just so much as is required for production of the articles absolutely necessary for the maintenance of the worker, for the continuation, by hook or by crook, of his own existence and that of his class.” Wages above subsistence paid in prosperous times of the cycle are allowed, but these merely compensate for below-subsistence wages paid in depression. 47

47 See also the emphasis on cycles earlier in the document: “As a matter of principle in Political Economy, the figures of a single year must never be taken as the basis for formulating general

laws. We must always take the average of from six to seven years, a period during which modern industry passes through the successive phases of prosperity, overproduction, crisis, thus completing the inevitable cycle” (MECW 6: 458).

227 We also find the added notion that the cost of “subsistence” itself declines and this

K. Summary and Conclusion

as a result of the “progress of industry [which] creates less and less expensive means of subsistence” (463). One instance is cotton in place of wool and linen; but another is potatoes in place of bread and it is upon the latter that Marx focuses: “Thus, as means are constantly being found for the maintenance of labor on cheaper and more wretched food, the minimum of wages is constantly sinking” (emphasis added).

The idea that free trade would enhance international harmony – a brain-child of the bourgeoisie – is rejected on the grounds that “[e]very one of the destructive phenomena to which unlimited competition gives rise within any one nation is reproduced in more gigantic proportions in the market of the world” (464). More specifically, Marx here rejects the case for international trade based on “natural advantages” – a rather narrow perspective on the efficiency case – on the grounds that it implies a pattern engraved in stone: “Two centuries ago, nature, which does not trouble itself about commerce, had planted neither sugar-cane nor coffee trees [in the West Indies]. And it may be that in less than half a century you will find there neither coffee nor sugar, for the East Indies, by means of cheaper production, have already successfully broken down this so-called natural destiny of the West Indies.” Beyond this, the quantitative significance of industries could not be dismissed, Marx alluding to advantages of scale justifying some kind of protection: “there are . . . nowadays some branches of industry which prevail over all others, and secure to the nations which especially foster them the command of the market of the world. . . . ” And finally, we encounter a remarkable regression to the standard Mercantilism of an earlier era: “one nation can grow rich at the expense of another,” just as “in the same country one class can enrich itself at the expense of another” (464–5). All in all, Marx’s developmental perspective was wholly at odds with Ricardo’s.