Karl Marx: Greatness and Illusion - Gareth Stedman Jones (2016)

Chapter 10. The Critique of Political Economy


In 1857, faced with the prospect of a global economic crisis and the possibility of another period of revolution, Karl finally pulled together the components of the ‘critique of political economy’, upon which he had first embarked in Paris in 1844. ‘I am working like mad all night and every night collating my economic studies’, he informed Engels, ‘so that I at least get the outlines clear before the déluge.’2 As he wrote to Lassalle in February 1858, he had ‘been at work on the final stages for some months’ and was ‘at last ready to set to work after 15 years of study’. He wanted to publish the work in instalments without any ‘rigid datelines’, and hoped Lassalle might help him by finding ‘someone in Berlin’ prepared to undertake this form of publication. As Karl described the work to Lassalle:

The work I am currently concerned with is a Critique of Economic Categories or, IF YOU LIKE, a critical exposé of the system of the bourgeois economy. It is at once an exposé and, by the same token, a critique of the system …

The whole is divided into 6 books: 1. On Capital (contains a few introductory CHAPTERS). 2. On Landed Property. 3. On Wage Labour. 4. On the State. 5. International Trade. 6. World Market. I cannot, of course, avoid all critical consideration of other economists, in particular a polemic against Ricardo in as much as even he, qua bourgeois, cannot but commit blunders even from a strictly economic viewpoint. But generally speaking the critique and history of political economy and socialism would form the subject of another work and, finally, the short historical outline of the development of economic categories and relations yet a third.3

The story narrated in what later became known as the Grundrisse was that of man’s loss and historical recuperation, of his ‘social’ or ‘human nature’. This nature had been concealed beneath the external and abstract form which it had assumed in civil society. The attempt to recount this development took the form of a ‘critique of political economy’, because economic categories – trade, competition, capital, money, etc. – were ‘only the theoretical expressions, the abstractions, of the social relations of production’.4

But Karl’s work did not go smoothly. Some months later, exasing his delay in sending off the manuscript, he explained to Lassalle that this was caused by illness; he also had to carry on with his journalistic ‘ “bread and butter” work’. It was not so much that he needed to do more research – ‘the material was to hand and all that I was concerned with was the form’. But, he continued, ‘the style of everything I wrote seemed tainted with liver trouble’; and he was determined that ‘the product of 15 years of research, i.e. the best years of my life’ should not be ‘spoiled on medical grounds’. Furthermore, he added, reasserting his conception of himself as head of the ‘party’, ‘In it an important view of social relations is scientifically expounded for the first time. Hence I owe it to the Party that the thing shouldn’t be disfigured by the kind of heavy, wooden style proper to a disordered liver.’5

The exposition of Karl’s argument in the Grundrisse was clumsy and disjointed. The presentation was chaotic. He did not follow the plans which he had laid out to Lassalle, and there was little or no sign of the last three books. The manuscript consisted of around 800 pages; an unfinished introduction, and two chapters, the first on ‘Money’, amounting to 120 pages, the second on ‘Capital’, amounting to around 690 pages. Most of the text related to part 1, on ‘Capital’, and this was subdivided into three subsections – ‘The Process of Production of Capital’, ‘Circulation Process of Capital’ and ‘Capital as Bearing Fruit. Interest. Profit. (Production Costs, etc.)’. Major themes jostled with preoccupations arising from the events of 1848, or from his New-York Tribune journalism. Although the text abounded with unresolved intellectual questions, it is wrong to interpret this disorganization in a wholly negative light. In part, it was the result of a period of intense creativity marked by desperate attempts to jot down thoughts which properly belonged to much later stages in the argument than the topics supposedly to be covered in the initial volume. As Jenny wrote to ‘Mr Engels’ in April 1858, Karl’s ‘bile and liver are again in a state of rebellion … The worsening of his condition’, she went on, ‘is largely attributable to mental unrest and agitation which now, of course, after the conclusion of the contract with the publisher, are greater than ever and increasing daily, since he finds it utterly impossible to bring the work to a close.’6 Six weeks later, Karl himself wrote asking whether Engels could write something general about the British forces in India for the Tribune, ‘Since reading over my own manuscript will take me the better part of a week. The damnable part of it is that my manuscript (which in print would amount to a hefty volume) is a real hotchpotch, much of it intended for much later sections. So I shall have to make an index briefly indicating in which notebook and on which page to find the stuff I want you to work on first.’7


In 1844, when Karl had first begun to criticize political economists, there had been no internal critique or detailed engagement with political economy and there was nothing which could be depicted as a contradiction specific to the modern ‘bourgeois economy’. The only reality described was that of private property, whose effect had been to make man dependent upon competition and to turn the worker into a commodity whose creation or destruction depended upon changes in demand. Karl followed Proudhon in maintaining that where private property existed, objects cost more than they were worth, and goods were sold for more than their value. Exchange, as Engels maintained, was the result of ‘mutual swindling’ and its only law was ‘chance’. The overall contrast was between the miseries attributable to private property and the true destination of ‘man’. The ‘man’ delineated here was not the empirical man invoked by political economy, but man as he was essentially: ‘a human natural being’, whose meaning was to be found not in his natural beginnings, but in his historical destination.

Similarly, the ‘forces’ and ‘relations’ of production mentioned in Karl’s writings of 1845 and 1846 were not linked to the internal workings of any specific economic system. Although the terminology may have been new, the ideas themselves were not original. Ideas that linked private property to higher degrees of productivity, or suggested an affinity between forms of production and forms of government, were already to be found in the seventeenth century: for example, in contrasts between European landed property and the nomadic hunting-and-gathering practices of American tribes, or between the property-based regimes of Europe and ‘oriental despotism’.8

Only in The Poverty of Philosophy did Karl begin to focus upon ‘the bourgeois economy’, and even then only in a cursory manner.9 Engaged in a denunciation of Proudhon, Karl drew upon Ricardo’s Principles of Political Economy and Taxation to provide an alternative theory of value.10 Proudhon had objected that Ricardo’s assumption of the equivalence of values and prices in exchange was a mere idealization. The main problem of the bourgeois economy was that products did not sell at their value. To remedy this failing, Proudhon proposed various measures including the abolition of money, which he saw as the main obstacle to the establishment of true and just relations of exchange.

Karl replied with a defence of Ricardo: ‘the determination of value by labour time – the formula M. Proudhon gives us as the regenerating formula of the future’ was ‘merely the scientific expression of the economic relations of present-day society’. He then drew upon his reading of English political economists to argue that Proudhon’s practical proposals were similar to those of John Francis Bray and others, put forward twenty years earlier. These Owenite socialists had believed that problems of deflation and credit restriction could be solved by the introduction of a system of labour notes to replace money.11 Beyond such arguments, there had been no sustained examination of Ricardo’s economic theory. In The Poverty of Philosophy, Karl had simply treated Ricardo’s work as the ‘completion’ of the science of political economy at its moment of triumph, the expression of an epoch, now passed.

Settled in London in 1850–51 in the aftermath of the revolutions, Karl resumed his economic studies and again consulted Ricardo.12 He began to think that Ricardo’s conception of value might be employed both to provide a measure of bourgeois wealth and to explain how the ‘bourgeois economy’ – or what he increasingly called ‘capital’ or the ‘value form’ – drove forward the forces of production. It reinforced the emphasis that he was now placing upon the power and centrality of the development of productive forces. In 1847, he had argued that the ‘productive forces’ had been driven forward by a ‘system of class antagonisms’, especially that between ‘accumulated labour and immediate labour’ (capital and labour).13 Yet in his writings up to and including The Class Struggles in France, productive forces played a relatively modest and indeterminate role in Karl’s thought. In the early 1850s, however, he could not miss their power and dynamism in the world-wide boom and return to prosperity that had killed off the revolution in Europe. He now placed his hopes in the cyclical character of the growth of the productive forces. The volatile development of modern industry associated with steam power and the factory system was accompanied by recurrent bouts of overproduction. This would soon bring about renewed unemployment, the re-emergence of the workers’ movement and the return of revolution.

Karl attempted to employ Ricardo’s concept of value in the elaboration of a theory quite remote from anything which had concerned Ricardo himself. Ricardo’s theory related value to socially necessary labour time, and was intended to be valid only in aggregate; he placed qualifications upon its validity. His notion of value was not intended to be generally applicable. Its purpose was limited: to make possible an account of changing distribution, once complicating factors like the heterogeneity of products had been removed.

Unlike Ricardo himself, Karl saw Ricardo’s value simply as ‘bourgeois wealth in its most abstract form’.14 He wanted to make the value of labour measurable and applicable to the individual enterprise. He wanted it to explain the source of unpaid labour and show why a system ostensibly resting upon equal and fair exchange could consistently yield a surplus to one of the parties to the exchange. If, as he believed, the source of inequality was not to be discovered in the process of exchange, but in the process of production, a focus upon the hours of labour worked in value terms in contrast to the notional number of hours necessary to enable the labourer to subsist and reproduce his kind would provide a way of substantiating the argument.

Around 1857, Karl drew together into one argument a number of propositions from previously unconnected sources. From the French radical economic literature of the 1830s and 1840s, he adopted the idea that what the labourer sold was not his labour, but his ability to labour, his ‘labour power’. This idea was already to be found in Buret and Proudhon. He now attempted to connect this insight with his reading of Ricardo, in which the value of a commodity was determined by socially necessary labour time and the value of labour was that necessary to sustain and reproduce the labourer. He also added in the belief, popular among radicals and socialists, that labour was the sole source of wealth (‘the labour theory of value’), and that therefore profit could only be derived from living labour.

Karl’s approach offered a new way of demonstrating the exploitative character of capital. In purchasing labour power, the labourer’s capacity to work, the capitalist was motivated to increase the value created by labour beyond that necessary to sustain and reproduce the labourer (Ricardo’s subsistence theory of wages); in other words, to extract ‘surplus value’ from the workers. The way this had been done was by lengthening the working day, what Karl called ‘absolute surplus value’. But with the growing use of machines and steam power, the emphasis was moved towards increasing the productivity of the labourer during each hour of work, by using machines to determine the speed at which labourers were compelled to work. This was called ‘relative surplus value’.

According to Karl, the great advantage of the value theory was that it made possible the development of a theory of crisis which was specific to the ‘bourgeois economy’. In place of broad references to private property, polarization and immiseration, it pointed to contradictions specific to modern industry and capital; and it was particularly relevant as a counter to bourgeois public opinion that still accepted the popular Malthusian approach, which attributed problems of poverty and unemployment to overpopulation and the workers’ lack of self-restraint: ‘Since the condition of production based on capital is that the worker produces an ever greater quantity of surplus labour, it follows that an ever greater quantity of necessary labour is set free. The chances of his sinking into pauperism therefore increase. The development of surplus labour implies that of surplus population.’15

With the development of modern industry and increasing investment in labour-saving machinery, the trend was accentuated in two ways. First, the productivity, and hence intensity, of exploitation of labourers was increased. As Karl’s reading of the works of Andrew Ure and Charles Babbage had revealed, increased productivity was not simply a matter of machine technology; it also involved the reorganization of the division of labour and of factory space such that work was no longer divided between workers, but between machines and their minders.16 Secondly, the numbers of labourers from whom surplus value could be extracted was diminishing; or to put it in the terms Karl employed, the ratio of ‘constant capital’ (fixed capital investment) to ‘variable capital’ (wage labour) increased. Since, in Karl’s view, profit could only be derived from living labour, this meant that the rate of profit was falling:

the rate of profit depends on the ratio between the part of capital exchanged for living labour and the part of it existing in the form of raw material and means of production. So, as the portion exchanged for living labour declines, there is a corresponding decline in the rate of profit. In the same degree, therefore, in which capital as capital takes up more space in the production process relative to immediate labour, i.e. the greater the increase in relative surplus value – in the value creating power of capital – the more the rate of profit declines.17

‘In every respect,’ Karl wrote, ‘this is the most important law of modern political economy, and the most essential one for comprehending the most complex relationships’; and it had never before been grasped, let alone ‘consciously formulated’.18 For what it proved, he thought, was that there was a mechanism inherent within capital itself which was productive of crisis.

Faced with this threat, capital would ‘try everything to make up for the smallness of the proportion which surplus value, if expressed as profit, bore to “the pre-posited capital” ’. The result would be that:


These contradictions, he asserted, would lead to:


Capital’s survival might be ensured through a:




The adoption of this value theory was combined with a picture of human development, presented as the changing relationship between matter and form. ‘Matter’ consisted of persons and things. Form consisted of the particular connections made between persons and things, together with accompanying conceptions of the world. The advantage of this terminology over the more frequently employed ‘forces and relations of production’ was that it highlighted the idea that value and the production of commodities constituted a social form. At a certain point in human development, there had been progressively superimposed upon the relations between and within societies the primacy of a particular social form. Assisted by the growth of monetary relations, the simple exchange of useful products had increasingly given way to the exchange of commodities as embodiments of exchange value. Thus the subsequent growth of productive powers had taken place under the auspices of what Karl called ‘the value form’: economic activity defined as the maximization of exchange value.

Subsequent history was therefore the development of a dual process of material production and of valorization. At the beginning, the process of material production and the process of valorization had been relatively distinct. But ‘by the incorporation of labour into capital, capital becomes process of production, but initially material process of production; process of production in general, so that the process of production of capital is not distinct from the material process of production in general. Its determinateness of form is completely extinguished.’20 This meant that capital was ‘this unity of production and valorisation not immediately, but only as a process tied to certain conditions’.21


Why and how did this social form come into being? At the beginning of The Wealth of Nations, Adam Smith stated that the division of labour was ‘the necessary, though very slow and gradual, consequence of a certain propensity in human nature … the propensity to truck, barter, and exchange one thing for another’.22 Similar assumptions were made in manuals of popular political economy, which Karl attacked at the beginning of his introduction to the Grundrisse. In them, economic life was imagined to have begun as it did in Robinson Crusoe, with an ‘individual and isolated hunter and fisherman … They saw this individual not as a historical result, but as the starting point of history; not as something evolving in the course of history, but posited by nature, because for them this individual was the natural individual, according to their idea of human nature.’23 Karl stressed the absurdity of believing that private property and the individual should be considered the appropriate historical starting points in accounts of political economy: ‘It is not until the 18th century, in “bourgeois society” ’ that the various forms of the social nexus confront the individual as merely a means towards his private ends, as external necessity … Production by an isolated individual outside society’, he continued, ‘is just as preposterous as the development of language without individuals who live together and speak to one another.’24

In order to establish that capital or commercial society was not simply an expression of human nature, it was necessary to show that it was the product of a particular social form. The Grundrisse traced an elaborate history designed to demonstrate that ‘the value form’ was the product of a certain stage of productive development and was destined to be superseded once a higher stage was reached. Underlying Karl’s alternative picture was the supposition of a world of aboriginal sociability, which had been disrupted, but also propelled into a particular trajectory of development, by the incursion of private property and the development of exchange relations. Man became ‘individualised only through the process of history’. Originally, he was ‘species being, a tribal being, a herd animal … The further back we go in history, the more does the individual and accordingly also the producing individual, appear to be dependent and belonging to a larger whole. At first he is still in a quite natural manner part of the family, and of the family expanded into the tribe, later he is part of a community, of one of the different forms of community which arise from the conflict and the merging of tribes.’25

Exchange was the major agent of individualization. It made ‘herd-like existence … superfluous’ and dissolved it. If, as he argued, ‘the earth is the great workshop, the arsenal, which provides both the means and the material of labour’, then:

What requires explanation, is not the unity of living and active human beings, with the natural, inorganic conditions of their exchange of matter with nature, and therefore their appropriation of nature. Nor of course is this the result of an historical process. What we must explain is the separation between these inorganic conditions of human existence and this active being, a separation which is posited in its complete form only in the relationship between wage labour and capital.26

In historical terms, the form most frequently found in the earliest times was common property, as it had prevailed, for instance, among the Indians, Slavs and ancient Celts. But even where land was not common property, the individual was not a proprietor in a modern sense. ‘An isolated individual could no more have property in land than he could speak.’ His relation to the objective conditions of labour was ‘mediated by his being a member of a community’.27

In time, increase in population and the beginnings of trade destroyed these conditions. The communal system decayed and died along with the property relations upon which it was based. But the process was a gradual one. ‘Even where the land has become private property, it is exchange value only in a restricted sense. Exchange value originates in the isolated natural product separated from the earth and individualised by means of industry (or simple appropriation). This is the stage too, at which individual labour makes its first appearance.’28 Exchange did not initially arise within communities, but at their borders. Trading peoples like the Jews and the Lombards were ‘the intermundia of the ancient world’ and could coexist with ancient communities, without disrupting them. But eventually, the impact of trade on communities was ‘to subject production to exchange value and force immediate use value more and more into the background by making subsistence depend more upon the sale of the product than upon its immediate use’.29

The speed at which this happened varied. In Asia, the communal system was most long-lasting, still in existence, in part because of poor communications, in part because it rested upon a self-sustaining unity of manufacture and agriculture at village level. In these conditions, the individual did not become independent in relation to the commune. In Ancient Rome, on the other hand, and other small warring polities, the continuation of the commune was dependent upon ‘the reproduction of all its members as self-sustaining peasants’, whose surplus time belonged to the commune, ‘the labour of war etc.’. In areas accustomed to communal production, where conquest in war meant that the producer was captured along with his land, systems of slavery or serfdom were established. ‘Slavery and serfdom are therefore only further developments of property based on tribalism.’30 These conditions were ‘the result of a restricted historical stage of the development of the productive forces, both of wealth and the mode of producing it … The purpose of the community, of the individual – as well as the condition of production – was the reproduction of these specific conditions of production and of individuals, both singly and in their social groups and relations – as the living carriers of these conditions.’31

Ancient history was ‘the history of cities, but cities based on landed property and agriculture’. ‘Asiatic’ history was a ‘kind of indifferent unity of town and country’; really large cities were merely ‘royal camps’ and were ‘an artificial excrescence on the actual economic structure’. A third form of development emerged in the Middle Ages, Hegel’s ‘Germanic period’. It began with ‘the land as the locus of history’, and its further development then proceeded ‘through the contradiction between town and country’. Modern history was ‘the urbanisation of the countryside, not as in ancient times, the ruralisation of the city’.32

The origins of modern bourgeois society were explained in terms of the breakdown of communal forms in the face of the development of forces of production and emergence of the value form. The attempt was to tell a two-fold story: on the one hand, of the development of man’s essential capacities (industry, the forces of production), and on the other, of the sequence of social relations which punctuated the expansion of capital and the value form.

In his manuscript, Karl noted that in the first section, where exchange value, money and price were considered, ‘commodities always appear as already in existence’, they expressed ‘characteristics of social production’, even if their determinant role was not explicit.33 As a result, in the published version of the work, A Contribution to the Critique of Political Economy, which appeared in 1859, Karl chose to begin with the commodity; and he retained this starting point in the eventual publication of Capital in 1867. The commodity was chosen because it represented both a concrete and useful object, a ‘use value’, and an abstract component of an economic system, based upon private property, an ‘exchange value’.34

From the commodity it was possible to trace the emergence of money. Unlike the commodity, money as an abstract exchange value lacked any connection with the natural form of commodity. If exchange value represented man’s externalized social relations, money embodied this relationship in its most abstract form; it was a pure abstraction of ‘universal social qualities’. Karl was obliged to modify the unqualified condemnation of money which he had issued in 1844. Money in some of its forms – as a measure of value or as a medium of exchange – had coexisted with ancient communities. Hence, it was not money as such but money in its ‘third determination’, as abstract exchange value and its role as an externalized social relationship in civil society, which was incompatible with the existence of primitive pre-capitalist communities. The ‘community of antiquity’ had been shattered by the ‘development of money in its third dimension’.35 Its effect had been to dissolve tribes, clans and ancient peasant communities.

In this form, money enabled capital to emerge. Its emergence was to be traced in the transition between two cycles. The first cycle, in which money functioned solely as a medium of exchange – C–M–C (commodity–money–commodity) – and which did not presuppose the existence of capital, Karl called ‘simple circulation’. But exchange value did appear in the following cycle, M–C–M (money–commodity–money), which Karl considered characteristic of merchant capital. But its presence on the periphery of society and its employment by the Lombards or the Jews did not involve the production of commodities and did not – at least in its early stages – disrupt the functioning of ancient communities.

The morally corrupting effects of money in its third dimension was condemned as vehemently in 1857 as it had been in 1844: ‘The exchangeability of all products, activities, relationships for a third, objective entity, which can in turn be exchanged for everything without distinction – in other words the development of exchange values (and of monetary relationships) is identical with general venality, with corruption. General prostitution appears as a necessary phase … Equating the incommensurate, as Shakespeare appropriately conceived of money.’36 But the role of money was now linked in a more measured way with the larger pattern of economic development. While it was true that ‘the prehistory of the development of modern industrial society’ opened ‘with a general greed for money on the part of individuals and states’, that appetite had also provoked innovation. The search for gold had created new wants and led to the discovery of remote parts of the world. Furthermore, unlike Rome, where money was accumulated by plunder, and the wealth of individuals was fortuitous, money ‘as a developed element’ now presupposed the presence of wage labour. It pointed to the presence of the ‘elementary precondition for bourgeois society’, wage labour and capital as ‘different forms of developed exchange value and of money as its incarnation’.37

This was of particular importance in the countryside, where the spread of monetary relations and the formation of modern capital was signalled by the transformation of the feudal lord into the recipient of money rent. Such a transition could not have happened simply through the movement of exchange values in the process of circulation. It was made possible through ‘the dissolution of the old form of landed property’. Feudal retainers were dismissed, and, as Adam Smith noted, the landowner was instead enabled to exchange his corn and cattle for imported use values. Agriculture was converted into ‘industrial agronomy’, while cotters, serfs, villeins, copyholders and cottagers ‘necessarily’ became ‘day labourers, wage labourers’. Thus ‘wage labour in its totality’ was first created by the action of capital upon landed property.38

In his account, Karl distinguished between ‘the original [or ‘primitive’] accumulation of capital’ and the assemblage of large concentrations of resources by non-economic means from the regular process of circulation. Investment in new forms of manufacture and the commercialization of agriculture were made possible by the availability of concentrations of monetary wealth, acquired through usury, trade, urbanization and the development of government finance, together with enclosure and the appropriation of church property.39 At the same time, in England, by means of wage legislation and other coercive measures, the Tudor state had forced those thrown off the land – beggars and ‘sturdy vagabonds’ – towards wage labour.

Once they were separated from their land, those who had originally combined the possession of a smallholding with spinning or weaving as ancillary activities found themselves increasingly dependent upon the domestic manufacture and sale of these products. Entanglement in a system of monetary relations, dominated by merchants and situated outside the towns, and therefore beyond the control of the guilds, led to increasing indebtedness and the eventual loss of their possession of instruments of labour. Finally, even the illusion that these workers were independent producers selling products evaporated. The final step was to remove the work performed at home into large workshops and eventually factories. What had begun ostensibly as a form of exchange ended as wage labour in a system resting upon ‘the total separation of labour and property’.40

Capital now included not only the exchange of values, but also the production of exchange values, and this entailed the development of a labour process that bound together capital and wage labour. It also produced a cycle which possessed an inner dynamic. For now, at the point of departure:

Production which creates, which posits exchange values … presupposes circulation as a developed moment and appears as a constant process positing circulation and continually returning from circulation back into itself, in order to posit it anew. Hence the movement which posits exchange values now appears in a much more complex form in that it is no longer only the movement of the presupposed exchange values or the movement which formally posits them as prices, but the movement which simultaneously creates, produces, exchange values as its own premiss.41

Such a self-sustaining cycle of production and circulation encroached upon landed property – the intended subject of Karl’s Book III. It also constantly enlarged and extended the sphere of wage labour – the intended subject of Book IV.

Although Karl’s historical examples were drawn overwhelmingly from England, England was only intended as an illustration of the development of a global organic system; one in which each entity followed the other along a predetermined path of development: or, as Karl put it, ‘the anatomy of man is the key to the anatomy of the ape’.42 Each circuit of capital entailed the return to its point of departure; capital thus created the social conditions for its continued reproduction and expansion through the increasing subversion of pre-capitalist forms, whether of peasant or craft production, and progressively installed in their place the continually renewed production of capitalists and wage labourers. Thus the global destiny of capital was ‘to conquer the whole earth for its market’. Through circles of ever greater universality, the purport of the simple commodity at the beginning was linked to the development of the world market at the end. But, like other organisms, capital as a whole was characterized by a life cycle, which meant that its ultimate global conquest would at the same time mark the beginning of its dissolution.


The mixture of elements put together to underpin this first full-scale ‘critique of political economy’ was the product of Karl’s critical encounters with those who had most deeply shaped his philosophical formation: Hegel and Feuerbach. It is clear that when attempting to organize his material, Karl’s first resort was Hegel. At points in the Grundrisse, Karl attempted to apply Hegel’s dialectical organization of concepts.43 But he also reminded himself that it would be necessary ‘to correct the idealist manner of presentation which makes it appear as if it were merely a matter of the definitions of concepts and the dialectic of these concepts’.44 Karl remained true to the original insight which he derived from his reading of Hegel’s Phenomenology in 1844: that the essence of labour was to be understood as the creation of man as ‘the outcome of man’s own labour’.45 But by 1857 this original emphasis upon man as producer had been transformed into a more grounded conception of the historical development of the forces of production.

In attempting to visualize this global pattern of productive development, Karl was also attracted by the circular image which he found in Hegel’s Science of Logic. In a letter written to Engels in January 1858, he stated, ‘What was of great use to me as regards method of treatment was Hegel’s Logic, at which I had taken another look by MERE ACCIDENT, Freiligrath having found and made a present of several volumes of Hegel, originally the property of Bakunin.’46 In his Science of Logic, Hegel had conceived the development of thought as a circular process, or rather as a spiral of concepts of increasing universality. In the Grundrisse, Karl similarly presented the growth of the value form as a series of cycles or of one great spiral embracing more and more universal forms of human interaction. Thus, in the depiction of the development from simple circulation to capital, Karl noted that ‘Exchange value posited as the unity of commodity and money is capital, and this positing itself appears as the circulation of capital. (But this is a spiral line, an expanding curve, not a simple circle).’47 In this way, the circular trajectory of the commodity proceeded from the simplest of beginnings through to its apogee in the world market.

Even so, the dialectic present in the Grundrisse was not that of Hegel. In both Hegel and the Grundrisse, a relationship is presented between form and matter or content (the Grundrisse text refers indifferently to StoffInhalt or Materie). This relationship begins as one of seeming externality and indifference, but conceals and eventually reveals itself as one of reciprocal interdependence. In Hegel’s thought, this contradiction, embodied in the exteriority of form and matter, would be surmounted as soon as the internal relations were revealed, and it became clear that the matter contained the form enclosed within it. In the Grundrisse, the relationship between use value and exchange value was similarly presented as the immanence of the one within the other. But while Hegel saw this relationship of contradiction and exteriority as ending in unity and synthesis, in the Grundrisse form and matter remained separate and irreducible to each other. The one was subordinate to the other, and their relationship remained that of hierarchy, in which the dominant moment was played by production.

In other words, the value form – economic relations – was unilaterally determined by the movement of productive forces embodied in the labour process. In the introduction to the Grundrisse, Karl stated this objection to Hegel: ‘nothing is simpler for a Hegelian than to posit production and consumption as identical’. Production, distribution, exchange and consumption were not identical; they were all ‘elements of a totality, differences within a unity’. But production was ‘the dominant moment, both with regard to itself in the contradictory determination of production and with regard to the other moments’.48 Distinguishing his own approach from that of Hegel later in the manuscript, Karl wrote, ‘Considered notionally, the dissolution of a definite form of consciousness would be sufficient to destroy an entire epoch. In reality, this barrier to consciousness corresponds to a definite degree of development of the material productive forces and thus of wealth.’49 In the introduction, Karl’s ‘point of departure’ – ‘individuals producing in a society – hence the socially determined production by individuals’ – also defined his opposition to conventional political economy.50 He considered its main defect to be the assumption of the priority of circulation and relations of exchange. This was his main objection to French political economy. He mocked what French radicals believed to be the original promise of the French Revolution: that equal citizenship would lead to equal exchange. There were some like Frédéric Bastiat who maintained that with the advent of free trade this promise was being realized. But Karl’s main target was Proudhon, who, together with other socialists, objected that exchanges remained unequal and that the exchange process had been distorted by the banks. This was why the first twenty-five pages of the GrundrisseChapter One, was taken up with a critique of proposals for banking reform put forward by the Proudhonist Alfred Darimon.51 Karl’s acceptance of the Ricardian claim that products did exchange at their value obliged him not only to elaborate his conception of the primacy of production over exchange and circulation, but also to explain why the surface appearance was deceptive.

This association of capital with equality and freedom was understandable. Bourgeois society was not hampered by the explicit relations of hierarchy and subordination found in feudalism or slavery. The performance of labour was preceded by a freely made contract between the worker and the capitalist, who encountered each other in conditions of apparent equality. Furthermore, the commodities then produced were sold in a market governed by free competition. In bourgeois society, the worker also confronted the capitalist as consumer; ‘he becomes one of the innumerable centres of circulation, in which his specific character as worker is extinguished’.52 The legitimacy of capital was built upon these facts. The system of exchange, of the market, represented the public face of bourgeois society; society appeared to consist of exchangers. As Karl was later to put it in Capital, it was ‘a very Eden of the innate rights of man. There alone rule Freedom, Equality, Property and Bentham.’53

But if exchanges were equal, how had capital accumulation taken place? Equal exchange implied the principle of identity, or non-contradiction. Without contradiction, there could be no movement. The simple movement of exchange values could never realize capital; ‘circulation … does not contain in itself the principle of self-renewal’.54 Karl’s solution was that circulation, seen as ‘that which is immediately present on the surface of bourgeois society’, was ‘pure semblance’. It was ‘the image of a process occurring behind it’.55 This process began when trade seized control of production and the merchant became a producer or the producer a merchant. It had been documented by Karl in his account of the transformation of the English rural economy, of expropriation from the land, of the emergence of the putting-out system and, as a result, the growth of a relationship between wage labour and capital, based upon ‘the propertylessness of the labourers’.56 The picture of exchange painted by Proudhon and other socialists was an anachronism. It meant applying the property and legal relationships corresponding to simple exchange to those of a higher stage of exchange value.57 The socialists had been deceived by its surface appearance. It was true that ‘an exchange of equivalents occurs … [But it] is merely the surface layer of [a system] of production which rests on the appropriation of alien labour without exchange, but under the guise of exchange. This system of exchange has capital as its basis. If we consider it in isolation from capital, as it presents itself on the surface, as an independent system, we are subject to a mere illusion, though a necessary one.58

Reference to the illusory characteristics of exchange enabled Karl to restate an argument he had first sketched out in 1844. This was that the effect of the ascendancy of capital as a social form was akin to the emergence of religion. This approach was originally inspired by his encounter with Feuerbach in 1843–4. During his years in Brussels in 1846–7, Karl had criticized Feuerbach for the passivity of his image of man, but he had not distanced himself from Feuerbach’s idea of abstraction or alienation. In Feuerbach’s critique of religion and philosophy, human emotions or thoughts (concepts) were projected onto God, or, by extension, onto equally fictive impersonal beings, now endowed with independent movement and agency. Under the sway of capital and the value form, an analogous evacuation of human agency had taken place in the everyday conduct of economic life. Just as in religion, it no longer appeared that man had created God, but that God had created man, so in economic life humans no longer saw themselves as the authors of their social relationships, but as the creatures of impersonal economic forces endowed with independent will and power. In bourgeois society, ‘the absolute mutual dependence of individuals, who are indifferent to one another, constitutes their social connection. This social connexion is expressed in exchange value … The activity, whatever its individual form of manifestation, and the product of the activity, whatever its particular nature, is exchange value, i.e. something general in which all individuality, all particularity, is negated and extinguished.’

These conditions superimposed upon social relations an ‘objective illusion’ and in particular a process of inversion or abstraction analogous to that discussed by Feuerbach in his analyses of Christianity or Hegel: ‘The general exchange of activities and products, which has become the condition of life for every single individual, their mutual connection, appears to the individuals themselves alien, independent, as a thing. In exchange value, the social relationship of persons is transformed into a social attitude of things; personal capacity into a capacity of things.’59 Capital as ‘objectified labour’ continued to be presented as a baleful Frankenstein’s monster: ‘The product of labour, objectified labour is endowed with a soul of its own by living labour itself and establishes itself as an alien power confronting its creator.’60

As the visible surface of society, behind which the process of production pressed forward, exchange or circulation represented the boundary or limit of capital as a social form. Value could only be ‘realized’ in an act of exchange, and money was the medium of this exchange. But there was no guarantee that such exchanges would take place. Overproduction or the disproportionality between sectors could easily disrupt the process. Capital was the ‘dynamic unity of production and circulation’.61 Circulation was ‘an essential process of capital’ since ‘the process of production cannot be recommenced until the commodity has been transformed into money’. Thus, ‘The uninterrupted continuity of that process, the unhindered and fluent transition of value from one form into the other, or from one phase of the process into the other, appears as a basic condition for production based on capital to a much greater degree than for all earlier forms of production.’62 The continuity of this process depended on chance, even if this unpredictability was to an increasing extent reduced by the operation of credit. With the extension of credit, however, came over-trading, speculation and overproduction. The forces that drove capital on were also those that drove towards its dissolution: ‘The universality for which capital ceaselessly strives, comes up against barriers in capital’s own nature, barriers which at a certain stage of its development will allow it to be recognised as being itself the greatest barrier in the way of this tendency, and will therefore drive towards its transcendence through itself.’63 What was becoming increasingly clear was that ‘there is a limit, not inherent to production generally, but to production founded on capital’.64

The signs of approaching crisis were everywhere to be seen in their effects upon the worker: ‘the activity of the worker, restricted to a mere abstraction of activity, is determined and governed in every respect by the movement of machinery, not vice versa’. Yet far from diminishing the intensity of labour, the pressure imposed by the falling rate of profit upon employed workers meant that ‘the most developed machinery now compels the labourer to work for a longer time than the savage does, or than the labourer himself did when he was using the simplest, crudest implements’.65 It was approaching the point where ‘the relation of capital becomes a barrier to the productive forces of labour’. Once this point was reached, wage labour ‘enters the same relation to the development of social wealth and the productive forces as the guild system, serfdom and slavery did, and is, as a fetter, necessarily cast off’.66

In the Grundrisse, there was little or nothing to indicate what the promised ‘books’ on the state, international trade and the world market might contain. Mention of wage labour was also sparse and unspecific. For labour, ‘The recognition of the products as its own, and its awareness that its separation from the conditions of its realisation is improper and imposed by force, is an enormous consciousness, and is itself the product of the mode of production based on capital, and just as much the KNELL TO ITS DOOM as the consciousness of the slave that he cannot be the property of another, his consciousness of being a person, reduced slavery to an artificial lingering existence, and made it impossible for it to continue to provide the basis of production.’67 The imminence of the end of wage labour was indicated by the direction taken by the productive forces. As Robert Owen had suggested, ‘since the general introduction of inanimate mechanism into British manufactories, man, with few exceptions, has been treated as a secondary and inferior machine’. The worker now stood ‘beside the production process rather than being its main agent’.68

This new foundation of production created by large-scale industry suggested a possible escape from the current ‘miserable foundation’ provided by ‘the theft of alien labour time, which is the basis of present wealth. Once labour in its immediate form ceased to be ‘the great source of wealth’, this would mean that the ‘surplus labour of the masses’ would cease to be ‘the condition for the development of general wealth, just as the non-labour of a few’ would cease to be ‘the condition for the development of the general powers of the human mind’. Then production based upon exchange value would collapse, and the immediate material production process itself would be ‘stripped of its form of indigence and antagonism’.69 In these conditions, man would achieve ‘comprehension of his own history as a process and knowledge of nature (likewise available as practical control of nature) as his real body’.70 Work would become pleasurable once it was no longer ‘externally imposed, forced labour’.71

It was in this context that Karl reflected upon his own neo-classical humanism and his love of Shakespeare: ‘as regards art’, how could it be that there were ‘certain periods of its florescence’ which by no means ‘corresponded to the general development of society, or therefore to the material base, the skeleton as it were, of its organisation?’ There was an obvious answer. Greek art and epic poetry presupposed Greek mythology; and all mythology ‘subdues, dominates and fashions the forces of nature in the imagination and through the imagination; it therefore disappears when real domination over these forces is established’. But the real difficulty, he admitted, was that ‘they still give us aesthetic pleasure and are in certain respects regarded as a standard and unattainable model’. Here he was forced back himself into an old-fashioned mythology about ‘the childhood of man’. Not all mythologies were attractive. There were ‘unbred children and precocious children’. But the Greeks were ‘normal children’, and therefore ‘the charm their art has for us’ did not conflict with ‘the immature stage of society in which it originated’. And does not the child’s ‘naivety’ and ‘veracity’ give pleasure to the adult?72

In another passage, however, he adopted a more determinedly modernist stance. He contrasted ‘the old view … which seems very exalted’, in which ‘man always appears in however narrowly national, religious or political a determination as the end of production’ with the ‘modern world, in which production is the end of man, and wealth the end of production’. In fact, however, ‘If the narrow bourgeois form is peeled off, what is wealth if not the universality of the individual’s needs, capacities, enjoyments, productive forces, etc., produced in universal exchange; what is it if not the full development of human control over the forces of nature – over the forces of so-called Nature, as well as those of his own nature?’73 The relationship between man and nature would change. The humanization of nature dreamt of in 1844 would become a fact. For the first time, nature would become ‘purely an object for men, nothing more than a matter of utility’. It would cease to ‘be acknowledged as a power for itself’.74


In an essay entitled ‘Bastiat and Carey’, intended for inclusion in the Grundrisse, Karl wrote condescendingly about developments in political economy in the years following Ricardo or Sismondi.75 Since the 1820s, economic literature had ended up either in ‘eclectic, syncretic compendia’, like the work of John Stuart Mill, or in the ‘detailed elaboration of particular branches’, like Thomas Tooke’s History of Prices.76 It was ‘altogether derivative’. By contrast, the distinctiveness of Karl’s position derived from the priority he ascribed to productive activity. This enabled him to construct a form of socialism that assigned an active political role to producers. They were no longer the victims of history or ‘the suffering class’, oppressed by force and fraud. Nor were they – as they were to become in the post-Darwin era – natural beings striving to rise above their simian origins and baser instincts or instinctively herding together in nature’s competitive struggle.

But this focus on production had not proved an adequate guide either to a full understanding of the economy, or to the construction of a tenable politics based upon it. Other forms of radicalism and socialism were proving more flexible. In England, more attention was paid to inequalities of distribution, and the political domination of the landed class. The aim of Mill’s Land Tenure Reform Association and of the Land and Labour League, both founded in 1869, was to contest this dominance.77 In France, the Saint-Simonians had contested more broadly the right of inheritance. Among the socialists, the followers of Owen and Proudhon emphasized the defects of circulation, a system based upon ‘buying cheap and selling dear’. They suggested a variety of measures ranging from cooperative production to a currency of labour-notes or, in more moderate and reform-minded versions, the full legalization of trade unions, an expansion of credit or reform of the banks.

The politics of producers, on the other hand, placed a particular emphasis upon the overthrow or capture of the state. Inspired originally by Jacobin politics, it aimed to re-create society and the state in its own image, and was prepared to employ violent or authoritarian means to accomplish this end. Such an approach in Karl’s case was perceptive in its insight into the nature of work and what went on inside the factory. This was an emphasis shared with the American protectionists and factory reformers, who highlighted the dangerous domestic consequences of free trade, and campaigned to restrict child-labour and limit working hours. But the emphasis upon production ran the risk of replacing one half-truth – exclusive focus upon exchange – by another. Workers were not just producers, but also consumers and, even more importantly, workers also aspired to become citizens. This had been the inspiration offered by the French and American Revolutions. This was why, beyond the confines of socialism, exclusion from active participation in the polity – Chartism, republicanism, radicalism – was in practice a more potent activating creed than exploitation, a far more variable experience.

When Karl first formulated his approach in the mid-1840s, its great strength had been its focus upon the power and dynamism of the bourgeois economy. His intervention occurred at a moment when radical and socialist movements were entering a moment of defeat or uncertainty. Chartism was in decline, while the first socialist systems – Owenism, Fourierism and Icarianism – were in crisis. The failure of the more grandiose utopian visions of cooperative community in both Europe and the United States had become clear for all to see. But that was not the end of the story.

At the close of the 1850s, a new politics had begun to emerge, in which the radical and socialist ideas of the 1840s reappeared in a more modest and practical form. Ideals of cooperation had been reformulated; trade unionism was expanding and was seeking a more secure legal basis. Liberals and radicals had begun to collaborate in reform-minded suffrage movements, and there were signs of the renewal of a feminist movement which had first appeared in Britain and France in the 1830s. It is perhaps not surprising that, in comparison with earlier texts, the Grundrisse had so little to say about working-class movements. These were developments which Karl did his best to ignore.

Karl’s condescension towards developments in political economy seems also to have been misplaced, especially when the defects of his own core arguments in the Grundrisse are considered. His own approach relied heavily upon his reading of Ricardo’s labour theory of value, firstly because it purported to prove the reality of workers’ exploitation behind the supposed equality of exchanges, and secondly because it claimed to identify a form of crisis peculiar to what he had begun to call ‘the capitalist mode of production’: the falling rate of profit. Karl’s argument contained fundamental flaws, which he was never able to overcome. In the Grundrisse, his treatment of the value problem was obscure. In the first volume of Capital, he evaded the most difficult issues surrounding the question by confining his discussion to production, while his reluctant efforts to confront the problem in the unpublished second and third volumes were unsuccessful. Given the extraordinary volume of literature and the intensity of scholarly debate which subsequently came to surround the notion of value, it is worth retracing the origins of the question.

Confusion over the question of value did not begin with Karl, but went back to the original debate surrounding the reception of Ricardo’s argument in the first edition of his Principles of Political Economy and Taxation of 1817. According to Ricardo, the exchange value of a commodity was its power of exchange against other commodities. It was measured by the number of commodities for which it could be exchanged under equilibrium conditions. Exchange value was a relative magnitude. Underlying the exchange value of a commodity was its value. Value was the absolute magnitude which underlay the relativities of equilibrium price. Ricardo suggested that the magnitude of value was determined by socially necessary labour time. According to his argument, when rates of profit and wages were uniform, commodities sold at their natural prices, their exchange value depending upon the quantities of labour expended upon them. But this no longer held when commodities were produced with unequal amounts of fixed and circulating capital. Where this happened, the relative prices of such commodities would vary ‘in proportion to the quantity and durability of the fixed capital employed’.

In the period immediately following the publication of The Principles, Ricardo was flattered by the attention his book received. He seems to have been fairly relaxed about the status ascribed to his arguments and inattentive to the particular ways in which his hypotheses might be understood. This was particularly true of his reaction to a eulogistic review of The Principles, written in 1818 by one of his admirers, J. R. McCulloch. In McCulloch’s review, the qualifications Ricardo made to his own argument were ignored.

Ricardo’s first inclination was nevertheless to praise McCulloch’s essay. But when his friend Hutches Trower pointed out the omission of the qualifications, Ricardo acknowledged ‘the inaccuracy of the reviewer’.78 The reason why this matters was because McCulloch stuck to his initial version of the theory in the ‘Memoir’ that formed the preface to the French edition of The Principles, which appeared in 1835. It was in this edition that Karl first read Ricardo. In the accompanying ‘Memoir’, McCulloch asserted that ‘The fundamental principle maintained by Mr. Ricardo in this great work, is that the exchangeable value, or relative worth of commodities, as compared with each other, depends exclusively on the quantities of labour necessarily required to produce them.79 McCulloch dismissed Adam Smith’s opinion that such principles only applied ‘in the earliest and rudest stages of society’, and argued that Ricardo had shown that the same principle held in the present.

When in 1850–51, Karl returned to his economic studies, he read the 1821 third edition of the Principles in English. But even at this stage he showed no interest in Ricardo’s qualifications. Only in the Grundrisse did he finally cite the relevant passage from the Principles: ‘The principle that the relative amounts of labour contained by commodities determine their value, becomes significantly modified by the application of machinery and other fixed and durable capital.’80 Yet he did not treat this as a significant challenge to his approach. He observed that ‘this has nothing to do with value determination; it comes under the heading of price’.81 Later, in Capital, Karl’s answer to the qualifications made by Ricardo was that the question did not concern the deviation of value from socially necessary labour time, but that of equilibrium price from value. But he had already defined value as socially necessary labour time. In other words, he had conceded Ricardo’s point without appearing to do so.

A large part of the problem arose from Karl’s conflation of two propositions which derived from quite separate forms of discourse. The first was Ricardo’s tentative proposition that socially necessary labour time determined equilibrium price – a proposition which Ricardo was quite happy to qualify substantially, when he took into account variations in periods of production. The second proposition – similar in its form, but in fact completely unrelated – was the politically loaded assertion that only labour created value, and for this reason was resistant to qualification.82

The original proposition had arisen from a question about how markets operated. If commodities didn’t exchange with each other randomly, but in definite proportions and in time and space, what then explained equilibrium prices? In 1867, in Capital, Karl arbitrarily ruled out the relative desirability or utility of commodities, what he called their ‘use values’. Use values constituted ‘the substance of all wealth, whatever may be the social form of that wealth’.83 But in the particular social form constituted by ‘the capitalist mode of production’, use values were also ‘the material depositories of exchange value’. Use values were of different qualities, but as exchange values they were ‘merely different quantities’. If, therefore, use value was left aside, it was easy for Karl to single out his pre-chosen solution, that the ‘one common property left’ was that of ‘being products of labour’. Labour must therefore be the value-creating substance. The ‘magnitude of this value’ was measured by ‘the quantity of the value-creating substance, the labour, contained in the article’.84

The problem about this way of proceeding was that the original question posed – the relativities of equilibrium price in market exchange – had disappeared. For in market exchange, even if it were assumed that all commodities were the products of labour, it by no means followed that socially necessary labour time was the only determinant of equilibrium price.

There was also a further complication. Ricardo’s theory derived the magnitude of value from socially necessary labour time and assumed that this magnitude was determined by currently necessary labour time. In a strict sense, what this meant was that past socially necessary labour time no longer had any bearing upon current value. This position contradicted the idea found in radical discourse which claimed that labour and only labour created value, irrespective of time and place. In an attempt to overcome Ricardo’s qualification – that, given divergences in periods of production, equilibrium prices were not always determined by socially necessary labour time – Karl shifted between one position and the other without consistent awareness of their incompatibility.

Karl’s fixation on production in the Grundrisse led him to identify exchange with just one of the properties of a commodity, that it was a product of labour, that it was ‘labour objectified’. In Karl’s approach, as in Adam Smith’s original discussion, the value of a commodity was known before it was submitted to exchange. But Smith considered this situation only to have existed in primitive society. Karl tried to transform it into an objective process valid in the present. This, however, ignored the fact that, in market exchange, commodities only possessed a relative value, a value relative to other commodities. In Karl’s approach, value first appeared as an individual quantity, as the objectification of a determinant quantity of labour. This was not deduced from the law of value, but preceded its expression as a relative expression in the law of value. Karl’s approach made most sense not in a commercial society, but in a feudal one. The exploitation of the serf was manifest. What he produced went not to him, but to his feudal superior. In commercial society, there was no comparable process since the product was not divided between capitalist and worker. It wholly belonged to the capitalist but then had to be marketed.85

Finally, and most extraordinary considering the article of faith it subsequently became for Marx’s followers, what of the lynchpin of ‘the capitalist mode of production’, what of ‘surplus value’ itself? According to the Grundrisse:

If … only half a working day is needed to keep a worker alive for a whole working day, a surplus value of the product is the automatic result, because the capitalist has paid in the price [of labour] only half a working day and he has received a whole working day objectified in the product; therefore has exchanged nothing for the second half of the working day. It is not exchange, but a process in which he obtains without exchange objectified labour time, i.e. value, which alone can make him into a capitalist. Half the working day costs capital nothing; it therefore receives a value for which it has given no equivalent. And the augmentation of values can occur only because a value over and above the equivalent is obtained, hence created.86

If? … If? The idea of surplus value, however plausible it may have seemed at the time, was no more than a piece of unsupported speculation, a single paragraph in an 800-page manuscript.


At the beginning of 1858, Lassalle offered to try and find a publisher in Berlin for Karl’s Grundrisse (Outlines of the Critique of Political Economy). But Karl’s attempt to publish his findings in A Contribution to the Critique of Political Economy: Part One in 1859 was little short of a disaster. His liver complaint, as Jenny told Engels, was made worse by ‘mental stress and excitement’, but especially because ‘he finds it utterly impossible to bring the work to a close’.88 In the summer of 1858, his finances once again reached a point of apparently terminal crisis, only avoided by bail-outs from Engels. The Marx family’s penury continued into the following year. In January 1859, ‘the ill-fated manuscript’ was ready, but couldn’t be sent off, ‘as I haven’t even a farthing for postage or insurance’.89 Jenny herself became ‘a nervous wreck’, haunted ‘by the spectre of final and unavoidable catastrophe’. Their doctor could not rule out ‘brain fever’ unless she was sent to a seaside resort ‘for a longish stay’.90

As if this were not enough, Karl’s political authority in London was also under increasing threat. Edgar Bauer arrived in London in 1858, appointed as editor of Die Neue Zeit, and then worked on Gottfried Kinkel’s journal, Hermann. Bauer was introduced into the Workers’ Educational Association by Wilhelm Liebknecht. ‘Watch him!’ Karl warned. The ‘philistine’ Freiligrath wrote a moving poem on the death of Mrs Kinkel: ‘nice of Freiligrath to give the signal for a Kinkel revival in Germany … The canaille believed that we were both of us done for – the more so just now when Mr Clown “Edgar Bauer” had “supplanted” us “in the eyes of working men”, as Gottfried Kinkel is telling all and sundry in the City.’91

When Karl first began to consider in what form to publish his Critique of Political Economy, he originally sought Lassalle’s help in finding a publisher in Berlin. He hoped to ‘bring out the whole work in instalments without any rigid deadlines’, and so find a publisher more easily.92 Three weeks later, he wrote to Lassalle putting forward a plan, identical to that later adopted in the three published volumes of Capital: ‘Whatever the circumstances, the first instalment would have to constitute a relative whole and, since it lays the foundations for all that follows, it could hardly be done in under 5 or 6 sheets. But that is something I shall find out when I come to finish it off. It contains 1. Value, 2. Money, 3. Capital in General (the process of production of capital; process of its circulation; the unity of the two, or capital and profit; interest). This constitutes a pamphlet in its own right.’93 In the course of March 1858, Lassalle managed to persuade the Berlin publisher Franz Duncker to go along with Karl’s idea of publishing the work in instalments.94 The intention was to have the first ready around the end of May.

On 2 April, Karl wrote to Engels outlining the plan of the first instalment, Capital in General, which would be composed of three parts: (i) value; (ii) money; (iii) capital. When, after outlining in reasonable detail his plans for ‘value’ and ‘money’, he reached the third section on ‘capital’, he informed Engels that this was ‘really the most important part of the first instalment’, and one on which he particularly needed Engels’ opinion, ‘but today I can’t go on writing. My bilious trouble makes it difficult for me to ply my pen.’ He promised it ‘for next time’.95

Engels’ reply on 9 April betrayed signs of alarm. He praised the division into six books and ‘the development of the monetary business’; but ‘the study of your ABSTRACT of the first half instalment has greatly exercised me; IT IS A VERY ABSTRACT ABSTRACT INDEED’. He hoped he would ‘get a better idea of the DRIFT when I’ve had the last part of capital in general’ and trusted that ‘the abstract dialectical tone of your synopsis will, of course, disappear in the development’.96

But, throughout April, nothing more came, and on 29 April Karl wrote to explain his silence. Illness meant that he could not write, even in a physical sense – he dictated the Tribune articles to Jenny. Both Dr Allen and Karl’s family agreed that he should be sent to Manchester, where he should ‘drop all INTELLECTUAL LABOUR FOR SOME TIME and take up riding as his main therapy. He hoped Lassalle would explain the delay to Duncker.97

Karl returned to London, claiming to be ‘fully restored’. But, whether because of his continuing health problems, his wife’s shattered nerves, or his own financial desperation, he produced no new work over the summer. He resumed writing in August and at the end of November informed Engels that Jenny was now ‘copying the manuscript’, which was ‘hardly likely to go off before the end of this month’. He explained that the first section was longer because the two initial chapters now started with ‘The Commodity’, which had not existed in the rough draft, while the second, ‘Money, or Simple Circulation’, he had treated at greater length. But he failed to mention the crucial third chapter on ‘Capital’.98

Whether he was deceiving others or – more likely – deceiving himself about the reality or likelihood of the third chapter is unclear. Just over a fortnight before, when he had written to Lassalle explaining the delay in sending off the manuscript and asking him to put Duncker in the picture, he had added, ‘There is a further circumstance which, however, you should not put to him until the arrival of the manuscript. The first section, “Capital in General”, is likely to run to two instalments since I have discovered while elaborating it that here, at the very juncture where the most abstract aspect of political economy is to be discussed, undue brevity would render the thing indigestible to the public.’ In other words, the third chapter, on ‘Capital’, would not be there. But, confusingly, he went on, ‘this second instalment must come out at the same time as the first. This is demanded by their intrinsic coherence, and the whole effect depends upon it.’99

Finally, in a letter to Engels around mid-January 1859, Karl divulged the contents of the manuscript he was sending to Duncker: ‘The manuscript amounts to ABOUT 12 sheets of print (3 instalments) and – don’t be bowled over by this – although entitled Capital in General, these instalments contain nothing as yet on the subject of capital, but only the two chapters: 1. The Commodity2. Money or Simple Circulation.’100

The book was entitled Zur Kritik der politischen Oekonomie (A Contribution to the Critique of Political Economy) and was published in Berlin in 1,000 copies in June 1859. In the preface, Karl announced the plan for his study of ‘the system of bourgeois economy’. It was arranged under six headings and divided into two parts: the first concerned ‘the economic conditions of existence of the three great classes into which modern bourgeois society is divided’ – ‘capital, landed property, wage-labour’; the second examined their interconnections in relation to ‘the State, foreign trade, world market’. The first part of the first book, ‘Capital’, would be divided into three chapters: (i) the commodity; (ii) money or simple circulation; (iii) capital in general. But this study would only deal with the first two of these topics. The book was relatively short – around 130 pages – and could be read as the first draft of what became the opening chapters of Capital in 1867. This tripartite division of the book was followed in all subsequent plans and announcements of Capital and provided the basis of Engels’ posthumous publication of Volumes II and III of Capital in 1885 and 1894.

The first chapter of the 1859 Critique analysed in general terms the commodity, use value, exchange value and labour time in a way which had already been broached in the Grundrisse, but with none of the detail found there. It was an exposition to be repeated in more systematic form in Capital, Volume I. The chapter was followed by ‘Historical Notes on the Analysis of Commodities’, starting with seventeenth-century writers like Petty and Boisguilbert and ending with Smith and Ricardo. The second chapter, ‘Money or Simple Circulation’, examined the exchange value of commodities in the form of a general equivalent and, as a measure of this equivalence, price. Price represented the relation between commodities as expressed within the value form, while their ‘real form’ in circulation was comprised by their use value. It was followed by more detailed discussion of the various functions of money – as a measure of value and as a medium of exchange – together with sections on means of payment, hoarding, coins, precious metals and other items. There was no discussion of the subsequent development of exchange relations. As in the first chapter, a concluding section provided a historical account of money forms pertaining to the sequence of simple circulation described in the Grundrisse, C–M–C (commodity–money–commodity). That is where the book ended. There was no concluding summary or argument.

Without the third part on ‘Capital in General’, which Engels thought essential for a better idea of ‘the drift’, this was a very strange book. Even stranger, however, was how impervious Karl remained to the defects of the book, and his continuing fantasy about its importance. Whether because of illness, penury or the parlous state of family relations, Karl’s judgements at this time were increasingly disordered, perhaps even touched by delusion, with mood changes ranging from unreal euphoria through uncontrolled paranoia to fantasies of revenge. In his letter to Engels, he maintained that the omission of the chapter on ‘capital’ was a ‘good’ thing, firstly, because, ‘if the thing is a success, the third chapter on capital can follow very soon’ and, secondly, because the book’s restrictive coverage would prevent ‘the curs’ confining ‘their criticism solely to tendentious vituperation … and since the whole thing has an EXCEEDINGLY serious and scientific air’, he maintained, ‘the canaille will later on be compelled to take my views on capital RATHER SERIOUSLY.’101

A fortnight later, he struck a similar note in a letter to Weydemeyer in Milwaukee. Excusing a year’s delay in replying to Weydemeyer’s original letter, Karl referred to his liver trouble and the fact that he had been ‘overwhelmed with work’. But, ‘now for essentials’, he went on. He described the contents of his Critique and continued, ‘you will understand the political motives that led me to hold back the third chapter on “Capital” until I have again become established’.102

Karl’s hope was ‘to win a scientific victory for our party’. As in the Grundrisse, one of his main ambitions in the published text appears to have been the scoring of yet another knock-out blow against his major antagonist of the 1840s, Proudhon. ‘Proudhonist socialism now FASHIONABLE in France’, he informed Weydemeyer, ‘is demolished to its very foundations.’103 Similarly, later in 1859, when attempting to persuade a somewhat reluctant Engels to review the book, he asked him to emphasize that ‘it extirpates Proudhonism root and branch’.104

By this stage Karl was becoming aware that the book had not secured the recognition he had expected. Wilhelm Liebknecht, a day-to-day ally in London exile politics and a family friend, who lived just round the corner, stated that ‘never has a book disappointed him so much’, while Biscamp, the editor of Das Volk, could not see what the point of the book was.105 Karl’s own reaction was to revert once again to a conspiratorial view of the book’s problems. It began with the delay in the manuscript reaching Duncker, which Karl suspected to be the work of the notorious Prussian police officer Wilhelm Stieber. But it was much intensified when Duncker decided to publish Lassalle’s work before his Critique, and was slow in advertising Karl’s book. Karl was furious and, despite the fact that it was Lassalle who had secured the publication of the Critique in the first place, was quick to blame him for the hold-up: ‘I shan’t forget the trick the little Jew has played.’106

Engels, always at his worst when he suspected a rival for Karl’s attention, ascribed the darkest motives to Lassalle, who had also had the temerity to take a different line on the question of the war in Italy. Writing on the occasion of the Peace of Villafranca, which had brought to an end the Italian War of 1859, Engels wrote that all except the Russians and the revolutionaries had been discredited, but that ‘His Excellency Ephraim Artful [Lassalle] is the most discredited of all.’ Karl agreed. A few days later, he wrote urging Engels to review his book since this would ‘set the tone for the correspondents down here’, prevent the possibility of a review by Biscamp and ‘likewise help frustrate Lassalle’s plan to KILL me’.107

Engels loyally accepted Karl’s request, but clearly did not feel comfortable in taking it on. On 3 August, he wrote, ‘through lack of practice, I have grown so unused to this sort of writing that your wife will be greatly tickled by my awkwardness. If you can knock it into shape, do so.’ He also wished that there could be ‘a few convincing examples of the materialistic viewpoint’.108 Every effort was to be made to promote the Critique. Engels urged him to make sure about translation rights and Karl had asked Dana whether he could find ‘a Yankee’ for an English edition.109 Karl continued to convince himself of the book’s future through to the autumn. He claimed that after the book’s preface had been published in Das Volk, it had been variously commented on by German papers in America from New England to California; and he repeated this point to Lassalle as late as November, claiming that its first instalment had been discussed at length from New York to New Orleans. But with reference to Germany, as he now admitted to Lassalle, ‘I expected to be attacked or criticised, but not to be utterly ignored, which, moreover, is bound to have a serious effect on sales.’110

Today the only thing remembered about the Critique is the preface, five pages introducing a strange book lacking a last chapter and without a conclusion. The preface was sent off to Duncker on 23 February 1859. Karl reprinted a version of it in Das Volk and Engels referred to it in his unfinished review, which appeared later in the same journal. But through the rest of the century the preface does not seem to have occasioned much comment.111 By contrast, however, in the twentieth century, while the book was ignored, the preface, or more precisely one long paragraph within it, acquired canonical status. Here is the beginning of the key passage:

In the social production of their existence, men inevitably enter into definite relations, which are independent of their will, namely relations of production appropriate to a given stage in the development of their material forces of production. The totality of these relations of production constitutes the economic structure of society, the real foundation, on which arises a legal and political superstructure and to which correspond definite forms of social consciousness. The mode of production of material life conditions the general process of social, political and intellectual life. It is not the consciousness of men that determines their existence, but their social existence that determines their consciousness. At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production or – this merely expresses the same thing in legal terms – with the property relations within the framework of which they have operated hitherto. From forms of development of the productive forces these relations turn into their fetters. Then begins an era of social revolution.112

This passage came to be considered a magisterial statement of the principles of what was later called ‘historical materialism’. Similarly, among commentators there was an increasing tendency to separate themes like alienation or ‘the fetishism of commodities’, considered as relics of Karl’s youthful philosophy, from the formulations of 1859, taken from the announcement of his ‘mature’, ‘scientific’ theory of history. But such readings took no account of the circumstances in which the text was composed or of the particular combination of presences and absences which shaped the language of this famous passage. When placed in relation to the Grundrisse, this point will become clearer.

In the Grundrisse, Karl had traced the emergence and development of the ‘value form’. At the beginning of history, common property and communal forms characterized the social relations between human beings. But trade and population increase led to the spread of exchange relations and a process of individualization. Communal systems broke down and the relations both between communities and between individuals within communities were increasingly subjected to the domination of exchange value.

This history was conceived in terms of a complex dialectical interplay between matter and form, between processes of material production and ‘valorization’. Capital, or the value form, was a social form which came into existence as a result of human productive development. This domination of the value form first spread across systems of circulation and then began to invade the labour process and systems of production. As it spread, it engulfed human beings and led to the loss of a human sense of mastery. Older systems of slavery or feudalism, where social relations were conceived in terms of hierarchy and subordination, gave way to a system in which products were sold in a free market and wages were the result of a contract freely entered into by masters and men. What emerged was a society based upon the universality of private exchange. Dependence was no longer between person and person, but upon a system perceived as alien and in no sense the product of the efforts of associated individuals. If the freedom and equality associated with exchange provided the ‘public face of society’, exchange itself was only a ‘semblance’, the image of a ‘process occurring behind it’. It was a society in which humans conceived themselves to be the creatures of economic forces, and the relations between persons appeared to have been replaced by the relations between things.

The problem of the 1859 preface was that in the absence of the chapter on capital, Karl attempted to introduce the book without mentioning the value form. This meant that the complex dialectical relationship between matter and form was replaced by a crude and mechanical relationship of determination between base and superstructure. The illusions of consciousness in relation to the freedom and equality of exchange or the subjugation of persons to economic forces, which Karl considered comparable to those produced by religion, were reduced to ‘the determination of consciousness by social being’. Human activity and creativity embodied in the term ‘forces of production’ were conflated with their coexistent social relations of production within the term ‘mode of production’. History was composed of a succession of modes of production, made familiar by the work of the German Historical School and, in a larger sense, the whole tradition of natural law starting from the seventeenth century.113 In turn, ‘the mode of production of material life’ was said to condition ‘the general process of social, political and intellectual life’.

In the Grundrisse, the boundary between freedom and necessity set by the division of labour was seen as receding as human invention and productivity advanced. Productive advance made possible by the coming of steam power and machinery meant that the surplus labour of the masses would cease to be the condition of general wealth and the non-labour of the few. In the future, ‘the theft of alien time’, the basis of present wealth, would come to an end, and work would be free of externally imposed, forced labour.

In the preface, Karl stated that ‘bourgeois relations of production’ were ‘the last antagonistic form of the social process of production’. But there was no mention of capital as a mode of production, of the struggle between the classes or of excessive labour involved in the extraction of surplus value. Nor was there any mention of politics or the state. Thus situated, the meaning of an ‘antagonistic form’ remained abstract and vague.

It is possible that the language of the preface owed something to Engels. Karl had stayed with Engels in Manchester in May 1858, and it is probable that Engels emphasized the ways in which Germany had abandoned any interest in Hegel and was now moving towards a form of materialism inspired by the natural sciences. In his Das Volk review, Engels claimed that while ‘Hegelianism gradually fell asleep … Germany applied itself with quite extraordinary energy to the natural sciences’, accompanied by ‘a new materialism’, inspired in particular by chemistry and physiology. ‘The essential foundation of German political economy’ was ‘the materialist conception of history, whose principal features’ were ‘briefly outlined in the “Preface” ’.

Supposedly, this materialist conception had now been successfully combined with the Hegelian dialectic. Karl, he claimed, was ‘the only one who could undertake the work of extracting from the Hegelian logic the kernel containing Hegel’s real discoveries in this field and of establishing the dialectical method divested of its idealist wrappings, in the simple form in which it becomes the only correct mode of the development of thought’.114 How far Karl took account of Engels’ opinion in the mode of presentation of his ideas in the preface can only be a matter of conjecture. The changing intellectual climate had already begun to make his use of Hegel more guarded, especially as he addressed a new, post-1848 generation. But there was no fundamental change in Karl’s viewpoint between 1857 and 1859. Even within the 1859 paragraph, he had been careful to distinguish between ‘the material transformation of the economic conditions of production, which can be determined with the precision of natural science, and the legal, political, religious, artistic or philosophic – in short, ideological forms in which men become conscious of this conflict and fight it out’.115 History was still the process through which man’s essential social being would be realized, once the ‘narrow bourgeois form’ had been ‘peeled off’. But it had become increasingly clear that the apparent simplicity of the world-historical trajectory, which had led from the breakdown of man’s original sociality to its restoration at the end of the process, was not as straightforward as it had originally looked. That is why Karl now spent eight years in what amounted to an attempt to reformulate the missing third chapter – ‘Capital in General’.


In August 1861, Karl resumed work on the third section of ‘Capital in General’ at the point at which the 1859 Critique had left off. He worked on a second draft of the whole text until March 1863. The manuscript began with a chapter on ‘The Transformation of Money into Capital’, which explained in greater detail how labour became ‘objectified’ in commodities. As in the Grundrisse, Karl distinguished between material production and the process of valorization. But now he was able to provide a more precise picture. He first defined the universal and elementary components of ‘the labour process’, found in any mode of production, and then examined its particular appropriation by capital, once money became capital by being exchanged for living labour capacity. Capital took control, according to Karl, not only of ‘the labour process in general’, but of the ‘specific actual labour processes’ as it found them ‘in the existing technology’, and in the form in which they had developed ‘on the basis of non-capitalist relations of production’. He called this process the ‘subsumption’ (or subordination) of labour under capital.116

By using the notion of subsumption, it was possible to depict the progressive stages by which capital was able to take control over the labour process and exert pressure upon the productivity of wage labour. Historically, this was described in terms of a transition from the ‘formal’ to the ‘real’ subsumption of labour under capital. He described three historical stages in the increase of labour productivity – cooperation, the division of labour and machinery. Cooperation, the oldest means of increasing the productiveness of labour, was found as much among the ancients as the moderns. Division of labour, on the other hand, was more specific to the inception of capital, and the emergence of civil society. For division of labour presupposed the formal subsumption of labour under capital and the universal spread of commodity production. The third stage, machinery, corresponded to the full development of the capitalist mode of production and the growth of the ‘real’ subsumption of labour under capital.

‘Formal subsumption’ also described the conditions in which the Ricardian definition of value became applicable. For ‘the general laws formulated in respect of the commodity, e.g. that the value of the commodity is determined by the socially necessary labour time contained in it, first come to be realised with the development of capitalist production, i.e. of capital’;117 ‘the capitalist will make sure that the worker really works, works the whole time required, and expends necessary labour time only, i.e. does the normal quantity of work over a given time’. At this stage, capital only subsumed the labour process ‘formally, without making any changes in its specific technological character’. But in the course of its development, capital came ‘not only formally [to] subsume the labour process but [to] transform it, [to] give the very mode of production a new shape and thus create the mode of production peculiar to it’.118This was the ‘real’ subsumption of labour under capital, which encompassed factory production and machine technology.

Formal subsumption was accompanied by major social changes. The nature of ‘the compulsion’ to labour altered. Worker and capitalist now formally met ‘as commodity owners, as seller and buyer, and thus as formally free persons’. In urban manufacture, there was an important shift away from the hierarchy of guild master, journeyman and apprentice, towards the relationship between capitalist and wage-earner. ‘The form of domination and subordination’ was no longer ‘politically or socially fixed’. Particularly important was the change of form which had taken place in agriculture, where ‘former serfs or slaves’ were transformed into free wage labourers. But the same transition in the case of formally ‘self-sustaining peasants’ or farmers meant that a ‘relation of domination, of subordination’ followed ‘the loss of a previous independence’.119

But by far the largest part of the manuscript was devoted to a critical history of political economy: ‘Theories of Surplus Value’. While the chapters on the ‘Transformation of Money into Capital’ and on ‘Absolute Surplus Value’ and ‘Relative Surplus Value’ amounted to around 350 pages, the draft notebooks devoted to the history of political economy amounted to over 1,200 pages. As in the Grundrisse, the main line of distinction was that between the original landmarks in the development of political economy as a science – ending with insights associated with Smith, Ricardo and Sismondi – which Karl defined as ‘classical’, and the later ones, defined as ‘vulgar’. It was argued that after the 1820s political economy became evasive or apologetic. This shift was argued to have been the result of an inability to resolve mounting problems surrounding the acknowledgement and definition of surplus value in a period in which the development of the forces of production led to increasing class antagonism. Those categorized among the exponents of ‘vulgar’ political economy included not only free-trade propagandists like Bastiat, but also substantial theorists including Jean-Baptiste Say, John Stuart Mill, John McCulloch and William Nassau Senior. This historical survey was intended by Karl to provide the concluding volume of his critique of political economy. It would eventually be published as Theories of Surplus Value in three volumes between 1905 and 1910 by Karl Kautsky.120

Getting back into work on ‘Capital in General’ proved very difficult. In April 1862, progress was ‘very slow’ and through that summer Karl remained in a state of depression, even wondering whether he should try to do something else in life; that autumn, he applied for a job as a railway clerk. In addition to domestic worries and acute financial problems, there was also the anxiety that Lassalle, who stayed for three weeks with the Marx family in July, might use some of Karl’s ideas in producing a critique of political economy of his own.121 It may be for these reasons that most of his time was spent working on his history of economic ideas rather than pushing forward with his own theoretical work. Illness was also becoming increasingly intrusive, preventing any creative work through the spring of 1863.

Nevertheless, at the end of 1862, Karl wrote to his admirer Dr Kugelmann in Hanover that the second part of the 1859 book was now finished, ‘save for the fair copy and the final polishing … It is a sequel to Part 1, but will appear on its own under the title Capital, with A Contribution to the Critique of Political Economy as merely the subtitle.’122 He had drawn up a plan for the fresh version of the first and third sections of ‘Capital in General’ around the same time, and this suggested that the order of exposition would largely follow that of the second draft.123 Despite this, in July 1863 Karl embarked upon a fresh draft of the whole.

The only part of this third draft to survive was ‘Chapter Six. Results of the Direct Production Process’. But this chapter was of particular importance, since it was designed to summarize and conclude the preceding account of production and lead into ‘The Circulation Process of Capital’. The chapter began by stressing the centrality of ‘the commodity’ to capitalist production. ‘Commodity circulation’ and ‘money circulation’ were ‘the presupposition, the starting pointof capital formation and the capitalist mode of production’. The capitalist mode of production had been the first ‘to make the commodity the universal form of all products’.124

The account of the transition from pre-capitalist forms to ‘formal’ subsumption slightly enlarged upon what had been written in the second draft. One of its main features was an emphasis upon the increased scale of production. What had counted as a maximum of apprentices and journeymen in handicraft production ‘hardly even forms a minimum for the capital-relation’. Attention was also paid to the effect of ‘subsumption; upon rural and domestic occupations, originally pursued to meet the needs of the family, but progressively ‘transformed into independent capitalist branches of labour’.125

Reiterating a theme which he had first encountered in the 1840s, Karl stated that the ability of ‘objectified labour to convert itself into capital i.e. to convert the means of production into means of command over, and exploitation of, living labour, appeared under capitalist production as ‘an inherent characteristic of the means of production’ that was ‘inseparable from them as a quality which falls to them as things … The social form assumed by labour in money expressed itself as the qualities of a thing.’ In this perspective, ‘The capitalist functions only as capital personified … just as the worker only functions as the personification of labour … Thus the rule of the capitalist over the worker is … the rule of the object over the human, of dead labour over living, of the product over the producer.’ This, he claimed, was ‘exactly the same relation in the sphere of material production, in the real social life process – for this is the production process – as is represented by religion in the ideological sphere, the inversion of the subject into the object and vice versa’.126

‘Historically’, Karl claimed, it was necessary ‘to pass through this antagonistic form, just as man had first to shape his spiritual forces in a religious form, as powers independent of him’. This ‘inversion’ appeared ‘at the point of entry, necessary in order to enforce, at the expense of the majority, the creation of wealth as such, i.e. the ruthless productive powers of social labour, which alone can form the material basis for a free human society’. Seen in relation to this ‘alienation process’, the worker stood ‘higher than the capitalist from the outset’. For the capitalist is ‘rooted in that alienation process and finds in it his absolute satisfaction, whereas the worker as its victim stands from the outset in a relation of rebellion towards it and perceives it as a process of enslavement’.127

Just as the production of absolute surplus value could be regarded as the material expression of formal subsumption, so the production of relative surplus value could be regarded as that of real subsumption of labour under capital. As this transition was effected, there took place a ‘complete and constant, continuous and repeated revolution in the mode of production itself, in the productivity of labour and in the relation between capitalist and worker’. In the capitalist mode of production now fully in place:

new branches of business are constantly called into existence, and in these capital can again work on a small scale and again pass through the different developments outlined until these new branches of business are also conducted on a social scale. This is a constant process. At the same time, capitalist production tends to conquer all branches of industry it has not yet taken control of, where there is as yet only formal subsumption. Once it has taken control of agriculture, the mining industry, the manufacture of the main materials for clothing, etc., it seizes on the other spheres where the subsumption is as yet only formal or where there are still even independent craftsmen.128

In sum, ‘a complete economic revolution was taking place’. And here the scenario reverted to that of the Communist Manifesto. Capital:

does not just produce capital, it produces a growing mass of workers, the material which alone enables it to function as additional capital. Hence not only does labour produce the conditions of labour on an ever increasing scale as capital, in opposition to itself; capital for its part, produces on an ever increasing scale the productive wage labourers it requires … Capitalist production is not only the reproduction of the relation, it is its reproduction on an ever increasing scale … along with the capitalist mode of production, the pile of wealth confronting the worker grows, as wealth ruling over him, as capital, and the world of wealth expands vis-à-vis the worker as an alienating and dominating world … The deprivation of the worker and the abundance of capital correspond with each other, they keep in step.

But the revolution had created the real conditions for a new mode of production, ‘superseding the antagonistic form of the capitalist mode of production’ and laying the basis ‘for a newly shaped social life process’.129

The aim of Chapter Six was both to summarize the results of the study of the production process of capital and to provide a transition to the study of the circulation process, which would be analysed in the second part of the book. As Karl envisaged the work as a whole as late as October 1866, the text would deal both with production and with circulation within a single volume. In a letter to Dr Kugelmann, he outlined the following plan:

The whole work is thus divided into the following parts:

Book I. The Process of Production of Capital.

Book II. The Process of Circulation of Capital.

Book III. Structure of the Process as a Whole.

Book IV. On the History of the Theory.130

The summary provided by Chapter Six drew upon previous drafts. The chapters on the ‘Transformation of Money into Capital’, on ‘Absolute and Relative Surplus Value’ and on ‘The Accumulation of Capital’ were connected more closely to the analysis of subsumption, which now incorporated its effects in agriculture, its relationship to the ‘alienation’ of the producers, and a discussion of its relationship with productive and unproductive labour. The historical excursions, which had occupied a substantial part of the 1859 Critique, were now to be moved to a separate volume.

At various points, Karl mentioned the relationship between production and circulation. Commodity circulation and money circulation were ‘the presupposition, the starting point, of capital formation and the capitalist mode of production’; ‘Commodities are the elements of capitalist production and they are its product, they are the forms in which capital reappears at the end of the production process.’131 As in the Grundrisse, analysis of the expansion of capital through the circulation process focused upon its circular form: ‘What appears first as its element is later revealed to be its own product … the commodity, as it emerges from capitalist production is determined differently from the commodity, as it was, as the element, the presupposition, of capitalist production.’132

Capitalist production had annihilated the original basis of commodity production: independent production and the exchange between owners of commodities, or the exchange of equivalents. This was the origin of the association between capital, freedom and equality. But it no longer pertained. A transition had occurred from ‘simple circulation’ (the conversion of commodities into money, and their reconversion into commodities) to a situation in which commodities were ‘the repositories of capital’, and in which at the same time ‘they are capital itself, valorised, pregnant with surplus value’.133

The constant transformation of surplus value back into capital created new capital and new wage-earners. Therefore, the growth of capital and the growth of the proletariat were interconnected. As economic relations took on an increasingly capitalist character, the worker–capitalist relation was reproduced on an ever more extensive scale, incorporating more and more branches of production. In this way, the scale of the capitalist mode of production was reaching global proportions. Capital was now approaching its point of culmination, but also a terminal point of over-reach in its growing domination of the world market.

After completing Chapter Six in the summer of 1864, Karl returned to the draft of the whole, to the plan, which he would present to Dr Kugelmann in 1866. He began writing Book III, ‘Forms of the Entire Process’. This was conceived as a simpler and more descriptive volume, itemizing how various forms of capital – profit, interest, ground rent – could all be understood as offshoots of surplus value. The overall design of Books I–III was to proceed from the abstract to the concrete, in line with his thoughts on method in his introduction to the Grundrisse in 1857. ‘Book I: The Process of Production of Capital’ would set in place the skeleton of abstract concepts required to demonstrate ‘the laws of motion’ of capital. Book III would analyse these developments in concrete and empirical terms. Book II on ‘Circulation’ would connect the beginning and end of the analysis by introducing the dimensions of time and space into the abstract depiction of the development and expansion of capital which had been posited in Book I.

By 1865, an almost final draft of the first part of Book III was ready. It was followed by a series of notes and fragments, since Karl interrupted his work on Book III in order to prepare a draft of Book II. The bulk of the writing of the unfinished Book III was completed before that year and published in more or less unamended form by Engels in 1894. It discussed the conversion of surplus value into profit and attempted to account for the discrepancy between prices and values by arguing that value constituted the centre of gravity around which prices would fluctuate. The volume also reiterated Karl’s conception of the falling rate of profit.

Engels’ published edition of Volume III in 1894 soon encountered fundamental criticism, notably from Eugen von Böhm-Bawerk.134 The solution to the question of the conversion of surplus value into profit was found to be cursory and superficial. Thirty years earlier, however, the problem that seemed to have troubled Karl more was how to connect the production of capital with its supposed circulation and extended reproduction. This was why he had left its drafting until last.

As in the Grundrisse, the starting point of Karl’s depiction of circulation in the draft of Volume II was that of the circular or spiral progression of capital, which through its own momentum dissolved previous economic forms and produced workers and capitalists on an ever-increasing scale. The particular aim of the analysis was to connect the emergence of commodity production in Book I with the transition from feudal or other pre-capitalist forms of land tenure to capitalist ground rent in Book III. But how could a necessary connection be established between the abstract depiction of the extended reproduction of capital and the actual historical expansion of capitalist relations? The version of Volume II which Engels published in 1885 presented Karl’s writings on this question as a series of consecutive chapters. But the material itself suggested repeated attempts to draft a satisfactory solution to the same problem. For the discussion of circulation and expanded reproduction never got beyond abstractions. Karl wrote eight drafts of the section on circulation between 1865 and 1880, and this suggests that he had not given up hope of finding a solution to the problem. But the fact that he reached no solution at the time of preparing Capital for publication helps to account for the peculiar shape of Capital, Volume I, when it was published in 1867.


Capital: A Critique of Political Economy was published in 1867. It was not the three-volume work that Karl had envisaged in his letter to Dr Kugelmann as late as October 1866, but a single volume entitled The Process of Production of Capital. In March 1863, with the help of Wilhelm Strohn, a former member of the Communist League and regular visitor to Hamburg, Karl had secured a contract with Meissner, a Hamburg publisher of school textbooks and medical books.135 The original deadline had been set for May 1865, but in July Karl wrote to Engels that he still had three chapters to write in order to complete the theoretical part: ‘I cannot bring myself to send anything off until I have the whole thing in front of me. WHATEVER SHORTCOMINGS THEY MIGHT HAVE, the advantage of my writings is that they are an artistic whole, and this can only be achieved through my practice of never having things printed until I have them in front of me IN THEIR ENTIRETY.’136

In response, Engels had evidently made fun of ‘the work of art to be’, but in August Karl was still sticking to the idea of simultaneously publishing the whole work.137 He changed his mind in early February 1866. Engels wrote, warning Karl to ‘give over working at night for a while and lead a more regular life … If your brain is not UP TO THE MARK for the theoretical part, then do give it a bit of a rest from the more elevated theory … Can you not so arrange things that the first volume at least is sent for printing first and the second one a few months later?’ A few days later, Karl agreed to ‘get the first volume to Meissner as soon as it is ready’.138 In the light of Karl’s physical condition, this was a sensible decision. On 26 February, Jenny wrote to Dr Kugelmann:

For four weeks now, my poor husband has been laid low again with his old, very painful and dangerous complaint … Right at the beginning of January he had begun to prepare his whole book for printing, and he was making wonderfully rapid progress with copying, so that the manuscript piled up most impressively. Karl felt in the best of ‘SPIRITS’ and was happy to be so far on at last, when a carbuncle suddenly erupted, soon to be followed by 2 others. The last one was especially bad and obstinate and furthermore was so awkwardly placed that it prevented him from walking or moving at all. This morning it has been bleeding more strongly, which has brought him some relief. Two days ago we began the arsenic cure, of which Karl expects a good effect. It is really dreadful for him to be interrupted again in the completion of his book, and in his delirium at night he is forever talking of the various chapters going round and round in his mind.139

The illness was menacing and real enough. What was less clear was whether the illness was the cause or effect of his difficulties in completing the book. For, as his own remarks implied, its most ferocious assaults appeared to occur whenever he was compelled to encounter ‘the more elevated theory’.

Evidently, the decision to defer the publication of the two subsequent volumes was beneficial. By November 1866, he had sent off the first batch of manuscripts to the publisher, and by the end of March 1867 the whole of Volume I was completed. In the middle of April, Karl sailed to Hamburg, and after spending three or four days dealing with last-minute corrections and revisions, he moved on to Dr Kugelmann in Hanover, where he stayed until 14 May. The first proofs did not begin to arrive until 5 May. Ten days later he had to return to England, and the last proofs were not sent until the end of August. The book was published in late September.

Capital contained eight parts:

1.    Commodities and Money, pp. 1–156

2.    The Transformation of Money into Capital, pp. 157–86

3.    The Production of Absolute Surplus Value, pp. 187–316

4.    Production of Relative Surplus Value, pp. 317–508

5.    The Production of Absolute and Relative Surplus Value, pp. 509–34

6.    Wages, pp. 535–63

7.    The Accumulation of Capital, pp. 564–703

8.    The So-Called Primitive Accumulation, pp. 704–61

These parts were redrafted versions of the material found in the Grundrisse and the second draft of 1861–3, but with substantial additions of empirical material, not used before. There were also significant changes made between the published volume and what remained from the third draft (the material which was summarized in ‘Chapter Six’).

The opening part, on ‘Commodities and Money’, started with the commodity. It first distinguished between use value and exchange value – a distinction which went back to Aristotle – and then explained how a single commodity in the course of exchange could become the equivalent of all other commodities; in other words, perform the function of money. It was argued that money and the commodity in the form of exchange value described a logical circle, whose conclusion was also a return to its point of departure. In the ‘value form’, use values appeared as abstract representations of universal exchange value. As a particular and distorted reflection of underlying social relations, the value relation was also responsible for the objective illusion, conveyed by Karl’s notion of ‘the fetishism of commodities’, in which relations between people appeared as relations between things.

Engels raised questions about the obscurity of the argument in the first part of the book about ‘the form of value’ for a post-Hegelian generation. ‘The populus, even the scholars, just are no longer at all accustomed to this way of thinking, and one has to make it as easy for them as one possibly can.’140 Karl conceded that his first chapter was of ‘the greatest difficulty’ and in answer both to Engels and to Kugelmann, who had raised a similar question, he produced an appendix on the ‘value form’ which aimed to help ‘the non-dialectical reader’.141 But it is doubtful how much this appendix helped, since in later editions it was dropped. Much of the difficulty could have been avoided had the argument simply begun with exchange. But for Karl the point of starting with ‘the commodity’ was to move forward from his original approach, in which exchange value in the form of money had been the corrosive agent responsible for the destruction of ancient communities. That, in turn, had been linked with his notion of the transition from ‘C–M–C’ to ‘M–C–M’. But now the destruction of ancient communities was scarcely mentioned. Instead, he hoped to infer the emergence of the ‘value form’ by a process of deduction. This would demonstrate that money as such was not the agent responsible for the development of the exchange values and the production of commodities; any other commodity could have played the role of the universal equivalent.

Karl made little attempt to address the difficulties attending the theory of socially necessary labour time. He only considered the criticism that ‘Some people might think that if the value of a commodity is determined by the quantity of labour spent on it, the more idle and unskilful the labourer, the more valuable would his commodity be, because more time would be required in its production’.142 He summarily dismissed this objection by stating that the labour in question was ‘homogeneous human labour’, and that the theory referred to ‘one homogeneous mass of human labour power, composed though it be of innumerable individual units … The whole mystery of the form of value’, he claimed, was concealed in the equation, 20 yards of linen = 1 coat. Once this mystery was removed, it became clear that ‘it is not the exchange of commodities which regulates the magnitude of their value; but, on the contrary, that it is the magnitude of their value which controls their exchange proportions’.143

The problem remained, however, that ‘man’s reflections on the forms of social life’ did not proceed in step with historical development. They began ‘post festum’ (after the event). Reflection started from the point where ‘the characters that stamp products as commodities, and whose establishment is a necessary preliminary to the circulation of commodities, have already acquired the stability of natural self-understood forms of social life’. Therefore, despite the discovery of the underlying determinant of the magnitude of value, everyday practice and belief carried on as before. For ‘this ultimate money form of the world of commodities’ concealed rather than disclosed ‘the social character of private labour, and the social relations between the individual producers’. Such forms of concealment or inversion were characteristic of ‘the categories of bourgeois economy’, which consist of ‘such like forms’. They were ‘forms of thought expressing with social validity the conditions and relations of a definite and historically determined mode of production, viz., the production of commodities’. But ‘The whole mystery of commodities, all the magic and necromancy that surrounds the products of labour as long as they take the form of commodities, vanishes … so soon as we come to other forms of production.’144

The second part, on ‘The Transformation of Money into Capital’, examined how surplus value was extracted from the worker in the production process and then transformed into capital in circulation. This argument followed preceding drafts from the Grundrisse onwards in presenting the distinction between the sale of labour and the sale of labour power as the solution to the riddle of how inequality could result from a process of equal exchange. At the end of Part 2, both the riddle and its solution were revealed with an artfully contrived rhetorical flourish, as if no one previously had thought of the answer: ‘Moneybags, who as yet is only an embryo capitalist, must buy his commodities at their value, must sell them at their value, and yet at the end of the process must withdraw more value from circulation than he threw into it at starting. His development into a full-grown capitalist must take place both within the sphere of circulation and without it. These are the conditions of the problem. Hic Rhodus, hic salta!145 But, as in previous drafts, once the possibility of the extraction of surplus value in production had been established, the division of the working day into periods of necessary and surplus labour – the putative rate of surplus value – was simply assumed.

The change which was to make the biggest impact upon the understanding of Capital was the decision not to include discussion of circulation and expanded reproduction in the published volume. In the Grundrisse, capital had been defined as the dynamic unity of production and circulation. In Volume I, however, ‘detailed analysis’ was reserved for the following volume; while in the meantime it was simply assumed ‘that capital circulates in its normal way’.146 This decision was not simply the result of an inability to complete the text in time. It was also a way of avoiding questions posed by the approach adopted towards the circulation and extended reproduction of capital in the Grundrisse. The lack of such a discussion left essential questions unanswered. In what sense, for example, was capital a global phenomenon? What was the connection between ‘the process of capitalist production’ and the proclaimed imminence of capitalist crisis? Ideas about the falling rate of profit and the relationship between global capitalist crisis and ever more extended circuits of capital were deferred until a subsequent volume, and not in fact published in Karl’s lifetime.

The effects of this change were particularly noticeable in Parts III and IV of the published volume. In Part III, on ‘The Production of Absolute Surplus Value’, the distinction between the production process and the valorization process was retained, but the ‘subsumption’ of labour under capital, which had played such a prominent role in the second draft, was all but eliminated. Similarly, in the part contrasting ‘absolute’ and ‘relative’ surplus value, there was only a brief mention of the transition from ‘formal’ to ‘real subsumption’, while most other references to ‘subsumption’ were removed. Thus the distinction between the three methods of increasing the productivity of labour – cooperation, division of labour and machinery – were no longer presented as progressive stages in the subsumption of labour under capital.

In earlier versions of the work, the narrative was propelled by the advance of the ‘value form’. Its spread and development had been presented as responsible for the destruction of ancient communities. Its trajectory had been depicted as one in which historical development and the growth of the value form formed part of a single process. Overall development was depicted in the guise of a complex dialectic between matter and form, between human activity and its unintended consequences. Human beings entered a process, first of exchange and later of production, which had increasingly come to dominate their activity and their relations with each other. They came to believe themselves the victims of a process in which relations between persons appeared as relations between things. As a result, they increasingly lost the sense of their own agency in the creation of the situation by which they were confronted: ‘the product of labour, objectified labour, was endowed with a soul of its own’ and established itself as ‘an alien power confronting its creator’.147 ‘Fetishism of commodities’ was a product of the ‘value form’.

Alongside the desire to avoid problems raised by circulation, there was also a noticeable retreat from the picture of capital as a continuous and unstoppable progression, as a developing organism from its inception in ancient times through to its global triumph in the world market followed by its collapse and dissolution. Just as there was now an attempt to present value as a logical deduction rather than an organic development, so subsequent chapters were placed side by side in the form of a classificatory arrangement rather than a developmental sequence. Therefore, although there remained an underlying historical logic to the arrangement of the book, this was not made explicit. It seems as if the intention in the published volume was to avoid an arrangement of the material which might too easily be identified with a Hegelian schema.

This might help explain why, unlike in the earlier drafts of Capital, there was no general account of the destruction of ancient communities through the process of ‘subsumption’. In the final version, the only example of such destruction was reserved for the explicitly historical Part 8 – ‘The So-Called Primitive Accumulation’ – which discussed the expropriation of peasants and independent producers in Britain from the fifteenth century to the nineteenth. But as this process was described in Capital, these communities were destroyed not by capital, but by conscious action on the part of royal authorities. Similarly, the emancipation of the serfs in Russia, which Karl originally saw as another example of the corrosive impact of capital upon traditional agrarian communities, was also soon to be revealed in the subsequent Russian debate around the issue as the product of political force.

Beneath the new arrangement of the material, fragments of the original design survived. But now, without the support of historical or philosophical analysis, such fragments appeared as mere dogmatic assertions. Thus it was claimed without further elaboration that ‘as soon as capitalist production stands on its own feet, it not only maintains this separation [between labour and means of production], but reproduces it on a constantly expanding scale’.148Similarly, of the global expansion of capital it was stated in the preface that ‘Intrinsically it is not a question of the higher or lower degree of development of social antagonisms that spring from the natural laws of capitalist production. It is a question of these laws themselves, of these tendencies winning their way through and working with iron necessity. The country that is more developed industrially only shows, to the less developed, the image of its own future.’149 There was also little in the preceding text to justify the famous peroration at the conclusion of the book, in which ‘the knell of capitalist private property sounds’ and ‘the expropriators are expropriated’.150 Instead, there was only a reiteration of themes found in The Communist Manifesto and the Grundrisse. Finally, the effect of the removal of developmental sequences was the weakening of a sense of the dialectic of form and matter. Although there was a reference to ‘the revolt of the working class’, the overall picture of the end of capital was of the conjunction of impersonal and inevitable processes, detached from the actions of human agents.

This difference of position between the published version of Capital and its earlier drafts was accentuated still further in the ‘Afterword to the Second German Edition’, which Karl wrote in 1873.151 This cited with apparent approval a Russian review of Capital from 1872. According to this review, what mattered in his work was: ‘the law of the phenomena with whose investigation he is concerned’ and still more, ‘the law of their variation, or their development i.e. of their transition from one form into another’. This law demonstrated ‘both the necessity of the present order of things, and the necessity of another order into which the first must inevitably pass over’; and this was the same ‘whether men are conscious or unconscious of it’. According to the reviewer, ‘Marx treats the social movement as a process of natural history, governed by laws, not only independent of human will, consciousness and intelligence, but rather on the contrary determining that will, consciousness and intelligence’. In the history of civilisation, ‘consciousness’ played a ‘subordinate part. That is to say, not the idea but the material phenomenon alone can serve as its starting point’. ‘Social organisms differ among themselves as fundamentally as plants and animals’. ‘The scientific value’ of such an enquiry lay ‘in the disclosing of the special laws that regulate the origin, existence, development, death of a given social organism and its replacement by another and higher one’. ‘What else is he picturing’, wrote Karl, ‘but the dialectic method?’152

The change in Karl’s approach was initially necessitated by the need to move from the original project to the publication of a single volume, dealing only with ‘the production process of capital’. But in making the choice to postpone the discussion of the process of circulation and global expansion of capital, he was arguably motivated not only by his inability to meet unrealistic deadlines, but also by his increasing awareness of how far the intellectual climate had changed since the 1840s. In his preparation of the single volume he had eliminated as far as possible the concepts designed to bridge the gap between production, circulation and expansion of capital, not least because these were the areas in which the philosophical derivation of his original conception was most obvious. In 1867, the reduction in scope of his theory may have seemed an unfortunate necessity. But by 1872 he appeared to accept the single volume as a sufficient statement of his theory as a whole.

This is also suggested by the changing place assigned to the notion of ‘subsumption’. It was given a prominent place up to the penultimate draft of Capital, and then was all but dropped. The idea of ‘subsumption’ had originally appeared in the philosophies of Schelling and Hegel. In his attempt to draw together the modern state and commercial society, Hegel in his early writings had contrasted ‘ethical life’ with inorganic nature as components of an organism. The attributes of his later conception of the state were also those of ‘an organism’. These attributes were expounded most clearly in the section on ‘the living being’ in the first book of his Encyclopaedia, the Logic. ‘The living being’, Hegel wrote, was ‘the syllogism whose very moments are inwardly systems and syllogisms’ or ‘the process of its own con-cluding with itself, which runs through three processes’. The first and most relevant process was ‘of the living being inside itself’; ‘in this process it sunders itself and makes its corporeity into its object, or its inorganic nature’. In addition, Hegel – like Schelling – cited the poet and biologist A. von Haller, in dividing this process of ‘the living being inside itself’ into the forms of ‘sensibility, irritability and reproduction’; ‘as sensibility, the living being is immediately simple relation to itself, the soul which is everywhere present in its body, so that the mutual externality of the bodily parts has no truth for it. As irritability, the living being appears sundered within itself, and, as reproduction, it is constantly reestablishing itself out of the inner distinction of its members and organs. It is only as this constantly renewed inner process that the living being is.’153 Or, as Hegel put it in the first version of The Philosophy of Right, ‘a living organism is the first and the last because it has itself as the product of its activity’.154

However remote this account of ‘living being’ might at first seem, it provided the template for Hegel’s picture of the state. It was a product of philosophical speculation that had accompanied the late-eighteenth-century proto-Romantic fascination with the growth of life sciences. The state was an organism encompassing a relationship between the particular and the universal, the inorganic and the organic, civil society and the state, the economic and the political. ‘Subsumption’ was the means by which the particular was related to the universal, by constantly renewing the process of incorporating the one within the other.155 In earlier drafts from the Grundrisse onwards, Karl attempted to adapt this approach to his own purposes.

The effective removal of ‘subsumption’ turned Capital into a far more descriptive work, now relying more upon statistical and empirical data than upon dialectical progression. The original dialectic between matter and form had preserved a notion of human agency, even if the results of its activity confronted it in alien form. By contrast, to make ‘the ideal … nothing else than the material world reflected by the human mind and translated into forms of thought’ was to make speech a reflection of action, and action, whether ‘conscious or unconscious’, the product of necessity.156 The ambiguity of these formulations opened the way back to the understanding of man as a natural being governed by impulse and the dictates of nature, and forward to the conventional understanding of ‘Marxism’ in the twentieth century.

Why Karl accepted this interpretation of his work is not entirely clear. But it seems likely that he was impressed by Engels’ point that a new generation would know little about Hegel and would be unlikely to grasp – let alone accept – the original premises of dialectical reasoning. In his afterword to the German edition of 1873, it is noticeable that despite paying tribute to Hegel’s greatness as a thinker, Karl was at pains to distance himself from Hegel’s philosophy. He did so by claiming that ‘my dialectic method is not only different from the Hegelian, but is its direct opposite’, and by conceding only that he had occasionally ‘coquetted with the modes of expression peculiar to him’.157


Yet to focus solely upon the philosophical status and problems surrounding Capital is to miss its most distinctive and lasting qualities. Two thirds of the book was devoted to a fact-based depiction of the development and current state of the relations between capital and labour, mainly in England. The precondition of the emergence of the capitalist mode of production was ‘the expropriation of the agricultural producer, of the peasant from the soil’. This was ‘the basis of the whole process’. England was chosen because, while ‘the history of this expropriation, in different countries, assumes different aspects, and runs through its various phases in different orders of succession, and at different periods … in England alone, which we take as our example, has it the classic form’.158

Part 7 on ‘The Accumulation of Capital’ provided a detailed account of the condition of wage-workers in sectors of the British economy in the 1860s. It described conditions in agriculture and in branches of industry. The extraordinary wealth of statistics, official reports and pieces of press reportage, from which his overall picture was composed, remains impressive. Extensive use was made of the reports of factory inspectors, medical officers of health and government commissions of enquiry. These were used to demonstrate a number of facets of this economy from pressures to lengthen the working day or increase the speed of work to the extensive use of child-labour. Karl surveyed not only cotton textiles, where the battles over hours of work had been most fiercely fought, but also the making of military clothing, pottery, wool manufacture, baking, dyeing and bleaching. Special attention was paid to the diet, housing and health of workers in agriculture. Capitalist development had not only increased the ratio of ‘constant’ to ‘variable’ capital, but in so doing had put many smaller capitalists out of business and produced the growth of a ‘reserve army of labour’ that moved in or out of employment as dictated by fluctuations in the trade cycle.159

Away from the complexities of value and the falling rate of profit, in this part Karl came nearest to a concrete assessment of the prospect of crisis and revolt. He was particularly struck by the development of agriculture, in which increasing productivity combined with the misery of agricultural workers was leading to an ever-increasing exodus to the towns: ‘The dispersion of the rural labourers over larger areas breaks their power of resistance while concentration increases that of the town operatives.’160

The final part, on ‘The So-Called Primitive Accumulation’, provided a historical account of the development of a capitalist economy in Britain from the dissolution of feudal relations at the end of the fourteenth century through to its triumph in the mid-Victorian period. It demonstrated the ambiguity of the notion of ‘freedom’ in the case of the early-modern peasant or artisan, freed from serfdom, but also free in the sense of being deprived of any independent access to the means of production. Possessing nothing therefore, except their labour power, these once independent peasants and artisans were compelled constantly to resell their labour power in order to survive. It traced how the separation of labour from means of production was maintained and reinforced by the process of primitive accumulation: ‘the spoliation of the church’s property, the fraudulent alienation of the State domains, the robbery of the common lands, the usurpation of feudal and clan property, and its transformation into modern private property, under circumstances of reckless terrorism, were just so many idyllic methods of primitive accumulation. They conquered the field for capitalistic agriculture, made the soil part and parcel of capital, and created for the town industries the necessary supply of a “free” and outlawed proletariat.’161 Once more, the narrative was enriched by an array of sources, which stretched from Holinshed, Thomas More and Francis Bacon to Richard Price, William Cobbett, Thomas Macaulay and James Thorold Rogers.

If Capital became a landmark in nineteenth-century thought, it was not because it had succeeded in identifying the ‘laws of motion’ of capital. Karl had produced a definitive picture neither of the beginning of the capitalist mode of production, nor of its putative end. He had made some cogent criticisms of specific tenets of political economy. He mocked Nassau Senior’s defence of ‘the last hour’ against the advocates of factory hours limitation, the conception of a ‘wage fund’ and Malthus’s idea of overpopulation, which he showed to be related to means of employment rather than means of subsistence.162 But he did not succeed in producing an immanent critique of political economy as a whole. Similarly, while he produced a powerful picture of the misery and wretchedness of child-labour, of the degrading conditions to be found among agricultural workers, and of the poor diet and housing of a large proportion of English workers, he did not succeed in establishing a logically compelling connection between the advance of capitalist production and the immiseration of producers.

Karl’s achievement was precisely in the area for which he affected to have least regard. That was the work which had developed from his writing and research for the New-York Daily Tribune and for the various lectures delivered from the late 1840s onwards. He was able to connect critical analysis of the current capitalist economy with its longer term historical roots. The foregrounding of production led him to uncover unfamiliar tensions within the modern workshop or the automatic factory. Through his determination to trace the progress of the capitalist economy as a whole, and in particular the consequences of new forces of production, he became one of the principal – if unwitting – founders of a new and important area of historical enquiry, the systematic study of social and economic history.163 He inaugurated a debate about the central economic and social landmarks in modern history which has gone on ever since.

Any analysis of Karl’s critique of political economy which simply treated the resulting volume as an intellectual defeat would also be untrue to the recasting of his hopes and expectations around 1867. Although he was unable to admit it, the original approach had failed. He had not been able to sustain his original depiction of capital as an organism whose continuous and unstoppable spiral of growth from inconspicuous beginnings in antiquity to global supremacy would soon encounter world-wide collapse. Examination of the global development of capitalist relations in Britain showed that economic development had been decisively assisted by political intervention during the period of ‘primitive accumulation’. But, by the same token, what this examination implied was that the triumph of capitalist production in areas outside Western Europe could be resisted or avoided.

Nearer home, the changes made to the sequence of chapters prior to publication might also be seen as a response to the new political situation in England after 1864. The growth of trade societies, the foundation of the International, the success of the factory movement, the growing strength of cooperative production and, above all, the increasing popular agitation for (political) reform all enabled Karl to imagine new and possibly non-violent ways of precipitating revolutionary change. In the 1850s, imagination of a global crisis on the horizon had been abstract and remote. Pictures of revolutionary change were still overwhelmingly derived from the great Revolution in France. But in the mid-1860s, in place of the peremptory replacement of one social order by another, as had occurred in France in 1792–3, another vision of transition had begun to take shape. In this picture, change could be envisaged not as a rapid succession of revolutionary journées, but as a cumulative process composed of both political and social developments and occurring over a much longer period of time. In this sense, the transition from capital to the rule of the ‘associated producers’ might be more akin to the transition from feudalism to the rule of capital between the fourteenth and nineteenth centuries. To aid such a comparison was one of the reasons why in 1867, in place of the Grundrisse’s speculative account of the destruction of ancient communities by the value form, Karl chose to substitute as his final chapter the more memorable long medieval and early-modern history of the ‘So-Called Primitive Accumulation’ of capital.