Easy outlines of economics

The bulk of the work of typing this book for the printer has been performed by my friend James Reynolds. Without that assistance, and the invaluable aid of Mr. and Mrs. Horrabin in preparing material for the printer, etc., the work would have been very much delayed. I wish to record my thanks for their kind assistance.

What pains me most is that the impatience with which this little work has been expected will be exceeded by the disappointment at the result. The only consolation I can offer is the advice contained in another ancient saying, the authority for which I cannot quote, but the truth of which, applied to this book, my readers will be able to vouch for:—"Blessed is he that expecteth little, for he shall not be dissapointed."

They are, respectively, the Inorganic, the Biologic, and the Economic or Social evolutionary periods. The first, and by far the longest, the Inorganic, has to do with tbe transformation of matter from its nebulous condition to the forms of vegetable and animal life, whence it is clearly perceivable that the form which life (a mode of matter) takes, is determined by the material environment which creates it. This gives rise to the first biologic fact we need notice, viz., that the form of organic life is shaped (by adaption) by material surroundings. This takes place through contact. Life is differentiated or modified matter, but has no independent existence apart from matter. The degree of differentiation or modification is the true measure of what we call progress.

The second period has to do with the process of this modification. From the simple cell to the evolved human being represents a series of steps of increased differentiation from inorganic matter. Thus the stomach of the amoeba is in direct contact with the outside world, while in the higher animals the stomach is a differentiated organism which never has direct contact. The physiological differences between species of animals are accounted for by the modes in which they come into contact with nature in the struggle for existence. This is the pre-eminent feature which stamps the Biologic period with an unmistakable impress.

In the third period the indirection of contact with nature receives a line of demarcation at once clear, distinct and striking. This is the introduction of tools. The best definition of man ever yet given is that he is a tool-using (tool-making and tool-owning) animal. The tool prevents direct contact with nature, and as a result subordinates the biologic law of physiological alteration. Alterations in the physiology of man now practically cease and mind becomes the most prominent responding medium. The changes in the indirect interact with nature now are determined by the changes in the tools of production : we have arrived at the economic and social period.

Society is not biologic, it is economic. Failure to notice this simple and striking fact, and its influence on systems of thought, is responsible for as much error in social science as ever phlogiston was in chemistry.^[1] Let us quote in substance, Untermann on this point. The division of labour among bees is resposible for the physiological structure of queen bees, workers, and drones. Each of these three types is clearly marked and cannot be confused. But the division of labour among men fails to produce the same effect in, say,

We shall now examine the Economic period in a more detailed way. If we examined any system of society, since the introduction of private property, we should find it stratified into certain orders or social classes. And if we contrasted any two different systems of society we should find this stratification had undergone a change, and the social classes would be different. Why does one order of society give way to a new order? What causes the change? These questions, if they could be answered, would lay bare the law of motion in society. Economics is the science whose work it is to discover this law. Let us, however, explain more precisely what we mean by social classes and their change. Every one is aware of the systems of slavery and serfdom, and that these belong to different periods of time and forms of society. Wherein does the difference between these two consist and why did they change, the one for the other? When we speak of slavery or slaves we also infer the existence of another order or class, viz., slave-owners. Similarly serfs suggest over-

We have described superstructures as relations, but relations cannot exist except on a basis of reality. Commodities are the only realities. Hence science, politics, art, etc., are related to commodities. How are they related? They are all different methods of assisting in the production of commodities. But there is a closer relation than that. Whenever a society changes from one system, e.g., slavery, to another, e.g., serfdom, the change that takes place is primarily an economic one. But this causes changes in all the superstructures.Government, art literature, ethics, etc., have to change and adapt themselves to the new order. The changes are gradual or sudden according to necessity, the pace being regulated by the resistance offered by an institution to the new mode of production. In proportion to the resistance will the revolutionary forces be strong or

Are these conditions always and at all times present? No. There have been communities where private ownership was not recognised, and did not exist. In such a society there could be no commodities. In all societies previous to the present capitalist society, only a small, but perhaps increasing, fraction of goods produced were produce for the purpose of exchange. So that in these societies the normal condition would be that goods were not commodities. In our own day of fully fledged capitalism only a very insignificant frac-

Commodities, then, are the typical and almost exclusive products of capitalism. As Marx puts it : "The wealth of those societies in which the capitalist mode of production prevails presents itself as an immense accumulation of commodities, its unit being a single commodity. Our investigation must therefore begin with the analysis of a commodity."

Use-value and Exchange value.—The first noticeable feature in the analysis of a commodity is that it is a compound of two values. Thus a chair has a value in its use, or its use-value. That is, it is useful for the purpose of sitting upon. On the other hand, it has a value in exchange, or an exchange value. That is, it can be exchanged for, say a fountain pen, a watch, etc. Of these two values Economic Science is mainly concerned with exchange-value. Why? Because the use-value of a commodity has no bearing on its exchange value. Economics is concerns with use-value on in so far as it is present in a commodity, and that fact must always be presumed because an article cannot become a commodity unless it contains use-value. But the investigation of use-value is a question of chemical properties, or general attributes of an object. Its estimation is often a matter of individual taste or fancy. The main object in the production of commodities is not to produce use-values. It is - to produce exchange-values. The capital subscribed to the coal-mining industry is not subscribed for the purpose of extracting coal from the earth, or because coal has a use-value in the production of steam etc. The coal-owner des not want the coal ; he only wants other people to want it ; people who are prepared to give other commodities, the possession of which will make the coal-owner rich in exchange for

So we have the spectacle of a world engaged in the production of commodities which are to their owners non-use-values. Indeed it would be easy to show that millions of tons of commodities have been deliberately destroyed rather than their use-values should be appropriated at too low a price. In times when there is what is termed a "glut" in the market, these happenings should be fairly obvious that in a society based on the exchange of commodities, where the whole purpose of production is exchange, the investigation of use-value is irrelevant in a discussion where the principles regulating exchange-value is in question. Therefore, whenever the term Value is used in this book it is value in exchange that is referred to.

What is Exchange Value? - Many writers of Classical Political Economy - as distinct from modern orthodox economists, called by Marx "Vulgar Economists," for reasons we shall describe later - have indicated more or less clearly theories of exchange-value based on Labour. A brief history of the more important of these is given in the next chapter. But the Marxian theory of Value differs from all these theories because it is based on SOCIAL LABOUR. Let us examine this question of Value very carefully, because upon it is based the whole structure of Economic Science.

What is the question? The question is - What is the principle, in the exchange of commodities, that determines what proportion of a given commodity shall

Production then appears in the shape of vast armies of workmen engaged in all the different industries transforming nature into commodities. The commodities bear in themselves the human energy transferred from the bodies and brains of the workers. They appear on the market to be exchanged the one for the other. To exchange one thing for another is to equalise both. What is it that makes them equal? Say the one is a chair and the other a watch. They were both, as raw material, of a very different character. That they were exchanged on the market proves that they possessed something that was common to both, however different they looked. What was it? They were the embodiments of a common human energy. But did they

The "normal" condition of industry, paradoxical as it may sound, constantly varies, otherwise we should become a stagnant instead of a progressive society, but at any given time, through competition, the values of commodities are measured according to the social labour contained in them. This is one of the great discoveries of Marx—one which had previously eluded all efforts of the economists and, as we shall see in future chapters, of enormous significance.

Wealth, Value, and Labour.—Wealth must not be confused with value. Value, as we have seen, is human energy, or Social Labour. But wealth is merely the material upon which human energy is expended. Thus coal in the bowels of the earth, timber in virgin forests, etc., is wealth. But before this wealth is transformed into values, social labour must come into contact with it, and only in the proportion that that labour has been engaged in its transformation into commodities does wealth become value. Use-values of all kinds are wealth. Thus air is a use-value and is also wealth, but when social labour comes in contact with it and com- presses it for the purposes of industry, it then becomes compressed air—a commodity and an exchange-value. When social labour is properly understood, as in the foregoing, social labour is value, and value is social labour. They are two names for the same thing. The absurdity of the old question that puzzled all the economists, the question, What is the value of labour, becomes apparent. They went wrong because they were trying to answer the wrong question. We shall deal with the right question and the right answer later.