6. THE ORIGIN OF THE CONCEPT OF CLASS
We have seen that James Mill in the early decades of the 19th century worked out a simple
but cogent and effective two-class theory of class, the ruling class that ran the state
and the remainder of society who constituted the ruled. At about the same time during the
In the restoration period in France after the fall of Napoleon in 1814, a group of laissez-faire libertarian theorists were working out a far more sophisticated version of the same model, a model that contained a historical and sociological dimension absent in James Mill.
This group were the spiritual and physical descendants of the ideologues of the Napoleonic era, and the major link was J.B. Say.
Say was the inspirer and elder statesman of this restoration group, which was led by his
son-in-law, Charles Comte, François Charles-Louis Comte, 1782-1837, and Charles Dunoyer, Barthélemy
Charles-Pierre Joseph Dunoyer, 1786-1862.
An important follower of Comte and Du Noyer was the young Augustin Thierry, 1795 to 1856,
soon to become the most notable of French historians.
At the beginning of the Restoration and until 1820, Comte and Du Noyer founded and edited
Le Censure, followed by Le Censure Européen, periodicals that became the center for the
new laissez-faire movement.
President Mill, Comte and Du Noyer defined conflicting classes as those who gained control
of the state apparatus as against those who were controlled by the state, but they also
pointed out that history had been a history of such class or caste struggles.
Under Oriental despotism, the emperor and his bureaucracy constituted the ruling class.
In early Europe, conquering tribes settled down among the conquered to constitute a state with a ruling class.
Historically, then, another component of such a ruling class is that, at least initially, it was of a different ethnic group from the ruled.
In this way, ethnic oppression reinforced political-economic class oppression by the state.
But to Comte and Du Noyer, the new element, the factor that would bring about the inevitable emergence and triumph of a classless, in the sense of caste-less society, was what they called industrialism.
The emergence of an industrial society required an international free market economy to enable it to work.
Hence Comte and Du Noyer saw it as inevitable that a free market economy would spread throughout Europe and eventually the world, dissolving the ruling classes and bringing about a libertarian region and world, a world free of the oppression of the state.
Thus the state in this vision would wither away, to be dissolved into the market exchange economy,
and in the explicit language of Comte and Du Noyer, the government of men would be replaced by the administration of things.
Thus Comte and Du Noyer saw the world as being split into the productive classes,
The non-producers were, in particular, politicians, government officials, and rentiers living off government bonds, as well as subsidized businessmen or receivers of government privilege.
The peak of perfection, which Comte and Dunoyet saw as eventually arriving, would be reached if all the world worked and no one governed.
In their analysis, Comte and Dunoyet went beyond their mentor, J.B. Say, with his blessing,
to add the historical, sociological and political-philosophic dimensions to the strictly economic.
The Comte du Noyer movement were firm and militant believers in individual liberty and
in property rights, thus du Noyer's attack on egalitarianism.
Equality would be the reversal of that fundamental law of humanity and of society, which provides
that the income and the position of each man depends above all on his conduct, and is
is proportionate to the activity, the intelligence, and the morality and the persistence of his efforts.
And on liberty, Du Noyer wrote that for 40 years I have defended the same principles,
liberty in everything, in religion, in philosophy, in literature, industry, in politics,
and by liberty I mean the triumph of individuality.
The worm in the apple, the way in which libertarian social class analysis got transmuted into a
mixture of itself and its opposite, was provided by a garrulous French aristocrat, Henri Comte
de Saint-Simon. Claude Henri de Rouvrois, Comte de Saint-Simon, 1760-1825. Saint-Simon, a hopelessly
The muddled thinker was not aided in his existential confusion by his penchant for picking up
ideas orally at salons, instead of by systematic reading.
For a while, during the censure period, Saint-Simon, who had picked up the Comte du Noyer ideas
at salons, was what could best be described as a fellow traveler of theirs, and pushed
their ideas in his own periodical, L'Industrie.
1816-1818. After that, however, Saint-Simon grew increasingly authoritarian and hostile to laissez-faire liberalism.
Having imbibed libertarian class analysis from Comte de Dunoyet, he characteristically got the concepts confused
and introduced the fateful and unacknowledged contradiction between conflicting classes
in the sense of those who govern or are governed by the state versus employers vis-à-vis wage earners on the free market.
The Marxian jumble was Saint-Simon's dubious contribution to social thought.
After Saint-Simon's death in 1825, his disciple, Olinde Rodriguez, an engineer and son of a bureaucrat,
– joined by Enfantin and Bazar – founded the Saint-Simonian journal Le Producteur,
which followed by conferences and tracts for the remainder of the 1820s, converted their
deceased masters' confused social philosophy into a militant proposal for a totalitarian
socialist system.
This system was to be run by what the Saint-Simonians considered the true class representatives
of Industrialism, an alliance of engineers and other technocratic intellectuals with
investment bankers, coordinated and led by a banker-dominated central bank.
In short, in contrast to Communist Socialism, which was at least ostensibly egalitarian,
Sansimonianism was frankly elitist, to be run by the good and allegedly modern classes.
Thus the Saint-Simonians, who were the first users of the word socialism, repudiated capitalists
and entrepreneurs on behalf of their favored bankers and intellectual classes, representing
the worker-producers.
It is perhaps not coincidental that of the two maximum co-leaders of Saint-Simonianism,
Enfantin and Bazar, Barthéléme Prospert-Enfantin was the son of a banker, was trained as a
of the Banker and Engineer, and had been a mathematics student of Olande Rodriguez.
Nor is it surprising that Sansimonianism appealed hugely to the investment bankers, the producteur
being financed by the prominent banker Jacques Lafitte.
The Sansimonian culture reached the peak of its remarkable influence in France from 1830
1791-1832, after which the dual popes of this political-religious cult, Enfantin and Saint-Amand-Bazart, 1791-1832, had a fiery split on the free-love question on which every disciple was required to take immediate sides.
Unfortunately, the destructive split between the two popes came too late, and the Saint-Simonian
socialist movement had already become astoundingly influential throughout Europe.
In France, artists and writers became Saint-Simonians, including Georges Saint, Balzac, Hugo and
Eugène Sault.
While in music, Berlioz attempted to apply Saint-Simonian principles by composing a song
on the Installation of Railroads, and Franz Liszt played the piano at Sansemonian meetings.
In England, the reactionary Romantic pantheist Thomas Carlyle took to Sansemonian socialism
immediately and became its leading spokesman in England, going so far as to translate and
attempting to publish the master's final work, The New Christianity, in which he foreshadowed
the development of his movement into the cult of a new religion.
Of more lasting importance was the deep influence that Sansimonianism had on John Stuart Mill.
For it was the Sansimonians who were initially and largely responsible for Mill's quasi-conversion
from his father's hardcore free-market views to semi-socialism.
In his autobiography, Mill explains that he read every Sansimonian tract and how it was
It is partly by their writings that his eyes were open to the very limited and temporary value of the old political economy, which assumes private property and inheritance as indefeasible facts and freedom of production and exchange as the dernier mot of social improvement.
Indeed, in a letter to a leading French Saint-Simonian, Gustave Dictal, a friend of Rodriguez, Mill went so far as to concede that some form of Saint-Simonian socialism is likely to be the final and permanent condition of our race, although he differed with them in believing that it would take a long time for mankind to become capable of achieving that happy state.
There is no country, however, that took to Sansimonianism with more gusto than Germany.
In the early 1830s, Sansimonianism went like wildfire through the German literary world.
Its enthusiastic adepts included the eminent political writer Friedrich Buchholz and the
famous poet Heinrich Heine, while the young German school of poets became Sansimonian
adepts.
But the most important influence of Saint-Simonianism in Germany was on the young Hegelians.
Young German poets such as T. Munt and G. Kuhne were Hegelian university lecturers on
philosophy.
More directly, Saint-Simonianism exercised a formative influence on Marx.
In the first place, Marx's hometown of Trier had been part of the German Rhineland, occupied
by France for two decades of the French Revolutionary Wars.
Hence the town had become greatly susceptible to French intellectual influences.
As a result, Trier was rife with Saint-Simonian agitation when Marx was a young adolescent,
so much so that the Archbishop felt obliged to condemn Saint-Simonian doctrines from the
pulpit.
Ludwig Gall, former secretary to the Trier City Council, was a prominent and prolific
Sansemonian writer.
There is little doubt that Marx read Gall's writings.
Another powerful influence on Marx was one of his favorite teachers at the University
of Berlin, Eduard Gans, one of Hegel's favorite disciples, who taught criminal law.
Marx was both a Hegelian and a Saint-Simonian, and the interpenetration of the two doctrines
in Germany deeply shaped the views of the young Hegelians, of whom Marx became a leader.
As Billington notes, the entire phenomenon of left Hegelianism has indeed been described
as nothing more than a Hegelianized Saint-Simonianism, or a Saint-Simonianized Hegelianism.
Deeped in Saint-Simon as well as Hegel, Marx found the concept of class struggle as strained
through the defective lenses of the Saint-Simonians ready to hand and suited for incorporation
into his own grand design.
In addition to the class struggle between proletarians and capitalists, Marx also adopted
the Saint-Simonian version of industry and its embodiment, among the Saint-Simonians
as inevitably victorious, along with the future goal of history as the withering away of the state and the replacement of the government of men by the administration of things.
There was, of course, a crucial difference between this abortive concept and its original.
Among Comte and Dunoyet, the utopian state was to be a purely free society of individual property holders and free market exchangers.
For Marx, it was to be a communal collective self-ownership of all goods by man, with no extant division of labor, specialization, money or exchange.
Marx himself has testified to a particularly powerful Sansemonian influence over him, as
conveyed by his beloved mentor, surrogate father and future father-in-law, Baron Ludwig
von Westphalen.
Towards the end of his life, Marx told his close friend and admirer, the Russian liberal
aristocrat, Maxim Kovalevsky, that he had imbibed Sansemonianism from von Westphalen,
who was apparently an ardent admirer of Saint-Simonian doctrine.
We have already seen that in the Communist Manifesto Marx and Engels slipped into the
original libertarian rather than the Saint-Simonian Marxian theory of class, confusing the state
privileged with capitalists who hire workers on the market.
In a penetrating discussion, Professor Ralph Reiko has pointed out that the term bourgeois
The bourgeois, as used on the continent, provided the basis for that confusion.
As Reiko notes, when Marx says that the bourgeoisie is the main exploiting and parasitic class
in modern society, bourgeoisie may be understood in two different ways.
In England and the United States it has tended to suggest the class of capitalists and entrepreneurs
who make their living by buying and selling on the more or less free market.
On the continent, however, the term bourgeoisie has no such necessary connection with the
market.
It can just as easily mean the class of civil servants and rentiers off the public debt
as the class of businessmen involved in the process of social production.
Hayek goes on to state that the systematic exploitation of other classes by bureaucrats
and public debt holders was a commonplace of 19th century social thought.
Tocqueville, for example, denounces the middle class rule under the bourgeois monarchy of
Louis Philippe, 1830 to 1848, as follows.
It settled into every office, prodigiously increased the number of offices, and made
a habit of living off the public treasury almost as much as from its own industry.
But this is far from all.
Professor Reiko shows that in analyzing specific historical events, particularly in contemporary
French history, Marx and Engels kept slipping into the state-bound, two-class, libertarian-type
analysis.
Thus, consider Marx's 18th Brumaire of Louis Bonaparte, 1852, analyzing the events leading up to Bonaparte's coup of 2 December 1851,
which Marx himself portrayed as a demonstration how the class struggle in France created circumstances and relationships
that made it possible for a grotesque mediocrity to play a hero's part.
In the 18th Brumaire, Marx writes indignantly of this executive power, with its enormous
bureaucracy and military organization, with its ingenious state machinery embracing wide
strata, with a host of officials numbering half a million, this appalling parasitic body
which enmeshes the body of French society like a net and chokes all its pores, spraying
Starting up in the days of the absolute monarchy.
Every common interest was straightway severed from society, counterpoised to it as a higher
general interest, snatched from the activity of society's members themselves and made
an object of government activity, from a bridge, a schoolhouse and the communal property of
a village community, to the railways, the national wealth and the National University
of France, all revolutions perfected this machine instead of smashing it.
The parties that contended in turn regarded the possession of this huge state edifice
as the principal spoils of the victor.
Under the second Bonaparte, the state seems to have made itself completely independent,
as against civil society the state machine has consolidated its position.
Not only is Marx using here a two-class, state-bound analysis of class conflict, but he foreshadows
the libertarian development of the idea of the state as an anti-social instrument, as
in Herbert Spencer and in Franz Oppenheimer and even Albert J. Knox's advanced 20th century
libertarian analysis of state power as being an interest inherently opposed to and exploitative
of Social Power.
Fine, but where in all of this are the capitalists and their use of the state as their executive
committee to redouble their exploitation of the proletariat?
Where in fact are capitalists and proletariat at all?
As Reiko points out, there is a delicious irony here, for sophisticated libertarian analysts
speak not only of state power, but also of various groups in history, Asiatic bureaucratic
despotism, feudal landlords, communist parties or whatever, who have managed to gain control
of the state and use its coercive apparatus of exploitative rule over the rest of society.
Thus, as Reiko notes, the Marxian analysis here completely ignores the massive use of
of State Power by Segments of the Capitalist Class, and limits itself to the exploitative
activities of those directly in control of the state apparatus.
Why Marx and Engels should care to whitewash the capitalists in this way, Reiko concludes
ironically, I cannot say.
Marx repeated a similar analysis 20 years later in his The Civil War in France, 1871,
on the rise and fall of the Paris Commune.
That Commune, he wrote, aimed at restoring to the social body all the forces hitherto
absorbed by the state parasite feeding upon and clogging the free movement of society.
In particular, the Commune was able to succeed, at least for a while, by destroying the two
greatest sources of government expenditure, the standing army and state functionarism.
Finally, Engels, in his 1891 preface to the Civil War in France, applied this same libertarian
and very un-Marxian analysis to the existing political situation in the United States.
Nowhere do politicians form a more separate and powerful section, class, of the nation
than precisely in North America.
There, each of the two major parties which alternately succeed each other in power is
itself in turn controlled by people who make a business of politics.
It is in America that we see best how there takes place this process of the state power
Making itself independent in relation to society, we find two great gangs of political speculators
who alternately take possession of the state power and exploit it by the most corrupt means
and for the most corrupt ends. The nation is powerless against these two great cartels of
politicians who are ostensibly its servants but in reality dominate and plunder it.
Professor Reiko concludes his analysis as follows.
It seems, therefore, that there are two theories of the state, as well as, correspondingly,
two theories of exploitation within Marxism.
There is the customarily discussed, and very familiar one, and the one which Marx himself
proclaimed, of the state as the instrument of the ruling class, and the concomitant
Theory which locates exploitation within the production process, and there is the theory
of the state which pits it against society and nation, two surprising and significant
terms to find in this context.
Moreover, it would seem suggestive that it is this second theory that predominates in
those writings of Marx which, because of their nuanced and sophisticated treatment of concrete
and Immediate Political Reality, many commentators have found to be the best expositions of the
Marxian historical analysis.
7.
The Legacy of Ricardo
As Karl Marx plunged into the economics of capitalism that would occupy the rest of his
life, he found ready at hand a marvelous weapon, Ricardian economics.
In contrast to J.B. Say and the French tradition, Ricardo concentrated not on market exchange
and its inevitable focus on individual actors and exchangers benefiting from exchange, but
on production, followed by distribution of income as a distinct and separate process.
Ricardo's main focus was on how this social income from production is distributed, whereas
Say or Torgot looked at individual factors of production and how their income emerges
from production and exchange.
Ricardo focused only on entire, allegedly homogeneous, classes of producers, workers
earning wages, capitalists earning profits, and landlords acquiring rent.
As von Mises pointed out, on the market there are always only single individuals.
Even Marx had to make a point of explaining that as purchases and sales are made only
between single individuals, it is not admissible to look to them for relations between social
classes.
For Ricardo, then, tautologically, given total production, which was mysteriously there and
not explained.
More of the fixed total pie obtained by one class must mean less for other classes.
There are, as we remember, no entrepreneurs in Ricardo, because the Ricardians had their
eyes firmly fixed on long-run equilibrium, which is supposed to describe living reality,
and in such equilibrium, devoid of change or uncertainty, there is no room for entrepreneurship.
Thus, for Ricardo, the conditions were already there for a class struggle theory of the capitalist economy.
Not only that, for the delighted Marx found the Ricardian doctrine was, in effect, a quantity of labor theory of value.
Utility dropped out, and since only reproducible goods, and not non-reproducible goods, such as Rembrandt paintings, were considered explainable,
Only the cost of production was considered a determinant of the embodied value of goods, and since Ricardo finessed rent as allegedly not a part of cost, the only possible cost except labor hours was profit, interest, or cost of capital, and this was so small as to be readily neglected.
Besides, profits are allegedly only a declining residual after the payment of wages, which are doomed to keep rising in money, but not in real terms, as population continues to press upon the food supply.
In the gloomy Ricardian perspective, there are two logical paths toward a call for change in the status quo.
For Marx, the labor theory of value, the view that labor is the sole producer of value, meant that the capitalist's return, profit, constituted the exploitative extraction of surplus value from the workers.
The workers produce all value, but the capitalists are able somehow to coerce the workers into accepting wages that are below the full product.
In fact, adopting the Malthusian, Ricardian view of population, the workers are paid a subsistence wage, while the capitalists extract the remainder of the workers' product as their surplus value or profit.
To the old Malthusian problem, wouldn't the same problem of overpopulation foil a socialist economy?
The Marxian answer was that such an iron law of wages, to adopt the term of LaSalle, would
not apply under socialism.
Oddly, neither Marx nor his critics ever realized that there is one place in the economy where
the Marxian theory of exploitation and surplus value does apply.
Not to the capitalist-worker relation in the market, but to the relation of master and
and Slave Under Slavery
Since the masters own the slaves, they indeed only pay them their subsistence wage, enough
to live on and reproduce, while the masters pocket the surplus of the slave's marginal
product over their cost of subsistence.
This surplus value extracted from the slave constitutes the profits of the masters from
slave ownership.
In the free society, in contrast, the workers, owning their own bodies and their own labor,
pocket their full marginal product, discounted, as an Austrian would add, by the interest
return the laborers freely and willingly pay to the capitalists for advancing them the
value of their production now, rather than wait until after the product is produced
and sold.
But such is the process of capitalization in the market, that in a system of slavery
in the midst of a general market economy, as in the American South, the surplus value
will be capitalized by bidding up the value and therefore the selling or buying price
of the slaves.
The long-run tendency will be for the business of slavery to yield a return equal to that
of any other industry.
The surplus profits will be bid away into the general rate of return on capital.
To return to Marx, he also found very handy the Smithian concept, not to the latter's
credit, much employed by Ricardo, that only material commodities and not immaterial services
constitute production or value.
All goods are frozen labor, whereas immaterial labor services are, in Marxian terms, non-productive.
In this area, Marx took a giant step backwards from Ricardo to Adam Smith.
All this, however, fitted neatly into Marxian philosophical materialism.
Marx also found that Ricardo had already treated all labor as homogeneous, with any differences
was in quality simply weighted by some sort of index to reduce them to quantity of labor hours.
One logical path for a radical Ricardian, clearly, was to call for the expropriation of surplus value
and the establishment of a system in which the laborers earn the full value of their product.
As we shall see shortly, this was the path taken by the Ricardian socialist writers in Britain.
But there was another, more logical path. After all, the Ricardians could and did say
that capital earned profits from their supplying workers with capital goods, with frozen labor.
Such a service is clear. Otherwise, the workers would not have had to rely on capitalists for
money while working on the product. Marx's reply that capital goods being frozen labor
should be owned by the workers, misses the point that something, some service, must have
been added by the capitalists, which as we have already seen was essentially savings,
and if we may put it that way, who were advancing the workers' frozen time.
A very different radical path, much more Ricardian and indeed already trod by James Mill, was
was to concentrate on the other possible bugbear class in the Ricardian system, the landlords,
they who simply extract a return for no service, for simply sitting on the original and indestructible
powers of the soil.
Furthermore, in their own vision of historical laws, the orthodox Ricardians saw the capitalists
Marks losing profit, the workers static at subsistence level, and the social product
increasingly eaten up by the parasitic landlord class.
The nationalization of land rent, then, the pre-Henry Georgist route, was taken by other
disciples, including the last of the consistent radical Ricardians, Henry George.
But how has Marx managed to dispose of the land question that so agitated Ricardo and
Mill?
First of all, Marx was the great prophet of man as labourer.
In his version of Hegelianism, man created nature, indeed, the entire universe.
Since land is man's creature, there is no room for worry about land or land-created
value.
is all. Second, land as the basis for technology, the economy and the social system, was the key to the feudal system, but feudalism was part of the dying pre-capitalist, pre-industrial order, a reactionary remnant unworthy of attention.
Basically then, Marx simply assimilated land into capital and returns on land into profits.
Thus land, the annoying superfluous third class of factors, can drop out and make way
for the mighty two-class polarization and final struggle between the capitalists and
the proletariat.
8.
Ricardian Socialism
Marx was hardly the first person to arrive at radical proletarian conclusions from the
Ricardian system and the labor theory of value.
Mediating between Ricardo and Marx were the Ricardian socialists, who greatly influenced
Marx, but whose influence has been depreciated by Marxists, including Marx himself, who liked
to think that the master's unique genius in arriving at neo-Ricardian socialism had no predecessors.
The first Ricardian socialist was William Thompson, 1775-1833, a well-to-do Irish landlord
from County Cork.
Thompson's prolix and repetitious work, An Inquiry into the Principles of the Distribution
of Wealth, published in 1824, went into three editions in the next half century.
An extreme Benthamite utilitarian, Thompson, in his inquiry also simply declared that labor
is the sole parent of wealth.
Neither utility, pleasure or scarcity had anything to do with it.
From this flat assertion, the labor theory of value swiftly followed.
As Alexander Gray puts it with his characteristic wit, it should be obvious that if the definition
selected gives in advance an assurance labor is the sole parent of wealth, this ought to
be a considerable aid towards proving that wealth may be attributed entirely to labor.
Thompson advocated a world of free and voluntary exchanges as a way of ensuring that workers
will earn their product.
But what of the existing system of exchange?
Anticipating Marx, these exchanges were, according to Thompson, coerced.
The capitalists seizing the products of their labor, of the laborers, by force.
But here, on the edge of Marxism, Thompson retreated into a libertarian class analysis.
For what constitutes such coercion?
An entire spectrum of bounties, protestations, apprenticeships, guilds, corporations, monopolies,
which sounds very much like Comte du Noyer or James Mill.
But Thompson presses on.
Rent and profit are, in particular, surplus value, in Thompson's original phrase, extracted
from the exploited workers.
But then Thompson retreats again from his full vision, conceding that the laborer must pay
for the use of these capital goods when so unfortunate as not to possess them.
So even though Thompson is full of invective against the greedy and rapacious capitalists,
he concedes that they perform a necessary function.
How much, then, should they be paid?
It is not surprising that Thompson floundered in trying to discover such a principle.
Thompson wound up, then, far from a revolutionary.
Instead, his mild, pre-John Stuart Mill-like solution was to encourage cooperatives as
a means of arriving at interclass harmony in his Labor Rewarded, 1827.
But this scarcely exhausted Thompson's heresies as a pre-Marxian.
For being dedicated to free exchange, Thompson sensibly had to admit that from exchange often
emerges accumulation, and from accumulation there arises the dread capitalist class.
Thus, you cannot abridge the exchanges and consequent accumulations of the capitalist
without at the same time abridging all barter and, further, admitting the serpent of wages
and rent back into Eden, why not permit the laborer to exchange for the use of a house,
a horse, a machine, as well as for its possession?
The other founding father of Ricardian socialism in the 1820s, John Gray, 1799-1883, was possessed
Just like Thompson of a most un-Marxian spirit of moderation.
As a young Scottish clerk in a wholesale house in London, Gray published his socialistic
Lectures on Human Happiness in 1825.
An arch-utilitarian and expounder of the Ricardian labor theory of value, Gray fulminated against
capitalists as exploiters of the working class, and, like Marx, saw the seeds of such exploitation
in Trade or Barter.
If William Thompson's innovation was the phrase surplus value, John Gray's particular contribution
to the Marxian brew was to bring back in a heavy way the physiocratic Adam Smith notion
of productive versus unproductive labor, and thus rescue this flawed concept from Ricardian
neglect.
Not only that, but Gray narrowed the Smithian standard of productive labor considerably.
As Gray put it, they only are productive members of society who apply their own hands either
to the cultivation of the earth itself or to the preparing and appropriating the produce
of the earth to the uses of life.
Having narrowed the definition of productive, Gray then began to make curious concessions
admitting, for example, that some occupations may be to some extent useful, although unproductive.
John Gray then proceeded happily to run through the list of British occupations and to allocate
in an obviously purely arbitrary way the percentages of productivity or usefulness in each occupation.
Thus Gray contends that merchants, manufacturers and others who are mere distributors of
of Wealth could still be useful, but only in a sufficient number.
Gray concluded that the productive classes were far short of half the total population.
Harking back, perhaps unconsciously, to the ancient Greeks, Gray reserved some of his
choicest venom for the retailers, whom he savaged as productive only of deception and
and falsehood, folly and extravagance, slavery of the corporeal and prostitution of the intellectual
faculties of man.
It turns out that for Gray the main sin, the crucial evil, is competition.
The competition of labor pushes the wages of labor down to a minimum, standard Marxian
and Fair no doubt.
But in addition, even though labor is supposedly the sole creator of value, Gray also worries
that competition with equal perniciousness also keeps to a minimum the amount of profits
and rent.
John Gray concludes with the general principle that every individual in society, except those
Businesses living on fixed incomes finds their incomes limited and ground down by competition.
It turns out that the exploitation of labor, indeed of everyone, is engineered by competition
itself, which limits production.
Put an end to competition, then, and not only will the ideal world arrive where the laborer
The World is only impoverished because of competition. Eliminate it and wealth will be abundant for all.
Even though Gray maintained that competition could be abolished immediately and with only good effects,
He was distressingly vague on how to accomplish this feat. He seemed to favor some sort of all-embracing
cooperative, thereby bringing him close to Thompsonian reform.
Soon, however, Gray shifted his attention to the limitations on production,
allegedly imposed by hard money, and so he turned increasingly to a call for
accelerating amounts of cheap and easy money.
Thus, in 1831, Gray's book, The Social System, called for cheap and abundant credit to fuel
and finance increased production, guided by a governmental national bank.
Gray, of course, also advocated irredeemable paper money and the abolition of the gold
standard.
This analysis was further developed in John Gray's last work, Lectures on the Nature
and Use of Money, 1848.
After 1848, John Gray's social protests ceased completely, and so until recently it was assumed
by historians that he had died around 1850.
It turns out, however, that Gray, shortly after the publication of his Lecture of Human
Happiness, founded with his brother James the famous publishing firm of J. and J. Gray
Gray of Edinburgh.
As the firm flourished, especially after 1850, Gray settled down to a comfortable existence
and died at a ripe old age of 84 in 1883.
A decade and a half after Thompson and Gray, the third leading Ricardian socialist made
his Appearance, John Francis Bray, 1809-1897, in his major work, much quoted by Marx, Labor's
Wrongs and Labor's Remedy, 1839. Bray was born in Washington, D.C., the child of English
actors, and when his mother died, his ailing father brought John Francis back to Leeds
in England in 1822.
In Leeds, Bray became a compositor and plunged into the trade union movement, becoming treasurer
of the Leeds Working Men's Association in 1837.
Like the others, an extreme utilitarian, Bray, in Labor's Wrongs, asserts that God had meant
men to be happy, but that unhappiness was injected into the world by the institution
of Private Property, which destroyed the just institution of communal property, particularly
in the land.
From private property arose the odious division of labor and class conflict, exploitation
of laborers, and extraction of their surplus value by the capitalist class.
Moreover, Bray averred that the root problem is the alleged fact of unequal exchange, although
Although understanding that in market exchanges each party benefits, Bray asserts that, especially
in a labor contract, this is not enough, that the exchange and its benefits must be equal.
Not realizing that there is no point in any exchange unless the value for each man of
each of the two exchanged goods is unequal, Bray, in a notable pre-Marxian passage, asserts
Men have only two things which they can exchange with each other, namely labor and the product
of labor.
Therefore, let them exchange as they will.
They merely give, as it were, labor for labor.
If a system of exchanges were acted upon, the value of all others would be determined
by the entire cost of production and equal values would always exchange for equal values.
Here we have packed into one short compass a number of crucial Marxian fallacies that
only commodities are produced or important, in contrast to allegedly non-productive services.
The ancient Aristotelian fallacy that exchange implies equality of value, the labor theory
of value, and the idea that in a just world, prices will be equal to their costs of production
– basically, the quantity of labor hours expended in production.
To John Bray, as to Marx after him, the remedy for all this systemic evil is communism, the
The most perfect form of society man can institute.
But in contrast to Marx, Bray saw no inevitable mechanism or law of history to yield that
great event.
To the contrary, and in contrast to the other communists of his day, John Bray perceived
that communism required a new communist man to work.
But that the advent of this new man was definitely not on the horizon.
Many communism would come up against the foul and loathsome selfishness which now more or
less accompanies every action, clings to every thought, and pollutes every aspiration.
Instead, Bray focused his vision not on the impractical and remote ultimate goal, but
on his allegedly practical transition or intermediate social goal.
That happened to be a hypertrophied version of the cooperative schemes that had proved
so alluring to Thompson and Gray.
Gray proposed that the world be organized into one vast cartelized network of cooperative
corporations, that is, cooperatives organized on the principle of one stockholder, one vote.
The cartelized network would be achieved by the workers and cooperators buying out all existing capitalists.
Bray did not seem to see that acquiring the capital to finance this most massive buyout of all time might be even more impractical than organizing Marx's violent proletarian revolution.
Scratch a socialist of this epoch and one will find a money crank.
Sure enough, Bray envisioned that the cooperative cartel, once established, would eliminate
existing money and substitute a national bank that would issue notes to each worker based
on the quantity of labor time he had expended in production.
The goods the laborer would buy would, in their turn, be priced at the amount of labor
time embodied within them.
Perhaps if Marx had ever been interested in charting his future communist economy, labor
time notes might have been part of his package.
Strictly there would be no reason for Marxian labor time notes to increase, but John Bray,
as an inflationist, did not of course see it that way.
The function of his national bank would be to keep money issued and flowing like blood
within the living body, equably through society at large and infuse universal health and vigor.
The note issue would of course always be kept within the limits of the actual effective
capital existent, a form of needs-of-trade argument at least as absurd as the usual variant.
For the nominal value of existing capital would of course increase, as the money supply
kept rising.
A few years after the publication of Labor's Wrongs in 1842, Bray returned to the United
States.
A second book, A Voyage from Utopia, was finished in manuscript but remained unpublished
until the 1950s.
For the rest of his life in the United States, Bray wrote sporadically, contributing many
and many letters to labor and socialist periodicals, as well as chapters in the mid-1850s for an unfinished book, The Coming Age.
Bray's life was as sporadic as his output. He found making a living precarious, working for brief jobs as a printer for newspapers,
and complaining rather inconsistently with his doctrines that American employers were far more exploitative than British.
The Yankees, as Professor Dorfman paraphrased Bray, appearing more like gamblers and sharpers than honest businessmen.
Eventually, Bray went west to Michigan, where he had inherited some land and eked out a living as a newspaper man and small farmer.
During the 1870s and 1880s, Bray became vice president of the American Labor Reform League and was a member of the Socialistic Knights of Labor.
His later writings, some of which denounced spiritualism, emphasized a tax on the gold
standard and a call for an abundance of state paper money that would allegedly drive interest
rates down to zero.
His communist ideal was now abandoned as utopian.
Two of Bray's later writings are worthy of note.
Even though he was opposed to slavery in Labour's wrongs, his opposition to the Civil War in
and his anonymous anti-war pamphlet, American Destiny, What Shall It Be?
Republican or Cossack, 1864, led him onward to judge slavery as really no worse than countries
cursed by a huge public debt.
Moreover, the natural state of the black man to bray is nakedness and indolence, so that
and a South that freed its slaves would decay irremediably, with capital disappearing and
plantations returning to the wilderness.
In his final book, God and Man, a Unity and All Mankind, a Unity, 1879, John Bray added
to his money-crankism the idea of a non-theological religion in which establishing the right social
A striking anomaly is a writer of the 1820s and later who is invariably listed by historians
as a leading Ricardian socialist, but who was most emphatically neither a Ricardian
nor a socialist.
Thomas Hodgkin, 1787-1869, was a brilliant, innovative and self-educated political theorist
who, far from being a socialist, was a laissez-faire libertarian to the point of being an individualist anarchist.
Hodgkin's father was a storekeeper at the naval dockyard who sent his son to sea at the age of 12.
Eventually, Hodgkin's individualist instincts and principles rubbed against naval discipline,
and one day, he writes, I complained of the injury done me by a commander-in-chief to
himself in the language that I thought it merited.
He had unjustly deprived me of every chance of promotion from my own exertions, and that
was robbing me of every hope.
As one might expect, Hodgkin's naval commander did not take kindly to his outburst of righteous
indignation, and Hodgkin was forcibly retired from the Navy at half pay at the comparatively
young retirement age of 25.
Embittered, Hodgkin promptly took revenge on the Navy by publishing his first book,
An Essay on Naval Discipline, 1813, a blistering attack on military tyranny.
Eloquently, Hodgkin began his work by setting down the main lesson he had learned, patiently
submitting to oppression because it comes from a superior is a vice.
To surmount your fears of that superior and resist it is a virtue.
Hodgkin's experience left him a bitter enemy of government and government intervention in all its forms, and several years of traveling around Europe and reading and meeting people strengthened and deepened these convictions.
Returning to Great Britain, Hodgkin published a two-volume travel book, Travels in the North of Germany, Edinburgh 1820, in which, as Alexander Gray puts it,
Innocent riser-builder are interlarded with anarchistic digressions,
doubtless to the amazement and perturbation of many of his readers.
Settled in London, Hodgkin was, for the rest of his life,
to work as a lecturer and a journalist.
He worked for a while with people who seemed to be his natural allies
for laissez-faire, Francis Place, James Mill and the Philosophic Radicals.
But very shortly it became clear that there were severe philosophical differences between them.
In the first place, Hodgkin abandoned his early Benthamite utilitarianism for a trenchant
and militant natural law and natural rights position.
In his brilliant and logical work, The Natural and Artificial Right of Property Contrasted,
In 1932, Hodgkin presented a radicalized Lockean view of property rights.
An ardent defense of the right of private property, including a homesteading defense
of private property and land, Hodgkin corrected Locke's various slippages from a consistent
Lockean position.
To Hodgkin, it was crystal clear that natural private property rights were sound and just,
such as each man in his own person, or in property that he creates, or land that he homesteads, or in property which he acquires in an exchange of just property titles.
On the other hand, great mischief was performed by artificial property rights, that is, rights created by government artificially, in defiance of natural law and natural rights.
Hodgkin's work remains today as one of the best expositions of natural property rights doctrine.
Another difference with the Benthamites was that, unfortunately and anomalously,
Hodgkin imbibed the labor theory of value from another influential Ricardian socialist of the day,
the pseudonymous Piercy Ravenstone.
Ravenstone denounced private ownership of land and capital for creating stolen or artificial property.
Whereas, since labor is the sole creator of production, by rights or naturally, all income should redound to labor.
Rent and profit, asserted Ravenstone, are extracted from the product of labor.
This fund for the maintenance of the idol is the surplus produce of the labor of the industrious.
Furthermore, Ravenstone put forth a truly bizarre theory of capital, in which capital is a non-existent concept designed to cloak the theft of labor's surplus.
Capital, Ravenstone absurdly declared, may be increased to any imaginable amount, without
adding to the real riches of a nation.
From then on, Hodgkin was afflicted by an anomalous combination of laissez-faire anarchism
and a Ravenstonian labor theory of value.
How square the two?
At first, Hodgkin tried to do so by attributing the exploitation, the surplus value of the
of Labor, solely to such government intervention as the Combination Laws, which restricted
the right to form labor unions.
Hence, Hodgkin helped found the Mechanics Magazine, and then its affiliate, the London
Mechanics Institute, an institution for lectures to the working classes.
During the course of the successful Ricardian-Benthamite agitation for repeal of the Combination Laws
in 1824, Hodgkin wrote his Ravenstonian booklet, Labor Defended Against the Claims of Capital,
1825, followed by Mechanics Institute Lectures, published as Popular Political Economy, 1827.
Particularly bizarre was Hodgkin's development of the Ravenstonian view that capital is unimportant
and non-existent.
Man denies that any savings are involved in capital, any advances from foregone consumption.
Circulating capital, he says, sophistically, are not produced in advance.
The bread the worker buys is baked each day, rather than being stored in advance by the
capitalist.
In fact, of course, no one claims that the capitalist actually stores the worker's food
and other means of subsistence in advance.
But his saved money is advanced ahead of production and sale to the worker, which enables the
worker to buy his subsistence now, instead of having to wait for years.
As for fixed capital, not only is it stored up labor, a general Ricardian socialist argument,
but these machines are only inert, decaying and dead matter, unless guided, directed and
and applied by skillful hands.
Hodgkin concludes that fixed capital does not derive its utility from previous, but
present, labor, grotesquely ignoring the fact that just because capital and labor need each
other does not make labor the sole factor of production.
In the crowning absurdity, Hodgkin declares that it is a miserable delusion to call capital
something saved.
There is no question that Hodgkin's ultralaborism influenced Karl Marx, but his extreme labor
theory of value does not make him a Ricardian, much less a socialist.
In fact, Hodgkin was highly critical of Ricardo and the Ricardian system, denounced Ricardo's
abstract methodology and his theory of rent, and considered himself a Smithian, rather
than a Ricardian.
Roth's natural law and harmony of interest free market doctrine was also far more congenial
to Hodgkin.
Although continuing to be a laborist, Hodgkin became increasingly repelled by the English
labor movement and its growing interest in state intervention.
Labor unions he no longer saw as much of a remedy, let alone a panacea.
Increasingly he saw that the only way to reconcile laborism and laissez-faire was to
to press for the repeal of all government intervention, indeed, of all positive law that was not simply a restatement of natural law and natural rights, for all such law was an invasion of rights of property.
In contrast to the Ricardian socialists who extolled cartel-like cooperatives, Hodgkin called for removal of all government restrictions on free and unlimited competition.
He enthusiastically joined Cobden and Bright in agitation for repeal of the Corn Laws,
and in repealing feudalistic laws restricting and entailing land from free sale outside
the family.
From 1846 to 1855, Hodgkin served as an editor of The Economist, the journalistic champion
of laissez-faire, with as yet no important incompatibility of views with editor-in-chief
by James Wilson. There he became a friend and mentor of the young Herbert Spencer, hailing
Spencer's anarchistic work, social statics, with the exception of denouncing the early
Spencer's pre-Georgist land socialism on behalf of Lockean individualism. Furthermore, even
at his most laborist in the 1820s, Thomas Hudgeskin, in contrast to John Gray, widened,
Rather Than Narrowed the Definition of Labor
Mental activity is as much labor, he pointed out, as muscular exertion, so he warned against
limiting the term labor to the operations of the hands.
Not only that, Hodgkin also pointed out cogently that the capitalist is also very often a manager,
and therefore also a laborer.
So whereas capitalists may be oppressors, businessmen in their capacity as managers
or masters are laborers as well as their journeymen, and there is nothing wrong with the wages
of management.
In addition, the hudskin of the 1820s hailed retailers as indispensable agents and praised
wholesalers and merchants in Smithian terms as conferring blessings on society by pursuing
their own interests.
Even bankers are still very important and have long been very useful laborers.
Banking, let us never forget, is altogether a private business, and no more needs to be
regulated by meddling statesmen than the business of papermaking.
Finally, in his popular political economy, Hodgkin eulogized the market price system,
which in a deep sense is the finger of heaven, indicating to all men how they may employ
After his retirement from the Economist Editorial Board, Hodgkin continued to write articles
for that journal.
There he praised commerce.
We are all merchants, and trade is only mutual service by mutual dealing.
Speculation, without speculation we should have no railroads, no docks, no great companies.
And competition, the soul of excellence and gives to every man his fair reward.
In his final publication of lectures on criminal law delivered in 1857, Thomas Hodgkin summed
up his economic and political philosophy.
The people's wants for higher standards of living, he declared, can only be satisfied
by more freedom and less taxation.
The free trade principles of the 1840s must be only a stepping stone towards ever purer
and more consistent laissez-faire.
Ultimately, all government services must be privatized and subjected to the requirements
of the free market.
The unrestricted competition which nature establishes must be the rule for all our transactions,
and by the higgling of the market, which is mutual and free action, the salaries of government
officials and the payments of the priesthood must be regulated as well as the profit of
the shopkeeper and the wages of the laborer.
In printing his lectures, Hodgkin announced his intention of completing and publishing
a Masterwork, The Absurdity of Legislation Demonstrated, which would show, in a connected
didactic form, that all legislation, which of course includes government, is founded
on false assumptions.
Unfortunately, Hodgkin never completed the work, or published anything further, and when
When he died in 1869 at the age of 82, this man, once so widely influential, received
not a single obituary notice in the London papers.
But at any rate, enough is surely known to dismiss the view that this individualist,
despite the laborism that influenced Marx, was in any sense a socialist or even a Ricardian.