"Marx, Hegel, Ricardo:
The 'Inverted World' in the Heart of the Critique of Political Economy"

Loren Goldner

[This article was written for Wildcat (Germany), #73.]

“Yet the way that surplus-value is transformed into the form of profit, by way of the rate of profit, is only a further extension of that inversion of subject and object which already occurs in the course of the production process itself…This inverted relationship necessarily gives rise, even in the simple relation of production itself, to a correspondingly inverted conception of the situation… It is, as one can study in the case of the Ricardian school, a completely inverted attempt to want to attempt the laws of the rate of profit as laws of the rate of surplus value, or vice versa.” — Marx, Capital, vol. III, London, 1981, p. 136. [Translation slightly modified. All Marx quotes from Capital are from the Fowkes and Fernbach translations; page references without quotes are from the German edition (vols. 23–25 of the Marx-Engels Werke). Quotes from Theories of Surplus Value are from the MEW, Berlin 1956-1975; my translation.]

In the past forty years, it has become easier to draw a sharp line between Ricardo’s and Marx’s theory of value and between Ricardo’s economics and Marx’s critique of political economy.

Ricardo was for Marx the “most advanced capitalist viewpoint” in political economy. Marx’s “sensuous transformative activity” is, in the "Theses on Feuerbach," the “active side developed by idealism”, and in particular by the other “most advanced capitalist viewpoint”, the work of G.F.W. Hegel (1770–1832).Marx proceeds like Hegel in the Phenomenology of Mind. Where Hegel begins with “sense certainty” and finds that it implies as its presupposition (Voraussetzung) absolute knowledge, Marx begins with the commodity, the “cell” of the capitalist mode of production, and shows that it has as its presupposition the movement of the total social capital. Marx begins vol. I of Capital with the immanent critique of Ricardo, echoing Ricardo’s belief that the value of a commodity is determined by the socially necessary labor time required for its production (Ricardo, Principles of Political Economy and Taxation, London, 1977, p. 5). Here, and throughout much of vols. I and II, Marx is “making the petrified relationships dance by singing to them their own tune”. Marx’s actual view, that the value of a commodity is determined by the socially necessary labor time required for its re-production, emerges only slowly in Capital.

In fact, “Ricardian” or quasi-Ricardian formulations (once again, as immanent critique)  are retained throughout much of vols. I and II: the focus (in vol. I) on the value of a commodity being determined by the necessary time of its production, the exclusive focus on the immediate process of production, the atomistic viewpoint of the single capitalist enterprise, and the assumption of simple reproduction. “We showed in Volume I how accumulation proceeds for the individual capitalist” (Capital, vol. II p. 565). As for vol. II, “What we were dealing with in both Parts One and Two, however, was always no more than an individual capital“ (ibid. p. 429). As Marx says in vol. III, capitalism finds no limit in the immediate process of production, or at best a very elastic one, and its real problem is the re-production of the total social capital presented at the end of vol, II and throughout vol. III. Again, near the end of vol. III, Marx criticizes political economy because “the interconnectedness of the reproduction process is not understood, i.e. as this presents itself not from the standpoint of the individual capital, but rather from that of the total capital (Capital, vol. III, p. 983). The total social capital, distinct from a mere additive sum of individual capitals, as the framework for distribution of the average rate of profit to those individual capitals, in the context of expanded reproduction, is the decisive “apples to oranges” shift between vols. I and most of vol. II of Capital, on one hand, and the concluding chapters of vol. II and the entirety of vol. III. “Simple reproduction on the same scale seems to be an abstraction, both in the sense that the absence of any accumulation or reproduction on an expanded scale is an assumption foreign to the capitalist basis” (Capital, vol. II, p. 470).

Marx’s immanent critique of Ricardo’s inversion culminates in the concluding chapters of vol. III of Capital, first in the famous “trinity” passage (Vol. III, p. 969): the “trinity” of capital-interest, ground rent and wage labor), the “bewitched, inverted and upside-down world”, and continues in the discussion of the “the absurd dogma, which runs through the entirety of political economy, that the value of commodities in the last instance breaks down into incomes, i.e. into wages, profit and rent“. Smith had already inverted (verkehrt) value into rent, profit and wages (Theorien ueber den Mehrwert, Bd. I, p. 353).

And this in turn completes the sense of Marx’s formulation that, with political economy’s mystifying categories of fixed and circulating capital “the all-important distinction between variable and constant capital is thereby obliterated, and with it the whole secret of surplus-value formation and of capitalist production” (Capital, vol. II, p. 296).

Hegel’s phenomenology, as a closed system, ends in a circle where absolute knowledge returns back on itself into sense certainty, whereas Marx’s open system breaks with the (simple reproductive) “circle” (Kreislauf des Kapitals) running through most of vols. I and II, into “reproduction, moving from the circular form to the spiral” (Capital, vol. I, p. 780: translation amended).

Ricardo’s inversion, understanding capitalism “merely from the vantage point of circulation” (Bd. II, p. 220) prevents him from ever seeing surplus value as such, but only the inverted forms in which it appears to capitalists. Further, Ricardo follows Smith in resolving the entire social product into the three forms of revenue, profit/interest, rent and wages. He treats all capital as variable and abstracts from constant capital (Kapital, Bd. I, pp. 615-616 and Theorien ueber den Mehrwert, Bd. I, p. 376). Smith and Ricardo go so far as to identify accumulation with the consumption of the entire capitalized part of the surplus product by productive workers (Kapital, Bd. I, p. 642). Ricardo muddles the distinction between fixed capital (means of labor) and circulating capital (items of workers’ consumption) confusing constant capital with “forces of nature” (Kapital, Bd. I, p. 409, footnote) Ricardo’s confusion of surplus value with profit means that he does not see that the same rate of surplus value can express itself in the most varied rates of profit and different rates of surplus value in the same rate of profit (Bd. I, pp. 546–547). Thus Ricardo’s confused conception is only true when the composition of capital, the working day, and changes in the rate of surplus value caused by changes in wages are held constant (Bd. III, p. 74, p. 251). 

Ricardo’s worry over the mere possibility that the rate of profit can fall, however, shows his “deep understanding of the conditions of capitalist production”; there is “something deeper, that he merely senses”; that deeper thing is “within the boundaries of capitalist understanding, from the viewpoint of production itself, its limit, its relativity” (Capital, vol. III, p. 368, translation modified; Bd. III, pp. 269-270). Ricardo’s limited theory of value also prevents him from seeing absolute ground rent, because of his belief that the average prices of commodities must equal their values (Theorien ueber den Mehrwert, Bd. II, p. 122).

But equally, perhaps more damning is that when the rate of profit falls, it threatens the development of the capitalist production process, and the “economists like Ricardo, who take the capitalist mode of production as an absolute, feel here that this mode of production creates a barrier for itself and seek the source of this barrier not in production but rather in nature (in the theory of rent)”. (Capital, vol. III, p. 350).

Ricardo’s scenario for the end of capitalism is through the choking off of accumulation through rising rents caused by capitalist development. In the absence of new fertile lands, poorer and poorer lands are brought into production, raising differential rents, hence the price of food, and hence stimulating workers to demand higher wages and thus squeezing profits.

“The natural tendency of profits then is to fall; for, in the progress of society and wealth, the additional quantity of food required is obtained by the sacrifice of more and more labor. This tendency… is happily checked at repeated intervals by the improvements in machinery connected with the production of necessaries, as well as by discoveries in the science of agriculture, whch enable us to relinquish a portion of labour before required, and therefore to lower the price of the prime necessary of the labourer. The rise in the prices of necessaries and in the wages of labour is, however, limited; for as soon as wages should be equal (as in the case formerly stated) to 720 pounds sterling, the whole receipts of the farmer, there must be an end of accumulation; for no capital can then yield any profit whatever, and no additional labour can be demanded, and consequently population will have reached its highest point. Long, indeed, before this period, the very low rates of profits will have arrested all accumulation, and almost the whole produce of the country, after paying the labourers, will be the property of the owners of land and the receivers of tithes and taxes.” (Ricardo, pp. 71–72).  

Thus we see the culmination of Ricardo’s reified view of capitalism through the lenses of fixed and circulating capital, hence concealing surplus value, and behind surplus value, labor power. Ricardo is not Malthus: he does not see capitalism strangled by geometric population growth and arithmetic growth of the means of subsistence. But he shares with Malthus a linear view of material improvements in man’s relationship to nature, and hence imagines a natural barrier — the scarcity of fertile land — as the absolute limit of capitalist accumulation. Marx devoted major work to demonstrating the existence of absolute ground rent (ground rent even for the owner of the poorest soil) in order to show how capitalist social relations (in this case in land) were the barrier that Ricardo could only see in the finite availability of fertile land.  

We have thus far laid out the main outline of Marx’s critique of Ricardo, and shown the immanent limitations of Ricardo’s inverted world view. But the larger question remains: what, in seeing capitalism from the standpoint of circulation, what did Ricardo invert?

To see this fully, we must move to another theoretical level, which connects Marx’s critique of political economy to his early work, and prior to that, to German critical philosophy:

“(Ricardo)…wants production for production’s sake, and this is right…Production for production’s sake means nothing but the development of human productive powers, i.e. the development of the wealth of human nature as a goal in itself"  (Theorien ueber den Mehrwert, Bd. II, p. 111).

Or, as Marx puts it in the Grundrisse, “the development of the rich individuality which is as all-sided in its production as in its consumption, and whose labor no longer appears as labor, but as the full development of activity itself” (London, 1973, p. 325).

Marx rejected political economy’s “eternalization” of commodity exchange by seeing such relationships as transitional between feudalism and socialism; he criticized Hegel for never going beyond “negation” (objects as objects of thought alone) and took over Feuerbach’s idea of the “self-subsisting positive” (1844 Manuscripts) as the real determinate supersession of philosophy and abstract speculation. The real “self-subsisting positive” for Marx was “sensuous transformative praxis” (sinnliche umwaelzende Taetigkeit): “an animal produces its own nature, but man reproduces all of nature” (again, 1844 Manuscripts). For Marx, there was no “positive” practical viewpoint within capitalism except the emerging “class-for-itself” pushing beyond capitalist social relations. Neither the individual capitalist (the atomistic assumption of political economy), nor the total capitalist, nor the working class “in itself” as the wage-labor proletariat could act practically for society as a whole, i.e. in a truly universal way.  Only the proletariat, “dissolving itself” as proletariat, the “class with radical chains” whose emancipation was the precondition of all emancipation, achieved a true “self-subsisting positive” by posing itself as the practical supersession of the existing order, and acceding to the “development of the wealth of human nature as a goal in itself”, once labor power had freed itself from its status as a commodity.

The recent publication  of Marx’s mathematical manuscripts shed light on this problematic (1). They show that Marx, right up to his death, pursued a mathematical program derived from Hegel’s Logic, and not the sections of the Logic which have inspired figures such as Lenin, James, or Dunayevskaya, but precisely the 200 pages on 18th century mathematics in which Hegel is developing a critique of “bad infinity”, the idea of infinity as endless repetition never arriving at its goal, a linear infinity at the end of space and time. Not only did Marx focus on Hegel’s Logic, but he studied all the 18th century mathematicians whom Hegel studied, while remaining unaware of the mathematical revolution of his own time in the work of Riemann, Cantor and Klein. Marx’s own experimentation with calculus was a probably vain attempt to formalize an “actual infinity”, in all likelihood with an eye to solving the reproduction schema of the end of vol. II and the more general problem of expanded reproduction he left incomplete. But he had already stated the practical realization of “actual infinity” without mathematical formalization.  

Capital is a relationship that relates itself to itself; it is the commodified inversion of labor power, the actual relationship that relates itself to itself, the true practical historical location of Hegel’s reified Geist. Labor power as the total worker (Gesamtarbeiter) in a capitalist social relationship is, in inverted, scattered form, the total powers of humanity; it is, through the unconscious, inverted form of capitalist social relationships, this historical “actual infinite”. Because Hegel could not go beyond the self-movement of thought to the practical self-development of humanity, he left this “actual infinite” in the realms of art, religion and philosophy; his idea of “universal labor” (i.e. creativity) was restricted to the Prussian monarch. Marx’s “sensuous transformative praxis” (sinnliche umwaelzende Taetigkeit, from the "Theses on Feuerbach") shifts this creativity to man’s reproduction of all of nature, man’s ability to move his (self) relationship in and through nature to more intensive levels.

 Many people know Marx's quip that communist man "will fish in the morning, hunt in the afternoon, and write criticism in the evening, without for all that being a fisherman, hunter or critic". But the underlying theoretical meaning of that quip is not often grasped; it is usually understood merely to mean the overcoming of the division of labor, but it is rather more than that. It is the practical expression of what is meant here by "actual infinity". It is the concrete expression of the overcoming of the reduction of human beings to their fixed life activity in the capitalist division of labor.
 

The "full development of activity itself", in the above quote from the Grundrisse, is the "practical" realization of actual infinity. It means that every specific activity is always the "external" expression of a more fundamental general activity, having an expanded version of itself as its own goal, just as Marx says of “production for production’s sake” in his critique of Ricardo. In such a social condition, the immediate productive activity of freely-associated individuals would always be in reality self-(re)production aimed at the multiplication of human powers, including the innovation of new powers. Every activity relates back to the actor. "Actual infinity" in this sense is the practical presence of the general in every specific activity in the here and now. For the Enlightenment, including for spinoffs of the Enlightenment such as Ricardo, an object was merely a thing; for Hegel and above all for Marx, an object is a (self) relationship, mediated by a thing:

 "...When the narrow bourgeois form has been peeled away, what is wealth, if not the universality of needs, capacities, enjoyments, productive powers, etc. of individuals, produced in universal exchange? What, if not the full development of human control over the forces of nature — those of his own nature as well as those of so-called "nature"? What, if not the absolute elaboration of his creative dispositions, without any preconditions other than antecedent historical evolution which makes the totality of this evolution — i.e. the evolution of all human powers as such, unmeasured by any previously established yardstick, an end in itself? What is this, if not a situation where man does not produce himself in any determined form, but produces his totality? Where he does not seek to remain something formed by the past, but is in the absolute movement of becoming?" — K. Marx, Grundrisse (“Formen die der kapitalistischen Produktion vorhergehen”)

Footnote

1. They were  first published in a German-Russian bilingual edition in Moscow in 1968, later in English and in French.