Bonar Review of Bohm Bawerk

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  • 7/28/2019 Bonar Review of Bohm Bawerk


    Karl Marx and the Close of His System: A Criticism. by Eugen v. Bohm-Bawerk; Alice M.Macdonald; James BonarReview by: John B. ClarkPolitical Science Quarterly, Vol. 13, No. 4 (Dec., 1898), pp. 720-723Published by: The Academy of Political ScienceStable URL: .

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  • 7/28/2019 Bonar Review of Bohm Bawerk


    720 POLITICAL SCIEN-CE QUARTERLY. [VOL.XIII.Karl Marx and the Close of His System: A Criticism. By

    EUGENv. BOHM-BAWERK,ustrianMinisterof Finance, andHonoraryProfessor f Political Economy n the UniversityfVienna. TranslatedbyAlice M. Macdonald,with a prefacebyJamesBonar,M.A., LL.D. New York,The MacmillanCo., I898.-221 pp.Itwouldbe difficulto estimatehiswork oo highly. It is a modelof acutethought nd lucid statement.After howing hat hechiefthesis nthefirst artof Karl Marx's Capital s surrendered- and,

    indeed, efutedin the thirdpart, t makes an independenttudyof certaintest passages in the earliervolume nd exposestheirweaknesses. It ends by a criticismf Dr. Werner ombart's pologyforMarx's economic ystem,nd shows the difficultyf takingmiddle osition n referenceotheessential arts f Marx's eaching.Central n the theoryf Marx is the claimthatexchange alueidentifiestselfwith abor. This meansthatgoods tend o exchangefor ach othernratios hat refixed ythe mounts f abor hat re" socially ecessary" or heproductionf them. This is not a mereformula f thought, nderwhich man, fhe will,may conceiveofthething ermed alue without egard o the questionwhetherheactualrates hatprevailnthe market illaccordwith heconceptionor not. Reality s,onthecontrary,f theessenceof Marx's heory.It claims that commerce espects he labor law of value,and thatthe pricesof goods in the shops actually xpress,nthemain, heamounts f laborthat are "congealed in the severalarticles. Athings worthhe abor t has cost,notmerelyn a subtleand sci-entificense,butinfact: it willbuy another rticle hatembodiesthesame amount f abor.Marx has, indeed, noted in his first olume that the varyingamounts fcapitalthat ooperatewith abor nthemaking fdiffer-entgoods have an influence nvalues. Thus, f one unit f laboris combinedwith en units f capital n the making f thearticleA,while ne unitof laboris used in connection ith nlyoneunitofcapital nthemaking f thearticleB, then hesetwothingswillnotexchangeforeach other n the shops. Competitionends to giveequal returns er unitto capital, n itsdifferentmployments;ndwithwagesalso tending owarduniformity,hisfactrequires hatAshould ell formore hanB. Yet, as they mbody he sameamountof labor, here eemshere to be inconsistencynthetheory. Marxclaimed hat hiscontradictionasonly pparent,nd notreal; andhe promised o remove hedifficultyy the third artof hiswork.

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  • 7/28/2019 Bonar Review of Bohm Bawerk


    No. 4.] REVIE WS. 721The promise ept livethefaith f disciples;but the ttempt o fulfilit has been disastrous. It is now admitted,n the volume ecentlypublished, hat there s no tendencyn thepartof thegoods A andB to cometo an equality f price. The ruleof themarket allsfordifferentrices forthese goods; and the labor theory f value isnot theone to whichthe transactionsf the mercantile orld on-form. If, after his, here s anythingeftof the original efinitionof value,what t formulatess merely conceptionf value,whichwe can use only fwe are careful o remember,t everypoint, hatit doesnot correspond ith heactual purchasingower f goods.In Marx'sformula hat s paid in wages s a partofcapital. Onearticle omes ntoexistence ythe agency f a largeoutfit f tools,buildings,materials,tc., nd entailsa relativelymallpayment orlabor; while another alls for ess capital of the auxiliary ort, ndformore fthedirectwages capital. If, ncases likethis, ll capital,constant nd variable,s rewarded t a uniformate, hepricesofthe differentoods do not at all correspondo the laborthat heproductionfthem ntails. If,ontheotherhand, hepricesof thegoods conformo the labor that theyembody, he capitals areunequally ewarded. From hisdilemmahere s no escape. Valueaccording o labor only and a uniform ateof gainfor apital areirreconcilableonditions.Marx's reconciliation,s Professor . B6hm-Bawerkhows, s asurrender.The uniformateof gainfor apital, aysMarx, swhatcompetitionendsto give; and values that accordwithmere aborexpended re what t does nottendtogive. It does, however, ivea totalof values thatagreeswith hesumtotalof laborexpended.It does notmakeA exchangeforB, though ach has cost a unit flabor; but it makesthe valueof the two on theassumptionhattheseareall thegoods that reofferedor ale-to be twounits flabor. Nothing an exceed nclearness rofessor . Bohm-Bawerk'sexposureof the real effect f this long-promisedemovalof theunremovable ifficulty.All articles, akentogether,"ays Marx,in effect,sell for the sumof their alues; and as some of themregularlyell formore hantheir alues,others ellfor ess,andthevariations ancel each other." What is thiscancellation ut anabandonmentf comparisonsnd a dealing solelywith ggregates?And it is comparisonshatwereto be accounted or. We were obe toldwhy, y"an overrulingaw of nature," old sells for morethan ron, nd ironfor more thancobblestones. Realism s takenoutoftheMarxian heoryfvaluebythe author's ecently ublished

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  • 7/28/2019 Bonar Review of Bohm Bawerk


    722 POLITICAL SCIENCE QUARTERLY [VOL.XIII.volume. There s nothingeftof it but a concept hat confessedlyis not ikethefact.One may,however, hink f a value of an imaginary indthatshall consist olely n labor. It willbe necessary, hen, o inventanother erm or ctual value nexchange. If thisbe done, t willbepossibleto estimate he differenceetween he actual purchasingpower f an article ndwhat,n ourspecial nomenclature,s calleditsvalue. Werner ombart's pology orMarx'stheoryimstosavethisfragmentrom he wreck. The laborthat has gone intothemaking f a thingmaybe measured,ays Sombart,nd thequantityof it maybe thoughtfas constituting,n somephilosophicalense,thevalue of the article. Onewould, f course, lwayshave to beon his guardagainst magininghatmarketsespect his tandard;but, f he wereto do this,he might se the maginarytandard ora theoretical urpose.Professor.B6hm-Bawerkhows hat his nvolveshangingMarx'sactualmeaning. It is re-interpretingis statements. Sombart sdefending omethinghat is unlike the theory f value which sundoubtedly resented n Marx's first olume. I venture o say,however, hat ftheearlier artof Marx's workwere o changedastoconformo Sombart'snterpretation,hewholeworkwould ccom-plishone importanturpose.At bottomt is principallydialecticalwayof conceivingnd stating hings,ather han presentationfwhatsobjectivelyrue. It is a ponderousrgumentgainst nterest.It is an attempt, y long and involved hought,o dissociatetheproduct f capitalfromhecapital, nd to attach t to labor. Animaginary alue, whichthemarketdoes not respect,mayfit theneeds of suchan argument.A coatthatwouldnothave come ntoexistence,f t hadnotbeenfor ools andmaterials,s wellas effort,may tillbe thoughtf as createdby empty-handedaboronly. Ifwe order man to makethegarment ithoutools or materials, eshallperceive heunrealityf ourconceptionf the relation f abortoproducts. The coatwill notbe made. Whenwespeakofthingsas simply heproducts f labor,we mustknow hatwe are subli-mating hetheory,ut thetheorymay ccomplish omethingn thesublimatedtate. Dr. Sombart's it of salvage-the conceptof akind of value thatcan existin imaginationharmonizes withtheconcept fthe aborthat s thesole creator f wealth,nd that alsoexistsonly n imagination.A dialecticalbut not real formula ormeasuring alues fits dialecticalbutnotrealtheoryf theoriginofwealth.

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  • 7/28/2019 Bonar Review of Bohm Bawerk


    No.4.] REVIEWS. 723Here is the bottom f thewhole matter;and a point of great

    interestn connection ithProfessor. Bohm-Bawerk'sndependentcriticismf theseveral estpointsntheMarxian ystems whetherhe has exposedthe fallacy romwhichall others pring. He hascompletelyroved hat he third artof Marx'streatiseefutesmuchof the first. He has furtherxposedthefaultiness f the argumentby whichMarxsought o provethat abor s the "common actor"in exchangeablegoods. He has exposed the fallacy nvolved nMarx's proof hat killed abor s commonabor" condensed." Hashe shownthat the parent allacy f all is the denialof the produc-tivity f capital?The answerto this questionwould requirethat we ascertainwhetherProfessorv. Bohm-Bawerk'srilliant heoryof interestdenies or affirmshe productivityf capital. Formally,t contro-verts ll productivityheories; nd adherence o ithandicaps criticin stating,n a simpleform,he fundamentalrror f the Marxiansystem. Professor . Bohm-Bawerk'sheoryoesnot make timpos-sibleto contendgainst hat rror;but tputsthe ritic nder mostseriousdisadvantage. It makes t necessaryo think f interest sa premiumnpresent oods, s compared ith utureoods, nd notas a product f capitaland as cobrdinate ith heproduct f labor.It makes tnecessaryocarry hroughheargumentn elusive on-ception f the effect f periods f time. It makes t necessary,nrefuting arx'sclaim hat abor s theonly roducerfwealth,osaywhat,to the superficial iew,seemsto meanthe same thing, ndthen oprove hat his tatementeallymeans heopposite fMarx's.I must ecord heopinion hatProfessor.Bohm-Bawerk'semorse-less dissectionf Marx's theoryannot ully xposetheoriginal al-lacy n it. The criticisms,to be sure, ncomparableo faras itgoes,and is worth astlymorethanmany olumes f ordinaryon-troversialiterature; ut inclaiming hat apitalearns tspay,Pro-fessor . Bohm-Bauerks forced odo so byan argumenthatbeginsby sayingneffect,In theordinaryenseofterms,apitaldoes notproduce." A businessmanwould ay: " With unit fcapital dded

    tomy quipment, canproducemoregoodsevery ay. The addedcapitalcreatesthe incrementf product. It earns its pay. Theday's interest n the capital s theday'sproduct f it." Commonthoughtmakes hortwork f Marx'sfundamentalallacy.JOHN B. CLARK.

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