Thorstein Veblen
(30.7.1859-3.8.1929)
THE SOCIALIST ECONOMICS OF KARL MARX AND HIS FOLLOWERS (1*)
The Quarterly Journal of Economics, vol. 20, No. 4. (Aug., 1906), 575-595; 
vol. 21, No. 2. (Feb., 1907), pp. 292-322.
I. The Theories of Karl Marx
II The Later Marxism
----------------------------

I. The Theories of Karl Marx
The system of doctrines worked out by Marx is characterized by a certain 
boldness of conception and a great logical consistency. Taken in detail, the 
constituent elements of the system are neither novel nor iconoclastic, nor does 
Marx at any point claim to have discovered previously hidden facts or to have 
invented recondite formulations of facts already known; but the system as a 
whole has an air of originality and initiative such as is rarely met with among 
the sciences that deal with any phase of human culture. How much of this 
distinctive character the Marxian system owes to the personal traits of its 
creator is not easy to say, but what marks it off from all other systems of 
economic theory is not a matter of personal idiosyncrasy. It differs 
characteristically from all systems of theory that had preceded it, both in its 
premises and in its aims. The (hostile) critics of Marx have not sufficiently 
appreciated the radical character of his departure in both of these respects, 
and have, therefore, commonly lost themselves in a tangled scrutiny of 
supposedly abstruse details; whereas those writers who have been in sympathy 
with his teachings have too commonly been disciples bent on exegesis and on 
confirming their fellow-disciples in the faith.
Except as a whole and except in the light of its postulates and aims, the 
Marxian system is not only not tenable, but it is not even intelligible. A 
discussion of a given isolated feature of the system (such as the theory of 
value) from the point of view of classical economics (such as that offered by 
Böhm-Bawerk) is as futile as a discussion of solids in terms of two dimensions.
Neither as regards his postulates and preconceptions nor as regards the aim of 
his inquiry is Marx's position an altogether single-minded one. In neither 
respect does his position come of a single line of antecedents. He is of no 
single school of philosophy, nor are his ideals those of any single group of 
speculators living before his time. For this reason he takes his place as an 
originator of a school of thought as well as the leader of a movement looking to 
a practical end.
As to the motives which drive him and the aspiration which guide him, in 
destructive criticism and an creative speculation alike, he is primarily a 
theoretician busied with the analysis of economic phenomena and their 
organization into a consistent and faithful system of scientific knowledge; but 
he is, at the same time, consistently and tenaciously alert to the bearing which 
each step in the progress of his theoretical work has upon the propaganda. His 
work has, therefore, an air of bias, such as belongs to an advocate's argument; 
but it is not, therefore, to be assumed, nor indeed to be credited, that his 
propagandist aims have in any substantial way deflected his inquiry or his 
speculations from the faithful pursuit of scientific truth. His socialistic bias 
may color his polemics, but his logical grasp is too neat and firm to admit of 
an bias, other than that of his metaphysical preconceptions, affecting his 
theoretical work.
There is no system of economic theory more logical than that of Marx. No member 
of the system, no single article of doctrine, is fairly to be understood, 
criticised, or defended except as an articulate member of the whole and in the 
light of the preconceptions and postulates which afford the point of departure 
and the controlling norm of the whole. As regards these preconceptions and 
postulates, Marx draws on two distinct lines of antecedents, - the Materialistic 
Hegelianism and the English system of Natural Rights. By his earlier training he 
is an adept in the Hegelian method of speculation and inoculated with the 
metaphysics of development underlying the Hegelian system. By his later training 
he is an expert in the system of Natural Rights and Natural Liberty, ingrained 
in his ideals of life and held inviolate throughout. He does not take a critical 
attitude toward the underlying principles of Natural Rights. Even his Hegelian 
preconceptions of development never carry him the length of questioning the 
fundamental principles of that system. He is only more ruthlessly consistent in 
working out their content than his natural-rights antagonists in the liberal-
classical school. His polemics run against the specific tenets of the liberal 
school, but they run wholly on the ground afforded by the premises of that 
school. The ideals of his propaganda are natural-rights ideals, but his theory 
of the working out of these ideals in the course of history rests on the 
Hegelian metaphysics of development, and his method of speculation and 
construction of theory is given by the Hegelian dialectic.
What first and most vividly centred interest on Marx and his speculations was 
his relation to the revolutionary socialistic movement; and it is those features 
of his doctrines which bear immediately on the propaganda that still continue to 
hold the attention of the greater number of his critics. Chief among these 
doctrines, in the apprehension of his critics, is the theory of value, with its 
corollaries: (a) the doctrines of the exploitation of labor by capital; and (b) 
the laborer's claim to the whole product of his labor. Avowedly, Marx traces his 
doctrine of labor value to Ricardo, and through him to the classical 
economists.(2*) The laborer's claim to the whole product of labor, which is 
pretty constantly implied, though not frequently avowed by Marx, he has in all 
probability taken from English writers of the early nineteenth century,(3*) more 
particularly from William Thompson. These doctrines are, on their face, nothing 
but a development of the conceptions of natural rights which then pervaded 
English speculation and afforded the metaphysical ground of the liberal 
movement. The more formidable critics of the Marxian socialism have made much of 
these doctrinal elements that further the propaganda, and have, by laying the 
stress on these, diverted attention from other elements that are of more vital 
consequence to the system as a body of theory. Their exclusive interest in this 
side of "scientific socialism" has even led them to deny the Marxian system all 
substantial originality, and make it a (doubtfully legitimate) offshoot of 
English Liberalism and natural rights.(4*) But this is one-sided criticism. It 
may hold as against certain tenets of the so-called "scientific socialism," but 
it is not altogether to the point as regards the Marxian system of theory. Even 
the Marxian theory of value, surplus value, and exploitation, is not simply the 
doctrine of William Thompson, transcribed and sophisticated in a forbidding 
terminology, however great the superficial resemblance and however large Marx's 
unacknowledged debt to Thompson may be on these heads. For many details and for 
much of his animus Marx may be indebted to the Utilitarians; but, after all, his 
system of theory, taken as a whole, lies within the frontiers of neo-
Hegelianism, and even the details are worked out in accord with the 
preconceptions of that school of thought and have taken on the completion that 
would properly belong to them on that ground. It is, therefore, not by an 
itemized scrutiny of the details of doctrine and by tracing their pedigree in 
detail that a fair conception of Marx and his contribution to economics may be 
reached, but rather by following him from his own point of departure out into 
the ramifications of his theory, and so overlooking the whole in the perspective 
which the lapse of time now affords us, but which he could not himself attain, 
since he was too near to his own work to see why he went about it as he did.
The comprehensive system of Marxism is comprised within the scheme of the 
Materialistic Conception of History.(5*) This materialistic conception is 
essentially Hegelian,(6*) although it belongs with the Hegelian Left, and its 
immediate affiliation is with Feuerbach, not with the direct line of Hegelian 
orthodoxy. The chief point of interest here, in identifying the materialistic 
conception with Hegelianism, is that this identification throws it immediately 
and uncompromisingly into contrast with Darwinism and the post-Darwinian 
conceptions of evolution. Even if a plausible English pedigree should be worked 
out for this Materialistic Conception, or "Scientific Socialism," as has been 
attempted, it remains none the less true that the conception with which Marx 
went to his work was a transmuted framework of Hegelian dialectic.(7*)
Roughly, Hegelian materialism differs from Hegelian orthodoxy by inverting the 
main logical sequence, not by discarding the logic or resorting to new tests of 
truth or finality. One might say, though perhaps with excessive crudity, that, 
where Hegel pronounces his dictum, 'Das Denken ist das Sein', the materialists, 
particularly Marx and Engels, would say 'Das Sein macht das Denken'. But in both 
cases some sort of a creative primacy is assigned to one or the other member of 
the complex, and in neither case is the relation between the two members a 
causal relation. In the materialistic conception man's spiritual life - what man 
thinks - is a reflex of what he is in the material respect, very much in the 
same fashion as the orthodox Hegelian would make the material world a reflex of 
the spirit. In both the dominant norm of speculation and formulation of theory 
is the conception of movement, development, evolution, progress; and in both the 
movement is contrived necessarily to take place by the method of conflict or 
struggle. The movement is of the nature of progress, - gradual advance towards a 
goal, toward the realization in explicit form of all that is implicit in the 
substantial activity involved in the movement. The movement is, further, self-
conditioned and self-acting: it is an unfolding by inner necessity. The struggle 
which constitutes the method of movement or evolution is, in the Hegelian system 
proper, the struggle of the spirit for self-realization by the process of the 
well-known three-phase dialectic. In the materialistic conception of history 
this dialectical movement becomes the class struggle of the Marxian system.
The class struggle is conceived to be "material," but the term "material" is in 
this connection used in a metaphorical sense. It does not mean mechanical or 
physical, or even physiological, but economic. It is material in the sense that 
it is a struggle between classes for the material means of life. "The 
materialistic conception of history proceeds on the principle that production 
and, next to production, the exchange of its products is the groundwork of every 
social order."(8*) The social order takes its form through the class struggle, 
and the character of the class struggle at any given phase of the unfolding 
development of society is determined by "the prevailing mode of economic 
production and exchange." The dialectic of the movement of social progress, 
therefore, moves on the spiritual plane of human desire and passion, not on the 
(literally) material plane of mechanical and physiological stress, on which the 
developmental process of brute creation unfolds itself. It is a sublimated 
materialism; sublimated by the dominating presence of the conscious human 
spirit; but it is conditioned by the material facts of the production of the 
means of life.(9*) The ultimately active forces involved in the process of 
unfolding social life are (apparently) the material agencies engaged in the 
mechanics of production; but the dialectic of the process - the class struggle - 
runs its course only among and in terms of the secondary (epigenetic) forces of 
human consciousness engaged in the valuation of the material products of 
industry. A consistently materialistic conception, consistently adhering to a 
materialistic interpretation of the process of development as well as of the 
facts involved in the process, could scarcely avoid making its putative 
dialectic struggle a mere unconscious and irrelevant conflict of the brute 
material forces. This would have amounted to an interpretation in terms of 
opaque cause and effect, without recourse to the concept of a conscious class 
struggle, and it might have led to a concept of evolution similar to the 
unteleological Darwinian concept of natural selection. It could scarcely have 
led to the Marxian notion of a conscious class struggle as the one necessary 
method of social progress, though it might conceivably, by the aid of empirical 
generalization, have led to a scheme of social process in which a class struggle 
would be included as an incidental though perhaps highly efficient factor.(10*) 
It would have led, as Darwinism has, to a concept of a process of cumulative 
change in social structure and function; but this process, being essentially a 
cumulative sequence of causation, opaque and unteleological, could not, without 
an infusion of pious fancy by the speculator be asserted to involve progress as 
distinct from retrogression or to tend to a "realization" or "self-realization" 
of the human spirit or of anything else. Neither could it conceivably be 
asserted to lead up to a final term, a goal to which all lines of the process 
should converge and beyond which the process would not go, such as the assumed 
goal of the Marxian process of class struggle which is conceived to cease in the 
classless economic structure of the socialistic final term. In Darwinianism 
there is no such final or perfect term, and no definitive equilibrium.
The disparity between Marxism and Darwinism, as well as the disparity within the 
Marxian system between the range of material facts that are conceived to be the 
fundamental forces of the process, on the one hand, and the range of spiritual 
facts within which the dialectic movement proceeds this disparity is shown in 
the character assigned the class struggle by Marx and Engels. The struggle is 
asserted to be a conscious one, and proceeds on a recognition by the competing 
classes of their mutually incompatible interests with regard to the material 
means of life. The class struggle proceeds on motives of interest, and a 
recognition of class interest can, of course, be reached only by reflection on 
the facts of the case. There is, therefore, not even a direct causal connection 
between the material forces in the case and the choice of a given interested 
line of conduct. The attitude of the interested party does not result from the 
material forces so immediately as to place it within the relation of direct 
cause and effect, nor even with such a degree of intimacy as to admit of its 
being classed as a tropismatic, or even instinctive, response to the impact of 
the material force in question. The sequence of reflection, and the consequent 
choice of sides to a quarrel, run entirely alongside of the range of material 
facts concerned.
A further characteristic of the doctrine of class struggle requires mention. 
While the concept is not Darwinian, it is also not legitimately Hegelian, 
whether of the Right or the Left. It is of a utilitarian origin and of English 
pedigree, and it belongs to Marx by virtue of his having borrowed its elements 
from the system of self-interest. It is in fact a piece of hedonism, and is 
related to Bentham rather than to Hegel. It proceeds on the grounds of the 
hedonistic calculus, which is equally foreign to the Hegelian notion of an 
unfolding process and to the post-Darwinian notions of cumulative causation. As 
regards the tenability of the doctrine, apart from the question of its 
derivation and its compatibility with the neo-Hegelian postulates, it is to be 
added that it is quite out of harmony with the later results of psychological 
inquiry, just as is true of the use made of the hedonistic calculus by the 
classical (Austrian) economics.
Within the domain covered by the materialistic conception, that is to say within 
the domain of unfolding human culture, which is the field of Marxian speculation 
at large, Marx has more particularly devoted his efforts to an analysis and 
theoretical formulation of the present situation, - the current phase of the 
process, the capitalistic system. And, since the prevailing mode of the 
production of goods determines the institutional, intellectual, and spiritual 
life of the epoch, by determining the form and method of the current class 
struggle, the discussion necessarily begins with the theory of "capitalistic 
production," or production as carried on under the capitalistic system.(11*) 
Under the capitalistic system, that is to say under the system of modern 
business traffic, production is a production of commodities, merchantable goods, 
with a view to the price to be obtained for them in the market. The great fact 
on which all industry under this system hinges is the price of marketable goods. 
Therefore it is at this point that Marx strikes into the system of capitalistic 
production, and therefore the theory of value becomes the dominant feature of 
his economics and the point of departure for the whole analysis, in all its 
voluminous ramifications.(12*)
It is scarcely worth while to question what serves as the beginning of wisdom in 
the current criticisms of Marx; namely, that he offers no adequate proof of his 
labor-value theory.(13*) It is even safe to go further, and say that he offers 
no proof of it. The feint which occupies the opening paragraphs of the Kapital 
and the corresponding passages of Zur Kritik, etc., is not to be taken seriously 
as an attempt to prove his position on this head by the ordinary recourse to 
argument. It is rather a self-satisfied superior's playful mystification of 
those readers (critics) whose limited powers do not enable them to see that his 
proposition is self-evident. Taken on the Hegelian (neo-Hegelian) ground, and 
seen in the light of the general materialistic conception, the proposition that 
value - labor-cost - is self-evident, not to say tautological. Seen in any other 
light, it has no particular force.
In the Hegelian scheme of things the only substantial reality is the unfolding 
life of the spirit. In the neo-Hegelian scheme, as embodied in the materialistic 
conception, this reality is translated into terms of the unfolding (material) 
life of man in society.(14*) In so far as the goods are products of industry, 
they are the output of this unfolding life of man, a material residue embodying 
a given fraction of this forceful life process. In this life process lies all 
substantial reality, and all finally valid relations of quantivalence between 
the products of this life process must run in its terms. The life process, 
which, when it takes the specific form of an expenditure of labor power, goes to 
produce goods, is a process of material forces, the spiritual or mental features 
of the life process and of labor being only its insubstantial reflex. It is 
consequently only in the material changes wrought by this expenditure of labor 
power that the metaphysical substance of life - labor power - can be embodied; 
but in these changes of material fact it cannot but be embodied, since these are 
the end to which it is directed.
This balance between goods in respect of their magnitude as output of human 
labor holds good indefeasibly, in point of the metaphysical reality of the life 
process, whatever superficial (phenomenal) variations from this norm may occur 
in men's dealings with the goods under the stress of the strategy of self-
interest. Such is the value of the goods in reality; they are equivalents of one 
another in the proportion in which they partake of this substantial quality, 
although their true ratio of equivalence may never come to an adequate 
expression in the transactions involved in the distribution of the goods. This 
real or true value of the goods is a fact of production, and holds true under 
all systems and methods of production, whereas the exchange value (the 
"phenomenal form" of the real value) is a fact of distribution, and expresses 
the real value more or less adequately according as the scheme of distribution 
force at the given time conforms more or less closely to the equities given by 
production. If the output of industry were distributed to the productive agents 
strictly in proportion to their shares in production, the exchange value of the 
goods would be presumed to conform to their real value. But, under the current, 
capitalistic system, distribution is not in any sensible degree based on the 
equities of production, and the exchange value of goods under this system can 
therefore express their real value only with a very rough, and in the main 
fortuitous, approximation. Under a socialistic régime, where the laborer would 
get the full product of his labor, or where the whole system of ownership, and 
consequently the system of distribution, would lapse, values would reach a true 
expression, if any.
Under the capitalistic system the determination of exchange value is a matter of 
competitive profit-making, and exchange values therefore depart erratically and 
incontinently from the proportions that would legitimately be given them by the 
real values whose only expression they are. Marx's critics commonly identify the 
concept of "value" with that of "exchange value,"(15*) and show that the theory 
of "value" does not square with the run of the facts of price under the existing 
system of distribution, piously hoping thereby to have refuted the Marxian 
doctrine; whereas, of course, they have for the most part not touched it. The 
misapprehension of the critics may be due to a (possibly intentional) oracular 
obscurity on the part of Marx. Whether by his fault or their own, their 
refutations have hitherto been quite inconclusive. Marx's severest stricture on 
the iniquities of the capitalistic system is that contained by implication in 
his development of the manner in which actual exchange value of goods 
systematically diverges from their real (labor-cost) value. Herein, indeed, lies 
not only the inherent iniquity of the existing system, but also its fateful 
infirmity, according to Marx.
The theory of value, then, is contained in the main postulates of the Marxian 
system rather than derived from them. Marx identifies this doctrine, in its 
elements, with the labor-value theory of Ricardo,(16*) but the relationship 
between the two is that of a superficial coincidence in their main propositions 
rather than a substantial identity of theoretic contents. In Ricardo's theory 
the source and measure of value is sought in the effort and sacrifice undergone 
by the producer, consistently, on the whole, with the Benthamite-utilitarian 
position to which Ricardo somewhat loosely and uncritically adhered. The 
decisive fact about labor, that quality by virtue of which it is assumed to be 
the final term in the theory of production, is its irksomeness. Such is of 
course not the case in the labor-value theory of Marx, to whom the question of 
the irksomeness of labor is quite irrelevant, so far as regards the relation 
between labor and production. The substantial diversity or incompatibility of 
the two theories shows itself directly when each is employed by its creator in 
the further analysis of economic phenomena. Since with Ricardo the crucial point 
is the degree of irksomeness of labor, which serves as a measure both of the 
labor expended and the value produced, and since in Ricardo's utilitarian 
philosophy there is no more vital fact underlying this irksomeness, therefore no 
surplus-value theory follows from the main position. The productiveness of labor 
is not cumulative in its own working; and the Ricardian economics goes on to 
seek the cumulative productiveness of industry in the functioning of the 
products of labor when employed in further production and in the irksomeness of 
the capitalist's abstinence. From which duly follows the general position of 
classical economics on the theory of production.
With Marx, on the other hand, the labor power expended in production being 
itself a product and having a substantial value corresponding to its own labor 
cost, the value of the labor power expended and the value of the product created 
by its expenditure need not be the same. They are not the same, by supposition, 
as they would be in any hedonistic interpretation of the facts. Hence a 
discrepancy arises between the value of the labor power expended in production 
and the value of the product created, and this discrepancy is covered by the 
concept of surplus value. Under the capitalistic system, wages being the value 
(price) of the labor power consumed in industry, it follows that the surplus 
product of their labor cannot go to the laborers, but becomes the profits of 
capital and the source of its accumulation and increase. From the fact that 
wages are measured by the value of labor power rather than by the (greater) 
value of the product of labor, it follows also that the laborers are unable to 
buy the whole product of their labor, and so that the capitalists are unable to 
sell the whole product of industry continuously at its full value, whence arise 
difficulties of the gravest nature in the capitalistic system, in the way of 
overproduction and the like.
But the gravest outcome of this systematic discrepancy between the value of 
labor power and the value of its product is the accumulation of capital out of 
unpaid labor and the effect of this accumulation on the laboring population. The 
law of accumulation, with its corollary, the doctrine of the industrial reserve 
army, is the final term and the objective point of Marx's theory of capitalist 
production, just as the theory of labor value is his point of departure.(17*)
While the theory of value and surplus value are Marx's explanation of the 
possibility of existence of the capitalistic system, the law of the accumulation 
of capital is his exposition of the causes which must lead to the collapse of 
that system and of the manner in which the collapse will come. And since Marx 
is, always and everywhere, a socialist agitator as well as a theoretical 
economist, it may be said without hesitation that the law of accumulation is the 
climax of his great work, from whatever point of view it is looked at, whether 
as an economic theorem or as a tenet of socialistic doctrine.
The law of capitalistic accumulation may be paraphrased as follows:(18*) Wages 
being the (approximately exact) value of the labor power bought in the wage 
contract; the price of the product being the (similarly approximate) value of 
the goods produced; and since the value of the product exceeds that of the labor 
power by a given amount (surplus value), which by force of the wage contract 
passes into the possession of the capitalist and is by him in part laid by as 
savings and added to the capital already in hand, it follows (a) that, other 
things equal, the larger the surplus value, the more rapid the increase of 
capital; and also (b), that the greater the increase of capital relatively to 
the labor force employed, the more productive the labor employed and the larger 
the surplus product available for accumulation. The process of accumulation, 
therefore, is evidently a cumulative one; and, also evidently, the increase 
added to capital is an unearned increment drawn from the unpaid surplus product 
of labor.
But with an appreciable increase of the aggregate capital a change takes place 
in its technological composition, whereby the "constant" capital (equipment and 
raw materials) increases disproportionately as compared with the "variable" 
capital (wages fund). "Labor-saving devices" are used to a greater extent than 
before, and labor is saved. A larger proportion of the expenses of production 
goes for the purchase of equipment and raw materials, and a smaller proportion - 
though perhaps an absolutely increased amount - goes for the purchase of labor 
power. Less labor is needed relatively to the aggregate capital employed as well 
as relatively to the quantity of goods produced. Hence some portion of the 
increasing labor supply will not be wanted, and an "industrial reserve army," a 
"surplus labor population," an army of unemployed, comes into existence. This 
reserve grows relatively larger as the accumulation of capital proceeds and as 
technological improvements consequently gain ground; so that there result two 
divergent cumulative changes in the situation, - antagonistic, but due to the 
same set of forces and, therefore, inseparable: capital increases, and the 
number of unemployed laborers (relatively) increases also.
This divergence between the amount of capital and output, on the one hand, and 
the amount received by laborers as wages, on the other hand, has an incidental 
consequence of some importance. The purchasing power of the laborers, 
represented by their wages, being the largest part of the demand for consumable 
goods, and being at the same time, in the nature of the case, progressively less 
adequate for the purchase of the product, represented by the price of the goods 
produced, it follows that the market is progressively more subject to glut from 
overproduction, and hence to commercial crises and depression. It has been 
argued, as if it were a direct inference from Marx's position, that this 
maladjustment between production and markets, due to the laborer not getting the 
full product of his labor, leads directly to the breakdown of the capitalistic 
system, and so by its own force will bring on the socialistic consummation. Such 
is not Marx's position, however, although crises and depression play an 
important part in the course of development that is to lead up to socialism. In 
Marx's theory, socialism is to come by way of a conscious class movement on the 
part of the propertyless laborers, who will act advisedly on their own interest 
and force the revolutionary movement for their own gain. But crises and 
depression will have a large share in bringing the laborers to a frame of mind 
suitable for such a move.
Given a growing aggregate capital, as indicated above, and a concomitant reserve 
of unemployed laborers growing at a still higher rate, as is involved in Marx's 
position, this body of unemployed labor can be, and will be, used by the 
capitalists to depress wages, in order to increase profits. Logically, it 
follows that, the farther and faster capital accumulates, the larger will be the 
reserve of unemployed, both absolutely and relatively to the work to be done, 
and the more severe will be the pressure acting to reduce wages and lower the 
standard of living, and the deeper will be the degradation and misery of the 
working class and the more precipitately will their condition decline to a still 
lower depth. Every period of depression, with its increased body of unemployed 
labor seeking work, will act to hasten and accentuate the depression of wages, 
until there is no warrant even for holding that wages will, on an average, be 
kept up to the subsistence minimum.(19*) Marx, indeed, is explicit to the effect 
that such will be the case, that wages will decline below the subsistence 
minimum; and he cites English conditions of child labor, misery, and 
degeneration to substantiate his views.(20*)
When this has gone far enough, when capitalist production comes near enough to 
occupying the whole field of industry and has depressed the condition of its 
laborers sufficiently to make them an effective majority of the community with 
nothing to lose, then, having taken advice together, they will move, by legal or 
extra-legal means, by absorbing the state or by subverting it, to establish the 
social revolution, Socialism is to come through class antagonism due to the 
absence of all property interests from the laboring class, coupled with a 
generally prevalent misery so profound as to involve some degree of physical 
degeneration. This misery is to be brought about by the heightened productivity 
of labor due to an increased accumulation of capital and large improvements in 
the industrial arts; which in turn is caused by the fact that under a system of 
private enterprise with hired labor the laborer does not get the whole product 
of his labor; which, again, is only saying in other words that private ownership 
of capital goods enables the capitalist to appropriate and accumulate the 
surplus product of labor. As to what the régime is to be which the social 
revolution will bring in, Marx has nothing particular to say beyond the general 
thesis that there will be no private ownership, at least not of the means of 
production.
Such are the outlines of the Marxian system of socialism. In all that has been 
said so far no recourse is had to the second and third volumes of Kapital. Nor 
is it necessary to resort to these two volumes for the general theory of 
socialism. They add nothing essential, although many of the details of the 
processes concerned in the working out of the capitalist scheme are treated with 
greater fulness, and the analysis is carried out with great consistency and with 
admirable results. For economic theory at large these further two volumes are 
important enough, but an inquiry into their contents in that connection is not 
called for here.
Nothing much need be said as to the tenability of this theory. In its 
essentials, or at least in its characteristic elements, it has for the most part 
been given up by latterday socialist writers. The number of those who hold to it 
without essential deviation is growing gradually smaller. Such is necessarily 
the case, and for more than one reason. The facts are not bearing it out on 
certain critical points, such as the doctrine of increasing misery; and the 
Hegelian philosophical postulates, without which the Marxism of Marx is 
groundless, are for the most part forgotten by the dogmatists of to-day. 
Darwinism has largely supplanted Hegelianism in their habits of thought.
The particular point at which the theory is most fragile, considered simply as a 
theory of social growth, is its implied doctrine of population, implied in the 
doctrine of a growing reserve of unemployed workmen. The doctrine of the reserve 
of unemployed labor involves as a postulate that population will increase 
anyway, without reference to current or prospective means of life. The empirical 
facts give at least a very persuasive apparent support to the view expressed by 
Marx, that misery is, or has hitherto been, no hindrance to the propagation of 
the race; but they afford no conclusive evidence in support of a thesis to the 
effect that the number of laborers must increase independently of an increase of 
the means of life. No one since Darwin would have the hardihood to say that the 
increase of the human species is not conditioned by the means of living.
But all that does not really touch Marx's position. To Marx, the neo-Hegelian 
history, including the economic development, is the life-history of the human 
species; and the main fact in this life-history, particularly in the economic 
aspect of it, is the growing volume of human life. This, in a manner of 
speaking, is the base-line of the whole analysis of the process of economic 
life, including the phase of capitalist production with the rest.
The growth of population is the first principle, the most substantial, most 
material factor in this process of economic life, so long as it is a process of 
growth, of unfolding, of exfoliation, and not a phase of decrepitude and decay. 
Had Marx found that his analysis led him to a view adverse to this position, he 
would logically have held that the capitalist system is the mortal agony of the 
race and the manner of its taking off. Such a conclusion is precluded by his 
Hegelian point of departure, according to which the goal of the life-history of 
the race in a large way controls the course of that life-history in all its 
phases, including the phase of capitalism. This goal or end, which controls the 
process of human development, is the complete realization of life in all its 
fulness, and the realization is to be reached by a process analogous to the 
three-phase dialectic, of thesis, antithesis, and synthesis, into which scheme 
the capitalist system, with its overflowing measure of misery and degradation, 
fits as the last and most dreadful phase of antithesis. Marx, as a Hegelian, - 
that is to say, a romantic philosopher, - is necessarily an optimist, and the 
evil (antithetical element) in life is to him a logically necessary evil, as the 
antithesis is a necessary phase of the dialectic; and it is a means to the 
consummation, as the antithesis is a means to the synthesis.

Notes
1. The substance of lectures before students in Harvard University in April, 
1906.
2. Cf. Critique of Political Economy, chap. i, "Notes on the History of the 
Theory of Commodities," pp. 56-73 (English translation, New York, 1904).
3. See Menger, Right to the Whole Produce of Labor, section iii-v and viii-ix, 
and Foxwell's admirable Introduction to Menger.
4. See Menger and Foxwell, as above, and Schaeffle, Quintessence of Socialism, 
and The Impossibility or Social Democracy.
5. See Engels, The Development of Socialism from Utopia to Science, especially 
section ii. and the opening paragraphs of section iii.; also the preface of Zur 
Kritik der politischen Oekonomie.
6. See Engels, as above, and also his Feuerbach: The Roots of Socialist 
Philosophy (translation, Chicago, Kerr & Co., 1903).
7. See, e.g., Seligman, The Economic Interpretation of History, Part I.
8. Engels, Development of Socialism, beginning of section iii.
9. Cf., on this point, Max Adler, "Kausalitat und Teleologie im Streite um die 
Wissenschaft" (included in Marx - Studien, edited by Adler and Hilferding, vol. 
i), particularly section xi; cf. also Ludwig Stein, Die soziale Frage im Lichte 
der Philosophie, whom Adler criticizes and claims to have refuted.
10. Cf., Alder as above.
11. It may be noted, by way of caution to readers familiar with the terms only 
as employed by the classical (English and Austrian) economists, that in Marxian 
usage "capitalistic production" means production of goods for the market by 
hired labor under the direction of employers who own (or control) the means of 
production and are engaged in industry for the sake of profit. "Capital" is 
wealth (primarily funds) so employed. In these and other related points of 
terminological usage Marx is, of course, much more in touch with colloquial 
usage than those economists of the classical line who make capital signify "the 
products of past industry used as aids to further production." With Marx 
"Capitalism" implies certain relations of ownership, no less than the 
"productive use" which is alone insisted on by so many later economists in 
defining the term.
12. In the sense that the theory of value affords the point of departure and the 
fundamental concepts out of which the further theory of the workings of 
capitalism is constructed, - in this sense, and in this sense only, is the 
theory of value the central doctrine and the critical tenet of Marxism. It does 
not follow that Marxist doctrine of an irresistible drift towards a socialistic 
consummation hangs on the defensibility of the labor-value theory, nor even that 
the general structure of the Marxist economics would collapse if translated into 
other terms than those of this doctrine of labor value. Cf. Böhm-Bawerk, Karl 
Marx and the Close of his System; and, on the other hand, Franz Oppenheimer, Das 
Grundgesetz der Marx'schen Gesellschaftslehre, and Rudolf Goldscheid, 
Verelendungs- oder Meliorationstheorie.
13. Cf., e.g., Böhm-Bawerk, as above; Georg Adler, Grundlagen der Karl 
Marx'schen Kritik.
14. In much the same way, and with an analogous effect on their theoretical 
work, in the preconceptions of the classical (including the Austrian) 
economists, the balance of pleasure and pain is taken to be the ultimate reality 
in terms of which all economic theory must be stated and to terms of which all 
phenomena should finally be reduced in any definitive analysis of economic life. 
It is not the present purpose to inquire whether the one of these uncritical 
assumptions is in any degree more meritorious or more serviceable than the 
other.
15. Böhm-Bawerk, Capital and Interest, Book VI, chap. iii; also Karl Marx and 
the Close of his System, particularly chap. iv; Adler, Grundlagen, chaps. ii and 
iii.
16. Cf. Kapital, vol. i, chap. xv, p.486 (4th ed.). See also notes 9 and 16 to 
chap. i of the same volume, where Marx discusses the labor-value doctrines of 
Adam Smith and an earlier (anonymous) English writer and compares them with his 
own. Similar comparisons with the early - Classical - value theories recur from 
time to time in the later portions of Kapital.
17. Oppenheimer (Das Grundgesetz der Marx'schen Gesellschaftslehre) is right in 
making the theory of accumulation the central element in the doctrines of 
Marxist socialism, but it does not follow, as Oppenheimer contends, that this 
doctrine is the keystone of Marx's economic theories. It follows logically from 
the theory of surplus value, as indicated above, and rests on that theory in 
such a way that it would fail (in the form in which it is held by Marx) with the 
failure of the doctrine of surplus value.
18. See Kapital, vol. i, chap. xxiii.
19. The "subsistence minimum" is here taken in the sense used by Marx and the 
classical economists, as meaning what is necessary to keep up the supply of 
labor at its current rate of efficiency.
20. See Kapital, vol. i, chap. xxiii, sections 4 and 5.
---End ---

II. The Later Marxism
The substance of lectures before students in Harvard University in April, 1906.

Marx worked out his system of theory in the main during the third quarter of the 
nineteenth century. He came to the work from the standpoint given him by his 
early training in German thought, such as the most advanced and aggressive 
German thinking was through the middle period of the century, and he added to 
this German standpoint the further premises given him by an exceptionally close 
contact with and alert observation of the English situation. The result is that 
he brings to his theoretical work a twofold line of premises, or rather of 
preconceptions. By early training he is a neo-Hegelian, and from this German 
source he derives his peculiar formulation of the Materialistic Theory of 
History. By later experience he acquired the point of view of that Liberal-
Utilitarian school which dominated English thought through the greater part of 
his active life. To this experience he owes (probably) the somewhat pronounced 
individualistic preconceptions on which the doctrines of the Full Product of 
Labor and the Exploitation of Labor are based. These two not altogether 
compatible lines of doctrine found their way together into the tenets of 
scientific (1*) socialism, and give its characteristic Marxian features to the 
body of socialist economics.
The socialism that inspires hopes and fears to-day is of the school of Marx. No 
one is seriously apprehensive of any other so-called socialistic movement, and 
no one is seriously concerned to criticise or refute the doctrines set forth by 
any other school of "socialists." It may be that the socialists of Marxist 
observance are not always or at all points in consonance with the best accepted 
body of Marxist doctrine. Those who make up the body of the movement may not 
always be familiar with the details perhaps not even with the general features - 
of the Marxian scheme of economics; but with such consistency as may fairly be 
looked for in any popular movements the socialists of all countries gravitate 
toward the theoretical position of the avowed Marxism. In proportion as the 
movement in any given community grows in mass, maturity, and conscious purpose, 
it unavoidably takes on a more consistently Marxian complexion. It is not the 
Marxism of Marx, but the materialism of Darwin, which the socialists of today 
have adopted. The Marxist socialists of Germany have the lead, and the 
socialists of other countries largely take their cue from the German leaders.
The authentic spokesmen of the current international socialism are avowed 
Marxists. Exceptions to that rule are very few. On the whole, substantial truth 
of the Marxist doctrines is not seriously questioned within the lines of the 
socialists, though there may be some appreciable divergence as to what the true 
Marxist position is on one point and another. Much and eager controversy circles 
about questions of that class.
The keepers of the socialist doctrines are passably agreed as to the main 
position and the general principles. Indeed, so secure is this current agreement 
on the general principles that a very lively controversy on matters of detail 
may go on without risk of disturbing the general position. This general position 
is avowedly Marxism. But it is not precisely the position held by Karl Marx. It 
has been modernized, adapted, tilled out, in response to exigencies of a later 
date than those which conditioned the original formulation of the theories. It 
is, of course, not admitted by the followers of Marx that any substantial change 
or departure from the original position has taken place. They are somewhat 
jealously orthodox, and are impatient of any suggested "improvements" on the 
Marxist position, as witness the heat engendered in the "revisionist" 
controversy of a few years back. But the jealous protests of the followers of 
Marx do not alter the fact that Marxism has undergone some substantial change 
since it left the hands of its creator. Now and then a more or less consistent 
disciple of Marx will avow a need of adapting the received doctrines to 
circumstances that have arisen later than the formulation of the doctrines; and 
amendments, qualifications, and extensions, with this need in view, have been 
offered from time to time. But more pervasive tho unavowed changes have come in 
the teachings of Marxism by way of interpretation and an unintended shifting of 
the point of view. Virtually, the whole of the younger generation of socialist 
writers shows such a growth. A citation of personal instances would be quite 
futile.
It is the testimony of his friends as well as of his writings that the 
theoretical position of Marx, both as regards his standpoint and as regards his 
main tenets, fell into a definitive shape relatively early, and that his later 
work was substantially a working out of what was contained in the position taken 
at the outset of his career.(2*)
By the latter half of the forties, if not by the middle of the forties, Marx and 
Engels had found the outlook on human life which came to serve as the point of 
departure and the guide for their subsequent development of theory. Such is the 
view of the matter expressed by Engels during the later years of his life.(3*) 
The position taken by the two greater leaders, and held by them substantially 
intact, was a variant of neo-Hegelianism, as has been indicated in an earlier 
section of this paper.(4*)
But neo-Hegelianism was short-lived, particularly considered as a standpoint for 
scientific theory. The whole romantic school of thought, comprising neo-
Hegelianism with the rest, began to go to pieces very soon after it had reached 
an approach to maturity, and its disintegration proceeded with exceptional 
speed, so that the close of the third quarter of the century saw the virtual end 
of it as a vital factor in the development of human knowledge. In the realm of 
theory, primarily of course in the material sciences, the new era belongs not to 
romantic philosophy, but to the evolutionists of the school of Darwin. Some few 
great figures, of course, stood over from the earlier days, but it turns out in 
the sequel that they have served mainly to mark the rate and degree in which the 
method of scientific knowledge has left them behind. Such were Virchow and Max 
Müller, and such, in economic science, were the great figures of the Historical 
School, and such, in a degree, were also Marx and Engels. The later generation 
of socialists, the spokesmen and adherents of Marxism during the closing quarter 
of the century, belong to the new generation, and see the phenomena of human 
life under the new light. The materialistic conception in their handling of it 
takes on the color of the time in which they lived, even while they retain the 
phraseology of the generation that went before them.(5*)
The difference between the romantic school of thought, to which Marx belonged, 
and the school of the evolutionists into whose hands the system has fallen, - or 
perhaps, better, is falling, - is great and pervading, tho it may not show a 
staring superficial difference at any one point, - at least not yet. The 
discrepancy between the two is likely to appear more palpable and more sweeping 
when the new method of knowledge has been applied with fuller realization of its 
reach and its requirements in that domain of knowledge that once belonged to the 
neo-Hegelian Marxism. The supplanting of the one by the other has been taking 
place slowly, gently, in large measure unavowedly, by a sort of precession of 
the point of view from which men size up the facts and reduce them to 
intelligible order.
The neo-Hegelian, romantic, Marxian standpoint was wholly personal, whereas the 
evolutionistic - it may be called Darwinian - standpoint is wholly impersonal. 
The continuity sought in the facts of observation and imputed to them by the 
earlier school of theory was a continuity of a personal kind, - a continuity of 
reason and consequently of logic. The facts were construed to take such a course 
as could be established by an appeal to reason between intelligent and fair-
minded men. They were supposed to fall into a sequence of logical consistency. 
The romantic (Marxian) sequence of theory is essentially an intellectual 
sequence, and it is therefore of a teleological character. The logical trend of 
it can be argued out. That is to say, it tends to a goal. It must eventuate in a 
consummation, a final term. On the other hand, in the Darwinian scheme of 
thought, the continuity sought in and imputed to the facts is a continuity of 
cause and effect. It is a scheme of blindly cumulative causation, in which there 
is no trend, no final term, no consummation. The sequence is controlled by 
nothing but the vis a tergo of brute causation, and is essentially mechanical. 
The neo-Hegelian (Marxian) scheme of development is drawn in the image of the 
struggling ambitious human spirit: that of Darwinian evolution is of the nature 
of a mechanical process.(6*)
What difference, now, does it make if the materialistic conception is translated 
from the romantic concepts of Marx into the mechanical concepts of Darwinism? It 
distorts every feature of the system in some degree, and throws a shadow of 
doubt on every conclusion that once seemed secure.(7*) The first principle of 
the Marxian scheme is the concept covered by the term "Materialistic," to the 
effect that the exigencies of the material means of life control the conduct of 
men in society throughout, and thereby indefeasibly guide the growth of 
institutions and shape every shifting trait of human culture. This control of 
the life of society by the material exigencies takes effect thru men's taking 
thought of material (economic) advantages and disadvantages, and choosing that 
which will yield the inner material measure of life. When the materialistic 
conception passes under the Darwinian norm, of cumulative causation, it happens, 
first, that this initial principle itself is reduced to the rank of a habit of 
thought 
induced in the speculator who depends on its light by the circumstances of his 
life, in the way of hereditary bent, occupation, tradition, education, climate, 
food supply, and the like. But under the Darwinian norm the question of whether 
and how far material exigencies control human conduct and cultural growth 
becomes a question of the share which these material exigencies have in shaping 
men's habits of thought; i.e., their ideals and aspirations, their sense of the 
true, the beautiful, and the good. Whether and how far these traits of human 
culture and the institutional structure built out of them are the outgrowth of 
material (economic) exigencies becomes a question of what kind and degree of 
efficiency belongs to the economic exigencies among the complex of circumstances 
that conduce to the formation of habits. It is no longer a question of whether 
material exigencies rationally should guide men's conduct, but whether, as a 
matter of brute causation, they do induce such habits of thought in men as the 
economic interpretation presumes, and whether in the last analysis economic 
exigencies alone are, directly or indirectly, effective in shaping human habits 
of thought.
Tentatively and by way of approximation some such formulation as that outlined 
in the last paragraph is apparently what Bernstein and others of the 
"revisionists" have been seeking in certain of their speculations,(8*) and, 
sitting austere and sufficient on a dry shoal up stream, Kautsky has 
uncomprehendingly been addressing them advice and admonition which they do not 
understand.(9*) The more intelligent and enterprising among the idealist wing - 
where intellectual enterprise is not a particularly obvious trait have been 
struggling to speak for the view that the forces of the environment may 
effectually reach men's spiritual life thru other avenues than the calculus of 
the main chance, and so may give rise to habitual ideals and aspirations 
independent of, and possibly alien to, that calculus.(10*)
So, again, as to the doctrine of the class struggle. In the Marxian scheme of 
dialectical evolution the development which is in this way held to be controlled 
by the material exigencies must, it is held, proceed by the method of the class 
struggle. This class struggle is held to be inevitable, and is held inevitably 
to lead at each revolutionary epoch to a more efficient adjustment of human 
industry to human uses, because when a large proportion of the community find 
themselves ill served by the current economic arrangements, they take thought, 
band together, and enforce a readjustment more equitable and more advantageous 
to them. So long as differences of economic advantage prevail, there will be a 
divergence of interests between those more advantageously placed and those less 
advantageously placed. The members of society will take sides as this line of 
cleavage indicated by their several economic interests may decide. Class 
solidarity will arise on the basis of this class interest, and a struggle 
between the two classes so marked off against each other will set in, - a 
struggle which, in the logic of the situation, can end only when the previously 
less fortunate class gains the ascendency, - and so must the class struggle 
proceed until it shall have put an end to that diversity of economic interest on 
which the class struggle rests. All this is logically consistent and convincing, 
but it proceeds on the ground of reasoned conduct, calculus of advantage, not on 
the ground of cause and effect. The class struggle so conceived should always 
and everywhere tend unremittingly toward the socialistic consummation, and 
should reach that consummation in the end, whatever obstructions or diversions 
might retard the sequence of development along the way. Such is the notion of it 
embodied in the system of Marx. Such, however, is not the showing of history. 
Not all nations or civilizations have advanced unremittingly toward a 
socialistic consummation, in which all divergence of economic interest has 
lapsed or would lapse. Those nations and civilizations which have decayed and 
failed, as nearly all known nations and civilizations have done, illustrate the 
point that, however reasonable and logical the advance by means of the class 
struggle may be, it is by no means inevitable. Under the Darwinian norm it must 
be held that men's reasoning is largely controlled by other than logical, 
intellectual forces; that the conclusion reached by public or class opinion is 
as much, or more, a matter of sentiment than of logical inference; and that the 
sentiment which animates men, singly or collectively, is as much, or more, an 
outcome of habit and native propensity as of calculated material interest. There 
is, for instance, no warrant in the Darwinian scheme of things for asserting a 
priori that the class interest of the working class will bring them to take a 
stand against the propertied class. It may as well be that their training in 
subservience to their employers will bring them again to realize the equity and 
excellence of the established system of subjection and unequal distribution of 
wealth. Again, no one, for instance, can tell to-day what will be the outcome of 
the present situation in Europe and America. It may be that the working classes 
will go forward along the line of the socialistic ideals and enforce a new deal, 
in which there shall be no economic class discrepancies, no international 
animosity, no dynastic politics. But then it may also, so far as can be 
foreseen, equally well happen that the working class, with the rest of the 
community in Germany, England, or America, will be led by the habit of loyalty 
and by their sportsmanlike propensities to lend themselves enthusiastically to 
the game of drastic politics which alone their sportsmanlike rulers consider 
worth while. It is quite impossible on Darwinian ground to foretell whether the 
"proletariat" will go on to establish the socialistic revolution or turn aside 
again, and sink their force in the broad sands of patriotism. It is a question 
of habit and native propensity and of the range of stimuli to which the 
proletariat are exposed and are to be exposed, and what may be the outcome is 
not a matter of logical consistency, but of response to stimulus.
So, then, since Darwinian concepts have begun to dominate the thinking of the 
Marxists, doubts have now and again come to assert themselves both as to the 
inevitableness of the irrepressible class struggle and to its sole efficacy. 
Anything like a violent class struggle, a seizure of power by force, is more and 
more consistently deprecated. For resort to force, it is felt, brings in its 
train coercive control with all its apparatus of prerogative, mastery, and 
subservience.(11*)
So, again, the Marxian doctrine of progressive proletarian distress, the so-
called Verelendungstheorie, which stands pat on the romantic ground of the 
original Marxism, has fallen into abeyance, if not into disrepute, since the 
Darwinian conceptions have come to prevail. As a matter of reasoned procedure, 
on the ground of enlightened material interest alone, it should be a tenable 
position that increasing misery, increasing in degree and in volume, should be 
the outcome of the present system of ownership; and should at the same time 
result in a well-advised and well-consolidated working-class movement that would 
replace the present system by a scheme more advantageous to the majority. But so 
soon as the question is approached on the Darwinian ground of cause and effect, 
and is analyzed in terms of habit and of response to stimulus, the doctrine that 
progressive misery must effect a socialistic revolution becomes dubious, and 
very shortly untenable. Experience, the experience of history, teaches that 
abject misery carries with it deterioration and abject subjection. The theory of 
progressive distress fits convincingly into the scheme of the Hegelian three-
phase dialectic. It stands for the antithesis that is to be merged in the 
ulterior synthesis; but it has no particular force on the ground of an argument 
from cause to effect.(12*)
It fares not much better with the Marxian theory of value and its corollaries 
and dependent doctrines when Darwinian concepts are brought in to replace the 
romantic elements out of which it is built up. Its foundation is the 
metaphysical equality between the volume of human life force productively spent 
in the making of goods and the magnitude of these goods considered as human 
products. The question of such an equality has no meaning in terms of cause and 
effect, nor does it bear in any intelligible way upon the Darwinian question of 
the fitness of any given system of production or distribution. In any 
evolutionary system of economics the central question touching the efficiency 
and fitness of any given system of production is necessarily the question as to 
the excess of serviceability in the product over the cost of production.(13*)
It is in such an excess of serviceability over cost that the chance of survival 
lies for any system of production, in so far as the question of survival is a 
question of production, and this matter comes into the speculation of Marx only 
indirectly or incidentally, and leads to nothing in his argument.
And, as bearing on the Marxian doctrines of exploitation, there is on Darwinian 
ground no place for a natural right to the full product of labor. What can be 
argued in that connection on the ground of cause and effect simply is the 
question as to what scheme of distribution will help or hinder the survival of a 
given people or a given civilization.(14*)
But these questions of abstruse theory need not be pursued, since they count, 
after all, but relatively little among the working tenets of the movement. 
Little need be done by the Marxists to work out or to adapt the Marxian system 
of value theory, since it has but slight bearing on the main question, - the 
question of the trend towards socialism and of its chances of success. It is 
conceivable that a competent theory of value dealing with the excess of 
serviceability over cost, on the one hand, and with the discrepancy between 
price and serviceability, on the other hand, would have a substantial bearing 
upon the advisability of the present as against the socialistic régime, and 
would go far to clear up the notions of both socialists and conservatives as to 
the nature of the points in dispute between them.
But the socialists have not moved in the direction of this problem, and they 
have the excuse that their critics have suggested neither a question nor a 
solution to a question along any such line. None of the value theorists have so 
far offered anything that could be called good, bad, or indifferent in this 
connection, and the socialists are as innocent as the rest. Economics, indeed, 
has not at this point yet begun to take on a modern tone, unless the current 
neglect of value theory by the socialists be taken as a negative symptom of 
advance, indicating that they at least recognize the futility of the received 
problems and solutions, even if they are not ready to make a positive move.
The shifting of the current point of view, from romantic philosophy to matter-
of-fact, has affected the attitude of the Marxists towards the several articles 
of theory more than it has induced an avowed alteration or a substitution of new 
elements of theory for the old. It is always possible to make one's peace with a 
new standpoint by new interpretations and a shrewd use of figures of speech, so 
far as the theoretical formulation is concerned, and something of this kind has 
taken place in the case of Marxism; but when, as in the case of Marxism, the 
formulations of theory are drafted into practical use, substantial changes of 
appreciable magnitude are apt to show themselves in a changed attitude towards 
practical questions. The Marxists have had to face certain practical problems, 
especially problems of party tactics, and the substantial changes wrought in 
their theoretical outlook have come into evidence here. The real gravity of the 
changes that have overtaken Marxism would scarcely be seen by a scrutiny of the 
formal professions of the Marxists alone. But the exigencies of a changing 
situation have provoked readjustments of the received doctrinal position, and 
the shifting of the philosophical standpoint and postulates has come into 
evidence as marking the limits of change in their professions which the 
socialistic doctrinaires could allow themselves.
The changes comprised in the cultural movement that lies between the middle and 
the close of the nineteenth century are great and grave, at least as seen from 
so near a standpoint as the present day, and it is safe to say that, in whatever 
historical perspective they may be seen, they must, in some respects, always 
assert themselves as unprecedented. So far as concerns the present topic, there 
are three main lines of change that have converged upon the Marxist system of 
doctrines, and have led to its latter-day modification and growth. One of these 
- the change in the postulates of knowleedge, in the metaphysical foundations of 
theory - has been spoken of already, and its bearing on the growth of socialist 
theory has been indicated in certain of its general features. But, among the 
circumstances that have conditioned the growth of the system, the most obvious 
is the fact that since Marx's time his doctrines have come to serve as the 
platform of a political movement, and so have been exposed to the stress of 
practical party politics dealing with a new and changing situation. At the same 
time the industrial (economic) situation to which the doctrines are held to 
apply - of which they are the theoretical formulation - has also in important 
respects changed its character from what it was when Marx first formulated his 
views. These several lines of cultural change affecting the growth of Marxism 
cannot be held apart in so distinct a manner as to appraise the work of each 
separately. They belong inextricably together, as do the effects wrought by them 
in the system.
In practical politics the Social Democrats have had to make up their account 
with the labor movement, the agricultural population, and the imperialistic 
policy. On each of these heads the preconceived program of Marxism has come in 
conflict with the run of events, and on each head it has been necessary to deal 
shrewdly and adapt the principles to the facts of the time. The adaptation to 
circumstances has not been altogether of the nature of the compromise, although 
here and there the spirit of compromise and conciliation is visible enough. A 
conciliatory party policy may, of course, impose an adaptation of form and color 
upon the party principles, whether thereby seriously affecting the substance of 
the principles themselves; but the need of a conciliatory policy may, even more, 
provoke a substantial change of attitude toward practical questions in a case 
where a shifting of the theoretical point of view makes room for a substantial 
change.
Apart from all merely tactical expedients, the experience of the past thirty 
years has led the German Marxists to see the facts of the labor situation in a 
new light, and has induced them to attach an altered meaning to the accepted 
formulations of doctrine. The facts have not freely lent themselves to the 
scheme of the Marxist system, but the scheme has taken on such a new meaning as 
would be consistent with the facts. The untroubled Marxian economics, such as it 
finds expression in the Kapital and earlier documents of the theory, has no 
place and no use for a trade-union movement, or, indeed, for any similar non-
political organization among the working class, and the attitude of the Social-
Democratic leaders of opinion in the early days of the party's history was 
accordingly hostile to any such movement,(15*) - as much so, indeed, as the 
loyal adherents of the classical political economy. That was before the modern 
industrial era had got under way in Germany, and therefore before the German 
socialistic doctrinaires had learned by experience what the development of 
industry was to bring with it. It was also before the modern scientific 
postulates had begun to disintegrate the neo-Hegelian preconceptions as to the 
logical sequence in the development of institutions.
In Germany, as elsewhere, the growth of the capitalistic system presently 
brought on trade-unionism; that is to say, it brought on an organized attempt on 
the part of the workmen to deal with the questions of capitalistic production 
and distribution by business methods, to settle the problems of working-class 
employment and livelihood by a system of nonpolitical, businesslike bargains. 
But the great point of all socialist aspiration and endeavor is the abolition of 
all business and all bargaining, and, accordingly, the Social Democrats were 
heartily out of sympathy with the unions and their endeavors to make business 
terms with the capitalist system, and make life tolerable for the workmen under 
that system. But the union movement grew to be so serious a feature of the 
situation that the socialists found themselves obliged to deal with unions, 
since they could not deal with the workmen over the heads of the unions. The 
Social Democrats, and therefore the Marxian theorists, had to deal with a 
situation which included the union movement, and this movement was bent on 
improving the workman's conditions of life from day to day. Therefore it was 
necessary to figure out how the union movement could and must further the 
socialistic advance; to work into the body of doctrines a theory of how the 
unions belong in the course of economic development that leads up to socialism, 
and to reconcile the unionist efforts at improvement with the ends of Social 
Democracy. Not only were the unions seeking improvement by unsocialistic 
methods, but the level of comfort among the working classes was in some respects 
advancing, apparently as a result of these union efforts. Both the huckstering 
animus of the workmen in their unionist policy and the possible amelioration of 
working-class conditions had to be incorporated into the socialistic platform 
and into the Marxist theory of economic development. The Marxist theory of 
progressive misery and degradation has, accordingly, fallen into the background, 
and a large proportion of the Marxists have already come to see the whole 
question of working-class deterioration in some such apologetic light as is shed 
upon it by Goldscheid in his Verelendungs- oder Meliorationstheorie. It is now 
not an unusual thing for orthodox Marxists to hold that the improvement of the 
conditions of the working classes is a necessary condition to the advance of the 
socialistic cause, and that the unionist efforts at amelioration must be 
furthered as a means toward the socialistic consummation. It is recognized that 
the socialistic revolution must be carried through not by an anaemic working 
class under the pressure of abject privation, but by a body of fullblooded 
workingmen gradually gaining strength from improved conditions of life. Instead 
of the revolution being worked out by the leverage of desperate misery, every 
improvement in working-class conditions is to be counted as a gain for the 
revolutionary forces. This is a good Darwinism, but it does not belong in the 
neo-Hegelian Marxism.
Perhaps the sorest experience of the Marxist doctrinaires has been with the 
agricultural population. Notoriously, the people of the open country have not 
taken kindly to socialism. No propaganda and no changes in the economic 
situation have won the sympathy of the peasant farmers for the socialistic 
revolution. Notoriously, too, the large-scale industry has not invaded the 
agricultural field, or expropriated the small proprietors, in anything like the 
degree expected by the Marxist doctrinaires of a generation ago. It is contained 
in the theoretical system of Marx that, as modern industrial and business 
methods gain ground, the small proprietor farmers will be reduced to the ranks 
of the wage-proletariat, and that, as this process of conversion goes on, in the 
course of time the class interest of the agricultural population will throw them 
into the movement side by side with the other wage-workmen.(16*) But at this 
point the facts have hitherto not come out in consonance with the Marxist 
theory. And the efforts of the Social Democrats to convert the peasant 
population to socialism have been practically unrewarded. So it has come about 
that the political leaders and the keepers of the doctrines have, tardily and 
reluctantly, come to see the facts of the agrarian situation in a new light, and 
to give a new phrasing to the articles of Marxian theory that touch on the 
fortunes of the peasant farmer. It is no longer held that either the small 
properties of the peasant farmer must be absorbed into larger properties, and 
then taken over by the State, or that they must be taken over by the State 
directly, when the socialistic revolution is established. On the contrary, it is 
now coming to be held that the peasant proprietors will not be disturbed in 
their holdings by the great change. The great change is to deal with 
capitalistic enterprise, and the peasant farming is not properly "capitalistic." 
It is a system of production in which the producer normally gets only the 
product of his own labor. Indeed, under the current régime of markets and credit 
relations, the small agricultural producer, it is held, gets less than the 
product of his own labor, since the capitalistic business enterprises with which 
he has to deal are always able to take advantage of him. So it has become part 
of the overt doctrine of socialists that as regards the peasant farmer it will 
be the consistent aim of the movement to secure him in the untroubled enjoyment 
of his holding, and free him from the vexatious exactions of his creditors and 
the ruinous business traffic in which he is now perforce involved. According to 
the revised code, made possible by recourse to Darwinian concepts of evolution 
instead of the Hegelian three-phase dialectic, therefore, and contrary to the 
earlier prognostications of Marx, it is no longer held that agricultural 
industry must go thru the capitalistic mill, and it is hoped that under the 
revised code it may be possible to enlist the interest and sympathy of this 
obstinately conservative element for the revolutionary cause. The change in the 
official socialist position on the agricultural question has come about only 
lately, and is scarcely yet complete, and there is no knowing what degree of 
success it may meet with either as a matter of party tactics or as a feature of 
the socialistic theory of economic development. All discussions of party policy, 
and of theory so far as bears on policy, take up the question; and nearly all 
authoritative spokesmen of socialism have modified their views in the course of 
time on this point.
The socialism of Karl Marx is characteristically inclined to peaceable measures 
and disinclined to a coercive government and belligerent politics. It is, or at 
least it was, strongly averse to international jealousy and patriotic animosity, 
and has taken a stand against armaments, wars, and dynastic aggrandizement. At 
the time of the French-Prussian war the official organization of Marxism, the 
International, went so far in its advocacy of peace as to urge the soldiery on 
both sides to refuse to fight. After the campaign had warmed the blood of the 
two nations, this advocacy of peace made the International odious in the eyes of 
both French and Germans. War begets patriotism, and the socialists fell under 
the reproach of not being sufficiently patriotic. After the conclusion of the 
war, the Socialistic Workingmen's Party of Germany sinned against the German 
patriotic sentiment in a similar way and with similarly grave results. Since the 
foundation of the empire and of the Social-Democratic party, the socialists and 
their doctrines have passed thru a further experience of a similar kind, but on 
a larger scale and more protracted. The government has gradually strengthened 
its autocratic position at home, increased its warlike equipment, and enlarged 
its pretensions in international politics, until what would have seemed absurdly 
impossible a generation ago is now submitted to by the German people, not only 
with a good grace, but with enthusiasm. During all this time that part of the 
population that has adhered to the socialist ideals has also grown gradually 
more patriotic and more loyal, and the leaders and keepers of socialist opinion 
have shared in the growth of chauvinism with the rest of the German people. But 
at no time have the socialists been able to keep abreast of the general upward 
movement in this respect. They have not attained the pitch of reckless loyalty 
that animates the conservative German patriots, although it is probably safe to 
say that the Social Democrats of to-day are as good and headlong patriots as the 
conservative Germans were a generation ago. During all this period of the new 
era of German political life the socialists have been freely accused of 
disloyalty to the national ambition, of placing their international aspirations 
above the ambition of imperial aggrandizement.
The socialist spokesmen have been continually on the defensive. They set out 
with a round opposition to any considerable military establishment, and have 
more and more apologetically continued to oppose any "undue" extension of the 
warlike establishments and the warlike policy. But with the passage of time and 
the habituation to warlike politics and military discipline, the infection of 
jingoism has gradually permeated the body of Social Democrats, until they have 
now reached such a pitch of enthusiastic loyalty as they would not patiently 
hear a truthful characterization of. The spokesmen now are concerned to show 
that, while they still stand for international socialism, consonant with their 
ancient position, they stand for national aggrandizement first and for 
international comity second. The relative importance of the national and the 
international ideals in German socialist professions has been reversed since the 
seventies.(17*) The leaders are busy with interpretation of their earlier 
formulations. They have come to excite themselves over nebulous distinctions 
between patriotism and jingoism. The Social Democrats have come to be German 
patriots first and socialists second, which comes to saving that they are a 
political party working for the maintenance of the existing order, with 
modifications. They are no longer a party of revolution, but of reform, tho the 
measure of reform which they demand greatly exceeds the Hohenzollern limit of 
tolerance. They are now as much, if not more, in touch with the ideas of English 
liberalism than with those of revolutionary Marxism.
The material and tactical exigencies that have grown out of changes in the 
industrial system and in the political situation, then, have brought on far-
reaching changes of adaptation in the position of the socialists. The change may 
not be extremely large at any one point, so far as regards the specific articles 
of the program, but, taken as a whole, the resulting modification of the 
socialistic position is a very substantial one. The process of change is, of 
course, not yet completed, - whether or not it ever will be, but it is already 
evident that what is taking place is not so much a change in amount or degree of 
conviction on certain given points as a change in kind, - a change in the 
current socialistic habit of mind.
The factional discrepancies of theory that have occupied the socialists of 
Germany for some years past are evidence that the conclusion, even a provisional 
conclusion, of the shifting of their standpoint has not been reached. It is even 
hazardous to guess which way the drift is setting. It is only evident that the 
past standpoint, the standpoint of neo-Hegelian Marxism, cannot be regained, - 
it is a forgotten standpoint. For the immediate present the drift of sentiment, 
at least among the educated, seems to set toward a position resembling that of 
the National Socials and the Rev. Mr. Naumann; that is to say, imperialistic 
liberalism. Should the conditions, political, social, and economic, which to-day 
are chiefly effective in shaping the habits of thought among the German people, 
continue substantially unchanged and continue to be the chief determining 
causes, it need surprise no one to find German socialism gradually changing into 
a somewhat characterless imperialistic democracy. The imperial policy seems in a 
fair way to get the better of revolutionary socialism, not by repressing it, but 
by force of the discipline in imperialistic ways of thinking to which it 
subjects all classes of the population. How far a similar process of 
sterilization is under way, or is likely to overtake the socialist movement in 
other countries, is an obscure question to which the German object-lesson 
affords no certain answer.

Notes:
1. "Scientific" is here used in the half technical sense which by usage it often 
has in this connection, designating the theories of Marx and his followers.
2. There is, indeed, a remarkable consistency, amounting substantially to an 
invariability of position, in Marx's writing, from the Communist Manifesto to 
the last volume of the Capital. The only portion of the great Manifesto which 
became antiquated, in the apprehension of its creators, is the polemics 
addressed to the "Philosophical" socialists of the forties and the illustrative 
material taken from contemporary politics. The main position and the more 
important articles of theory, the materialistic conception, the doctrine of 
class struggle, the theory of value and surplus value, of increasing distress, 
of the reserve army, of the capitalistic collapse are to be found in the 
Critique of Political Economy (1859), and much of them in the Misery of 
Philosophy (1847), together with the masterful method of analysis and 
construction which he employed throughout his theoretical work.
3. Cf. Engels, Feuerbach (English translation, Chicago, 1903), especially Part 
IV., various papers published in the Neue Zeit; also the preface to the 
Communist Manifesto written in 1888; also the preface to volume II of Capital, 
where Engels argues the question of Marx's priority in connection with the 
leading theoretical principles of his system.
4. Cf. Feuerbach, as above; The Development of Socialism from Utopia to Science, 
especially sections II and III.
5. Such a socialist as Anton Menger, e.g., comes into the neo-Marxian school 
from without, from the field of modern scientific inquiry, and shows, at least 
virtually, no Hegelian color, whether in the scope of his inquiry, in his 
method, or in the theoretical work which he puts forth. It should be added that 
his Neue Staatslehre and Neue Sittenlehre are the first socialistic constructive 
work of substantial value as a contribution to knowledge, outside of economic 
theory proper, that has appeared since Lassalle. The efforts of Engels (Ursprung 
der Familie) and Bebel (Die Frau) would scarcely be taken seriously as 
scientific monographs even by hot-headed socialists if it were not for the lack 
of anything better. Menger's work is not Marxism, whereas Engels' and Bebel's 
work of this class is practically without value or originality. The unfitness of 
the Marxian postulates and methods for the purposes of modern science shows 
itself in the sweeping barrenness of socialistic literature all along that line 
of inquiry into the evolution of institutions for the promotion of which the 
materialistic dialectic was invented.
6. This contrast holds between the original Marxism of Marx and the scope and 
method of modern science; but it does not, therefore, hold between the latterday 
Marxists - who are largely imbued with post-Darwinian concepts - and the non-
Marxian scientists. Even Engels, in his latter-day formulation of Marxism is 
strongly affected with the notions of post-Darwinian science, and reads 
Darwinism into Hegel and Marx with a good deal of naivete. (See his Feuerbach, 
especially pp. 93-98 of the English translation). So, also, the serious but 
scarcely quite consistent qualification of the materialistic conception offered 
by Engels in the letters printed in the Sozialistische Akademiker, 1895.
7. The fact that the theoretical structures of Marx collapse when their elements 
are converted into the terms of modern science should of itself be sufficient 
proof that those structures were not built by their maker out of such elements 
as modern science habitually makes use of. Marx was neither ignorant, imbecile, 
nor disingenuous, and his work must be construed from such a point of view and 
in terms of such elements as will enable his results to stand substantially 
sound and convincing.
8. Cf. Voraussetzungen des Sozialismus, especially the first two (critical) 
chapters. Bernstein's reverent attitude toward Marx and Engels, as well as his 
somewhat old-fashioned conception of the scope and method of science, gives his 
discussion an air of much greater consonance with the orthodox Marxism than it 
really has. In his latter expressions this consonance and conciliatory animus 
show up more strongly rather than otherwise. (See Socialism and Science, 
including the special preface written for the French edition). That which was to 
Marx and Engels the point of departure and the guiding norm - the Hegelian 
dialectic - is to Bernstein a mistake from which scientific socialism must free 
itself. He says, e.g., (Voraussetzungen, end of ch. iv.), "The great things 
achieved by Marx and Engels they have achieved not by the help of the Hegelian 
dialectic, but in spite of it."
The number of the "revisionists" is very considerable, and they are plainly 
gaining ground as against the Marxists of the older line of orthodoxy. They are 
by no means agreed among themselves as to details, but they belong together by 
virtue of their endeavor to so construe (and amend) the Marxian system as to 
bring it into consonance with the current scientific point of view. One should 
rather say points of view, since the revisionist endevors are not all directed 
to bringing the received views in under a single point of view. There are two 
main directions of movement among the revisionists: (a) those who, like 
Bernstein, Conrad Schmidt, Tugan-Baronowski, Labriola, Ferri, aim to bring 
Marxism abreast of the standpoint of modern science, essentially Darwinists; and 
(b) those who aim to return to some footing on the level of romantic philosophy. 
The best type and the strongest of the latter class are the neo-Kantians, 
embodying that spirit of revulsion to romantic norms of theory that makes up the 
philosophical side of the reactionary movement fostered by the discipline of 
German imperialism. (See K. Vorländer, Die neukantische Bewegung im 
Sozialismus.)
Except that he is not officially inscribed in the socialist calender, Sombart 
might be cited as a particularly effective revisionist, so far as concerns the 
point of modernizing Marxism and putting the modernized materialistic conception 
to work.
9. Cf. the files of the Neue Zeit, particularly during the controversy with 
Bernstein, and Bernstein und das Sozialdemokratische Programm.
10. The "idealist" socialists are even more in evidence outside of Germany. They 
may fairly be said to be in the ascendant in France, and they are a very strong 
and free-spoken contingent of the socialist movement of America. They do not 
commonly speak the language either of science or of philosophy, but, so far as 
their contentions may be construed from the standpoint of modern science, their 
drift seems to be something of the kind indicated above. At the same time the 
spokesmen of this scattering and shifting group stand for a variety of opinions 
and aspirations that cannot be classified under Marxism, Darwinism, or any other 
system of theory. At the margin they shade off into theology and the creeds.
11. Throughout the revisionist literature in Germany there is visible a 
softening of the traits of the doctrine of the class struggle, and the like 
shows itself in the programs of the party. Outside of Germany the doctrinaire 
insistence on this tenet is weakening even more decidedly. The opportunist 
politicians, with strong aspirations, but with relatively few and ill-defined 
theoretical preconceptions, are gaining ground.
12. Cf. Bernstein, Die heutige Sozialdemokratie in Theorie und Praxis, an answer 
to Brunhuber, Die heutige Sozialdemokratie, which should be consulted in the 
same connection; Goldscheid, Verelendungs- oder Meliorationstheorie; also 
Sombart, Sozialismus und soziale Bewegung, 5th edition, pp. 86-89.
13. Accordingly, in later Marxian handling of the questions of exploitation and 
accumulation, the attention is centred on the "surplus product" rather than on 
the "surplus value". It is also currently held that the doctrines and practical 
consequences which Marx derived from the theory of surplus value would remain 
substantially well founded, even if the theory of surplus value were given up. 
These secondary doctrines could be saved - at the cost of orthodoxy - by putting 
a theory of surplus product in the place of the theory of surplus value, as in 
effect is done by Bernstein (Sozialdemokratie in Theorie und Praxis, sec. 5. 
Also various essays included in Zur Geschichte und Theorie des Sozialismus).
14. The "right to the full product of labor" and the Marxian theory of 
exploitation associated with that principle has fallen into the background, 
except as a campaign designed to stir the emotions of the working class. 
Even as a campaign it has not the prominence, nor apparently the efficacy, 
which it once had. The tenet is better preserved, in fact, among the 
"idealists", who draw for their antecedents on the French Revolution and the 
English philosophy of natural rights, than among the latter-day Marxists.
15. It is, of course, well known that even in the transactions and 
pronunciamentos of the International a good word is repeatedly said for the 
trade-unions, and both the Gotha and the Erfurt programs speak in favor of labor 
organizations, and put forth demands designed to further the trade-union 
endeavors. But it is equally well known that these expressions were in good part 
perfunctory, and that the substantial motive behind them was the politic wish of 
the socialists to conciliate the unionists, and make use of the unions for the 
propaganda. The early expressions of sympathy with the unionist cause were made 
for an ulterior purpose. Later on, in the nineties, there comes a change in the 
attitude of the socialist leaders toward the unions.
16. Cf. Capital, vol. i. ch. xiii., sect. 10.
17. Cf. Kautsky, Erfurter Programm, ch. v., sect. 13; Bernstein, 
Voraussetzungen, ch. iv., sect. e.
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