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OVERPRODUCT ION

AND CRISES

fihan n KARL ROBBER TUS

TRANSLATED BY

JULIA FRANKLIN

With an 3ntrobuction by

JOHN B. CLARK

PROFESSOR OF POLIT ICAL ECONOMY I N COLUMBIA’ UAIVERSlT’Y

ZXZAUDCUV'

SWAN SONN ENSCHE IN CO . , L I M .

NEW YORK : CHARLES SCRIBNER’

S SONS

1898

INTRODUCTION

PROFESSOR JOHN B. CLARK .

HE modern wo rld regards busin ess crises

much as the an cien t Egyptian s regarded the

overflowings of the N i le. The phen omen on recurs

a t in terva ls ; i t is of great importan ce to every

o n e, and n atura l causes of it a re n o t in sight.

An econ omist may make a formula that tel ls,to

his own satisfaction , why a con vulsion in busin ess

takes place about on ce in a decade ; but if the

statemen t is a t all complete, i t wil l ha rdly be

un derstood by the public. It wil l n ecessarily be

in tricate. The phen omenon is complex, and a

statemen t that accurately accoun ts for it must be

so. The most ava i lable reason s that can be

assign ed for busin ess crises are vaguely expressed

in single terms , such as“ overproduction

,

” “ in fla

tion ,

” “ speculation ,”

and“ l iquidation .

”

B

2 OVERPRODUCTION AND CRISES.

Ofthe terms that may be used for this purpose,

the o n e tha t most n early satisfies the public min d

is overpr oduction . I t describes what,in the time of

a crisis , and in the case of many producers, is a

rea l ity, n amely, the possession of goods that they

have made and can n ot sel l, except a t a ruin ous

sacrifice. I t is, moreover, a true in stin ct that

dictates the resort to this particular explan ation .

Before every commercial crisis there is a period

durin g which there takes place very much pro

duction that does n o t cater to n orma l and per

man en t wan ts, and tha t, therefore, can n ot con tin ue.

Much production n eeds to be checked, and i t is

checked by the harsh opera tion of the crisis itself.

The so-ca l led “ boom h as deranged busin ess, and

the en suin g depress ion is a time of pa in fu l re

adj ustmen t and recuperation . I t is a time of co n

valescen ce from the disease that is rudely described

as an excess of production , and that rea l ly is an

excess of some kin ds of production and a deficien cy

of other kin ds.

Rodbertu s’

Tkoory of Cr ises wa s published in

1 8 50—5 1 . I t h as the merit of con forming to th e

popular in stin ct. It a scribes crises to overproduc

tion . That un iversa l overproduction is impossible

INTRODUCTION . 3

h as been con sidered n ea rly axiomatic, and certain ly

it is n o t possible that more of every kin d of article

should be created than i s wan ted by the en tire

public. I f we deal very cava l ierly with human

n ature and with society, we can suppose a case of

overproduction l ike this ; but we can n ot make it

appea r possible. We can imagin e a society in

which men are al l a l ike, and in which they wan t

o n e un it of each art icle that is made, and n o more.

They a lso wan t n o other kin ds of a rt icles . Every

man,i f he h ad a secon d un it of an ything that he

a lready possesses , would find it in the way ; and

i f,n ow,

through n ew machin ery,a secon d un i t of

everything were to be created , i t would clearly be

an excess .

In the world of real ity we have in satiable wan ts to

deal with,and an un usable surplus of all things can

n ever be produced . An u n sa loaolo su rplus ofmanythings can be produced . Overproduction is prae

tica lly misdirected production . Rodbertus’

own

theory of gluts rea l ly reduces them to misdirected

production ,however l ittle his own language and

thought may have made such a reduction . We

have on ly to create, in imagin ation , the con di

tion that Rodbertus describes— that of a society


devoting a fixed fraction of its productive power

to making goods for labourers , while the labourers

are able to buy and pay for a dimin ishin g sha re

of these goods— in order to see that the trouble

would be rel ieved i f a certa in portion of the

productive power were used for making what

other classes desire.

The makin g of a relative excess of some things

is,in deed , a rea l phen omen on of what are ca l led

“ ha rd times .” If we can detect the actua l cause

of this misuse of productive en ergy, we sha l l go

far toward a tta in in g a true philosophy of crises.

Something h as misled busin ess men and h as

made them cater to a deman d tha t is un n a tura l

an d tran sien t. I f we kn ow just what h as don e

this,we have removed the mystery from the cause

of crises. I t is doubtless somethin g tha t ‘ fa ll s

un der the gen era l term , speculation . Future

va lues have been an ticipated ; men have thought

they saw amoun ts of wea lth comin g to them that

appeared ample. I f these h ad on ly been rea l,

they would have justified la rge expen ditures in

an ticipation of them . Orders for la rge amoun ts of

con sumers’ wea lth have been given , and the mills

have been set run n ing In order to meet them .

INTRODUCTION.

‘

5

The goods have come in to existen ce ; but the

wea lth tha t was seen in a vision of the future h as

n o t materia l ized . The mills have made cloth,

shoes,furn iture

,etc. ; and the va lues that were to

have pa id for these things have resolved them

selves in to a mirage.

The critica l test of a theory of so-ca l led over

production , which , in a ctua l fact, is always u n

ba lan ced o r misdirected production ,i s whether it

refers this phen omen on to a cause tha t is rea l,and

tha t actua l ly deludes employers,and makes them

ru n their mil ls o n goods that a re n o t“ effectua l ly

deman ded .

” A fa tuous discoun tin g of the future

might do this. I t might cause articles to be made

for person s who wa n t them ,but find tha t they

can n ot pay for them . Let men order goods in

the expectation of payin g for them with wea lth

tha t is apparen tly about to exist. The producers

fi l l the orders that, in such con dition s , are given to

them . Con sumer’s delusion s result in producer’s

blun ders.

Rodbertus’ theory of “ overproduction lacks

this pa rticula r elemen t. I t in volves n o delusion

o n the con sumers’ side. These men go o n

spen ding their da i ly in comes and n o more ; yet


the producers create too much for them . Tha t

occurs which can n ot occur in a commun ity in which

mills are run according to the orders that they

get. If wha t is sold to-day is the basis of what, as

may be a ssumed, will be sold to-morrow, the kin d

of overproduction of a certain class of goods that

is the basis of Rodbertus’ theory of crises can n ot

take place.

Let wage earn ers get a dimin ishing fraction of

the in come of society ; let employers make for

wage earn ers goods tha t sha l l represen t a fixed

fraction of the in come of society ; and a case of

m isd irected production is presen ted . There a re

n ow too many things of the kin ds that on ly wage

earn ers wil l use. This is the n ature of Rodbertus’

a ssumption .

It makes producers cease to follow the effectual

deman ds of con sumers . I t makes them run their

mil ls o n coarse clothing,heavy shoes, etc., lon g

after the workmen have ceased to buy them . I t

makes the man ufacturers del iberately accumulate

an excess of stock in the absen ce of either a

presen t or a prospective deman d for it. There is

n o delusion o n the con sumers’ part as to what

they can pay for, and there is n o reason for any

INTRODUCTION . 7

delusion o n the producers’ part as to wha t the

con sumers w ill pay for. There is a perverse

fa i lure to make the actua l deman d of yesterday a

basis for the production of to-day, or to make the

deman d of last year a basis for the production

of this yea r.

Let wage earn ers at first get two-thirds of the

gross in come of society. Two-thirds of th e co n

sumers ’ goods an n ua l ly created by society wil l

then con sist of things that a re adapted to the

workin g men ’s n eeds . Now let the terms of dis

tributio n be so changed tha t the workmen get

on ly a ha lf of the in come of society ; and if there

a re still made goods for these men ’s use that

embody two-th irds of the gross in come of society,

there is an excess of such goods. On e-sixth of

the gross in come of soc iety is n ow embodied in

goods that will n o t be bought by the class for

which they were in ten ded.

Now the change in the terms of distribution

that is the basis of this theory must come about

gradua l ly. A slow-acting and gen era l cause is, as

is assumed,making wages in the aggrega te to

con stitute a smaller and sma l ler fraction of the

tota l gain s of the world . This is an assump


tion,in deed

,tha t requires statistica l proof ; but

Rodbertus bel ieved tha t this proof could be fur

n ish ed. Even he could n o t have cla imed that the

reduction of the relative in come of the workin g

class is made sudden ly. Slow a nd perman en t

must be the chan ges tha t would c ause wages to

shrin k rela tively, and to con stitute a dwin dl in g

fraction of the whole in come of the world .

In View of the gradua l cha racter of this chan ge,

what follows " Th e producers have all the evi

den ce tha t busin ess men n eed as to wha t kin ds

of products will be effectua l ly deman ded . Very

sen sitive is production to slow chan ges in c o n

sumption, and very efficien t is competition in

making it to be so. Short would be the busin ess

ca reer of an employer, who, after a yea r or two of

shrin king deman d for his goods, should con tin ue

to make these t hings in fixed or in creasing

amoun ts . No competitor in a busin ess can survive

who does n o t develop a greater capacity than this

implies for crea tin g things that the public ca l ls for.

Even sudden changes in deman d— the capric ious

action s of fashion— must be and are respected by

the mass of successful producers. The spectacle

of a great body of employers going seren ely o n

INTRODUCTION . 9

in makin g for workmen more things than ,by

reason of some gradua l and n atura l change, work

men can buy,is n o t o n e that wi l l bea r the test of

comparison with facts. Speculation s, delusion s

about the future, and fictitious in comes in the

presen t may bewilder con sumers, and, through

them , may misdirect producers . Slow chan ges in

the terms of distribution can n ot do this.

The theory of crises that Rodbertus advan ced

furn ished the substan ce of the doctrin e o n this

subject that reappeared in the writin gs of Ma rx .

The chief con clusion to which the theory leads

is that crises are a n orma l result of a competitive

wage system . They result from a steady and

perman en t change in the terms of distribution,

and this change results from a n atura l law ofo

wages. The full proof tha t crises a re a n ecessary

part of the econ omy of society, as n ow organ ized ,

rests, therefore, partly o n the theory of Wages ;

and i t is c lea r that the view of this subject that

was held in Rodbertus’ time is n ow held by few

econ omists . N o t many men n ow believe in the

Rica rdian Iron Law doctrin e con cern ing the

earn ings of labour. I f the productivity theory

of Wages is true,— if a n atura l law ten ds to give

I O OVERPRODUCTION AND CRISES.

to the worker what he specifica l ly creates , and

i f that amoun t is an in creasing o n e— the major

premise of Rodbertus’ reason in g about crises

must be recon sidered . Wha t is of most in terest,

however, in direct con n ection with this theory

itself, is the deduction that is drawn from the

old wages doctrin e. Is this deduction legitimate,

even o n the assumption that the I ron Law theory

of Wages is true " Here is a specific weakn ess

that n eeds on ly to be stated to be admitted by

can did men . Whatever qua l ities producin g em

ployers may lack, they have the capacity to brin g

the kin ds of goods that , from year to year, they

make in to a gen era l con formity to any gradua l ly

chan gin g deman d . Fictitious deman ds— vision s of

coming wealth o n the con sumer’s side— may bafi‘le

them,but a steady and perman en t change in th e

rate of wages can n ot do so.

Rodbertus’

theory is presen ted in the form of

a con troversia l letter to his scien tific frien d,vo n

K irchman n , who is an acute reason er and o n e

with whom Rodbertus agrees up to a certain

poin t. Vo n Kirchman n’

s statemen t of the problem ,

as he con ceives it— which is cited at great length

by Rodbertus— is admirably clea r. Three em

INTRODUCTION . I I

ployers have each three hun dred workmen , and

with them con stitute an isolated commun ity

en gaged in in tern a l trade. On e -ha lf of the

product of each establishmen t goes as wages

to the workmen , and the other ha lf rema in s as

the share of the capita l ist-employer. To the

n in e hun dred labourers there accru e as wages

the products created by four hun dred and fifty

men .

I t is, of course, to be n oted that this force of

labourers is a ided by the machin es, materia ls , etc .,

furn ished by the employers,and tha t it is a loose

use of terms to say that the whole working force

gets , as its pay, on ly the product of a ha l f of

the force. What they get is a j oin t product of

o n e-ha lf of the labour and o n e-ha lf of the capital

in the establishmen ts . Moreover,i f the produc

tivity theory of wages is true, these capita l ists

could n o t,in the long ru n , get o n e-half of the

product of their establishmen ts un less,by an

accurate tracing of products to their sources, it

could be shown that o n e-ha lf of the product is

virtua l ly created by capita l and the other ha lf by

labour. In stead of sayin g “ Employers get, as

their shares , the product of the labour of four


hun dred and fifty men,a ided by capita l, we

might, with grea ter clearn ess, say,“ Employers

get the product of all the capita l ; and it amoun ts

to a ha lf of the product of the establishmen t. ”

Acceptin g, however, the form of expression

adopted by vo n K irchman n , we may create an

imagin ary case of overproduction ,

” which clea rly

resolves itself in to misdirected production . The

food,coarse clothing, etc. , created by the four

hun dred and fifty men con stitute the rea l wages of

the n in e hun dred . Fin er products crea ted by the

rema in ing four hun dred a nd fifty men con stitute

the rea l in comes of the three employers.

The employers n ow take , accordin g to vo n

K irchman n ,the heroic resolution of usin g, in

luxurious con sumption , on ly the labour of o n e

hun dred men,and of devoting to the build in g of

n ew mil ls, etc., the labour of three hun dred and

fifty. They “ save ” seven -n in ths of their in comes

and spen d two-n in ths. This amoun ts to takin g

the larger fraction of their ga in s in a d ifferen t

con crete form from that in which they take the

sma ller fraction . Havin g at their comman d the

services of four hun dred and fifty men , they

dictate what these men sha l l make, and take i t

INTRODUCTION . I 3

as their rea l in comes. They take mills in stead

of luxuries as the chief part of their return s .

The problem of determin ing what happen s as

the sequel of this decision is a rithmetica l and n o t

difficult,though at first it appea rs slightly puzzl in g.

Accordin g to vo n K irchman n ,the n ew mills a t

first make coarse products,of the kin ds that work

men use. As o n e-ha lf of the labourin g population

is a lready engaged in making such thin gs,and as

the whole labourin g popula tion can n ot have more

than the product of this ha lf,the situation en sures

a glut of coarse products . I f, o n the other han d ,

the n ew'

mil ls a re set run n in g o n luxuries they

create a glut of these things ; for the employers

a lready use, in this form , the product of o n e

hun dred men , and they have heroica l ly resolved

n ever to use more‘than that.

The reader wil l see tha t the logica l d ifficulty

van ishes i f we state in differen t terms what the

resolution of the employers rea l ly sign ifies . I t

mean s tha t they determin e to take in the form

of addition s to their productive plan ts,n o t on ly

the products of the three hun dred a nd fifty men,

but the en tire future products created by those

addition a l plan ts themselves . They defin itely

I4 OVERPRODUCTION AND CRISES.

restrict their own future person al con sumption

to the product of o n e hun dred men . Nature

restricts the con sumption of the n in e hun dred

labourers to the product created by four hun dred

and fifty. Five hun dred and fifty men work to

create con sumers ’ goods and the reason why the

remain der of th e force is n o t so occupied is that

the employers deman d , as the result of al l further

agen cies at their comman d, n othin g but addition s

to th e workin g p lan t, which is their capital. Th e

employers’ heroic abstin en ce mean s that th e

n ew capital sha l l compoun d itself for ever. The

n ew mills, farms , etc., sha l l create more mil ls,

farms, etc. I f they do this, the case sti l l presen ts

n o glut.

The importan ce of the problem justifies any

amoun t of a tten tion that may be required for the

solving of what is really a logical puzzle con n ected

with it. The key to the solution l ies in recogn iz

ing th e un question able fact tha t saving is in

rea l ity deman ding and gettin g productive in stru

men ts as a part of an in come. I f capita l ists were,

l ike the three employers in vo n K irchman n’

s

i l lustration , resolved to save all of their in comes,

presen t and future, beyon d a fixed amoun t, they

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16 OVERPRODUCTION AND CRISES .

over-clothe the poor for lack of other con sumers

to cater to. While the mills a re build in g, the

surplus productive en ergies of society are used in

buildin g them ; and when the mills are run n in g,

these en ergies a re la rgely used in ca tering to the

higher wan ts of the own ers , to whom the mil l s

have secured n ew in comes.

Let a"

man ufacturer exten d his plan t, an d let a

fa rmer d ra in a swamp andb ring it in to cultiva tion .

Both have n ew in comes , an d both require for their

con sumption goods of fin erqua l it ies . The man u

facturer wil l make fin er cloth for the fa rmer, an d

the fa rmer wil l ra ise fin er vegetables and more

fruit for the man ufacturer. Moreover, the creation

of these n ew productive plan ts gives to labour

i tself a larger wea lth-crea ting power, and ra ises

wages. There are fin er goods n ow to be made for

the labourers themselves. A steady turn ing of the

productive en ergies of society in to n ew chan n els,

a gradua l d iversion of more power to the makin g

of luxuries,IS the con sequen ce of such an in crease

in productive machin ery. There is n o n eed of crises

because of such a steady chan ge a nd improvemen t.

Let the mills turn out food a nd coarse goods for

labourers , and luxuries and a lso more mills for the

INTRODUCTION . I 7

capita l ists, and the problem is solved ; but in ci

den ta l to this solution— which is the actua l o n e

reached in the practica l world— is a steady

improvemen t in the qua l ity of the goods that a re

received an d used by the labourers . The n ew

mills mean rising wages . Vo n Kirchman n’

s case

of over-abstin en ce o n employers ’ pa rt does n o t

in volve busin ess con vulsion s ; it does in volve

prosperity for workmen . Rodbertus’ theory of

the rela tive fa l l in wages,as compa red with

.

the

tota l socia l in come , does n o t ca l l for crises . The

difficulty is removed by giving to each class its

rea l in come in the con crete forms in which it

demands it . This is something tha t employers

a re compelled by competition to accomplish ; and

they do it in a n early perfect man n er. I t is in the

relation s of presen t to future— in speculative and

in accurate estimates of in comes that are about to

be— that there l ie in fluen ces that cause goods to

be created for which,in time, there is n o effectua l

deman d.

As the ea rl iest well-kn own attempt to con n ect

crises with overproduction ,and that with a law of

D istribution , this work of Rodbertus is of great

scien tific in terest. I f it h ad asserted that crises

C


a re due to misdirected production , it would have

stated an essen tia l fact, -and it would have

rema in ed on ly to iden tify the causes of the

misd irection .

Miss Fran klin h as put the En glish-readin g

public un der much obl igation by this excellen t

tran slation of an econ omic classic. Sh e and her

readers a re to be congratula ted o n the success

that she h as h ad in overcomin g the difficulties of

Rodbertu s’ style, and in givin g to the reader some

thin g tha t is accura te as a tran slat ion and clea r

as an English statemen t of a subtle theory. The

book wil l furn ish as useful an in troduction as a

studen t can have to the theory of crises .

JOHN B. CLARK.

COLUMBIA UN IVERSITY ,

NEW YORK.

OVERPRODUCTIONANDCRISES

OU , l ike myself, my hon oured frien d , recog

n ize tha t i t is pauperism and a glutted

market that l ie at the roo t of the econ omic

distresses of the time ; and n o o n e,I should

think, who h as sufficien tly reflected upon the

subject,can fa i l to perceive this. I t is

,then

,in

our views of the causes a nd remedies on ly tha t

we find ourselves differin g from others . I sha l l

first give a complete accoun t of the investigation

of the ca uses, according to your con ception of them

as wel l as min e,before proceeding to a con sidera

tion of the remedies proposed by you and by

myself,for the coun teraction of them .

You , l ike so many others, do n o t trace those

phen omen a back to o n e single cause, to on e sing le

er r or in the presen t econ omic organ ization . You

agree with me, in deed , in the conviction that they

spring from econ omic circumstan ces and relation s,

while so many— merely from lack of thorough

comprehen sion of political econ omy— accoun t for

20 OVERPRODUCT ION AND CRISES.

them o n soc ial grounds of a gen era l n ature, or

even o n mora l groun ds ; but you a ssign a differen t

econ omic circumstan ce as the cause of pauperism,

and stil l other econ omic circumstan ces as th e

cause ofgluts:

You have devoted to the explan ation of these

two phenomen a two dissertation s, D ie Gr und’

ren te

in socia ler Bez ienn ng and D ie Ta usc/zg esellscnaft.

In th e first of these you accoun t for pa uper ism

o n th e basis of the fun damen ta l law’

which , accord

ing to R icardo, govern s the Creation and in crease

of th e ren t of land . You fully agree wi th him

upon his theory Of ren t, but do n o t coin cide in

all the in feren ces which that famous man h as

deduced from it. YOu draw other con clusion s

from it'

,con clusion s which ought by al l mean s to

fol low from it, if— if, in deed , the theory itself were

a correct o n e. I must take the privi lege of quot

ing from my paper, to which yOu a lso make

referen ce,“An In quiry con cern ing Presen t Eco

nomic Condition s ,”

in which already I cal led

at ten tion to th e fact that Ricardo’s’

in eth od was

n o t logical. The passage is as fol lows“ R icardo has a differen t View of th e fa l l Of

profit, and McCulloch sh ares his vie‘

w‘, inasmuch

as h e understan ds by profit the relative share Of

OVERPRODUCTION AND CRISES 2 1

the capital ist in the product. Sin ce both let ren t

arise in its own specia l way, th ey put th e share

in th e product con tained therein to o n e side, and

then let th e other two shares in the product, wages

and profit, va ry inversely to each oth er. Theyhold accordin gly, that in con sequen ce of the

in creas ing unproductiven ess of the land, and

because th e [real] wages of labour con sist in th e

ma in of the products of th e soi l , wages in their

n omin a l amoun t and con sequen tly also as relative

share in the product, become contin ual ly grea ter,and for th is rea son the relative sh are of the

capita l ist in the product, i.e.

, profit, becomes

con tin ua lly sma l ler.“ Yet even admitting the hypothes is of th e in

creasing unproductiveness of the soi l, that theoryis wro ng. Of course, i f the effect which ren t h as

upon profit is on ce for al l con sidered as having

a lready been taken in to accoun t, and is then ce

forwa rd left out of the discuss ion,a change in

the profit o n capita l can take place on ly in th e

case of an in verse change in wages . But then

that would be the most trivial of proposition s.The rea l question is , what is the fun damen tal

law which govern s the con stan t fall of profit o ncapita l " On e must n o t

, therefore, leave out of


account o n e share in the product,and con sider

on ly the inverse changes in the other two , but

special ly in vestigate ionic/c one of the differen t

shares chiefly effects, by its changes, the fa l l of

profit o n capita l . This fa l l , however, is due far

more,even according to the R icardian view of

ren t and of the in creasin g un productiven ess of

agriculture, to ren t than to wages . For i f by

the rise in value of raw materia l wages are

relatively in creased , then the relative‘

share of

the lan d-own er must in crease sti ll more,because

this is affected solely by the price of raw materia ls ,

while wages in volve an other factor besides the

labour of producing raw materials— the ever

in creasingly productive processes of man ufacture

and of tran sportation . On e can n ot, therefore,

con sider the rise of wages— due to th e in creasin g

un productiven ess of the soil— and the con sequen t

fa l l of ‘ profit o n capital, without bearin g in min d

that there occurs a t Me some time, and to a stil l .

greater degree , a rise in ren t and also a co n se

quen t fa l l in the profit o n capita l . Ricardo seems

to overlook the fact that i f poorer soi l is brought

un der cultivation , and‘

the product of good soi l

ri ses in -va lue equal ly with that of the poorer, the

lan down er’s " wlzole relative share of the n ation al


I n ow go o n to give an accoun t of this theo ry by

mean s o fextracts from your presen tation .

You distinguish a two-fold origin of ren t, a

historic and an econ omic o n e ; the former you find

in slavery, and the latter in those circumstan ces

from which Ricardo a lso derives ren t. For,you

say, the historic restriction of the labourer to the

bare n ecessa ries of l ife — to the food of slaves,

which leaves remain in g a part of the product for

ren t should have disappea red when,at leas t in

Western Europe, the freedom of the person and of

occupation were developed , when labourers were

n o longer obl iged to submit to the dicta te : ‘

So

much on ly sha l l you con sume, and the rest del iver

to me, your master. Nevertheless,ren t rema in ed ,

n ay, i t h as even a risen in the populous states of

North America , which en j oy complete civi l and

political l iberty. In this case the basis must be a

differen t o n e, and Ricardo has shown what it is .”

Accordin g to this,“ ren t is based upon three

circumstan ces

( I )“ That n o coun try possesses lan d and soil of

un iform composition or qua l ity , but that they

presen t the most varied degrees of ferti l ity. To

this is added the greater proximity or remoten ess

of the fields from t he places where the con sumers

OVERPRODUCTION AND CRISES. 25

live ; the location ,which in creases or dimin ishes

the cost of tran spo rtation , h as th e same effect

as differen ce in ferti lity.

(2)“ That in populous coun tries the better and

n earer lan d n o lon ger suffices to furn ish th e

amoun t of raw materia l required for th e n ourish:

men t and clothing of the inhabitan ts, and th a t

th erefore poorer and more remote lan d must be

brought in to requisition .

(3)“ That th e price of gra in , meat , skin s, and

all other products of the soi l must be un iform

fo r products of the same kin d and qual ity,

whether the in dividual bag of gra in be raised

Upon good or upon poor soil .”

For “with the rise in price — you say in an other

place— “which is caused by the in crease of po pula

tion and the con sequen t n ecessity of cultivating

poorer land , the price of the gra in grown o n good

lan d i s, n atural ly, also ra ised , and th e advan tage

thereby ga in ed accrues— for th e same reason as

remarked above, n amely, that labour and in terest

o n capital can n ot stan d at differen t levels— n o t to

the labourer or the capita l ist but to the lan down er.”

Let us assume,” you con tin ue, that an acre of

good lan d h as hitherto yielded 8 bushels of grain

tha t the price of a bushel was I th lr., and that


capital ists '

and labourers d ivided these 8 th lrs.

among th emselves ' alo n e . The in crease of popu

lation n ecessitates the cultivation of poorer soil

Which , applying an equa l amoun t of labou r and

capita l, yields on ly 6 bushels ; n ow it is clea r that

this grain can n ot be sold for less than I I th lr. a

bushel , because the labourer and capita l ist wan t to

get 8 th lr . here as wel l . But then the price of

those bushels grown o n good soil rises a lso ; those

8 bushels n ow cost, a t Ifith lr. per bushel , 103: th lr

and i t is clear tha t the lan down er wil l in this case

too give up on ly 8 th lr. to the labourer and capi

talist,retain in g

,therefore, zfi th lr. per acre as ren t

for himself.“ I f the growth of population compels the use

of stil l poorer soil,which yields on ly 4 bushels ,

then the price of a bushel of gra in must rise to

2 th lr . ; although the lan dlord obtain s n o ren t as

yet from this class of soil,he does n ow from the

secon d class ; his ren t from the first class n ow

amoun ts to 8 th lr .,from the secon d to 4 th lr . ,

altogether 12 th lr., while before it amoun ted to

on ly zg th lr.“ Th e da ta furn ished by experien ced agricul

tu rists agree exactly with this view. According

to Block’s estimates, page 30, the n et product

from soils of various classes was as follows


Class I . 40-50 per cen t. ofthe gross product of I O bu.

IV. 36—4 I 7

VI I . 282-38 4

X a . 2 2-32 I

X b. 20-30

“ That is to say,that upOn good soi l the cost of

the capita l and labour required to obta in IO bushels

of gra in amoun ted to on ly 4 to 5 bushels , but in

order to ra ise 10 bushels of gra in upon poor soi l

(X b) 7 to 8 bushels must be expen ded. In the

first,out of IO bushels 5 to 6 a re left over for the

lan down er as ren t, in the last on ly 2 to 3 bushels .

”

This prin ciple is , according to you , the most im

portan t cause of the in crease of ren t. “Society,

”

you say,

“ h as hitherto n eeded 200 mill ion bushels

of grain for its ma in ten an ce ; society h as, how

ever,by the blessing ofGod and the skil l of the

physician,in creased by souls. I t requires

,

therefore , the addition of an other million bushels

of gra in to those 200 mill ion . This n ew mill ion

bushels must be ra ised upon poorer soil , or with a

larger outlay of capital , than those 200 mil l ion ; they

cost,therefore, a proportion ately greater amoun t

of capita l and labour. Those cost I th lr. a bushel,

these cost I th lr . 5 sgr. Society would assuredly

be glad to pay this in crease of si lber

28 OVERPRODUCTION AND CRISES

gro schen , equa l to th lr. But the lan d

own er says ,‘No " n o t on ly these last

bushels, which alon e cost more, sha l l have this

higher price , society shall pay as h igh fo r th eo ld 200 million bushels ; instead of thlr. ,

i t sha l l give us 335 mill ion . th lr. addition a l ’ ; and

society obediently fulfi ls the comman d.

”

“ This law,

” you go o n to say,“ is n o t n ul lified

by the progress made in husban dry and by free

trade in grain .

” This , you say, is demon strated byexperi en ce. These two facts are wel l kn ownthat the price of grain is con stan tly

,even i f slowly

,

ris in g, and that these prices, in coun tries of a pretty

equa l degree of ferti l ity,are highest where the

population is den sest. ‘For in stan ce , the average

price of rye in Brun swick for fifty-yea r peri ods

was as fol lows

1 5 00- 1 5 5 0 markgrosch en .

1 5 5 1—1 600

1 60 1—1 65 0

1 65 1—4700

1 70 1—1 75 0

1 75 1- 1 800

In Brussels the averages for whea t were

1 7o 1—1 749 Braban t sols.

1 75 0—1 799 68-4

1 8007 1849 1 05 . o


The experien ce of all coun tries furn ishes the

same result. The sudden jump in the sixteen th

cen tury, i t is true, is explain ed by the decl in e of

the Va lue of silver consequen t on the discovery of

America ; but the steady in crease is a proof th at

prices, and therefore ren t, in crea sed with the in

crease of population , in spite of a ll the improve

men ts in agriculture. The relation in which the

average price of rye in Prussia , from the year 18 16

to the yea r 1837, stan ds to the population in the

separate provinces is as followsPopu la tio n to

Pro vin ce. Pr i ce ofRye. th e square milein 1837.

Prussia sgr . 1 8 2 7 souls.

Posen 2 1 80

BrandenburgaudPomeran ia 2093

Saxony 3396

Silesia 36 1 2

Westphalia 47. 75 3600

Rh in e Provin ce 5 078

(Compare RAU’s P olitical E conomy , page

“ In Wu rtemburg we have the following relat ion s

Average Ren t Po pula tio n toD istrict . ofan Acre. th e square mi le.

Danube fl. 3300 souls.

Jaxt 3600

Black Forest 4800

5-7 7200


We see here that prices keep a lmost exact

pace with den sity of population,and the slight

deviation s in the first table may be readi ly

a ccoun ted for by the greater productivity of

Si les ia and the greater difficulty it h as, as com

pared with Saxon y, in finding a market. I f it

were possible to in crease productivity in hus

ban dry in l ike proportion with the in crease in

population ,why does n o t this in crease take place

o n the Rhin e , where the price— more than ha lf

aga in as high — certa in ly strongly in cites and

urges the agriculturist to it "”

I t is eviden t,

” you con tin ue,“ that the improve

men ts in agriculture have at all even ts con tributed

to check th e excessive rise of prices and thus of

ren t ; but it is a lso eviden t that they are n o t able

fully to coun teract the law ; and we may look

forward to a time when this law will be far

more powerful ly man i fested , especially in Prussia,

n amely, when the separation s and the peasan try

regulation s wil l have been con summated , whereby

the chief obstacle to agricu ltural productivity and

industry will have been removed , but at the same

time this great source of in crease of productivity

will have been exhausted .

”

In this law which govern s ren t, and accordingly

32 OVERPRODUCTION AND CRISEs‘

.

l ive a l ife in which the ma in part of their in come

is spen t o n food . The smal l art isan spen ds th ree

fou rths of his yearly in come for potatoes, bread,

butter, oil, a nd fuel, and on ly a quarter for cloth

ing, dwelling, a nd l i ttl e,simple

,socia l pleasures .

This disproport ion i s sti ll grea ter in the ca se of the

labourer. He expen ds seven -eighths of his wages

upon food and fuel . What does it ava i l this class ,

which comprises seven -eighths of the n ation ,that

the price of ca l ico,cloths

,suga r and coffee

,kn ives

and scissors is lowered , wh i l e that of pota toes,grain , wood , oil , leather is con stan tly risin g " The

l ittle that is ga in ed in the purchase of clothing is

far from coun terba lan cin g the in creased rate of

food products ; their on ly recourse is to dress

worse than before, l ive in worse dwellin gs, and

eat less and worse food . Hen ce the misery of

these poor mechan ics and of the labourers.“ This is the explan ation , you con clude,

“ of

o n e of the Weightiest and most far-reachin g

phenomen a of presen t society. Notwithstan ding

that the n ation h as been freed from its shackles

of slavery and hered itary subj ection , the labouring

classes of the population a re materially stil l for

the most pa rt in the old depressed co n dition .

They have been given the right to freedom ,but

OVERPRODUCTION AND CRISES . 33

the mean s wherewith to en joy this freedom the

lan dlord reserves n ow ,as he did before, to himself,

and this supremacy of the lan dlord is the more

dreadful,as it is based upon the apparen tly n u

a lterable laws of n ature and of trade.“ So lon g as human society can n ot abol ish the

in equa l ities in the fert il ity and location of lan d,

th e in crease of population , and the . paymen t of

l ike prices for like products , so long will i t have

to suffer the ren t of the landown er ; so long wil l

the greater part of the fruit of labour have to be

delivered over in to the han ds of a strange master,

who, with his han ds folded in id len ess, permits the

labourer to make use of kin d Na ture’s productive

forces. But n o t satisfied with this , every in crease

in populatio n will on ly serve to multiply the lan d .

own er’s share of food products , wood , metals, ren t

of dwellings,all without his expen din g any labour.

The more children the poor have, the greater the'

deman d of a growing population for work,the

sma l ler will be the sha re left over for the work of

the hungerin g labourer,and the greater the share

that fa l ls in to the lan down er’

s pocket and all this

wil l happen upon the groun d of those in exorable

laws of n ature and of trade, which, l ike blin d Fate,

pour riches where they a lready aboun d , and robD


poverty a lready sufferin g from lack of the meces

sat ies of l ife. I relan d offers an awfu l in stan ce of

this in crease of ren t, o n e that must with mathe

matical certa in ty be developed in every coun try

havin g a rapidly growing population,un less, as

in En glan d , it is tempered by a great expan sion

of man ufacturing in dustries. It is ren t a lon e

which is the source of the dreadful destitution of

I relan d , n o t the splittin g up of the lan d . For give

the fa rmer the ren t he pays , often amoun ting to

8 for an acre of potato lan d , and he wil l be able

to return to a decen t mode of l ife, and thus a lso

to restra in the excessive growth of population for

it is on ly where man in his wretchedn ess sinks to

the level of a brute tha t this excess of population

springs up— a grim and awful con trast of misery

and fertil ity.

Take,o n th e other han d , t h e Un ited States of

North America. Its prosperity, its stren gth, l ies

simply and alon e in the fact that ren ts do n o t as

yet exist in the greater pa rt of the Un ion,and

a re,in the rema in in g portion s, very low. The rate

of in terest and the rate of wages a re both, as is

wel l kn own ,very high in America ; the usua l rate

of in terest is from eight to twelve per cen t. the

daily wages of a labourer, o n e dollar and aboveu


But what would this high rate of in terest and of

wages ava i l if ren ts stood in the proportion in

which they do in Western Germany " I t is well

kn own that wages and the ra te of profit are the

factors which determin e the price of all goods,

in clud ing the products of th e soi l ; these last

because those produced upon the poorest soil

set the price, and yet yield n o ren t. Now,when

in terest and wages are high,the price of all

products is high a lso ; the labourer gain s n othin g

in con sequen ce ; his wages a re three times as high ,but so also are bread , cloth, the ren t of his dwel l

in g, l ight , a nd wood three times as dear, and thus

he can procure n o more indulgen ces for himsel f

than before. This result would be l iterally verified

in America were the ren ts the same as in Germany.

But th e superabun dan ce of ferti le soi l relatively to

the presen t population ,together with their excel len t

and cheap mean s of tran sportation , en able them

to raise sixteen bushels o n an acre, whereas, with

the same amoun t of capita l and labour applied

to the last grade of lan d , we should , here in

Germany , produce perhaps two bushels. Though

the rate of in terest and of wages be,therefore

,

three times as great as in Germany, their return s

from the soil are eight times as great, and co n


sequen tly the price of corn three-eighths of the

price in Germany. This holds good , of course ,

of all products of th e ea rth , as wel l as of corn ;

tha t is why meat, leather, and all raw materia ls

are also on ly ha l f as clea r as in Germany. Now,

sin ce i n such products as cloth and shoes a great

part of the value con sists in the raw materia l ,

i t fol lows that these p roducts , too, in spite of th e

high wages and in terest, can be man ufactured

lower than in Germany. Those goods alon e form

an exception where the work required to tran s

form th e raw material is very great— a rticles of

l uxury, and those deman ding skill, which , therefore ,

are lower in Germany than in America.

“ Thus a labourer in North America who does

n o t require luxuries is six times as wel l off as o n e

in Germany, solely because ren t is either low or does

n o t as yet exist at all. His wages are three times

as great and the prices of all his n ecessaries on ly

ha lf as high as in German y.

‘He can eat more

meat every day, drin k more beer, and, i f he chooses ,

n eed n o t work as much as does a very well-to-do

mechan ic and citizen with us.

That this fortun ate condition of the population

of North America is based solely upon the fact"

that they are either tota lly exempt from ren t or

OVERPRODUCT ION AND CRI SES.

that the ren ts are very low, can n ever be too

deeply impressed upon the min d or too often

repeated . All other groun ds upon which it is

customary to accoun t for it are either deceptive,

or merely skim the surface of the rea l ity, or turn

upon hazy n otion s , such as‘virgin soil

,

’ ‘ a rising

n ation ,

’ which are but a cloak to ign oran ce.“ I relan d and North America : these are th e

an tipodes in the effects of ren t. There, wretched

n ess and men lowered to the state of brutes ; here,

prosperity, activity, stirring, happy life every

where.“ Germany’s position is between the two ; but

towards which o n e is it ten ding " Towa rds the

con dition s preva i l ing in I relan d , or towards th ose

in America " To o n e who un derstan ds the state

of society th e an swer can n ot long remain doubtful.

The ten den cy is a downward o n e, towards the

misery of Irelan d. I t is beyon d doubt that in

German y, too, and particularly in Pruss ia , ren ts

are regularly rising ; all the miseries,therefore

,

atten dan t Upon an excessive in crease in ren t the

future,though it may be on ly a distan t o n e , holds

in store for our coun try a lso, should the presen t

con dition s con tin ue.”

While in this first treatise you trace pauperism

38 OVERPRODUCTION “

AND CRISES .

back to this o n e cause— the presumed law of ren t— in the second you find th e explan ation of gluts

in a mass of circumstan ces,so to say in the

whole cha racter of presen t-day traffic. I sha l l

give a fa ithful abstract of this theory a lso.

You put as the brun t of your a rgumen t : “that

the greatest part of the socia l evils sprin g n o t from

deficien t production,but from a deficien t market

for products ; that the more a coun try is able to

produce, the more mean s it possesses of satisfyin g

all its n eeds,the grea ter i s the danger it in curs

of bein g exposed to misery and wan t.”

This question of a ma rket affects the capita l ist

as wel l as the merchan t,the agriculturist as well as

th e mechan ic ; even“ the much-vexed question of

th e right to work fin a l ly resolves itself in to a

question of how to find a market.”

“We see — you con clude therefore that the

social problem is almost iden tical with the problem

of a market. The evils of that so much abused

competition even disappear with the certa in ty of a

market ; its good features a lon e would rema in ;

the emulat ion to provide good and cheap wares ;

but the l ife-and-death struggle which is caused

solely by the wan t of a market will d isappea r.”

You then proceed to give Say’s explan ation of


A closer examin a tion of t hese circumstan ces

forms the prin cipa l matter of this,you r secon d

treatise.“ The first circumstan ce — to use your own

words— may be more con cisely expressed by say

ing“ that wages a re too low,

that from this cause

arises stagn ation in trade. To o n e who un der

stan ds tha t the two factors which a lon e regula te

the price of goods are wages a nd rate of profit,

this proposition may appear strange ; i f wages are

low,so a lso is the price of goods low ; i f, aga in ,

the former a re high, the latter, too, will be high .

-Wages and prices , then , are in a direct proportion

and compen sate each other. The On ly reason tha t

En glan d abol ished its duty o n corn ,as well as o n

meat and other a rticles of food,was in order to

lower the working-man ’swages,and thus en able the

man ufacturer to drive out all other competitors in

the markets of the world by sti ll cheaper goods .

This view is correct, however, on ly in part, and

does n o t touch upon the proportion , which here

is the on ly thin g to be con sidered,the proportion

in which production is d ivided between capita l

and labour. The too un equa l distribution between

these two is the first and weightiest reason why

Say’s law i s n o t actua l ly rea l ized ; why, in spite


of production in every bran ch , all the markets

suffer from over-supply. This assertion is so

importan t that it deman ds an exact proof. Let

us assume,to simplify the proof

,that the in h abi

tan ts of a certa in place supply all their own wan ts

by their own production ; that this production

con sists of three kin ds on ly : o n e Supplies the

clothin g ; the secon d , food, l ight, and fuel ; and

the third,dwellings , furn iture, and

.

implemen ts .

In each o n e of these depa rtmen ts of production

there is an en trepre neu r who furn ishes the capita l

and the raw materia l , and 300 workmen who do

the mechan ica l part of the work. The result in

each o n e of these departmen ts is that the work

man receives as his wages o n e-ha lf of the yearly

products , and that the en trepren eu r gets the other

half as in terest o n his capita l and profit o n his

un dertakin g.

“ This place, then , con sists of 903 inhabitan ts,

who themselves produce a ll their n ecessaries ; the

o n e who undertakes to provide the clothing for

these 903 in habitan ts is very able to do so with

his body of 300 workmen ; and so can he who is

to furn ish food , l ight , and fuel very wel l succeed ,

with his 300 labourers, in obta in in g the requisite

food and materia ls for al l the 903 people from


the cultivation of the soil ; the same is true of the

o n e who un dertakes to provide dwel l ings and

implemen ts ; he can ,with his 300 workmen , fur

n ish the repairs,the n ew con struction s, as wel l

as the furn iture,housekeepin g uten sils, and all

the implemen ts n eeded for dwellin g and house

keepin g purposes for the 903 inhabitan ts . This

local ity , then , possesses a ll the con dition s requisite

to secure a gen eral wel l-being for all its in

habitan ts . All,accordingly

,sta rt out fresh and

full of courage to their work . But a fter a few

days the matter appears in quite a difleren t

aspect ; those 900 workmen have on ly the very

scan tiest clothin g, food, and dwel ling-places, and

those three en trepr eneu rs have their warehouses

fi lled with clothes and raw ma teria ls , and houses

stan din g vacan t ; they complain of the lack of amarket , and the workmen , o n the con tra ry, of their

in ability to satisfy their wan ts, j ust as is the case

in actual life to-day. How does this happen in a

place where the forces and mean s of production

a re so j ustly employed and apportion ed tha t,

takin g all the in habita n ts and their wan ts in to

con sideration , n othing could be better " We see

tha t in this place the trouble does n o t l ie, as Say

and Rau hold , in the fact that too much is pro


duced in o n e bran ch of in dustry and too little in

an other,or that there is a deficien cy in the aggre

gate mean s of production . N o . The mean s a re

j ust so great,their apportionmen t to the differen t

in dustries just so arranged , that all of the 903 in

habitan ts could procure for themselves good and

ample clothing and n ourishmen t, and good and

ample dwell ings . That , in spite of all, this does

n o t take place , that there is an obs truction , is due

simply and solely to th e way the products a re

divided ; the distribution is n o t an equa l o n e

among all, for the en tr epren eu rs reta in as in terest

and profit ha lf for themselves and give on ly ha lf

to the workmen . I t is c lear that the man en

gaged in workin g o n clothes, therefore, can get in

exchange for ha l f of his production s on ly ha lf of

the products required for n ourishmen t, dwelling,

and so o n , and it is clear that the en trepr eneu rs can

n o t get rid ofthe other half,because non e of the

workmen have any products left to exchange with

him. The en tr epreneu rs a re lost with their abu nd

an ce, the workmen with their hunger and their

n akedn ess .

The un equa l d istribution which is the cause

of this con dition of simultan eous superflu ity and

misery, is but an other n ame for wages and profit.

OVERPRODUCT ION AND CRISES .

The misery of this vi llage, then ,is caused

solely by the fact tha t the en trepren eu r does n o t

share equa l ly with his workmen ; tha t is, that he

appropriates a pa rt of the products beforehan d

before the distribution takes place. I f he divided

equa l ly, without such deduction ,every man en

gaged in makin g clothes would be able to obta in

his own clothing with o n e-third of his product ,

exchan ge his secon d third for food,fuel

, and l ight,

and, usin g his rema in ing third as ren t,procure for

himself a hea lthy and comfortable dwellin g. The

workmen in the other two bran ches of p roduction

would be in the same position , a nd a ll tue in lzabi

tan ts of the vil lage comfortable and happy ; they

would be plen tifully n ourished and clothed , and

have good dwell in gs,without havin g to work o n e

momen t longer than where the en trepren eu r reta in s

ha lf a s his profit. We have in this v i l lage a

mathematical demon stration that Say’s law does

n o t suffice ; that the marketin g of products through

products a lon e can n ot be secured ; that there

en ters,rather, an other elemen t, which is con cern ed

with the d istribution of products among those who

have con tributed to create them .

”

You find this fun damen ta l example applicable to

the grea t commercia l in tercourse of the rea l world,


because the circumstan ces that “ in stead of three

kin ds of production there are a hun dred and more

in actual society ”

; tha t“ the proport ion in which

the en trepren eu rs share with the workmen is n o t

always a half, but, i t may be, a third or a fourth

that “ the en trepren eu rs do n o t own a capita l with

which they con duct busin ess ’ that “ in rea l ity

production in th e various bran ches is n o t so

abun dan t tha t all members could , with an‘

equa l division ,obta in ample satisfaction for their

wan ts tha t “ wages and profit are pa id n o t in

kind,but in mon ey — all these circumstan ces

would n o t in any essen tial part icula r a lter the

force of tha t example.

There a re , however, you con tin ue, “ two poin ts

of differen ce between ou r village and the rea l

world , which may exert greater in fluen ce than

those hitherto men tion ed ; these a re luxury and

foreign trade, which, in con n ection with this

question , stan d in close relation to each other.“ In our fictitious loca l ity the en trepr en eu rs foun d

their stock accumulating because they could n o t

themselves make use of the en tire ha lf of the

total production of clothin g, food , dwellings, and

household materia ls,which fell to th eir share as

profit, and because the 900 workmen had n o t the

OVERPRODUCTION AND CRISES .

mean s to purchase it of them . Now,it may be

sa id that th is surplus would at on ce disappear if

half of the workmen , in stead of makin g such

ordin a ry goods,would man ufacture a rticles of

luxury,which require more capita l a nd labour ;

th ose 450 workmen would , in con sequen ce, pro

duce n o more goods than the en trepreneu rs can

con sume. I t is in the n ature of luxuries that

they en able the con sumer to utilize more of the

producing power of capital and labour than is

possible in the case of ordin a ry goods .

Should the three en trepre neu rs agree to these

proposition s the state of thin gs would be as fol lows :

in stead of 300 workmen there would be but 1 50

employed in makin g clothin g ; these would stil l

be able to man ufacture as much clothin g as the

en tire population used before ; i t is the surplus

of clothing on ly which would be elimin ated by

takin g away I 50 of the men from the work o n

clothing— a surplus which the en trepr en eu rs had

hitherto retain ed as profi t, and which accumu

lated because they could n o t con sume the profit

in this shape themselves . The en trepren eu r , cou se

quen tly, decides to employ these I 50 and the same

amoun t of capita l with which these men h ad

worked before upon the man ufacture of a rticles


grea t sca le in rea l l ife a lso ; yet, you ask with

good reason , Why, in spite of the most refin ed

luxury, is there a glut of all kin ds -o i products ,

common and expen sive al ike "“ The on ly an swer possible is that this glut of

goods in the rea l world is due solely to the fact

that there is too l ittle luxury,or

,in o th er

’

wo rds,

tlta t a s yet too little is con sumed by tue capita lists

tlta t is, by tlzose who nave t/te means ofcon sumption .

”

This assertion , which you yourself ackn owledge

is a glaring con tradiction of the n ow prevail in g

views of politica l econ omy, according to which

savin g is the primary con dition of the welfa re

of n ation s, you proceed to prove in the fol lowin g

man n er. You revert to that fun damen tal example

in which you showed that the lux ury of the three

en trepreneu rs obviated over production , and

con tin ue : “Now let us suppose a case, o n e

commen ded in pol itica l econ omy as preferable,

a case of productive con sumption . In this case

the en trepren eu rs say : We -do n o t wish to co n

sume our in come down to the last pen ny in

luxury and show ; we sha l l use it aga in in pro

ductive investmen ts . Wha t does tha t mean "

I t mean s n othin g but the foun din g of n ew

productive en terprises of all kin ds, by mean s


of which commodities wil l aga in be obta in ed ;the sa le of th ese '

commodities is to furn ish the

in terest o n the un con sumed capita l of the three

en tr epren eu rs which they have saved and in vested .

The three en tr epren eu rs determin e,accordingly, to

con sume the production of 100 workmen on ly ;that is,

’

to ma teria l ly retren ch their luxuries,and

to employ the labour-power of the rema in in g 350

men ,and the capita l they h ad used

,in the foun d

ing of n ew productive en terprises. But n ow the

question a rises, In what departmen ts of in dustry

should this capita l be in vested " The three en tre

pr en eu r s have the choice on ly of sta rtin g either

man ufactories of ordin a ry goods , or man ufactories

of luxuries. They choose at first the former.

The first year is devoted to setting up the n ew

factories con structin g workshops for ta ilors, shoe

makers , and so forth ; prepa ring the n ew groun d

for grain a nd raw products ; establ ishing n ew

quarries fo r building houses ; con structing n ew

machin es for the man ufacture of household im

plemen ts and uten sils . The secon d yea r, the

a rrangemen ts being completed,the 350 men are

employed in producin g the n ew commodities .

But the three en trepren eu r s soon n otice with dis

may that they a re con fron ted with the same

E

OVERPRODUCTION AND CRISES.

difficulty as in the first in stan ce ; for there is n o

o n e who could purchase their stock of them . The

900 workmen ,in con sequen ce of their scan t pay,

a re on ly able to buy the products of the 450

workmen who have con tin ued in their old

in dustries ; that which the 350 addition a l men

have n ow produced , much as they would l ike to

con sume it , much as they may feel the n eed for

i t,is beyon d their reach ; they have n o mean s to

buy it. Neither would the three en trepren eu rs buy

it of each other, for they can n ot con sume these

ordin a ry goods themselves .

In angry mood the three en trepreneu rs n ow turn

their productive con sumption,their in vestmen t of

n ew capita l,in the other d irection . No places are

fitted up for the man ufacture of ordin ary goods,

on ly those for the man ufacture of luxuries . All

the a rran gemen ts and applian ces are completed

by the first yea r ; the secon d , they proceed to the

work . At the end of this yea r the en trepren eu rs

a re aston ished to see tha t they have by this mean s

on ly reverted to the secon d case ; for there is n o

o n e to purchase th ese luxuries from them, un less

they should buy them of each other ; and this they

do n o t wish to do because they desire to save and

n o t to con sume, and the 100 workmen suffice to

OVERPRODUCTION AND CRISES . 5 1

secure them moderate comfort. Thus we see that

in the simple condition s of this place it is by n o

mean s possible for this so -ca l led productive co n

sumption ,of which politica l econ omists make so

much,to ameliora te the condition of society

,to

promote its progress . The population is a lways

con fron ted with this dilemma : The three en tre

pren eu rs must either expen d their in come to the

last pen ny in comforts and luxuries of every

description ,in which case all the 900 workmen

wil l at least be able to make a l iving , even though

a miserable o n e, or if they curta i l their luxuries

and determin e to save , they find n o ma rket, the

goods accumulate,and pa rt of th e workmen wil l

have n o work and therefore n o mean s of subsisten ce.”

I t is the same, you ma in ta in ,in rea l l ife. “ I t is

because capita l ists con sume too little unproduc t

ively and too much productively, that in spite of

the preva len ce of luxury we stil l in actua l . l ife

have deficien t markets,accumulation of goods,

and lack of opportun i ty for labour. The en or

mous accumulation of capita l in recen t times is ,

according to you,the cause of these evi ls. The

rea l world— you hold— finds itself in the same

dilemma as the vil lage in our oft-quoted example.


-The accumula tion of capital does n o t, as is wel lkn own

,con sist in the mere storing up of goods, or

in the heapin g up of quan tities of mon ey and

bullion to l ie un used in the own er’ s cellar ; whoever

wishes to save does so by in vestin g his savings

either himself or through others— profitably as

capital , an d thus deriving an in come from them .

Such in come is on ly possible if this capita l

is employed in such n ew en terprises as are

capable of yield in g the required in terest. On e

man builds a ship, an other builds a barn,the

third cultivates a ba rren heath with his savings,

the fourth gets himself a n ew spin n ing-jen ny, the

fifth buys more leather and engages more journ ey

men ,in order to exten d his shoemaker’s trade

and so o n . On ly in thus applying it will the

capita l that has been saved bear in terest, which is

the end and a im of all saving.

“ Now ,in rea l l i fe

,as well as in our imagin ed

commun ity, even before this n ew accumulation of

capital,seven -eighths of the in habitan ts— that is,

al l those who l ive by the products of their labour,

the mechan i c who works in a sma l l way, the smal l

la n ded proprietor— were un able to buy more than

the barest n ecessa ries , the things they had been

con suming all a lon g ; and th e remain ing eighth ,


a l though able, h ad n o t the desire to buy more,

because their overruling ten den cy is to save.“What, then , is to become of those n ew com

modities which a re produced by the n ew capita l

in vested in the form of ships, machin ery, improve

men t of lan d , and which serve to furn ish the in

terest I f they a re ordin a ry goo ds the well-to-do

(the last o n e-eighth) do n o t wish them,and the

po or— the first seven -eighths— can n ot buy them ,

for they do n o t ea rn a ny more than before ; the

former amoun t of products amply sufficed to

furn ish what they could afford to purchase. I f,

o n the con tra ry, they a re luxuries, the poor,

n atural ly, are sti l l less able to buy them ; the

rich , of course, could do so, but o n accoun t of th e

predomin an t ten den cy to save before men tion ed ,they will n o t. I t is then quite in evitable that th is

predomin an t ten den cy of modern times , to save,

must produce gluts in the markets, and as a

con sequen ce augmen t wan t in the labouringclass.

The condition of al l man ufacturin g coun tries

is the most convin cing proof of this ; all the

warehouses are full, everybody is in ten tly, eagerly

seekin g a market, and the majority wan t to save,

that is , to in crease the amoun t of commodities stil l

OVERPRODUCTION ”

AND CRISES.

more,and by that mean s augmen t their fortun e

and their in come.”

You believe tha t the objection s of pol itica l

econ omy to this view sprin g from delusion and

short-sightedn ess. I n ’ the first place it overlooks

the fact tha t this amassing of goods certain ly does

n o t a t on ce follow the n ew accumulation of capita l .

The fitting up of places for busin ess,the tran s

formation ofmon ey-capital in to rea l ly productive

capita l , the con sequen tly in creasin g deman ds at

first man ifested for the various products and a lso

for work , blin d the eyes of pol itica l econ omy.

“ As soon,however

,as the machin es are set in

motion,as soon as the n ew products are sen t to

the markets, the occupation of the men engaged in

fittin g out the en terprises ceases, and the capita l ist

is n ow a nxious to dispose of h i s wa res ; but in

vain does he look a roun d for a purchaser. The

n umber and the circumstan ces of the con sumers

have rema in ed tota l ly un changed ; the former

arran gemen ts for producing commodities were

adequate to supply their wan ts, and n o o n e isJable to buy the n ew in crease.’ Accordin g to your

Opin ion ,the politica l econ omists are right On ly so

far as rega rds the begin n ings of the n ew application

of capita l . In order that those en terprises should

OVERPRODUCTION AND CRISES.

a rt isaii s en gage in busin ess , n ew factories are set

up,n ew ships built, the flocks of sheep in creased ,

and so o n . I t is clea r tha t th is secon d sort of

capital -accumula tion must n ecessarily in crease

the pil ing up of stock, the glut in the market.

For it does n o t, as h asbeen shown ,have the effect

of ra is in g wages ; more goods , merely of the old

familiar kin ds a re produced a t the old rates, and

n o o n e can or n o o n e wishes to buy them , for

reason s so often stated .

”

You therefore rega rd the en ormous accumu

latio n s of capita l in recen t times as advan tageous

on ly to society as a whole,n o t to the in dividua l .

For when the calm observer looks upo n those

n ation s so rich in capita l , he sees with aston ish

men t o n turn ing his a tten tion to the in dividual,who hitherto has appeared to him on ly as a’ pa rt

of a great whole,tha t in spite of these en ormous

accumulation s of capita l,in spite of the coun tless

in ven tion s for the guidan ce and mastery of the

forces of n ature and of man , but a sma l l part of

the resulting advan tages are en j oyed by all

bran ches of society ; that the greater part of these

advan tages accrue to the ben efit of a chosen class

on ly, and tha t, owing to the hitherto prevail ing

system of wages and profit, and to the ten den cy

OVERPRODUCTION AND CRISES. S7

to save,these fortun ate classes themselves occupy

a pa radoxica l position which a l lows them n o rest.

Selfish n ess impels them to take from -the labourer

in the shape of in terest o n capital and en tr epren eu r s ’

profit , half of the product and his abil ity to co n

sume ; and from selfishn ess again they themselves

refrain from con suming, while with a bl in d eager

n ess they con tinue to set up n ew establishmen ts of

production to produce things that n o o n e can

buy. Seated in the midst of all the means ofen joymen t, they can n either make Up their min ds

to let the labourers standing aroun d them reap

the ben efits, n o r to make use of them themse lves .

L ike an other Sisyphus, they tormen t themselves

with an in soluble con tradiction— a des ire to sel l,

after they have deprived the buyer of th e mean s

wherewith to buy. Presen t-day society may,

indeed, be well compared to a ban d of travellers

in the desert. Sufferin g with thirst, they find a

sprin g which would sufl‘ice to refresh and

strengthen them all ; but a sma l l n umber co n

stitu te themselves masters of the sprin g ; they

gru dge givin g the majority more than a few drops

to quen ch their thirst ; they themselves take lon g

draughts , but the stream flows faster than they a re

able to drin k , and so from satiety and wan t of


goodwil l they let half of the gushing stream waste

itself in the san d .

Neither can an in crease of population,accord

ing to you , preven t these results caused by the

accumulation of capita l. I f it be in proportion to

the latter,i t produces n o chan ge in the hitherto

exist ing glut if the a ccumulation of capita l is in

the lead , the glut becomes sti l l greater ; i f, aga in ,

population in creases at the greater rate,the glut

would n o t cease, on ly the misery of the poor

wou ld be in creased , because the addition a l

n umber of labourers would in tha t case find n o

employmen t o n accoun t of lack of capital ; th e

glut“

remain s the same,while the starvation of

"

these n ew labourers is added besides

No r does foreign trade, in your opin ion , create

any change in this d iscon solate state of thin gs ;

for the essen ce of this trade is either “ to in crease

the va riety of goods in the home market ” or to

in crease productivity.

“ E ither, then ,” you co n

clude,“ these goods which foreign trade through

its factories offers the n ation for sa le are common ,

in which case the capita l ist does n ot w ists to buy

them ,and the labourer can n ot do so because he

h as n o t the mean s , or they a re luxuries,in which

case the labourer is, n a tura l ly, sti l l less able to buy


them, and the capita l ist, owing to his en deavour

to save, does n o t wan t them .

”

You believe that by the foregoing a rgumen ts you

have set forth thefirst of those three circumstan ces

to which you cha rge the existen ce of gluts ,

n amely, the too un equa l d istribution of products

amon g those who have con tributed to create them .

You say repeatedly that so c iety'

can n o t con sume

the fruits of its en ormous masses of capita l ,

because the labo u rer ’s ‘

sh are of the product is too

sma l l. I have h ad to follow you pretty ful ly in

this port ion of your trea tise,partly in order

to give a j ust idea of your peculia r con ception of

the n a ture and effects of capita l,partly because I

do n o t agree with you in a sin gle o n e of the

groun ds upon which you derive gluts from the

disproport ion ate d ivision of products . You r views

upon the other two circumstan ces I sha l l be able

to extract more briefly.

“Agriculture differs essen tia lly,you say,

“ from

all other productive in dustries in two poin ts : in the

very un equa l crops , va rying as they do with the

fruitfuln ess of the yea r, though the amoun t of

capita l and labour expen ded rema in the same , and

in the ever-in creasing difficulty,in the populous

coun tries of Europe,of augmen tin g the average

quan tity of the products of the soi l.”


The first peculia rity h as, acco rd in g to you , on ly

an in direct effect upon the markets. From the

fluctuation s in the ma rket price of food products

it results that the farmer cla ss receives n ow so

many million s more and aga in j ust so many

mill ion s less. Though,therefore

,con sumption

“ remain s, o n the whole, the same in va lue, i t

does n o t in bin a’

. But with this chan ge in the

kin d of con sumption a chan ge must a lso be made

in the kin ds of product ion ,an d the n ecessary

con sequen ce is tha t al l productive in dustries are

affected , and n ow flou rish , n ow languish, accordin g

to the va rying price of gra in .

But the secon d pecul iarity of agriculture has,

acco rding‘

to you,a direct effect upon the problem

of markets. “ In the in dustria l coun tri es of

Europe all the good or wel l-situated lan d h as ”

you a ssert ,“ lon g sin ce been brought un der cult i

va tion ,and all the improvemen ts have been

effected which bear promise of yielding reven ue ;

that is, the curren t rate of in terest o n the outlay.

Cred it, which , through the in stitution of the mort

gage,is pre-emin en tly at the lan down er’s comman d ,

the lon g-con tin ued peace, and the abun dan ce

of capita l before the era of ra i lroad-build in g,

n ecessari ly led to this result. Excepting, then ,


un fortun ate in dividual cases, in dividua l n eglected

estates, agriculture h as for the last twen ty years

been in such a con dition that n ew in vestmen ts

of capita l , whether they be employed in open in g

up n ew soi l or in improvin g the old,n o lon ger

yield the curren t rate of in terest,at the prices

which agricultura l products n ow comman d . On ly

when the popula tion in creases and the con sequen t

deman d makes the in crease in prices a perman en t

o n e wil l a n ew application of capita l be made

possible.

But the in crease of population , you say, is slow,

its effect is markedly n oticeable on ly a fter the

lapse of decades,while other circumstan ces may

con vert the rise of prices in to a fa ll . Thus the

repeal of the English corn laws lowered the price

of gra in in Prussia a lso for a con siderable time.

Prussia lost, thereby, a great dea l o n its export

trade to Englan d . With the former sl id in g scale

of duti'

ézs those coun tries a lon e which lay close

to Englan d could engage in the busin ess of

exportin g gra in to that coun try— this closen ess

en abl ing them to take rapid advan tage of the

fluctuation s in the duty, which often lasted on ly

a few weeks . Sin ce the imposition of a fixed

duty of o n e shil ling (equa l to 10 sgr .) per qua rter


(equa l to 33Berl in bushels) all coun tries , even the

most remote,a re able to ca rry o n a regu la r traffic

in grain with Englan d ; and it is well kn own wha t

immen se quan tities of flour North America h as

sin ce then been sen din g there. Prussia wil l n ever

aga in , in spite of an a lmost n omin a l duty, reach

its former height of gra in exports to En glan d , and,therefore

,un ti l this former En glish con sumption is

made up by an in creased population a t home the

price in Prussia must fa l l .

The reason,you bel ieve

,tha t durin g longer or

shorter periods of time the grea test of all in dus

tries— agriculture— does n o t permit of any n ew

in vestmen ts of capita l is because it does n o t yield

the curren t rate of in terest ;“ the n ecessary co n

sequen ce, therefore , is that the n ewly-saved capita l ,especial ly tha t amassed in agriculture , i s applied

a lmost exclusively to commerce,man ufactures,

and the various trades and thus the gluts, arisin g

from causes above expla in ed,a re sti l l further

in creased .

” An other in j urious effect which this

presumed in creasin g agricultura l un productiven ess

is supposed to have upon the ma rkets is tha t whi le

o n the o n e han d it restricts the application of

capita l to husban dry, o n the other, through the

rise in ren t which it en ta i ls , it lessen s the labourer’s

and a rtisan ’s abil ity to purchase.


capacity to con sume, the ability to buy, is , there

fore,on ly ha lf attain ed by the possession of pro

ducts ; the other equa l ly essen tia l con dition is that

these products be first sola’. This secon d con dition

offers far more difficulties,these times, than the

first, and i t is this poin t tha t Say h as overlooked .

“ In a society where sales could be readily

effected,where the presen t d isproportion ofwork

ing-men ’s wages did n o t exist, the difficulties in

the way of the secon d condition would , of course,

disappear.

But in a society l ike that of ou r modern states,

where the con sumption of products is already

ch ecked by the in terest deman ded for capita l , by

ren t and the con sequen t restriction of wages, Say’s

idea of forcin g a market and con sumption by an

in crease of products is an en tirely perverted o n e .

Every such in crease must augmen t the pressure

for sel l in g, which is the second before-men tion ed

con dition , and thereby magn ify th e diffi culty of

sell ing, of con vertin g products in to mon ey.

Mon ey, therefore, has in our time become th e

watchword of every man ufacturer, every producer ,every merchan t. In times and in coun tries where

sa les are effected with ea se and regulari ty mon ey

does n o t possess a predomin ating va lue, and


serves merely to facil itate exchan ge ; in times ,however

,when it is d ifficult to find a market

,the

va lue and effective power of mon ey are ra ised to

an abn orma l height , which in its turn exerts an

in j urious effect upon the markets . The man u

facturer can n ot with his fin ished goods pay his

workmen or those who supply him with raw

materi al,n o r pay fo r repa irs o n his machin es and

bui ldings in modern society he can’

use mon ey on ly

fo r these pu rpos es ; this mon ey h e must have at a

fixed time ; in n o case may the mon ey be lackin g

beyon d that period if he is to keep his busin ess

free from ru in ous in terruption s and himself from

ban kruptcy. But the sa le of his goods , by which

mean s he wan ts to obta in the mon ey, does n o t rest

with him ; even ts of the most various n ature mayin terven e to check this sa le. Yet the sa le must

be effected by a certa in time in order that the

mon ey due at tha t time should be o n han d,and

thus this pressure creates that competition,that

rush after buyers and a market which in the end

serves on ly to ruin even the regular chan n els of

sale.“To this danger, you go o n to say,

“ which is

primarily caused by the wild struggle for a market

of the great and sma l l man ufacturers and mer

F


chan ts is added an other, the en ormous in crease

of credit to which modern trade h as been driven .

I t is true that in olden times,too

,the man ufac

turer and the wholesa le merchan t sold to the

reta i l dea ler o n credit, upon drafts which fel l due at“

the n ext fa ir (M esse) , but his capita l was so large

tha t he could keep t hese drafts in his portfol io

u n ti l the day they fel l due. In the old times it

was con sidered a disgrace n o t to do so. Nowa

days n o man ufacturer, n o merchan t , retain s his

drafts in that man n er ; he sends them , immediately

a fter acceptan ce, to the ban k to be discoun ted ;

tha t is,he sells these drafts a t on ce, and is thus

n atura l ly able to ca rry o n an equa l ly la rge

busin ess with much sma ller capita l than in the

old times. Now the whole system of man ufactures

and commerce being so arranged that the min i

mum of capita l possible to ca rry it o n is used,

it can n ot stan d even the slightest hitch if the

machin ery is to be kept going. In olden times

capita l was larger, and a portion of it remain ed

un used ,“fa i lure to pay could be better a nd longer

born e ; n ow this is impossible. Ou t of o n e hun dred

busin ess houses n in ety-n in e can n ot n ow subsist

if their drafts are n o t pa id and their products

sold by a certain day. The modern age h as by.


most ingen ious devices,such as the discoun tin g of

n otes , the ful l developmen t of the ban kin g

busin ess,achieved for trade something like Wha t

it h as don e for man ufactures by the in troduction

of machin es ; trade, the exchange of goods, can

in con sequen ce be ca rried o n with much less

capita l than formerly, but this restriction to wha t

is absolutely n ecessary, though it h as con tributed

essen tia l ly to the in crease of trade, h as at the same

time put it in to a feverish con dition , in to a state'of

ten sion , such that a ny disturban ce, even a very

slight o n e , shatters the whole structure "”

To recapitulate in brief, your view of the causes

of pauperism and gluts is as follows

As regards pa uper ism, agriculture,which fur

n ishes ma teria l for all in dustries and n ourishmen t

for the human stomach, is always growin g more

u nproductive ; i t requires , according to you , a lways

more labour and capita l to satisfy the in creasin g

wan ts of a growin g population . Hen ce the

con stan t rise in the price of the n ecessaries of

l ife ; hen ce also a rise in ren t,even of lan d tha t

is worked with n o more labour and capita l

than before ; hen ce con stan t d imin ution of the

capita l ists ’ an d labourers ’ share ; hen ce pauper ismamong all those classes of people tha t spen d the


greatest pa rt of their in come upon the n ecessaries

of l ife.

As rega rds. commercial cr ises they can n ot , in

your estima tion , be traced to an equally simple

cause. They a re rather the result of three

circumstan ces actin g together, the first of which

con sists in th e proportion in which products are

divided between capita l ists and labo urers ; the

secon d , in th e inheren t peculiarities of h usban dry ;

and the third , in the presen t system of mon ey and

credit tran saction s. The ra tio of division between

capita l ists and labo urers a l lows the first too much

and the secon d too l ittle. To the capital ists’ ex

cessive share is added their exaggera ted ben t for

saving. Thus capita l accumulates and production

in creases without there being a sufficien t n umbe r

of purchasers for the products, for the capita l ists

do n ot w isit to con sume more and the workmen

are n ot able to do so. The second circumstan ce,

the peculia rity of husband ry, aggravates this

first cause of a congested market. Agriculture,

by its frequen t changes— changes beyon d the

con trol of man — o i good and bad harvests ,

fluctuates between high and low prices, and is thus

always disturbin g the regularity of the ma rkets ,

th e ru ral population having n ow much and n ow


l ittle mean s a t their disposa l. The in creas in g“

un productivity of the soi l exerts a stil l more

d irect effect upon gluts . For while, o n the o n e

han d , those classes whose in come is expen ded

chiefly upon the n ecessaries of l ife,are con stan tly

growing less able to buy man ufactured products,

On the other, the in vestmen t of capita l in agricul-L

ture is ren dered more diffi cult, and what is saved

in its pursuit is l ikewise d iverted in to man u

fac tu r ing chan n els . As, fin a l ly, in the th ird place,most en terprises a re con ducted upon credit, and

therefore n eed mon ey a t a“ fixed time ,

” there

a rises a gen era l pressure to sel l,which adds nu

other factor to the d ifficulty of fin ding a market.

Facts and laws of a n ature Opposite to what yo u

thin k you have discovered in history,in sta t istics,

in politica l econ omy, and in agricu lture, h ave led

me, my hon oured frien d , to adopt an a lmost

Opposite view of the cause of the economic dis-i

tresses of the time.

I,for my part, find that the R icardian theory of

ren t is fundamen ta l ly fa lse, a nd very far from

offerin g an explan ation of the socia l sign ifican ce

of ren t. Altogether, I find tha t a ll the theories

hitherto adva n ced have fai led to make clear th e

socia l s ign ifican ce either of ren t or of profit, or


even of wages. I find that scien ce h as as yet

shed but l ittle l ight upon the three bran ches of

n ation a l in come in tbeir r ela tion a s sna res of tbc

pr oduct ; a lso tha t the peculiar effects of lan d and

capita l own ership upon “ production and distribu

tion ”

a re as good as ign ored . I find a lso tha t

these laws of the production and distribution of

the n ation a l product, as in fluen ced by the own er

ship oflan d and capita l, must be gra sped in their

con n ection , in order to obta in access to the cause

of commercia l crises a nd of pauperism .

I n opposition to your theory, therefore, and to

the theories of others , I ma in ta in o n e which , I

a ssert, is but the con sisten t sequel of the propo

sitio n in troduced in to the scien ce by Smith and

placed upon a stil l deeper foun dation by the school

of Ricardo, th e proposition th at all commodities

econ omica lly con sidered must be r eg a rded solely as

the pr oduct of labour , as costing n otbing bu t labou r

—a proposition of which a lready Kraus sa id tha t

i t sign ifies for socia l scien ce wha t the un it in tro

duced by Galileo does for velocity in physics .

According to this theory,pauperism and com

merc ial crises spring from on e a nd tbc same cause,

it is o n e and the same circumstan ce of our presen t

econ omic system which is an swerable for these,


n o t fa l l , but be main ta in ed , i f in quan tity they

were in creased in direct proportion with the

in crease of productiven ess — ii they in creased

from 50 to 100 bushels ; because then on lywould they, as well a fter as before the in crease

in productiven ess , amoun t to half of the gross

product. I con sider it R icardo’s greatest meri t

to have been the first to advan ce this conception

of the rela tive wages of labour,though

,unfo r

tun ately, n either his frien ds n o r his oppon en ts

kn ew what to do with it,an d Rica rdo himself

made a perverted use of it ; so absorbed was he

in his theory Of ren t, and in the con templation of

the in creasing un productivene ss of lan d , that he

even thought that wages as quota of product were

con stan tly increas ing .

You will gran t, my hon oured frien d , that if it

were in deed possible to establish th e circumstan ce

that wages to-day a re becomin g an a lways smal ler

sha re of product, i ts con n ection with paupe rism

and commercia l crises would be man ifest. For it

would appear clear that thereby the labourin g

classes are excluded from all in crease of the

n ation al wea lth, and, in opposition to the pro

gressively growmg i n come of the other classes,

a t best on ly ma in tain their former in come, which ,

OVERPRODUCTION AND CRISES: 73

in the presen t lega l and political status of the

labouring classes,must

,upon econ omic as well as

socia l groun ds,bear pauperism in i ts tra in . I t

would be equa l ly clea r that o n accoun t of that

circumstan ce the ma in chan n el of sa le of in terna l

and con sequen tly of the en t ire n ation a l trade, that

is, the purchasing power of four-fifth s or five-sixths

of society, do es n o t expan d in proportion to the“

progressive production,but rather simu ltan eously

con tracts in l ike proportion , from which it would

be just as easy to demon stra te the n ecessity o f

gluts. I,for my part, am in fact convin ced tha t

this circumstan ce can be shown to exist ; I am

con vin ced that in presen t econ omic con dition s it

even asserts itself so strongly that th e wages of

labour,rega rded

'

as quota of product, fall in a

proportion at least equa l to the rise Of the pro

ductiven ess of labour, i f n o t in a greater proportion .

The proof tha t this is so depen ds eviden tly upon

th e proof of two n ecessary supposition s. I t must

be shown , first , that productiven ess of labour h as

in creased and con tin ues to in crease, and, secon d ly,

tha t the quan titative sum of wages h as at best

n o t in creased in l ike proportion , has perhaps res

ma in ed station ary,or even fa l len . Should these

two historica l prel iminaries be demon strated , th e


existen ce of that circumstan ce must follow as a

theoretica l con clusion ; the fa l l of wages, as quota

of product,must then stan d in some relation to

the in crease of productiven ess .

I t seems , then ,that I should on ly have to

un dertake the proof of these two supposition s,

in order to proceed to the easier demon stration

that it is from them that pauperism and comm

merc ial crises sprin g. And yet, I have n o t

reached that poin t " You , hon oured frien d , with

your kn owledge of the presen t sta te of econ omic

theory, kn ow best how many con cepts sti l l

obscure,how man y scien tific prej udices stan d

in the way of the very starting-poin t of this

con ception of min e. Why, even the idea i tself

tha t wages “ are to be regarded as share of the

product is disputed " How differen t is the gen eral

view of the n ature and con stitution of profit from

tha t which forms the basis of my con ception of it "

How greatly does the preva i l ing doctrin e of the

origin and in crease of ren t stan d in i ts way " Nay,

I do n o t go too far i f I assert that the en t ire

method of trea tmen t to which our scien ce h as

thus fa r been subj ected makes d ifficult the com a

prehen sion of tha t proposition to which I trace

the econ omic distresses of our t ime .


In stead of the scien ce startin g out, as it ought

to have don e, by recogn iz in g that , through the

division of labour, society becomes an in dissoluble

whole ; in stead of takin g, as it should have don e,

this whole as a sta rt in g-poin t and from it proceed

ing to expla in the sepa ra te econ omic con cepts and

phen omen a ; in stead , therefore , of placing the idea

of n ation a l property (the property of society),

n ation a l production , n ation al capital , n ation al in

come, and its division in to ren t , profit, and wages ,

at the head, and, through these socia l con cepts ,

expla in in g the sha res of the individua l in them ,

pol itica l econ omy h as been un able to escape the

exaggerated in dividua l istic ten den cies of the time.

I t h as torn in to shreds that which, th rough the

division of labou r,is an in dissoluble whole, a social

en tity, that which can have being on ly upon . the

assumption of the existen ce of such a whole ; and

from the shreds, from the particular shares of

in dividua l s , i t h as wished to rise to the co n cepa

t ion of the whole. I t h as,for example

,used

’

th e

property of the in dividua l as a bas is,without

con sidering that the property of a person un ited

to other members of society by the division of

labour is a thing en tirely differen t from the pro

perty of an individua l tota l ly isola ted,man aging


for himself. I t h as sta rted out,for in stan ce , from

the ren t of a sin gle own er of lan d , without co n

sidering tha t the con ception of ren t presupposes

that of profit and of wages ; that, in deed , n on e

of these con ception s can en ter in to the discussion

un less we presuppose the whole pre sen t co n stitu

tion of society a nd socia l in come,of which the ren t,

etc., a ris in g in society are but the pa r ts . I t has

proceeded as if society were but a sum of differen t

econ omic un i ts , a mathema tica l and n o t a mora l

en t ity, as i f even politica l econ omy itself were but

an aggrega te of in dividua l econ omies and n o t an

organ ic combin ed econ omy, whose separa te orga n s

may be sti l l sufferin g from the pressure of man y

a historic circumstan ce, even from such as partlyst an d in th e way

’

of the rights of th e individua l

also.

Had po l itica l econ omy n o t fa l len in to this radi

Cally false method it would by this time have

assumed a differen t shape,and certa in ly have pr04

gressed further in i ts developmen t. I can n ot

refra in from givmg here a brief sketch of a system

of politica l econ omy such as a method govern ed

by the prin ciple of this scien ce— the d ivision of

labo ur-a—would deman d ; more particula rly as I

am con vin ced tha t this sketch wil l con tribute


greatly to the un derstandin g of the discussion

I have un dertaken .

Had politica l econ omy sought to fol low a right

method,it should certa in ly in a first part of the

scien ce, correspon din g to the presen t con ception

of econ omics — as a mere n atura l scien ce of

econ omic in tercourse— have sta rted out with the

presen t econ omic con dition of the world , with all

th e wea lth of phen omen a i t presen ts, and its

man ifesta tions when left to itself.

And it should in a first division of this part

have sta rted out d irectly from the con ception of

n a tion a l (social) labour and of th e n a tion a l property- the former as the combin ed action of the in di

vidua l forces in dissolubly bound together in to o n e

whole through the d ivision of labour ; the latter,as the aggregate of the materia l goo ds of the

n ation,boun d together just as in dissolubly through

the employmen t of the n a tion a l labour. Then i t

should have shown h ow the circumstan ce of the

division of labour, in the case of every a rt icle,

breaks up socia l labour in to production -division s

-extractive in dustry,man ufactures

,tran sportation

—and these division s again in to production-groups ,in to in dividual en terpri ses ; wherefore the n ation a l

property a lso is correspon din gly subdivided . I t


should , in the n ation a l pr oper ty ,have distinguished

between n at ion a l la nd— the more or less abun dant

source of a ll materia ls— and the n ation a l capita l,

i .e., the aggregate of the products d istributed in

va rious un dertakin gs for use in further productive

work ; and then it should have set over again st the

n a tion a l capi ta l the result of the varyin g n ation al

production in a given period of time, i .e. , the

na tion a l pr oduct. I t should have further been

shown how o n e portion of the la tter is always

destin ed to be used for replacing the capita l co n

sumed or impaired in the process of production ,

and the other port ion , the n a tiona l income, for

satisfying t h e direct n eeds of society and i ts

membe rs. I t would then have h ad to discuss

the con cept of n a tion a l pr oductiveness and to show

therefrom how the magn itude of the n ation a l pro

duct (and accordingly a lso of the n ation al in come)relatively to the population , in other words, h ow

the na tion a l wea lth depen ds upon the degree of

productiven ess.

After such a gen era l exposition of econ omic

con ception s and of their con n ection with each

other,it w ould have remain ed t o show how the

ma nagemen t and th e movemen t -Ofn ationa l pro-1

duction,as

'

well as the distribution‘

of the n a tiona l


and origin al prin ciple. And there can be n o doubt

that an econ omic organ ization of n ation a l produc

t ion,as well as of distribution of the n ation a l

product con formable to such a state of the law ,

cou ld be carried out. The on ly question would

be the practica l o n e , whether the mora l strength

of the people would be great en ough to cause

them to pers is t, of their own free will , upon th e

path of n ation a l labou r , th at is , of n a tion al pr o

gress, without being, as they are to-day, held fast

to it, or even d riven forward by the scourge of

n ecessi ty, thro ugh th e compell ing force of land

and capital own ership.

I t should have been shown by the meth o d of

comparison h ow un der a con dition of law in which

lan d and capital were social possession s and th e

n ation a l in come a lon e were private property, there

would have to be a public a utho r ity which would

un dertake to direct the n ation a l production in

accordan ce with n ation a l n eeds , or, in other words,

to regulate the appl ication of the n ation al pro

perty in the most advan tageous man n er, wh ile

un der presen t con dition s where the n a tion al pro

perty is, by the in sti tution of lan d and capital

own ersh ip, divided up amo n g private own ers, the

in terest of these. owner s takes th e place ofsuch an

OVERPRODUCTION AND CRISES . 8 I

authority ; these own ers l ikewise applyin g those

parts of the n ation a l property which n ow belon g

to them,to the production of thin gs in ten ded to

meet the n eeds of society.

I t should have been shown how un der th ose

con dition s it would on ly be n ecessary for that

public authority to issue an order, to bring about

the tran sportation of goods in process of produc

tion and stil l in the public possession ,from o n e

production -division and production - loca l ity to

an other, and at last to its destin a tion , the home

of the con sumer ; while under these, where the

own ership of lan d and of capita l in cludes a lso

the own ership of the property produced directly

by them,in place of such an order there

n ecessa rily in terven e,besides the l ike econ omic

work of tran spo rtation ,a lso the leg a l busin ess

of0

the sa le o r excha ng e of pr oducts , trade a nd

with it money ; so t hat to-day the movemen t

of n ation a l production,from begin n in g to end, i .e. ,

from the fi rst stroke of work applied to the raw

material up to the completion of th e product, i s

carried o n by a series of property tran sfers

effected through the medium of mon ey.

I t would have been n ecessa ry to poin t out how

th ere it would devolve upon that public authorityG


to take ca re that o n e part of the n ation a l produc

tion should a lways be devoted to replacin g the

capita l which h as been con sumed or impa ired in

the process of production , and on ly the remain in g

portion be used for producin g the n ation a l in

come, i .e. , the products required to satisfy socia l

n eeds ; while here, in place of that care, these

things a re govern ed by the man agemen t and

the in terest of the own ers of capita l or thei r

represen tatives,the en trepr eneu rs, who rega rd as

profit, as in come

,that only which trade in their

products leaves as a rema in der over and above

the restitution of capita l , and who will un dertake

such production a lon e as yields such a rema in der.

After havin g in this man n er shown the effect

which positive law h a s upon the ma nagemen t a nd

movemen t of pr odu ction , its in fluen ce upon the

distr ibu tion ofth e n a tion a lproduct would have h ad

to be expla in ed .

I t would have been n ecessary to show how in a

state of thin gs in which lan d and capita l belon g

to society an d the n a tion a l in come a lon e becomes

priva te property, distributed by a prin ciple of justice

accordin g to the work ren dered , the en tire n ation a l

in come would fa l l to the share of the producers,

the workers,while in a state of thin gs in which


lan d and capita l own ership exist this in come

is distributed in such a man n er between the

labourers , the own ers of land , and the own ers of

capital , that the larger part fa l ls to the last two ;how the distribution th ere, where it would be in

accordan ce with the work ren dered , would have to

be made in such a way that the va lue of every

product would be determin ed by the time ex

pen ded upon its production “; and every pa rtici

pan t in the n ation a l production would receive

a long with the certificate a ttesting the time he

expen ded o n his work a dra ft upon an equa l

va lue of any desired in come-commodities , which

commodities would then,after he h ad given up his

draft, be del ivered to him from the storehouses of

the State, and be con sidered private property as

strictly as a re the wages which the workman

receives to-day ; while h ere, where a d ivision is

made between the labourers , the own ers of

lan d , and the own ers of capital , this d ivis ion

assumes such a shape that it is the lan down ers

and the capital ists , or their represen tatives ,Th e co n stitu ted va lue ofPro udhon . I must permit myselfth e

remark tha t th e idea of th e co n stitu ted va lue was advan ced byme befo re Proudho n , and tha t th e pa pers in my wo rk Z u r

E r hen n tn iss u n ser er staa tsw i r tschafilich cn Z u sta'

nde co n ta in n o thingbu t th e preliminary in vestiga tio ns n ecessary fo r th e develo pmen toftha t idea .

0


the en trepr en eu rs,who engage the workmen in

production ,un der a law which govern s wages and

depresses them far below the va lue of the product ;they then con vert the completed product in to

mon ey, in a cc ordan ce with the defin ite va lue set

upon it by the n a tu ra l laws govern in g competition

and the ma rket ; a fter deducting those wages a nd

replacin g the capita l (see above) the lan down ers

and the capitalists d ivide the rema in in g amoun t

of product un der the n ame of ren t and profit

amon g themselves,in accordan ce with a law

foun ded upon the va lue of the respective pro

ducts (raw materials a nd man ufactured products)

d ivide it in order to purchase, j ust a s the workman

does with his wages , their share of the n ation a l

in come out of the stores of the va rious private

establ ishmen ts .

I t should , fin a l ly, have been shown in the first

d ivision of this first pa rt of politica l econ omy how

it is the distribution of the n ation al in come— the

magn itude of the in dividua l sha re— which, in th e

succession and varying degrees of a ll human

n eeds , dictates the direction and va riety of

n ation a l production ; so that un der the o n e set of

condition s the public authority which regulated

the kin ds of productio n would have to carry


out,j ust as un der the other set of con dition s

the in terest of the lan down ers and the capita l ists

does ca rry out , the mandate con ta in ed in this

distribution of the n a tion al in come.

While in thisfirst division th e econ omic move

men t would have been discussed under th e

presumption of uncha ng ed productive for ces, in

the secon d the effect of a chan ge in productive

forces upon this movemen t— and the effect, in deed ,of a change in the aggrega te of productiveforces as

wel l as of productivity— would have had to beexhibited .

In this con n ect ion the mean ing of increase ofthe n a tion a l capi ta l and of “saving should first of

all have been expla in ed From this it would have

appeared that “ savin g is on ly a form of in crease

of capita l which is depen den t upon the existen ce

of lan d and capita l own ership , and whose place

can be largely supplied by credit.

It would then have been n ecessary to show tha t

the in crease of the aggrega te of the productive

forces , con sequen t upon in creased n ation a l labour

or in cr ea sed population,is in deed capable of

augmen ting the n ation a l capita l and the n a tion al

product , and therefore reven ue“ in gen era l and the

Th e wo rd reven u e is used thro ughou t,in wha t fo llows, as

a techn ica l term to co rrespo nd to th e au tho r ’s “Emte.”

By this


combin ed n ation a l wages but that this augmen ta

tion effects a r ise [of rate] on ly in the ren t of lan d,sin ce the in creased amoun t of wages must be

distributed among a grea ter n umber of labourers ,

the in creased profits of capita l be reckon ed upon

th e in creased capita l in vested,and the in creased

ren t of lan d alon e is reckon ed upon an un changed

a rea of lan d ; and that an in crease of the n a tion a l

wea lth , an in crease of the n a tion a l product which

might redoun d to the ben efit of a ll, can on ly

occur in case of the in creased fruitfuln ess of labour,

in creased productivity.

Here it should have been shown from what

smal l begin n ings n ation a l wea lth had its rise,

how reven ue itself— ren t of lan d and profits of

capita l— was made possible on ly by the progress

of productiven ess .

I t would further have been n ecessa ry to

expla in ,how in a con dition in which lan d and

capita l own ership did n o t exist, the result of

in creased productiven ess would accrue solely

to the ben efit of the labourers,so tha t their

in come would in crea se in direct proportion to

the in crease of productiven ess while to-dayterm h e designa tes gen erically th e in come of capita lists, en tr epr encu r s, and lan down ers , as distin gu ished from that of labourers


superficia l l in kin g together of econ omic matter, of

which Say’s school and the German s have in

particular been guilty. But if this latter proc edure

has con tributed to divert atten tion from the livin g

developmen t of politica l econ omy, th at ,meth od

would have made it eviden t tha t it is the veryfact

of politica l econ omy n ow passing through such a

l iving,urgen t phase of developmen t

,which does

n o t a l low its actua l problems to assume tha t

symmetry which would permi t them to be ranged

and classified , l ike , for in stan ce , those of ju rispru

den ce. Tha t method would at the same time

con ta in an in dication tha t politica l econ omy would

be capable of systema t ic trea tmen t and classifi

cation on ly a fter havin g passed this phase,and

would then become the foremos t and most

comprehen sive of all the socia l scien ces , havin g

in great part absorbed j urispruden ce itself.

Had this method been followed in econ omics,

h ad econ omists thus proceeded from the whole

of society to the in dividua l , the scien ce would

to-day con ta in a far less n umber of prej ud ices ;the more gen era l recogn ition of tha t c ircumstan ce

which I rega rd as the cause of pauperism and of

commerc ia l crises would have foun d the groun d

better prepared for it I should , in fact, have been

OVERPRODUCT ION AND CRISES. 89

able to proceed a t on ce, in order to establish my

views,to the proof of the actua l in crease of the pro

ductiven ess of labour and the un chan ged (or even

decreased) wages , and to deduce from the fact of

this decrease in wages regarded as sh a re of the

pr oduct the in evitablen ess of those visitation s. As

it is,I am obliged to add to the foregoin g sketch

of a better method a complete theory, in accord

an ce with that better method . They will make

each other mutually clearer.

I wish to sum up this n ew th eory, which I place

over aga in st the hitherto prevai ling o n e, in a

n umber of proposition s which I sha l l en deavou r

to make as con cise and as clear as possible.

( I ) I repeat that wages, in terest , ren t of lan d ,profits of capita l a re socia l facts and con cepts

,i .e.

,

facts and con cepts which exist on ly because the

in dividua ls who pa rticipate in them a re j oin ed by

the d ivision of labou r in to a society ; that from the

very start o n e sets out from a false stan dpoin t

i f o n e attempts to expla in the pr in ciples which

un derlie those facts from con sideration s referring

to the individua l pa rticipan ts , from the stan dpoin t

of o n e of the many labourers, and so o n that o n e

must, o n the con tra ry, in an explan ation of prin "

c iples un derstan d by wages, in terest, and so forth


the aggregate wages accru ing in the society,or thin k

of the whole of the society as represen ted by o n e

labourer, o n e lan down er, and o n e capita l ist. For

the laws which regulate the further d istribution

of wages, ren t, and profit amon g the individu a l

labourers,the irm

’

ividual lan down ers a nd the

individua l capita l ists are differen t from th e laws

which in the first place govern the divis ion of the

product in to wages , ren t, and profit ; and in taking

the former for the latter econ omists on ly con tin ue

to do what the Say school h as pre-emin en tly don e

to mistake the chan ce circumstan ces which play

upon the surface of econ omic in tercourse for the

prin ciples which work with si len t , un perceived

power. Accordingly in the fol lowing discussion

I un derstan d these con cepts always in their most

gen era l s ign ifica n ce.

(2) Reven ue, accordin g to this theory, in cludes

all in come which is derived , without on e’

s own

labour, solely from on e’s possession s . The exist

en ce of such a n in come in society n o o n e will deny,

even though it be a sserted tha t this possession is

the product of the possessor’s own labour. To it

belong ren t of lan d , profits of capita l, and in terest

o n capita l . Profits of capita l and in terest o n

capita l are therefore n o less reven ue than the ren t

of lan d .

OVERPRODUCTION AND CRISES . 9 I

(3) As there can be n o in come which is n o t

produced by labour,reven ue depen ds upon two

in dispen sable prel imin ary con dition s . Fi rst,there

can be no reven ue un less labour produces a t

all even ts mor e than the labourers require in

order to con tin ue their work— for it is impossible

for anyon e n o t labourin g himself to con tin ue

regularly to draw an in come without such a

surplus . Secondly, there can be n o reven ue if

there be n o a rran gemen ts which deprive the

labourers of the whole or part of this surplus,

and bestow it upon others who do n o t themselves

labour ; for by n ature th e labourers a re the first

to come in to possession of their own production s;

That labou r yields such a surplus is due to

econ omic causes,causes tha t in crease the pro

ductivity of labour. That this surplus is in whole

or in part taken away from the labourers and

given to others is due to positive law,which h as

a lways a l l ied itself to force, and which n ow effects

this deprivation on ly by con tin ued coercion .

(4) Origin a lly it was slavery, whose begin n ing

is coin ciden t with that of agriculture and the

own ership of lan d , which exercised this coercion .

The labourers,who by their labour produced such

a surplus, were slaves , and the'

master, to whom


the labourers and con sequen tly the product also

belonged, gave them on ly as much of it as was

required for the con tin uan ce of their labour,

keeping the rest or surplus for himself. When

al l the soil of a coun try h as become priva te

prope rty, and al l capital a t the same time is in

private possession , then the own ership of lan d and

capital exercises a simila r coercive power over freed

or free labourer s . For this own ership brin gs abo ut,

j ust as slavery did,that, in th e first place

,the pro

duct does n o t belon g to thelabourers but to th e

masters of lan d and capital ; and secondly ,that

th e labourers , possessin g n othin g, as again st th e

masters who own the lan d and the capital, are

glad to obtain out of the product of their own

labour such a pa rt as will suffice for their main ten

an ce,that is, for the further con tin uan ce of their

work. Thus the compact between the labourer

and the master of wages h as in deed taken the

place of the slave-own er’

s orders,but this compact

is free on ly in form n o t in rea l ity, and hun ger

is an almost exact substitute for the lash . On ly,

that which was formerly ca l led feed is n ow ca l led

wages .

(5) Reven ue and wages a re then the sha res

in to which product, in so far as it forms in come,

OVERPRODUCT ION AND CRISES . 93

is d ivided . I t follows hen ce that the grea ter the

o n e share is,the sma l ler must the other be .

* If

reven ue (ren t of lan d an d profits of capita l com

b in ed) absorb a la rge sha re of the product, on ly a

sma l l o n e can be left over for wages . I f the

magn itude of o n e share chan ges, the other share

must chan ge inversely. As the magn itude of the

sha res in the product determin es a t the same time

the va lue of the shares , the terms“ high , and

“ rise,”

a nd “ fa l l ” are used to in dicate the level

a nd the changes of reven ue a nd wages, these

terms thus den oting rela t ive con ception s . Reven ue

is sa id to be “ high ” or “ rising,

”

and wages“ low ” or “ fa l l in g

,

” when the former takes up a

large or a growin g sha re in the product , and the

la tter, con sequen tly, a sma l l or d imin ishin g sha re

in it.

(6) But in speaking of wages, the terms high

and low level , risin g and fa l l ing , a re con sidered

from an other a spect besides The degrading idea,

n amely,of “ n ecessa ry wages h as been in troduced

in to the scien ce— of wages which comprise on ly

From this po in t to 19 , th e rela t ive chan ge in wages and reven uewi ll be co n sidered un der th e supposi tion of u ncha nged amou n t oflabou r labo unng po pu la tio n ) and un chan ged o r chan gin gproductiven ess from 19 o n , u nder th e suppo sitio n of un changedproductiven ess and changing amo un t o f labo ur.


such an amoun t of commodities as i s required by

the workman to en able him to con tin ue his work

thus the free labourer h as aga in imperceptibly

come to be rega rded in the l ight of a slave who

costs on ly as much in the way of susten an ce as

a machin e does in repairs . This amoun t of

n ecessa ry wages is taken as a criterion,as a fixed

stan dard of measure, and wages are said to be

high or risin g,or, o n the con tra ry , low or fa l l in g,

accordin g as they va ry to the advan tage or the

disadvan tage of the workmen by recedin g from

or approaching that poin t. This con ception of

n ecessa ry wages does n o t, however, imply that

actua l wages can n ot fa l l below that poin t,n o r

tha t it represen ts a quan tity un iform at a ll times

and in all coun tries.

(7) I n dea l in g with the level or the change of

wages, we must carefully distinguish between these

two relation s , which are by n o mean s iden tica l .

In o n e relation wages may be high or be rising ,

while they may, at the same time, in referen ce to

the other, be low or fa ll ing ; and vice ver sa. The

creation of these effects depen ds en t irely upon

the degree or the change of the productiven ess

of labour. I f,for example

,the same amoun t of

labour produces a la rge or a growin g quan tity of


o n e ; and,in fact, there could be n o recogn ized

d istin ction between the reven ue of lan d and the

reven ue of capita l . This con dition con stituted

the ru le in an cien t Greece and Rome, and is o n e

of the reasons why the rich doma in of political

econ omy rema in ed un discovered by the an cien ts,

and especia l ly why they kn ew on ly mon ey-capita l ,

and did n o t even con ceive of capita l in its econ omic

sen se.“

(9) But if the divis ion of labour h as been so

developed that lan d and capital have differen t

own ers , and that, therefore, the raw product which

is produced by o n e set of workmen in th e service

of the lan down ers is then man ufactured in to

fin ished wa res by an other set in the serv ice o f

the capital ists,in to whose possession this raw

product is tran sferred ; in that case the reven ue

wil l be divided, o n e part going to the own er of

the raw product, the lan down er, the other to the

person wh o had this product con verted in to

fin ished product, the capita l ist. For if reven ue

in gen era l origin ated , o n the o n e han d , because

labou r produced more than was n ecessa ry for the

See my paper , " ‘Zur Geschichte der romisch en Tributsteuern

seit Augustus,”in H I LDEBRAND

'

Sj abrbu‘

cherfur N a tr in a lb'

hon omic

un d Sta tistih , vo l. iv. et seq.


susten an ce of the labourers , and, o n the other,

because positive law gave this surplus n o t to the

labourers, but to the own ers of the product of

labour,there follows a lso the division of reven ue

part of the product of labour which is in excess

of tha t required for the labourers’ main ten an ce

going to on e own er and pa rt to the other . And

it can make n o differen ce that there exists this

cross-wise division , as it were, of the products of

labour between the two own ers , the lan dlord and

the capita l ist, that in o n e and the same article

the result of the work goes to the o n e in so far

as it is raw product , to the other in so far as it

is man ufactured product, sin ce the division takes

place o n the bas is of va lue a fter al l. No r does the

in stitution of priva te property produce a differen t

effect upon the status of the labourers engaged in

the production of raw materia ls or the labourers

en gaged in man ufactures after its d ivision in to

lan d and capita l own ership from what it did

before that division . With the German distin c

tion between city and coun try, with the legal

separation between “ city trades ” and agriculture,

this sepa ration between lan d own ership and

capital own ership, and con sequen tly the division

of reven ue in to reven ue of land a nd revenue ofH


capita l , fi rst came in to bein g as a thorough-goin g

system,tran sformin g the division of labour.

(10) This divis ion is made according to th e

ratio which the va lue of the raw product bears to

th e value added to the raw product by the labou r

furn ished by the capita l ists in the way of

man ufacture or tran sportation “ ; in other words ,

in proport ion to the fraction ofth e value ofth e

fin ished product which is taken up by the raw

product. The lower th e value ofth e raw product

in propo rtion to the value of th e man ufacture :

product or vice versa , the smal ler o r the greater

will be the part ofthe reven ue fa l l in g to the raw

product, the greater or smaller th e part going to

th e man ufacture-product.

( I I ) The own ers of capita l term the last part

profit of capita l,and rech on i t accordin g to th e

ratio it bea rs to the amoun t ofcapital ; as h as

become customary, in comparison with a hun dred

or according to percen tage . This ratio expresses

the ra te of the profit of capita l. It sets the

stan da rd a t the same time for the yield of the

reven ue of all application s of capita l -propertyIt is th is added va lue, th e addition accru in g to th e va lue ofth e

raw materia l by th e subsequen t pro cesses , tha t th e au tho r fromthis po in t o n den o tes by th e wo rd Fabr iha tion sprodu ht, whic h Itran slate ma n ufactu r e-pr odu ct. Tr a n slator .

I 00 OVERPRODUCTION AND CRISES .

of the man ufacture-product— so that i f the latter

i s high a low value of the raw product must

be reckon ed in with the capita l and, o n the co n

tra ry, i f it is low a high va lue of the raw product

is to be reckon ed in with the capita l— it is

eviden t tha t the ratio of the profit o n capita l

to the va lue of the capita l the rate

of in terest) must rise with the rise of value

of the man ufacture-product or the fal l of value of

the raw product, and must fa l l in the Opposite

case. For the in terest o n capita l (sin ce the

capital ist must buy the raw product) must be

reckon ed in the o n e case upon a relatively lower,

and in the other upon a relatively higher capita l

value.

( 13) I f the profit of capita l is high, then the

ren t of lan d , so far as rega rds the divis ion of the

reven ue , must be low. For if of that portion of

the reven ue— already a sma l l o n e— which fa l l s to

the sha re of the lan down er a sti l l greater pa rt h as

to be reckon ed as profit o n the capita l he has

appl ied , then a correspon dingly sma l ler portion

wil l be left over for the ren t of lan d. Un der such

con dition s , then , the profits o n capital wil l swa llow

up the whole, or a lmost the whole,reven ue of

so ciety , and can leave little or n o rema inder for '

OVERPRODUCTION AND CRISES . IOI

the ren t of lan d . Yet the va lue of the raw pro

duct may easily be high en ough to admit of a ren t

of lan d ; ren t must, for in stan ce, a lways be left

over where the va lue of the raw product is equa l to

that of the man ufacture-product, and this for the

reason that while in man ufactures the va lue of the

ma ter ia l, that is, the whole of the r aw pr oduct, is

reckon ed in with the capita l, in raw production i t

is the lan d itself which con stitutes this materia l ,

an d lan d does n o t come in to play as capita l .

I f in raw'

produc tio n lan d , rega rded as materia l,

were coun ted in with the capita l , as is don e, for

in stan ce,by purchasers“ [or ifin man ufacture the

raw product or materia l were n o t reckon ed as

capita l, because it, too, belonged to th e capi

talists] ,t there could n ever be any ren t of lan d

left over, n o matter how high the va lue of raw

products might rise.

Practica l men wh o are n o t po l itica l eco n omists dispu te, therefo re

, that there is such a thin g as ren t oflan d at all likewise acu teju rists , as was shown in th e discu ssion upon th e prin ciple ofren tla id down by me .

1” Th e passage en clo sed between square brackets sho uld beomitted in readin g th e sen ten ce. Wha t th e au tho r in ten ded to saywas

, eviden tly, tha t if th e ma terial used in ma n ufactures were n o t

recko n ed as capita l , there wou ld be ren t in man ufactu re as there isin extractive industry ; while if lan d were recko n ed as capita l ,there would be n o ren t in extractive in dustry as there is n o n e inmanufacture . But

,as it stan ds in th e o rigin al , th e sen ten ce makes

n o n sen se — Tr an slator .


(14) However, the r a tio of va lue between r aw

pr oduct a nd ma n ufa ctu re-pr oduct can determin e

on ly the rat io of division between lan dlord and

capita l ist ; can determin e on ly in wha t ra tio the

whole reven ue— the level of which is fixed by

the ratio of division between i t and wages— is to

be further d ivided in to ren t of lan d a nd profit

On capita l . A va ria tion in tha t ratio of va lue

a lon e, therefore, merely takes from o n e part to

give to the other. A rise in the va lue of raw

product does , i t is true, ra ise the ren t of lan d ,'

but on ly a t the expen se of the profit of capita l

which, o n its s ide , must fa l l . A fa l l in the va lue

of raw products does,it is true

,ra ise the profits o n

capita l, but on ly a t the expen se of the ren t of lan d ,

which must n ow’

o n its side fa ll . But n o fa l l or rise

in the va lue of raw product or of man ufacture

product can in i tself ra ise or lower the prOfit

o n capita l, or ra ise or lower the ren t of land ,

without effecting a con tra ry movemen t in the

other part of reven ue .

(1 5 ) A variation in o n e pa rt of reven ue which

should n ot affect the other, or a va riation in both

pa rts of reven ue in the same direction , as, for

example,a rise in the ren t of lan d without a

fa l l in the profit o n capita l , or a rise both in ren t


for subsisten ce,depen ds en tirely upon whether

at the same time the pr oductiveness of labou r has

in creased or n o t.

(17) I f the productiven ess of labour has n o t

in crea sed , and there is a rise either in o n e or

in both parts of reven ue,then wages must fa l l ,

whether rega rded as share of the product or

from the stan dpoin t of the wages n ecessa ry for

subsisten ce. For sin ce, in this case, the product

of a given amoun t of labour— the quan tity of

goods resultin g from it— h as n o t va ried , a dimin u

tion in the proportion a l part,the sha re of the

product, which anyon e obta in s must carry with it

a dimin ution in the amoun t of product, the

quan tity of goods,which he receives. But

suppose tha t the productiven ess of labour h as

in creased , that the same amoun t of labour pro

duces more commodities,and that, accordingly ,

a greater quan tity of commodities would fa l l to

a given proportion al pa rt or share in the product

goin g to the labourer. Then it sti l l rema in s to

be con sidered what relation the d imin ution of

this proportion a l pa rt,due to the rise of o n e or

both parts of reven ue,bears to the in crease in

productiven ess or in the quan tity of goods fa l l ing

to a given proportion a l part. If, for in stan ce,


productiven ess h as doubled,i f,therefore , the pro

duct of a given amoun t of labour or a given

proportion a l part of that product h as doubled in

amoun t— doubled in quan tity of goods— wages as

share of the product may dimin ish by a ha l f, e.g . ,

from i to 3 of the product, while , measured by

quan tity of goods , or viewed in referen ce to the

stan da rd of “ n ecessa ry wages,

” they have remain ed

the same.

( 18) In l ike man n er a change in wages as sha re

of the product must exert a con trary effect upon

o n e or both parts of reven ue. I f a chan ge h as

taken place in wages without an accompanyin g

change in productiven ess , then ren t of lan d and

profits of capita l would ben efit or suffer in the

same proportion in which they have hitherto

divided the reven ue between them ; for the ratio

between raw product and man ufacture-product can

n o t on its part be chan ged by a chan ge in wages

un accompan ied by a simultan eous change in pro

ductiven ess. I f, however, the change in wages be

accompan ied by a chan ge in productiven ess,i f,e.g . ,

wages have fa l len while productiveness h as in

creased , the question wil l be in what proportion

extractive in dustry and man ufactures have co n

tributed to this in crease in productiven ess ; and


that pa rt of reven ue whose produc tiven ess h as n ot

in creased , or h as in creased lea st, wil l a lon e or

ma in ly profit by this rise— con sequen t upon the

fa l l in wages— ofthe reven ue as a whole.

( 19) Up to this poin t on ly the effects of changes

taking place in the various sha res of the product,

wages, ren t, and profits , assumin g either a con

stan t or varying productiven ess,

* have been con

sidered, without bringin g in the question of a

cha nge in the agg rega te of the productivefor ces. I t

sti l l rema in s to n ote the effects of changes in the

aggregate of the productive forces applied,which ,

in the last an a lysis,con sist of changes in th e

quan tity of labour, i .e.,the labouring populat ion .

Such a chan ge in the aggregate of the productive

Productive fo rce an d productiven ess mu st be distin gu ished fromeach o ther . Productiven ess sign ifies th e effica cy o r fru itfu ln ess ofprodu ctive force. If in place of ten labo urers twen ty labou rersa re employed , o r in place of o n e machin e of a given degree of

effi ca cy two ofth e same kin d are Set up, th e pr oductivefor ce has

been do ubled iften labourers produce as much as hitherto twen tylabourers, o r ifa machin e h as twice th e efficacy ofan o ther machinein vo lvin g th e same expen se, productiveness has doubled . Here,

too,labo ur is th e u ltimate standard ofmeasure. G rea ter quan

t ities of labo ur a re grea ter productive fo rce ; mo re product withequal quan tity of labo ur is in creased pro ductiven ess. I n recen ttimes , owing to th e mo re rapid in crease ofpo pu latio n and to ih

dustria l in ven tio n s, productive fo rce h as in creased as well as productiven ess, bu t their differen t effects have scarcely been regardedin po l i tica l eco n omy .


lan d do n o t grow,but are con fin ed within fixed

limits. The in crea sed or dimin ished profit, o n

the con trary, is reckon ed upon the in creased or

dimin ished capita l , without which the assumed

in crease or decrease in the aggregate product

can n ot be con ceived ; the r a te of pr ofit can n ot,therefore, rise or fa ll, but on ly a greater or less

amoun t of profit a ccrue to the n a tion . While,

then , the ren t of a given piece of lan d may rise

upon the same groun ds upon which the profits of

capita l rise, n amely,because reven ue as a whole

h as risen a t the expen se of the labourer’s sha re

in the product,a s well as because o n e part of

reven ue has risen a t the expen se of the other,

ren t may in addition rise from the third cause,

th e in crease of the total reven ue, while this does

n o t occur in the case of profit. This last— to cal l

atten tion already here to this poin t— is perhaps

th e most efficacious cause of the rise of ren t,

which circumstan ce,however

,politica l econ omists

have thus fa r n o t represen ted in a proper l ight,

even though Yan es, the chief oppon en t of Ricardo,

a l leges the augmen tation of production to be o n e

of the most importan t causes of the rise of ren t.

(2 1) The lega l regulation of property rights does

n o t alter these prin ciples of reven ue. Ren t of


lan d , e.g . , is merely divided between the higher and

the lower lan down er,the ‘ hereditary lan dlord

,

and the heredita ry ten an t-farmer, accordin g to

positive lega l regula tion s. Just as l ittl e does

the in terpolation of the en trepren eu r a lter the

above prin ciples. The ten an t-farmer on ly draws

profit o n his capita l, and if he has made an

advan tageous lease, a part of the ren t besides.

The en tr epr en eu r in the trades,in man ufacture

,

and in tran sporta tion ,in so far as he is distin

gu ish ed from the capital ist, on ly d ivides the profits

o n capita l with the latter, and that in accordan ce

with the usua l rate of in terest o n borrowed

capita l . But n o regular ga in upon en terprises

can a rise from a nythin g but profits o n capita l

— mortgage capita l is n o t in question here,the

in terest o n it being but an amoun t of g round

ren t, the loan o n a piece of lan d but a purchase

of ren t— n o regular profit o n capital can arise

from anything but reven ue, n o reven ue from

anything but the product of labo urfi‘

(22) Within the circle of these n umerous

variation s, then , may the d ivision of the n ation a l

Compare my pamph let , Fu r den Kredit der Gr u ndbesitzer .

Eine Bitte a n die Reich sta'

nde. Ber lin,1847. Sin ce then I have

wr itten th e mo re elabo ra te wo rk upo n th e Prin ciple ofRevenue.


product revolve. Wages may va ry a s sha re

in th e product as well as in relation to the

stan dard of n ecessary susten an ce ; equa l ly in

both respects , in depen den tly of each other, a nd

even in versely ; they may, eg ,fa l l as sha re in

the product, and yet rise in relation to n ecessary

sustenan ce. If a fixed ratio of divisio n be

assumed between wages a nd reven ue , then the

two pa rts of revenue, ren t and profit , can vary,

as share in th e product, on ly in versely ; just as

much,as th e o n e rises or fa l ls must the other fa l l

or rise. Aga in , if o n e part of reven ue varies as

sha re in the product without exercisin g any effect

upon th e other, or i f both vary equa l ly, this can

on ly oc cur i f a co n tra ry variation takes place in

wages eg . a rise in ren t— as sha re in the product

—" without a fa l l in profit must lower wages as

share in the product. An in crease in reven ue

con sequen t upon the in crease in the n ation a l

product,however, ra ises ren t a l so without lowering

either the level of profit or wages as share in the

product ; and amon g the combin ation s , therefore,

formed by these va rious changes the case is even

con ceivable where profit, wages— the latter l ike

wise as share in the product— and even r en t r ise

s imultan eously; namely, when , though ren t fa l ls

1 12 OVERPRODUCTION AND CRISES .

va lue. Exchan ge, therefore, proves to be a

relation in which everyon e produces va lue-in -use

for an other person ,and obta in s in con sequen ce

his compen sation from tha t other person . And

exchan ge va lue is n othing but va lue-in -use to

others , which receives its compen sation . Exchan ge

value may, therefore, be a lso termed socia l value

in -use; that it is the former proves that it is th e

latter.

(24) The exchange value expresses at the same

time the measure of compen sation which the

exchan ger receives. Assuming tha t each of the

excha ngers a lways produced ex actly th a t qua n tity

of value-in -use wh ich the other r equ ires to sa tisfy

h is successive needs,th is compe nsa tion would be a

j ust one on ly if it cor responded w ith th e sacr ifice,

th e cost,th e amoun t ofpr oductiveforce wh ich each

excha nger h as expended for the other in the pr o

duction of the va lue-in -use. Such would be the

case i f the product received in exchange con tain ed

a lihe sacrifice, an equa l amoun t of cost, th e

same expenditure of productive force— in other

words,if the exchange va lue coin cided with the

amoun t of cost , i f in the products exchanged

equal amoun ts of cost were exchan ged . Labou r

is the origin a l sacrifice , the prima ry cost , the


first and last productive force which is expen ded

upon a ll products . Under th e above assumption

the exchan ge va lue of the products exchanged

must be equa l to the quan t ity of labour which h as

been expen ded upon them ; in the exchan ge of

products equa l quan tities of labour must a lways

be exchanged for each other. An d labour, varied

a s i t is or appears to be in the various production s,

does admit a n adj ustmen t and a measu re accordin g

to the work and the time— days and the hours of

labo u rfi" But it is clea r that if tha t assumption

were n o t rea l ized such compen sation could make

n o preten sion to justice ; j ustice could n o t deman d

this rule of compen sation . For if A h as n o t

produced the va lue-in -use required by B,i f he

h as,con sequen tly, expended uselessly a quan tity

of productive force,how can A deman d com

pen satio n of B just as though he h ad rea l ized that

assumption " And this assumption will be least

con formed to in isolated cases of exchange.

Therefore the measure of compen sation,the

exchan ge va lue, will here depen d upon the

urgen cy of n eed and the supply of product of

Compare th e first paper in my wo rk , Zu r E r hen n tn iss u n srer

staa tswir th sch afilichen Z u sta'

nde, etc . Also I . of th e presen t wo rk ,where this is shown still mo re tho rough ly .

r 14 OVERPRODUCTION AND CRISES .

each of the exchangers , i .e. , upon individua l

dema nd a nd supply. But even supposing that

that assumption were rea l ized , there would stil l

have to be, sin ce everything would depen d upon

human h n ow ledg e and human w ill,a j ust estima te

,

adjustmen t, and determin a tion of the quan tities of

labour con ta in ed in the products to be exchan ged ;

and for this purpose a law would be required to

which the exchan gers would submit.

(2 5) I f exchan ge becomes the rule, because

every pa rticipan t produces n ow on ly va lue-in -use

for others , socia l va lue-in -use, exchange va lue ;because of the existen ce of the d ivision of labour

,

th at stron g bon d of un ion in which o n e works for

all and all for o n e ; exchange va lue becomes ma rh et

va lue. In isolated , acciden ta l cases of exchan ge

the on ly exchan ge va lue that can come in to

question is tha t which o n e product received in

exchan ge h as as aga in st an other given in return ;and this is con trol led by individua l deman d and

supply . The market va lue is the excha nge va lue

which each product h as relat ive to a ll other

pr oducts which a re exchanged in commerce ; a nd

it is con trolled by the gen era l demand a nd supplyof th e competitors . The existen ce of market va lue

is facil itated by the in terven tion of a peculiar

1 16 OVERPRODUCTION AND CRISES.

same quan tity in return .

* I t is on ly a h istor ic

n ecessity, an a cciden t, therefore, tha t til l n ow

mon ey con sists of a commodity ,i .e.

,i s a cert ificate

and a draft which expresses the va lue certified and

drawn for a lways by its ow n va lue. I t is well

kn own that , because mon ey is to-day a com

modity which is itsel f, l ike all other products,

subject to fluctuation s in va lue,a given quan tity

of this mon ey-commodity, or a n equa l amoun t

coined according to the same sta nda rd of co in age,

will a fter a time n o longer represen t the same

va lue as before. And o n e can , therefore, in th is

respect a lso speah , e.g . ,of a r ise in wages and in

ren t ; though n o t in deed of a rise in profit o n

capita l , s in ce the in creased mon ey-va lue of the

in come of capita l is reckon ed upon a li ke in

creased mon ey-va lue of the capita l , thus leavin g

the ra tio between the two , which determin es the

level of profit, the same. In asmuch as the quan

t ities of the mon ey-commodity a re co ined un der

certa in co in -n ames , it may a lso happen tha t sma l ler

quan tities of mon ey-commodity a re substituted

for the origin a l on es ; so tha t, fin a l ly, in this

respect a lso a rise in wages an d in ren t , though

Compare th e last paper in my wo rk , Zu r E r hen n tn iss u n sr er

sta a tsw ir th schafllichen Zusta'

nde,and I . of this wo rk.


aga in n o t in profit, may take place. This is ,

in deed,a deception o n the pa rt of the admin is

trato rs of the Min t, but it is o n e which it is wel l

kn own h as often been practised .

(26) Even though the ma rket va lue, in a

commerce left to itself,is subject to the changeful

domin ion of the gen era l deman d and supply, it

g ravita tes at least towards the amoun t of pro

duc tive force which h as been expen ded in the

creation of the product : towa rds its cost. I t

strives con tin ua l ly, at least, to allow a j ust

compen sation . For self-in terest wil l, in com

petition , brin g it about that n o o n e wil l long

obta in for a sma l ler amoun t of expen ded pro

ductive force a larger amoun t in the product

he gets in exchange. For everybody would rush

in to such advan tageous production un til equi

l ibrium would aga in be restored , and there would

aga in be a n equa l expen diture of productive force,

equa l cost, equa l labour in the products exchan ged .

But the actua l movemen ts of the market will

n evertheless, l ike the oscillation s of the pen dulum ,

swin g beyon d this position of equil ibrium o n

either side ; though the school which h as most

closely followed in Adam Smith ’s footsteps,the

school of Rica rdo, takes this mere striving for the


accomplished fact itself, a nd bases a ll its further

deduction s , therefore, upon an a ssumption which

does n ot exist in rea l ity. That which R ica rdo

assumes to be rea l ized is on ly wha t sh ould take

place , is o n e of the greatest , and practica l ly also

o n e of the most importan t of econ omic ideas.

Just as in the theory of n atura l law the social

con tract was in the begin n ing regarded as an

actua l historica l fact of the past, un ti l a j uster

perception recogn ized in i t on ly an idea accordin g

to which in dividua l rights and duties shou ld be

regulated— a thin g by its n ature,therefore

,to

be rea l ized in the future ; so l ikewise the co n

gruen ce of the exchan ge va lue of products with

the quan tity of labour which they cost is n o t a

fact , but the gran dest econ omic idea which has

ever striven towards rea l i za tion . Tha t law of

g ravita tion ,however

,to which a llusion has been

made accomplishes even tod ay so much as this

tha t in gen era l the market va lue of products is

in in verse ratio to productiven ess ; that if with

the same expen diture of productive force double

the quan tity of product is crea ted , the ma rket

va lue of the origin a l quan tity of product will at

the same time sin k to ha lf its former amoun t.

(27) j ust as much market va lue as o n e h as,

I 20 OVERPRODUCTION AND CRISES .

each participan t produced a certa in product

en tirely by a nd for himself, and con sequen tly

a lso reaped the proceeds of this product en tirely

himself ; i f, e.g . , A produced bread,B clothes ,

C shoes, D tables , and so o n, and each o n e himself

obta in ed the en tire va lue of the product , then the

purchasing power of each o n e would a lways be

equa l to the market va lue of his whole product.

But the division of labour is n o t so simple a s

a ll that . The d ivision is made n o t merely as

those pol itica l econ omists assume, but in such

a man n er in addition tha t the own ers of the

production -fund , th e lan down ers and capita l ists ,

share with the rea l producers,the labourers , in

every sin gle product. For positive law decla res

lan d and capita l to be as peculiarly the property

of s ingle in dividua ls as labour-power [Arbeitskraft]is of the labourer. Con sequen tly the labourers

a re compelled , in order to be able to produce at

all,to en ter in to a combin ation with the own ers

of lan d and capita l,and to share the product

of labour with them . A fa lse and superficia l

abstraction h as,in deed

,in i ts explan ation of

wha t lan down ers and capita l ists receive in that

compu lsory division , poin ted back to the specia l

and varied services ren dered to production by

OVERPRODUCTION AND CRISES. 12 I

labour,lan d

, and capita l ; and, aga in , has con ceived

the product created by this combin ation to be the

result of these va ried services Opera tin g together.

But who does n o t see that this is the grossest

petitio pr in cipii of which any scien ce h as ever

been guilty, and,it may be added , the most

pern icious practica l error which stil l rema in s for

the human un derstan ding to comba t " That

combin ation certa in ly effects n o a lteration in the

n a tu r a l elemen ts of the production of all com

modities i t on ly removes a socia l hin dran ce to

production,the a rbitra ry Quod n on of the own ers

of lan d and capita l,and removes this by a

division of the p ro duct . Therefore, though it is

true that un der the form which the division of

labour actua l ly assumes to-day, there is sti l l

exchan ge of “ products for products,

”

as the

econ omists express it , yet the pu rchas ing-powerwh ich each pa r ticipa n t possesses is n ot

,as th ose

econ omists h ave fu r th er fa lsely con cluded, reg u la ted

by the va lue of h is pr oduct, bu t by h is share in this

product. I beg my readers to con sider this , tha t

purchasing-power to-day is on ly sh a re in the

pr oduct,for to the fact that the Say-Bastiat school

h as overlooked this is it due that it so violen tly

Opposes the n ecessa ry further developmen t of

pol itica l econ omy.


(29) I n a society su ch as is here assumed and

such as to-day still actua lly ex ists, the sha res of th e

labou rers, la ndow ners,a nd capitalists in the pr o

duct a re n ot reg u la ted by socia l for esigh t, by a

rat ion al socia l law ,bu t a r e lihew ise left to be a cted

o n by ex ch ang e left to itself; by the se—ca lled n a tura l

laws of society . I t depen ds upon the chan ces of

the market wha t the sha re of each class in the

n ation a l product sha l l amoun t to . The rela tive

shares of the landown ers and the capita l ists are,

in deed,determin ed by the relative va lue of the

raw product a nd the man ufacture-product, and this

gravitates , as h as been shown , towards the cost of

the respective products,or accordin g to the law of

the productiven ess of the respective amoun ts of

labour. Yet , because the h igh est ofecon om ic g oods,

the essen ce [Prin cip] of a ll products, la bou r ,

h as a lso become an obj ect of exchan ge, the more

momen tous division between reven ue-receivers and

labourers is given over to the domin ation of ex

chan ge. The labourer gives his labour in accord

an ce with the laws of supply and deman d to the

en tr epren eu r , an d receives for it , accord ing to th e

same laws, its exchange va lue, his wages r eceives,

ther efo re, h is sh a re in the product as determined by

exch ang e. A con ception j ust as degrading as tha t


their pa rt their labour grows a lways more pro

ductive, are econ omica l ly n o t in a position to

in sist,as aga in st their Oppon en ts in the barga in ,

that their labour should be compen sated in ex

change according to its productiven ess,and ac

cord in g to the in crease in tha t productiven ess .

With them the motives for exchange which

determin e them to get rid of their goods,n amely

labour, a re of the most urgen t n a ture , and thus is

the highest of econ omic goods,the essen ce of a ll

products, put o n a level with a common and

ra ther worthless commodity. The labourers own

man y hours of labour, but n othing more, and they

have , therefore, fighting aga in st them in the fron t

ran k,“ in exchange tran saction s, their own hunger

and the sufferin gs of their families . Con sequen tly

they give away their labour easi ly , i f on ly their

most crying wan ts a re satisfied by the exchan ge,

if on ly this exchan ge amoun ts to en ough to give

them stren gth to con tin ue their labour, i .e., en able

them by labour further to satisfy these crying

wan ts. I t is on ly when wages amoun t to stil l less

—this is established by experien ce— when they

a re so low that the labourers in con tin uing their

labour would do so a t the expen se of their bodily

strength , on ly then do they desist from work , and

OVERPRODUCTION AND CRISES . 1 2 5

rather stea l , in accordan ce with a profoun d n atura l

in stin ct tha t un der such circumstan ces the mora l

con dition s of socia l existen ce have been viola ted,

and violated aga in st them . But the measu re of

what satisfies those most crying wan ts is n o t a

quota but a qua n ti ty of pr oduct, a nd a quan tity

which durin g a labourer’s l ifetime in the same

coun try, and takin g the average of the season s,

rema in s a pretty con sta n t quan tity. I f labour,

then , becomes mOre productive,i f a n equa l

quan tity of labour creates more product,if,ac

co rdingly, an equa l quan tity of product represen ts

a sma l ler quan tity of labour, and,

therefore, co n

stitu tes a sma l ler proportion a l share of the en tire

product, then i t is eviden t , sin ce those motives for

exchan ge a re domin an t with the labourers,that

with the in creasin g productivity of labour their

wages become a n a lways sma l ler quota of the

product.

(31) In the developmen t of society still other

causes are added,which strengthen the labourers ’

motives to get rid of their product at cost price.

The more populous the coun try , the more pro

duc tive its labour, and the grea ter a t the same time

the freedom of the individua l,the more will the

labourer, trade bein g left to itsel f, be forced to


work “ cheap. For the more w i l l labour be

placed o n a level with a commodity subject to the

law of competition , and a competition which is

harmfu l ; and the more able will the en trepren eu rs

be to “ give out ” the work to those who deman d

the least. As if the en trepren eu rs gave away the

work in stead of receivin g it " But so perverted

h ave even ordin ary con ception s become in co n

sequen ce of existing relation s , that because to-daywork can n ot be don e without permission

,this

permission is called the work itself. I n the early

con dition s of modern colon ies— which may be

expressed by the formula : The a rts a nd the

capita l of the old civi l ization , with en tire pol itica l

l iberty,spa rse population , and rich , superfluous

lan d l— these laws keepin g down wages appea r,

of course,to be changed ; but their operation s

are on ly suspen ded,because here competition for

th e time being turn s to the advan tage of the

labo u rersf" Un der the con dition s which exist in

the mother coun tries where the decisive factor of

tha t formula— ferti le lan d more than sufli c ien t for

t h e population— is lackin g ; where the labourin g

classes have n ever occupied the position in which

Th e presen t state of things in N o rth America is a pro ofofthis.


pur chasing power , th erefo re, con sisted in the ma r/set

va lue of th e en tire product— which,as i s well

kn own,the econ omists of the school of Rica rdo

,

as of the Say-Bastiat school , fa lsely represen t to

be the case— then n o g lu t could a r ise fr om a n

in crease of pr oductiven ess , either in respect to a ny

o n e or to a ll commodi ties , u n til a ll th e pa r ticipa n ts

h ad r eceived en ough of th em for th eir use,un til

more of them h ad been pr odu ced th a n is requ ired by

society . For sin ce the market va lue of the product

is in inverse rat io to productivity, the ma rket

va lue of each man ’s product would rema in

con stan t, and con sequen tly a lso his purchasing

power ; this as well in the case of those in

respect to whose products there h ad been an in

crease in productiven ess as of those who were n o t

so placed . Every participan t would be able to

buy a larger quan tity of every product in respect

to which productiven ess h ad in creased ; and the

un dimin ished purchasing power of everyon e cou ld

cope with the in crea sed amoun t of product

con sequen t upon in creased productiven ess— un ti l

the wan ts of everyon e were absolutely sa tisfied ;

un ti l n o o n e would buy more even though he

could. In this case,then ,

the purchasin g power

of society would always remain commen sura te


with its productiven ess ; or, in other words, as

much va lue-in -use as society might produce, so

much market va lue and so much purchas ing

power would it possess a lso,un ti l a ll the wan ts

of every Sharer in production were gratified ; and

va lue-in -use would cease to be market va lue and

purchasin g power on ly when i t h ad itself ceased

to be va lue-in -use a ny longer for anybody in

society. As is familia r, the school of Rica rdo

and of Say en deavour a lso by this example to

prove,in th e midst of the woes of “

o verprodu c

t ion,

” that n o such thin g can take place. And

eviden tly this example a lso pictures the happiest

econ omic outcome a nd con dition that can possibly

be imagin ed— a con dition ,n amely, where there is

overproduction on ly after a ll the members of

society have fully satisfied their n eeds ; while

the commercia l crises of to-day con sist precisely

in this,that s imulta n eously with superflu ity, four

fifths or five-sixths of society suffer wan t. A lihe

success w ou ld a ttend th e in crease ofproductiven ess

even tho ug h thepr oduct w ere divided, as it is to-day ,

among th ree sh a r ers, if th e sha re of each o n e

remain ed a fixed,un alterable q uo ta of th e

p ro duct. U n der this supposition a lso the pur

chasin g power of every participan t in exchange

K

130 OVERPRODUCTION AND CRISES

would rema in con stan t, be the in crease in produc

tiven ess what it may. And overproduction in the

case of o n e or of a ll commodities could l ikewise

take place on ly a fter[

the n eeds of a ll the sharers

were satisfied— even though , to reach that poin t,

there would have to be, o n accoun t of that divis ion

of the product, a yet greater rise in productiven ess

than in the con dition a ssumed by Rica rdo and

Say, where each o n e would have the ma rket va lue

of his en tire product at his d isposa l . Bu t if n either

of these assumption s is rea lized, if th e pr oduct is n o t

on ly divided amo ng th ree sha rers,bu t th e sh a re of th e

labou r ing cla sses of th eg r ea t maj or ity ofsociety)

is bes ick s, in acco rda n ce w ith the n a tu r a l”

laws

of tr ade left to itself, n o t a fix ed,u n a lter a ble quota

of the pr odu ct but, o n th e co n t rary, becomes a

sma l ler q uo ta of th e pro duc t exac tly in propo r

t io n to th e in crease in pro duc t iven ess— then

th a tfor tunate issue of th e in cr ea se in pr oductiven ess

ca n n ot occu r . For a ccordin g to this third supposi

tion,purchasin g power a nd productiven ess a re n o

lon ger in direct proportion to each other. On the

con trary, the pu rchasing power Of the greatest

pa rt of society d imin ishes in proportion to

in creas in g productiven ess ; and society is placed

in th e position of producin g va lue-in -use which


before the n eeds of society are fully satisfied ,

s in ce the purchasin g power of the majority of

society,of the workin g classes

,dimin ishes in

proportion to the in crease of productiven ess .

And as rega rds pa uper ism- sin ce the materia l

deman ds of the maj ority of society,the labourin g

classes,a re con stan tly rising

,and their desires

a re con stan tly in flamed by seein g the wea lth of

the min ority a lon e in crease,whil e the measure

of their in come dimin ishes,or rema in s the same,

and therefore at l east relatively dimin ishes— the

econ omic position of the labourin g classes must

n ecessari ly be a distracted o n e. I n a word , the

result must be the in credible absurdity tha t

though the maj ority of society are lan guishing

in poverty,they can n ot by fa r put their productive

force in to ful l activity,sin ce then even the sma l ler

portion would a lso be plunged in to poverty.

(34) In these“n a tura l ” laws of exchange left

to itself l ies the key to the econ omic problems

of the presen t time . The assumption s fr om wh ich

such phen ome na a s pa uper ism a nd commer cia l cr ises

have j ust been deduced as n ecessa ry conclusions ,

actua lly ex ist to-day a nd society h as th u s fa r

pr omulg a ted n o laws to chech th e con sequen ces ,

n ow a lso g r ow ing practica l, of a ssumptions wh ich


h ave become pr a ctica l. Productiven ess h as in fact

greatly in creased , and though the in crease h as

been far greater in man ufacture and transportat ion

than in the production of raw materia l,the in crease

in the last, too, h as been con siderable. The

n a tion a l product h as, moreover , been la rgely

in creased a l so through the in crease in productive

for ce con sequen t upon the growth of population .

Wages in Europe,o n the other han d— where they

have n ever been favoured by colon ia l con dition s

such as preva i l in North America and Austra l ia ,

but have been evolved , un der the con dition s of

fa r greater den sity of popula tion and of lan d

a lready fully occupied , from the wage-rela tion s

Of serfs— have n ever in gen era l risen much or for

a ny length of time above the poin t of n ecessary

wan ts . Other socia l circumstan ces have besides

developed in such a way tha t they have exerted

a con stan tly depressing effect upon them . An d

accord in gly the con sequen ces,the presen t form

of division of the n a tion a l product , have been

in evitable. Wages in Europe have in fact become

an a lways sma ller share of the product. I n

con sequen ce of this,reven ue as a whole h as risen ,

a nd this rise h as ma in ly ben efited ren t, sin ce

productiven ess h as in creased more in man ufacture


an d tran sportation than in the production of raw

ma terials ; i t has d irectly ben efited profit o n

capital on ly in so far that without this rise in

reven ue a s a whole it would have fa l len still

lower. The ren t of o n e and the same piece of

lan d h as in addition experien ced a con siderable

rise through the in cr ease of r even ue con sequen t

upon the in cr ease of p ro ductive force, and i t is

this in grea t part which h as ra ised it to i ts

presen t high level * This fo rm of d ivision of

the n ation a l product , then , h as decreed again st

so c iety pauperism and commercia l crises. They

have both become facts,as fully as that division

a nd the assumption s from which they were

deduced . There is n o longer an Optim ism so

blin d or a self-in terest so n arrow as n o t to

ackn owledge the existen ce of phen omen a which

have sprun g in to l ife with such violen ce, and

which arouse such gen era l a tten tion . Those wh o

sti l l deny them n o longer coun t. The con troversy

n o longer turn s upon the existen ce of these

Th e lan down ers, in spite of this, do n o t grow r ich ; fo r withth e freedom of th e own ership of land , an d th e mo rtgagin g of it

in th e shape of n ego tiable capital , lan ded pro per ty is a lwaysin vo lved in debt to i ts fu ll va lue

,and passes in to th e han ds of th e

capita lists . See my wo rk, Z u r E r hla'

r u ng u ndAbh ilfe der h eu tigen

Creditn oth dos Gr u n dbesitzes. j en a, Fr . Mauke,1869 .


pletely in the power of society as i t is in its power

to-day‘ to supply any desired quan tity of cloth ,

provided on ly there be the n ecessa ry provision of

wool . And yet i f n o ration a l laws oppose the“n atura l ” on es , pauperism and commercia l crises

wil l con tin ue to be the compan ion s of rea l ity,

a nd society will con tin ue to be in possession of

productive forces whose efficacy could be of avai l

to all, but which can n ot be a l lowed to become

efl'

ective lest they be harmful to all. Wi l l societysuffer this " Will a school

,un doubtedly a rden t

for l iberty, succeed in in oculatin g society itself

with their own con fusion of “ creation and

history,of n a tu re a nd society " I doubt it " I n

n a tu re a lon e do th ing s a nd rela tion s con ta in th ei r

ow n ra tion a l law w ith in th emselves ; in society they

dema nd th is of ma n . And n ecessity will help to

lead society to a recogn ition of this truth , if doc

trin e a lon e should n o t sufl‘ice.

This,then

,i s the theory

,my hon oured frien d,

which I oppose to yours,and which I will l ikewise

briefly review.

To the labour of society I join a productiven ess

which h as in creased in grea t degree in all bran ches

of industry , and pa rticularly a lso in all bran ches


of agriculture, and whose further in crease is

un l imited . But the “n a tu ra l

” laws which , in a

commerce left to itsel f,where lan d and capita l

own ership exist,govern the division of the socia l

product , preven t that in crease from proving a n

un alloyed blessing to society. For o n the o n e

han d, they cause this division to assume the form

of ex ch a ng e, in which the private own ers of the

lan ded a nd capita l property of society can

in stitute n o production at all,or n on e beyon d

the capacity of the existin g purchasing power ;and o n the other han d

,they n o t on ly cause the

product to be divided between these own ers and

the labourin g classes,but a lso brin g it about tha t

th e sh a re of th e la tter in th e pr odu ct,a nd th erefore

th e pur ch as ing power of th e maj or ity of society ,

g r ows a lways sma ller . They produce this last

effect because labour,the creator of all product

,

becomes l ikewise a commodity which is pa id

is recompen sed , or receives its sha re of the

product— accordin g to the laws of supply and

deman d ; a nd because these laws, in the develop

men t of society, prove , precisely with growin g

productiven ess,in creasingly disadvan tageous to

those who possess this “ commodity,” the

labouring classes.


Thus , because accordin g to the “n a tura l laws

of trade the productive force of society can

man ifest itself on ly to the exten t to which ther e

is a correspon d in g purchasing power,a nd the

same laws,aga in

,with in creasin g productiven ess

lower the purchasin g power of the majority,the

effect of these laws is tha t an in crease of fortun e

which should by its n ature serve on ly the growth

of the wel l -bein g and happin ess of society

becomes a cause of the Opposite. The in crease

in productiven ess which should make all richer,

o n ly causes,accord ing to the “

n a tura l ” laws of

trade, o n e pa rt of society to grow poorer, while

it in jures and j eopardises even the prosperity of

the other,the favoured pa rt .

These “n atura l ” laws have the effect, then , that

productiven ess to-day can n ever man ifest itself

to a degree correspo n din g to its rea l capacity.

Though ever strivin g to do so,it is crippled by

c ommercia l crises, and is forced to l ie fa l low,while

it is capable of bea rin g fruit adequate fo r al l

the members of soc iety who a re languishing in

poverty. The ca lculation ,therefore

,that if the

presen t n ation a l in come were distributed equal ly

amon g all the in dividua l s of society the sum

fa ll in g to each would stil l be in con siderable, is


on es " For this she n eeds but clear vision and

mora l strength " I t is the part of politica l eco n o

mists to sha rpen the first. Should the last be

lacking for a free resolve, history wil l in deed have

to swing the lash of revolution over her aga in .

I have thus far , my hon oured frien d, purposely

con fin ed myself to an abstract, methodica l form ,

for it is possible tha t these letters may fa l l i n to the

han ds of o n e or other of the “ lea rn ed ” German

econ omists , and they a re n o t accustomed to any

other treatmen t of our scien ce. In my third letter,

in which I sha l l en deavour to refute your views

a nd to establ ish min e more in deta i l , I sha l l strive

to be more popula r. Perhaps o n e form will a id the

other,to the better un derstan din g of the un usua l

econ omic con ception s con ta in ed in them .

SCAR LET CLOTI I . EACH 2 9 . (M .

1. Work a n d Wages. Pr of. J . E . THOROLD ROGERS.

No th in th a t. Pro fessor Rogers writes can fail to be ofin terest to th ough tfulpeople.

”then amm.

2. Civi lisa tion : i ts Ca u se an d Cure.q

EDWARD CARPENTER.

No pa ssin g piece Of polemics , bu t a perman en t possession .— Sco ttish Review.

8. Qu in tessen ce of Socia lism. Dr . SCHXFFLE .

Precisely th e man u a l n eeded . Brief, lucid , fair and wise .—Br i tish Weekly.

4. Da rw in ism a n d Poli tics. D. G . RI TCHI E , M.A.

New Edi tion , with two addition a l E ssays on HUMAN EVOLUTI ON .

On e ofth e most suggestive bo oks we h ave met wi th .

”— Liter ary .Wor ld.

5 . Religion of So c ia lism. E . BELFORT Bu .

6. Eth ics of Socia lism . E . BELFORT BAX .

Mr . Bax is byfar th e ablest ofth e English expon en ts ofSocialism.

” —Westmin ster

7. Th e Dr in k Quest io n . Dr . KATE MI TCHELL.Plen ty ofin terestin g ma tter fo r reflection . k 7rap h z

’

c.

8. Promo tio n of Gen er a l Happin ess. P r of. M. MACMILLAN .

A reaso n ed ac co u n t Of th e mo st advan ced and most en ligh ten ed u tilitarian doctrin e in a Clea r and readable fo rm .

” — Scotsma n .

9 . Engla n d ’ s i dea l, ac. EDWARD CARPENTER.

Th e litera ry power is u nmistakable,th eir fresh n ess of style , th eir h umo u r , and

th eir en th u siasm.

” —Pa ll Ma ll Gazette.

10. Soc ia lism in En gla n d. SIDNEY WEBB , LL B.

Th e bes t gen era l view ofth e subj ect from th emodern So cia list side.

” — Athen ceum.

11. Pr i n ce Bi sma r ck a n d Sta te Socia li sm. W. H. DAWSON .

A su ccin ct , well-digested review ofGerman so cial and econ omic legisla tio n sin ce1870.

— Sa tu rday Review.

12. Godw in ’s Po li tica l J ustice (On Pr operty). Edited by H. S. SALTSh ows G odwin a t h is best ; with an in teresting and in forming in troduction .

Glasgow Her a ld

18 . Th e Sto ry of th e Fren ch Revo lu tion . E . BELFORT BAx .

A tru stwo rth y o u tlin e.— Sco tsma n .

14. Th e CLO-Opera tive Commo nwea lth . LAURENCE GRONLUND.

An independen t expo sition ofth e Soc ialism of th e Marx sch ool. ” -Con tempo ra ry

15 . Essays a n d Addr esses. BERNARD BOSANQUET , M.A.

Ough t to be in th e h an ds ofevery studen t of th e Nin eteen th Cen tury spir it. ”Echo .

“ No on e can compla in of n o t being able to un derstan d wh a t Mr . Bosan qu etmea ns .- P a ll Ma ll Gazette.

16. Ch a r i ty Orga n i sa tion . C . S. LOCR , Secretary to Chari ty Orgagisati

t

on

ocre y.

A perfect little man u al. ” — Athenwum.

Deserves a wide c ircu latio n .

" — Sco tema n .

17. Th orea u ’ s An ti-Slavery an d Reform Pa per s. Edited by H. S. SALT.

An in te restin g co llec tio n Of essays. ”— Li tera ry Wor ld.

18 . Self-Help a Hu n dred Yea r s Ago . G . J. HOLYOAKE .Will be studied with much ben efit by all wh o are i n terested in th e amelio ra tion

ofth e co n ditio n ofth e po o r .-Morn ing P ost.

19. Th e New York Sta te Re fo rma to ry a t Elmira . ALEXANDER WINTER.

Wi th P reface by HAVELOCK ELLrs.

A va luable con tribu tion to th e li tera ture ofpen ology.

”—Black a ndWh i te.

20. Common Sen se abou t Women . T. W. HIGG INSONAn admirable co llec ti o n of papers, afioca ting in th e mo st lib eral spiri t th

eman cipa tio n ofwomen .

” Woman '

s Herald.

21 . Th e Un ea rn ed In cremen t. W. H. DAWSONA co n cise bu t compreh en sive volume.

”—Echo.

22. Our Destin y. LAURENCE GRONLUND“ A very vigo ro us li ttle boo k , dealin g wi th th e in fluen ce ofSo cialism o n mo r al

and religio n .

’ — Da i ly Ch r on icle.

28 . Th e Wo rkin g-Cla ss Movemen t in Amer ica .

Dr . EDWARD an dE . MARX AVELINGWill gi ve a go od idea ofth e co n dition of th e wo rki n g classes in America , and o

th e vario us o rgan isat io ns wh ich th ey h ave formed .

” - Sco ts Leader .

24. Luxu ry. P r of. EMI LE DE LAVELEYE“ An eloquen t plea o n mora l and eco n omica l groun ds fo r simplici ty of life.

“

Academy.

25 . Th e La n d a n d th e La bourers. Rev. C . W. STUBBS, M A“ Th is admirable bo ok sh ould be circula ted in every vi llage in th e coun try.

Man chester Gua rdia n .

26. Th e Evo lu tion of Pr o per ty. PAUL LAPARGUE“Will prove in terestin g an d profitable to all studen ts of eco n omic h isto ry.

"

Sco tsma n .

27 . Cr ime a n d i ts Cau ses. W. DOUGLAS MORRI SONCa n h a rdly fail to s gest to all readers several n ew and pregn an t reflec tion s o

th e subj ect .—An ti-J aco m .

28. Pr in ciples o f Sta te i n ter feren ce. D. G . RITCHIE , M.A

An in terestin g co n tr ibu tion to th e co n tro versy on th e fun ctio n s of th e Sta te .

"

Glasgow Her a l'

d.

29 . German Socia li sm an d P. La ssa lle. W. H . DAwSON

As a biograph ical h isto ry ofG erman So c ia lis tic movemen ts du ring th is cen tu rit may be accepted as complete .

” — Bri tish Weekly.

80. Th e Pu r se a n d th e Con scien ce. H. M. THOMPSON , BA (Can tab. )Sh ows commo n sen se and fai rn ess in h is argumen ts. ”— 8cotema n .

81. Or igin of Pr o per ty i n La n d . FUSTEL DE COULANGES. Edi ted , with a

In troducto ry Ch apter o n th e En gli sh Man o r , by Pr of. W. J. ASHLEY, M.AHis views a re clea rly sta ted , and are worth readin g.

” — Sa turday Review.

82. Th e Engli sh Republic. W. J. LI NTON. Edited by KINETON PARKESCh aracterised by th a t vigo rou s in tellec tuali tywh ich h as ma rked h is lo n g life 0

li tera ry and a rt istic ac tivi ty.

” — Glasgow Her a ld.

33. Th e (Jo-Opera tive Movemen t. BEATRI CE POTTEWi th ou t do ub t th e ablest an d mo st ph ilosoph ical an alysis of th e Co-Opera tiMo vemen t wh ich h as yet been produ ced.

"— Spealcer .

84. Neigh bo u r h o od Gu i lds. Dr . STANTON COIA mo st suggestive little bo ok to anyon e in teres ted in th e soc ial question .

”

P all Ma ll Gazette.

85 . Moder n Huma n i sts. J. M. ROBERTSONMr . Rober tso n ’

s style is excellen t—n ay, even brillia n t—an d h is purely li terancri ti cisms bea r th e mark ofmuch acumen .

”— Times.

36. Ou tlooks fr om th e New Sta n dpo in t. E . BELFORT BAx“ M r. Bax is a very acu te and accomplish ed studen t ofh isto ry and eco n omics.

—Da ily Ch r on i cle.87. Distr i bu tin g Cc-Oper a tlve So cieties. Dr . LUIG I P I ZZAMI GLIO. Edi ted b

F. J. SNELIDr . Pizzamiglio h as ga th ered to eth er and ouped a Wide a rray offacts an

sta tistics , a n d th ey Speak fo r th emse ves.

"—Spea er .

88. Co llec tivi sm a n d Soc ia lism. By A. NACQUET. Edi ted by W. BEAFORDAn admi rable cri tic ism by a well-kn own Fren ch po litician ofth e New Soc ialism

ofMar x an d Lassalle.

” — Da ity Ch ron icle.

SOCIAL SCIENCE SERIES

65 . En gla n d ’s For eign Tr a de i n X IX th Cen tu ry. A. L . BOWLEY.Fu ll of va lu able in fo rma tio n , ca refu lly compiled .

—Times.

66. Th eo ry a n d Po licy ofLa bo u r Pr o tec ti o n . Dr . SCHA'

FFLE .

An a t tempt to sys tema t ize a co n serva tive programme Of refo rm.

” — Ma n . Gua rd.

67. Hi sto ry ofRo c h da le P i o n eer s . G . J. HOLYOAKE .Bro ugh t do wn from 1844 to th e Ro ch da le Co n gress of — Co-0p . News.

68 . Righ ts o fWomen . M. OSTRAGORSKI .“ An admirable sto reh o u se ofpreceden ts, conven ien tlya rran ged .

” — Da,ily Ch r on .

69 . Dwellin gs ofth e Peo ple . L OCKE WORTHI N GTON .

“ A va luab le c o n tr ibu tio n to o n e of th e most pressin g problems Of th e day.

"

Da ily Ch r o n icle.

70. Hou r s , Wages , a n d Pr odu c tio n . Dr . BRENTANO .Ch aracter ised by a ll P ro fessor Bren tan o ’

s clearn ess ofstyle.— Econ om ic Review.

71 . Ri se ofModer n Demo cra cy. CH . BORGEAUD.

A very usefu l lit tle vo lume , ch a ra cterised by exa ct resea rch .—Da i ly Ch r on icle .

72. La n d Systems ofAu str a la s ia . WM . E PPS.

Exceedin gly va lua ble a t th e presen t time of depr ession and difi cu lty.

"

78. Th e Tyr a n n y ofSo c ia li sm . YVES GUYOT . Pr e f. by J . H. LEVY .

M . G uyo t is smar t, lively, tren ch an t , an d in terestin g .

" — Da i ly Ch r on ic le.

74. Popu la tio n a n d th e So c ia l System . Dr . NI TH .

A very va lua ble work ofa n I ta lia n eco n omist . —West. Rev.

75 . Th e La bo u r Qu estio n . T . G . SPYRES.

Will b e fo u n d extremely u sefu l .—Times.

76. Br i ti sh Fr eew omen . C . C . STOPES.

Th emo st complete study ofth eWomen’

s Su ii rage question .— English Wom . Rev.

77 . Su ic ide a n d i n sa n ity. Dr . J . K . STRAHAN .

An in terestestin g mo n ograph dealin g exh austively wi th th e subj ect . " Times.

78 . AHi sto ry ofTi th es. Rev . H . W . CLARKE .

Mayb e recommen ded to a llwh o desire a n accu ra te idea ofth e su bject . ” — D. Ch r on .

79 . Th r ee Mo n th s in a Wo r ksh o p . P . G OHRE , Wi th P r ef . by P r of. ELY .

A vivid pic tu re ofth e state ofmin d ofGerma n wo rkmen .

” -Man ch . Gu a rd.

80. Darw in i sm a n d Ra ce Pr ogr ess. P r of. J. B. HAYCRAFT.

An i n terestin g subjec t trea ted in an a ttra c tive fash ion .— Glasgow Her ald.

81 . Lo ca l Taxa tion a n d Fin a n ce. G . H . BLUNDEN .

82. Per i ls to Br i ti sh Tra de. E . BURG I S.

83. Th e So cia l Co n tr a c t . J. J. ROUSSEAU . E dited by H . J . TOZER .

84. Labou r u pon th e La n d . E di ted by J . A. HOBSON ,M .A.

85 . Mo ra l Pa th o logy. ARTHUR E . G ILES, M .D . , B.Sc .

86. Pa r a s i ti sm , Orga n ic a n d So c ial. MASSART an d VANDERVELDE .

87 . Allo tmen ts a n d Sma ll Ho ld in gs. J . L . GREEN.

88 . Mo n ey a n d i ts Rela t io n s to Pr ices. L . L . PRI CE .89. So ber by Act ofPa r liamen t . F. A. MACKENZ IE .90. Wo r ker s o n th e ir In du str ies. F. W. GALTON .

91 . Revolu tion a n d Cou n ter-Revo lu tion . KARL MARX .

DOUBLE VOLUM ES, 3 s . 6 d .

1 . Life ofRober t Owen . LLOYD JONES.

2. Th e Impo ssibi li ty ofSo c ia lDemocr a cy : a Seco n d P ar t of Th e Qu in tessen ceofSocia lism ”

. Dr . A. SCRA’

P PLE .8 . Con d i tio n ofth e Worki n g Cla ss in England in 1844. FREDERI CK E NGELs .

4. Th e Pr i n ciples ofSocia l Econ omy. YVE S GUYOT.

5 . So c ia l Pea ce. G. VON SCHULTZE-GAEVEBNITZ .

6. A Han dboo k ofSo ciali sm. W . D . P . BLI SS.

SWAN SONNENSCHE IN CO. ,LONDON .

NEW YORK : CHARLE S SCRIBNER ’S SONS.

Overproduction and Crises - Forgotten Books · PDF filea crisis, an d in the case of man y...

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