The more immediate theoretical founder of social democracy, and for many years its leading representative, was Karl Marx, born in 1818 in Treves (Trier). The social position of his family in Germany was excellent. His father, a converted Jew, occupied a high position in the civil service. Marx studied law at the universities of Bonn and Berlin. In the latter place he became so much interested in philosophy that he abandoned law. The philosophy which he adopted was the Hegelian. He intended to become a professor, but was led into politics and journalism by the apparent dawn of freedom accompanying the succession of Frederick William IV. to the Prussian throne in 1840. He soon became editor-in-chief of the Rhenish Gazette (Rheinische Zeitung), which had been founded by leading liberals, and began to criticise the government with what was then called unheard-of boldness. But he was so skilful in his expressions that the special censor of the press, who was sent from Berlin to Cologne to watch the paper, could find no cause for legal proceedings against him. Finally, government becoming weary of such attacks, and having then the power to do so, simply decreed that at the expiration of the first quarter-year of 1843 the paper should cease to appear.[171] The interest which Marx had begun to take in matters of government showed him the necessity of informing himself more fully on subjects of political economy. He went to Paris, accordingly, after the suppression of the Rheinische Zeitung, to study that science, thinking that France then afforded better advantages for that purpose. He was, no doubt, right in this, as the Germans have only lately become great in political economy. In Paris he continued to wage war with the pen on the Prussian government, and was banished from France in 1844 by Guizot, to please Prussia. Going to Brussels, he continued his economic studies, interested himself in the cause of the laborers, and in his writings at this time expressed views similar to those which he held at the time of his death. In 1847, in company with Friedrich Engels, he composed and published a manifesto of the communistic party, which closed with these words: “The communists scorn to conceal their views and purposes. They declare openly that their aims can be attained only by a violent overthrow of the existing social order. Let the ruling classes tremble before a communistic revolution. The proletarians have nothing to lose except their chains. They have a world to gain. Proletarians of all lands, unite!”

The events of 1848 brought Marx to Germany again, where, with his friends, Engels, Wolff, and the poet Freiligrath, he founded the New Rhenish Gazette (Neue Rheinische Zeitung). For one year this paper was an able advocate of the cause of the laborers. German democracy and reaction were alike rejected, and the interest of the laborers was represented as irreconcilably opposed to that of all other classes. The paper was suppressed in 1849, and its founders banished from Germany. Marx lived thereafter in London.

The last issue of the paper contained a spirited farewell poem, by Freiligrath, promising the reappearance of the journal when its undying spirit should have triumphed over all its foes. The following is a good translation:[172]

In London, Marx continued his agitation and literary work uninterruptedly—the former reaching its climax in the foundation of the International, in 1864; the latter in the appearance of his most important work, “Das Kapital” (“Capital”), in 1867.[173] It is a development and continuation of his “Zur Kritik der politischen Oekonomie”—“A Critique of Political Economy”—published in 1859. Marx intended, in “Das Kapital,” to present a complete system of political economy in three volumes, but had published only the first, “On the Process of Capital Production,” at the time of his death, March 14, 1883. The delay was due, it is said, to the extraordinary thoroughness with which he worked. He had, however, practically completed the second volume and had the third volume well under way before his decease. These two volumes, treating of the “Circulation of Capital” and “The Forms of the Entire Process and the History of the Theory,” will be brought out by his friend, Friedrich Engels. It is further stated that Marx had prepared a third and improved edition of the first volume, which is now in press.

Marx’s book, “Capital,” has been called the Bible of the social democrats, and it deserves the name. It defends their doctrines with acuteness of understanding and profundity of learning, and certainly ranks among the ablest politico-economic treatises ever written. I should place it on a par with Ricardo’s “Principles of Political Economy and Taxation.” Much has been said against its style. I think it, at least, equal to Ricardo’s. It is difficult reading, not because it is poorly written, but because it is deep. Any one, however, who has had some training in political economy, and is ordinarily bright, ought not to find its difficulty insurmountable.

Marx lived a quiet life in London, directing from that point the movements of the International, corresponding for the New York Tribune for a time, besides writing his books and pamphlets, and enjoying the society of his friends. His family life was a happy one. His wife was Jenni von Westphalen, daughter of the Prussian minister of the same name, who belonged to the celebrated reactionary ministry of which Von Manteuffel was president. He had four children, of whom two have already been mentioned as wives of well-known French socialists. The death of a son in early life was a severe blow to him, and he never recovered from the death of his wife, in 1881.

About the ability of Marx there is unanimity of opinion. The philosopher Professor Friedrich A. Lange regarded him as one of the ablest political economists that ever lived. So conservative a man as Professor Knies, of Heidelberg, has often spoken in high terms of his talents and acquisitions; and the well-known Cologne Gazette used these words in an obituary notice:[174] “He exercised, perhaps, a more lasting influence on the inner politics of civilized states than any one of his contemporaries. Political economy, especially in Germany, knows no writer who has influenced both masses and scholars in a more decided, thoroughgoing manner than Karl Marx.... He was one of the sharpest thinkers and readiest dialecticians ever possessed by economic science.... His ‘Capital’ is classical and indispensable for every one who wishes to concern himself earnestly with social and economic science.”

Immediately after the death of Marx, meetings were held in all parts of the United States and elsewhere, as far as the laws would allow it, to do honor to his memory. One characteristic feature of these meetings was the vow which was taken in all to spread the works and to disseminate the ideas of their departed leader. At the mass-meeting in the Cooper Institute, in New York city, undoubtedly the largest one held, the following resolutions were read and adopted:

Similar resolutions were adopted at the other meetings, in Baltimore, Chicago, Cleveland, etc.

Marx’s followers boast particularly of two discoveries which he made—viz., the correct theory of the development of history and his doctrine of value. While it is not true that these were, by any means, entirely original with him, no one would dispute that his presentation is worked out in an original and remarkable manner.

His theory of history is that it is a development, and is shaped at each period by the economic life of the people, by the manner in which goods are produced and distributed. He takes, as his starting-point, the fact that men must eat, drink, wear clothes, and find shelter from rain, snow, and cold. Art, religion, and science come after the satisfaction of these elementary wants. The production of wealth by slaves gave form to the history of the classical world, while that of the Middle Ages is dominated by serfdom and its accessories. The governing idea of the present age is capitalistic production—that is to say, concentration of large masses in factories, running a race with immense machines, and systematically robbed by their employers. When we take the view that history is a growth governed by the necessities of production, past ages do not seem so inhuman as they otherwise do. It has hitherto been necessary that the vast majority should toil incessantly, while only few devoted themselves to the pursuit of the higher goods. The processes of production were so primitive and imperfect that it was physically impossible for the many to enjoy leisure for cultivating their minds and bodies. Hence it was that the ancients regarded slavery as necessary and natural. Plato and Aristotle both considered it a law of nature, just the same as it has hitherto been supposed that private property in land and capital was a law of nature; whereas, as already shown by Rodbertus, they are all only institutions of positive and changeable law. Private property in the instruments of production can be abolished, as private property in human beings has been. This abolition could not, however, take place until society had made such advance in the art of producing goods that all requisites for human existence and progress could be produced without requiring the unceasing toil of the vast majority. That time has come. It is now easy to produce all the requirements of civilization and at the same time to leave leisure to each one to make the most of himself. Aristotle, in defending slavery, uttered words which sound almost like a prophecy. In his “Politics” (i. 4) he uses this language: “Every servant is an instrument more valuable than any other instrument. For if every instrument at command, or from foreknowledge of its master’s will, could accomplish its special work—if the shuttle thus should weave and the lyre play of itself—then neither would the architect want servants nor the master require slaves.” These remarks seem to contain a dim foreboding of the marvellous invention of machinery which has taken place in this age, and has substituted iron and steel for bone and muscle.

A feudal aristocracy was once required to protect and guide industry and agriculture. The growth of the bourgeoisie in the cities finally rendered feudalism an antiquated institution, and it had to make way for the third estate, under whose guidance wealth has increased most marvellously and laborers have been gathered together and organized. But the bourgeoisie has fulfilled its mission. It is now but a hinderance and an obstacle. The repeated crises and the continual concentration of property in the hands of a few mammoth millionaires prove conclusively that they are not equal to the task of leadership. The time has arrived when the proletariat, the fourth estate, must take the reins into its own hands. It is now to play the grand rÔle in the history of the world. “With the continually decreasing number of the magnates of capitalism, who usurp and monopolize all the advantages of the changed form of production, there is an accompanying increase in the mass of misery, of oppression, of bondage, of degradation, of exploitation; but there also arises a revolt of an increasing class of laborers, who have been schooled, united, and disciplined by the mechanism of the capitalistic processes of production. The monopoly of capital becomes a shackle to the method of production, under and with which it has grown up. The concentration of the means of production and the association of laborers reach a point where they are incompatible with their capitalistic shell. The shell is broken. The death-knell of capitalistic private property sounds. The expropriateurs are expropriated.”[175] Thus dawns a new and better era in the history of human development.

The key to Marx’s economic doctrines is his theory of value, with an exposition of which “Das Kapital” opens. It is based on Ricardo and Rodbertus, but is developed and defended in an original manner. He begins by separating value in use from value in exchange. Value in use is utility, arising from the adaptation of an article to satisfy some human need. Air, water, sunshine, wheat, potatoes, gold, and diamonds are examples. It does not necessarily imply exchange value. Many goods are very useful but not exchangeable, because they are free to all. Such is the case, usually, with water. On the other hand, no good can have value in exchange unless it is useful. Men will not give something for that which satisfies no want or need. Both value in use and value in exchange are utilities, but, as they differ, there must be some element in the one which the other does not per se contain. We find what that is by analyzing the constituent elements of different goods which possess exchange value. How can we compare them? Only because they contain some common element. But what is there in common between a horse and a house? You cannot say that this stick is longer than that sugar is sweet. Yet you say this house is worth ten times as much as that horse. Materials are not compared, nor stability with swiftness, nor color with color. The common element is found alone in human labor. You compare labor with labor. It requires ten times the amount of average social labor (gesellschaftliche Durchschnittsarbeitskraft) to secure such a house as it does to put one in possession of such a horse. Labor-time is the measure which we apply to different commodities in order to compare them. We mean thereby the ordinary average labor which is required at a given time in a given society. The average man is taken as a basis, together with the average advantages of machinery and the arts. This is average social labor-time. Complicated labor is simply a multiple of simple labor. One man’s labor, which has required long and careful training, may count for twice as much as ordinary, simple labor; but the simple labor is the unit.

This distinction between value in use and value in exchange enables us to understand how capitalists exploit their laborers. They pay for labor its exchange value, which depends upon the cost of labor or the standard of life of the laborer, as we have already seen in our examination of Rodbertus’s system. What it takes to support a laborer’s family is the exchange value of all the labor which can be got out of that family.

Let us suppose that a laborer requires each day goods whose value is denoted by A, each week in addition thereto goods denoted by B, besides quarterly needs which are satisfied by goods whose value is C. Then his support for each day will require the value of

Now, if it requires six hours to produce these goods, the laborer is producing surplus value if he labors more than that time. This the capitalist requires him to do, as he has hired his entire labor power. Under these circumstances, the laborer who works twelve hours a day for his employer is paid for six hours’ work, while he is robbed of the product of the other six hours’ labor. The capitalist is able to do this because he possesses the means of production. The laborer would gladly work without recourse to the capitalist, but he has not the means, the instruments with which to produce. He must accede to the terms of the capitalist or starve. The capitalist goes on the market and finds there the commodity, labor, for which he pays its value in exchange, as for any other commodity. But value in use does not depend upon value in exchange. The value in use of labor to the capitalist is all that he can squeeze out of it. The capitalist pockets the surplus value, and it becomes capital, enabling him to continue and enlarge his process of exploitation.

Let the line,

a——b——c,

represent the labor of twelve hours, b dividing it into two equal parts; a——b is necessary labor; b——c is unpaid labor productive of surplus value. It is the capitalist’s interest to extend b——c as much as possible, as that governs his accumulations. Hence, the efforts of employers to increase the length of a day’s labor; hence, the efforts of employees to shorten a————c, as they thereby diminish the amount of unpaid labor, of whose value they are robbed.

This enables us to comprehend the significance of Marx’s definition of capital, which is as follows: “A negro is a negro. In certain relations he becomes a slave. A cotton-spinning-machine is a machine for spinning cotton. It becomes capital only in certain relations. Capital is a social relation existing in the processes of production. It is an historical relation. The means of production are not capital when they are the property of the immediate producer. They become capital only under conditions, in which they serve at the same time as the means of exploiting and ruling the laborer.... The foundation of the capitalistic method of production is to be found in that theft which deprived the masses of their rights in the soil, in the earth, the common heritage of all.”[177] That is to say, Marx limits the name capital to economic goods in the hands of employers.

The capitalist buys the commodity labor (l), for money (m), and sells its product for more money (m+). The formula of capitalistic production is therefore m-l-m+. In the socialistic state, the +, surplus value, vanishes. The entire product belongs to the producer. If he exchanges it for other products by means of money which must be based on labor-time—labor-time money—the formula will be c-m-c. Money becomes simply a medium of exchanging commodities (c) of equal value. The only source, then, of obtaining the fruits of labor will be—labor, physical or mental, but always labor of some kind or another. Idlers will disappear from the earth. The race of parasites will become extinct.

One of Marx’s most important doctrines is his theory of crises. During prosperous times manufacturers employ all the men, women, and children who will work. The laboring classes prosper, marriage is encouraged, and population increases. Suddenly there comes a commercial crisis. The greater part of the laborers are thrown out of employment, and are maintained by society at large; that is, the general public has to bear the burden of keeping the laborers—the manufacturer’s tools—for their employer until he may need them again. These laborers without work constitute an army of reserve forces for the manufacturer. When times begin to improve, he again gradually resumes business, and becomes more prosperous. The laborer’s wages have previously been reduced on account of hard times, and the manufacturer is not obliged to raise them, as there is a whole army in waiting, glad to take work at any price. “If a surplus labor population is a necessary result of the accumulation or the development of wealth on a capitalistic basis, this surplus population is in turn a lever of capitalistic accumulation. It forms an always ready, industrial reserve army which belongs as absolutely to capital as if it had been at the expense of raising it.... Surplus capital presses forward with frenzy into all established branches of production, whose market suddenly widens, and into new ones, as railroads, etc., the need of which springs from this development. In all such cases must large masses of men suddenly, and without loss to the leaders of production in other places, be ready to be employed at the important point. These masses are furnished by the surplus population.”[178]