The Recognition of Labor as a Commodity

In Germany, reflection on market society included from the outset production based on the purchase of labor through the wage contract. It began not just with liberty of trade in manufactures, as in Britain, but with the full regime of capitalism, in keeping with the simultaneous creation of formal markets in wares and in labor power.^[34] German economists who interpreted the emergence of industrial liberalism in the first decades of the nineteenth century appropriated many of Smith's insights but resold them by casting the role of labor to conform with the genesis of wage labor in Germany.^[35] Long before the extensive development of the factory system in their coun-

try, German observers of the market were occupied with a distinctive apparition of labor as a commodity which eventually emerged on the factory shop floor itself.

A survey of market theories in Britain can sight the pinnacles of Smith and Ricardo, but the terrain in Germany shows few towering peaks. If German economists of the period did not cast a long shadow, they still serve as indicators of the rise of contrasting economic assumptions. One of the first notable German treatises that presented an alternative to the British appreciation of labor came from the pen of Ludwig Jakob, a professor of philosophy at the University of Halle.^[36] In a work published in 1805, Jakob adopted Smith's formulation of the labor theory of value, but already with modification. Smith, he noted perceptively, mistakenly identified the wage for labor with the quantity of labor delivered.^[37] "It is not what the worker receives for his labor that forms the measure of exchange value," he wrote in the 1825 edition, "but what it has cost him in the expenditure of power."^[38] Jakob was ready to consider the value of a good as determined by the expenditure of labor upon it, apart from the cost of the labor or from its embodiment in the product. In his view, labor did not identify the real values which inhere in the goods; it approximated the outcomes of trading between individuals due to individuals' strategizing.^[39]

Jakob's work reveals the transcription of British terms for labor and work into the German field of meanings. When the Germans first transmitted Smith's wondrous ideas into their own language, their translators had had to improvise in two ways: they resorted to the adoption of several words not ordinarily used in German, and they attached more restricted meanings to current words.^[40] The word work , however, they did not transcribe. It was not that they merged it with their word for labor (Arbeit ) or that they tried out

a simple surrogate. They wrote around it. When Smith said, "There may be more labour in an hours hard work than in two hours easy business," the German translator rendered it something like this: "There may be more labor [Arbeit ] in one hour's difficult manifestation of power [angestrengten Kraftäusserung einer Stunde ] than in two hours' easy business."^[41] Jakob adopted this mode of expression for the work activity as part of his system. In British thinking, work could appear in a system of political economy because it became abstract labor only when examined from the perspective of the later moment of exchange. In Jakob's picture, however, the work activity itself, from the beginning of the process, is seen as abstract labor because it is the expression of a general power. This point of origin, rather than the exchange process, makes heterogeneous kinds of work comparable as abstract labor. Jakob referred to labor as the activation of a latent capacity, defining it as "the activation of human power" and measuring its quantity by "the sacrifice of power."^[42]

The difference in Jakob's approach was not only a matter of vocabulary. In his discussion of the employment relation Jakob says that the worker does not merely sell his labor—as Smith, looking at the output, would have expressed it—but "hires out his diligence [Fleiss ]" to the capitalist or landowner.^[43] Jakob's refusal to identify "labor" with a material product showed up as well in the contrast he drew between the functions of factory owners and of landowners. "The whole difference [between them]," he said, "comes down to the simple fact that the landowner is master of external nature, the factory owner master of internal nature."^[44] Whereas the landowner made his profit through his control of the goods of the earth, the factory owner made his profit through his control of indispensable human labor. If Jakob had thematized the difference between these economic agents by drawing the conventional distinction between land and capital, as happened in British economics, this would have directed attention to differences in the material resources under their command. He emphasized instead the factory owner's disposal over human powers, which he saw as a "nonmaterial" good of an entirely different dimension.

Before long, others used this alternative concept of labor as a commodity to articulate a real theoretic break. Johann Lotz, a contemporary of Jakob's, rejected labor as a measure of the values of goods in the market. In 1811 he emphasized that "the products of labor are always different from the labor itself.  . . . Labor," he declared, "is something purely immaterial." The distinction between use value and exchange value, a pairing the British could imagine applying only to finished commodities, he extended to the labor potential hired by the employer. "Viewed as a productive power," Lotz concluded, "it [labor] is always a capacity, a good of high value, but only of use value, not of exchange value."^[45] He reasoned that labor could not be used to compare products because the worker's personal expenditure of effort was an immeasurable subjective experience.^[46] Lotz's inference, though crudely psychological, betrays the assumption that the value of labor had to be compared at its moment of origin in the production process or not at all. Wilhelm Roscher, in his classic history of German economic theory, completed in 1874, ranked Lotz's rejection of "real" values standing behind prices as an important contribution to the evolution of the country's "national economic grammar."^[47] For emphasis on the concrete moment of using labor power led German scholars in the first half of the nineteenth century to abandon Smith's faith that labor establishes a metric for product values.

The insight that labor was conveyed to the employer in the form of a capacity became commonplace in the writings of later German economists. Hans Mangoldt, an economist who after midcentury became particularly well known for his analysis of entrepreneurs' organization of the production process, said that "the wage is the compensation for the use of one's personal labor power that has been entrusted to another person."^[48] He referred to hiring labor as "acquiring the disposition over another person's labor power," a phrase which, in keeping with Mangoldt's approach, highlighted the entrepreneur's consumption of a potential.^[49] Friedrich Hermann,

a major expounder of German business economics, distinguished between labor power, the commodity of "the highest-use value," and labor, "the main component of most goods."^[50] The Germans' separation of labor from its product was a prerequisite for talking about the "use value" of labor at all. The British could not have theorized about the use value of labor purchased by an employer, because this would have required them to treat the power behind the activity as the actual thing that could be bought and "used" by the employer.

The distinction between labor and labor power which emerged in the Germans' lofty treatises paralleled the development of popular economic thinking in their country. Workers' descriptions of employment highlighted the renting of their labor capacity. For example, Die Verbrüderung , the newspaper of the workers' associations during the revolutions of 1848, complained that workers "chained to the power of capital have to hire out their physical or mental powers."^[51] In a petition submitted to authorities in 1850, the weavers from a town near Potsdam called employers of wage labor "renters of labor power."^[52] The language of formal remonstrance was no different from that of everyday expression, for a textile worker interviewed by the police in 1858 for having left his job described wage labor as "renting yourself out."^[53] The assumption that workers put their person in the hands of their employer formed part of the popular understanding of the vending of labor as a commodity.^[54]

The evolution of everyday concepts in economic life can be traced through the introduction of new terms into the German language. The translations of Adam Smith for popular consumption at the beginning of the century lacked the term Arbeitskraft ("labor power") to translate the employer's purchase of labor, as well as the plural, Arbeitskräfte , to refer to the work force at large.^[55] These terms did not appear in dictionaries of the time.^[56] Yet by 1854, when the Brothers Grimm released their German dictionary, they included an entry for Arbeitskraft. They did not define it, but they illustrated its usage: "One views a person with his labor power as a commodity, whose price rises and falls with the level of supply and demand."^[57] The Grimms' example emphasizes that the term is linked to the commodification of labor and did not represent a locution, inherited from the precapitalist era, that highlighted merely a person's natural potential or concrete ability to work.^[58] What is more, their explanation specified that the commodity inheres in the person of the seller: the producers themselves, not simply their wares, are inserted into the marketplace. The Grimms' compilation, written to codify the national language, scarcely represents a source that can be faulted for its inclusion of arcane vocabulary. To the contrary, scholars have criticized the work for its admission only of commonplace words.^[59]

The public's adoption of the term labor power in the first decades of the nineteenth century indicates that the Germans, in contrast to the British, felt a need to mark the workers' contribution in the employment relation by a term more precise than the existing terms for labor available

in their language.^[60] May we say that thought impressed itself on language, not language on thought? No lexical or semantic obstacles blocked a similar course of development in Britain. Indeed, the British already applied market terms to human qualities by referring to such intangibles as popular "favor" and "opinion" as commodities, since they represented assets that could bring monetary gain.^[61] By the nineteenth century the Germans had forgotten lexical resources which they might have employed to designate the contrast between materialized labor and the execution of work. In the period of Middle High German some writers had used the terms Werk and Arbeit to distinguish between the product of labor and the activity.^[62] But in modern German this distinction was no longer sharp enough to enable people to take over the simple word Arbeit to signify the disposal of a person's labor power in the market.^[63] The economic agents had to start anew.

The German invention of a fresh term rather than rearranging the connotations of an old one was in keeping, perhaps, with the more thoroughgoing break that the simultaneous transition to formal markets in finished articles and in labor power in Germany entailed. Workers themselves used the term Arbeitskraft for the commodification of labor. A workers' newspaper published in Chemnitz in the revolutionary days of 1848 said that if property relations were not governed by the market, the workers' "property, labor power" could not be assigned a value.^[64] Wurm's German dictionary, published in 1858, emphasized the context of market relations when it asserted that the term Arbeitskraft refers "especially to the strength of the commercial worker himself." Wurm also offered a forceful example of usage: "The rich factory masters, who exploit the material labor power of the

people."^[65] German society did not wait for Marx to use labor power to describe the extraction of profit; it surfaced in the vernacular beforehand and became commonplace during the revolution of 1848.^[66]

The coining of the new term Arbeitskraft , its conscious linkage with the new market regime, and the timing of its appearance show that the difference in British and German expressions was not just a matter of linguistic form, of superficial words used to refer to the execution of work in any economic context. It represented a genuine difference in concepts of employment viewed under a capitalist regime. Where labor was not discussed in the context of commercial relations, other terms could be called to service. In Germany, an alternative locution, Menschenkraft , referred to the contribution of labor that was not necessarily exchanged as a commodity in the market. For example, a Saxony business journal said that good soil, fine weather, and "human power" (Menschenkräfte ) went into growing raw materials.^[67] The German labor movement during the revolution of 1848 used the general term labor to refer to the workers' contribution to society, but the term Arbeitskraft to describe the use of labor in production.^[68]

The innovative nomenclature for labor as a commodity appeared in the writings of factory directors and other capitalist entrepreneurs concurrently with its appearance in the popular media. On the eve of the revolution of 1848, employers defined the jobless in terms that specified exactly what the subordinates were trying to sell: they were people who "cannot valorize their labor power."^[69] Similarly, in 1861 a Saxony newspaper described unemployed wage workers as persons who "let their labor power lie fallow."^[70] In the German textile trade the expression labor power appeared in the 1860s in the earliest technical guides to the establishment of a mill.^[71] Employers and workers moved toward the locution at the same juncture in history, neither ahead of the other.^[72] Despite all the differences between them, both groups responded to a shared societal condition, the regulation of social relations through formally free commerce in human work activity.

The basic difference in the way German and British economic agents conceived of the transmission of labor influenced their views of labor's contribution to national wealth and to employers' profits. Adam Smith created a divide between manufacturing labor, which he designated productive because it was fixed in a product, and services, which he called unfruitful because they did not terminate in a durable good.^[73] Ricardo excluded serv-

ices from his model altogether. But in the early German reviews of the Wealth of Nations , including the very first, in 1777, German commentators took issue with Smith's separation of productive labor from the delivery of a service.^[74] Friedrich Hermann, the theorist who built a new renown for German political economy, illustrated in 1832 the German method for equating the two: whether hiring workers or servants, an employer offers money in return for disposition over labor capacity. "The pay of the master [Brodherr ] goes to the worker, of course; but in return," Hermann reasoned, "the activity [Tätigkeit ] of the worker comes under the authority [Gewalt ] of the employer."^[75] In the second edition of this book, Hermann said, "We will no longer distinguish rigorously between service and labor."^[76] Hermann could carry out this merger of the two categories because he thought that in both instances the worker sold control over the execution of the activity rather than transferring materialized labor.^[77]

British economists defined the efficiency of labor in terms of the employer's ability to obtain produce from his workers at a certain price.^[78] German economists, by contrast, defined it in terms of the difference between the use value of labor and its exchange value, that is, in terms of the distinct process of converting labor power to an output. The distinction allowed them to see that the production carried out by "labor" could be worth more than the price the employer [Lohnherr ] had paid for the right to use the "labor." For example, Karl Heinrich Rau, the eminent synthesizer of economic ideas during the 1820s, thought that although labor was not a "material good," it was something from which the employer could acquire unequal amounts of value depending on how he used it.^[79] In the case of personal services, Rau said, labor "usually is to be had for a price which stands far under its value."^[80] Rau contended here that labor's price in the market could stand below what the employer could get out of the use value of the labor. Such a proposition the British economists could not have entertained, since they did not look at the use made of labor but only at labor's exchange via finished commodities. Rau's own way of interposing a separate

moment for labor's utilization also entailed a theoretical loss, however. In contrast to the British, Rau declined to put forward any important propositions about the relation between wages and the exchange value of the goods produced.^[81]

The Germans' conception of the work activity opened up wider possibilities for envisioning the source of the employer's profit. British economists saw labor as a kind of intervening variable that allowed the capitalist to expand his capital. It operated as a requisite that allowed the investment to yield profit, not as an independent source of that profit. The German economists, by contrast, saw the purchase of labor as potentially realizing a profit quite apart from the earnings on the capital invested. Hans Mangoldt, for instance, argued that the employer made a profit not only by putting his capital to work and not only by acquiring part of the worker's produce in return for the use of the capital stock; he also made a profit by renting labor. The employer engages labor, Mangoldt said, only if he "is in a position to turn the hired labor into a value greater than he has to pay for it himself."^[82] Roscher believed that workers got less pay for the same output if they sold their labor to an employer rather than directly to consumers in the form of either a product or a service.^[83] In the German tradition, the use of labor in the production process, leaving aside the return on capital invested, generated surplus value.

The German economists not only developed their ideas with reference to the British, but they also offered penetrating textual comparisons between the British concept of labor and their own. Theodor Bernhardi, writing in 1847, thought that part of the difference grew out of the infelicities of the English language. The word production , he said, had a "double sense" in classical English political economy. It referred to the mathematical function of adding units together to yield a result. This described the process of adding together the market prices of inputs to raise the exchange value of a good. The term could also refer, however, to the physical process of creating a good. By using the word production in both these senses, he said, Smith and Ricardo avoided considering labor from the distinct vantage points of commercial exchange value and concrete use

value and overlooked divergences between them.^[84] Smith, Bernhardi said, theorized labor only from its appearance in the realm of exchange, so that "labor is immediately conceived as a product."^[85] He cited instances from the Wealth of Nations where Smith collapsed the process of production into that of exchange by equating the price of labor with the quantity of labor delivered. He objected in particular to Smith's argument that "labour was the first price, the original purchase-money, that was paid for all things."^[86] To Bernhardi, this formulation inappropriately turned every producer into a merchant: the employment of natural materials was equated with a commercial exchange. Bernhardi found it incredible that British political economy neither anticipated German innovations nor incorporated them after the fact. "How could reflection on the matter not lead to the distinction between the price of labor and its value?" he concluded. "It seems almost inconceivable that, based on this point, an entire revolution of the whole doctrine did not come about."^[87]

Readers in the twentieth century can nod their heads in assent, for they know that Bernhardi foretold the precise route by which classical political economy would finally be subverted. As the inheritors of this historical process, we believe that the perpetrator was another scholar of German origin—Karl Marx. How does the prior evolution of German economic doctrines in the first half of the nineteenth century illuminate the emergence of Marx's seditious theory? Marx did not arrive at his insights purely by applying the force of logic upon British sources. Nor did he knowingly draw upon the traditions of German economic doctrine. History transpires in a more complex and surprising fashion. The answer not only demonstrates how Marx's analysis of labor and profit emerged but helps us recover the historical processes by which the popular concept of labor as a commodity appeared in Germany.