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-
[34] Maurice Dobb, Studies in the Development of Capitalism (London: George Routledge & Sons, 1946), pp. 7–9.
[35] At first, however, German writers tried to counterfeit his currency. German economists in the opening years of the nineteenth century could acquire a reputation in their country by demonstrating an ability to recapitulate, accurately or not, Smith's expositions. Christian Jacob Kraus, a respected colleague of Immanuel Kant's, was the first of the German professors to give lectures that belong to the modern discipline of economics. Kraus also achieved a measure of prominence for his influence upon the Prussian administrators who eliminated landlords' rights to tithes in labor in 1807. Hasek, op. cit., p. 96. William Reddy emphasizes Kraus's role in Money and Liberty in Modern Europe (Cambridge: Cambridge University Press, 1987), p. 82. In Staatswirtschaft , his treatise on political economy, Kraus reproduced not only Smith's ideas but his sentences, chapter headings, and anecdotes (including stories which had no particular bearing on Germany). See Staatswirtschaft , Volume I, composed before 1807 (Breslau: G. Schletter, 1837): p. xxvi has the same chapter headings; p. 37 revisits the pin factory; p. 22 borrows the same sentences, as well as some vocabulary unusual for German, such as "frivolste Professionen." By our standards he committed plagiarism; for contemporaries who were grappling with this new school of thought, including those who realized Kraus acted only as a transmitter, Kraus seemed brilliant. The two other German economists who published the first treatises on political economy, Georg Sartorius and August Lueder, advertised their debt to Smith by choosing book titles in which they declared that they had "worked out" Smith's ideas. Sartorius, op. cit.; Lueder, op. cit. Johann Heinrich von Thünen described his own excitement on reading Smith for the first time. Der isolirte [sic ] Staat , Part II (Berlin: Wiegandt, Hempel & Parey, 1875), p. 61 The change in the reception of Smith's ideas indicates the depth of change that economic liberalization since 1776 had effected.
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
[36] Wilhelm Roscher evaluates Jakob's contribution in Geschichte der National-Oekonomik in Deutschland (München: R. Oldenbourg, 1874), pp. 688 ff.
[37] Cited in Roscher, op. cit., p. 690. Here Jakob anticipated by fifty years the critique of Smith that Marx offered. See Grundrisse der Kritik der politischen Ökonomie (Berlin: Dietz Verlag, 1974), p. 232.
[38] Ludwig Jakob, Grundsätze der National-Ökonomie; oder, Theorie des National-Reichtums (Halle: Friedrich Ruff, 1825), p. 122. The choice appears in the first edition of 1805: Ludwig Jakob, Grundsätze der National-Ökonomie oder National-Wirthschaftslehre (Halle: Ruffscher Verlag, 1805), pp. viii, 68.
[39] Jakob reasoned that labor serves as an adequate measure of value because people on average are likely to labor only at occupations through which they can obtain an equivalent amount of labor from others. Op. cit., 1805, pp. 68–72; op. cit., 1825, p. 115. This represented a standard German interpretation of Smith. See Friedrich Hermann, Staatswirtschaftliche Untersuchungen (München: Anton Weber, 1832), p. 133.
[40] Erämetsä, ibid.
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.
[41] From the translation by Christian Garve, op. cit., p. 53.
[42] These phrases occur on op. cit., 1825, pp. 69, 122, 199. "For it [labor] is only an action, not a thing." Op. cit., 1805, p. 30.
[43] Op. cit., 1825, p. 140. Jakob also asserted that the worker does not receive a wage from a particular employer merely for his "labor," the actually executed work, but for "the sake of his willingness to labor." Op. cit., 1825, p. 153.
[44] Op. cit., 1825, p. 247.
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,
[45] Revision der Grundbegriffe der Nationalwirtschaftslehre , Volume One (Leipzig: Sinner, 1811), pp. 101–105; quotation is on pp. 102–103.
[46] Op. cit., p. 61.
[47] Op. cit., p. 666.
[48] Grundriss der Volkswirtschaftslehre (Stuttgart: J. Engelhorn, 1863), p. 122. For Mangoldt's subsequently published lectures, see ibid.
[49] Op. cit., 1863, p. 122. Sale of "the disposition over [one's] labor power" was a common phrase for employment. Georg Hanssen, "Ueber den Mangel an landwirtschaftlichem Arbeitspersonal," Archiv der politischen Oekonomie und Polizeiwissenschaft (Heidelberg: C. F. Winter, 1844), p. 154.
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]
[50] Staatswirtschaftliche Untersuchungen (München: Fleischmann, 1870), p. 107 (written in the 1850s but published posthumously). Hermann reserved the term labor power (Arbeitskraft ) for the ability of a worker to produce goods over the duration of his lifetime (p. 13). See also Karl Heinrich Rau, Grundsätze der Volkswirtschaftslehre (5th ed. Heidelberg: C. F. Winter, 1847), p. 234. Sartorius had broached the idea of a "use value" of abstract "labor" in Germany as early as 1806. Georg Sartorius, Elemente des National-Reichtums , Part One (Göttingen: Johann Röwer, 1806), p. 30 The distinction between labor's value in use and in exchange was to become a stock assumption in Germany even among insipid moneymakers unconcerned with the subtleties of theory. The Chamber of Commerce in the textile town of Greiz proclaimed in 1906 that "although the moral value of labor is the same everywhere, its use value and its exchange value are diverse." Reussische Volkszeitung , September 13, 1902.
[51] Die Verbrüderung , October 3, 1848. Analogously, see Freiheit, Arbeit , February 11, 1849, p. 36.
[52] See Zentrales Staatsarchiv Merseburg, Rep. 120, D V Fach 1, Nr. 32, Vol. 1, Nr. 605, February 19, 1850. "Bericht der Kommission zur Untersuchung des Nothstandes der Spinner und Weber in Schlesien, auf dem Eichsfelde und in Westfalen" (p. 10 of report).
[53] Staatsarchiv Dresden, Amtshauptmannschaft Chemnitz, Nr. 16, p. 92, June 7, 1858. Bebel later made a similar observation: "Insofar as the worker sells his labor power for a certain time period, to a certain extent he includes himself in the sale." August Bebel, Gewerkschaftsbewegung und politische Parteien (Stuttgart: J. H. W. Dietz, 1900), p. 14.
[54] J. Georg Eccarius, in his discussion of "labor as a commodity," emphasized that the worker "sells his own personal self." Eines Arbeiters Widerlegung der national-ökonomischenLehren John Stuart Mills (Berlin: Buchhandlung des 'Vorwärts,' 1888), p. 34. For an early factory ordinance relying on this terminology, see "Dienst-Anstellungs-Vertrag," in Das Volk: Organ des Central-Komitees für Arbeiter , July 4, 1848, p. 55.
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
[55] See the Christian Garve edition, op. cit.
[56] Johann Adelung, Grammatisch-Kritisches Wörterbuch der hochdeutschen Mundart (Leipzig: J. G. I. Breitkopf, 1793), Part One; Theodor Heinsius, Volksthümliches Wörterbuch der deutschen Sprache (Hannover: Hahn, 1818); Joachim Heinrich Campe, Wörterbuch der deutschen Sprache , Part One (Braunschweig: In der Schulbuchhandlung, 1807); Encyclopädisches Wörterbuch , Volume I (Berlin: Zeitz, 1793).
[57] Jacob Grimm and Wilhelm Grimm, Deutsches Wörterbuch von Jacob Grimm und Wilhelm Grimm (Leipzig: S. Hirzel, 1854), Volume One, p. 545.
[58] For another example of passages that use the term Arbeitskraft only in the context of business relations, see Versammlung deutscher Gewerbetreibender, Bericht über die Verhandlungen in der Versammlung deutscher Gewerbetreibender in Leipzig am 7. Oktober 1844 (Leipzig: Friedrich Nies, 1844), p. 13. "The free valorization of free 'Arbeitskraft'" became a philistine cliché. Allgemeine deutsche Arbeiter-Zeitung , September 24, 1865, p. 792.
[59] Alan Kirkness, Geschichte des deutschen Wörterbuchs 1838–1863 (Stuttgart: S. Hirzel, 1980), pp. 15–16.
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
[60] The entry for Arbeitskraft in Wilhelm Hoffmann's dictionary emphasizes that it is the "forces or force suitable for carrying out labor." See Wilhelm Hoffmann, Vollständiges Wörterbuch der deutschen Sprache , Volume One (Leipzig: A. M. Colditz, 1853), p. 215. For an example of the adoption of the term in popular journals to describe commercial employment, see Nacht-Eilwagen Volume XVI, Nr. 28 (July 1845), p. 110. As European scholars were to note, economic agents in Germany also distinguished themselves by using the term Arbeitslohn to distinguish the recompense of wage labor from the remuneration received from the sale of labor's products. Riccardo dalla Volta, Le Forme del Salario (Firenze: Fratelli Bocca, 1893), p. 62.
[61] Oxford English Dictionary , Volume III, p. 564.
[62] Ortrud Reichel, "Zum Bedeutungswechsel der Worte 'Werk' und 'Wirken' in as, ahd, und mhd Zeit," diss., University of Tübingen, 1952, p. 92.
[63] Meta Krupp, "Wortfeld 'Arbeit,'" in Sprachwissenschaftliches Colloquium, editor, Europäische Schlüsselwörter: Wortvergleichende und wortgeschichtliche Studien (München: Max Hueber Verlag, 1964), p. 260.
[64] Der Arbeitsfreund , April 11, 1848, pp. 245–246.
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]
[65] Christian Friedrich Ludwig Wurm, Wörterbuch der deutschen Sprache von der Druckerfindung bis zum heutigen Tage , Volume One (Freiburg in Breisgau: Herder, 1858), p. 509.
[66] Freiheit, Arbeit , February 22, 1849, p. 48. In 1848 W. Dieterici referred to the "reigning concepts of the threat of capital and its ascendancy over labor power." Über Preussische Zustände, über Arbeit und Kapital (Berlin: Ernst Siegfried Mittler, 1848), "Preface." Consider also Deutscher Handwerker- und Gewerbe-Congress, Entwurf einer allgemeinen Handwerker- und Gewerbe-Ordnung für Deutschland: Berathen und beschlossen von dem Handwerker- und Gewerbe-Congress zu Frankfurt am Main im Juli und August 1848 (Hamburg, 1848), which defines the capitalist as someone who "profiteers from labor power" (p. 5).
[67] Gewerbe-Blatt für Sachsen , May 16, 1839. See also Gewerbe-Blatt für Sachsen , February 9, 1841, p. 61; Zentrales Staatsarchiv Merseburg, Rep. 120, B I 1 60, Volume 7, January, 1849, p. 108; Sächsische Landesbibliothek, Nationalversammlung, Volkswirtschaftlicher Ausschuss über Petitionen von Webern und Spinnern, "Beilage II zum Protokoll der 184. öffentlichen Sitzung vom 12. März 1849." For examples of workers' journals using Arbeitskraft only in the context of commercial employment of wage labor, see Der Arbeitsfreund , August 19, 1848, title page. Commercial experts who applied the term Menschenkraft to labor in general believed workers should learn that the proper designation for labor as a commodity was Arbeitskraft. V. Funk, Arbeiter-Katechismus (Giessen: Emil Roth, 1881), p. 47. On the other hand, Marx himself used the term Arbeitskraft in two senses: to refer not only to the social construct of labor as a commodity but to a person's "natural" ability to work, "an expression of a natural force." "Randglossen zum Programm der deutschen Arbeiterpartei," printed in Karl Marx and Friedrich Engels, Briefwechsel mit Wilhelm Bracke 1869–1880 (Berlin: Dietz Verlag, 1963), p. 49. In dissecting Marx, however, German exegetes reasserted the distinction between Naturkraft , the strength of the human organism, and Arbeitskraft , the expenditure of social labor under capitalism. Franz Petry, Der soziale Gehalt der Marxschen Werttheorie (Jena: Gustav Fischer, 1916), p. 22.
[68] Consider the use of the term Arbeitskraft in the Arbeiter-Blatt Nr. 3 (October 1848).
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-
[69] Gustav Dörstling, Die Arbeitgeber und die Löhne der Arbeiter (Chemnitz: J. C. F. Pickenhahn & Sohn, 1847), p. 12.
[70] "Seine Arbeitskraft zeitweiligbrach gelegt." Sächsische Industrie-Zeitung , January 4, 1861, p. 1.
[71] J. A. Hülffe, Die Technik der Baumwollspinnerei (Stuttgart: J. G. Cotta, 1863), p. 339.
[72] German employers could make the same distinction between the value and the price of labor power that workers did. See the discussion of value in Der Arbeitgeber , January 6, 1866.
[73] Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Chicago: University of Chicago Press, 1976 [1776]), pp. 351–352. For the views of Smith's successors, John Stuart Mill, Essays on Some Unsettled Questions of Political Economy (2d ed. London: Longmans, Green, Reader & Dyer, 1874), pp. 84–86. For a history of the distinction, consult Mark Blaug, Ricardian Economics: A Historical Study (New Haven: Yale University Press, 1958), pp. 176–177. Mill says that labor devoted to training people is productive even if it does not accumulate in a material product, because the resulting skill has "a certain durability." Principles of Political Economy (London: Longmans, Green & Co., 1920), p. 47 note. Senior objects to the division between manufacturing labor and the provision of a service. But his reasoning is significant: he thinks they are ultimately similar because even services create products in some form. An Outline of the Science of Political Economy (New York: Farrar & Rinehart, 1939 [1836]), pp. 51–53. John Ramsay McCulloch objected to Smith's claim that only labor deposited in a material ware was productive, but, unlike German theorists, he declined to fuse manufacturing and service employment in a single category as the delivery of a service potential. John Ramsay McCulloch, introduction to Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Edinburgh: Adam Black and William Tait, 1828), Volume One, p. lxxi.
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
[74] Roscher, "Die Ein- und Durchführung," op. cit., p. 7.
[75] Op. cit., 1832, p. 33.
[76] Op. cit., 1870, p. 167.
[77] On the merger of manufacturing labor and services in German economic thought, see Carl Rotteck and Carl Welcker, editors, Das Staats-Lexikon , Volume One (Altona: J. F. Hammerich, 1834), pp. 634, 639.
[78] Wealth of Nations , op. cit., pp. 183–184; Mill, Principles , op. cit., p. 419.
[79] Rau, op. cit., pp. 234–235.
[80] Ibid.
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
[81] He said only that the exchange value of those goods had "an influence" on the price of the labor hired to make them, because it set an upper limit against which wages could not rise without bankrupting the employer. Ibid., and Autorenkollektiv, op. cit., pp. 442 ff.
[82] Grundriss , op. cit., p. 158.
[83] Wilhelm Roscher, Grundlagen der Nationalökonomie (Stuttgart: J. G. Cotta, 1922), p. 495.
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.