The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Vulgar Economy

  • Krishna Bharadwaj
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_1389

Abstract

Karl Marx used the epithet ‘vulgar economy’ to describe certain analytical positions which, beginning in classical political economy in the works of Malthus, Say, some of the post-Ricardians including John Stuart Mill, developed eventually into an ‘analytical system’ (as in Say) and took an ‘academic form’ (as in the writings of Roscher, among others) (see Theories of Surplus Value, Vol. III, pp. 500–502). The epithet was not simply a derogatory label but had thus a specific analytical content and significance. Marx contrasted sharply the ‘vulgar’ from the classical political economy, the latter comprising of ‘all the economists who since the time of W. Petty have investigated the real internal framework of bourgeois relations of production’ (Capital, Vol. I, pp. 174–5). Vulgar economy, while drawing upon the materials provided by scientific political economy – and therefore lacking in originality – ruminated instead over the ‘appearances’. Marx saw, in the capitalist production, ‘more than in any other’, a ‘reality’, ‘the inner physiology of the system’ – which was captured in scientific political economy, in their analysis locating the generation of surplus in production, in their theory explaining the manner in which surplus is appropriated by the owners of the means of production and distributed as the tripartite revenues of rents, profits and wages, and which brought to light the inevitable and endemic conflicts of class interests and thence the contradictions incipient in the processes of generation, distribution and accumulation of surplus. Marx was himself to build his theory on the rudiments provided by political economy. However, this ‘reality’ hides behind ‘appearances’ which assume forms and emerge as esoteric concepts and categories of analysis pertaining to the sphere of exchange where ‘Freedom, Equality, Property and Bentham’ reign supreme; exchange appears as between ‘equivalents’, governed entirely by competition on the market. Also, the true social relations take fetishistic forms in ‘false consciousness’, forming the subjectivist perceptions of the participant agents of production. Marx attacked vulgar political economy for remaining at the level of these ‘appearances’; since these often reflected perceptions of the bourgeois agents of production, vulgar economy tends to defend, rationalize and therefore to serve the interests of the bourgeois class. While Marx thus recognized, in vulgar political economy, an explicit or implicit ideological function, providing apologetics for the bourgeoisie, his critique was not confined only to the ideological; he painstakingly traced its analytical roots and development and criticized the logical inconsistencies and ambivalences of their theoretical positions.

Karl Marx used the epithet ‘vulgar economy’ to describe certain analytical positions which, beginning in classical political economy in the works of Malthus, Say, some of the post-Ricardians including John Stuart Mill, developed eventually into an ‘analytical system’ (as in Say) and took an ‘academic form’ (as in the writings of Roscher, among others) (see Theories of Surplus Value, Vol. III, pp. 500–502). The epithet was not simply a derogatory label but had thus a specific analytical content and significance. Marx contrasted sharply the ‘vulgar’ from the classical political economy, the latter comprising of ‘all the economists who since the time of W. Petty have investigated the real internal framework of bourgeois relations of production’ (Capital, Vol. I, pp. 174–5). Vulgar economy, while drawing upon the materials provided by scientific political economy – and therefore lacking in originality – ruminated instead over the ‘appearances’. Marx saw, in the capitalist production, ‘more than in any other’, a ‘reality’, ‘the inner physiology of the system’ – which was captured in scientific political economy, in their analysis locating the generation of surplus in production, in their theory explaining the manner in which surplus is appropriated by the owners of the means of production and distributed as the tripartite revenues of rents, profits and wages, and which brought to light the inevitable and endemic conflicts of class interests and thence the contradictions incipient in the processes of generation, distribution and accumulation of surplus. Marx was himself to build his theory on the rudiments provided by political economy. However, this ‘reality’ hides behind ‘appearances’ which assume forms and emerge as esoteric concepts and categories of analysis pertaining to the sphere of exchange where ‘Freedom, Equality, Property and Bentham’ reign supreme; exchange appears as between ‘equivalents’, governed entirely by competition on the market. Also, the true social relations take fetishistic forms in ‘false consciousness’, forming the subjectivist perceptions of the participant agents of production. Marx attacked vulgar political economy for remaining at the level of these ‘appearances’; since these often reflected perceptions of the bourgeois agents of production, vulgar economy tends to defend, rationalize and therefore to serve the interests of the bourgeois class. While Marx thus recognized, in vulgar political economy, an explicit or implicit ideological function, providing apologetics for the bourgeoisie, his critique was not confined only to the ideological; he painstakingly traced its analytical roots and development and criticized the logical inconsistencies and ambivalences of their theoretical positions.

For Marx, the significant achievement of scientific political economy was in tracing the source of surplus in production and identifying the role of labour as a cause of value and the source of surplus value. It grasped the ‘internal interconnections’ of capitalist production through recognizing the different roles that the ‘agents’ – land, capital and labour – played in the process of production and in generating value and the different principles by which their revenues were governed. It identified the constraint binding upon the wage – profit relation. In contrast, vulgar political economy adopted the ‘trinity formula’ concerning the form and sources of these revenues. Treated as having a symmetric coordinate status, land was seen as the source of rent and capital, of profits just as labour is of wages, it being held that the agents are all paid according to their productivity. Thus land as well as capital is as much a source of value and of surplus as labour. Thus ‘we have complete mystification of the capitalist mode of production, the conversion of social relations into relations among things’; to Marx, the entitlement to surplus in the form of rents and profits, originating from the property relations, is here confounded with the creation of surplus by the material means themselves. Further, through giving a symmetric role and status to the trinity, by envisaging their revenues as determined by the same process of competition, and independently of each other, a harmonious view of classes was constructed. This view, explaining distributive revenues in ‘doctrinaire language’ helped their theory to conform to the bourgeois perceptions: wages appeared as the competitive return to labour and, analogously, as Senior proposed, profits as the recompense for abstinence. The rise in distributive revenues of any one class, reflecting its enhanced productive contribution could not interfere with others’ revenues which were determined alike but independently.

Marx sees the roots of the later vulgar economy in certain ‘vulgar representations’ or ‘elements’ in classical political economy. While generously praising the masterly vision of Adam Smith for fathoming ‘the inner connection’ and, for the first time, describing and providing ‘a nomenclature and corresponding mental concepts’ for ‘the external, apparent forms of its life’, Marx criticizes, at length, an important ‘vulgar’ element in Smith: when Smith constructs the natural price of a commodity from adding up wages, rents and profits, determined independently of each other and separately, they become sources of value instead of having ‘a source in value’. After having revealed the intrinsic connection among wages and profits, Smith leaps into ‘the connection as it appears in competition’. Marx attaches a great historical significance to Ricardo, ‘for science’ in that he brought back ‘the inner connection – the contradiction between the apparent and the actual movement of the system and brought into the open the objective basis for the inescapable antagonism of class interests’.

This apart, Marx also discusses a number of other shortcomings of classical political economy that provided scope for vulgarization, such as their inadequate recognition of the historical and transient character of the capitalist mode, of the full implications of labour-power becoming a ‘commodity’ and of capital as a ‘social relation’ apart from its ‘material form’; of the processes of transforming surplus value into profits and of the intervention of money into barter and the evolution of its functions over the advancing stages of capitalist accumulation. All these inadequacies were exploited by vulgar political economy in building up a sanguine and harmonious view of the functioning and growth of the capitalist system, whereas Marx found the system ridden with internal contradictions and recurrent crises.

Marx traced the growth of vulgar political economy and its ascendancy over scientific political economy in terms of the concrete conditions of the historical stages of class struggle. He saw the period between 1820 and 1830 as the last decade of scientific activity when Ricardo’s theory was popularized and extended and when ‘unprejudiced polemics’ was possible. By 1830, the bourgoisie had conquered political power in France and England, their ascendancy over the landed interests was firmly established while the class struggle of labour was assuming threatening proportions. ‘It sounded the knell of scientific bourgeois economics. It was thenceforth no longer a question whether this or that theorem was true but whether it was useful to capital or harmful, expedient or inexpedient’ (Preface to the second edition, Capital, Vol. I).

Vulgar political economy itself passed through analytical stages in the period. Marx notices: ‘Only when political economy has reached a certain stage of development and has assumed well-established forms – that is, after Adam Smith – does … the vulgar element become a special kind of political economy.’ Thus, Say separates the vulgar notions in Smith’s work (such as the supply and demand determination of value) and puts them forward as a distinct system. Borrowing from the advancing political economy, vulgar economy also thrives: after Ricardo, particularly, the decline of his theory sets in; the erosion and obfuscation occurring in the hands of his own followers. The hostility to Ricardian theory was sharpened by the use made of labour theory by the utopian writers who, on the basis of their naive interpretation, advocated a radical change in social order. Vulgar political economy becomes increasingly apologetic, as in Bastiat, with the capital-labour confrontation emerging sharply in society, until it assumes a further ‘academic form’ where apologetics was concealed in an ‘insipid erudition’ (Marx refers to Roscher as a ‘master of this form’!) (1861–3, Vol. III, pp. 500–502.)

What emerges from Marx’s detailed critique, particularly in the Theories of Surplus Value, is that his attack was not only ideological but also analytical. While a fully-fledged alternative system to replace classical political economy had not yet emerged in Marx’s time, the latter had been eroded and conditions become ripe for its subversion.

See Also

Bibliography

  1. Marx, K. 1861–3. Theories of surplus value, Vols. I–III. London: Lawrence & Wishart, 1972.Google Scholar
  2. Marx, K. 1890. Capital, vol. I, 4th ed. London: Pelican Marx Library, 1976.Google Scholar
  3. Marx, K. 1894. Capital, vol. III. Moscow: Progress Publishers, 1974.Google Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Krishna Bharadwaj
    • 1
  1. 1.