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B. Vulgar Political Economy, Marginalism, and the Issue of Ideological Motivation
Given the fertile ground Ricardo's political economy presented for socialist conclusions, it was naturally seen as problematic
by apologists for the newly arisen system of industrial capitalism. Marx made a fundamental distinction, in this regard, between
the classical political economists and the "vulgar economists" who came after them. Smith, James Mill and Ricardo had developed
their scientific political economy without fear of its revolutionary implications, because industrial capital was still the
progressive underdog in a revolutionary struggle against the unearned income of feudal landlords and chartered monopolists.
But that situation came to an end with the capitalists' acquisition of political power.
In France and England the bourgeoisie had conquered power [in the "decisive crisis" year of 1830]. Thenceforth,
the class struggle, practically as well as theoretically, took on more and more outspoken and threatening forms. It sounded
the knoll of scientific bourgeois economy. It was thenceforth no longer a question whether this theorem or that was true,
but whether it was useful to capital or harmful, expedient or inexpedient, politically dangerous or not. In place of disinterested
enquirers, there were hired prize-fighters; in place of genuine scientific research, the bad conscience and the evil intent
of apologetic.8
Maurice Dobb, likewise, commented on the transition of political economy from a revolutionary to an apologetic role:
As a critique leveled simultaneously against the authoritarianism of an autocratic state and against the privileges and
influence of the landed aristocracy Political Economy at its inception played a revolutionary role.... Only later, in its
post-Ricardian phase, did it pass over from assault on privilege and restriction to apology for property.9
Although the break was perhaps not as fundamental as the Marxists have made it out to be, there is evidence that at least
some of the political economists from the 1830s on, as well as the founders of marginalism, were conscious of the political
aspect of the problem. According to Maurice Dobb, the "vulgar political economists" were consciously motivated by apologetic
considerations; as an alternative to the mainstream classical school of England, they turned to the subjectivist continental
school, which had been influenced by Say's interpretation of Adam Smith.
It was against this whole [Ricardian] mode of approach that the Senior-Longfield school reacted so strongly--not
merely as an inapposite analytical tool..., but against its wider applications and corollaries. In reacting in this way, it
was almost inevitable that they should be carried in the wake of (and eventually join) the other and rival tradition deriving
from Smith, reinforcing it by so doing. If they are properly described at all as "improvers" or "conciliators", such a term
should really be applied to their role in developing this Smithian tradition and not the Ricardian approach.10
Among the first generation of marginalists, Jevons at least was quite conscious of the political dimension of his anti-Ricardian
project. To quote Dobb again, "...although Menger could be said to have represented this break with classical tradition
even more clearly and completely, Jevons was apparently more conscious of the role he was playing in reshunting the 'car of
economic science' which Ricardo had so perversely directed 'onto a wrong line.'"11
Dobb considered it telling that the marginalist refinement of subjectivism had been produced near-simultaneously by three
different writers, within a decade of the publication of Capital. It indicated a prevailing atmosphere of ideological
combat, and a vacancy for anti-Marxian polemicists waiting to be filled.
It is, at least, a remarkable fact that within ten years of the appearance of the first volume of Kapital, not only
had the rival utility-principle been enunciated independently by a number of writers, but the new principle was finding a
receptivity to its acceptance such as very few ideas of similar novelty can ever have met. If only by the effect of negation,
the influence of Marx on the economic theory of the nineteenth century would appear to have been much more profound than it
is fashionable to admit….
That so many of the economists of the last quarter of the century should have advertised their wares as such an epoch-making
novelty, and tilted their lances so menacingly at their forebears, seems to have an obvious, if unflattering explanation:
namely, the dangerous use to which Ricardian notions had been recently put by Marx.12
And of the second generation of Austrians, Böhm-Bawerk seemed quite aware, in Dobb's opinion, of the ideological nature
of the task before him.
It seems clear that Böhm-Bawerk at any rate appreciated the problem which the classical theory had sought to solve. While
he is sparing, almost niggardly, in paying tribute to Marx even for formulating the question accurately, there is every indication
that he framed his theory directly to provide a substitute answer to the questions which Marx had posed.13
If such speculations on the political motives of the marginalist revolutionaries seem "unflattering," unfair, or ad hominem,
it is worth bearing in mind that Böhm-Bawerk himself was not above pointing to the ideological motivations of his predecessors,
in language very reminiscent of Marx's dismissal of the "vulgar economists." Even more than grinding his axe against Marx,
Böhm-Bawerk seems to have been motivated by a desire to demonstrate the originality of his own views at the expense of previous
defenses of interest, like that of Nassau Senior.
Senior's Abstinence theory has obtained great popularity among those economists who are favourably disposed to interest.
It seems to me, however, that this popularity has been due, not so much to its superiority as a theory, as that it came in
the nick of time to support interest against the severe attacks that had been made on it. I draw this inference from the peculiar
circumstance that the vast majority of its later advocates do not profess it exclusively, but only add elements of the Abstinence
theory in an eclectic way to other theories favourable to interest.14
Since Böhm-Bawerk was not above such a critique of his own predecessors, we have no obligation to spare him similar treatment,
from an excess of chivalry.
It is remarkable, at least, how the cultural atmosphere of the classical liberal mainstream changed from the early nineteenth
century on. From a revolutionary assault on the entrenched power of the landed aristocracy and chartered monopolies, by the
late nineteenth century it had become an apology for the institutions and interests most closely resembling, in power and
privilege, the ruling class of the Old Regime: the large corporations and the plutocracy.
The shift toward reaction was by no means uniform, however. The revolutionary and anti-privilege character of the early
movement continued in many strands of liberalism. Thomas Hodgskin, squarely in the classical liberal tradition and also by
far the most market-oriented of the Ricardian socialists, criticized the power of the industrial capitalist in language reminiscent
of Adam Smith's attack on landlords and mercantilists--and on very much the same principles.
The American school of individualist anarchism, likewise, turned the weapons of free market analysis against the statist
props of capitalist privilege. Even Hodgskin's disciple Spencer, usually regarded as a stereotypical apologist for capitalism,
at times displayed such tendencies. Henry George and his follower Albert Nock, likewise, turned classical liberalism toward
radically populist ends. Our own version of free market socialism, set out in this book, comes from these heirs of the armed
doctrine of classical liberalism.
At any rate, regardless of their political motivations, the marginalists performed a necessary role. Their detailed critique
of classical political economy pointed out many areas in need of clarification, or of a more explicit philosophical basis.
And the marginalist critique, especially that of Böhm-Bawerk, produced genuinely valuable innovations which any viable labor
theory of value must incorporate. One such criticism (Böhm-Bawerk's critique of the labor-theory for its lack of an adequate
mechanism), and one innovation (the Austrian time preference theory) will be integrated, in the following chapters, into a
reworked labor theory of value.
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