Takahisa Oishi

Introduction

Here we are concerned with Marx's dialectical method and its relationship with his critique of economic categories. His The Poverty of Philosophy (1847; hereafter POP) offers the key to the problem, as he writes in the Preface to A Critique of Political Economy (1859):

The decisive points of our view were first scientifically, although only polemically, indicated in my work published in 1847 and directed against Proudhon: The Poverty of Philosophy, etc.[1] (Emphasis mine.)

However, this crucial work has not been fully appreciated by commentators. They have asserted that Marx, to begin with, 'negated' or 'rejected' Ricardian value theory, but began to 'affirm' or 'accept' it in POP. This implies: that in POP 'The decisive points' of Marx's view were NOT 'indicated' yet; and that Marx became a Ricardian but was NOT yet Marx[2]. This misunderstanding of POP indicates that Marx has not been appreciated well enough, because the decisive points of his view have not been comprehended. Let me explain the causes of this absurdity.
Firstly; Commentators have skipped a necessary, fundamental step; i.e., an investigation of Proudhon's System of Economic Contradictions, or The Philosophy of Poverty (1846; Hereafter SEC). Marx's POP is his reply to Proudhon's SEC. Consequently, for a full understanding of Marx's POP, it is essential to investigate Proudhon's SEC. However, commentators seem to have skipped this necessary step and misunderstood the relationship between Marx and Proudhon. They have overlooked the similarity and dissimilarity between them.
Modern civil society (capitalist relations of production and commerce) produces wealth on the one hand and poverty on the other. The contradiction between wealth and poverty is represented by the controversy between political economists and socialists. Political economists 'work only to purge economic relations of feudal taints, to increase the productive forces and to give a new upsurge to industry and commerce' (Marx-Engels Collected Works, Volume 6, p.186; hereafter cited as 6 MEC 186).
'Poverty is in their eyes merely the pang which accompanies every childbirth, in nature as in industry'. On the other hand, 'the socialists and the communists are the theoreticians of the proletarian class' (6 MEC 177).
In 1844-45 Marx often visited Proudhon and discussed many problems, in particular dialectical method[3]. For both of them neither classical political economists nor socialists is sufficient. They realise the methodological deficiencies of the political economists fully and 'wants to be the synthesis' of the contradiction (6 MEC 178) between political economists and socialists (wealth and poverty) by using dialectical method. They share the same purpose, i.e., a critique of private property. Thus the methodological deficiency of political economists is the starting point for both of them. SEC is Proudhon's methodological and theoretical critique of political economy based on his 'dialectics of system.' There Proudhon flatters himself 'on having given a criticism of both political economy and communism' (6 MEC 178). Marx and Proudhon diverge from each other on the understanding of dialectics and its relationship to a critique of economic categories, but Proudhon was not aware of it at its publication. Thus, it is Proudhon who invited Marx's criticism on his new book, sending a copy to Marx and asking for 'stern criticism,' probably expecting unstinted praise. However, Marx's reply was so severe as to say:

He [Proudhon] wants to be the synthesis--he is a composite error. He wants to soar as the man of science above the bourgeois and the proletarians; he is merely the petty bourgeois, continually tossed back and forth between capital and labour, political economy and communism' (6 MEC 178).

Faced with this 'stern criticism,' Proudhon writes in the margin on a page of Marx's POP, saying:

The real meaning of Marx's work [POP] is, in particular, his mortification at that I think similarly to him and that I expressed it before he does[4].

This shows the close relationship between Marx and Proudhon, and their relationship to the political economists.
Secondly; Commentators have read two chapters of Marx's POP separately. Consequently, they have misunderstood Marx's critique of Proudhon. In chapter one, Marx criticises Proudhonian value theory by contrasting it with the Ricardian. In chapter two, Proudhonian dialectics is criticised in contrast with Hegelian. Although chapter two includes Marx's methodological critique of political economists, the first chapter has not been understood in its context. By contrasting Ricardo with Proudhon, Marx does not mean that Ricardo is right, but that Proudhon is beneath Ricardo (See Marx's above quoted criticism in 6 MEC 178).
Consequently, Marx's appreciation of the scientific aspect of Ricardian value theory (in chapter one) and his methodological critique of it (in chapter two) do not contradict each other. On the contrary, a careful investigation of chapter one reveals that Ricardo's value theory is also criticised indirectly. The Ricardian value theory as opposed to Proudhon is not Ricardian as such, but the reread by Marx[5].
Similarly, Bray is contrasted with Proudhon to show that Proudhon's utopian interpretation of Ricardo's value theory has no originality as such.
In chapter two Marx contrasts Hegel with Proudhon to criticise Proudhon's made-up dialectics. Proudhon's 'dialectics of system' has little affiliation with Hegel's dialectics, but with Fourier's 'system.[6]' However, Marx is still right in the following deeper sense: Proudhon, like Hegel, inverts the relationship between categories and economic relations. He understands categories as eternal by deifying them. On the other hand, unlike Hegel's, Proudhon's dialectics has a deficiency as speculative dialectics, because his categories do not have life in themselves[7]. Marx's critique of Proudhon's dialectics turns out to be his critique of Hegel's. Readers will see there how Marx rereads Hegel.
Thirdly; Consequently, commentators have completely misunderstood the relationship between Marx and classical political economists. They have asserted that Marx, to begin with, 'negated' or 'rejected' Ricardian value theory, but in POP he comes to 'affirm' or 'accept' it. Chapter two of POP expounds how Proudhon failed in transcending the methodological insufficiency of political economists. There Marx criticises Proudhon based on his dialectical method, but not on Ricardo's analytical method. Marx's criticism of Ricardo's method is summarised briefly but decidedly in his letter to J.Schweizer in 1865, saying:

For an estimate of his book [Proudhon's SEC], which is in two fat tomes, I must refer you to the work I wrote as a reply [Marx's POP]. There I showed, among other things, how little he had penetrated into the secret of scientific dialectics; how, on the other hand, he shares the illusions of speculative philosophy, for instead of conceiving the economic categories as theoretical expressions of historical relations of production, corresponding to a particular stage of development of material production, he garbles them into pre-existing, eternal ideas; and how in this roundabout way he arrived once more at the standpoint of bourgeois economy[8].

Fourthly; Consequently, commentators have overlooked Marx's criticism of Ricardian value theory in chapter one. The purpose of POP is to show Proudhon's insufficiency and to make him the laughingstock, thus Marx's critique of Ricardian method and value theory does not come out in the open. However, methodological critique in the first chapter necessarily includes theoretical critique in the first chapter. A close look at chapter one reveals Marx's indirect critique of Ricardian value theory by rereading it.
Lastly; Commentators have not clarified the differentia specifica of Marx's value concept, i.e., the characteristics that distinguish Marx's value concept from others'. On the contrary, they seem to have mistaken Marx's value theory as quite similar to Ricardo's. This makes the fundamental deficiency of the assertions on Marx's formation process. It is well known that Marx criticises political economists on their confusion of 'value' and 'price,' but this has not been appreciated by many commentators.
Now let us move on to the diverging point between Marx and Proudhon.
Capitalist relations spontaneously emerged from feudal relations and exist now as an historical stage and will evolve into higher levels. This means that capitalist relations form a sum total by coexisting simultaneously and supporting one another. They form the social structure in which each relation forms a limb. The intrinsic connection between the relations shows the structure and the relative stability in their process: formation, development and resolution.
Naturally political economists knows that capitalist relations are formed historically. However, they virtually understand them to be eternal, because they do not pay any attention to their historical conditions. Theoretically speaking, they understood capitalist relations as eternal by defining economic categories non-historically.
Proudhon wants to transcend this methodological deficiency by explaining the origin (Genesis) of each category. Marx rated it very highly[9]. However, he does not pursue 'the historical movement of production relations, of which the categories are but the theoretical expression' (6 MEC 162). He puts economic categories into the order 'which are found alphabetically arranged at the end of every treatise on political economy' (6 MEC 162). Consequently, he does not criticise the economic categories of political economists. His critique of political economy is not a critique of economic categories. Proudhon inverted the relationship between economic categories and capitalist relations. In his dialectics, like in Hegel's, categories produce real relations, as Marx states 'he [Proudhon] shares the illusion of speculative philosophy,'[10] and makes economic categories eternal. Proudhon made the same mistake as did the political economists, and arrived at their standpoint by a detour, as Marx states 'in this roundabout way he arrived once more at the standpoint of bourgeois economy.'[11]
On the other hand, Marx grasps the economic categories as theoretical expressions of capitalist relations of production in two respects: the historical character and the intrinsic connection[12]. This means that Marx analyses the transitory and historical characters of capitalist relations, and define each economic category from both sides: historical character and intrinsic connection. Thus POP is crucial for a better understanding of Marx's dialectical method and his critique of political economy.
In short, the following points are the core of a full understanding of POP and consequently Marx's system as such:
1) Proudhon's methodological critique of political economy;
2) Marx's methodological critique of Proudhon;
3) Proudhon's critique of political economy's value theory;
4) Marx's critique of Proudhon's theory of 'constituted value.'
As I have already clarified the last two points in my preceding papers[13], here we are concerned with the first two points: Proudhon's methodological critique of political economy and Marx's critique of Proudhon's dialectical method. In the next chapter, Proudhon's dialectics and his presentation of economic categories will be summarised, followed by Marx's critique of Proudhonian dialectics.

Proudhon's Dialectical Method

Proudhon's Dialectics of System

Proudhon's method in SEC is his 'theory of system'. In this chapter I would like to clarify how Proudhon grasped and presented the economic categories.
According to Proudhon, 'metaphysics' is the modern recognition which emerged from the abolition of 'religion' and 'philosophy' and its content is the 'method of system' or the 'theory of laws of system'. Thus his 'metaphysics' as such is not a 'science' but a 'methodology of science' which provide 'method' and 'accuracy' to 'individual sciences'. It is a methodology to classify 'objects' into 'class,' 'subclass,' 'order,' 'family,' 'genus,' 'species,' and to systematise the 'objects' by putting them into order. For Proudhon 'specific science' is the 'individual science' in which the objects are systematised as well as the nature and regularity by which its system are proved.
Proudhon views that political economy is not a 'science,' because 'it is nothing but a chaos of a large number of observations and nothing is classified, related or systematised.[14]' Thus Proudhon's SEC is his critique of political economy, i.e., the work to elevate economics to 'economic science,' based on his scientific methodology. However, Proudhon's 'system' is not of substance or of causality but an 'order,' 'relations' or a 'totality of laws.[15]' His system is the 'collection of the divided,' the repetition of the 'similarity' (or 'unit') of the objects. The 'system' is given 'form' by the relationship between units, the 'similarity' and the 'grounds' ('analogy,' 'progress' and 'composition') which are variants of the 'similarity.' The only relation of system to economics is the relation of 'equivalence', i.e., the relationship between the two systems in which absolute broadness is the same but the number of units differs. Proudhon writes:

It is by this kind of system [of equivalent relation] that economics will bring a shift from our anarchic, destructive society to a regularly organised society[16].

Dialectics in The System of Economic Contradictions

Proudhon's 'dialectical system' consists of the following two stages:
1) The first stage in which abstract conception is formed by abstracting (analysing) empirical conception;
2) The second stage in which abstract conceptions are classified, and systematised by further abstraction. 'Systematise' means classify or assign various abstract conceptions (dialectical system) to inclusive classification groups by subjects and their contents. 'Abstract conception' is produced by speculation which is based on experience. Proudhon terms this abstract conception 'logical system' and the logical system which consists of a unit 'dialectical system.' According to him: 'truth' is a logical system that reached the state of this 'dialectical system'; and his 'dialectics of system' deals with this 'dialectical system.' In 'dialectics of system,' the relation of 'similarity' will be found between various inharmonious abstract conceptions. They will be classified or put into order by a certain 'principle of classification.' Proudhon's method in his SEC, i.e., 'theory of system', is the method to analyse and synthesise abstract conceptions. It is a method to classify economic categories systematically[17].

Proudhon's View on The Economic Category

As is shown by its title, the purpose of Proudhon's System of Economic Contradictions is to show that the present economic system consists of 'many kinds of antagonistic species or powers' and that 'these contradictions, which divide the economic society, bring poverty and subordination to the working class.'[18] In other words, the system of property necessarily causes class struggles, monopoly of wealth and poverty, despotism and robbery and exploitation of human beings by human beings[19]. Political economists analysed the capitalist production and deduced abstract concepts and laws, but they do not show their origins. Proudhon wants to explain them and is rated highly by Marx.

Economists express the relations of bourgeois production, the division of labour, credit, money, etc., as fixed, immutable, eternal categories. M. Proudhon, who has these ready-made categories before him, wants to explain to us the act of formation, the genesis of these categories, principles, laws, ideas, thoughts (6 MEC 162).

For example, Proudhon asserts that 'property is theft' and explains its origin by 'miscalculation.' However, we must note here that Proudhon's 'property' includes all kinds of 'unearned income right,' tenant rights to land, rents for houses and furniture, rents for land, interest for money, profits from exchange and etc[20]. This means that his 'property' is not limited to 'capital' in a narrow sense and that he does not distinguish capitalist relations from feudal or other relations. Thus, Proudhon does not comprehends the historical character of capitalist relations nor the intrinsic connection between them. In this roundabout way, he arrives at the standpoint of political economists again by making economic categories eternal.
To sum up: Proudhon does not analyse the real movement of capitalist relations but the economic categories. He cannot grasp economic categories as the theoretical expressions of capitalist relations nor explain the origin of those categories. His critique of political economy is not a critique of economic categories[21]. It is not an analysis of the capitalist relations, but an abstraction of economic categories[22]. It is merely a moral accusation of capitalist relations and a proposal for redefining economic categories.

Proudhon's Presentation of Economic Categories

In SEC Proudhon presents (or in his words 'organises') economic categories based on his 'theory of system' (dialectics). 'Class' is followed successively in descending order by some main subordinate categories: genus, species and type. Economic categories (species) are divided into types: 'the good side' and 'the bad side,' 'the advantages' and 'the drawbacks,' etc. The principle of its classification is 'equality' = 'justice.' In this presentation of economic categories, economic laws and necessities are proved.
The first point to note here is that Proudhon's 'proof of necessity' means discerning 'similarity'--'equality' or 'poverty' (the negative side of 'equality') -- between species[23]. To take a couple of examples, the 'division of labour' is divided into two 'manners': 'the manner in which equality of conditions and of intelligence is realised,' and the manner as 'an instrument of poverty.' 'Competition' is divided into the competition for the 'advantage of equality' and the ones which 'ruin those whom it drags in its train.' Similarly, each economic category is divided into its positive and negative sides by an outsider, i.e., 'equality.'[24]
As we have seen, Proudhon's system, his presentation of economic categories, is forming them based on 'similarity, i.e., the good and bad sides of 'equality.' Thus the basic character of his system is determined by the principle of the classification ('equality' = 'justice') before the classification. This might be a classification of categories, but is not an explanation (or development) of them.
The second point to note is that Proudhon's 'antithesis,' 'contradiction,' 'synthesis,' 'dialectics' and 'necessity' are quite different from that of Marx or Hegel. His 'contradiction' does not mean a coexistence of interdependence and antagonism, but merely a 'distinction' or a 'difference.' His 'antithesis' and 'synthesis' are not the 'abolition of 'thesis' and 'antithesis.' In his dialectics, the latter are not deduced necessarily from the former. Thus, Proudhon's 'economic progress' is not a 'progress' but a mere 'sequence.' His 'proof of necessity' is by no means a 'necessity.'
Be the matter as it may, 'equality' as the principle of classification is presupposed in the Introduction of his SEC and its 'scientific, or empirical proof' is given through the presentation of economic categories, i.e., through the following 'evolution' of economic categories: division of labour (chapter 3), machinery (chapter 4), competition (chapter 5), monopoly (chapter 6) and police (chapter 7). In chapter 8, the illusion of Providence is negated by the considerations of 'system of evil' in preceding chapters. From chapter nine onward, Proudhon pursues discovery of justice (policies to realise justice): balance of trade (chapter 9), credit (chapter 10), property (chapter 11), common property (chapter 12) and population (chapter 13). In chapter 14 (Summary and Conclusion), he suggests 'mutuality' as the policy to realise justice.
By 'system' Proudhon means 'laws' and 'necessity.' Thus, Proudhon thinks it enough for him to prove the 'necessity' of categories can be proved successfully by the verification of 'similarities' (common characters) between species ('equality' of 'poverty') in the above-shown organisation (presentation) of economic categories[25].

Marx's Critique of Proudhon's Dialectics

Marx's Critique of Proudhon's View on Category

Modern civil society (capitalist society) emerged spontaneously from feudal society via many transitional forms and exists as an historical epoch. It shall be superseded by a new society in future but is relatively stable at the moment resting on a delicate balance between continuity and transition. Thus, capitalist society is to be grasped from two sides: On the one hand it is historical and transitory; On the other it is a stable whole body. Hereafter I call the two sides historic and unific characters of capitalist society. By 'unific character' I mean the intrinsic connection and mutual support between limbs of the structure.
As far as Marx is concerned, he comprehends 'society' as a product of man's interaction with man', i.e., a certain form of 'organisation, whether of the family, of the estate or of the classes.' (38 MEC 96) He also understands that a definite form of society is determined by the relations of production and commerce that corresponds to a certain stage in the development of productive forces. He grasps capitalist relations of production and commerce by defining economic categories with two respects: the historical character of capitalist relations and the intrinsic connection between them. Thus categories are defined as theoretical expressions of those relations.
In short the transitory and unific characters of capitalist society are comprehended theoretically through the historical character and the intrinsic connection between categories. Up to now we have expounded only the method of investigation. However, the method of presentation cannot be the same as that of investigation. In science, presentation of categories must be made in sequence by explaining the unknown based on the known. Marx calls this method 'genetical presentation'[26] because the genesis of each category shall be demonstrated. Our main concern in this section is on the method of investigation, and is on the method of presentation in the next section.
Political economists analysed capitalist relations of production and formulated laws of them. They were methodologically unclear, but grasped economic categories, virtually as theoretical reflections of capitalist relations production and commerce. They analyse historical capitalist relations but fail to define their categories as historic ones, e.g., 'capital' is a certain amount of 'accumulated labour', tools or machines. It is well known that Ricardo criticised Smith by calling 'the weapon necessary to kill the beaver' and the deer in 'that early state to which Smith refers' as 'capital'[27]. Even by Ricardo, the differentia specifica of capital is not understood at all, e.g., he cannot tell 'machinery as capital' from 'machinery as machinery.'
The reduction of 'capital' into 'accumulated labour' makes it possible for Smith and Ricardo to develop labour theory of value, i.e., to grasp capitalist society as a form of mutual interrelations of human beings with labour and the products of labour. On the other hand, their reduction shows the insufficiency of their 'analytical method',[28] i.e., deleting the historic character from each economic category. Their strong point is at the same time their weak point. This insufficiency comes from the fact that 'they do not explain how these relations themselves are produced, that is the historical movement[29] that gave them birth [every day]' (6 MEC 162).
Political economists do not pay any attention to the 'origin' of 'profit' and 'rent', for example. They take the 'origin' of 'profit' as 'natural', and reduce that of 'rent' into natural, unhistorical factors, i.e., 'the differentiation of the land in location and fertility.[30]' Consequently, their concern is only with the quantitative laws, i.e., on 'the average rate', 'the highest rate' and the 'lowest rate.' As a result of their reduction of 'capital' into 'accumulated labour' and of 'rent' into 'the differentiation of the land in location and fertility,' the political 'Economists express the relations of production . . . as fixed, immutable, eternal categories.' (6 MEC 162) Here is Marx and Proudhon's criticism of economists. Their first concern is on the 'origin' or the 'genesis' of economic categories. Proudhon writes in his SEC:

How does use value become exchange value? . . . The genesis of the idea of (exchange) value has not been noted by economists with sufficient care. It is necessary, therefore, for us to dwell upon it. (6 MEC 111)

It is true that Proudhon dwells upon the origin of economic categories which have been ignored by economists, but he does not 'pursue the historical movement of production relations, of which the categories are but the theoretical expression'. (6 MEC 162) Furthermore, he does not distinguish capitalist relations from other transferring relations to them. Thus, Proudhon does not grasp economic categories as the reflection of capitalist relations much less the transitory character of the categories. Having ready-made categories before him, he merely puts those into his order classified by the principle 'equality' or 'justice'. Thus, in his dialectics of system, just as in Hegelian dialectics, categories produce the real social relations. Although Marx's criticism that Proudhon inverts the relationship between the social relations of production and economic categories is not accurate, the criticism is still true and effective. Let me demonstrate Marx's critique of Proudhon's explanation of the genesis of exchange value.
As will be shown in the next chapter, Proudhon's dialectics has no contradiction in Hegelian sense and his categories cannot develop by themselves. To solve this problem Proudhon sets out a man who proposes to other men that they establish exchange and make a distinction between use value and exchange value. He does not explain the genesis of exchange value from the history of exchange. Marx criticises and makes fun of this as calling for 'a deus ex machina', i.e., 'a person who appears unexpectedly to save a situation.'[31] Admitting the proposal of the man, the reasons why the man made the proposal and why other men accepted it was not explained at all. The real problem stays unsolved. Instead Marx explains the genesis of exchange value from the three stages in the development of exchange:
1) 'There was a time, as in the Middle Ages, when only the superfluous, the excess of production over consumption, was exchanged.' (6 MEC 113)
2) 'There was again a time, when not only the superfluous, but all products, all industrial existence, had passed into commerce, when the whole of production depended on exchange'. (ibid.)
3) 'Finally, there came a time when everything that men had considered as inalienable became an object of exchange, of traffic and could be alienated. This is the time when the very things that till then had been communicated, but never exchanged; given, but never sold; acquired, but never bought--virtue, love, conviction, knowledge, conscience, etc.--when finally passed into commerce.' (ibid.) After the second stage, the product becomes not only a use value but also an exchange value.

The product supplied is not useful in itself. . . . In the course of production, it has been exchanged for all the costs of production, such as raw materials, wages of workers, etc., all of which are marketable value. The product, therefore, represents, in the eyes of the producer, a sum total of marketable values. What he supplies is not only a useful object, but also and above all a marketable value.' (6 MEC 118)

As to demand, on the other hand, 'it will be effective on condition that it has means of exchange at it disposal. These means are themselves products, marketable values.' (ibid.) Consequently, the concept of 'exchange value' is 'each time the resultant of these contradictory appreciations' (ibid.), the result of supply and demand.

But in the real world [based on division of labour and private exchange], . . . [t]he competition among the suppliers and the competition among the demanders form a necessary part of the struggle between buyers and sellers, of which marketable value is the result. (6 MEC 119)

In other words '(exchange) value' distinguished from 'price' can be conceptualised only under an advanced division of labour and private exchange, i.e. only in the age of large-scale industry and free competition, in which products are produced as commodities. Only in such age the abstracting 'value' from 'prices' is possible and is a 'truth', because the relation it expresses continues to exist[32].
That which Marx illustrates, in similar criticisms all through POP, is the real economic relations that are to be expressed by economic categories but not the history as such. We can witness there the dissimilarity between Marx and Proudhon's critique of political economy, i.e., between a critique of economic categories with an analyses of the real economic movement (of production and consumption) and a critique without them. As 'critique' means clarifying the grounds and the limitations, a critique of economic categories means comprehending the grounds and the limitations of economic categories as reflections of capitalist relations of production and commerce, which correspond to a certain stage in the development of productive forces. Proudhon, on the other hand, does not have such a critique of economic categories and fails in understanding capitalist society as an historical one.

Proudhon does not directly assert that to him bourgeois life is an eternal truth: he says so indirectly, by deifying the categories which express bourgeois relations in the form of thought. (38MEC 102)

To sum up, Proudhon wants to 'rise above the bourgeois horizon' (ibid.) but 'in this roundabout way he arrived once more at the standpoint of bourgeois economy' mainly because he does not pursue the real movement of capitalist relations.

Marx's Critique of Proudhon's Presentation of Categories

The Intrinsic Connection between Economic Categories

Here I would like to investigate the intrinsic connection between categories, i.e., Marx's presentation of economic categories.
In POP Marx criticises Proudhon's artificial presentation of categories by analysing some of them, i.e. by clarifying the real economic relations that they express: 'exchange', 'money' (Chapter one), division of labour and machinery', 'competition and monopoly' and 'landed property or rent' (Chapter two). Written in this polemic form, Marx's own presentation is not clear as such. However, we can read its outline between the lines: 'logical development' (6 MEC 193) on the basis of the intrinsic relations of the economic categories. Here I would like to demonstrate it by following Marx's critique of Proudhon's 'division of labour and machinery' and 'rent'.
Needless to say, 'property' developed in many epochs under wholly different sets of social relations. Thus, a definite form of 'property' comprises all the social relations of production of that time. With Proudhon the issue is modern bourgeois property as it exists today. However, Proudhon does not understand that bourgeois property is the whole of capitalist relations of production, or that it is the capitalist form of the division of labour. Consequently he investigates 'property' and 'division of labour' separately and does not clarify their historical features at all. He thinks of 'modern bourgeois property' as an independent economic category and a phase of his 'economic evolution.[33]' That is to say, Proudhon cannot grasp the intrinsic connection between capitalist relations of production, and thus between economic categories.

The Historical Character of Categories

'Division of Labour and Machinery'

In the real world, 'division of labour' develops in many epochs and under many different relations of production. For Proudhon, however, the division of labour is 'an eternal law, a simple, abstract category' (6 MEC 179). He is only concerned with 'division of labour' in general only, thus 'Caste, corporations, manufacture, large-scale industry must be explained by the single word 'divide' (ibid.), instead of analysing its capitalist form. According to him, 'division of labour' is the 'thesis' of labour and a method to realise 'equality'. It consists of the good and the bad sides: the manner in which equality of conditions and of intelligence is realised: an instrument of poverty. To draw the negative sides from the positive sides, Proudhon considers 'modern factory' as the 'antithesis' and moves into 'machinery' as the 'synthesis'.
As Marx criticises: 'He [Proudhon] opposes the division of labour of one historical epoch to the division of labour of another historical epoch.' (6 MEC 182) Consequently, in Proudhon's paradialectics each following category is given artificially as an antidote for the preceding one without any connection with the real world, i.e., with the order in which categories produce each other[34]. To illustrate this let us compare Proudhon's investigation into 'machinery' and Marx's critique of it.
According to Proudhon, the 'machine' or the modern 'workshop' is a method to combine small parts divided by the 'division of labour', which introduces the principle of authority in society, and theoretically results in the 'wage system'. 'Machinery', on the one hand, recovers the workers divided by the 'division of labour,' reduces the pains of workers and the price of products, increases the general welfare and brings equality with intelligence. On the other, it reduces wages, produces overproduction, revolves the social position of workers and brings poverty.
From the 'historical and economic point of view' (6 MEC 184), Marx examines the two kinds of division of labour, i.e. in the workshop and inside society, 'whether it [the workshop] rehabilitated the worker on the one hand, while submitting him to authority on the other; whether the machine [or the workshop] is the recomposition of divided labour, the synthesis of labour as opposed to its analysis.' (ibid.) After pointing out the similarity of 'society as a whole' and the 'workshop', i.e. both of them have 'division of labour', Marx writes about the dissimilarity between them:

While inside the modern workshop the division of labour is meticulously regulated by the authority of the employer, modern society has no other rule, no other authority for the distribution of labour than free competition.
. . . It can even be laid down as a general rule that the less authority presides over the division of labour inside society, the more the division of labour develops inside the workshop, and the more it is subjected there to the authority of a single person. Thus authority in the workshop and authority in society, in relation to the division of labour, are in reverse ratio to each other. (6 MEC 184-5)

Then Marx examines the kind of workshop 'which the occupations are very much separated, where each person's task is reduced to a very simple operation, and where the authority, capital, groups and directs the work', i.e., the developing process of 'manufacturing industry' without machinery. (6 MEC 185) After pointing out that the 'division of labour' is generally regulated by the extent and the form of the market, Marx counts the following as indispensable conditions for the formation of manufacturing industry:
1)The accumulation of capital, facilitated by the discovery of America and the import of its precious metals (the depreciation of wages and land rents, and the growth of industrial profits on the other). (ibid.)
2) The so-called primitive accumulation of capital -- e.g., 'the increase of commodities put into circulation from the moment trade penetrated to the East Indies by way of the Cape of Good Hope; the colonial system; the development of maritime trade' (ibid.) -- on the one hand, and the proletariat on the other. In short:

The growth of the market, the accumulation of capital, the modification in the social position of the classes, a large number of persons being deprived of their sources of income, all these are historical preconditions for the formation of manufacture. (6 MEC 186)

Marx shows that the manufacture 'consisted much more in the bringing together of many workers and many crafts in one place, in one room, under the command of one capital, than in the analysis of labour and the adaptation of a special worker to a very simple task.' (ibid.) For Proudhon, who sees things upside down, the division of labour precedes the workshop, which is a condition of its existence. In reality, 'once the men and the instruments had been brought together, the division of labour, such as it existed in the form of the guilds, was reproduced, necessarily reflected inside the workshop.' (ibid.)
Furthermore, Marx clarifies that the 'machine is a uniting of the instruments of labour, and by no means a combination of different operations for the workers himself' and that the 'machine, properly so-called, dates from the end of the eighteenth century.' (ibid.) Through this developing process of 'machine', the following propositions are shown:
1) For Proudhon the concentration of the instruments of production is the negation of the division of labour. In reality, however, as 'the concentration of instruments develops, the division develops also, and vice versa.' (6 MEC 187);
2) The 'invention of machinery brought about the separation of manufacturing industry from agricultural industry' and 'to the application of machinery and of steam, the division of labour was able to assume such dimension that large-scale industry, detached from the national soil, depends entirely on the world market, on international exchange, on an international division of labour.' (ibid.);
3) The 'machine has so great an influence on the division of labour, that when, in the manufacture of some object, a means has been found to produce parts of it mechanically, the manufacture splits up immediately into two branches independent of each other.' (ibid.);
4) '[F]rom 1825 onwards, almost all the new inventions were the result of collisions between the worker and the employer who sought at all costs to depreciate the worker's specialised ability.' (6 MEC 188);
5) Consequently, 'we need not to speak of the providential and philanthropic aim that M. Proudhon discovers in the invention and the first application of machinery.' (ibid.)
To sum up, in the real historical movement, 'with the introduction of machinery the division labour inside society has increased, the task of the worker inside the workshop has been simplified, capital has been concentrated, the human being has been further dismenbered.' (ibid.) Which means Proudhon's presentation of economic categories -- economic evolution -- is not scientific but utopian.
By the way, the division of labour in the automatic workshop is characterised by the fact that 'labour there has completely lost its specialised character' (6 MEC 190), which Proudhon overlooks. Marx sees the revolutionary side of modern automatic workshop through the fact, i.e., 'However the moment every special development stops, the need for universality, the tendency towards an integral development of the individual begins to be felt.' (ibid.)

'Landed Property or Rent'

As has already been stated, Proudhon cannot comprehend 'property'. In spite of his claim to clarify the origin of 'property', he 'declares himself incapable of understanding the economic origin of rent and of property' (6 MEC 197), because he abandons the clarification of its economic origin by affirming 'that there is something mystical and mysterious about the origin of property.' (ibid.) As a matter of fact, he says on the average amount of rent:

Ricardo's theory answers this question. In the beginnings of society, . . . , rent must have been nil. . . . Little
by little, the multiplication of families and the progress of agriculture caused the price of land to make itself felt. Labour came to give the soil its worth: from this, rent came into being. The more fruit a field yielded with the same amount of labour, the higher it was valued; hence the tendency of proprietors was always to arrogate to themselves the whole amount of the fruits of the soil, less the wages of the farmer--that is, less the costs of production. Thus property followed on the heels of labour to take from it all the product that exceeded the actual expenses. . . . In essence and by destination, then, rent is an instrument of distributive justice one of the thousand means that the genius of economy employs to attain to equality. (6 MEC 198)

This is Ricardo's theory of rent itself. Proudhon does better by making the 'proprietor' intervene, like a deus ex machina, to explain 'property' or 'rent'. Here again, Proudhon avoids his original task to explain the economic origin of rent by making use of the intervention of the proprietor to explain property, of intervention of the rent-receiver to explain rent. That is why he cannot get beyond the word: 'Property is theft.'
The main cause lies in his views on economic category. Without pursuing the historical movement of the real relations of production, understanding those relations as 'principles, categories, abstract thoughts', instead understanding economic categories as the 'scientific expression' of those relations, he has no choice but to develop economic categories from the movement of a 'pure reason', i.e., from the principle 'equality' brought into from outside.
To explain historically means to explain from its historical conditions by starting from the 'praxis' -- productive activity -- of real individuals. This is possible only on the basis of a minute examination on the following points: 'their respective needs, their productive forces, their mode of production, the raw materials of their production--in short-- . . . the relations between man and man that result from all these conditions of existence.' (6 MEC 170) As to the origin of 'rent', Marx writes as follows in outline:
1) The 'origin of property' is 'the relation between production itself and the distribution of the instrument of production'. (6 MEC 197) and is reproduced every day before our eyes;
2) Ricardo explains 'rent' from the difference in the location and the fertility of lands on two conditions, i.e., -- in 'manufacturing industry, the price of product obtained by the minimum of labour regulates the price of all other commodities of the same kind' (6 MEC 199), -- in 'agricultural industry, on the contrary, it is the price of the product obtained by the greatest amount of labour that regulates the price of all products of the same kind' (ibid.);
3) The historical conditions for the Ricardian doctrine to be generally true, or the historical conditions 'rent' should express, are the original accumulation, the development of capitalist mode of agriculture and the transformation of landowners to capitalists.

The abasement of the labourer, reduced to the role of a simple worker, day labourer, wage-earner, working for the industrial capitalist; the intervention of the industrial capitalist, exploiting the land like any other factory; the transformation of the landed proprietor from a petty sovereign into a vulgar usurer: these are the deferent relations expressed by rent. (6 MEC 201)

4) Land, insofar as it yields interest, is land capital, and as land capital it yields no rent. Consequently, land does not constitutes landed property anymore. 'Rent . . . is industrial capital applied to land' (6 MEC 201), and is a 'result of society and not of the soil.' (6 MEC 205)
As is shown in the above account, it is safe to say that Marx's 'historical', 'genetical' presentation of economic categories means the clarification of the real historical, economic relations expressed by the categories. On the other hand, Proudhon tried to explain the origin of the economic categories, about which political economists were not concerned, but he could not finish it properly 'chiefly because he does not know history.' (38 MEC 100)
Proudhon is certainly an Hegelian insofar as he grasps the economic categories as principles, not as the expression of the relations of production. Actually, he does not pursue the real movement of relations of production. At least in theory, Proudhon, like Hegel, explains the origin of the economic categories from the movement of a pure reason 'equality'. On the other hand, unlike Hegel, Proudhon's categories do not have life in themselves because there are no real 'contradictions' in them. Proudhon's dialectics is not Hegelian dialectics but mere paradialectics. That is why he needs a deus ex machina to explain the origin of the economic categories.
Marx views economic categories as the theoretical expressions of the relations of production and of the mutual interactions between individuals. In other words, Marx sees what the individuals are through their relations of production, or their expressions of their mutual activities. Consequently, Marx's critique of political economy is not another political economy but the only one 'human science', the science of man incorporated into 'natural science.[35]'

Conclusion

Capitalist society produces wealth on the capitalist side and poverty on the worker side. Wealth and poverty are both sides of the same coin and two necessary results of capitalist relations of production. However, political economists represent wealth and socialists poverty exclusively. Political economists start from their principle that labour is the sole source of wealth, but they do not care about the poverty of labourers. On the other hand, socialists do not investigate the structure and the movement of capitalist production that yield poverty. Thus socialists do almost nothing other than imploring the mercy of the rich for the poor.
Marx and Proudhon want to transcend the contradiction by using dialectical method. Thus, the methodological and theoretical deficiencies of political economists and socialists are their prepositions and make their starting point. They share not only the same purpose, i.e., a critique of political economy, but also the method, i.e., dialectical method. Their works look quite similar. However, their critique of political economy is quite different from each other.
Political economists understand that capitalist society is natural and eternal, because they make economic categories non-historical. Both Proudhon and Marx start from this methodological insufficincy of political economists.
However, Proudhon does not pursue the real movement of capitalist production, and cannot clarify the origin of each economic category successfully. He does not criticise the economic categories of political economists, but has them as 'ready-made catgories.' Thus, he is concerned with only rearranging their order. He systematises the order of economic categories by outside standards which are irrelevant to the economic categories: the good sides and the bad sides, the advantages and the drawbacks. His dialectics has no intrinsic connection with any economic analysis. His critique of political economy is not a critique of economic categories, but is nothing more than a moral accusation of capitalist relations.

Proudhon does not directly assert that to him bourgeois life is an eternal truth; he says so indirectly, by deifying the categories which express bourgeois relations in the form of thought (38 MEC 102).

By a detour Proudhon arrived at the starting point, i.e., the stand point of political economists who assert capitalist relations are natural and eternal.
On the other hand, Marx's dialectics is the core of historical relations and leads him to adopt them in two respects: the historical character of capitalist relations, and the intrinsic connection between them. Marx analyses the real movement of capitalist relations, and redefines economic categories as the scientific expressions of capitalist relations. Marx's critique of economic categories means comprehending the grounds and the limitations of economic categories as scientific expressions of capitalist relations, which correspond to a certain stage in the development of productive forces. He demonstrates that capitalist relations are transitory by clarifing the origin (Genesis) of economic categories. Proudhon, on the other hand, does not have such a critique of economic categories and fails in understanding capitalist society as historical. He wants to 'rise above the bourgeois horizon,' but 'in this roundabout way he arrived once more at the standpoint of bourgeois economy.'
As we have clarified here, 'the decisive points' of Marx's dialectical method are scientifically indicated in POP. They are redefining economic categories in two respects: the historical character of capitalist relations, and the intrinsic connection between them. Unfortunately, this scientific method has been misunderstood as the so-called 'materialist interpretation of history.' Consequently, Marx has been misunderstood. However, I believe that we have now arrived at the core of Marx's method and his system.

(In memory of Gillian Clare Dodd. I would like to thank Dr. Barry Dodd and Dr. Terrell Carver who looked over the draft and checked my English. Naturally, however, any deficiencies are my own.)

NOTES

[1]. David McLellan, Karl Marx Selected Writings, Oxford, 1977, p. 390.

[2]. For detail, see my "Ricardo's Value Theory Re-examined," in: Journal of Social Sciences, Takushoku University, Vol. 1, No. 3, pp. 173-74.

[3]. In his letter to J. B. Schweitzer (dated January 24, 1865) , Marx writes:

During my stay in Paris in 1844 I came into personal contact with Proudhon. . . . In the course of lengthy debates, often lasting all night, I infected him to his great injury with Hegelianism, which, owing to his lack of German, he could not study properly. After my expulsion from Paris Herr Karl Grruen continued what I had begun. As a teacher of German philosophy he had, besides, the advantage over me that he understood nothing about it himself (KARL MARX and FREDRICK ENGELS SELECTED WORKS in three volumes, PROGRESS PUBLISHERS, MOSCOW, 1977, Volume Two, p. 26).

[4]. Shigeyuki Sato, Studies on Proudhon, Bokutakusha, Japan, 1975, p. 367.

[5]. For detail, see my "Ricardo's Value Theory Re-examined," in: Journal of Social Sciences, Takushoku University, Vol. 1, No. 3.

[6]. Sato, op. cit., p. 88.

[7]. See 6 MEC 169. However, readers must note that this criticism does not mean Marx's categories have life in themselves, but that Proudhon is beneath Hegel. Proudhon shares the speculative character of Hegelian dialectics, but his category does not have life in it. Thus, 'The sequence of categories has become a sort of scaffolding.' (6 MEC 169)

[8]. Marx's letter to J. B. Schweizer dated January 24, 1865. See KARL MARX and FREDRICK ENGELS SELECTED WORKS in three volumes, Volume Two, PROGRESS PUBLISHERS, MOSCOW, 1977, P. 26.

[9]. See 6 MEC 162. The importance of this point has been little noticed. This implies that Marx, Proudhon and political economists have not been fully understood yet.

[10]. Marx's letter to J. B. Schweizer dated January 24, 1865, op. cit., p. 26.

[11]. Ibid.

[12]. For detail, see chapter II of my "Ricardo's Method Re-examined," in: Journal of Social Sciences, Takushoku University, Vol. 1, No. 2.

[13]. Takahisa Oishi, "Ricardo's Method Re-examined" and "Ricardo's Value Theory Re-examined," in: Journal of Social Sciences, Takushoku University, Vol. 1, No. 2 and No. 3, 1993.

[14]. Shigeyuki Sato, Studies on Proudhon, Bokutakusha, 1975, p.81.

[15]. Sato, op.cit. , p.84.

[16]. Sato, op. cit., p.100.

[17]. Sato, op. cit., p.133.

[18]. Pier Ansar, Sociology of Proudhon, p.43 (Trns.)?*

[19]. Pier, op. cit., p.44 (JPN).

[20]. Keiichi Sakamoto, Marxism and Utopia, Kinokuniya, Tokyo, 1970, p.118.

[21]. Sato, op. cit., p.203.

[22]. "First Observation": Chapter two of POP deals with the difference between 'analysis' and 'abstraction.' See, in particular, 6 MEC 163.

[23]. Sato, op. cit., p.149.

[24]. Sato, op. cit., p.133, 148. Sato asserts:

In Proudhon's SEC the necessity for the continual realisation of justice and evil are corroborated simultaneously. Thus, it is clear that the necessity for the final victory of justice is not clarified in his book (Sato, op. cit., p.161-62).

[25]. Sato, op. cit., p. 149.

[26]. MEGA2, II-3, Teil 4, S. 1449. Theories of Surplus Value, Part III, Progress Publishers, 1971, p. 500.

[27]. Note the profound problem behind this confusion by Smith. Ricardo's criticism of Smith has both strong point and weakness. See, for detail, my "Marx's First Critique of Political Economy," in: The Review of Takushoku University, No. 190, 1991, pp. 163-64.

[28]. See chapter II of my "Ricardo's Method Re-examined," Journal of Social Sciences, Takushoku University, Vol. 1, No. 2, 1993.

[29]. Here 'historical' does not mean history qua history, but historical conditions which each category express.

[30]. See Marx's criticism of political economists in Economic Philosophic Manuscripts of 1844 (3 MEC 271). See chapter III of my "Ricardo's Method Re-examined."

[31]. Editor's note b on 6 MEC 198.

[32]. Note this with regard to his value theory in EPM. For detail, see chapter III of my "Ricardo's Value Theory Re-examined."

[33]. Proudhon gives 'property' an independent chapter: Chapter eleven says "Eighth Phase Property."

[34]. See 6 MEC 179.

[35]. 3 MEC 303-04. For detail, see chapter IV of my "Individual, Social and Common Property," in: The Review of Takushoku University, No. 199, 1992.