TAKAHISA OISHI 
Professor of Economics
Takushoku University
Tokyo, Japan
INTRODUCTION
Marx's Poverty of Philosophy  (1847; hereafter POVERTY) 
is a methodological and theoretical critique of political 
economy and socialism. It is a demonstration of Marx's 
dialectical method of a critique of economic categories 
in order to explain the genesis--or the origin--of 
economic categories.The point we would like to make 
here concerns Marx's dialectical method in Chapter 
2 of POVERTY, with special reference to his methodological 
critique of political economy. Marx's theoretical critique 
of political economy in POVERTY will be expounded in 
the next paper.
   Capitalist society, the sum total of capitalist relations 
of production and commerc, yields wealth on the one 
hand and poverty on the other, each of which is represented 
by political economists and socialists. Thus Proudhon 
declared in his System of Economic Contradictions, 
or Philosophy of Poverty (1846; hereafter SYSTEM) that 
he established 'a revolutionary theory' in order to 
abolish capitalist society by transcending both political 
economists and socialists. SYSTEM is a critique of 
political economy.
   Consequently, Marx's POVERTY, directed against SYSTEM, 
is not only a critique of Proudhon but also a critique 
of political economy and socialism. The methodological 
insufficiency of political economy, i.e. the unhistorical 
understanding of economic categories, is a premise 
for both Proudhon and Marx. The core of the controversy 
between Proudhon and Marx is how to transcend the insufficiency 
of political economy, i.e. the method of a critique 
of economic categories. The core of Marx's critique 
of Proudhon is that Proudhon, in a roundabout way, 
arrived at the standpoint of political economists, 
i.e. the unhistorical understanding of economic categories. 
The quotation from On Proudhon below demonstrates this 
to the full:
There [in POVERTY] I showed,...how in this roundabout way he [Proudhon] arrived once more at the standpoint of bourgeois economy [of making economic categories eternal] (italics mine)[1].
The point here is that political economists, as well as Proudhon and Hegel, are methodologically and theoretically criticised by Marx for their unhistorical understanding of economic categories, thus of capitalist society. This is the reason why Marx states as follows:
The decisive points of our view [of his critique of political economy] were first scientifically, although only polemically, indicated in my work [POVERTY] published in 1847 and directed against Proudhon[2].
Marx's POVERTY is not the work in which Marx defended 
political economy from Proudhon's attack but the work 
in which he expounded how political economy is to be 
criticised. Thus, in this sense, Marx's methodological 
critique of Proudhon in Chapter 2 of his POVERTY is 
also directed against political economy, including 
Ricardo[3]. Added to this, a careful investigation 
of Chapter 1 will reveal that the Ricardian value theory 
is also criticised, albeit indirectly, with regard 
to the historical understanding of economic categories.
   Methodologically speaking, 'the decisive points' 
indicated in POVERTY can be summarised as follows: 
1.  Capitalist relations of production and commerce 
are historical, transitory. 
2. They form a sum total by coexisting simultaneously 
and supporting one another.
3.  Economic categories are only the theoretical expressions 
of capitalist relations. Thus each economic category 
must represent the historical character of capitalist 
relation which it expresses and the intrinsic connection 
with other relations.	
4.  Understanding economic categories from the twofold 
aspects is explaining the genesis, or the origin, of 
each economic category, i.e. what, how and by what 
means each category is yielded. This is the crux of 
Proudhon's and Marx's methodological critique of political 
economy, i.e. of their unhistorical understanding of 
categories.	
5.  Economic categories should be presented in accordance 
with their genesis, i.e. in 'the order in which they 
engender one another' (Marx-Engels Collected Works, 
Vol.6, p.169; hereafter cited as 6 MEC 169) which was 
later termed the 'genetical presentation' of economic 
categories[4].          
   In Chapter I we examine the general character and 
limitations of both political economists' and Marx's 
method. Chapter II and III expound the historical character 
and the intrinsic connection between economic categories. 
Chapter IV investigates Marx's genetical presentation 
of economic categories. 
RICARDO VS. MARX ON METHOD
	  THE CHARACTER AND LIMITATIONS OF
              RICARDO'S  AND MARX'S METHOD
The method of political economy is logically termed 
the 'analytical method'. Political economists analysed 
capitalist relations of production and commerce, and 
abstracted their essences. For example, they reduced 
capital and commodity to labour. Also they analysed 
fluctuation in prices and abstracted central price 
from it. They called it 'natural price' (Smith) or 
'cost of production' (Ricardo) and defined the value 
of a commodity accordingly. It is this analytical method 
 which made their economics scientific and led them 
to the formation of labour theory of value.
   The analytical method, however, is inadequate to 
comprehending historical organisms which pass the process 
of formation development resolution: On the one hand, 
the method cannot clarify the historical character 
of capitalist relations. It reduces the substance of 
commodity, capital, rent etc., but does not demonstrate 
historical conditions which transform the substance, 
i.e. labour, into capital or commodity. The "First 
Observation" of POVERTY says:   
Economists explain how production takes place in the 
above-mentioned relations, but what they do not explain 
is how these relations themselves are produced, that 
is, the historical movement which gave them birth (Marx-Engels 
Collected Works, Vol.6, p.162; hereafter sited as 6 
MEC 162).
	      
On the other hand, the method is inadequate to comprehend 
the intrinsic connection between capitalist relations 
of production and commerce. 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 of formation development 
resolution: Capitalist relations spontaneously emerged 
from feudal relations and exist now as an historical 
stage and will evolve into higher levels.In the "Third 
Observation", Marx emphasises the interrelation 
of capitalist relations:
The different limbs of society are converted into so many separate societies [by Proudhon], following one upon the other. How, indeed, could the single logical formula of movement, of sequence, of time, explain the structure of society, in which all relations co-exist simultaneously and support one another(6 MEC 167).
In short, the analytical method is inadequate to comprehend 
the following two aspects of capitalist relations: 
the historical character and the intrinsic connection. 
Both Proudhon and Marx attempt to explain the origin 
of economic categories in order to transcend those 
insufficiencies of political economy by using a dialectical 
method[5]. Although Proudhon does not analyse the real 
movement--process--of capitalist production, Marx's 
dialectical method is a method of comprehending capitalist 
relations from the two aspects of capitalist relations 
based on an anlysis of the real capitalist relations. 
In this sense, the analytical method of political economy 
provides the basis for Marx's critical analysis of 
economic categories. The general character and limitations 
of the	analytical method,thus of political economists, 
is observed in Marx's Manuscripts of 1861-63 as follows: 
Classical economy is not interested in elaborating how the various forms come into being, but seeks to reduce them to their unity by means of analysis, because it starts from them as given premises. But analysis is the necessary prerequisite of genetical presentation, and of the understanding of the real, formative process in its different phases[6].
As he was once an Hegelian, Marx has been critical on 
the analytical method since his first encounter with 
political economy in 1843[7]. For example, Marx writes 
in his Economic Philosophic Manuscript of 1844 (hereafter 
EPM) as follows: 
 
Political economy proceeds from the fact of private 
property [the right of ownership]; it does not explain 
it to us. It grasps the material process of private 
property, the process through which it actually passes, 
in general and abstract formulae which it then takes 
as laws. It does not comprehend these laws, i.e. it 
does not show how they arise from the nature of private 
property (3 MEC 270-271). 
As a matter of fact, in the passage which follows the 
quotation above, Marx sets himself the task of comprehending 
economic laws of political economists from the 'general 
nature of private property'[8] with the help of the 
two concepts: 'private property' and 'estranged labour' 
(3 MEC 281). This reminded us of Marx's Manuscripts 
of 1861-63 [9] and should have been understood as his 
first plan of the genetical presentation of economic 
categories, but this has been interpreted as evidence 
of immaturity of the 'early Marx'.   
Å@It is also noteworthy that Marx's "On Proudhon" 
quoted partly in INTRODUCTION is preceded by a critique 
of the Hegelian speculative dialectics, a method of 
understanding organisms from two aspects: the historical 
character and the intrinsic connection. Here this can 
be mentioned only briefly but the point is that in 
the Hegelian dialectics categories and abstract ideas 
produce real social relations, as Marx writes in his 
Preface to the Second Edition of Capital [10]. 
     
    Marx's dialectical method, however, is only the 
dialectic of description, no more and no less than 
that. It is said to be a systematic description for 
comprehending capitalist relations from the two aspects: 
the historical character and the intrinsic connection. 
Therefore, his dialectic is, unlike Hegel's, not the 
self-development or selfcreation of concepts themselves. 
The movement of categories in Marx's dialectical presentation 
is not 'the real act of production' of categories but, 
in fact, 'a product of thinking and comprehending'[11]. 
In short, the limitation of Marx's dialectical method 
is that it is only but 'the working- up of observation 
and conception into concepts'[12]. This can be observed 
in Marx's critique of Proudhon's made-up dialectics. 
In the "Fifth Observation' Marx states: '...now 
we have M. Proudhon reduced to saying that the order 
in which he gives the economic categories is no longer 
the order in which they engender one another' (6 MEC 
169). To read it the other way round, Marx presents 
categories in the order in which they do engender one 
another.
RICARDO VS. MARX ON VIEW OF ECONOMIC CATEGORIES
Political economists reduce the various forms of wealth 
to their inner unity, but they do not explain the real 
formative process in its	 different phases. This is 
a necessary result of their method. The idea of explaining 
the genesis of economic categories never came into 
their minds. As Marx states in the "First Observation": 
'what they ... do not explain is how these relations 
themselves are produced' (6 MEC 162). 
   To take a couple of examples, they reduce 'commodity' 
to 'labour', but they are not concerned with why, how 
and by what means the 'labour' appears in the 'value' 
of a product in capitalist condition. Similarly, they 
do not explain 'natural price' 'production cost' from 
'value' nor the possibility and necessity for the historical 
abolition of commodities. They concentrate instead 
on the quantitative analysis of economic relations, 
i.e. average, highest and lowest rates. The deficiency 
of political economists in this respect is a necessary 
result of their analytical method. Consequently, Ricardo 
is not an exception.
   It would be clear from these examples that political 
economists do not understand capitalist relations, 
or economic categories, as historical, because their 
method necessarily abstracts all characteristics distinctive 
of capitalist relations. At least in theory, political 
economists do not understand economic categories as 
theoretical reflections of capitalist relations of 
production and commerce. They do not directly assert 
that capitalist relations are eternal, but they say 
so indirectly. In the "First Observation" 
Marx remarks: 'Economists express the relations of 
bourgeois production, the division of labour, credit, 
money, etc., as fixed, immutable, eternal categories' 
(6 MEC 162).  
   On the other hand, Marx understands: 'Economic categories 
are only the theoretical expressions,the abstractions 
of the social relations of production' (6 MEC 165). 
What concerns Marx is the historical conditions which 
transform 'labour' into the 'value' of a commodity 
or into 'capital'. In other words, the genesis of economic 
categories are explained, as Marx states in the "First 
Observation": Economists explain how production 
takes place in the above-mentioned relations, but what 
they do not explain is how these relations themselves 
are produced, that is, the historical movement which 
give them birth' (6 MEC 162). By 'the historical movement' 
in the quotation, we should not understand history 
qua history. Once capitalist relations are established, 
they are produced every day before our eyes. Furthermore, 
by 'movement' Marx means 'process'. The point here 
is that economic laws are grasped from the 'very nature 
of private property' through this genetical presentation 
of economic categories. Comprehending economic laws 
as necessary laws of private property is the other 
side of explaining the gnesis of economic categories. 
This requires a critical analysis of capitalist relations 
which even Ricardo had never thought of. Thus for Marx's 
genetical presentation of economic categories, the 
arrival-point of political economists serves, at most, 
only as the starting-point.
   For example, Marx points out that the followings 
must be examined minutely: what are men's 'respective 
needs, their productive forces, their mode of production, 
the raw materials of their production in short, what 
[are] the relations between man and man which resulted 
from all these conditions of existence' (6 MEC 170).
    This leads us to the definition of economic categories 
from the two aspects. As the theoretical expression 
of capitalist relations: each category must express 
the stage in the development of productive forces to 
which it corresponds. In the "Second Observation" 
Marx writes that 'Social relations are closely bound 
up with productive forces' (6 MEC 166); each category, 
on the other hand, must reflect the interconnection 
with other relations, which coexist simultaneously 
and support one another. 
    There are a couple of things worth mentioning in 
regard to Marx's dialectical method. First, economic 
categories 'are truths only insofar as those relations 
continue to exist' (38 MEC 100). Marx specifies that 
Proudhon's and Hegel's dialectics have to be speculative 
because they do not 'pursue the historical movement 
of production relations, of which the categories are 
but the theoretical expression'(6 MEC 162). As we shall 
see later, this concerns the order in which economic 
categories should be presented.  
   Secondly, capitalist relations must be separated 
from feudal or mere transitional relations through 
critical analyses of the movement of capitalist production 
and consumption. The term 'capital', for example, has 
been used from ancient times. It is, however, careless 
to jump from this simple fact to the conclusion that 
capitalism is as old as the term. As Marx points out 
in "$4. PROPERTY OR RENT" of "Chapter 
2", 'property has developed differently and under 
a set of entirely different social relations' (6 MEC 
197). Confusing modern capital with that in ancient 
times, e.g. the cattle, will lead us to a complete 
misunderstanding of our society based on large-scale 
industry. 
    In the following two chapters, let us examine further 
the point we have been considering with special reference 
to the Ricardian rent theory. 
RICARDO VS. MARX ON THE 'HISTORICAL CHARACTER'
Let us take up Marx's critical analysis of rent in POVERTY 
and demonstrate how the historical character of rent 
is grasped by Marx. Proudhon declares himself incapable 
of understanding the economic origin of rent by saying 
that it is 'so to speak, extra-economic'; Though he 
referrs to the Ricardian rent theory as to the average 
rent. To begin with, Marx summarises Ricardo's rent 
theory as follows: 
  (1) 'In agricultural industry, ... it is the price 
of the product obtained by the greatest amount of labour 
which regulates the price of all products of the same 
kind' (6 MEC 199). 
  (2) 'Then, as population increases, land of an inferior 
quality begins to be exploited, or new outlays of capital, 
proportionately less productive than before, are made 
upon the same plot of land. In both cases a greater 
amount of labour is expended to obtain a proportionately 
smaller product' (6 MEC 199). 
  (3) 'As competition levels the market price,the product 
of the better soil will be paid for as dearly as that 
of the inferior. It is the excess of the price of the 
products of the better soil over the cost of their 
production that constitutes rent' (6 MEC 200).
   After this summary, Marx points out that the Ricadian 
rent theory partly shows the economic origin of rent. 
Rent, in the Ricardian sense, is property in land in its bourgeois state, that is, feudal property which has become subject to the conditions of bourgeois production (6 MEC 199).
In contrast with Proudhon, Marx rates the Ricardian 
rent theory as a scientific analysis of real production 
relations. However, it should also be noted that Marx 
points out the insufficiency of Ricardo's analysis 
of rent as an historical, or a production relation. 
   For example,Marx names the followings as the historical 
conditions of the Ricardian doctrine:
  (1) that 'capital should be freely applicable to different 
branches of industry'; 
  (2) that 'a strongly developed competition among capitalists 
should have brought profits to an equal level';
  (3) that 'the farmer should be no more than an industrial 
capitalist claiming for the use of his capital on inferior 
land a profit equal to that which he would draw from 
his capital it were applied in any kind of manufacture'; 
  (4) that 'agricultural exploitation should be subjected 
to the regime of large-scale industry'; and finally, 
  (5) that 'the landowner himself should aim at nothing 
beyond the money return' (6 MEC 200). 
     In a succeeding paragraph, with regard to the subjective 
essence of rent, Marx counts the followings as 'the 
different relations expressed by rent':
  (1) 'The abasement of the labourer, reduced to the 
role of a simple worker,  day labourer,  wage-earner, 
working for the industrial capitalist';
  (2) 'the intervention of the industrial capitalist, 
exploiting the land like any other factory'; 
  (3) 'the transformation of the landed proprietor from 
a petty sovereign into a vulgar usurer' (6 MEC 201). 
  It would be clear from these that Marx grasps rent 
as a capitalist production relation by analysing historical 
conditions which rent expresses. This analysis, on 
the other hand, separates rent relation from other 
feudal, transitional or untypical relations. The following 
serves as an example: 
Farm rent can imply again, apart from rent proper, the interest on the capital incorporated in the land. In this instance the landowner receives this part of the farm rent, not as a landowner but as a capitalist; but this is not the rent proper that we are to deal with (6 MEC 205).
It is well-known that Ricardo determines rent by the 
following two factors:  (1) the different 'situation' 
of land to market; and (2) the different 'degrees of 
fertility of soil'. Marx argues against this determination. 
Since the two factors are unhistorical, this determination 
makes his rent unhistorical and unsocial. In this sense, 
his rent theory illustrates the insufficiency as well 
as the scientific aspect of the Ricardian economics. 
Marx writes: 
  
Ricardo, after postulating bourgeois production as necessary 
for determining rent, applies it [the conception of 
rent: in the German ed.],  nevertheless, to the landed 
property of all ages and all countries. This is an 
old trick [error: in  the German ed.] common to all 
the economists, who represent the bourgeois relations 
of production as eternal categories [relations: in 
the German ed.] (6 MEC 202).	
Although he had not yet finished his own rent theory in POVERTY, basic points of Marx's view have already become clear. For example, he asserts: 'Rent results from the social relations in which the exploitation of the land takes place' (6 MEC 205). Rent should express those social relations. However, this is beyond the analytical method.
RICARDO VS. MARX ON THE 'INTRINSIC CONNECTION'
Capitalist relations of production coexist simultaneously, 
support one another and form a whole. They are all 
interconnected, accordingly economic categories must 
express the intrinsic connection between capitalist 
relations. To 'give an exposition of all the social 
relations of bourgeois production' is 'to define bourgeois 
property' (6 MEC 197). On the other hand, unless the 
'bonds' are shown, each capitaist relation is understood 
as independent of the others. 
   In his SYSTEM, Proudhon gives property an independent 
chapter (Chapter 11  Property).  Furthermore, as a 
matter of fact, there he investigates only rent. In 
the opening paragraph of "Chapter 2  $4	Property 
or Rent", Marx criticises this.
To try to give a definition of property as of an independent relation, a category apart, an abstract and eternal idea, can be nothing but an illusion of metaphysics or jurisprudence (6 MEC 197).
However, this criticism can be applied to political 
economy too. The  Ricardian rent theory provides an 
example. He deals with rent in relation to 'value' 
(Chapter 2  On Rent), but his point of view is limited 
to whether rent is a component of natural price or 
a result of it. Rent, especially average rent, is already 
presupposed in his determination of value (Chapter 
1). Rent is not explained as a 'particular and developed 
expression' (3 MEC 281) of value. Similarly, the intrinsic 
connection between value, profit, rent or cost of production 
(including profit) are not grasped nor developed from 
value by Ricardo.
   Thus, from Marx's point of view or from the standpoint 
of the genetical presentation of economic categories, 
Ricardo does not grasp the connection between the categories 
nor explain anything. His presentation of economic 
categories is nothing but a tautology. This is also 
a necessary result of his analytical method.
    Another notable example occurs in Chapter 1 of POVERTY. 
Marx investigates money as 'a social relation' (6 MEC 
145) closely connected with a whole chain of other 
economic relations.Although the criticism is directed 
against Proudhon, it should be understood as a critique 
of the Ricardian money theory because he does not differ 
much from Proudhon in money theory. This is the reason 
why Ricardo is not contrastd with Proudhon any longer. 
Anyway, Marx's critique of Proudhon's money theory 
can be completely applied to Ricardo's. 
   Marx's critique can be summarised as follows: Proudhon 
does not distinguish money itself from its functions 
forms and grasps money only in its concrete functions, 
i.e. only as means of exchange. He presupposes the 
necessity for money a special agent of exchange rather 
than explains it. He explains only a secondary question, 
i.e. 'why this particular function [a special agent 
of exchange] has developed upon gold and silver rather 
than upon any other commodity' (6 MEC 146). He does 
not realise that 'this [the money] relation corresponds 
to a definite mode of production neither more nor less 
than does individual exchange' (6 MEC 146). Gold and 
silver are commodities and also have the capacity of 
being the universal agent of exchange. Thus the first 
question to be asked is, 'why, in exchanges as they 
[the values] are actually constituted, it has been 
necessary to individualise exchangeable-value, so to 
speak, by the creation of a special agent of exchange' 
(6 MEC 145). Commodity production and commodity exchange 
require and perpetually produce money. The necessity 
for the creation of money is in the determination of 
value itself. This is, however, beyond Ricardo's comprehension. 
Marx specifies this in his Manuscripts of 1861-63 by 
saying: 
But Ricardo does not examine the form the peculiar characteristic of labour that creates exchange-value or manifests itself in exchange-value the nature of this labour. Hence he does not grasp the connection of this labour with money or that it must assume the form of money. Hence he completely fails to grasp the connection between the determination of the exchange-value of the commodity by labour time and the fact that the devlopment of commodities necessarily leads to the formation of money[13].
As we have examined above, the Ricardian theory of rent 
and money do not comprehend the intrinsic connection 
with other capitalist relations, or economic categories. 
Understanding money as a means of exchange does not 
necessarily mean comprehending it as 'a production 
relation' (6 MEC 145). Marx, on the other hand, comprehends 
the connection between commodities and money from the 
social substance of value[14].    
   So far, we have examined the inadequacy of the Ricardian 
method from three points of view: the view on economic 
categories, the historical character of capitalist 
relations and the connections between them. Those limitations 
are necessary results of his analytical method. They 
are not three different things, but three aspects of 
the same thing, i.e. the analytical method. In the 
next chapter we would  give readers the full particulars 
of Marx's methodological confrontation with Ricardo 
in POVERTY by unifying those three aspects. 
MARX'S PRESENTATION OF ECONOMIC CATEGORIES
The "First Observation" in Chapter 2 specifies 
that the crux of the Proudhonian and Marxian methodological 
critique of political economy is the historical understanding 
of economic categories by explaining the genesis of 
them, i.e. a dialectical method. Their point of diverging 
is whether they pursue the real movement of capitalist 
production and commerce or not,or whether their critique 
of political economy is a critique of economic categories 
or not. 
  Proudhon does not analyse the real movement. He does 
not examine the historical conditions nor the interrelation 
of capitalist relations which the categories express. 
He explains their origins by introducing a person, 
like a deus ex machina [15], who makes the proposition 
to other persons to establish the relation in question. 
Thus for Proudhon, economic categories do not express 
the historical conditions of them nor their interrelation. 
He presents economic categories in the order classified 
by an outside principle, i.e. 'equality'. In this sense, 
Proudhon's critique of political economy is not a critique 
of economic categories.
   Marx, on the other hand, analyses the movement of 
capitalist production from the following two aspects 
in order to explain their genesis: the historical character 
and the intrinsic connection. Economic categories are 
presented accordingly in the order which is shown by 
the intrinsic connection between the categories. Marx 
later calls this method of presenting economic categories 
the 'genetical presentation', because it explains the 
genesis of economic categories, thus, of the capitalist 
relations which they express. It is through this presentation, 
the logical necessity for capitalist society, i.e. 
of formation - development - resolution, is grasped 
by the twofold determination of economic categories 
too[16]: the historical character of capitalist relations 
corresponding to a certain stage in the development 
of productive forces; the intrinsic connection between 
capitalist relations coexisting simultaneously and 
supporting one another.In this sense Marx's critique 
of political economy is a critique of economic categories. 
   With regard to this, it should be noted that Proudhon's 
attempt at explaining the genesis of economic categories 
as such is rated highly by Marx in the "First 
Observation"[17].      Unfortunately, not all 
economic categories are presented in POVERTY because 
of its polemical nature, but the outline of Marx's 
genetical presentation can be read between the lines 
such as: 
The same men who establish their social relations in 
conformity with their material productivity, produce 
also principles, ideas and	categories, in conformity 
with their social relations (6 MEC 166).
  Now that he has to put this dialectics into practice, 
his reason in default.  M. Proudhon's dialectics runs 
counter to Hegel's dialectics, and now we have M. Proudhon 
reduced to saying that the order in which he gives 
the economic categories is no longer the order in which 
they engender one another. Economic evolutions are 
no longer the evolutions of reason itself (6 MEC 169; 
italics added).
Here we should note that the so-called  return journey 
from abstract to concrete[18] is suggested by the emphasised 
sentence. Taking into account his critical analysis 
of rent in POVERTY and his plans in the works preceding 
POVERTY[19], it would be safe to say that Marx plans 
to develop economic categories in the following order: 
from the abstract to the concrete; from the simple 
to the aggregate; from those of production process 
to those of circulation process. For example, commodities 
and money before capital, profit and average profit 
before rent. The term 'engender' in the above quotation 
indicates the 'premise - development' relation between 
the categories.   
   It is worth mentioning the 'spontaneity' of economic 
categories. The following passage in POVERTY may mislead 
us unless we keep it within its context.  
Indeed, from the moment the process of the dialectic movement is reduced to the simple process of opposing good to bad, of posing problems tending to eliminate the bad, and of administering one category as an antidote to another, the categories are deprived of all spontaneity; the idea 'no longer function'; there is no life left in it. It is no longer posed or decomposed into categories (6 MEC 169).
It is careless to jump from this to the interpretation 
that Marx's categories have spontaneity or life in 
themselves. On the contrary, the quotation above indicates 
the inadequacy of Proudhon's made-up dialectics even 
as speculative. 
   First: Proudhon does not 'pursue the historical movement 
of production relations, of which the categories are 
but the theoretical expression' (6 MEC 162). He inverts 
the relationship between economic categories, just 
as in Hegel's speculative dialectics.
   Secondly: however,Proudhon's dialectics differs from 
Hegel's. Contradictions produce other categories in 
Hegel's dialectics, but not in Proudhon's. Because, 
for Proudhon, 'the dialectic movement is the dogmatic 
distinctions between good and bad' (6 MEC 168). His 
contradictions are not real contradictions but mere 
distinctions.   
    Thirdly: consequently, in Proudhon's speculative 
dialectics, unlike Hegel's, categories have to be developed 
through the power of other categories, i.e. other categories 
must be presupposed. For example, 'to arrive at the 
constitution of value, which for him is the basis of 
all economic evolutions, he could not do without division 
of labour, competition, etc.' (6 MEC 166). Thus the 
quotation above is followed by:
The sequence of categories has become a sort of scaffolding. Dialectics has ceased to be the movement of absolute reason. There is no longer any dialectics but only, at the most, absolutely pure morality (6 MEC 169).
In contrast to that, Marx's genetical presentation is 
the dialectic of description and merely 'the working-up 
observation and conception into concept'. It must be 
based on the analysis of 'the historical movement of 
production relations' (6 MEC 162). Consequently, however 
his presentation of economic categories may appear 
as the self-development or self-creation of 'concept', 
it is not a dogma. As Marx warns us 'the subject, society, 
must constantly be kept in mind as the premise from 
which we start' [20] in the whole process of his presentation. 
    From all the observations above, we may conclude 
that Marx suggests the 'genetical presentation of economic 
categories' in POVERTY. 
CONCLUSION
In the early 1840s Marx faced the so-called material 
problem and the problem of the abolition of capital. 
At the time when capital was establishing itself and 
causing friction with feudal property in Germany, the 
abolition of capital was acclaimed by socialists and 
communists in England and France. Thus it was an anachronism 
for Marx to deal with the German domestic problems, 
because they had already been solved in England and 
France. The first step he took to solve the problem 
was a critical investigation of Hegel's Philosophy 
of Right which is an exceptional critique of capitalist 
society in England.
    Through that work, Marx realised that the separation 
of civil society and political state has its root in 
civil society, i.e. in the separation of individuals 
into citizen (citoyen )and bourgeois. Consequently, 
he formulates that human emancipation will be accomplished 
only when: 'the real, individual man ... in his particular 
work ... has reorganised and organised his "forces 
propres" as social forces, and consequently no 
longer separates social powers from himself' (3 MEC 
168).In this way, Marx comes to the conclusion that 
a critical analysis of capitalist relations of production 
is necessary for him to clarify material conditions 
for it. 
   For Marx the real question is: Can 'Germany attain 
a practice à la hauteur des principes, i.e. 
a revolution which will raise not only to the official 
level of the modern nations but to the height of humanity 
which will be the near future of these nations' (3 
MEC 182)? As I have already clarified in my preceding 
paper Individual, Social and Common Property", 
Marx tackles this question by separating out the general 
essence (Wesen ) of private property through a twofold 
analysis of the capitalist production process in EPM.	 
 
   Capitalist society, i.e. the sum total of capitalist 
relations, develops antagonistically by producing wealth 
on one hand and poverty on the other. A controversy 
between political economists and socialists follows. 
   Political economists are a fatalist school and represent 
a bourgeoisie which works only ... to increase the 
productive forces and to give a new upsurge to industry 
and commerce' (6 MEC 176). They understand capitalist 
society as eternal by conceptualising capitalist relations 
into unhistorical categories. They do not comprehend 
how economic laws arise from the very nature (Wesen 
) of capital nor demonstrate economic laws as necessary 
laws of capital. This is a necessary result of their 
analytical method. Socialists, on the other hand, are 
on the workers' side and try to reform society, especially 
distribution relations,without abolishing capitalist 
production relations. Neither economists nor socialists 
comprehend capitalist society as an historical, transitory 
society corresponding to a certain stage in the development 
of productive forces.  
   Proudhon claimed in his SYSTEM that he had transcended 
both political economy and socialism.Therefore, Marx 
in POVERTY is directly concerned with Proudhon, but 
indirectly, concerned with political economy and socialism. 
The methodological inadequacy of Ricardo's analysis 
was presupposed by Proudhon and Marx in 1846. The core 
of the problem is the new method required to transcend 
the inadequacy of the analytical method of political 
economy, including Ricardo. As we have seen, the point 
is how to understand economic categories by explaining 
the genesis of them. Marx's critique of Proudhon's 
made-up dialectical is only his methodologi-cal critique 
of Ricardo from the following two aspects: the historical 
character of economic categories; and the intrinsic 
connection between those categories. This brings us 
to another point which is going to be made in the succeeding 
paper, i.e. Marx's critique of the Ricardian concept 
cost of production' in Chapter 1 of POVERTY.
ä(TM)ññíç********************************
[1]. ÅgOn Proudhon" (Marx's letter to J. B. Schweitzer dated 24 January 1865), Karl MarxÅ|Fredrick Engels Selected Works in three volumes, Vol.2 (Progress Publishers, 1977), p.26.
[2]. The Preface to A Critique of Political Economy (1859), in: David McLellan, Karl Marx Selected Writings (Oxford, 1977), p.390.
[3]. In POVERTY, Marx contrasts Ricardo, Bray and Hegel with Proudhon. This is neither to defend them from Proudhon's attacks nor to criticise Proudhon by using their theories. It is to illustrate that Proudhon has not transcended Ricardo the economist or Bray the Ricardian socialist. It is expressed best in the following quotation:
Å@ He [Proudhon] wants to be the synthesis.... He wants to soar as the Å@ man of science above the bourgeois and the proletarians; he is Å@Å@Å@ merely the petty bourgeois, continually tossed back and forth Å@Å@Å@ between capital and labour, political economy and communism (6 Å@Å@ MEC 178).
Stressing the scientific aspect of the Ricardian value 
theory in Chapter 1 and the methodological critique 
of him in Chapter 2 of POVERTY, albeit indirectly, 
do not contradict each other. On the contrary, a careful 
investigation of Chapter 1 reveals that the Ricardian 
value theory opposed to Proudhon is not his but the 
reread by Marx; surprisingly few studies have clarified 
this. They have analysed the two chapters of POVERTY 
separately. As a result, Marx's methodological and 
theoretical critique of Ricardo's Åecost of production' 
has been completely overlooked. The interpretation 
follows that in POVERTY Marx Åeaccepted' or Åeaffirmed' 
the Ricardian value theory. I would like to argue against 
this undialectical interpretation of Marx's formation 
process in the next paper. The point is that Chapter 
1 of POVERTY is to be understood with regard to his 
methodological critique of Ricardo in Chapter 2.
   Similarly, Bray is contrasted with Proudhon in order 
to show that Proudhon has no originality as a utopian 
interpreter of the Ricardian value theory. Likewise, 
Hegel is opposed to Proudhon, albeit his dialectics 
has nothing to do with Hegel's, in order to rail against 
methodological confusion. Marx illustrates on the one 
hand, that Proudhon's dialectics has the same speculative 
structure as Hegel's; i.e. he understands economic 
categories as eternal by inverting the relationship 
between categories and real relations; on the other, 
that Proudhon's dialectics is fatal as a speculative 
dialectics. Since his categories have no life in themselves, 
they need help for development from the outside. 
[4]. MEGA2, Ö+-3, Teil 4, S.1499. Theories of Surplus Value, Part Öo (Progress Publishers, 1971), p.500.
[5].	See Marx's letter to J.B. Schweitzer dated on 24 
January 1865, in: KARL MARXÅ|FREDRICK ENGELS 
SELECTED WORKS in three volumes, Vol. 2 (Progress Publishers, 
Moscow, 1977), p.26. Marx came into personal contact 
with Proudhon in 1844 in Paris and Åeinfected 
him to his great injury with Hegelianism'. Both Marx 
and Proudhon attempt to  criticise private property 
in the form of a critique of political economy by using 
a dialectical method. However, since Proudhon does 
not pursue the real movement of capitalist production, 
his dialectics has to be speculative just like the 
Hegelian. In other words his critique of political
economy is not a critique of economic categories. 
[6]. MEGA2, Ö+-3, Teil 4, S.1499. Theories of Surplus Value, PartÖo (Progress Publishers, Moscow, 1971), p.500.
[7]. See, e.g. my ÅgMarx's First Critique of Political Economy", The Review of Takushoku University, No.190 (1991). To ignore this fact is to misunderstand the whole of Marx's formation process.
[8]. As to this concept, see Chapter Öc of my paper ÅgIndividual, Social and Common Property", The Review of Takushoku University, No. 199 (1992).
[9]. MEGA2, Ö+-3, Teil 4, S.1389. Theories of Surplus Value, PartÖo, pp.258-259.
[10]. Capital, Vol. 1, Pelican ed., pp.102-103. As Marx asserts in the ÅgFirst Observation", this is a necessary result of not pursuing Åethe historical movement of production relations' (6 MEC 162).
[11]. Grundrisse, Pelican ed., p.101.
[12]. Ibid., p.101.
[13]. MEGA2, Ö+-3, Teil 3, S.816. Theories of Surplus Value, PartÖ+, p.164. See also Footnotes 33, 34 and 35 of Capital, Vol.1, Pelican ed., pp.173-176.
[14]. This brings us to the point I would like to make in the next paper: Marx's critique of Ricardo's value theory in POVERTY. What we should notice here, with regard to this, is Marx's following remark:
There is no ready-constituted Åeproportional relation' [of supply to demand], but only a constituting movement (6 MEC 134).
[15]. See Editor's Note b on 6 MEC 198. As to how Proudhon explains the genesis of economic categories, see 6 MEC 198-199 and 112.
[16]. See Preface to the Second Edition of Capital, Vol. 1, Pelican ed., p.103.
[17]. See, e.g. 6 MEC 111 and 162.
[18]. See Grunrisse, Pelican ed., pp.100-101.
[19]. See, for example, EPM (3 MEC 281, 289) and Notes on James Mill (3 MEC 221-222).
[20]. Grunrisse, Pelican ed., p. 102.