12.8 Ricardian socialism

Marx was hardly the first person to arrive at radical proletarian conclusions from the Ricardian system and the labour theory of value. Mediating between Ricardo and Marx were the ‘Ricardian socialists’, who greatly influenced Marx, but whose influence has been depreciated by Marxists – including Marx himself – who like to think that the master's unique genius in arriving at neo-Ricardian socialism had no predecessors.

The first Ricardian socialist was William Thompson (1775–1833), a well-to-do Irish landlord from County Cork. Thompson's prolix and repetitious work, An Inquiry into the Principles of the Distribution of Wealth, published in 1824, went into three editions in the next half-century. An extreme Benthamite utilitarian, Thompson in his Inquiry also simply declared that ‘labour is the sole parent of wealth’. Neither utility, pleasure, or scarcity had anything to do with it. From this flat assertion, the labour theory of value swiftly followed. As Alexander Gray puts it, with his characteristic wit, ‘it should be obvious that if the definition selected gives in advance an assurance labour is the sole parent of wealth, this ought to be a considerable aid towards proving that wealth may be attributed entirely to labour’.²⁹

Thompson advocated a world of free and voluntary exchanges as a way of ensuring that workers will earn their product. But what of the existing system of exchange? Anticipating Marx, these exchanges were, according to Thompson, coerced, the capitalists ‘seizing the products of their labour [of the labourers] by force’. But here, on the edge of Marxism, Thompson retreated into a libertarian class analysis. For what constitutes such coercion? An entire spectrum of ‘bounties, protestations, apprenticeships, guilds, corporations, monopolies’ – which sounds very much like Comte, Dunoyer, or James Mill.

But Thompson presses on. Rent and profit are, in particular, ‘surplus value’ (in Thompson's original phrase) extracted from the exploited workers. But then Thompson retreats again from his full vision, conceding that ‘the labourer must pay for the use of these [capital goods], when so unfortunate as not to possess them’. So even though Thompson is full of invective against the greedy and rapacious capitalists, he concedes that they perform a necessary function. How much, then, should they be paid? It is not surprising that Thompson floundered in trying to discover such a principle.

Thompson wound up, then, far from a revolutionary; instead, his mild, pre-John Stuart Mill-like solution was to encourage cooperatives as a means of arriving at inter-class harmony (in his Labor Rewarded, 1827). But this scarcely exhausted Thompson's heresies as a pre-Marxian. For, being dedicated to free exchange, Thompson sensibly had to admit that from exchange often emerges accumulation, and from accumulation there arises the dread capitalist class. Thus: ‘you cannot abridge the exchanges and consequent accumulations of the capitalist without at the same time abridging all barter’. And, further, admitting the serpent of wages and rent back into Eden: ‘Why not permit the labourer to exchange for the use of a house, a horse, a machine, as well as for its possession?³⁰

The other founding father of Ricardian socialism in 1820s, John Gray (1799–1883), was possessed, like Thompson, of a most un-Marxian spirit of moderation. As a young Scottish clerk in a wholesale house in London, Gray published his socialistic Lectures on Human Happiness in 1825. An arch-utilitarian, and expounder of the Ricardian labour theory of value, Gray fulminated against capitalists as exploiters of the working class, and, like Marx, saw the seeds of such exploitation in trade or barter. If William Thompson's innovation was the phrase ‘surplus value’, John Gray's particular contribution to the Marxian brew was to bring back, in a heavy way, the physiocratic-Adam Smith notion of productive vs unproductive labour, and thus rescue this flawed concept from Ricardian neglect. Not only that: but Gray narrowed the Smithian standard of productive labour considerably. As Gray put it, ‘they only are productive members of society who apply their own hands either to the cultivation of the earth itself, or to the preparing and appropriating the produce of the earth to the uses of life’. Having narrowed the definition of productive, Gray then began to make curious concessions, admitting, for example, that some occupations may be to some extent ‘useful’ although ‘unproductive’.

John Gray then proceeded happily to run through the list of British occupations, and to allocate in an obviously purely arbitrary way the percentages of ‘productivity’ or ‘usefulness’ in each occupation. Thus, Gray contends that merchants, manufacturers and others who are ‘mere distributors of wealth’, could still be ‘useful’ but ‘only in a sufficient number’. Gray concluded that the productive classes were far short of half the total population.

Harking back, perhaps unconsciously, to the ancient Greeks, Gray reserved some of his choicest venom for the retailers, whom he savaged as ‘productive’ only of ‘deception and falsehood, folly and extravagance, slavery of the corporeal, and prostitution of the intellectual faculties of man’.³¹

It turns out that for Gray, the main sin, the crucial evil, is competition. The competition of labour pushes the wages of labour down to a minimum. Standard Marxian fare, no doubt. But, in addition, even though labour is supposedly the sole creator of value, Gray also worries that competition, with equal perni-ciousness, also keeps to a minimum the amount of profits and rent.³²

John Gray concludes with the general principle that every individual in society, except those living on fixed incomes, finds their incomes limited and ground down by competition.

It turns out that the exploitation of labour, indeed of everyone, is engineered by competition itself, which ‘limits’ production. Put an end to competition, then, and not only will the ideal world arrive where the labourer earns his full product, but also wealth will then be multiplied ‘without any known limits’. The world is only impoverished because of competition; eliminate it, and wealth will be abundant for all.³³

Even though Gray maintained that competition could be abolished immediately and with only good effects, he was distressingly vague on how to accomplish this feat. He seemed to favour some sort of all-embracing cooperative, thereby bringing him close to Thompsonian reform. Soon, however, Gray shifted his attention to the ‘limitations’ on production allegedly imposed by hard money, and so he turned increasingly to a call for accelerating amounts of cheap and easy money.

Thus, in 1831, Gray's book The Social System called for cheap and abundant credit to fuel and finance increased production, guided by a governmental national bank. Gray, of course, also advocated irredeemable paper money and the abolition of the gold standard. This analysis was further developed in John Gray's last work, Lectures on the Nature and Use of Money (1848).

After 1848, John Gray's social protests ceased completely, and so until recently it was assumed by historians that he had died ‘around 1850’. It turns out, however, that Gray, shortly after the publication of his Lecture of Human Happiness, founded with his brother James the famous publishing firm of J. & J. Gray of Edinburgh. As the firm flourished, especially after 1850, Gray settled down to a comfortable existence, and died at a ripe old age of 84 in 1883.

A decade and a half after Thompson and Gray, the third leading Ricardian socialist made his appearance: John Francis Bray (1809–97), in his major work, much quoted by Marx, Labour's Wrongs and Labour's Remedy (1839). Bray was born in Washington DC, the child of English actors, and, when his mother died, his ailing father brought John Francis back to Leeds in England in 1822. In Leeds, Bray became a compositor, and plunged into the trade-union movement, becoming treasurer of the Leeds Working Men's Association in 1837.

Like the others an extreme utilitarian, Bray, in Labour's Wrongs, asserts that God had meant men to be happy, but that unhappiness was injected into the world by the institution of private property, which destroyed the just institution of communal property, particularly in the land. From private property arose the odious division of labour and class conflict, exploitation of labourers and extraction of their surplus value by the capitalist class. Moreover, Bray averred that the root problem is the alleged fact of unequal exchange. Although understanding that, in market exchanges, each party benefits, Bray asserts that, especially in a labour contract, this is not enough, that the exchange and its benefits must be ‘equal’.

Not realizing that there is no point in any exchange unless the value, for each man, of each of the two exchanged goods is unequal, Bray, in a notable pre-Marxian passage, asserts:

Men have only two things which they can exchange with each other, namely, labour and the product of labour; therefore, let them exchange as they will, they merely give, as it were, labour for labour. If a system of exchanges were acted upon, the value of all others would be determined by the entire cost of production, and equal values would always exchange for equal values.³⁴

Here we have packed into one short compass a number of crucial Marxian fallacies: that only commodities are produced or important (in contrast to allegedly non-productive services); the ancient Aristotelian fallacy that exchange implies equality of value; the labour theory of value; and the idea that in a just world, prices will all be equal to their costs of production, basically the quantity of labour hours expended in production.

To John Bray, as to Marx after him, the remedy for all this systemic evil is communism, ‘the most perfect form of society man can institute’. But in contrast to Marx, Bray saw no inevitable mechanism or law of history to yield that great event. To the contrary, and in contrast to the other communists of his day, John Bray perceived that communism required a New Communist Man to work, but that the advent of this new man was definitely not on the horizon. Any communism would come up against ‘the foul and loathsome selfishness which now more or less accompanies every action, clings to every thought, and pollutes every aspiration’.³⁵

Instead, Bray focused his vision, not on the impractical and remote ultimate goal, but on his allegedly practical transition, or intermediate, social goal. That happened to be a hypertrophied version of the cooperative schemes that had proved so alluring to Thompson and Gray. Bray proposed that the world be organized into one vast cartellized network of cooperative corporations: that is, cooperatives organized on the principle of one stockholder, one vote. The cartellized network would be achieved by the workers and coopera-tors buying out all existing capitalists. Bray did not seem to see that acquiring the capital to finance this most massive buy out of all time might be even more impractical than organizing Marx's violent proletarian revolution.

Scratch a socialist of this epoch and one will find a money crank. Sure enough, Bray envisioned that the cooperative cartel, once established, would eliminate existing money, and substitute a national bank that would issue notes to each worker based on the quantity of labour-time he had expended in production. The goods the labourer would buy would in their turn be priced at the amount of labour-time embodied within them. Perhaps if Marx had ever been interested in charting his future communist economy, labour-time notes might have been part of his package.

Strictly, there would be no reason for Marxian labour-time notes to increase, but John Bray, as an inflationist, did not of course see it that way. The function of his national bank would be to keep money issued and flowing ‘like blood within the living body,... equably through society at large, and infuse universal health and vigor’. The note issue would, of course, always be kept ‘within the limits of the actual effective capital existent’ – a form of ‘needs of trade’ argument at least as absurd as the usual variant.³⁶ For the nominal ‘value’ of existing capital would of course increase as the money supply kept rising.

A few years after the publication of Labour's Wrongs, in 1842, Bray returned to the United States. A second book, A Voyage from Utopia, was finished in manuscript, but remained unpublished until the 1950s. For the rest of his life in the United States, Bray wrote sporadically, contributing many letters to labour and socialist periodicals, as well as chapters in the mid-18508 for an unfinished book, The Coming Age. Bray's life was as sporadic as his output. He found making a living precarious, working for brief jobs as a printer for newspapers, and complaining, rather inconsistently with his doctrines, that American employers were far more exploitative than British, the ‘Yankees’, as Professor Dorfman paraphrased Bray, ‘appearing] more like gamblers and sharpers than honest businessmen’.³⁷

Eventually, Bray went west to Michigan, where he had inherited some land, and eked out a living as a newspaperman and small farmer. During the 1870s and 1880s, Bray became vice-president of the American Labor Reform League and was a member of the socialistic Knights of Labor. His later writings, some of which denounced spiritualism, emphasized attacks on the gold standard and a call for an abundance of state paper money that would allegedly drive interest rates down to zero. His communist ideal was now abandoned as Utopian.

Two of Bray's later writings are worthy of note. Even though he was opposed to slavery in Labour's Wrongs, his opposition to the Civil War in his anonymous anti-war pamphlet, American Destiny: What Shall it Be, Republican or Cossack? (1864) led him onward to judge slavery as really no worse than countries cursed by a huge public debt. Moreover, the natural state of the black man, to Bray, is ‘nakedness and indolence’, so that a South that freed its slaves would decay irremediably, with capital disappearing, and plantations returning to the wilderness.

In his final book, God and Man a Unity and All Mankind a Unity (1879), John Bray added to his money crankism the idea of a ‘non-theological religion’, in which establishing the right social institutions would bring about a this-worldly kind of ‘immortality’.

A striking anomaly is a writer of the 1820s and later who is invariably listed by historians as a leading Ricardian socialist, but who was most emphatically neither a Ricardian nor a socialist. Thomas Hodgskin (1787–1869) was a brilliant, innovative and self-educated political theorist who, far from being a socialist, was a laissez-faire libertarian to the point of being an individualist anarchist. Hodgskin's father was a storekeeper at the naval dockyard who sent his son to sea at the age of 12. Eventually, Hodgskin's individualist instincts and principles rubbed against naval discipline, and one day, he writes, ‘I complained of the injury done me, by a commander-in-chief, to himself, in the language that I thought it merited; he had unjustly deprived me of every chance of promotion from my own exertions, and that was robbing me of every hope’.³⁸

As one might expect, Hodgskin's naval commander did not take kindly to his outburst of righteous indignation, and Hodgskin was forcibly retired from the navy, at half-pay, at the comparatively young retirement age of 25. Embittered, Hodgskin promptly took revenge on the navy by publishing his first book, An Essay on Naval Discipline (1813), a blistering attack on military tyranny. Eloquently, Hodgskin began his work by setting down the main lesson he had learned: ‘Patiently submitting to oppression (because it comes from a superior) is a vice: to surmount your fears of that superior, and resist it, is a virtue’.³⁹

Hodgskin's experience left him a bitter enemy of government and government intervention in all its forms; and several years of travelling around Europe and reading and meeting people strengthened and deepened these convictions. Returning to Great Britain, Hodgskin published a two-volume travel book, Travels in the North of Germany (Edinburgh, 1820), in which, as Alexander Gray puts it, ‘innocent Reisebilder are interlarded with anarchistic digressions, doubtless to the amazement and perturbation of many of his readers’.⁴⁰

Settled in London, Hodgskin was, for the rest of his life, to work as a lecturer and a journalist. He worked for a while with people who seemed to be his natural allies for laissez-faire: Francis Place, James Mill, and the philosophic radicals. But very shortly it became clear that there were severe philosophical differences between them. In the first place, Hodgskin abandoned his early Benthamite utilitarianism for a trenchant and militant natural law and natural rights position. In his brilliant and logical work, The Natural and Artificial Right of Property Contrasted (1832), Hodgskin presented a radicalized Lockean view of property rights. An ardent defence of the right of private property, including a homesteading defence of private property in land, Hodgskin corrected Locke's various slippages from a consistent ‘Lockean’ position. To Hodgskin, it was crystal-clear that ‘natural’ private property rights were sound and just (such as each man in his own person, or in property that he creates or land that he homesteads, or in property which he acquires in an exchange of just property titles). On the other hand, great mischief was performed by ‘artificial’ property rights, that is, rights created by government artificially, in defiance of natural law and natural rights. Hodgskin's work remains today as one of the best expositions of natural property rights doctrine.

Another difference with the Benthamites was that unfortunately and anomalously, Hodgskin imbibed the labour theory of value from another influential ‘Ricardian socialist’ of the day, the pseudonymous ‘Piercy Ravenstone’.⁴¹ Ravenstone denounced private ownership of land and capital for creating stolen, or ‘artificial’, property, whereas since labour is the sole creator of production, by rights, or naturally, all income should redound to labour. Rent and profit, asserted Ravenstone, are extracted from the product of labour: this ‘fund for the maintenance of the idle is the surplus produce of the labour of the industrious’. Furthermore, Ravenstone put forth a truly bizarre theory of capital, in which ‘capital’ is a non-existent concept designed to cloak the theft of labour's surplus. Capital, Ravenstone absurdly declared, ‘may be increased to any imaginable amount without adding to the real riches of a nation’.⁴²

From then on, Hodgskin was afflicted by an anomalous combination of laissez-faire anarchism and a Ravenstonian labour theory of value. How square the two? At first, Hodgskin tried to do so by attributing the exploitation, the ‘surplus value’ of labour, solely to such government intervention as the Combination Laws, which restricted the right to form labour unions. Hence Hodgskin helped found the Mechanics' Magazine, and then its affiliate, the London Mechanics' Institute, an institution for lectures to the working classes. During the course of the successful Ricardian-Benthamite agitation for repeal of the Combination Laws in 1824, Hodgskin wrote his Ravenstonian booklet, Labour Defended Against the Claims of Capital (1825), followed by Mechanics' Institute lectures published as Popular Political Economy (1827).

Particularly bizarre was Hodgskin's development of the Ravenstonian view that capital is unimportant and non-existent. Hodgskin denies that any savings are involved in capital, any advances from foregone consumption. Circulating capital, he says sophistically, are not produced in advance; the bread the worker buys is baked each day rather than being stored in advance by the capitalist. In fact, of course, no one claims that the capitalist actually stores the workers' food and other means of subsistence in advance; but his saved money is advanced ahead of production and sale to the worker, which enables the worker to buy his subsistence now instead of having to wait for years. As for fixed capital, not only is it stored-up labour – a general Ricardian socialist argument – but these machines are only ‘inert, decaying and dead matter’, unless ‘guided, directed and applied by skillful hands’. Hodgskin concludes that ‘fixed capital does not derive its utility from previous, but present labour’, grotesquely ignoring the fact that just because capital and labour need each other does not make labour the sole factor of production. In the crowning absurdity, Hodgskin declares that ‘it is a miserable delusion to call capital something saved’.

There is no question that Hodgskin's ultra labourism influenced Karl Marx, but his extreme labour theory of value does not make him a Ricardian, much less a socialist. In fact, Hodgskin was highly critical of Ricardo and the Ricardian system, denounced Ricardo's abstract methodology and his theory of rent, and considered himself a Smithian rather than a Ricardian. Smith's natural law and harmony-of-interest free market doctrine was also far more congenial to Hodgskin.

Although continuing to be a labourist, Hodgskin became increasingly repelled by the English labour movement, and its growing interest in state intervention. Labour unions he no longer saw as much of a remedy, let alone a panacea. Increasingly, he saw that the only way to reconcile labourism and laissez-faire was to press for the repeal of all government intervention, indeed of all positive law that was not simply a restatement of natural law and natural rights. For all such law was an invasion of rights of property. In contrast to the Ricardian socialists who extolled cartel-like cooperatives, Hodgskin called for removal of all government restrictions on free and unlimited competition. He enthusiastically joined Cobden and Bright in agitation for repeal of the Corn Laws, and in repealing feudalistic laws restricting and entailing land from free sale outside the family. From 1846–55, Hodgskin served as an editor of the Economist, the journalistic champion of laissez-faire, with as yet no important incompatibility of views with editor-in-chief James Wilson. There he became a friend and mentor of the young Herbert Spencer, hailing Spencer's anarchistic work, Social Statics, with the exception of denouncing the early Spencer's pre-Georgist land socialism on behalf of Lockean individualism.

Furthermore, even at his most labourist in the 1820s, Thomas Hodgskin, in contrast to John Gray, widened rather than narrowed the definition of ‘labour’. Mental activity is as much ‘labour’, he pointed out, as muscular exertion, so he warned against limiting the term ‘labour’ to the ‘operations of the hands’. Not only that: Hodgskin also pointed out cogently that the capitalist is also very often a manager, and therefore also a ‘labourer’. So whereas capitalists may be oppressors, businessmen in their capacity as managers or ‘masters’, ‘are labourers as well as their journeymen’. And there is nothing wrong with the wages of management.⁴³

In addition, the Hodgskin of the 1820s hailed retailers as ‘indispensable agents’, and praised wholesalers and merchants in Smithian terms as conferring blessings on society by pursuing their own interests. Even bankers ‘are still very important, and have long been very useful labourers’. Banking, ‘let us never forget... is altogether a private business, and no more needs to be regulated by meddling statesmen, than the business of paper-making’. Finally, in his Popular Political Economy, Hodgskin eulogized the market price system, which, in a deep sense, is ‘the finger of Heaven, indicating to all men how they may employ their time and talents most profitably for themselves, and most beneficially for the whole society’.⁴⁴

After his retirement from the Economist editorial board, Hodgskin continued to write articles for that journal. There he praised commerce (‘We are all merchants... and... trade is only mutual service by mutual dealing’); speculation (‘without speculation we should have no railroads, no docks, no great companies...’) and competition (‘the soul of excellence, and gives to every man his fair reward’).⁴⁵

In his final publication, of lectures on criminal law delivered in 1857, Thomas Hodgskin summed up his economic and political philosophy. The people's wants for higher standards of living, he declared, ‘can only be satisfied by more freedom, and less taxation’. The free trade principles of the 1840s must be only a stepping-stone towards ever purer and more consistent laissez-faire. Ultimately, all government services must be privatized and subjected to the requirements of the free market:

The unrestricted competition, which nature establishes, must be the rule for all our transactions; and by the higgling of the market, which is mutual and free action, the salaries of [government] officials, and the payments of the priesthood must be regulated as well as the profit of the shopkeeper, and the wages of the labourer.

In printing his lectures, Hodgskin announced his intention of completing and publishing a masterwork, The Absurdity of Legislation Demonstrated, which would show, ‘in a connected didactic form’, that ‘all legislation, which of course includes Government, is founded on false assumptions’.⁴⁶

Unfortunately, Hodgskin never completed the work, or published anything further, and when he died, in 1869, at the age of 82, this man, once so widely influential, received not a single obituary notice in the London papers. But, at any rate, enough is surely known to dismiss the view that this individualist, despite the labourism that influenced Marx, was in any sense a socialist, or even a Ricardian.