Pierre-Joseph Proudhon was a prominent radical thinker of nineteenth century France. He was, apparently, the first person to call himself an anarchist. He became a member of parliament during the revolution of 1848. A printer by trade, he was friends with Karl Marx when Marx came to Paris in the 1840s and a fellow member of the First International; but Marx became a prominent critic of Proudhon, writing the broadside, The Poverty of Philosophy, in 1846-47 mimicking the title of Proudhon’s book, System of Economical Contradictions or The Philosophy of Misery.
Marx was not alone in attacking Proudhon. Joseph Schumpeter’s conclusions about Proudhon in his book, History of Economic Analysis, were equally harsh:
“And we are interested in his economics only because it affords an excellent example of a type of reasoning that is distressingly frequent in a science without prestige: the type of reasoning that arrives, through complete inability to analyze, that is, to handle the tools of economic theory, at results that are no doubt absurd and fully recognized as such by the author. But the author, instead of inferring from this that there is something wrong with his methods, infers that there must be something wrong with the object of his research, so that his mistakes are, with the utmost confidence, promulgated as results.
Proudhon’s Système des contradictions économiques ou philosophie de la misère (1846) is the outstanding monument to this frame of mind. He was, among other things, unable to produce a workable theory of market value. But he did not infer: ‘I am a fool,’ but: ‘Value is mad’ (la valeur est folle). Marx’s scathing criticism (Misère de la philosophie, 1847) was fully deserved . . . “
Leon Walras, one of the first developers of economic equilibrium analysis and who Schumpeter mentions in the work cited above as “in my opinion the greatest of all economists,” like Marx, also wrote a book criticizing Proudhon (L’economie politique et la justice, examen critique et refutation des doctrines economiques de M. P.-J. Proudhon). Walras considered himself a socialist, but as one of the three inventors of marginal theory he criticizes Proudhon; not just for his confusions in economic thinking, but specifically for his use of the labor theory of value, which he shared with Marx and the English classical school.
Alan Ritter, in his book-length study, The Political Thought of Pierre-Joseph Proudhon, points out that Proudhon has been championed by those from all sides of the political spectrum, from the anarchist left to the nationalist and reactionary right and, as can be seen from the foregoing, likewise savaged from all sides. Ritter says, “Proudhon’s theory would not merit analytic treatment if two or more of these familiar portrayals of its aim could withstand critical examination, for then his theory would be proved a hopeless muddle. Fortunately, evidence abounds to refute all of these interpretations.”
I will take a somewhat different tack, following up on a comment from Marx that “he imitates the contradictory method of Kant, the only German philosopher that he knew at that time, from translation, and he leaves a strong impression that for him, as for Kant, the solution of these contradictions is “beyond” the human understanding, that is to say, that his understanding is incapable of solving them (extract from Sozial-Democrat, January, 1965 and included as an appendix to the Prometheus Books edition of The Poverty of Philosophy).” I agree with Marx that Proudhon presents the contradictions of capitalism as true, but I question Marx’s certainty that an historical solution is readily at hand, even today, over 150 years after Marx wrote these words.
I will concentrate on Proudhon’s book, The Evolution of Capitalism, also known as, System of Economical Contradictions or, The Philosophy of Misery (Système des contradictions économiques ou philosophie de la misère), and primarily on the first of its two volumes, available from Project Gutenberg in English by an anonymous translator. Contradictions has a very symmetrical structure from the Introduction, which proposes the necessity of the hypothesis of God, to Chapter VIII, where the opposite is maintained. In between, each of the major concepts of: value, division of labor, machinery, competition, monopoly, and taxation, are critiqued, first stating the necessity or benefit of each topic and then the opposite.
Right at the start, one must say that Proudhon’s style is outrageously ironical and exaggerated. He seems the William Blake of philosophy or economics (in whichever category one places him) in contrast to the deadpan style of someone like Walras or most economists, for that matter. Marx’s style is more like Proudhon’s, though Marx tends more towards the polemically sarcastic than Proudhon, who seems more truly manic, at least to this reader.
Introduction – The hypothesis of God
Proudhon starts the Contradictions as follows: “Avant que j’entre dans la matière qui fait l’objet de ces nouveaux mémoires, j’ai besoin de rendre compte d’une hypothèse qui paraîtra sans doute étrange, mais sans laquelle il m’est impossible d’aller en avant et d’être compris : je veux parler de l’hypothèse d’un dieu. [Before entering upon the subject matter of these new memoirs, I must explain a hypothesis, which will undoubtedly seem strange, but in the absence of which it is impossible for me to proceed intelligibly: I mean the hypothesis of a god.]”
Why is this hypothesis necessary? He says “I need the hypothesis of God to establish the authority of social science. . . I need the hypothesis of God, not only, as I have just said, to give a meaning to history, but also to legitimate the reforms to be effected, in the name of science, in the State. . . I need the hypothesis of God to show the tie which unites civilization with Nature. . . . I need the hypothesis of God to prove my good — will towards a multitude of sects, whose opinions I do not share, but whose malice I fear: — theists . . . I need the hypothesis of God to justify my style. . . . Finally, I need the hypothesis of God to explain the publication of these new memoirs.”
But he concludes this introduction saying, “Remember only, and never forget, that pity, happiness, and virtue, like country, religion, and love, are masks. . . .” He presents the hypothesis of God to gain perspective on humanity’s ways of justifying its purposes here on Earth.
He affirms the hypothesis of God in the course of his identification of the true contradictions of philosophy:
“Philosophy knows today that all its judgments rest on two equally false, equally impossible, and yet equally necessary and inevitable hypotheses,–matter and spirit. So that, while in former times religious intolerance and philosophic disputes, spreading darkness everywhere, excused doubt and tempted to libidinous indifference, the triumph of negation on all points no longer permits even this doubt; thought, freed from every barrier, but conquered by its own successes, is forced to affirm what seems to it clearly contradictory and absurd. The savages say that the world is a great fetich watched over by a great manitou. For thirty centuries the poets, legislators, and sages of civilization, handing down from age to age the philosophic lamp, have written nothing more sublime than this profession of faith. And here, at the end of this long conspiracy against God, which has called itself philosophy, emancipated reason concludes with savage reason, The universe is a NOT-ME, objectified by a ME.”
The first formal chapter in Contradictions presents Proudhon’s understanding of the work of his predecessors in the field of political economy. He says, “But I hasten to say that I do not regard as a science the incoherent ensemble of theories to which the name POLITICAL ECONOMY has been officially given for almost a hundred years, and which, in spite of the etymology of the name, is after ail but the code, or immemorial routine, of property. These theories offer us only the rudiments, or first section, of economic science; and that is why, like property, they are all contradictory of each other, and half the time inapplicable. The proof of this assertion, which is, in one sense, a denial of political economy as handed down to us by Adam Smith, Ricardo, Malthus, and J. B. Say, and as we have known it for half a century, will be especially developed in this treatise.” Before we agree with Schumpeter that Proudhon simply didn’t understand that of which he spoke, let’s look at what he says in the rest of his book.
Chapter 2 in the Contradictions presents Proudhon’s somewhat confused presentation of the profoundly puzzling nineteenth century notion of “Opposition of value in USE and value in EXCHANGE.” He warns the reader to pay close attention because ” . . . this chapter being the only one in the work which will tax the patience.” The problem, of course, is the famous “transformation problem” of Ricardo and Marx: “But how does value in use become value in exchange?” He starts in not too promising a fashion: “For it should be noticed that the two kinds of value, although coexisting in thought (since the former becomes apparent only in the presence of the latter), nevertheless maintain a relation of succession: exchangeable value is a sort of reflex of useful value; just as the theologians teach that in the Trinity the Father, contemplating himself through all eternity, begets the Son. This generation of the idea of value has not been noted by the economists with sufficient care: it is important that we should tarry over it.”
Proudhon starts in his evaluation from a surprising place; with a quotation from August Walras, who’s son Leon took over the father’s theory of scarcity on the way to “transforming” economics with his discovery of the marginal utility theory. Proudhon doesn’t directly mention scarcity in this quote, but insists on the productivity of labor overcoming that natural scarcity: “Labor, as an author (M. Walras) has beautifully expressed it, is a war declared against the parsimony of Nature; by it wealth and society are simultaneously created. Not only does labor produce incomparably more wealth than Nature gives us, . . . but, labor infinitely extending and multiplying its rights by the changes which it makes in natural values, it gradually comes about that all wealth, in running the gauntlet of labor, falls wholly into the hands of him who creates it, and that nothing, or almost nothing, is left for the possessor of the original material.”
Is he thinking here of the wage laborer or of the capitalist, whose labor is of an organizing, rather than a direct production activity? He goes on to say that “The economists have very clearly shown the double character of value, but what they have not made equally plain is its contradictory nature. Here begins our criticism.”
He goes on to get close to understanding the work of scarcity:
“I summon, therefore, every serious economist to tell me, otherwise than by transforming or repeating the question, for what reason value decreases in proportion as production augments, and reciprocally what causes this same value to increase in proportion as production diminishes. In technical terms, useful value and exchangeable value, necessary to each other, are inversely proportional to each other; I ask, then, why scarcity, instead of utility, is synonymous with dearness. For — mark it well — the price of merchandise is independent of the amount of labor expended in production; and its greater or less cost does not serve at all to explain the variations in its price. Value is capricious, like liberty: it considers neither utility nor labor; on the contrary, it seems that, in the ordinary course of affairs, and exceptional derangements aside, the most useful objects are those which are sold at the lowest price; in other words, that it is just that the men who perform the most attractive labor should be the best rewarded, while those whose tasks demand the most exertion are paid the least.
So that, in following the principle to its ultimate consequences, we reach the most logical of conclusions: that things whose use is necessary and quantity infinite must be gratuitous, while those which are without utility and extremely scarce must bear an inestimable price. But, to complete the embarrassment, these extremes do not occur in practice: on the one hand, no human product can ever become infinite in quantity; on the other, the rarest things must be in some degree useful, else they would not be susceptible of value. Useful value and exchangeable value remain, then, in inevitable attachment, although it is their nature continually to tend towards mutual exclusion.”
He sees exchange as reciprocal liberty: “Whatever the abundance of created values and the proportion in which they exchange for each other, in order that we may exchange our products, mine must suit you when you are the BUYER, and I must be satisfied with yours when you are the SELLER. For no one has a right to impose his own merchandise upon another: the sole judge of utility, or in other words the want, is the buyer. Therefore, in the first case, you have the deciding power; in the second, I have it. Take away reciprocal liberty, and exchange is no longer the expression of industrial solidarity: it is robbery. Communism, by the way, will never surmount this difficulty.”
So far, so good. But Proudhon never gets to a real resolution of this. That resolution had to wait for Walras, Jevons and Menger to draw up supply and demand curves as a theoretical means in establishing, not value, but price. Instead, he sees the apparent opposition between use and exchange mired in contradiction: “So, given man’s needs of a great variety of products together with the obligation of procuring them by his labor, the opposition of useful value to exchangeable value necessarily results; and from this opposition a contradiction on the very threshold of political economy. No intelligence, no will, divine or human, can prevent it.”
Elsewhere he makes a distinction between contradiction and antimony:
“ANTINOMY, literally COUNTER-LAW, means opposition in principle or antagonism in relation, just as contradiction or ANTILOGY indicates opposition or discrepancy in speech. Antinomy,–I ask pardon for entering into these scholastic details, comparatively unfamiliar as yet to most economists,–antinomy is the conception of a law with two faces, the one positive, the other negative. Such, for instance, is the law called ATTRACTION, by which the planets revolve around the sun, and which mathematicians have analyzed into centripetal force and centrifugal force.
Such also is the problem of the infinite divisibility of matter, which, as Kant has shown, can be denied and affirmed successively by arguments equally plausible and irrefutable. Antinomy simply expresses a fact, and forces itself imperatively on the mind; contradiction, properly speaking, is an absurdity. This distinction between antinomy (contra-lex) and contradiction (contra-dictio) shows in what sense it can be said that, in a certain class of ideas and facts, the argument of contradiction has not the same value as in mathematics.”
He is apparently thinking of Zeno in his infinite divisibility paradox, which Kant didn’t solve. It took Cantor to do that. To this reader the distinction Proudhon tries to make here is lost.
Instead of inventing supply and demand curves then, Proudhon, rests with the cost of production theory of Ricardo and Say. In fact, he explicitly rejects the theory of supply and demand put forward in a quote from Le Journal des Economistes (no author quoted):
“There is no measure of value, no standard of value” it said in its conclusions; “economic science tells us this, just as mathematical science tells us that there is no perpetual motion or quadrature of the circle, and that these never will be found. Now, if there is no standard of value, if the measure of value is not even a metaphysical illusion, what then is the law which governs exchanges? . . . . . As we have said before, it is, in a
general way, SUPPLY and DEMAND: that is the last word of science.
To which he responds:
“Now, how did “Le Journal des Economistes” prove that there is no measure of value? . . . This journal repeated, with accompanying examples, the exposition that we have just given of the variability of value, but without arriving, as we did, at the contradiction. . . . I confine myself for the moment within the limits of the discussion, and say that SUPPLY and DEMAND, held up as the sole regulators of value, are nothing more than two ceremonial forms serving to bring useful value and exchangeable value face to face, and to provoke their reconciliation.
They are the two electric poles, whose connection must produce the economical phenomenon of affinity called EXCHANGE. Like the poles of a battery, supply and demand are diametrically opposed to each other, and tend continually to mutual annihilation; it is by their antagonism that the price of things is either increased, or reduced to nothing: we wish to know, then, if it is not possible, on every occasion, so to balance or harmonize these two forces that the price of things always may be the expression of their true value, the expression of justice. To say after that that supply and demand is the law of exchange is to say that supply and demand is the law of supply and demand; it is not an explanation of the general practice, but a declaration of its absurdity; and I deny that the general practice is absurd.”
Proudhon concludes this chapter on value with words that sound reminiscent of Marx:
“It is labor, labor alone, that produces all the elements of wealth, and that combines them to their last molecules according to a law of variable, but certain, proportionality. . . .
Labor produces, capital has value: and when, by a sort of ellipsis, we say the value of labor, we make an enjambement which is not at all contrary to the rules of language, but which theorists ought to guard against mistaking for a reality. Labor, like liberty, love, ambition, genius, is a thing vague and indeterminate in its nature, but qualitatively defined by its object, — that is, it becomes a reality through its product. . . . .
Now, the effect of labor is continually to eliminate scarcity and opinion as constitutive elements of value, and, by necessary consequence, to transform natural or indefinite utilities (appropriated or not) into measurable or social utilities: whence it follows that labor is at once a war declared upon the parsimony of Nature and a permanent conspiracy against property. . . .
The principle that ALL LABOR SHOULD LEAVE AN EXCESS, undemonstrable by political economy, — that is, by proprietary routine,–is one of those which bear strongest testimony to the reality of the collective person: for, as we shall see, this principle is true of individuals only because it emanates from society, which thus confers upon them the benefit of its own laws. . . .
If labor is the source of all wealth, if it is the surest guide in tracing the history of human institutions on the face of the earth, why should equality of distribution, equality as measured by labor, not be a law? If, on the contrary, there is wealth which is not the product of labor, why is the possession of it a privilege? Where is the legitimacy of monopoly? Explain then, once for all, this theory of the right of unproductive consumption; this jurisprudence of caprice, this religion of idleness, the sacred prerogative of a caste of the elect. . . .
Now that we have determined, not without difficulty, the meaning of the question asked by the Academy of Moral Sciences touching the oscillations of profit and wages, it is time to begin the essential part of our work. Wherever labor has not been socialized, — that is, wherever value is not synthetically determined, — there is irregularity and dishonesty in exchange; a war of stratagems and ambuscades; an impediment to production, circulation, and consumption; unproductive labor; insecurity; spoliation; insolidarity; want; luxury: but at the same time an effort of the genius to perpetuate the anomalies of value and the prerogatives of selfishness, is truly the theory of misfortune and the organization of misery; but in so far as it explains the means invented by civilization to abolish poverty, although these means always have been used exclusively in the interest of monopoly, political economy is the preamble of the organization of wealth. . . .
The error of socialism has consisted hitherto in perpetuating religious reverie by launching forward into a fantastic future instead of seizing the reality which is crushing it; as the wrong of the economists has been in regarding every accomplished fact as an injunction against any proposal of reform. . . .
For my own part, such is not my conception of economic science, the true social science. Instead of offering a priori arguments as solutions of the formidable problems of the organization of labor and the distribution of wealth, I shall interrogate political economy as the depositary of the secret thoughts of humanity; I shall cause it to disclose the facts in the order of their occurrence, and shall relate their testimony without intermingling it with my own.”
I have quoted Proudhon’s own (translated) words here at some length to give a flavor of his exaggerated and ironical style. For all the disorder that seems to be in the microstructure of his chapters, this reviewer, at least, finds considerable order in the macroscopic structure of the book. It is the Kantian order about which Marx complained. The elements of capitalist reality contain their contradictory elements, but what is brought out by Proudhon, and not by Marx, is that some, at least, of these contradictions are real; that is, part of the structure of economic life in general, and may well not be overcome by the dawn of some future historical synthesis. Where Marx sees the harmful elements as something to be swept away in the (not very well defined) future, Proudhon gives more credit to the beneficial elements and has a less hopeful attitude towards the possibility of elimination of the ill effects.
The Rest of the Book
In the remaining central chapters of the Contradictions we find Proudhon’s analysis of some of the central concepts of political economy: the division of labor, the impact of machinery, competition, monopoly, and taxation. The final chapter of Volume One attempts not to sum up what has been accomplished in his analysis of political economy, but instead to answer what he says in his Introduction, about the hypothesis of God. Each of the inner chapters has a similar structure. First the basic concept is presented, often with quotes from previous economists. Then the truth of the basic concept is shown. Then the contradictory truth is developed.
For example, the division of labor is found to be the “primary cause of the multiplication of wealth and the skill of the laborers” but he also finds that “the more that we increase the productive power of labor; but at the same time the more does labor, gradually reducing itself to a mechanical operation, stupefy intelligence.” It is true that the division of labor creates wealth, but only at the expense of creating profound alienation. He finds that not only does the division of labor create alienation, but it also results in lowered wages and the lengthening, not the shortening, of the working day.
He concludes, “But you, critic, the reader undoubtedly will ask, what is your solution? Show us this synthesis which, retaining the responsibility, the personality, in short, the specialty of the laborer, will unite extreme division and the greatest variety in one complex and harmonious whole. My reply is ready: Interrogate facts, consult humanity: we can choose no better guide. After the oscillations of value, division of labor is the economic fact which influences most perceptibly profits and wages. It is the first stake driven by Providence into the soil of industry, the starting-point of the immense triangulation which finally must determine the right and duty of each and all. Let us, then, follow our guides, without which we can only wander and lose ourselves.”
His reply is ready, but what exactly does it mean? This is not really a reply to his critics. Along the way he is eager to throw in seemingly irrelevant asides, such as, “Such is the ordinary argument of all those who seek to justify Providence, but generally succeed only in lending new weapons to atheism.” Again, his appreciation for contradiction is on full display, but ultimately for Proudhon leading nowhere.
And likewise for machinery. He says, “Every machine may be defined as a summary of several operations, a simplification of powers, a condensation of labor, a reduction of costs. In all these respects machinery is the counterpart of division. Therefore through machinery will come a restoration of the parcellaire laborer, a decrease of toil for the workman, a fall in the price of his product, a movement in the relation of values, progress towards new discoveries, advancement of the general welfare.”
These are good things. But this coming of the machine age also presents questions and contradictions:
“From the very fact that machinery diminishes the workman’s toil, it abridges and diminishes labor, the supply of which thus grows greater from day to day and the demand less. Little by little, it is true, the reduction in prices causing an increase in consumption, the proportion is restored and the laborer set at work again: but as industrial improvements steadily succeed each other and continually tend to substitute mechanical operations for the labor of man, it follows that there is a constant tendency to cut off a portion of the service and consequently to eliminate laborers from production. Now, it is with the economic order as with the spiritual order: outside of the church there is no salvation; outside of labor there is no subsistence. Society and nature, equally pitiless, are in accord in the execution of this new decree.”
And so on with competition. He first references the work of contemporary economists, Louis Rebaud and M. Donoyer, to the effect of the necessity of competition to reduce cost and stimulate innovation. Real necessity. And as a vigorous defender of liberty, Proudhon can only praise the right of the individual entrepreneur to innovate and act freely in the international marketplace. But competition, in its relentless drive to reduce costs, brings much pain.
“Competition, with its homicidal instinct, takes away the bread of a whole class of laborers, and sees in it only an improvement, a saving; it steals a secret in a cowardly manner, and glories in it as a DISCOVERY; it changes the natural zones of production to the detriment of an entire people, and pretends to have done nothing but utilize the advantages of its climate. Competition overturns all notions of equity and justice; it increases the real cost of production by needlessly multiplying the capital invested, causes by turns the dearness of products and their depreciation, corrupts the public conscience by putting chance in the place of right, and maintains terror and distrust everywhere.”
Proudhon’s analysis of monopoly and taxation follows the similar pattern to his consideration of the division of labor, the impact of machinery and competition. He points out the bad, but also the good. He has less good to say about taxation. While he recognizes that taxation and regulation are aimed at alleviating the worst social consequences of capitalism, in practice he sounds more like our contemporary Grover Norquist than John Maynard Keynes on the subject of taxation.
Marx’s Critique of Proudhon
Marx’s book The Poverty of Philosophy is Marx’s answer to Proudhon’s Contradictions. His reaction is scathing. Marx is very well aware of Proudhon’s Kantian rather than Hegelian framework for his analysis of capitalism. It is here that he finds it’s chief fault.
In the article from which I quoted above Marx says, “He borrows from the economists the necessity of eternal relations; he borrows from the Socialists the illusion of seeing in poverty only poverty. He is in agreement with both in wishing to refer it to the authority of science. Science, for him, is reduced to the insignificant proportions of a scientific formula. It is thus that M. Proudhon flatters himself to have made the criticism of both political economy and of communism: he is below both the one and the other. Below the economists, since as a philosopher, who has under his hand a magic formula, he has believed himself able to do without entering into purely economic details; below the Socialists, since he has neither sufficient courage nor sufficient intelligence to raise himself, were it only speculatively, above the bourgeois horizon.”
These words strike the current reviewer less critique than character assassination. In the end it seems to this reader that the economics of Proudhon and Marx have more similarities than not. Both remained within the sway of the labor theory of value. Both recognized the magnification in productivity produced by social labor and railed against the sole expropriation of that productivity by the capitalist class. In the end I find Marx’s critique of Proudhon more personal than theoretical. Of course, Proudhon was prone to exaggeration, but so was Marx. Could it be that Marx’s obvious irritation with Proudhon was that Proudhon insisted upon the positive qualities of capitalist social organization? Marx, too, insisted on the positive character of capitalism, but only in an historical context. Proudhon saw it as persistent.
Walras’s Critique of Proudhon
Walras says, in his examen critique:
“Pour en revenir a M. Proudhon, qu’on me permette cette figure epique, revetu de mon armure es sachant quelles pieces manquent a la sienne, je vais l’attaque. Convaincu qu’il ignore la theorie de la valeur et pensant, quant a moi, la connaitre, je crois etre en mesure de prouver: Que M. Proudhon n’a pas une intelligence vraie des rapports de coordination ou de subordination qui lient les sciences economiques et la morale; 2 Que M. Proudhon n’a que des idees fausses sur l’origine de la valeur d’echange, et par suite, sur l’echange, sur la monnaie: 3 Que M. Proudhon ne sait pas distinguer nettement un capital d’un revenu; a fortiori, qu’il ignore les rapports qui existent entre la valeur du capital et la valeur du revenu, et les lois des-differents revenus. Qu’enfin, par suite de l’ignorance complete ou se trouve M. Proudhon de la theorie de la valeur d’echange, ses Balances economiques sont, pour la plupart, des utopies impraticables.
[Getting back to Mr. Proudhon, if one permits me to face this epic character, wearing my armor and knowing which parts are missing in his own, I will attack. Convinced that he ignores the theory of value and thinking, and to me of knowledge, I think to be able to prove: 1) That Mr. Proudhon has not real understanding of either the coordination or subordination linking economic and moral science; 2) That Mr. Proudhon has only false ideas about the origin of exchange value, and thus on the exchange of currency: 3) That Mr. Proudhon does not clearly distinguish a capital of income; a fortiori, he ignores the relationship between capital value and income value and the laws of various revenue. Finally, as a result of this complete ignorance that one finds in M. Proudhon’s theory of exchange value, his economic balances are mostly impractical utopias.]”
“Aside from the assassination, Mrs. Lincoln, how did you like the play?”
In Walras’s chief work in economics, the Elements of Pure Economy, he presents his full critique of the labor theory of value as a useless dead end in the theory of price. He follows his father, Auguste, in seeing scarcity, and not labor, as the source of value in the economy. In the Elements his critique is not of Proudhon and Marx, but of “The English Theory of the Price of Products.”
This comes in Lesson 38 of the Elements. He quotes Ricardo as correctly seeing the importance of scarcity, but then rejecting this as a basis for determination of price. Ricardo says, “There are some commodities the value of which is determined by their scarcity alone.” Ricardo give the examples of “rare statues and pictures, scarce books and coins, wines of peculiar character” but Ricardo then goes on to say that they “form a small part of the mass of commodities daily exchanged in the market.” Walras, on the contrary, sees all commodities partaking of the character of scarcity: “There are no products that can be multiplied without limit. All things which form part of social wealth — land, personal faculties, capital goods proper and income goods of every kind — exist only in limited quantities.”
I won’t go on here with Walras’s detailed critique, but rather point out that this critique came to be wholly accepted in the twentieth century, by economists of all stripes, from “laissez faire” economists like Milton Friedman to the prominent left-Keynesians like Joan Robinson and avowed socialists like Oscar Lange and Karl Polanyi.
What to make of P.J. Proudhon? Here I have focused solely on his attempts at economic theory as presented in his book, The Evolution of Capitalism, System of Economical Contradictions or, The Philosophy of Misery. I have not addressed his earlier work, What is Property?, or his later work in anarchist theory. But as an economist, how should he be judged? One would have to grant to Schumpeter and Marx that Proudhon was, at best, an extreme amateur economist. Many (including this reader) would grant to Walras that the base of his theory of value in labor is on shaky ground. His writing is “manic excessive” like our contemporary Zizek, but also like his predecessor Blake and his contemporary Marx. But while recognizing these limitations, this reader at least, must have an open heart to a man who tried to look into the true nature of human society. What he saw there were inherent contradictions that don’t go away. Have they gone away yet?