In May 1851, Karl Marx was no longer the dreamy young university student who spent days holed up in his dressing gown writing sonnets to a baron’s daughter, or the louche journalist who drank all night in Paris cafés. In the ten years since he had obtained his mail-order doctorate from the University of Jena, he had squandered a surprise inheritance of 6,000 francs from a distant relative. He had started three radical journals, two of which had folded after a single issue. He had never held a job for more than a few months. While his erstwhile protégé, Engels, had produced a best seller, his own magnum opus remained unwritten. He had published, but mostly long-winded polemics against other Socialists. At thirty-two, he was just another unemployed émigré, the head of a large and growing family, forced to beg and borrow from friends. Luckily for him, his guardian angel, Engels, had promised to pursue a career at his family’s firm expressly so that Marx could focus on his book full-time.
Meanwhile, as heads of state and other dignitaries swooped into town, Scotland Yard was keeping a close eye on radicals. Judging by a report from a Prussian government spy, the main threat posed by Marx was to Mrs. Beeton’s standards of housekeeping:
Marx lives in one of the worst, therefore one of the cheapest quarters of London. He occupies two rooms. The one looking out on the streets is the salon, and the bedroom is at the back. In the whole apartment there is not one clean and solid piece of furniture. Everything is broken, tattered and torn, with a half inch of dust over everything and the greatest disorder everywhere. In the middle of the salon there is a large old fashioned table covered with an oil cloth, and on it lie manuscripts, books and newspapers as well as the children’s toys, the rags and tatters of his wife’s sewing basket, several cups with broken ribs, knives, forks, lamps, an inkpot, tumblers, Dutch clay pipes, tobacco ash—in a word everything is topsy-turvy and all on the same table. A seller of second hand goods would be ashamed to give away such a remarkable collection of odds and ends.92
The Exhibition season represented a new nadir in Marx’s affairs. Though he adored his wife, he had carelessly gotten Helen Demuth, her personal maid and the family housekeeper, pregnant. Jenny, who was pregnant as well, was beside herself. Three months after she gave birth to a sickly girl, the family’s housekeeper delivered a bouncing baby boy. To quash the “unspeakable infamies” about the affair already circulating around gossipy émigré circles, Marx had his newborn son whisked off to foster parents in the East End, never to see him again. “The tactlessness of some individuals in this respect is colossal,” he complained to a friend.93 The boy’s mother stayed behind to care for the Marx family as before. With home more unbearable than ever, Marx hurried to seat number G7 every morning and stayed until closing.
By the time the Great Exhibition opened on May Day of 1851, Marx had already begun to doubt that the modern Rome would be overthrown by her own subjects. Instead of Chartists storming Buckingham Palace, four million British citizens and tens of thousands of foreigners invaded Hyde Park to attend the first world’s fair. The human wave helped launch Thomas Cook in the tour business and brought people of all backgrounds together. “Never before in England had there been so free and general a mixture of classes as under that roof,” crowed one of the many accounts of the fair published at the time.94 For Marx, the fair resembled the games Roman rulers staged to keep the mob entranced. “England seems to be the rock which breaks the revolutionary waves,” he had written in an earlier column for the Neue Rheinische Zeitung. “Every social upheaval in France . . . is bound to be thwarted by the English bourgeoisie, by Great Britain’s industrial and commercial domination of the world.”95 The Exhibition was meant to encourage commercial competition, which Prince Albert and some of its other sponsors hoped would foster peace. Marx had prayed for war: “Only a world war can break old England . . . and bring the proletariat to power.”96 The worse things got, he reasoned, the better the odds of revolution.
Still, he was not willing to totally discount the possibility that “the great advance in production since 1848” might lead to a new and more deadly crisis. Dismissing the Exhibition as “commodity fetishism,” he predicted the “imminent” collapse of the bourgeois order.97 As he and Engels had written in their Manifesto: “What the bourgeoisie therefore produces, above all, are its own grave-diggers.”98
Racing against time so as not to be overtaken by the “inevitable” revolution—if not in England, then on the Continent—Marx began working furiously on his own book of Revelation, a critique of “what Englishmen call ‘The Principles of Political Economy.’ ”99 Marx spent most days scouring the reading room at the British Museum for material for his great work. To the contemporary questions “How much improvement in living standards was possible under the modern system of private property and competition?” and “Could it endure?” Marx knew the answers had to be negative. His challenge now was to prove it.
When he took up economics in 1844, Marx did not set out to show that life under capitalism was awful. A decade of exposés, parliamentary commissions, and Socialist tracts, including Engels’s, had already accomplished that. The last thing Marx wanted was to condemn capitalism on moral (that is to say Christian) grounds, as utopian Socialists such as Pierre-Joseph Proudhon, who claimed that “private property is theft,” had done. Marx had no intention of converting capitalists as his favorite novelist, Dickens, dreamed of doing with his Christmas Carol. In any case, he had long repudiated the notion of any God-given morality and insisted that man could make up his own rules.
The point of his great work was to prove “with mathematical certainty” that the system of private property and free competition couldn’t work and hence that “the revolution must come.” He wished to reveal “the law of motion of modern society.” In doing so, he would expose the doctrines of Smith, Malthus, Ricardo, and Mill as a false religion, just as radical German religion scholars had exposed biblical texts as forgeries and fakes. His subtitle, he decided, would be A Critique of Political Economy.100
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Marx’s law of motion did not spring Athena-like from his powerful, brooding mind, as his doctor friend Louis Kugelmann supposed when he sent Marx a marble bust of Zeus as a Christmas present. It was Engels, the journalist, who supplied Marx with the rough draft of his economic theory. Marx’s real challenge was to show that the theory was logically consistent as well as empirically plausible.
In the Manifesto, Marx and Engels had offered two reasons for capitalism’s dysfunction. First, the more wealth that was created, the more miserable the masses would become: “In proportion as capital accumulates, the lot of the laborer must grow worse.” Second, the more wealth that was created, “the more extensive and more destructive” the financial and commercial crises that broke out periodically would become.101
While the Manifesto referred to “ever-decreasing wages” and “ever-increasing burden of toil” as matters of historical fact, in Das Kapital, Marx argued that the “law of capitalist accumulation” requires wages to fall, the length and intensity of the working day to rise, working conditions to deteriorate, the quality of goods consumed by workers to decline, and the average life span of workers to fall. He did not, however, fall back on the second of his arguments about ever-worsening depressions.102
In Das Kapital, Marx specifically rejected Malthus’s law of population, which, as it happens, is also a theory of how the level of wages is determined. In formulating his law, Malthus had assumed that pay was strictly a function of the size of the labor force. More workers meant more competition among them, hence lower wages. Fewer workers meant the opposite. Engels had already identified the primary objection to Malthus in his 1844 “Outlines of a Critique of Political Economy,” namely that poverty could afflict any society, including a Socialist one.
Marx’s edifice rests on the assumption that all value, including surplus value, is created by the hours worked by labor. “There is not a single atom of its value that does not owe its existence to unpaid labor.” In
Das Kapital, he cites Mill to support his claim:
Tools and materials, like other things, have originally cost nothing but labour . . . The labour employed in making the tools and materials being added to the labour afterwards employed in working up the materials by aid of the tools, the sum total gives the whole of the labour employed in the production of the completed commodity . . . To replace capital, is to replace nothing but the wages of the labour employed.103
Mark Blaug, a historian of economic thought, points out that if only labor hours create value, then installing more efficient machinery, reorganizing the sales force, hiring a more effective CEO, or adopting a better marketing strategy—rather than hiring more production workers—necessarily causes profits to fall. In Marx’s scheme, therefore, the only way to keep profits from shrinking is to exploit labor by forcing workers to work more hours without compensating them. As Henry Mayhew detailed in his Morning Chronicle series, there are many ways of cutting the real wage. It is crucial for Marx’s argument, writes Blaug, that trade unions and governments—“organizations of the exploiting class”—can’t reverse the process.104
A surprising number of scholars deny that Marx ever claimed that wages would decline over time or that they were tethered to some biological minimum. But they are overlooking what Marx said in so many words on numerous occasions. The inability of workers to earn more when they produce more—or more-valuable products—is precisely what made capitalism unfit to survive.
By asserting that labor was the source of all value, Marx claimed that the owner’s income—profit, interest, or managerial salary—was unearned. He did not argue that workers did not need capital—factories, machines, tools, proprietary technology, and the like—to produce the product. Rather he argued that the capital the owner made available was nothing more than the product of past labor. But the owner of any resource—whether a horse, a house, or cash—could use it herself. Arguing, as Marx does, that waiting until tomorrow to consume what could be consumed today, risking one’s resources, or managing and organizing a business have no value and therefore deserve no compensation is the same as saying that output can be produced without saving, waiting, or taking risks. This is a secular version of the old Christian argument against interest.
The trouble is, as Blaug points out, that this is just another way of saying that only labor adds value to output—the very statement that Marx set out to prove in the first place—and not an independent proof.
Marx compiled an impressive array of evidence, from Blue Books, newspapers, the Economist, and elsewhere, to show that the living standards of workers were wretched and working conditions horrendous during the second half of the eighteenth and first half of the nineteenth centuries. But he did not succeed in showing either that average wages or living standards were declining in the 1850s and 1860s, when he was writing Das Kapital, or, more to the point, that there was some reason for thinking that they would necessarily decline.
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Had Marx stepped outside and taken a good look around like Henry Mayhew, or engaged brilliant contemporaries such as John Stuart Mill who were grappling with the same questions, he might have seen that the world wasn’t working the way he and Engels had predicted. The middle class was growing, not disappearing. Financial panics and industrial slumps weren’t getting worse.
When the Great Exhibition of 1862 closed, the “great festival” refused to disband. A businessman bought the Crystal Palace, had it disassembled and carted to Sydenham in South London, and rebuilt it on an even more monstrous scale. Much to Marx’s disgust, the new Crystal Palace opened as a kind of Victorian Disney World. Worse, the economy boomed. As Marx had to admit, “It is as if this period had found Fortunatas’ purse.” There had been a “titanic advance of production” even faster in the second ten years than in the first:
No period of modern society is so favorable for the study of capitalist accumulation as the period of the last 20 years . . . But of all countries England again furnishes the classical example, because it holds the foremost place in the world-market, because capitalist production is here alone completely developed, and lastly, because the introduction of the Free-trade millennium since 1846 has cut off the last retreat of vulgar economy.105
More fatal to Marx’s theory, real wages weren’t falling as capital accumulated in the form of factories, buildings, railroads, and bridges. In contrast to the decades before the 1840s, when increases in real wages were largely limited to skilled workers, and the effect on living standards was offset by more unemployment, longer hours, and bigger families, the gains in the 1850s and 1860s were dramatic, unambiguous, and widely discussed at the time. The Victorian statistician Robert Giffen referred to the “undoubted” nature of the “increase of material prosperity” from the mid-1840s through the mid-1870s.106 Robert Dudley Baxter, a solicitor and statistician, depicted the distribution of income in 1867 with an extinct volcano that rose twelve thousand feet above sea level, “with its long low base of laboring population, with its uplands of the middle classes, and with the towering peaks and summits of those with princely incomes.”107 The Peak of Tenerife struck Baxter as a perfect metaphor for describing who got what. Still, his data show that by 1867, labor’s share of national income was rising.
Scholars have since corroborated these contemporary observations. As early as 1963, Eric Hobsbawm, the Marxist economic historian, admitted that “the debate is entirely about what happened in the period which ended by common consent sometime between 1842 and 1845.”108 More recently, Charles Feinstein, an economic historian on the “pessimist” side of a long-running debate on the effects of the industrial revolution, concluded that real wages “at last started an ascent to a new height” in the 1840s.109
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Marx never did step outside. He never bothered to learn English well.110 His world was restricted to a small circle of like-minded émigrés. His contacts with English working-class leaders were superficial. He never exposed his ideas to people who could challenge him on equal terms. His interaction with economists—“commercial travelers for the great firm of Free-trade”111 as he called them—whose ideas he wished to demolish, was nonexistent. He never met or conducted a scientific correspondence with the geniuses—John Stuart Mill, the philosopher; Charles Darwin, the biologist; Herbert Spencer, the sociologist; George Eliot, the writer; among them—who lived (and debated) a mile or two from him. Astonishingly for the best friend of a factory owner and the author of some of the most impassioned descriptions of mechanization’s horrors, Marx never visited a single English factory—or any factory at all until he went on a guided tour of a porcelain manufactory near Carlsbad, where he took the waters toward the end of his life.112
At Engels’s insistence, in 1859 Marx reluctantly published a preview of his unfinished magnum opus. The thin volume, called A Contribution to the Critique of Political Economy, was greeted with surprise, embarrassment, and virtually no reviews except ones that Engels wrote anonymously at Marx’s behest.113
Marx had frequently justified his decision to remain in England—and even to seek British citizenship—by pointing to the advantages of London, capital of the modern world, for studying the evolution of society and glimpsing its future. But Isaiah Berlin, himself an émigré, wrote that “he might just as well have spent his exile in Madagascar, provided that a regular supply of books, journals and government reports could have been secured.” By 1851, when he started to work seriously on the critique that he boasted would demolish English economics, Marx’s ideas and attitudes were “set and hardly changed at all” over the next fifteen or more years.114
When Marx took up the idea of “providing a complete account and explanation of the rise and imminent fall of the capitalist system,”115 his eyesight was so bad that he was forced to hold books and newspapers a few inches from his face. One wonders what effect his myopia had on his ideas. Democritus, the subject of his doctoral dissertation, was said to have blinded himself deliberate
ly. In some versions of his legend, the Greek philosopher is motivated by a desire to avoid being tempted by beautiful women. In others, he wants to shut out the messy, confusing, shifting world of facts so that he can contemplate the images and ideas in his own head without these bothersome distractions.
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One might think that his family’s climb from renters of rooms over a store to rate-paying owners of a London town house would have made Marx uneasy about his theory. In the twenty years since he had set out to prove that capitalism could not work, Marx himself had evolved from bohemian to bourgeois. He no longer favored the immediate abolition of the rights of inheritance in the Communist program.116 The Marxes used one of several legacies to trade their “old hole in Soho” for an “attractive house” in one of the new middle-class developments near Hampstead Heath. It was so new that they found there was no paved road, no gas street lights, and no omnibuses; only heaps of rubbish, piles of rock, and mud.
Marx often said that there was something rotten about a system that increased wealth without reducing misery, yet it did not seem to strike him that misery can sometimes increase with wealth. He assumed that London’s slums, which were becoming more Dickensian with each passing decade, were proof that the economy couldn’t deliver a decent standard of living for ordinary people. On the contrary, explains Gareth Stedman Jones, the housing crisis was an unwelcome by-product of London’s helter-skelter growth, growing prosperity, and voracious demand for unskilled labor. The key fact is that the mid-Victorian building frenzy involved an orgy of demolition. Between 1830 and 1870, thousands of acres in central London were cleared, mostly in the poor districts where land was cheap, to expand the London docks, lay railway lines, build New Oxford Street, dig the sewers and water pipes, and, in the 1860s, excavate the first stretches of the London tube. So, just as tens of thousands of migrants were flocking to the city in search of work, the supply of housing within walking distance of London’s industrial areas was plummeting. As a result, workers were crowded into ever more dilapidated, ever tighter, ever more expensive quarters. Once the demolition stopped and white-collar workers began to commute from the suburbs by rail, the housing crisis began to ease.