“Gold and silver were the first commodities to have their value constituted.” [1 69] 

Thus gold and silver are the first applications of “value 
constituted” ... by M. Proudhon. And as M. Proudhon constitutes the 

* Mr. Bray’s theory, like all theories, has found supporters who have allowed 
themselves to be deluded by appearances. Equitable-labour-exchange bazaars’’ have 
been set up in London, Sheffield, Leeds and many other towns in England. These 
bazaars have all ended in scandalous failures after having absorbed considerable 
capital. The taste for them has gone for ever. You are warned, M. Proudhon! [Note by 
Marx. The copy with correcticns in Marx’s hand has “Nota!” in the margin opposite 
this note.] 

It is known that Proudhon did not take this warning to heart. In 1849 he himself 
made an attempt with a new Exchange Bank in Paris. The bank, however, failed 
before it had got going properly: a court case against Proudhon had to serve to cover 
its collapse. F. E. [Note to the German edition, 1885.] 

The Poverty of Philosophy 145 

value of products determining it by the comparative amount of 
labour embodied in them, the only thing he had to do was to prove 
that variations in the value of gold and silver are always explained by 
variations in the labour time taken to produce them. M. Proudhon 
has no intention of doing so. He speaks of gold and silver not as 
commodities, but as money. 

His only logic, if logic it be, consists in juggling with the capacity of 
gold and silver to be used as money for the benefit of all the 
commodities which have the property of being evaluated by labour 
time. Decidedly there is more naiveté than malice in this jugglery. 

A useful product, being evaluated by the labour time needed to 
produce it, is always acceptable in exchange. Witness, cries M. 
Proudhon, gold and silver, which exist in my desired conditions of 
“exchangeability”! Gold and silver, then, are value which has 
reached a state of constitution: they are the incorporation of M. 
Proudhon’s idea. He could not have been happier in his choice of an 
example. Gold and silver, apart from their capacity of being 
commodities, evaluated like other commodities in labour time, have 
also the capacity of being the universal agents of exchange, of being 
money. By now considering gold and silver as an application of 
“value constituted” by labour time, nothing is easier than to prove that 
all commodities whose value is constituted by labour time will always 
be exchangeable, will be money. 

A very simple question occurs to M. Proudhon. Why have gold and 
silver the privilege of typifying “constituted value”? 

“The special function which usage has devolved upon the precious metals, that of 
serving as a medium for trade, is purely conventional, and any other commodity 
could, less conveniently perhaps, but just as authentically, fulfil this function. 
Economists recognise this, and cite more than one example. What then is the reason 
for this universal preference for metals as money? And what is the explanation of this 
specialisation of the functions of silver — which has no analogy in political economy?... 
Is it possible to reconstruct the series from which money seems to have broken away, and 
hence to trace it back to its true principle?” [I 68, 69] 

By formulating the question in these terms, M. Proudhon has 
already presupposed the existence of money. The first question he 
should have asked himself was, why, in exchanges as they are actually 
constituted, it has been necessary to individualise exchangeable 
value, so to speak, by the creation of a special agent of exchange. 
Money is not a thing, it is a social relation. Why is the money relation 
a production relation like any other economic relation, such as the 
division of labour, etc.? If M. Proudhon had properly taken account 
of this relation, he would not have seen in money an exception, an 
element detached from a series unknown or needing reconstruction. 

He would have realised, on the contrary, that this relation is a link, 
and, as such, closely connected with a whole chain of other economic 
relations; that this relation corresponds to a definite mode of 
production neither more nor less than does individual exchange. 
What does he do? He starts off by detaching money from the actual 
mode of production as a whole, and then makes it the first member 
of an imaginary series, of a series to be reconstructed. 

Once the necessity for a specific agent of exchange, that is, for 
money, has been recognised, all that remains to be explained is why 
this particular function has devolved upon gold and silver rather 
than upon any other commodity. This is a secondary question, which 
is explained not by the chain of production relations, but by the 
specific qualities inherent in gold and silver as substances. If all this 
has made economists for once “go outside the domains of their own 
science, to dabble in physics, mechanics, history and so on” [I 69], as 
M. Proudhon reproaches them with doing, they have merely done 
what they were compelled to do. The question is no longer within the 
domain of political economy. 

” 

“What no economist,” says M. Proudhon, “has either seen or understood is the 
economic reason which has determined, in favour of the precious metals, the favour 
they enjoy.” [I 69] 

This economic reason which nobody—with good ground in- 
deed — has seen or understood, M. Proudhon has seen, understood 
and bequeathed to posterity. 

“What nobody else has noticed is that, of all commodities, gold and silver were the 
first to have their value attain constitution. In the patriarchal period, gold and silver 
were still bartered and exchanged in ingots but even then they showed a visible 
tendency to become dominant and received a marked preference. Little by 
little the sovereigns took possession of them and affixed their seal to them: and of this 
sovereign consecration was born money, that is, the commodity par excellence, which, 
notwithstanding all the shocks of commerce, retains a definite proportional value and 
makes itself accepted for all payments.... The distinguishing characteristic of gold and 
silver is due, I repeat, to the fact that, thanks to their metallic properties, to the 
difficulties of their production, and above ali to the intervention of state authority. 
they early won stability and authenticity as commodities.” [I 69, 70} 

To say that, of all commodities, gold and silver were the first to 
have their value constituted, is to say, after all that has gone before, 
that gold and silver were the first to attain the status of money. This 
is M. Proudhon’s great revelation, this is the truth that none had 
discovered before him. 

If, by these words, M. Proudhon means that of all commodities 
gold and silver are the ones whose time of production was known the 
earliest, this would be yet another of the suppositions with which he 

The Poverty of Philosophy 147 

is so ready to regale his readers. If we wished to harp on this 
patriarchal erudition, we would inform M. Proudhon that it was the 
time needed to produce objects of prime necessity such as iron, etc., 
which was the first to be known. We shall spare him Adam Smith’s 
classic bow.” 

But, after all that, how can M. Proudhon go on talking about the 
constitution of a value, since a value is never constituted all alone? It 
is constituted, not by the time needed to produce it all alone, but in 
relation to the quota of each and every other product which can be 
created in the same time. Thus the constitution of the value of gold 
and silver presupposes an already completed constitution of a 
number of other products. 

It is then not the commodity that has attained, in gold and silver, 
the status of “constituted value”, it is M. Proudhon’s “constituted 
value” that has attained, in gold and silver, the status of money. 

Let us now make a closer examination of these economic reasons 
which, according to M. Proudhon, have bestowed upon gold and 
silver the advantage of being raised to the status of money sooner 
than other products, thanks to their having passed through the 
constitutive phase of value. 

These economic reasons are: the “visible tendency to become 
dominant”, the “marked preference” even in the “patriarchal 
period” [I 69], and other circumlocutions about the actual 
fact— which increase the difficulty, since they multiply the fact by 
multiplying the incidents which M. Proudhon brings in to explain 
the fact. M. Proudhon has not yet exhausted all the so-called 
economic reasons. Here is one of sovereign, irresistible force: 

‘Money is born of sovereign consecration: the sovereigns took possession of gold 
and silver and affixed their seal to them.” [I 69] 

Thus the whim of sovereigns is for M. Proudhon the highest 
reason in political economy. 

Truly, one must be destitute of all historical knowledge not to 
know that it is the sovereigns who in all ages have been subject to 
economic conditions, but they have never dictated laws to them. 
Legislation, whether political or civil, never does more than 
proclaim, express in words, the will of economic relations. 

Was it the sovereign who took possession of gold and silver to 
make them the universal agents of exchange by affixing his seal to 
them? Or was it not, rather, these universal agents of exchange 
which took possession of the sovereign and forced him to affix his 
seal to them and thus give them a political consecration? 

The impress which was and is still given to silver is not that of its 

value but of its weight. The stability and authenticity M. Proudhon 
speaks of apply only to the standard of the money; and this standard 
indicates how much metallic matter there is in a coined piece of 
silver. 

“The sole intrinsic value of a silver mark,” says Voltaire, with his habitual good 

sense, “is a mark of silver, half a pound weighing eight ounces. The weight and the 
standard alone form this intrinsic value.” (Voltaire, Systéme de Law.*) 

But the question: how much is an ounce of gold or silver worth, 
remains nonetheless. If a cashmere from the Grand Colbert stores 
bore the trade mark pure wool, this trade mark would not tell you the 
value of the cashmere. There would still remain the question: how 
much is wool worth? 

“Philip I, King of France,” says M. Proudhon, “mixes with Charlemagne’s Tours 
pound a third of alloy, imagining that, having the monopoly of the manufacture of 
money, he could do what is done by every tradesman who has the monopoly of a 
product. What was actually this debasement of the currency for which Philip and his 
successors have been so much blamed? It was perfectly sound reasoning from the 
point of view of commercial practice, but very unsound economic science, viz., to 
suppose that, as supply and demand regulate value, it is possible, either by producing 
an artificial scarcity or by monopolising manufacture, to increase the estimation and 
consequently the value of things; and that this is true of gold and silver as of corn, 
wine, oil or tobacco. But Philip’s fraud was no sooner suspected than his money was 
reduced to its true value, and he himself lost what he had thought to gain from his 
subjects. The same thing has happened as a result of every similar attempt.” [I 70-71] 

It has been proved times without number that, if a prince takes 
into his head to debase the currency, it is he who loses. What he gains 
once at the first issue he loses every time the falsified coinage returns 
to him in the form of taxes, etc. But Philip and his successors were 
able to protect themselves more or less against this loss, for, once the 
debased coinage was put into circulation, they hastened to order a 
general re-minting of money on the old footing. 

And besides, if Philip I had really reasoned like M. Proudhon, he 
would not have reasoned well “from the commercial point of view”. 
Neither Philip I nor M. Proudhon displays any mercantile genius in 
imagining that it is possible to alter the value of gold as well as that of 
every other commodity merely because their value is determined by 
the relation between supply and demand. 

If King Philip had decreed that one muid of wheat was in future to 
be called two muids of wheat, he would have been a swindler. He 
would have deceived all the rentiers, all the people who were entitled 
to receive a hundred muids of wheat. He would have been the cause 

* Voltaire, Histoire du parlement, chapitre LX “Finances et systéme de Law pendant 
la régence.”— Ed. 

The Poverty of Philosophy 149 

of all these people receiving only fifty instead of a hundred. Suppose 
the king owed a hundred muids of wheat; he would have had to pay 
only fifty. But in commerce a hundred such muids would never have 
been worth more than fifty. By changing the name we do not change 
the thing. The quantity of wheat, whether supplied or demanded, 
will be neither decreased nor increased by this mere change of name. 
Thus, the relation between supply and demand being just the same 
in spite of this change of name, the price of wheat will undergo no 
real change. When we speak of the supply and demand of things, we 
do not speak of the supply and demand of the name of things. Philip 
I was not a maker of gold or silver, as M. Proudhon says; he was a 
maker of names for coins. Pass off your French cashmeres as Asiatic 
cashmeres, and you may deceive a buyer or two; but once the fraud 
becomes known, your so-called Asiatic cashmeres will drop to the 
price of French cashmeres. When he put a false label on gold and 
silver, King Philip could deceive only so long as the fraud was not 
known. Like any other shopkeeper, he deceived his customers by a 
false description of his wares, which could not last for long. He was 
bound sooner or later to suffer the rigour of commercial laws. Is this 
what M. Proudhon wanted to prove? No. According to him it is from 
the sovereign and not from commerce that money gets its value. And 
what has he really proved? That commerce is more sovereign than 
the sovereign. Let the sovereign decree that one mark shall in future 
be two marks, commerce will keep on saying that these two marks are 
worth no more than one mark was formerly. 

But, for all that, the question of value determined by the quantity 
of labour has not been advanced a step. It still remains to be decided 
whether the value of these two marks (which have become what one 
mark was once) is determined by the cost of production or by the law 
of supply and demand. 

M. Proudhon continues: 

“It should even be borne in mind that if, instead of debasing the currency, it had 
been in the king’s power to double its bulk, the exchange value of gold and silver 
would immediately have dropped by half, always for reasons of proportion and 
equilibrium.” [I 71] 

If this opinion, which M. Proudhon shares with the other 
economists, is valid, it argues in favour of the latter’s doctrine of 
supply and demand, and in no way in favour of M. Proudhon’s 
proportionality. For, whatever the quantity of labour embodied in 
the doubled bulk of gold and silver, its value would have dropped by 
half, the demand having remained the same and the supply having 
doubled. Or can it be, by any chance, that the “law of proportionality” 

would become confused this time with the so much disdained law of 
supply and demand? This correct proportion of M. Proudhon’s is 
indeed so elastic, is capable of so many variations, combinations and 
permutations, that it might well coincide for once with the relation 
between supply and demand. 

To make “every commodity acceptable in exchange, if not in fact 
then at least in law,” on the basis of the role of gold and silver is, 
then, to misunderstand this role. Gold and silver are acceptable in 
law only because they are acceptable in fact; and they are acceptable 
in fact because the present organisation of production needs a 
universal agent of exchange. Law is only the official recognition of 
fact. 

We have seen that the example of silver as an application of value 
which has attained constitution was chosen by M. Proudhon only to 
smuggle through his whole doctrine of exchangeability, that is to say, 
to prove that every commodity assessed by its cost of production 
must attain the status of money. All this would be very fine, were it 
not for the awkward fact that precisely gold and silver, as money, are 
of all commodities the only ones not determined by their cost of 
production; and this is so true that in circulation they can be replaced 
by paper. So long as there is a certain proportion observed between 
the requirements of circulation and the amount of money issued, be 
it paper, gold, platinum or copper money, there can be no question 
of a proportion to be observed between the intrinsic value (cost of 
production) and the nominal value of money. Doubtless, in 
international trade, money is determined, like any other commodity, 
by labour time. But it is also true that gold and silver in international 
trade are means of exchange as products and not as money. In other 
words, they lose this characteristic of ‘stability and authenticity”, of 
“sovereign consecration”, which, for M. Proudhon, forms their 
specific characteristic. Ricardo understood this truth so well that 
after basing his whole system on value determined by labour time, 
and after saying: “Gold and silver, like all other commodities, are 
valuable only in proportion to the quantity of labour necessary to 
produce them, and bring them to market’, he adds, nevertheless, 
that the value of money is not determined by the labour time its 
substance embodies, but by the law of supply and demand only. 

“Though it” (paper money) “has no intrinsic value, yet, by limiting its quantity, its 
value in exchange is as great as an equal denomination of coin, or of bullion in that 
coin. On the same principle, too, namely, by a limitation of its quantity, a debased coin 
would circulate at the value it should bear, if it were of the legal weight and fineness, 
and not at the value of the quantity of metal which it actually contained. In the history 
of the British coinage, we find, accordingly, that the currency was never depreciated 

The Poverty of Philosophy 151 

in the same proportion that it was debased; the reason of which was, that it never was 
increased in quantity, in proportion to its diminished intrinsic value.” (Ricardo, loc. cit. 
[II 206-07; Eng. ed., pp. 422-23}.) 

This is what J. B. Say observes on this passage of Ricardo’s: 

“This example should suffice, I think, to convince the author that the basis of all value 
is not the amount of labour needed to make a commodity, but the need felt for that 
commodity, balanced by its scarcity.” 

Thus money, which for Ricardo 1s no longer a value determined by 
labour time, and which J. B. Say therefore takes as an example to 
convince Ricardo that the other values could not be determined by 
labour time either, this money,I say, taken by J. B. Say as an example 
of a value determined exclusively by supply and demand, becomes 
for M. Proudhon the example par excellence of the application of 
value constituted ... by labour time. 

To conclude, if money is not a “value constituted” by labour time, 
it is all the less likely that it could have anything in common with M. 
Proudhon’s correct “proportion”. Gold and silver are always 
exchangeable, because they have the special function of serving as 
the universal agent of exchange, and in no wise because they exist in 
a quantity proportional to the sum total of wealth; or, to put it still 
better, they are always proportional because, alone of all com- 
modities, they serve as money, the universal agent of exchange, 
whatever their quantity in relation to the sum total of wealth. 

‘A circulation can never be so abundant as to overflow; for by diminishing its 

value. in the same proportion you will increase its quantity, and by increasing its value, 
diminish its quantity.” (Ricardo [II 205; Eng. ed., p. 422 }.) 

‘What an imbroglio political economy is!” cries M. Proudhon. [I 72] 

““Cursed gold!’ cries a Communist flippantly” (through the mouth of M. 
Proudhon). “You might as well say: Cursed wheat, cursed vines, cursed sheep!—for 
just like gold and silver, every commercial value must attain its strict and exact 
determination.” [1 73] 

The idea of making sheep and vines attain the status of money is 
not new. In France, it belongs to the age of Louis XIV. At that 
period, money having begun to establish its omnipotence, the 
depreciation of all other commodities was being complained of, and 
the time when “every commercial value” might attain its strict and 
exact determination, the status of money, was being eagerly invoked. 
Even in the writings of Boisguillebert, one of the oldest of French 
economists, we find: 

* Say’s note to the French edition of Ricardo’s book, tome II, p. 207.— Ed. 

“Money then, by the arrival of innumerable competitors in the form of 
commodities themselves, re-established in their true values, will be thrust back again 
within its natural limits.” ? (Economistes financiers du XVIII‘ siécle, Daire edition, 
p- 422.) 

One sees that the first illusions of the bourgeoisie are also their 
last. : 

B) Surplus Left by Labour 

“In works on political economy we read this absurd hypothesis: If the price of 
everything were doubled.... As if the price of everything were not the proportion of 
things—and one could double a proportion, a relation, a law!” (Proudhon, tome I, 

p. 81.) 

Economists have fallen into this error through not knowing how to 
apply the “law of proportionality” and ‘constituted value”. 

Unfortunately in the very same work by M. Proudhon, tome I, p. 
110, we read the absurd hypothesis that, “if wages rose generally, the 
price of everything would rise”. Furthermore, if we find the phrase 
in question in works on political economy, we also find an 
explanation of it. 

‘When one speaks of the price of all commodities going up or down, one always 
excludes some one commodity. The excluded commodity is, in general, money or 
labour.” (Encyclopaedia Metropolitana, or Universal Dictionary of Knowledge, Vol. VI, 
Article Political Economy, by Senior, London, 1836. Regarding the phrase under 

discussion, see also J. St. Mill: Essays on Some Unsettled Questions of Political Economy, 
London, 1844, and Tooke: A History of Prices, etc., London, 1838.) 

Let us pass now to the second application of “constituted value”, and 
of other proportions—whose only defect is their lack of proportion. 
And let us see whether M. Proudhon is happier here than in the 
monetisation of sheep. 

“An axiom generally admitted by economists is that all labour must leave a surplus. 
In my opinion this proposition is universally and absolutely true: it is the corollary of 
the law of proportion, which may be regarded as the summary of the whole of 
economic science. But, if the economists will permit me to say so, the principle that all 

labour must leave a surplus is meaningless according to their theory, and is not 
susceptible of any demonstration.” (Proudhon [I 73].) 

To prove that all labour must leave a surplus, M. Proudhon 
personifies society; he turns it into a person-society—a society which is 
not by any means a society of persons, since it has its laws apart, 
which have nothing in common with the persons of which society is 
composed, and its “own intelligence”, which is not the intelligence of 

2 P. Boisguillebert, Dissertation sur la nature des richesses....— Ed. 

The Poverty of Philosophy 153 

common men, but an intelligence devoid of common sense. M. 
Proudhon reproaches the economists with not having understood 
the personality of this collective being. We have pleasure in 
confronting him with the following passage from an American 
economist, who accuses the economists of just the opposite: 

“The moral entity—the grammatical being* called a nation, has been clothed in 
attributes that have no real existence except in the imagination of those who 
metamorphose a word into a thing.... This has given rise to many difficulties and to 
some deplorable misunderstandings in political economy.” (Th. Cooper, Lectures on 
the Elements of Political Economy, Columbia, 1826.79) 

“This principle of the surplus left by labour,” continues M. Proudhon, “is true of 
individuals only because it emanates from society, which thus confers on them the 
benefit of its own laws.” [I 75] 

Does M. Proudhon thereby mean merely that the production of 
the social individual exceeds that of the isolated individual? Is M. 
Proudhon referring to this surplus of the production of associated 
individuals over that of non-associated individuals? If so, we could 
quote for him a hundred economists who have expressed this simple 
truth without any of the mysticism with which M. Proudhon 
surrounds himself. This, for example, is what Mr. Sadler says: 

“Combined labour produces results which individual exertion could never 
accomplish. As mankind, therefore, multiply in number, the products of their united 
industry would greatly exceed the amount of any mere arithmetica] addition 
calculated on such an increase.... In the mechanical arts, as well as in pursuits of 
science, a man may achieve more in a day ... than a solitary ... individual could perform 
in his whole life..... Geometry says ... that the whole is only equal to the sum of all its 
parts; as applied to the subject before us, this axiom would be false. Regarding labour, 
the great pillar of human existence>, it may be said that the entire product of 
combined exertion almost infinitely exceeds all which individual and disconnected 
efforts could possibly accomplish.” (T. Sadler, The Law of Population, London, 1830 
[pp. 83, 84].) 

To return to M. Proudhon. The surplus left by labour, he says, is 
explained by the person-society. The life of this person is guided by 
laws which are the opposite of those which govern the activities of 
man as an individual. He desires to prove this by “facts”. 

“The discovery of an economic process can never provide the inventor with a 
profit equal to that which he procures for society.... It has been remarked that railway 
enterprises are much less a source of wealth for the contractors than for the state.... 
The average cost of transporting commodities by road is 18 centimes per ton per 
kilometre, from the collection of the goods to their delivery. It has been calculated that 

2 In the original both terms are given in English in parentheses after the 
French.— Ed. 

> In the original the words “the great pillar of human existence” are given in 
English in parentheses after the French.— Ed. 

at this rate an ordinary railway enterprise would not obtain 10 per cent net profit, a 
result approximately equal to that of a road-transport enterprise. But let us suppose 
that the speed of rail transport compared with that of road transport is as 4 is to 1. 
Since in society time is value itself, the railway would, prices being equal, present an 
advantage of 400 per cent over road transport. Yet this enormous advantage, very real 
for society, is far from being realised in the same proportion for the carrier, who, 
while bestowing upon society an extra value of 400 per cent, does not for his own part 
draw 10 per cent. To bring the matter home still more pointedly, let us suppose, in 
fact, that the railway puts up its rate to 25 centimes, the cost of road transport 
remaining at 18: it would instantly lose all its consignments. Senders, receivers, 
everybody would return to the van, to the primitive waggon if necessary. The 
locomotive would be abandoned. A social advantage of 400 per cent would be 
sacrificed to a private loss of 35 per cent. The reason for this is easily grasped: the 
advantage resulting from the speed of the railway is entirely social, and each 
individual participates in it only in a minute proportion (it must be remembered that 
at the moment we are dealing only with the transport of goods), while the loss strikes 
the consumer directly and personally. A social profit equal to 400 represents for the 
individual, if society is composed only of a million men, four ten-thousandths; while a 
loss of 33 per cent for the consumer would suppose a social deficit of 33 million.” 
(Proudhon {I 75, 76].) 

We may even overlook the fact that M. Proudhon expresses a 
quadrupled speed as 400 per cent of the original speed; but that he 
should bring into relation the percentage of speed and the 
percentage of profit and establish a proportion between two 
relations which, although measured separately by percentages, are 
nevertheless incommensurable with each other, is to establish a 
proportion between the percentages without reference to denomina- 
tions. 

Percentages are always percentages, 10 per cent and 400 per cent 
are commensurable; they are to each other as 10 is to 400. 
Therefore, concludes M. Proudhon, a profit of 10 per cent is worth 
forty times less than a quadrupled speed. To save appearances, he 
says that, for society, time is money.’ This error arises from his 
recollecting vaguely that there is a connection between value and 
labour time, and he hastens to identify labour time with transport 
time; that is, he identifies the few firemen, guards and conductors, 
whose labour time is actually transport time, with the whole of society. 
Thus at one blow, speed has become capital, and in this case he is en- 
tirely right in saying: “A profit of 400 per cent will be sacrificed to a 
loss of 35 per cent.” After establishing this strange proposition as a 
mathematician, he gives us the explanation of it as an economist. 

“A social profit equal to 400 represents for the individual, if 
society is composed only of a million men, four ten-thousandths.” 

* In the original the words “time is money” are given in English in parentheses 
after the French.— Ed. 

The Poverty of Philosophy 155 

Agreed; but we are dealing not with 400, but with 400 per cent, and a 
profit of 400 per cent represents for the individual 400 per cent, 
neither more nor less. Whatever be the capital, the dividends will 
always be in the ratio of 400 per cent. What does M. Proudhon do? 
He takes percentages for capital, and, as if he were afraid of his 
confusion not being manifest enough, “pointed” enough, he 
continues: 

“A loss of 33 per cent for the consumer would suppose a social 
deficit of 33 million.” A loss of 33 per cent for the consumer remains 
a loss of 33 per cent for a million consumers. How then can M. 
Proudhon say pertinently that the social deficit in the case of a 33 per 
cent loss amounts to 33 million, when he knows neither the social 
capital nor even the capital of a single one of the persons concerned? 
Thus it was not enough for M. Proudhon to have confused capital 
with percentage; he surpasses himself by identifying the capital sunk in 
an enterprise with the number of interested parties. 

“To bring the matter home still more pointedly let us suppose in 
fact” a given capital. A social profit of 400 per cent divided among a 
million participants, each of them interested to the extent of one 
franc, would give 4 francs profit per head—and not 0.0004, as M. 
Proudhon alleges. Likewise a loss of 33 per cent for each of the 
participants represents a social deficit of 330,000 francs and not of 
33 million (100:33= 1,000,000:330,000). 

M. Proudhon, preoccupied with his theory of the person-society, 
forgets to divide by 100 and gets a loss of 330,000 francs; but 4 francs 
profit per head makes 4 million francs profit for society. There 
remains for society a net profit of 3.670,000 francs. This accurate 
calculation proves precisely the contrary of that which M. Proudhon 
wanted to prove: namely, that the profits and losses of society are not 
in inverse ratio to the profits and losses of individuals. 

Having rectified these simple errors of pure calculation let us take 
a look at the consequences which we would arrive at, if we admitted 
this relation between speed and capital in the case of railways, as M. 
Proudhon gives it—minus the mistakes in calculation. Let us suppose 
that a transport four times as rapid costs four times as much; this 
transport would not yield less profit than cartage, which is four times 
slower and costs a quarter of the amount. Thus, if cartage takes 18 
centimes, rail transport could take 72 centimes. This would be, 
according to “the rigour of mathematics”, the consequence of M. 
Proudhon’s suppositions—always minus his mistakes in calculation. 
But here he is all of a sudden telling us that if, instead of 72 centimes, 
rail transport takes only 25, it would instantly lose all its consign- 
ments. Decidedly we should have to go back to the van, to the 

primitive waggon even. Only, if we have any advice to give M. 
Proudhon, it is not to forget, in his Programme of the Progressive 
Association, to divide by 100. But, alas! it is scarcely to be hoped that 
our advice will be listened to, for M. Proudhon is so delighted with 
his “progressive” calculation, corresponding to the “progressive 
association”, that he cries most emphatically: 

“I have already shown in Chapter II, by the solution of the antinomy of value, that 
the advantage of every useful discovery is incomparably less for the inventor, 

whatever he may do, than for society. I have carried the demonstration in regard to 
this point to the rigour of mathematics!” [I 241] 

Let us return to the fiction of the person-society, a fiction which 
has no other aim than that of proving this simple truth—that a new 
invention which enables a given amount of labour to produce a 
greater number of commodities, lowers the marketable value of the 
product. Society, then, makes a profit, not by obtaining more 
exchange values, but by obtaining more commodities for the same 
value. As for the inventor, competition makes his profit fall 
successively to the general level of profits. Has M. Proudhon proved 
this proposition as he wanted to? No. This does not prevent him 
from reproaching the economists with failure to prove it. To prove 
to him on the contrary that they have proved it, we shall cite only 
Ricardo and Lauderdale—Ricardo, the head of the school which 
determines value by labour time, and Lauderdale, one of the most 
uncompromising defenders of the determination of value by supply 
and demand. Both have expounded the same proposition: 

“By constantly increasing the facility of production, we constantly diminish the 
value of some of the commodities before produced, though by the same means we not 
only add to the national riches, but also to the power of future production.... As soon as 
by the aid of machinery, or by the knowledge of natural philosophy, you oblige 
natural agents to do the work which was before done by man, the exchangeable value 
of such work falls accordingly. If ten men turned a corn mill, and it be discovered that 
by the assistance of wind, or of water, the labour of these ten men may be spared, the 
flour which is the produce partly of the work performed by the mill, would 
immediately fall in value, in proportion to the quantity of labour saved; and the society 
would be richer by the commodities which the labour of the ten men could produce, 

the funds destined for their maintenance being in no degree impaired.” (Ricardo [II 
59, 82; Eng. ed., pp. 321-22, 336].) 

Lauderdale, in his turn, says: 

“In every instance where capital is so employed as to produce a profit, it uniformly 
arises, either—from its supplanting a portion of labour, which would otherwise be 
performed by the hand of man; or—from its performing a portion of labour, which is 
beyond the reach of the personal exertion of man to accomplish.... The small profit 
which the proprietors of machinery generally acquire, when compared with the wages 
of labour, which the machine supplants, may perhaps create a suspicion of the 

The Poverty of Philosophy 157 

rectitude of this opinion. Some fire-engines, for instance, draw more water from a 
coalpit in one day than could be conveyed on the shoulders of three hundred men, 
even assisted by the machinery of buckets; and a fire-engine undoubtedly performs its 
labour at a much smaller expense than the amount of the wages of those whose labour 
it thus supplants. This is, in truth, the case with all machinery. All machines must 
execute the labour that was antecedently performed at a cheaper rate than it could be 
done by the hand of man.... If such a privilege is given for the invention of a machine, 
which performs, by the labour of one man, a quantity of work that used to take the 
labour of four; as the possession of the exclusive privilege prevents any competition in 
doing the work, but what proceeds from the labour of the workmen, their wages, as 
long as the patent continues, must obviously form the measure of the patentee’s 
charge; that is to secure employment, he has only to charge a little less than the wages 
of the labour which the machine supplants. But when the patent expires, other 
machines of the same nature are brought into competition; and then his charge must 
be regulated on the same principle as every other, according to the abundance of 
machines.... The profit of capital employed..., though it arises from supplanting 
labour, comes to be regulated, not by the value of the labour it supplants, but, as in all 
other cases, by the competition among the proprietors of capital; and it will be great or 
small in proportion to the quantity of capital that presents itself for performing the 
duty, and the demand for it.” [Pp. 119, 123, 124-25, 134; Eng. ed., pp. 161, 166-67, 
168-69, 181-82.] 

Finally, then, so long as the profit is greater than in other 
industries, capital will be thrown into the new industry until the rate 
of profit falls to the general level. 

We have just seen that the example of the railway was scarcely 
suited to throw any light on the fiction of the person-society. 
Nevertheless, M. Proudhon boldly resumes his discourse: 

“With these points cleared up, nothing is easier than to explain how labour must 
leave a surplus for each producer.” [I 77] 

What now follows belongs to classical antiquity. It is a poetical 
narrative intended to refresh the reader after the fatigue which the 
rigour of the preceding mathematical demonstrations must have 
caused him. M. Proudhon gives his person-society the name of 
Prometheus, whose high deeds he glorifies in these terms: 

“First of all, Prometheus emerging from the bosom of nature awakes to life, ina 
delightful inertia,” etc., etc. “Prometheus sets to work, and on this first day, the first day 
of the second creation, Prometheus’ product, i.e., his wealth, his well-being, is equal 
to ten. On the second day, Prometheus divides his labour, and his product becomes 
equal to a hundred. On the third day and on each of the following days, Prometheus 
invents machines, discovers new utilities in bodies, new forces in nature.... With every 
step of his industrial activity, there is an increase in the number of his products, which 
marks an enhancement of happiness for him. And since, after all, to consume is for 
him to produce, it is clear that every day’s consumption, using up only the product of 
the day before, leaves a surplus product for the next day.” [I 77, 78] 

This Prometheus of M. Proudhon’s is a queer character, as weak in 
logic as in political economy. So long as Prometheus merely teaches 

us the division of labour, the application of machinery, the 
exploitation of natural forces and scientific power, multiplying the 
productive forces of men and giving a surplus compared with the 
produce of labour in isolation, this new Prometheus has the 
misfortune only of coming too late. But the moment Prometheus 
starts talking about production and consumption he becomes really 
ludicrous. To consume, for him, is to produce; he consumes the next 
day what he produced the day before, so that he is always one day in 
advance; this day in advance is his “surplus left by labour’. But, if he 
consumes one day what he produced the day before, he must, on the 
first day, which had no day before, have done two days’ work in 
order to be one day in advance later on. How did Prometheus earn 
this surplus on the first day, when there was neither division of 
labour, nor machinery, nor even any knowledge of physical forces 
other than fire? Thus the question, for all its being carried back “to 
the first day of the second creation”, has not advanced a single step 
forward. This way of explaining things savours both of Greek and of 
Hebrew, it is at once mystical and allegorical. It gives M. Proudhona 
perfect right to say: 

“I have proved by theory and by facts the principle that all labour must leave a 
surplus.” [1 79] 

The “facts” are the famous progressive calculation; the theory is 
the myth of Prometheus. 

“But,” continues M. Proudhon, “this principle, while being as certain as an 
arithmetical proposition, is as yet far from being realised by everyone. Whereas, with 
the progress of collective industry, every day’s individual labour produces a greater 
and greater product, and whereas therefore, by a necessary consequence, the worker 
with the same wage“ ought to become richer every day, there actually exist estates in 
society which profit and others which decay.” II 79-80] 

In 1770 the population of the United Kingdom of Great Britain 
was 15 million, and the productive population was 3 million. The 
scientific power of production equalled a population of about 12 
million individuals more. Therefore there were, altogether, 15 
million of productive forces. Thus the productive power was to the 
population as | is to 1; and the scientific power was to the manua: 
power as 4 is to l. 

In 1840 the population did not exceed 30 million: the productive 
population was 6 million. But the scientific power amounted to 650 
million; that is, it was to the whole population as 21 is to 1, and to 
manual power as 108 is to 1. 

* In the copy with corrections in Marx’s hand the words “with the same wage” are 
underscored and the word “Nota” is written in the margin. — Ed. 

The Poverty of Philosophy 159 

In English society the working day thus acquired in seventy years a 
surplus of 2,700 per cent productivity; that is, in 1840 it produced 27 
times as much as in 1770. According to M. Proudhon, the following 
question should be raised: why was not the English worker of 1840 
twenty-seven times as rich as the one of 1770? In raising such a 
question one would naturally be supposing that the English could 
have produced this wealth without the historical conditions in which 
it was produced, such as: private accumulation of capital, modern 
division of labour, automatic workshops, anarchical competition, the 
wage system—in short, everything that is based upon class antago- 
nism. Now, these were precisely the necessary conditions of existence 
for the development of productive forces and of the surplus left by 
labour. Therefore, to obtain this development of productive forces 
and this surplus left by labour, there had to be classes which profited 
and classes which decayed. 

What then, ultimately, is this Prometheus resuscitated by M. 
Proudhon? It is society, social relations based on class antagonism. 
These relations are not relations between individual and individual, 
but between worker and capitalist, between farmer and landlord, etc. 
Wipe out these relations and you annihilate all society, and your 
Prometheus is nothing but a ghost without arms or legs; that is, 
without automatic workshops, without division of labour—in a word, 
without everything that you gave him to start with in order to make 
him obtain this surplus left by labour. 

If then, in theory, it sufficed to interpret, as M. Proudhon does, 
the formula of the surplus left by labour in the equalitarian sense, 
without taking into account the actual conditions of production, it 
should suffice, in practice, to share out equally among the workers all 
the wealth at present acquired, without changing in any way the 
present conditions of production. Such a distribution would certainly 
not assure a high degree of comfort to the individual participants. 

But M. Proudhon is not so pessimistic as one might think. As 
proportionality is everything for him, he has to see in his fully 
equipped Prometheus, that is, in present-day society, the beginnings 
of a realisation of his favourite idea. 

“But everywhere, too, the progress of wealth, that is, the proportion of values, 1s the 
dominant law; and when economists hold up against the complaints of the social party 
the progressive growth of the public wealth, and the improved conditions of even the 

most unfortunate classes, they unwittingly proclaim a truth which is the condemnation 
of their theories.” [I 80] 

What is, actually, collective wealth, public fortune? It is the wealth 
of the bourgeoisie—not that of each bourgeois in particular. Well, 
the economists have done nothing but show how, in the existing 

relations of production, the wealth of the bourgeoisie has grown and 
must grow still further. As for the working classes, it still remains a 
very debatable question whether their condition has improved as a 
result of the increase in so-called public wealth. If the economists, in 
support of their optimism, cite the example of the English workers 
employed in the cotton industry, they see the condition of the latter 
only in the rare moments of trade prosperity. These moments of 
prosperity are to the periods of crisis and stagnation in the “correct 
proportion” of 3 to 10. But perhaps also, in speaking of 
improvement, the economists were thinking of the millions of 
workers who had to perish in the East Indies so as to procure for the 
million and a half workers employed in the same industry in England 
three years’ prosperity out of ten. 

As for the temporary participation in the increase of public wealth, 
that is a different matter. The fact of temporary participation is 
explained by the theory of the economists. It is the confirmation of 
this theory and not its “condemnation”, as M. Proudhon calls it. If 
there were anything to be condemned, it would surely be the system 
of M. Proudhon, who would reduce the worker, as we have shown, to 
the minimum wage, in spite of the increase in wealth. It is only by 
reducing the worker to the minimum wage that he would be able to 
apply the correct proportion of values, of “value constituted” by 
labour time. It is because wages, as a result of competition, oscillate 
now above, now below, the price of food necessary for the sustenance 
of the worker, that he can participate to a certain extent in the 
development of collective wealth, and can also perish from want. 
This is the whole theory of the economists who have no illusions on 
the subject. 

After his lengthy digressions on railways, on Prometheus, and on 
the new society to be reconstituted on “constituted value”, M. 
Proudhon collects himself; emotion overpowers him and he cries in 
fatherly tones: 

“I beseech the economists to question themselves for one moment, in the silence of 
their hearts—far from the prejudices that trouble them and regardless of the 
employment they are engaged in or hope to obtain, of the interests they subserve, or 
the approbation to which they aspire, of the honours which nurse their vanity—let 
them say whether before this day the principle that all labour must leave a surplus 

appeared to them with this chain of premises and consequences that we have 
revealed.” {I 80]