Note 963 — Chapter II · : STATE SOCIALISM

The well-known German economist Professor Lexis has unfortunately not been mentioned in this chapter, for the Göttingen professor has the misfortune of being neither a State Socialist nor a member of the Historical school. His works, dealing with various topics—money, the population theory, and general economic theory—are scattered through a number of reviews and other publications, especially the Jahrbücher für Nationalökonomie und Statistik, Schönberg’s Handbuch, and the great Handwörterbuch der Staatswissenschaften. His writings are distinguished not only by a definitely scientific method of treatment, but also by a remarkable clearness of thought. While appearing to continue the tradition of the Classical school, he takes care to reject the optimistic conclusions which are too often regarded as an inseparable element of that tradition. In 1900 Lexis gave us a general résumé of his teaching in the Allgemeine Volkswirtschaftslehre, where he treats of the economic world as concerned merely with the circulation of goods. In addition to an interesting theory of crises, upon which we cannot dwell just now, the most original part of the work consists of a theory concerning the method of distributing the social product between workers and capitalists. Lexis thinks that all material goods are produced by labour and measurable in terms of labour. The problem then is to determine where the capitalist gets his income. The capitalist’s profit is not the result of exploitation, as Marx thought, but is simply what is added to the sale price—a sum corresponding to the capitalist’s interest is added to the sum representing the workmen’s wages. Profit originates in the sphere of circulation. But how will this increased sale price benefit the capitalists, seeing that under existing conditions the workers can only buy the equivalent of the products which they have already helped to produce? We need to remember, however, that they produce for the capitalist as well as for themselves, and with the money thus obtained the working classes are enabled to buy whatever they need at market prices, i.e. at a price that includes interest, which constitutes the capitalist’s profit. Whenever the capitalists themselves purchase goods made by themselves they are reciprocally benefiting one another. Their class position is not modified by such procedure, for each entrepreneur simply draws profits in proportion to his capital. And so we avoid the most serious objection which can be raised to Marx’s theory. This explanation of the surplus value received by the capitalists is at least very ingenious. Lexis has been mostly influenced by Marx and Rodbertus, and has attempted a fusion of their more vigorous conceptions. Despite the objections that might be raised to it, the work is certainly one of the most original of recent years.