In 1894, Engels published posthumously the third and last volume of Marx’s Capital, the work for which Marx was widely known. A number of economists then began to write critical analyses of Marx’s system. The best known of these is that by Eugen von Bohm-Bawerk (Karl Marx and the Close of his System, 1896).

The two basic concepts of Marx’s Capital are “value” and “surplus value.” Marx begins with an analysis of “commodity” and “commodity production.” “Exchange value presents itself in the first instance as the quantitative relation, the proportion, in which values in use of one kind are exchanged for values in use of another kind. . . . As use values commodities are of different qualities, but as exchange values they are merely different quantities,” which, however, “must be capable of being expressed in terms of something common to them all.” This common “something” is the property “of commodities being products of labor . . . all are reduced to one and the same sort of labor, human labor in the abstract.” Hence, Marx’s concept of value insists that labor, “and labor alone,” is that which determines value, from which Marx concludes that this value determines the prices of production. “The price is merely the money-name of the quantity of social labor realized in a commodity.” What about surplus value? “The owner of money must buy the commodities at their value, then sell them at their value, the process must draw out more money than he put in. Such are the conditions of the problem.” What enables him to do this is that he can find in the market a commodity “whose use-value possesses the peculiar property of being a source of value,” namely, “labor power,” which is being sold by its owner, the laborer.

Labor power as a commodity has the value of whatever it costs to maintain the worker and his family in existence. This “more”—which Marx called “surplus value”—was attributed by Marx to the capitalists’ keeping workers longer at work than the time required for producing the amount equivalent to their own value, thus “robbing” the workers of value produced though not owned by them. Bohm-Bawerk, however, pointed out that quite a few other factors besides labor determine a commodity’s value. He called Marx’s limitation of exchange values to commodities a “fallacious reduction, since ‘commodity’ is a concept narrower than ‘goods.’” Moreover, Marx entirely leaves out “the gifts of nature.” Marx maintained that surplus value varied with differences in the “organic composition” of capital (i.e., the proportion of labor to machinery and land.). Bohm-Bawerk argued that in the real world “capitals of equal amount, without regard to possible differences of organic composition, yield equal profits.” Moreover, wrote Bohm-Bawerk, when Marx “is confronted by the task of explaining why the permanent prices of commodities do not gravitate toward the incorporated quantity of labor but towards the ‘prices of production’ which deviate from it,” he “simply drops the assumption that commodities exchange according to their values.” It is interesting that, more than half a century after Bohm-Bawerk, it was Stalin who observed that in Soviet Russia in 1950 commodity production still prevailed.

The economists and the public seemed to believe that Bohm-Bawerk’s critique had finished Marx, but the Russian Revolution of 1917 and the great strength of Marxist political parties in Western Europe proved the contrary. A purely economic critique of Marx fails to see the appeal of Marx’s ideological construction of history, as well as his theory of revolution. The primary source for these aspects of Marx’s work is still the Communist Manifesto (1848). Marx’s only coherent statement about historical materialism amounts to no more than one and a half pages in Marx’s Preface to the Critique of Political Economy (1859); also relevant are The Holy Family (1844), and The German Ideology (1846).

Marx reduced man’s essence to labor and society to modes of economic production. He thus removed from history, as he saw it, any element of freedom and unpredictability. Feeling secure in the knowledge of bare material conditions, he proceeded to divide the historical past into clearly distinguished stages, each identified with a particular mode of production. He then concluded that these were the “laws of history”:

At a certain stage of their development, the material forces of production in society come into conflict with the existing relations of production. Then begins an epoch for social revolution. No social order ever disappears before all the productive forces for which there is room in it have been developed. Therefore, mankind always sets itself only such tasks as it can solve. The task itself arises only when the material conditions necessary for its solution already exist.

At this point Marx mentions the following stages of the past: “Asiatic, the ancient, the feudal, and the modern bourgeois modes of production” (at other times the list was slightly different). The revolution of the proletariat against the bourgeoisie will then usher in the fifth stage, which Marx asserts to be also the last one. That future and final destiny of mankind Marx claims to know with “scientific” precision. On this basis, Marxists speak of the future socialist existence of mankind not as a wishful utopia, but as a fact.