Economic Theory of the Leisure Class Nikolai Bukharin 1927 Contents Preface to the Russian Edition i Preface to the American Edition v Bourgeois Political Economy since Marx vi 1 Methodological Foundations of the Theory of Marginal Util- ity and of Marxism 1 1.1 Objectivism and Subjectivism in Political Economy . 2 1.2 The Historical Point of View and the Unhistorical Point of View . 10 1.3 The Point of View of Production and the Point of View of Consumption . 16 1.4 Conclusions . 19 2 The Theory of Value 20 2.1 Subjective and Objective Value; Definitions . 22 2.2 Utility and Value (Subjective) . 24 2.3 The measure of Value and the Unit of Value . 28 3 The Theory of Value (Continued) 33 3.1 The Theory of Utility by Substitution . 33 3.2 The Amount of Marginal Utility and the Quantity of Com- modities . 39 3.3 The Fixing of the Value of Commodities in Various Types of Consumption; Subjective Exchange Value; Money . 42 3.4 The Value of Complementary Goods . 45 3.5 The Value or Productive Commodities; Production Costs . 48 3.6 Conclusions . 54 1 CONTENTS 2 4 The Theory of Profit 60 4.1 The Importance of the Problem of Distribution; Formulation of the Question . 60 4.2 The Concept of Capital; "Capital" and ”Profit” in the "So- cialist" State . 63 4.3 General Description of the Capitalist Production Process; The Formation of Profits . 68 5 The Theory of Profit (Continued) 75 5.1 Two Causes for the Overestimation of Present Goods . 75 5.2 The Third Cause for the Overestimation of Present Goods; Their Technical Superiority . 81 5.3 The Subsistence Fund; The Demand for Present Goods and the Supply of such Goods; The Origin of Profit . 93 6 Conclusion 100 A The Policy of Theoretical Conciliation 105 A.1 Tugan-Baranovsky's formula . 106 A.2 Mr. Tugan-Baranovsky's "Logic" . 108 A.3 Tugan-Baranovsky's Fundamental Fallacy . 110 Preface to the Russian Edition This book was completed in the fall of 1914. The Introduction was written in August and September of that year. I had long been occupied with the plan of formulating a systematic crit- icism of the theoretical economy of the new bourgeoisie. For this purpose, I went to Vienna after succeeding in making my escape from Siberia; I there attended the lectures of Professor B¨ohm-Bawerk (1851-1914), of the Univer- sity of Vienna. In the library of the University of Vienna, I went through the literature of the Austrian theorists. I was not permitted, however, to finish this work in Vienna, since the Austrian Government had me imprisoned in a fortress just before the outbreak of the World War, while its argues were entrusted with the task of subjecting my manuscript to careful examination. In Switzerland, to which I repaired after my deportation from Austria, I had an opportunity to study the Lausanne School (Walras), as well as the older economists, at the library of the University of Lausanne, and thus to trace the theory of marginal utility to its roots. At Lausanne, I also made an ex- haustive study of the Anglo-American economists. Political activities took me to Stockholm, where the Royal Library and the special economic library of the Higher Commercial School (Handelsh¨ogskolan) afforded me an oppor- tunity to continue my study of the later bourgeois political economy. My arrest in Sweden and my deportation to Norway brought me to the library of the Nobel Institute at Christiania; after reaching the United States, I was enabled to study the American economic literature even more thoroughly in the New York Public Library. For a long time the manuscript of this book could not be found in Chris- tiania (now Oslo), where I had left it, and it is only due to the most painstak- ing efforts of my friend, the Norwegian communist, Arvid C. Hansen, that it was found and brought to Soviet Russia in February, 1919. I have since i added but a few notes and observations, concerned chiefly with the Anglo- American School and the most recent publications. So much for the external history of this book. As to its substance, I should like to make the following observations: Hitherto two types of crit- icism of the latest bourgeois political economy have been practiced in the Marxian camp, either an exclusively sociological criticism, or an exclusively methodological criticism. For instance, it was ascertained that the theo- retical system in question was the outgrowth of a specific class psychology, which definitely disposed of it; or, it was pointed out that certain method- ological bases, certain approaches to the problem were incorrect, and it was therefore considered unnecessary to proceed to an exhaustive criticism of the internal phases of the system. No doubt, if we start with the fact that it is only a class theory of the proletariat that can be objectively correct, a mere revelation of the bourgeois character of any specific theory, is, strictly speaking, sufficient to justify its rejection. At bottom, this is a correct attitude, for Marxism claims its general validity precisely for the reason that it is the theoretical expression of the most advanced class, whose "needs" of knowledge are far more audacious than those of the conservative and therefore narrow-minded mode of thought of the ruling classes in capitalist society. Yet it is quite clear that the correctness of this assumption should be proved precisely in the struggle between the ideologies themselves, and particularly, by a logical criticism of the theories of our opponents. A sociological characterization of a certain theory, therefore, does not relieve us of the responsibility of waging war against it even in the field of a purely logical criticism. The same is true also of a criticism of method. To be sure, to prove that the point of departure of the methodological bases is a false one is equivalent to overthrowing the entire theoretical structure erected on those bases. Yet the struggle between ideologies requires that the incorrectness in method be proved by the fallacious partial inferences of the system, in which connection we may point out either the internal contradictions of the old system, or its incompleteness, its organic inability to embrace and explain a number of important phenomena to the advantage of the discipline in question. It follows that Marxism must give an exhaustive criticism of the latest theories, which must include not only a methodological criticism, but also a sociological criticism, as well as a criticism of the entire system as pur- sued to its furthest ramifications. It was thus that Marx formulated the problem presented by bourgeois political economy (in his Theorien ¨uber den Mehrwert, edited by Karl Kautsky, fifth edition, 1923, 3 vols.). While Marxists have as a rule contented themselves with a sociological ii and methodological criticism of the Austrian School, the bourgeois oppo- nents of this school have criticised it chiefly from the point of view of the incorrectness of certain specific inferences. Only R. Stolzmann, who stands almost alone in this work, has attempted to furnish a complete criticism B¨ohm-Bawerk. In so far as certain fundamental ideas of this author are in close theoretical agreement with Marxism, our criticism of the Austrians re- sembles that made by Stolzmann. I have considered it my duty to point out agreements between these two criticisms even in cases in which I had arrived at the same conclusions before I became acquainted with Stolzmann's work. However, in spite of his talents, Stolzmann bases his work on an entirely in- correct conception of society as a "purposeful structure". It is not without reason that R. Liefmann, a very important adherent of the Austrian School, whose profundity he has enhanced and whose peculiarities he presents in a more emphatic form, defends him-self against Stolzmann by the method of attacking the latter's teleology. This teleological point of view, coupled with his most pronounced apologetic tone, prevents Stolzmann from constructing a suitable theoretical frame for his criticism of the Austrian School. Only Marxists can perform this task; it is to do this that I have written the present book. Our selection of an opponent for our criticism probably does not require discussion, for it is well known that the most powerful opponent of Marxism is the Austrian School. It may appear unusual that I should publish this book at a moment when civil war is rampant in Europe. Marxists, however, have never accepted any obligation to discontinue their theoretical work even at periods of the most violent class struggle, so long as any physical possibility for the performance of such work was at hand. More serious is the objection that it is at least foolish to refute the capitalist theory at a moment when both the object and subject of this theory are being destroyed by the flames of the communist revolution. But even such a contention will not hold water, since a criticism of the capitalist system is of the utmost importance for a proper under- standing of the events of the present day. And, in so far as a criticism of the bourgeois theories may smooth the path for such an understanding, such criticism has an abstract theoretical value. Now for a few words as to the form of presentation. I have aimed at the utmost brevity, which probably is the reason for the comparative difficulty of my exposition. On the other hand, I have made many quotations from the Austrians as well as from the mathematical economists, the Anglo-Americans, etc. There is considerable prejudice against this mode of presentation in our Marxist circles, which consider such treatment to be a mark of a merely "bookish" erudition.