To Conrad Schmidt In Berlin

I think you would do very well to take the post in Zürich. [Editor of the Zürich Post.] You could always learn a good deal about economics there, especially if you bear in mind that Zürich is still only a thirdrate money and speculation market, so that the impressions which make themselves felt there are weakened or deliberately distorted by twofold or threefold reflection. But you will get a practical knowledge of the mechanism and be obliged to follow the stock exchange reports from London, New York, Paris, Berlin and Vienna at first hand, and in this way the world market, in its reflex as money and stock market, will reveal itself to you. Economic, political and other reflections are just like those in the human eye, they pass through a condensing lens and therefore appear upside down, standing on their heads. Only the nervous system which would put them on their feet again for representation is lacking. The money market man only sees the movement of industry and of the world market in the inverted reflection of the money and stock market and so effect becomes cause to him. I noticed that in the 'forties already in Manchester: the London Stock Exchange reports were utterly useless for the course of industry and its periodical maxima and minima because these gentry tried to explain everything from crises on the money market, which were generally only symptoms. At that time the object was to explain away the origin of industrial crises as temporary overproduction, so that the thing had in addition its tendentious side, provocative of distortion. This point has now gone (for us, at any rate, for good and all), added to which it is indeed a fact that the money market can also have its own crises, in which direct disturbances of industry only play a subordinate part or no part at all--here there is still much, especially in the history of the last twenty years, to be examined and established.

Where there is division of labour on a social scale there is also mutual independence among the different sections of work. In the last instance production is the decisive factor. But when the trade in products becomes independent of production itself, it follows a movement of its own, which, while it is governed as a whole by production, still in particular cases and within this general dependence follows particular laws contained in the nature of this new factor; this movement has phases of its own and in its turn reacts on the movement of production. The discovery of America was due to the thirst for gold which had previously driven the Portuguese to Africa (compare Soetbeer's Production of Precious Metals), because the enormously extended European industry of the fourteenth and fifteenth centuries and the trade corresponding to it demanded more means of exchange than Germany, the great silver country from 1450 to 1550, could provide. The conquest of India by the Portuguese, Dutch and English between 1500 and 1800 had imports from India as its object--nobody dreamt of exporting anything there. And yet what a colossal reaction these discoveries and conquests, solely conditioned by the interests of trade, had upon industry: they first created the need for exports to these countries and developed large-scale industry.

So it is too with the money market. As soon as trading in money becomes separate from trade in commodities it has (under certain conditions imposed by production and commodity trade and within these limits) a development of its own, special laws and separate phases determined by its own nature. If, in this further development, trade in money extends in addition to trade in securities and these securities are not only government securities but also industrial and transport stocks and shares, so that money trade conquers the direct control over a portion of the production by which, taken as a whole, it is itself controlled, then the reaction of money trading on production becomes still stronger and more complicated. The money traders have become the owners of railways, mines, iron works, etc. These means of production take on a double aspect if their working has to be directed sometimes in the immediate interests of production but sometimes also according to the requirements of the shareholders, in so far as they are money traders. The most striking example of this is the American railways, whose working is entirely dependent on the stock exchange operations of a Jay Gould or a Vanderbilt, etc., these having nothing whatever to do with the particular railway concerned and its interests as a means of communication. And even here in England we have seen struggles lasting for tens of years between different railway companies over the boundaries of their respective territories - struggles in which an enormous amount of money was thrown away, not in the interests of production and communications but simply because of a rivalry which usually only had the object of facilitating the stock exchange dealings of the shareholding money traders.

With these few indications of my conception of the relation of production to commodity trade and of both to money trading, I have already also answered, in essence, your questions about "historical materialism" generally. The thing is easiest to grasp from the point of view of the division of labour. Society gives rise to certain common functions which it cannot dispense with. The persons selected for these functions form a new branch of the division of labour within society. This gives them particular interests, distinct too from the interests of those who gave them their office ; they make themselves independent of the latter and--the state is in being. And now the development is the same as it was with commodity trade and later with money trade; the new independent power, while having in the main to follow the movement of production, also, owing to its inward independence (the relative independence originally transferred to it and gradually further developed) reacts in its turn upon the conditions and course of production. It is the interaction of two unequal forces: on one hand the economic movement, on the other the new political power, which strives for as much independence as possible, and which, having once been established, is also endowed with a movement of its own. On the whole, the economic movement gets its way, but it has also to suffer reactions from the political movement which it established and endowed with relative independence itself, from the movement of the state power on the one hand and of the opposition simultaneously engendered on the other. Just as the movement of the industrial market is, in the main and with the reservations already indicated, reflected in the money market and, of course, in inverted form, so the struggle between the classes already existing and already in conflict with one another is reflected in the struggle between government and opposition, but also in inverted form, no longer directly but indirectly, not as a class struggle but as a fight for political principles, and so distorted that it has taken us thousands of years to get behind it again.

The reaction of the state power upon economic development can be one of three kinds: it can run in the same direction, and then development is more rapid; it can oppose the line of development, in which case nowadays state power in every great nation will go to pieces in the long run; or it can cut off the economic development from certain paths, and impose on it certain others. This case ultimately reduces itself to one of the two previous ones. But it is obvious that in cases two and three the political power can do great damage to the economic development and result in the squandering of great masses of energy and material.

Then there is also the case of the conquest and brutal destruction of economic resources, by which, in certain circumstances, a whole local or national economic development could formerly be ruined. Nowadays such a case usually has the opposite effect, at least among great nations: in the long run the defeated power often gains more economically, politically and morally than the victor.

It is similar with law. As soon as the new division of labour which creates professional lawyers becomes necessary, another new and independent sphere is opened up which, for all its general dependence on production and trade, still has its own capacity for reacting upon these spheres as well. In a modern state, law must not only correspond to the general economic position and be its expression, but must also be an expression which is consistent in itself, and which does not, owing to inner contradictions, look glaringly inconsistent. And in order to achieve this, the faithful reflection of economic conditions is more and more infringed upon. All the more so the more rarely it happens that a code of law is the blunt, unmitigated, unadulterated expression of the domination of a class--this in itself would already offend the "conception of justice." Even in the Code Napoleon the pure logical conception of justice held by the revolutionary bourgeoisie of 1792-96 is already adulterated in many ways, and in so far as it is embodied there has daily to undergo all sorts of attenuation owing to the rising power of the proletariat. Which does not prevent the Code Napoleon from being the statute book which serves as a basis for every new code of law in every part of the world. Thus to a great extent the course of the "development of law" only consists: first in the attempt to do away with the contradictions arising from the direct translation of economic relations into legal principles, and to establish a harmonious system of law, and then in the repeated breaches made in this system by the influence and pressure of further economic development, which involves it in further contradictions (I am only speaking here of civil law for the moment).

The reflection of economic relations as legal principles is necessarily also a topsy turvy one: it happens without the person who is acting being conscious of it; the jurist imagines he is operating with a priori principles, whereas they are really only economic reflexes; so everything is upside down. And it seems to me obvious that this inversion, which, so long as it remains unrecognised, forms what we call ideological conception, reacts in its turn upon the economic basis and may, within certain limits, modify it. The basis of the law of inheritance--assuming that the stages reached in the development of the family are equal--is an economic one. But it would be difficult to prove, for instance, that the absolute liberty of the testator in England and the severe restrictions imposed upon him in France are only due in every detail to economic causes. Both react back, however, on the economic sphere to a very considerable extent, because they influence the division of property.

As to the realms of ideology which soar still higher in the air, religion, philosophy, etc., these have a prehistoric stock, found already in existence and taken over in the historic period, of what we should to-day call bunk. These various false conceptions of nature, of man's own being, of spirits, magic forces, etc., have for the most part only a negative economic basis; but the low economic development of the prehistoric period is supplemented and also partially conditioned and even caused by the false conceptions of nature. And even though economic necessity was the main driving force of the progressive knowledge of nature and becomes ever more so, it would surely be pedantic to try and find economic causes for all this primitive nonsense. The history of science is the history of the gradual clearing away of this nonsense or of its replacement by fresh but already less absurd nonsense. The people who deal with this belong in their turn to special spheres in the division of labour and appear to themselves to be working in an independent field. And in so far as they form an independent group within the social division of labour, in so far do their productions, including their errors, react back as an influence upon the whole development of society, even on its economic development. But all the same they themselves remain under the dominating influence of economic development. In philosophy, for instance, this can be most readily proved in the bourgeois period. Hobbes was the first modern materialist (in the eighteenth century sense) but he was an absolutist in a period when absolute monarchy was at its height throughout the whole of Europe and when the fight of absolute monarchy versus the people was beginning in England. Locke, both in religion and politics, was the child of the class compromise of 1688. The English deists and their more consistent successors, the French materialists, were the true philosophers of the bourgeoisie, the French even of the bourgeois revolution. The German petty bourgeois runs through German philosophy from Kant to Hegel, sometimes positively and sometimes negatively. But the philosophy of every epoch, since it is a definite sphere in the division of labour, has as its presupposition certain definite intellectual material handed down to it by its predecessors, from which it takes its start. And that is why economically backward countries can still play first fiddle in philosophy: France in the eighteenth century compared with England, on whose philosophy the French based themselves, and later Germany in comparison with both. But the philosophy both of France and Germany and the general blossoming of literature at that time were also the result of a rising economic development. I consider the ultimate supremacy of economic development established in these spheres too, but it comes to pass within conditions imposed by the particular sphere itself: in philosophy, for instance, through the operation of economic influences (which again generally only act under political, etc., disguises) upon the existing philosophic material handed down by predecessors. Here economy creates nothing absolutely new (a novo), but it determines the way in which the existing material of thought is altered and further developed, and that too for the most part indirectly, for it is the political, legal and moral reflexes which exercise the greatest direct influence upon philosophy.

About religion I have said the most necessary things in the last section on Feuerbach.

If therefore Barth supposes that we deny any and every reaction of the political, etc., reflexes of the economic movement upon the movement itself, he is simply tilting at windmills. He has only got to look at Marx's Eighteenth Brumaire, which deals almost exclusively with the particular part played by political struggles and events; of course, within their general dependence upon economic conditions. Or Capital, the section on the working day, for instance, where legislation, which is surely a political act, has such a trenchant effect. Or the section on the history of the bourgeoisie. (Chapter XXIV.) Or why do we fight for the political dictatorship of the proletariat if political power is economically impotent? Force (that is state power) is also an economic power.

But I have no time to criticise the book now. I must first get Vol. III out and besides I think too that Bernstein, for instance, could deal with it quite effectively.

What these gentlemen all lack is dialectic. They never see anything but here cause and there effect. That this is a hollow abstraction, that such metaphysical polar opposites only exist in the real world during crises, while the whole vast process proceeds in the form of interaction (though of very unequal forces, the economic movement being by far the strongest, most elemental and most decisive) and that here everything is relative and nothing is absolute--this they never begin to see. Hegel has never existed for them.