Emil Lederer, Der Zirkulationsprozeß als zentrales Problem der ökonomischen Theorie

Emil Lederer’s theoretical journal article, republished in 1926 after its original appearance in 1924, proposes a reorientation of economics around circulation and accumulation. Its central distinction is between explaining prices within a stationary system and explaining the movement of capitalist society as a whole. Price theory retains its validity, but cannot independently explain growth, interest, monetary change, or crises. These require an account of how production, distribution, consumption, and accumulation condition one another.

Lederer begins with a historical reconstruction. Mercantilism and physiocracy addressed the whole economy; the physiocrats’ decisive achievement was to identify the circuit of reproduction as the object whose conditions economics must discover. Later theory understandably turned toward the constituent elements—value, prices, wages, interest, and rent—but the laws governing those elements do not yield the economic whole. Even theories acknowledging interdependence generally investigate equilibrium or the return to equilibrium after a disturbance. Dynamic theory must instead explain regularities among quantities that change together.

Eine Theorie der dynamischen, kapitalistischen Volkswirtschaft wird daher nicht von der Preislehre ihren Ausgangspunkt nehmen können, sondern der Zirkulationsprozeß der Volkswirtschaft in seiner Bewegung auf erweiterter Stufenleiter wird den Ausgangspunkt bilden müssen ²).

English translation: A theory of the dynamic, capitalist economy will therefore be unable to take price theory as its starting point; instead, the economy’s circulation process in its movement on an expanded scale will have to provide the starting point ²).

This reverses the explanatory order without abolishing price analysis. A stationary economy remains a necessary auxiliary construction, but systematic deviations from its price relations become the principal object of inquiry. Lederer’s immediate target is the transfer of conclusions about an individual enterprise to the aggregate economy. Lower wages may accelerate one firm’s accumulation, whereas enterprises collectively can grow only if the total wage bill also rises. The conditions of individual success cannot simply be generalized.

Marx and Schumpeter supply the major precedents. Lederer reads the first volume of Capital as an analysis of the socially constituted enterprise and its individual accumulation; the second asks how a society of accumulating enterprises can reproduce itself. Its achievement is principally to formulate the problem and indicate a direction. Schumpeter likewise separates stationary price theory from development, but makes entrepreneurial initiative carry too much explanatory weight. Lederer proposes replacing this personal, extra-economic disturbance with recurrent market situations generated by capitalist institutions and interests.

The article’s central critical sections test value theory against wages and interest. A general price principle works most clearly in a simplified economy stripped of specifically capitalist social relations. Unequal ownership of productive resources, however, pushes capitalism toward movement. Wages therefore cannot be treated merely as the socially neutral price of a service.

Der Lohn ist also die crux der ökonomischen Theorie, weil er ein Preisproblem aufwirft, dessen vielfältige Besonderheiten in der sozialen Anlage des Produktionsprozesses begründet sind.

English translation: The wage is thus the crux of economic theory because it poses a price problem whose manifold peculiarities are grounded in the social organization of the production process.

Against labour-value theory, Lederer argues that subsistence costs do not independently determine wages: the wage received determines which subsistence goods workers can obtain. Invoking a historical standard of living does not explain changing real wages through the value principle. Against marginal-utility and productivity approaches, he stresses organized production’s collective character. An isolated worker’s contribution cannot generally be separated from the enterprise’s organization; substitution calculations already presuppose wages and other prices rather than deriving the system itself.

Interest receives an analogous reconstruction. Scarcity is a general condition of prices, not an explanation of a continuing return beyond the price of capital goods. Abstinence explains why owners desire interest, not how entrepreneurs can pay it. Payment requires a recurrent excess of product prices over costs, whose reproduction must be explained through the economy’s changing price structure.

Der Zins als Preis für »Kapitalnutzung« ist ein abgeleiteter Preis, und muß auf Grundlage des eigentümlichen Preissystems der kapitalisti-Wirtschaft erklärt werden.

English translation: Interest as the price of “capital use” is a derived price and must be explained on the basis of the distinctive price system of the capitalist economy.

Editorial note: The original print on page 18 itself reads kapitalisti-Wirtschaft, with the adjective truncated. The German quotation preserves that printed defect; the translation follows the clear context.

Lederer qualifies the identification of interest with accumulation. Expansion can also proceed through saving out of wages and other incomes, even without interest. Interest becomes necessary within the particular model in which incomes are consumed while accumulation continues through the difference between prices and costs. His proposed theory must therefore distinguish economic types: accumulation through surpluses or saving, capital depletion through losses, and circulation under competition, monopoly, or regulation.

The final sections bring money and crises into this framework. Money’s purchasing power expresses the price system; its changes can both result from accumulation and initiate or accelerate it. Money is consequently not merely a neutral instrument disturbed from outside. Similarly, boom and crisis belong to the growth form of competitive capitalism, rather than arising accidentally from successive groups of innovative entrepreneurs. Lederer announces, rather than supplies, the fuller demonstration of their periodic necessity.

Erst die Erfassung des Zirkulations- und Akkumulationsprozesses als Gesamtphänomen gibt das theoretische Bild des gesamten Wirtschaftsprozesses und damit die Grundlage für alle Versuche, ihn zu verändern.

English translation: Only grasping the circulation and accumulation process as a whole phenomenon provides the theoretical picture of the entire economic process and thus the foundation for all attempts to change it.

The article’s contribution is thus a research programme: reconstruct historically specific economic systems through their interconnected movements, then explain particular prices as conditions and results of those movements. Its policy relevance follows directly. Isolated ceteris paribus propositions provide too narrow a foundation for intervention; changing an economy requires understanding how its parts reproduce, expand, and disrupt one another.