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Written in spring 1897 |
Published according to |
From V. I. Lenin, Collected Works, 4th English Edition,
Progress Publishers, Moscow, 1972,
First printing 1960
Second printing 1963
Third printing 1972
Translated from the Russian
Edited by George Hanna
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A CHARACTERISATION OF ECONOMIC ROMANTICISM |
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Chapter I. The Economic Theories of Romanticism .
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134 | |
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Does the Home Market Shrink Because of the Ruination |
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Chapter II.
The Character of the Romanticists' Criticism |
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The Sentimental Criticism of Capitalism .
. . . . The Petty-Bourgeois Character of Romanticism . . . The Problem of the Growth of the Industrial Population at the Expense of the Agricultural Population . . . . Practical Proposals of Romanticism . . . . . . . The Reactionary Character of Romanticism. . . . . Corn Tariffs in England as Appraised by Romanticism and by Scientific Theory. . . . . . . . . . . |
209 | |
page 133
The Swiss economist Sismondi (J.-C.-L. Simonde de Sismondi), who wrote at the beginning of the present century, is of particular interest in considering a solution of the general economic problems which are now coming to the forefront with particular force in Russia. If we add to this that Sismondi occupies a special place in the history of political economy, in that he stands apart from the main trends, being an ardent advocate of small-scale production and an opponent of the supporters and ideologists of large scale enterprise (just like the present-day Russian Narodniks), the reader will understand our desire to outline the main features of Sismondi's doctrine and its relation to other trends -- both contemporary and subsequent -- in economic science. A study of Sismondi is today all the more interesting because last year (1896) an article in Russkoye Bogatstvo also expounded his doctrine (B. Ephrucy: "The Social and Economic Views of Simonde de Sismondi," Russkoye Bogatstvo, 1896, Nos. 7 and 8).*
The contributor to Russkoye Bogatstvo states at the very outset that no writer has been "so wrongly appraised" as Sismondi, who, he alleges, has been "unjustly" represented, now as a reactionary, then as a utopian. The very opposite is true. Precisely this appraisal of Sismondi is quite correct. The article in Russkoye Bogatstvo, while it gives an accurate and detailed account of Sismondi's views, pro-
page 134
vides a completely incorrect picture of his theory,[*] idealises the very points of it in which he comes closest to the Narodniks, and ignores and misrepresents his attitude to subsequent trends in economic science. Hence, our exposition and analysis of Sismondi's doctrine will at the same time be a criticism of Ephrucy's article.
THE ECONOMIC THEORIES OF ROMANTICISM
The distinguishing feature of Sismondi's theory is his doctrine of revenue, of the relation of revenue to production and to the population. The title of Sismondi's chief work is: Nouveaux principes d'économie politique ou de la richesse dans ses rapports avec la population (Seconde édition. Paris, 1827, 2 vol. The first edition was published in 1819) -- New Principles of Political Economy, or Wealth in Relation to Population. This subject is almost identical with the problem known in Russian Narodnik literature as the "problem of the home market for capitalism." Sismondi asserted that as a result of the development of large-scale enterprise and wage-labour in industry and agriculture, production inevitably outruns consumption and is faced with the insoluble task of finding consumers; that it cannot find consumers within the country because it converts the bulk of the population into day labourers, plain workers, and creates unemployment, while the search for a foreign market becomes increasingly difficult owing to the entry of new capitalist countries into the world arena. The reader will see that these are the very same problems that occupy the minds of the Narodnik economists headed by Messrs, V. V. and N.-on.[46] Let us, then, take a closer look at the various points of Sismondi's argument and at its scientific significance.
DOES THE HOME MARKET SHRINK
Unlike the classical economists, who in their arguments had in mind the already established capitalist system and took the existence of the working class as a matter of course and self-evident, Sismondi particularly emphasises the ruination of the small producer -- the process which led to the formation of the working class. That Sismondi deserves credit for pointing to this contradiction in the capitalist system is beyond dispute; but the point is that as an economist he failed to understand this phenomenon and covered up his inability to make a consistent analysis of it with "pious wishes." In Sismondi's opinion, the ruination of the small producer proves that the home market shrinks.
"If the manufacturer sells at a cheaper price," says Sismondi in the chapter on "How Does the Seller Enlarge His Market?" (ch. III, livre IV, t. 1, p. 342 et suiv.),[*] "he will sell more, because the others will sell less. Hence, the manufacturer always strives to save something on labour, or on raw. materials, so as to be able to sell at a lower price than his fellow manufacturers. As the materials themselves are products of past labour, his saving, in the long run, always amounts to the expenditure of a smaller quantity of labour in the production of the same product." "True, the individual manufacturer tries to expand production and not to reduce the number of his workers. Let us assume that he succeeds, that he wins customers away from his competitors by reducing the price of his commodity. What will be the 'national result' of this? . . . The other manufacturers will introduce the same methods of production as he employs. Then some of them will, of course, have to discharge some of their workers to the extent that the new machine increases the productive power of labour. If consumption remains at the same level, and if the same amount of labour is performed by one-tenth of the former number of hands, then the income of this section
of the working class will be curtailed by nine-tenths, and all forms of its consumption will be reduced to the same extent. . . . The result of the invention -- if the nation has no foreign trade, and if consumption remains at the same level -- will consequently be a loss for all, a decline in the national revenue, which will lead to a decline in general consumption in the following year" (I, 344). "Nor can it be other wise: labour itself is an important part of the revenue" (Sismondi has wages in mind), "and therefore the demand for labour cannot be reduced without making the nation poorer. Hence, the expected gain from the invention of new methods of production is nearly always obtained from foreign trade" (I, 345).
The reader will see that in these words he already has before him all that so-familiar "theory" of "the shrinkage of the home market" as a consequence of the development of capitalism, and of the consequent need for a foreign market. Sismondi very frequently reverts to this idea, linking it with his theory of crises and his population "theory"; it is as much the key point of his doctrine as it is of the doctrine of the Russian Narodniks.
Sismondi did not, of course, forget that under the new relationships, ruination and unemployment are accompanied by an increase in "commercial wealth" that the point at issue was the development of large-scale production, of capitalism. This he understood perfectly well and, in fact, asserted that it was the growth of capitalism that caused the home market to shrink: "Just as it is not a matter of indifference from the standpoint of the citizens' welfare whether the sufficiency and consumption of all tend to be equal, or whether a small minority has a superabundance of all things, while the masses are reduced to bare necessities, so these two forms of the distribution of revenue are not a matter of indifference from the view point of the development of commercial wealth (richesse commerciale).* Equality in consumption must always lead to the expansion of the producers' market, and inequality, to the shrinking of the market" (de le [le marché] resserrer toujours davantage) (I, 357).
Thus, Sismondi asserts that the home market shrinks owing to the inequality of distribution inherent in capitalism, that the market must be created by equal distribution. But how can this take place when there is commercial wealth, to which Sismondi imperceptibly passed (and he could not do otherwise, for if he had done he could not have argued about the market )? This is something he does not investigate. How does he prove that it is possible to preserve equality among the producers if commercial wealth exists, i.e., competition between the individual producers? He does not prove it at all. He simply decrees that that is what must occur. Instead of further analysing the contradiction he rightly pointed to, he begins to talk about the undesirability of contradictions in general. "It is possible that when small-scale agriculture is superseded by large-scale and more capital is invested in the land a larger amount of wealth is distributed among the entire mass of agriculturists than previously" . . . (i.e., "it is possible" that the home market, the dimension of which is determined after all by the absolute quantity of commercial wealth, has expanded -- expanded along with the development of capitalism?). . . . "But for the nation, the consumption of one family of rich farmers plus that of fifty families of poor day labourers is not equal to the consumption of fifty families of peasants, not one of which is rich but, on the other hand, not one of which lacks (a moderate) a decent degree of prosperity" (une honnête aisance) (I, 358). In other words: perhaps the development of capitalist farming does create a home market for capitalism. Sismondi was a far too knowledgeable and conscientious economist to deny this fact; but -- but here the author drops his investigation, and for the "nation" of commercial wealth directly substitutes a "nation" of peasants. Evading the unpleasant fact that refutes his petty-bourgeois point of view, he even forgets what he himself had said a little earlier, namely, that the "peasants" became "farmers" thanks to the development of commercial wealth, "The first farmers," he said, "were simple labourers. . . . They did not cease to be peasants. . . . They hardly ever employed day labourers to work with them, they employed only servants (des domestiques), always chosen from among their equals, whom they treated as
equals, ate with them at the same table . . . constituted one class of peasants" (I, 221). So then, it all amounts to this, that these patriarchal muzhiks, with their patriarchal servants, are much more to the author's liking, and he simply turns his back on the changes which the growth of "commercial wealth" brought about in these patriarchal relationships.
But Sismondi does not in the least intend to admit this. He continues to think that he is investigating the laws of commercial wealth and, forgetting the reservations he has made, bluntly asserts:
"Thus, as a result of wealth being concentrated in the hands of a small number of proprietors, the home market shrinks increasingly (!), and industry is increasingly compelled to look for foreign markets, where great revolutions (des grandes révolutions) await it" (1, 361). "Thus, the home market cannot expand except through national prosperity" (I, 362). Sismondi has in mind the prosperity of the people, for he had only just admitted the possibility of "national" prosperity under capitalist farming.
As the reader sees, our Narodnik economists say the same thing word for word.
Sismondi reverts to this question again at the end of his work, in Book VII On the Population, chapter VII; "On the Population Which Has Become Superfluous Owing to the Invention of Machines."
"The introduction of large-scale farming in the countryside has in Great Britain led to the disappearance of the class of peasant farmers (fermiers paysans), who worked themselves and nevertheless enjoyed a moderate prosperity; the population declined considerably, but its consumption declined more than its numbers. The day labourers who do all the field work, receiving only bare necessities, do not by any means give the same encouragement to urban industry as the rich peasants gave previously" (II, 327). "Similar changes also took place among the urban population. . . . The small tradesmen, the small manufacturers disappear, and one big entrepreneur replaces hundreds of them who, taken all together, were perhaps not as rich as he. Nevertheless, taken together they were bigger consumers than he. The luxury he indulges in encourages industry far less than
the moderate prosperity of the hundred households he has superseded" (ibid.).
The question is: what does Sismondi's theory that the home market shrinks with the development of capitalism amount to? To the fact that its author, who had hardly attempted to look at the matter squarely, avoided analysing the conditions that belong to capitalism ("commercial wealth" plus large-scale enterprise in industry and agriculture, for Sismondi does not know the word "capitalism." Identity of concepts makes this use of the term quite correct, and in future we shall simply say "capitalism"), and replaced an analysis by his own petty-bourgeois point of view and his own petty-bourgeois utopia. The development of commercial wealth and, consequently, of competition, he says, should leave intact the average, uniform peasantry, with its "moderate prosperity" and its patriarchal relations with its farm servants.
It goes without saying that this innocent desire remained the exclusive possession of Sismondi and the other romanticists among the "intelligentsia"; and that day after day it came into increasing conflict with the reality that was developing the contradictions of which Sismondi was not yet able to gauge the depth.
It goes without saying that theoretical political economy, which in its further development* joined that of the classical economists, established precisely what Sismondi wanted to deny -- that the development of capitalism in general, and of capitalist farming in particular, does not restrict the home market, but creates it. The development of capitalism proceeds simultaneously with the development of commodity economy, and to the extent that domestic production gives way to production for sale, while the handicraftsman is superseded by the factory, a market is created for capital. The "day labourers" who are pushed out of agriculture by the conversion of the "peasants" into "farmers" provide labour-power for capital, and the farmers are purchasers of the products of industry, not only of articles of consumption (which were formerly produced by the peas-
ants at home, or by village artisans), but also of instruments of production, which could not remain of the old type after small farming had been superseded by large-scale farming.[*] The last point is worth emphasising, for it is the one that Sismondi particularly ignored when, in the passage we have quoted, he talked about "consumption" by peasants and farmers as if only personal consumption (the consumption of bread, clothing, etc.) existed and as if the purchase of machines, implements, etc., the erection of buildings, warehouses, factories, etc., were not also consumption, except that it is of a different kind, i.e., productive consumption, consumption by capital and not by people. And again we must note that it is precisely this mistake, which, as we shall soon see, Sismondi borrowed from Adam Smith, that our Narodnik economists took over in toto.[**]
SISMONDI'S VIEWS ON NATIONAL REVENUE AND CAPITAL
The arguments adduced by Sismondi to prove that capitalism is impossible and that it cannot develop are not confined- to this. He also drew the same conclusions from his revenue theory. It must be said that Sismondi took over in its entirety Adam Smith's labour theory of value and three forms-of revenue: rent, profit and wages. Here and there he even attempts to group together the first two forms of revenue and contrast them to the third: thus, he sometimes combines them and opposes them to wages (I, 104-05); sometimes he even uses the term mieux-value (surplus-value) to describe them (I, 103). We must not, however, exaggerate the importance of this terminology as, we think, Ephrucy does when he says that "Sismondi's theory
stands close to the theory of surplus-value" (Russkoye Bogatstvo, No. 8, p. 41). Properly speaking, Sismondi did not advance a single step beyond Adam Smith, who also said that rent and profit are "deductions from the produce of labour," the share of the value which the worker adds to the product (see An Inquiry into the Nature and Causes of the Wealth of Nations, Russian translation by Bibikov, Vol. I, chap. VIII: "Of the Wages of Labour," and chap. VI: "Of the Component Parts of the Price of Commodities"). Nor did Sismondi go further than this. But he tried to link up this division of the newly-created product into surplus-value and wages with the theory of the social revenue, the home market and the realisation of the product in capitalist-society. These attempts are extremely important for an appraisal of Sismondi's scientific significance, and for an understanding of the connection between his doctrine and that of the Russian Narodniks. It is therefore worth while analysing them in greater detail.
In everywhere pushing into the forefront the question of revenue, of its relation to production, to consumption and to the population, Sismondi was also naturally obliged to analyse the theoretical basis of the concept "revenue." And so at the very beginning of his work we find three chapters devoted to the question of revenue (l. II, ch. IV-VI). Chapter IV, entitled "How Revenue Originates from Capital," deals with the difference between capital and revenue. Sismondi begins straight away to deal with this subject in relation to the whole of society. "Inasmuch as each works for all," he says, "what is produced by all must be consumed by all. . . . The difference between capital and revenue is material for society" (I, 83). But Sismondi has a feeling that this "material" difference is not as simple for society as it is for the individual entrepreneur, "We are approaching," he makes the reservation, "the most abstract and most difficult problem of political economy. The nature of capital and that of revenue are constantly interwoven in our minds: we see that what is revenue for one becomes capital for another, and the same object, in passing from hand to hand, successively acquires different names" (I, 84), i.e., is called "capital" at one moment and "revenue" at another. "But to confuse them," asserts
Sismondi, "is ruinous" (leur confusion est ruineuse, p. 477). "The task of distinguishing between the capital and revenue of society is as important as it is difficult" (I, 84).
The reader has probably noticed wherein lies the difficulty which Sismondi speaks of: if the revenue of the individual entrepreneur is his profit, which he spends on various kinds of articles of consumption,[*] and if the revenue of the individual worker is his wages, can these two forms of revenue be added together to form the "revenue of society"? What, then, about those capitalists and workers who produce machines, for example? Their product exists in a form that cannot be consumed (i.e., consumed personally). It cannot be added to articles of consumption. These products are meant to serve as capital. Hence, while being the revenue of their producers (that is, that part which is the source of profit and wages) they become the capital of their purchasers. How can we straighten out this confusion, which prevents us from defining the concept of social revenue?
As we have seen, Sismondi merely approached the question and at once shrank from it, limiting himself to stating the "difficulty." He says plainly that "usually, three kinds of revenue are recognised: rent, profit and wages" (I, 85), and then goes on to expound Adam Smith's doctrine concerning each. The question of the difference between the capital and the revenue of society remained unanswered. The exposition now proceeds without any strict division between social revenue and individual revenue. But Sismondi reverts once again to the question he abandoned. He says that, as there are different kinds of revenue, so there are "different kinds of wealth" (1, 93), namely, fixed capital -- machines, implements, etc., circulating capital -- which, unlike the former, is consumed quickly and changes its form (seed, raw materials, wages) and, lastly, revenue from capital, which is consumed without being reproduced. Here it is not important to us that Sismondi repeats all the mistakes Adam Smith made in the theory of fixed and circulating capital, that he confuses these categories, which
belong to the process of circulation, with the categories which spring from the process of production (constant and variable capital). What interests us is Sismondi's theory of revenue. And on this question, he draws the following conclusion from the division of wealth into three kinds that has just been made.
"It is important to note that these three kinds of wealth go similarly into consumption; for everything that has been produced is of value to man only insofar as it serves his needs, and these needs are satisfied only by consumption. But fixed capital serves this purpose indirectly (d'une manière indirecte); it is consumed slowly, helping man to reproduce what serves for his consumption" (I, 94-95), whereas circulating capital (Sismondi already identifies it with variable capital) is converted into the "worker's consumption fund" (I, 95). It follows, therefore, that, as distinct from individual consumption, there are two kinds of social consumption. These two kinds differ very greatly. What matters, of course, is not that fixed capital is consumed slowly, but that it is consumed without forming revenue (a consumption fund) for any class of society, that it is not used personally, but productively. But Sismondi fails to see this, and realising that he has again strayed from the path* in quest of the difference between social capital and revenue, he helplessly exclaims: "This movement of wealth is so abstract, it requires such considerable attention to grasp it fully (pour le bien saisir), that we deem it useful to take the simplest example" (I, 95). And indeed, he does take the "simplest" example: a single farmer (un fermier solitaire) harvested a hundred sacks of wheat; part of the wheat he consumed himself, part went for sowing, and part was consumed by the workers he hired. Next year he harvested two hundred sacks. Who is to consume them? The farmer's family cannot grow so quickly. Using this extremely ill-chosen example to show the difference between
fixed capital (seed), circulating capital (wages) and the farmer's consumption fund, Sismondi says:
"We have seen three kinds of wealth in an individual family; let us now examine each kind in relation to the whole nation and see how the national revenue can result from this distribution" (I, 97). But all he says after this is that in society, too, it is necessary to reproduce the same three kinds of wealth: fixed capital (and Sismondi emphasises that a certain amount of labour has to be expended on it, but he does not explain how fixed capital will exchange for the articles of consumption required by both the capitalists and the workers engaged in this production); then come raw materials (Sismondi isolates these especially); then the workers' maintenance and the capitalists' profit. This is all we get from chapter IV. Obviously, the question of the national revenue remained open, and Sismondi failed to analyse, not only distribution, but even the concept of revenue. He immediately forgets the theoretically extremely important reference to the need to reproduce also the fixed capital of society; and in his next chapter, in speaking of the "distribution of the national revenue among the different classes of citizens" (ch. V), he goes straight on to speak of three kinds of revenue and, combining rent and profit, he says that the national revenue consists of two parts: profit from wealth (i.e., rent and profit in the proper sense) and the workers' means of subsistence (I, 104-05). He says, moreover, that:
"Similarly, the annual product, or the result of all the work done by the nation during the year, consists of two parts: one is . . . the profit that comes from wealth; the other is the capacity to work (la puissance de travailler) which is assumed to equal the part of wealth for which it is exchanged, or the means of subsistence of those who work. . . . Thus, the national revenue and the annual product balance each other and represent equal magnitudes. The entire annual product is consumed in the course of the year, but partly by the workers, who, giving their labour in exchange, turn the product into capital and reproduce it, and partly by the capitalists, who, giving their revenue in exchange, destroy it" (I, 105).
Thus, Sismondi simply thrusts aside the question of distinguishing between national capital and revenue, which he himself so definitely considered to be extremely important and difficult, and forgets entirely what he had said a few pages previously! And then he does not see that by thrusting this question aside, he reduced the problem to utter absurdity: how can the annual product be to tally consumed by the workers and capitalists in the shape of revenue, if production needs capital, or, to be more exact, means and instruments of production? They have to be produced, and they are produced every year (as Sismondi himself has only just admitted). And now all these instruments of production, raw materials, etc., are suddenly discarded and the "difficult" problem of the difference between capital and revenue is settled by the absolutely incongruous assertion that the annual product equals the national revenue.
This theory, that the entire product of capitalist society consists of two parts -- the workers' part (wages, or variable capital, to use modern terminology) and the capitalists' part (surplus-value), is not peculiar to Sismondi. It does not belong to him. He borrowed it in its entirety from Adam Smith, and even took a step backward from it. The whole of subsequent political economy (Ricardo, Mill, Proudhon and Rodbertus) repeated this mistake, which was disclosed only by the author of Capital, in Part III of Volume II. We shall expound the principles underlying his views later on. At present let us observe that this mistake is repeated by our Narodnik economists. It is of special interest to compare them with Sismondi, because they draw from this fallacious theory the very same conclusions that Sismondi himself drew*: the conclusion that surplus-value cannot be realised in capitalist society; that social wealth cannot be expanded; that the foreign market must be resorted to because surplus-value cannot be realised within the country; and lastly, that crises occur because the product, it is alleged, cannot be realised through consumption by the workers and the capitalists.
SISMONDI'S CONCLUSIONS FROM THE FALLACIOUS THEORY
To give the reader an idea of Sismondi's doctrine as a whole, we shall first state the most important conclusions which he draws from this theory, and then deal with the manner in which his chief error is rectified in Marx's Capital.
First of all, Sismondi draws from Adam Smith's fallacious theory the conclusion that production must correspond to consumption, that production is determined by revenue. He goes on reiterating this "truth" (which proves his complete inability to understand the nature of capitalist production) throughout the whole of his next chapter, chapter VI: "The Mutual Determination of Production by Consumption, and Expenditure by Revenue." Sismondi directly applies the ethics of the frugal peasant to capitalist society, and sincerely believes that in this way he has corrected Adam Smith's doctrine. At the very beginning of his work, when speaking about Adam Smith in the introductory part (Book I, History of Science ), he says that he "supplements" Smith with the proposition that "consumption is the sole aim of accumulation" (I, 51). "Consumption," he says, "determines reproduction" (I, 119-20), "the national expenditure must regulate the national revenue" (I, 113), and the whole of the work is replete with similar assertions. Two more characteristic features of Sismondi's doctrine are directly connected with this: firstly, disbelief in the development of capitalism, failure to understand that it causes an ever-increasing growth of the productive forces and denial that such growth is possible -- in exactly the same way as the Russian romanticists "teach" that capitalism leads to a waste of labour, and so forth.
"Those who urge unlimited production are mistaken," says Sismondi (I, 121). Excess of production over revenue causes over-production (I, 106). An increase in wealth is beneficial only "when it is gradual, when it is proportionate to itself, when none of its parts develops with excessive rapidity" (I, 409). The good Sismondi thinks that
"disproportionate" development is not development (as our Narodniks also do); that this disproportion is not a law of the present system of social economy, and of its development, but a "mistake" of the legislator, etc.; that in this the European governments are artificially imitating England, a country that has taken the wrong path.[*] Sismondi wholly denies the proposition which the classical economists advanced, and which Marx's theory wholly accepted, namely, that capitalism develops the productive forces. In fact, he goes to the length of regarding all accumulation as being possible only "little by little," and is quite unable to explain the process of accumulation. This is the second highly characteristic feature of his views. The way he argues about accumulation is extremely amusing:
"In the long run, the total product of a given year always exchanges only for the total product of the preceding year" (I, 121). Here accumulation is wholly denied: it follows that the growth of social wealth is impossible under capitalism. The Russian reader will not be very much surprised by this assertion, because he has heard the same thing from Mr. V. V. and from Mr. N.-on. But Sismondi, was, after all, a disciple of Adam Smith. He has a feeling that he is saying something utterly incongruous, and he wants to correct himself:
"If production grows gradually," he continues, "then annual exchange causes only a slight loss (une petite perte) each year, while at the same time improving the conditions for the future (en même temps qu'elle bonifie la condition future). If this loss is slight and well distributed, every body will bear it without complaint. . . . If, however, the discrepancy between the new production and the preceding one is great, capital perishes (sont entamés), suffering is caused, and the nation retrogresses instead of progressing" (I, 121). It would be difficult to formulate the fundamental thesis of romanticism and of the petty-bourgeois view of capitalism more vividly and more plainly than is done in
the above tirade. The more rapid the process of accumulation, i.e., the excess of production over consumption, the better, taught the classical economists, who, though they were not clear about the process of the social production of capital, and though they were unable to free themselves from Adam Smith's mistaken view that the social product consists of two parts, nevertheless advanced the perfectly correct idea that production creates a market for itself and itself determines consumption. And we know also that Marx's theory, which recognised that the more rapid the growth of wealth, the fuller the development of the productive forces of labour and its socialisation, and the better the position of the worker, or as much better as it can be under the present system of social economy, took over this view of accumulation from the classical economists. The romanticists assert the very opposite, and base all their hopes on the feeble development of capitalism; they call for its retardation.
Further, the failure to understand that production creates a market for itself leads to the doctrine that surplus-value cannot be realised. "From reproduction comes revenue, but production in itself is not yet revenue: it acquires this name" (ce nom! Thus the difference between production, i.e., the product, and revenue lies only in the word!) "and functions as such (elle n'opère comme telle ) only after it is realised, after each article produced finds a consumer who has the need or the desire for it" (qui en avait le besoin ou le désir) (I, 121). Thus, the identification of revenue with "production" (i.e., with all that is produced) leads to the identification of realisation with personal consumption. Sismondi has already forgotten that the realisation of such products as, for example, iron, coal, machines, etc., the realisation of means of production in general, takes place in a different way, although he had been very close to this idea earlier. The identification of realisation with personal consumption naturally leads to the doctrine that it is surplus-value that the capitalists cannot realise, because, of the two parts of the social product, wages are realised through workers' consumption. And indeed, Sismondi reached this conclusion (subsequently amplified in greater detail by Proudhon and constantly repeated by our
Narodniks). In controversy with MacCulloch, Sismondi makes the allegation that the latter (in expounding Ricardo's views) does not explain the realisation of profit. MacCulloch had said that, with the division of social labour, one branch of production provides a market for another: the producers of bread realise their commodities in the product of the producers of clothing and vice versa.[*] "The author," says Sismondi, "presupposes labour without profit (un travail sans bénéfice), reproduction which only replaces the workers' consumption" (II, 384, Sismondi's italics) . . . "he leaves nothing for the master . . . we are investigating what becomes of the excess of the workers' production over their consumption" (ibid.). Thus, we find that this first romanticist already makes the very definite statement that the capitalists cannot realise surplus-value. From this proposition Sismondi draws the further conclusion -- again the very same as that drawn by the Narodniks -- that the very conditions of realisation make it necessary for capitalism to have a foreign market. "As labour itself is an important component of revenue, the demand for labour cannot be reduced without making the nation poorer. Hence, the expected gain from the invention of new methods of production nearly always relates to foreign trade" (I, 345). "The nation which is the first to make some discovery is able, for a considerable time, to expand its market in proportion to the number of hands that are released by each new invention It employs them forthwith to produce that larger quantity of products which its invention enables it to produce more cheaply. But at last the time will come when the whole civilised world forms a single market, and it will no longer be possible to acquire new purchasers in any new nation. Demand in the world market will then be a constant (précise) quantity, for which the different
industrial nations will compete against each other. If one nation supplies a larger quantity of products, it will do so to the detriment of another. The total sales cannot be increased except by an increase in general prosperity, or by the transfer of commodities, formerly the exclusive possession of the rich, to the sphere of consumption by the poor" (II, 316). The reader will see that Sismondi presents the very doctrine that our romanticists have learned so well, namely, that the foreign market provides the way out of the difficulty of realising the product in general, and surplus-value in particular.
Lastly, this same doctrine that national revenue and national production are identical led to Sismondi's theory of crises. After what has been said above, we need scarcely quote from the numerous passages in Sismondi's work which deal with this subject. His theory that production must conform to revenue naturally led to the view that crises are the result of the disturbance of this balance, the result of an excess of production over consumption. It is evident from the passage just quoted that it is this discrepancy between production and consumption that Sismondi regarded as the main cause of crises; and in the forefront he placed the underconsumption of the masses of the people, the workers. This explains why Sismondi's theory of crises (which Rodbertus also adopted) is known in economic science as an example of the theories which ascribe crises to underconsumption (Unterkonsumption).
WHEREIN LIES THE ERROR OF ADAM SMITH'S
What is the fundamental error that led Sismondi, to all these conclusions?
Sismondi took over his theory of national revenue and of its division into two parts (the workers' and the capitalists') bodily from Adam Smith. Far from adding anything to Adam Smith's theses, he even took a step backward and omitted Adam Smith's attempt (albeit unsuccessful) to substantiate this proposition theoretically. Sismondi ap-
pears not to notice how this theory contradicts that of production in general. Indeed, according to the theory which deduces value from labour, the value of a product consists of three components: the part which replaces the raw materials and instruments of labour (constant capital), the part which replaces wages, or the maintenance of the workers (variable capital), and "surplus-value" (Sismondi calls it mieux-value). Such is the analysis of the individual product in terms of value made by Adam Smith and repeated by Sismondi. The question is: how can the social product, which is the sum-total of individual products, consist only of the two latter parts? What has be come of the first part -- constant capital? As we have seen, Sismondi merely beat about the bush on this question, but Adam Smith gave an answer to it. He asserted that this part exists independently only in the individual product. If, however, we take the aggregate social product, this part, in its turn, resolves itself into wages and surplus-value -- of precisely those capitalists who produce this constant capital.
But in giving this answer Adam Smith did not explain why, when resolving the value of constant capital, say of machines, he again leaves out the constant capital, i.e., in our example, the iron out of which the machines are made, or the instruments used up in the process, etc.? If the value of each product includes the part which replaces constant capital (and all economists agree that it does) then the exclusion of that part from any sphere of social production whatever is quite arbitrary. As the author of Capital pointed out, "when Adam Smith says that the instruments of labour resolve themselves into wages and profit, he forgets to add: and into that constant capital which is used up in their production. Adam Smith simply sends us from Pontius to Pilate, from one line of production to another, from another to a third,"[48] failing to notice that this shifting about does not alter the problem in the least. Smith's answer (accepted by all the subsequent political economists prior to Marx) is simply an evasion of the problem, avoidance of the difficulty. And there is in deed a difficulty here. It lies in that the concepts of capital and revenue cannot be directly transferred from the
individual product to the social product. The economists admit this when they say that from the social point of view what is "capital for one becomes revenue for another" (see Sismondi, as quoted above). This phrase, however, formulates the difficulty but does not solve it.[*]
The solution is that when examining this question from the social point of view, we must no longer speak of products in general, irrespective of their material forms. Indeed, we are discussing the social revenue, i.e., the product which becomes available for consumption. But surely not all products can be consumed through personal consumption: machines, coal, iron, and similar articles are not consumed personally, but productively. From the individual entrepreneur's point of view this distinction was superfluous: when we said that the workers would consume variable capital, we assumed that on the market they would acquire articles of consumption with the money the capitalist had paid them, the money which he, the capitalist, had received for the machines made by the workers. Here the exchange of machines for bread does not interest us. But from the social point of view, this exchange cannot be assumed: we cannot say that the entire capitalist class which produces machines, iron, etc., sells these things, and in this way realises them. The whole question is how realisation takes place -- that is, the replacement of all parts of the social product. Hence, the point of departure in discussing social capital and revenue -- or, what is the same thing, the realisation of the product in capitalist society -- must be the distinction between two entirely different types of social product: means of production and articles of consumption. The former can be consumed only productively, the latter only personally. The former can serve only as capital, the latter must become revenue, i.e., must be destroyed in consumption by the workers and capitalists. The former go entirely to the capitalists, the latter are shared between the workers and the capitalists.
Once this difference is understood and we rectify the error made by Adam Smith, who left its constant part (i.e., the part which replaces constant capital) out of the social product, the question of the realisation of the product in capitalist society becomes clear. Obviously, we cannot speak of wages being realised through consumption by the workers, and surplus-value through consumption by the capitalists, and nothing more.[*] The workers can consume wages and capitalists surplus-value only when the product consists of articles of consumption, i.e., only in one department of social production. They cannot "consume" the product which consists of means of production: this must be exchanged for articles of consumption. But for which part (in terms of value) of the articles of consumption can they exchange their product? Obviously, only for the constant part (constant capital), since the other two parts constitute the consumption fund of the workers and capitalists who produce articles of consumption. By realising the surplus-value and wages in the industries which produce means of production, this exchange thereby realises the constant capital in the industries which produce articles of consumption. Indeed, for the capitalist who manufactures, say, sugar, that part of the product which is to replace constant capital (i.e., raw materials, auxiliary materials, machines, premises, etc.) exists in the shape of sugar. To realise this part, he must receive corresponding means of production in return for it. The realisation of this part will therefore consist in exchanging the article of consumption for products which serve as means of production. Now the realisation of only one part of the social product, namely, the constant capital in the
department which manufactures means of production, remains unexplained. This is partially realised by part of the product going back again into production in its natural form (for example, part of the coal produced by a mining firm is used to produce more coal; the grain obtained by farmers is used for seed, and so forth); and partly it is realised by exchange between individual capitalists in the same department: for example, coal is needed for the production of iron, and iron is needed for the production of coal. The capitalists who produce these two products realise by mutual exchange that part of their respective products which replaces their constant capital.
This analysis (which, we repeat, we have summarised in the most condensed form for the reason given above) solved the difficulty which all the economists felt when they formulated it in the phrase: "capital for one becomes revenue for another." This analysis revealed the utter fallacy of reducing social production solely to personal consumption.
We can now proceed to examine the conclusions drawn by Sismondi (and the other romanticists) from his fallacious theory. But first let us quote the opinion of Sismondi expressed by the author of the above analysis, after a most detailed and comprehensive examination of Adam Smith's theory, to which Sismondi added absolutely nothing, merely leaving out Adam Smith's attempt to justify his contradiction:
"Sismondi, who occupies himself particularly with the relation of capital to revenue, and in actual fact makes the peculiar formulation of this relation the differentia specifica of his Nouveaux Principes, did not say one scientific word" (author's italics), "did not contribute one iota to the clarification of the problem" (Das Kapital, II, S. 385, 1-te Auflage).[51]
ACCUMULATION IN CAPITALIST SOCIETY
The first erroneous conclusion from the fallacious theory relates to accumulation. Sismondi did not in the least understand capitalist accumulation, and in his heated
controversy on this subject with Ricardo truth was really on the side of the latter. Ricardo asserted that production creates a market for itself, whereas Sismondi denied this, and based his theory of crises on this denial. True, Ricardo was also unable to correct the above-mentioned fundamental mistake of Adam Smith, and, therefore, was unable to solve the problem of the relation between social capital and revenue and of the realisation of the product (nor did Ricardo set himself these problems); but he instinctively characterised the quintessence of the bourgeois mode of production by noting the absolutely indisputable fact that accumulation is the excess of production over revenue. From the viewpoint of the modern analysis that is how matters stand. Production does indeed create a market for itself: production needs means of production, and they constitute a special department of social production, which occupies a certain section of the workers, and produces a special product, realised partly within this same department and partly by exchange with the other department, which produces articles of consumption. Accumulation is indeed the excess of production over revenue (articles of consumption). To expand production (to "accumulate" in the categorical meaning of the term) it is first of all necessary to produce means of production,* and for this it is consequently necessary to expand that department of social production which manufactures means of production, it is necessary to draw into it workers who immediately present a demand for articles of consumption,too. Hence, "consumption" develops after "accumulation," or after "production"; strange though it may seem, it cannot be otherwise in capitalist society. Hence, the rates of development of these two departments of capitalist production do not have to be proportionate, on the contrary, they must inevitably be disproportionate. It is well known that the law of development of capital is that constant capital grows faster
than variable capital, that is to say, an ever larger share of newly-formed capital is turned into that department of the social economy which produces means of production. Hence, this department necessarily grows faster than the department which manufactures articles of consumption, i.e., what takes place is exactly that which Sismondi declared to be "impossible," "dangerous," etc. Hence, products for personal consumption occupy an ever-diminishing place in the total mass of capitalist output. And this fully corresponds to the historical "mission" of capitalism and to its specific social structure: the former is to develop the productive forces of society (production for production); the latter precludes their utilisation by the mass of the population.
We can now fully appraise Sismondi's view of accumulation. His assertion that rapid accumulation leads to disaster is absolutely wrong and is solely the result of his failure to understand accumulation, as are his repeated statements and demands that production must not outstrip consumption, because consumption determines production. Actually, the very opposite is the case, and Sismondi simply turns his back on reality in its specific, historically determined form and substitutes petty-bourgeois moralising for an analysis. Particularly amusing are Sismondi's attempts to clothe this moralising in a "scientific" formula. "Messrs. Say and Ricardo," he says in his preface to the second edition of Nouveaux Principes, "came to believe . . . that consumption had no other limits than those of production, whereas actually it is limited by revenue. . . . They should have warned producers that they must count only on consumers who have a revenue" (I, XIII).* Nowadays, such naïveté only raises a smile. But are not the writings of our contemporary romanticists, like Messrs. V.V. and N.-on, replete with the same sort of thing? "Let the banking entrepreneurs ponder well" . . . over whether they will find a market for their commodities (II, 101-02).
When it is assumed that the aim of society is to increase wealth, the aim is always sacrificed for the means" (II, 140). "If, instead of expecting an impetus from the demand created by labour" (i.e., an impetus to production from the workers' demand for products), "we expect it to come from preceding production, we shall be doing almost the same thing as we would do to a clock if, instead of turning back the wheel that carries the chain (la roue qui porte la chainette), we turn back another wheel -- we would thereby break the whole machine and stop it" (II, 454). Sismondi says that. Let us now hear what Mr. Nikolai-on has to say. "We have overlooked the factors due to which this development" (i.e., the development of capitalism) "is taking place; we have also forgotten the aim of all production . . . an extremely fatal blunder. . ." (N.-on, Sketches on Our Post-Reform Social Economy, 298). Both these authors talk about capitalism, about capitalist countries; both reveal their complete inability to understand the essence of capitalist accumulation. But would one believe that the latter is writing seventy years after the former?
An example which Sismondi quotes in chapter VIII: "The Results of the Struggle to Cheapen Production" (Book IV, Of Commercial Wealth ) vividly demonstrates how failure to understand capitalist accumulation is linked up with the error of reducing all production to the production of articles of consumption.
Let us assume, says Sismondi, that the owner of a manufactory has a circulating capital of 100,000 francs, which brings him 15,000, of which 6,000 represent interest on capital and are paid to the capitalist, and 9,000 constitute the profit obtained by the manufacturer as the entrepreneur. Let us assume that he employs the labour of 100 workers, whose wages total 30,000 francs. Further, let there be an increase in capital, an expansion of production ("accumulation"). Instead of 100,000 francs the capital will be = 200,000 francs invested in fixed capital and 200,000 francs in circulating capital, making a total of 400,000 francs; profit and interest = 32,000 + 16,000 francs, for the rate of interest has dropped from 6% to 4%. The number of workers employed has doubled, but wages have dropped from 300 francs to 200 francs, hence, making a
total of 40,000 francs. Thus, production has grown fourfold.[*] And Sismondi counts up the results: "revenue," or "consumption," in the first case amounted to 45,000 francs (30,000 wages + 6,000 interest + 9,000 profit); it is now 88,000 francs (40,000 wages + 16,000 interest + 32,000 profit). "Production has increased fourfold," says Sismondi, "but consumption has not even doubled. The consumption of the workers who made the machines should not be counted. It is covered by the 200,000 francs which have been used for this purpose; it is already included in the accounts of another manufactory, where the facts will be the same" (I, 405-06).
Sismondi's calculation shows a diminution of revenue with an increase in production. The fact is indisputable. But Sismondi does not notice that the example he gives defeats his own theory of the realisation of the product in capitalist society. Curious is his observation that the consumption of the workers who made machines "should not be counted." Why not? Because, firstly, it is covered by the 200,000 francs. Thus, capital is transferred to the department which manufactures means of production -- this Sismondi does not notice. Hence, the "home market," which "shrinks," as Sismondi says, does not consist solely of articles of consumption, but also of means of production. These means of production constitute a special product which is not "realised" by personal consumption; and the more rapidly accumulation proceeds, the more intense, consequently, is the development of that department of capitalist production which manufactures products not for personal but for productive consumption. Secondly, answers Sismondi, it is the workers of the other manufactory, where the facts will be the same (où les mêmes faits pourront se représent-
er). As you see, Sismondi repeats Adam Smith in sending the reader "from Pontius to Pilate." But this "other manufactory" also consumes constant capital, and its production also provides a market for that department of capitalist production which manufactures means of production! However much we shift the question from one capitalist to another, and then to a third -- this department does not disappear, and the "home market" does not reduce itself just to articles of consumption. Therefore, when Sismondi says that "this calculation refutes . . . one of the axioms that has been most insisted upon in political economy, namely, the freer competition, the more profitable the development of industry" (I, 407), he does not notice that "this calculation" also refutes what he himself says. It is an undisputed fact that by displacing workers the introduction of machines worsens their conditions; and it is indisputably to Sismondi's credit that he was one of the first to point to this. But this does not in the least prevent his theory of accumulation and of the home market from being absolutely incorrect. His own calculation clearly indicates the very phenomenon which Sismondi not only denied but even turned into an argument against capitalism, when he said that accumulation and production must correspond to consumption, otherwise a crisis will ensue. His calculation shows, precisely, that accumulation and production outstrip consumption, and that it cannot be otherwise, for accumulation takes place mainly through means of production which do not enter into "consumption." What seemed to Sismondi to be simply an error, a contradiction in Ricardo's doctrine -- that accumulation is excess of production over revenue -- actually corresponds in full to reality and expresses the contradiction inherent in capitalism. This excess is necessary for all accumulation, which opens a new market for means of production without correspondingly expanding the market for articles of consumption, and even contracting this market.* Furthermore,
in rejecting the theory of the advantages of free competition, Sismondi does not notice that, together with groundless optimism, he throws overboard the undoubted truth that free competition develops the productive forces of society, as is again evident from his own calculation. (Properly speaking, this is only another way of expressing the same fact that a special department of industry is created which manufactures means of production, and that this department develops with particular rapidity.) This development of the productive forces of society without a corresponding development of consumption is, of course, a contradiction, but the sort of contradiction that exists in reality, that springs from the very nature of capitalism, and that cannot be brushed aside by means of sentimental phrases.
But this is just how the romanticists try to brush it aside. And to give the reader no grounds for suspecting us of levelling unsupported charges against contemporary economists in connection with the mistakes of such an "obsolete" author as Sismondi, let us quote a little sample of the writings of that "modern" author Mr. N.-on. On page 242 of his Sketches he discusses the development of capitalism in the Russian flour-milling industry. Referring to the appearance of large steam flour-mills with improved implements of production (since the seventies about 100 million rubles have been spent on reconstructing the flour mills) and with a more than twofold increase in the productivity of labour, the author describes this phenomenon as follows: "the flour-milling industry has not developed, it has merely become concentrated in large enterprises"; he then applies this description to all industries (p. 243) and draws the conclusion that "in all cases without exception, a mass of workers are displaced and find no employment" (243), and that "capitalist production has developed at the expense of the people's consumption" (241). We ask the reader: does this argument differ in any way from Sismondi's argument just quoted? This "modern" author registers two facts, those very facts which, as we have seen, were used by Sismondi, and brushes both these facts aside with exactly the same sentimental phrase. Firstly, the example he gives shows that capitalism develops through the means of production. This means that capitalism develops the
productive forces of society. Secondly, his example shows that this development proceeds along the specific road of contradictions that is typical of capitalism: there is a development of production (an expenditure of 100 million rubles constitutes a home market for products realised by non-personal consumption) without a corresponding development of consumption (the people's food deteriorates), i.e., what we have is production for the sake of production. And Mr. N.-on thinks that this contradiction will vanish from life if he, with old Sismondi's naïvetée, presents it merely as a contradiction in doctrine, merely as "a fatal blunder": "we have forgotten the aim of production"!! What can be more characteristic than the phrase: "has not developed, it has merely become concentrated"? Evidently, Mr. N.-on knows of a capitalism in which development could proceed otherwise than by concentration. What a pity he has not introduced us to this "original" capitalism, which was unknown to all the political economists who preceded him!
THE FOREIGN MARKET AS THE "WAY OUT
Sismondi's next error, which springs from his fallacious theory of social revenue and the product in capitalist society, is his doctrine that the product in general, and surplus-value in particular, cannot possibly be realised, and that consequently it is necessary to find a foreign market. As regards the realisation of the product in general, the foregoing analysis shows that the "impossibility" is due entirely to the mistaken exclusion of constant capital and means of production. Once this error is corrected, the "impossibility" vanishes. The same, however, must be said in particular about surplus-value: this analysis explains how it too is realised. There are no reasonable grounds whatever for separating surplus-value from the total product so far as its realisation is concerned. Sismondi's (and our Narodniks') assertion to the contrary is simply a misunderstanding of the fundamental laws of realisation
in general, an inability to divide the product into three (and not two) parts in terms of value, and into two kinds in terms of material form (means of production and articles of consumption). The proposition that the capitalists cannot consume surplus-value is merely a vulgarised repetition of Adam Smith's perplexity regarding realisation in general. Only part of the surplus-value consists of articles of consumption; the other part consists of means of production (for example, the surplus-value of the ironmaster). The "consumption" of this latter surplus-value is effected by applying it to production; the capitalists, however, who manufacture products in the shape of means of production do not consume surplus-value, but constant capital obtained by exchange with other capitalists. Hence, the Narodniks too, in arguing that surplus-value cannot be realised, ought logically to admit that constant capital also cannot be realised -- and in this way they would safely go back to Adam. . . . It goes without saying that such a return to the "father of political economy" would be a gigantic step forward for writers who present us with old errors in the guise of truths they have "arrived at by themselves.". . .
But what about the foreign market? Do we deny that capitalism needs a foreign market? Of course not. But the question of a foreign market has absolutely nothing to do with the question of realisation, and the attempt to link them into one whole merely expresses the romantic wish to "retard" capitalism, and the romantic inability to think logically. The theory which has explained the question of realisation has proved this up to the hilt. The romanticist says: the capitalists cannot consume surplus-value and therefore must dispose of it abroad. The question is: do the capitalists supply foreigners with products gratis, or do they throw them into the sea? They sell them -- hence, they receive an equivalent; they export certain kinds of products -- hence, they import other kinds. If we speak of the realisation of the social product, we thereby exclude the circulation of money and assume only the exchange of products for products, since the problem of realisation consists in analysing the replacement of all parts of the social product in terms of value and in terms of material form. Hence, to commence the argument about realisation
and to end it by saying that they "will market the product for money" is as ridiculous as answering the question about realising constant capital in the shape of articles of consumption by saying: "they will sell." This is simply a gross logical blunder: people wander away from the question of the realisation of the aggregate social product to the view point of the individual entrepreneur, who has no other interest than that of "selling to the foreigner." To link foreign trade, exports, with the question of realisation means evading the issue, merely shifting it to a wider field, but doing nothing towards clearing it up.[*] The problem of realisation will not be made one iota clearer if, instead of the market of one country, we take the market of a certain group of countries. When the Narodniks assert that the foreign market is "the way out of the difficulty"[**] which capitalism raises for itself in the realisation of the product, they merely use this phrase to cover up the sad fact that for them "the foreign market" is "the way out of the difficulty" into which they fall owing to their failure to understand theory. . . . Not only that. The theory which links the foreign market with the problem of the realisation of the aggregate social product not only reveals a failure to understand this realisation, but, in addition, reveals an extremely superficial understanding of the contradictions inherent in this realisation. "The workers will consume wages, but the capitalists cannot consume surplus-value." Ponder over this "theory" from the point of view of the foreign market. How do we know that "the workers will consume wages"? What grounds have we for thinking that the products intended by the entire capitalist class of a given country for consumption by all the workers of that country will really equal their wages in value and will replace them,
that there will be no need for a foreign market for these products? There are absolutely no grounds for thinking so, and actually it is not so at all. Not only the products (or part of the products) which replace surplus-value, but also those which replace variable capital; not only products which replace variable capital, but also those which replace constant capital (forgotten by our "economists" who also forget their kinship . . . with Adam); not only products that serve as articles of consumption but also those that serve as means of production -- all these products are realised in the same way, in the midst of "difficulties," in the midst of continuous fluctuations, which become increasingly violent as capitalism grows, in the midst of fierce competition, which compels every entrepreneur to strive to expand production unlimitedly, to go beyond the bounds of the given country, to set out in quest of new markets in countries not yet drawn into the sphere of capitalist commodity circulation. This brings us to the question of why a capitalist country needs a foreign market. Certainly not because the product cannot be realised at all under the capitalist system. That is nonsense. A foreign market is needed because it is inherent in capitalist production to strive for unlimited expansion -- unlike all the old modes of production, which were limited to the village community, to the patriarchal estate, to the tribe, to a territorial area, or state. Under all the old economic systems production was every time resumed in the same form and on the same scale as previously; under the capitalist system, however, this resumption in the same form becomes impossible, and unlimited expansion, perpetual progress, becomes the law of production.*
Thus, different conceptions of realisation (more exactly, the understanding of it, on the one hand, and complete misunderstanding of it by the romanticists, on the other) lead to two diametrically opposite views on the significance of the foreign market. For some (the romanticists), the foreign market is an indication of the "difficulty" which capitalism places in the way of social development. For others, on the contrary, the foreign market shows how
capitalism removes the difficulties of social development provided by history in the shape of various barriers -- communal, tribal, territorial and national.[*]
As you see, the difference is only one of the "point of view.". . . Yes, "only"! The difference between the romanticist judges of capitalism and the others is, in general, "only" one of the "point of view," -- "only" that some judge from the rear, and the others from the front, some from the viewpoint of a system which capitalism is destroying, the others from the viewpoint of a system which capitalism is creating.[**]
The romanticists' wrong understanding of the foreign market usually goes hand in hand with references to the "specific features" of the international position of capitalism in the given country, to the impossibility of finding markets, etc.; the object of all these arguments is to "dissuade" the capitalists from seeking foreign markets. Incidentally, we are not being exact in saying "references," for the romanticist gives us no actual analysis of the country's foreign trade, of its progress in the sphere of new markets, its colonisation, etc. He has no interest whatever in studying the actual process and in explaining it; all he wants is a moral condemnation of this process. So that the reader can convince himself of the complete identity between this moralising of contemporary Russian romanticists and that of the French romanticist, we shall quote some specimens of the latter's arguments. We have already seen how Sismondi warned the capitalists that they would find no market. But this is not all he asserted. He also claimed that "the world market is already sufficiently supplied" (II, 328) and argued that it was impossible to proceed along the capitalist path, that it was necessary to choose another path. . . . He assured the British employers that capitalism would not be able to give jobs to all the agricultural labourers displaced by capitalist farming (I, 255-56). "Will those to whom the agriculturists are sacri-
ficed derive any benefit from it? Are not the agriculturists the nearest and most reliable consumers of English manufactures? The cessation of their consumption would strike industry a blow more fatal than the closing of one of the biggest foreign markets" (I, 256). He assured English farmers that they would not be able to withstand the competition of the poor Polish peasant, whose grain costs him almost nothing (II, 257) and that they were menaced by the even more frightful competition of Russian grain from the Black Sea ports. He exclaimed: "The Americans are following the new principle: to produce without calculating the market (produire sans calculer le marché), and to produce as much as possible," and here is "the characteristic feature of United States' trade, from one end of the country to the other -- an excess of goods of every kind over what is needed for consumption . . . constant bankruptcies are the result of this excess of commercial capital which cannot be exchanged for revenue" (I, 455-56). Good Sismondi! What would he say about present-day America -- about the America that has developed so enormously, thanks to the very "home market" which, according to the romanticists' theory, should have "shrunk"!
CRISIS
Sismondi's third mistaken conclusion, drawn from the wrong theory which he borrowed from Adam Smith, is the theory of crises. Sismondi's view that accumulation (the growth of production in general) is determined by consumption, and his incorrect explanation of the realisation of the aggregate social product (which he reduces to the workers' share and the capitalists' share of revenue) naturally and inevitably led to the doctrine that crises are to be explained by the discrepancy between production and consumption. Sismondi fully agreed with this theory. It was also adopted by Rodbertus, who formulated it somewhat differently: he explained crise, by saying that with the growth of production the workers' share of the product diminishes, and wrongly divided the aggregate social product, as Adam Smith did, into wages and "rent" (according to his terminology "rent" is surplus-value,
i.e., profit and ground-rent together). The scientific analysis of accumulation in capitalist society[*] and of the realisation of the product undermined the whole basis of this theory, and also indicated that it is precisely in the periods which precede crises that the workers' consumption rises, that underconsumption (to which crises are allegedly due) existed under the most diverse economic systems, whereas crises are the distinguishing feature of only one system -- the capitalist system. This theory explains crises by another contradiction, namely, the contradiction between the social character of production (socialised by capitalism) and the private, individual mode of appropriation. The profound difference between these theories would seem to be self-evident, but we must deal with it in greater detail because it is the Russian followers of Sismondi who try to obliterate this difference and to confuse the issue. The two theories of which we are speaking give totally different explanations of crises. The first theory explains crises by the contradiction between production and consumption by the working class; the second explains them by the contradiction between the social character of production and the private character of appropriation. Consequently, the former sees the root of the phenomenon outside of production (hence, for example, Sismondi's general attacks on the classical economists for ignoring consumption and occupying themselves only with production); the latter sees it precisely in the conditions of production. To put it more briefly, the former explains crises, by underconsumption (Unterkonsumption), the latter by the anarchy of production. Thus, while both theories explain crises by a contradiction in the economic system itself, they differ entirely on the nature of the contradiction, But the question is: does the second theory deny the fact of a contradiction between production and consumption,
does it deny the fact of underconsumption? Of course not. It fully recognises this fact, but puts it in its proper, subordinate, place as a fact that only relates to one department of the whole of capitalist production. It teaches us that this fact cannot explain crises, which are called forth by another and more profound contradiction that is fundamental in the present economic system, namely, the contradiction between the social character of production and the private character of appropriation. What, then, should be said of those who, while they adhere essentially to the first theory, cover this up with references to the point that the representatives of the second theory note the existence of a contradiction between production and consumption? Obviously, these people have not pondered over the essence of the difference between the two theories, and do not properly understand the second theory. Among these people is, for example, Mr. N.-on (not to speak of Mr. V. V.). That they are followers of Sismondi has already been indicated in our literature by Mr. Tugan-Baranovsky (Industrial Crises, p. 477, with the strange reservation relative to Mr. N.-on: "evidently"). But in talking about "the shrinking of the home market" and "the decline in the people's consuming capacity" (the central points of his views), Mr. N.-on, nevertheless, refers to the representatives of the second theory who note the fact of the contradiction between production and consumption, the fact of underconsumption. It goes without saying that such references merely reveal the ability, characteristic in general of this author, to cite inappropriate quotations and nothing more. For example, all readers who are familiar with his Sketches will, of course, remember his "citation" of the passage where it says that "the labourers as buyers of commodities are important for the market. But as sellers of their own commodity -- labour-power -- capitalist society tends to keep them down to the minimum price" (Sketches, p. 178), and they will also remember that Mr. N.-on wanted to deduce from this both "the shrinkage of the home market" (ibid., p. 203 et. al.) and crises (p. 298 et. al.). But while quoting this passage (which, as we have explained, proves nothing), our author, moreover, leaves out the end of the footnote from which his quotation was
taken. This quotation was from a note inserted in the manuscript of Part II of Volume II of Capital. It was inserted "for future amplification" and the publisher of the manuscript put it in as a footnote. After the words quoted above, the note goes on to say: "However, this pertains to the next part,"[*] i.e., to the third part. What is this third part? It is precisely the part which contains a criticism of Adam Smith's theory of two parts of the aggregate social product (together with the above-quoted opinion about Sismondi), and an analysis of "the reproduction and circulation of the aggregate social capital," i.e., of the realisation of the product. Thus, in confirmation of his views, which are a repetition of Sismondi's, our author quotes a note that pertains "to the part" which refutes Sismondi: "to the part" in which it is shown that the capitalists can realise surplus-value, and that to introduce foreign trade in an analysis of realisation is absurd. . . .
Another attempt to obliterate the difference between the two theories and to defend the old romanticist nonsense by referring to modern theories is contained in Ephrucy's article. Citing Sismondi's theory of crises, Ephrucy shows that it is wrong (Russkoye Bogatstvo, No. 7, p. 162); but he does so in an extremely hazy and contradictory way. On the one hand, he repeats the arguments of the opposite theory and says that national demand is not limited to articles of direct consumption. On the other hand, he asserts that Sismondi's explanation of crises "points to only one of the many circumstances which hinder the distribution of the national product in conformity with the demand of the population and with its purchasing power." Thus, the reader is invited to think that the explanation of crises is to be found in "distribution," and that Sismondi's mistake was only that he did not give a full list of the causes which hinder this distribution! But this is not the main thing . "Sismondi," says Ephrucy, "did not confine himself to the above-mentioned explanation. Already in the first edition of Nouveaux Principes we find a highly enlightening chapter entitled 'De la connaissance du marché.'**
In this chapter Sismondi reveals to us the main causes that disturb the balance between production and consumption" (note this!) "with a clarity that we find among only a few economists" (ibid.). And quoting the passages which say that the manufacturer cannot know the market, Ephrucy says: "Engels says almost the same thing" (p. 163), and follows this up with a quotation saying that the manufacturer cannot know the demand. Then, quoting some more passages about "other obstacles to the establishment of a balance between production and consumption" (p. 164), Ephrucy assures us that "these give us the very explanation of crises which is becoming increasingly predominant"! Nay, more: Ephrucy is of the opinion that "on the question of the causes of crises in the national economy, we have every right to regard Sismondi as the founder of the views which were subsequently developed more consistently and more clearly" (p. 168).
But by all this Ephrucy betrays a complete failure to understand the issue! What are crises? Overproduction, the production of commodities which cannot be realised, for which there is no demand. If there is no demand for commodities, it shows that when the manufacturer produced them he did not know the demand. The question now arises: is this indication of the condition which makes crises possible an explanation of the crises? Did Ephrucy really not understand the difference between stating the possibility of a phenomenon and explaining its inevitability? Sismondi says: crises are possible, because the manufacturer does not know the demand; they are inevitable, because under capitalist production there can be no balance between production and consumption (i.e., the product cannot be realised). Engels says: crises are possible, because the manufacturer does not know the demand; they are inevitable, but certainly not because the product cannot be realised at all. For it is not true: the product can be realised. Crises are inevitable because the collective character of production comes into conflict with the individual character of appropriation. And yet we find an economist who assures us that Engels says "almost the same thing"; that Sismondi gives the "very same explanation of crises"! "I am therefore surprised," writes Ephrucy, "that Mr. Tugan-Baranovsky . . . lost sight
of this most important and valuable point in Sismondi's doctrine" (p. 168). But Mr. Tugan-Baranovsky did not lose sight of anything.[*] On the contrary, he pointed very exactly to the fundamental contradiction to which the new theory reduces matters (p. 455 et. al.), and explained the significance of Sismondi, who at an earlier stage indicated the contradiction which reveals itself in crises, but was unable to give it a correct explanation (p. 457 -- Sismondi, before Engels, pointed to the fact that crises spring from the contemporary organisation of the economy; p. 491 -- Sismondi expounded the conditions which make crises possible, but "not every possibility becomes a fact"). Ephrucy, however, completely misunderstood this, and after lumping everything together he is "surprised" that what he gets is confusion! "True," says the economist of Russkoye Bogatstvo, "we do not find Sismondi using the terms which have now received universal right of citizenship, such as 'anarchy of production,' 'unplanned production' (Planlosigkeit ); but the substance behind these terms is noted by him quite clearly" (p. 168). With what ease the modern romanticist restores the romanticist of former days! The problem is reduced to one of a difference in terms! Actually, the problem boils down to the fact that Ephrucy does not understand the meaning of the terms he repeats. "Anarchy of production," "unplanned production" -- what do these expressions tell us? They tell us about the contradiction between the social character of production and the individual character of appropriation. And we ask every one who is familiar with the economic literature we are examining: did Sismondi, or Rodbertus, recognise this contradiction? Did they deduce crises from this contradiction? No, they did not, and could not do so, because neither of them had any understanding of this contradiction. The very idea that the criticism of capitalism cannot be based on phrases
about universal prosperity,[*] or about the fallacy of "circulation left to itself,"[**] but must be based on the character of the evolution of production relations, was absolutely alien to them.
We fully understand why our Russian romanticists exert every effort to obliterate the difference between the two theories of crises mentioned. It is because fundamentally different attitudes towards capitalism are most directly and most closely linked with the theories mentioned Indeed, if we explain crises by the impossibility of realising products, by the contradiction between production and consumption, we are thereby led to deny reality, the soundness of the path along which capitalism is proceeding; we proclaim this path to be a "false one," and go out in quest of "different paths." In deducing crises from this contradiction we are bound to think that the further it develops the more difficult will be the way out of the contradiction. And we have seen how Sismondi, with the utmost naïveté, expressed exactly this opinion when he said that if capital accumulated slowly it was tolerable; but if it accumulated rapidly, it would become unbearable. -- On the other hand, if we explain crises by the contradiction between the social character of production and the individual character of appropriation, we thereby recognise that the capitalist road is real and progressive and reject the search for "different paths" as nonsensical romanticism. We thereby recognise that the further this contradiction develops the easier will be the way out of it, and that it is the development of this system which provides the way out.
As the reader sees, here, too, we meet with a difference in "points of view." . . .
It is quite natural that our romanticists should seek
theoretical confirmation of their views. It is quite natural that their search should lead them to the old rubbish which Western Europe has discarded long, long ago. It is quite natural that, feeling this to be so, they should try to renovate this rubbish, some times by actually embellishing the romanticists of Western Europe, and at others by smuggling in romanticism under the flag of inappropriate and garbled citations. But they are profoundly mistaken if they think that this sort of smuggling will remain unexposed.
With this we bring to a close our exposition of Sismondi's basic theoretical doctrine, and of the chief theoretical conclusions he drew from it; but we must make a slight addition, again relating to Ephrucy. In his other article about Sismondi (a continuation of the first), he says: "Still more interesting (than the theory on revenue from capital) are Sismondi's views on the different kinds of revenue" (Russkoye Bogatstvo, No. 8, p. 42). Sismondi, he says, like Rodbertus, divides the national revenue into two parts: "one goes to the owners of the land and instruments of production, the other goes to the representatives of labour" (ibid.). Then follow passages in which Sismondi speaks of such a division, not only of the national revenue, but of the aggregate product: "The annual output, or the result of all the work done by the nation during the year, also consists of two parts," and so forth (Nouveaux Principes, I, 105, quoted in Russkoye Bogatstvo, No. 8, p. 43). "The passages we have quoted," concludes our economist, "clearly show that Sismondi fully assimilated (!) the very same classification of the national revenue which plays such an important role in the works of the modern economists, namely, the division of the national revenue into revenue from labour and non-labour revenue -- arbeitsloses Einkommen. Although, generally speaking, Sismondi's views on the subject of revenue are not always clear and definite, we nevertheless discern in them a consciousness of the difference that exists between private revenue and national revenue" (p. 43).
The passage quoted, say we in answer to this, clearly shows that Ephrucy has fully assimilated the wisdom of the German textbooks, but in spite of that (and, perhaps, just because of it), he has completely overlooked the theoreti-
cal difficulty of the question of national revenue as distinct from individual revenue. Ephrucy expresses himself very carelessly. We have seen that in the first part of his article he applied the term "modern economists" to the theoreticians of one definite school. The reader would be right in thinking that he is referring to them this time too. Actually, however, the author has something entirely different in mind. It is now the German Katheder-Socialists[54] who figure as the modern economists. The author's defence of Sismondi consists in closely identifying his theory with theirs. What is the theory of these "modern" authorities that Ephrucy quotes? That the national revenue is divided into two parts.
But this is the theory of Adam Smith and not of the "modern economists"! In dividing revenue into wages, profit and rent (Book I, chap. VI of The Wealth of Nations; Book II, chap. II), Adam Smith opposed the two latter to the former precisely as non-labour revenue; he called them both deductions from the produce of labour (Book I, chap. VIII) and challenged the opinion that profit is also wages for a special kind of labour (Book I, chap. VI). Sismondi, Rodbertus and the "modern" authors of German textbooks simply repeat Smith's doctrine. The only difference between them is that Adam Smith was aware that he was not quite successful in his efforts to separate the national revenue from the national product; he was aware that by excluding constant capital (to use the modern term) from the national product after having included it in the individual product, he was slipping into a contradiction. The "modern" economists, however, in repeating Adam Smith's mistake, have merely clothed his doctrine in a more pompous phrase ("classification of the national revenue") and lost the awareness of the contradiction which brought Adam Smith to a halt. These methods may be scholarly, but they are not in the least scientific.
CAPITALIST RENT AND CAPITALIST OVERPOPULATION
We continue our survey of Sismondi's theoretical views. All his chief views, those which distinguish him from all other economists, who have already examined. The others
either do not play such an important role in his general theory, or are deduced from the preceding ones.
Let us note that Sismondi, like Rodbertus, did not agree with Ricardo's theory of rent. While not advancing a theory of his own, he tried to shake Ricardo's theory with arguments that were, to say the least, feeble. In this he acts as the pure ideologist of the small peasant; it is not so much a refutation of Ricardo as a complete rejection of the application of the categories of commodity economy and of capitalism to agriculture. In both respects his point of view is extremely characteristic of the romanticists. Chapter XIII of Book III[*] deals with "Mr. Ricardo's ground-rent theory." Stating at once that Ricardo's doctrine completely contradicts his own theory, Sismondi advances the following objections: the general level of profit (on which Ricardo's theory is based) is never established, there is no free movement of capital in agriculture. In agriculture we must discern the intrinsic value of the product (la valeur intrinsèque), which does not depend upon market fluctuations and provides the-owner with a "net product" (produit net), the "labour of nature" (I, 306). "The labour of nature is a power, the source of the net product of the land regarded intrinsically" (intrinsèquement) (I, 310). "We regarded rent (le fermage), or more correctly, the net product, as originating directly from the land for the owner's benefit; it takes no share either from the farmer or the
consumer" (I, 312). And this repetition of the old physiocratic prejudices concludes with the moral: "In general, in political economy, one should guard against (se défier) absolute assumptions, as well as against abstractions" (1, 312)1 There is really nothing to examine in such a "theory," since Ricardo's brief remark about the "labour of nature" is more than enough.[*] It is simply a refusal to analyse and a gigantic step back compared with Ricardo. Here, too, the romanticism of Sismondi is quite clearly revealed, for he hastens to condemn the process, but is afraid to touch it with an analysis. Note that he does not deny the fact of agriculture developing on capitalist lines in England, of the peasants there being displaced by capitalist farmers and day labourers, and of things developing in the same direction on the Continent. He simply turns his back on these facts (which he was in duty bound to examine since he was discussing capitalist economy) and prefers talking sentimentally of the advantages of the patriarchal system of exploiting the land. Our Narodniks behave in exactly the same way: none of them have attempted to deny the fact that commodity economy is penetrating into agriculture, that it must produce a radical change in the social character of agriculture; but at the same time none of them, in discussing the capitalist economy, raise the question of the growth of commercial farming, preferring to make shift with moralising about "people's production." Since we are confining ourselves for the moment to an analysis of Sismondi's theoretical economy, we shall postpone a more detailed examination of this "patriarchal exploitation" to a later occasion.
Another theoretical point around which Sismondi's exposition revolves is the doctrine of population. Let us
note Sismondi's attitude towards the Malthusian theory, and towards the surplus population created by capitalism.
Ephrucy assures us that Sismondi agrees with Malthus only on the point that the population can multiply with exceeding rapidity, and be the cause of terrible suffering. "Beyond this they are poles apart. Sismondi puts the whole population problem on a socio-historical basis" (Russkoye Bogatstvo, No. 7, p. 148). In this formula, too, Ephrucy completely obscures Sismondi's characteristic (namely, petty-bourgeois) point of view and his romanticism.
What does this mean -- "to put the population problem on a socio-historical basis"? It means studying the law of population of each historical system of economy separately, and studying its connection and interrelation with the given system. Which system did Sismondi study? The capitalist system. Thus, the contributor to Russkoye Bogatstvo assumes that Sismondi studied the capitalist law of population. There is a grain of truth in this assertion but only a grain. And as Ephrucy did not think of trying to discover what was lacking in Sismondi's argument about population, and as Ephrucy asserts that "here Sismondi is the predecessor of the most outstanding modern economists"[*] (p. 148), the result is exactly the same sort of embellishment of the petty-bourgeois romanticist as we saw in respect of the questions of crises and of national revenue. Wherein lies the similarity between Sismondi's doctrine and the new theory on these problems? In that Sismondi indicated the contradictions inherent in capitalist accumulation. This similarity Ephrucy noted. Wherein lies the difference between Sismondi's doctrine and the new theory? Firstly, in that it did not advance the scientific analysis of these contradictions one iota, and in some respects even took a step back compared with the classical economists; and secondly, in that he covered up his own inability to make an analysis (partly his unwillingness to do so) with petty-bourgeois moralising about the need for balancing national revenue
with expenditure, production with consumption, and so forth. This difference Ephrucy did not note on a single one of the points mentioned, and thereby totally misrepresented Sismondi's real significance and his relation to the modern theory. We see exactly the same thing on the present problem. Here, too, the similarity between Sismondi's view and the modern theory is limited to an indication of the contradiction. And here, too, the difference lies in the absence of a scientific analysis and in the substitution of petty-bourgeois moralising for the analysis. Let us explain this.
The development of capitalist machine industry since the end of the last century led to the formation of a surplus population, and political economy was confronted with the task of explaining this phenomenon. Malthus, as we know, tried to explain it by attributing it to natural-historical causes; he denied absolutely that it sprang from a certain, historically determined system of social economy and simply shut his eyes to the contradictions revealed by this fact. Sismondi indicated these contradictions and the displacement of the population by machines. This is indisputably to his credit, for in the period in which he wrote this was new. But let us see what his attitude towards this fact was.
In Book VII (On the Population ), chapter VII speaks particularly "on the population which has become superfluous owing to the invention of machines." Sismondi states that "machines displace men" (p. 315, II, VII), and at once asks whether the invention of machines is a boon or a bane to a nation. It goes without saying that the "answer" to this question for all countries and all times whatever, and not for a capitalist country, is a most meaningless piece of banality: it is a boon when "consumers' demand exceeds the population's means of production" (les moyens de produire de la population) (II, 317), and a bane "when production is quite sufficient for consumption." In other words: Sismondi notes the contradiction, but this merely serves as a pretext for arguing about some abstract society in which there are no longer any contradictions, and to which the ethics of the thrifty peasant can be applied! Sismondi makes no attempt to analyse this contradiction, to examine how it arises, what it leads to, etc., in the existing capitalist
society. On the contrary, he uses this contradiction merely as material for his moral indignation against such a contradiction. Beyond this the chapter tells us absolutely nothing about this theoretical problem, and contains nothing but regrets, complaints and innocent wishes. The displaced workers were consumers . . . the home market shrinks . . . as regards the foreign market, the world is already sufficiently supplied . . . if the peasants were moderately prosperous, this would be a better guarantee of a market . . . there is no more amazing and terrible example than England, which is being followed by the Continental countries -- such is the moralising we get from Sismondi, instead of an analysis of the phenomenon! His attitude towards the subject is exactly the same as that of our Narodniks. The Narodniks also confine themselves to stating the fact of a surplus population, and use it merely as a reason to voice lamentations about and complaints against capitalism (cf. N.-on, V. V., and others). Sismondi makes no attempt even to analyse the relation between this surplus population and the requirements of capitalist production, neither do our Narodniks ever set themselves such a problem.
The scientific analysis of this contradiction revealed the absolute falsity of this method. The analysis showed that surplus population, being undoubtedly a contradiction (along with surplus production and surplus consumption) and being an inevitable result of capitalist accumulation, is at the same time an indispensable component part of the capitalist machine.* The further large-scale industry de-
"From this it is clear that English manufacture must have, at all times save the brief periods of highest prosperity, an unemployed reserve army of workers, in order to be able to produce the masses of goods required by the market in the liveliest months. This reserve army is larger or smaller, according as the state of the market occasions the employment of a larger or smaller proportion of its members. And if at the moment of highest activity of the market the agricultural districts . . . and the branches least affected by the general prosperity temporarily supply to manufacture a number of workers, these [cont. onto p. 180. -- DJR] are a mere minority, and these too belong to the reserve army, with the single difference that the prosperity of the moment was required to reveal their connection with it."[55]
It is important to note in the last words that the part of the agricultural population which turns temporarily to industry is regarded as belonging to the reserve army. This is precisely what the modern theory has called the latent form of the surplus population (see Marx's Capital ).[56]
velops the greater is the fluctuation in the demand for workers, depending upon whether there is a crisis or a boom in national production as a whole, or in any one branch of it. This fluctuation is a law of capitalist production, which could not exist if there were no surplus population (i.e., a population exceeding capitalism's average demand for workers) ready at any given moment to provide hands for any industry, or any factory. The analysis showed that a surplus population is formed in all industries into which capitalism penetrates and in agriculture as well as in industry -- and that the surplus population exists in different forms. There are three chief forms[*]: Floating overpopulation. To this category belong the unemployed workers in industry. As industry develops their numbers inevitably grow. 2) Latent overpopulation. To this category belong the rural population who lose their farms with the development of capitalism and are unable to find non-agricultural employment. This population is always ready to provide hands for any factory. 3) Stagnant overpopulation. It has "extremely irregular" employment, under conditions below the average level.[57] To this category belong, mainly, people who work at home for manufacturers and stores, including both rural and urban inhabitants. The sum-total of all these strata of the population constitutes the relative surplus population, or reserve army. The latter term distinctly shows what population is referred to. They are the workers needed by capitalism for the potential expansion of enterprises, but who can never be regularly employed.
Thus, on this problem, too, theory arrived at a conclusion diametrically opposed to that of the romanticists. For the latter, the surplus population signifies that capitalism is impossible, or a "mistake." Actually, the oppo-
site is the case: the surplus population, being a necessary concomitant of surplus production, is an indispensable attribute to the capitalist economy, which could neither exist nor develop without it. Here too Ephrucy totally misrepresented the issue by saying nothing about this thesis of the modern theory.
A mere comparison of these two points of view is sufficient to enable one to judge which of them our Narodniks adhere to. The chapter from Sismondi's work dealt with above could with every right figure in Mr. N.-on's Sketches on Our Post-Reform Social Economy.
While noting the formation of a surplus population in post-Reform Russia, the Narodniks have never raised the issue of capitalism's need of a reserve army of workers. Could the railways have been built if a permanent surplus population had not been formed? It is surely known that the demand for this type of labour fluctuates greatly from year to year. Could industry have developed without this condition? (In boom periods it needs large numbers of building workers to erect new factories, premises, warehouses, etc., and all kinds of auxiliary day labour, which constitutes the greater part of the so-called outside non-agricultural employments.) Could the capitalist farming of our outlying regions, which demands hundreds of thousands and millions of day labourers, have been created without this condition? And as we know, the demand for this kind of labour fluctuates enormously. Could the entrepreneur lumber merchants have hewn down the forests to meet the needs of the factories with such phenomenal rapidity if a surplus population had not been formed? (Lumbering like other types of hired labour in which rural people engage is among the occupations with the lowest wages and the worst conditions.) Could the system, so widespread in the so-called handicraft industries, under which merchants, mill owners and stores give out work to be done at home in both town and country, have developed without this condition? In all these branches of labour (which have developed mainly since the Reform) the fluctuation in the demand for hired labour is extremely great. Yet the degree of fluctuation in this demand determines the dimensions of the surplus population needed by capitalism.
The Narodnik economists have nowhere shown that they are familiar with this law. We do not, of course, intend to make an examination of the substance of these problems here.[*] This does not enter into our task. The subject of our article is West-European romanticism and its relation to Russian Narodism. In this case, too, this relation is the same as in all the preceding cases: on the subject of surplus population, the Narodniks adhere entirely to the viewpoint of romanticism, which is diametric
* It is quite true that Sismondi was not a socialist, as Ephrucy states at the beginning of his article, repeating what was said by Lippert (see Handwörterbuch der Staatswissenschaften, V. Band, Artikel "Sismondi" von Lippert, Seite 678) (Dictionary of Political Science, Vol. V, article by Lippert entitled "Sismondi," p. 678. -- Ed.).
page 135
BECAUSE OF THE RUINATION OF THE SMALL PRODUCERS?
* All subsequent quotations, unless otherwise stated, are taken from the above-mentioned edition of Nouveaux Principes.
page 136
* Italics here and elsewhere are ours, unless otherwise stated.
page 137
page 138
page 139
* This refers to Marxism. (Author's footnote to the 1908 edition. -- Ed.)
page 140
* Thus, simultaneously the elements of both variable capital (the "free" worker) and constant capital are formed; the means of production from which the small producer is freed pertain to the latter.
** Ephrucy says nothing at all concerning this part of Sismondi's doctrine -- the shrinking of the home market as a result of the development of capitalism. We shall see again and again that he left out what is most typical of Sismondi's viewpoint and of the attitude of Narodism towards his doctrine.
page 141
page 142
* To be more exact: that part of profit which is not used for accumulation.
page 143
* Sismondi had only just separated capital from revenue. The first goes to production, the second to consumption. But we are talking about society, and society also "consumes" fixed capital. The distinction drawn falls to the ground, and the social-economic process which transforms "capital for one" into "revenue for another" remains unexplained.
page 144
page 145
* And which were prudently avoided by the other economists who repeated Adam Smith 's mistake.
page 146
OF TWO PARTS OF THE ANNUAL PRODUCT
IN CAPITALIST SOCIETY
page 147
* See for example, II, 456-57, and many other passages. Later we shall quote specimens of them, and the reader will see that even in their mode of expression our romanticists, like Mr. N.-on, differ in no way from Sismondi.
page 148
page 149
* See supplement to Nouveaux Principes, 2nd ed., Vol. II: "Eclaircissements relatifs à la balance des consommations avec les productions" ("Explanations Relative to the Balance of Consumption and Production." -- Ed.), where Sismondi translates and disputes the essay by Ricardo's disciple (MacCulloch) published in the Edinburgh Reviewentitled "An Inquiry into the Question as to Whether the Power to Consume Always Grows in Society Simultaneously with the Power to Produce."[47]
page 150
AND SISMONDI'S THEORIES OF NATIONAL REVENUE?
page 151
page 152
* We give here only the gist of the new theory which provides this solution, leaving ourselves free to present it in greater detail elsewhere. See Das Kapital, II. Band, III, Abschnitt.[49] (For a more detailed exposition, see The Development of Capitalism [in Russia], chap. I.)[50]
page 153
* That is just how our Narodnik economists Messrs. V. V. and N.-on reason. Above we deliberately dealt in great detail with Sismondi's wandering around the question of productive and personal consumption, of articles of consumption and means of production (Adam Smith came even closer to distinguishing between them than Sismondi did). We wanted to show the reader that the classical representatives of this fallacious theory felt that it was unsatisfactory, saw the contradiction in it, and made attempts to extricate themselves. But our "original" theoreticians not only see nothing and feel nothing, but know nothing about either the theory or the history of the question they prate about so zealously.
page 154
page 155
* We would remind the reader how Sismondi approached this; he distinctly singled out these means of production for an individual family and tried to do the same for society, too. Properly speaking it was Smith who "approached," and not Sismondi, who only related what Smith had said.
page 156
* As we know, on this question (as to whether production creates a market for itself) the modern theory fully agrees with the classical economists, who answered this question in the affirmative, in opposition to romanticism, which answered it in the negative. "The real barrier of capitalist production is capital itself" (Das Kapital, III, I, 231).[52]
page 157
page 158
* "The first result of competition," says Sismondi, "is a reduction in wages and at the same time an increase in the number of workers" (I, 403). We shall not dwell here on Sismondi's wrong calculation: he calculates, for example, that profit will be 8 per cent on fixed capital and 8% on circulating capital, that the number of workers rises in proportion to the increase of circulating capital (which he cannot properly distinguish from variable capital), and that fixed capital goes entirely into the price of the product. In the present case all this is unimportant, because the conclusion arrived at is correct: a diminution in the share of variable capital in the total capital, as a necessary result of accumulation.
page 159
* From the above analysis it automatically follows that such a case is also possible, depending upon the proportion in which the new capital is divided up into a constant and a variable part, and the extent to which the diminution of the relative share of the variable capital affects the old industries.
page 160
page 161
OF THE DIFFICULTY" OF REALISING SURPLUS-VALUE
page 162
page 163
* This is so clear that even Sismondi was conscious of the need to disregard foreign trade in analysing realisation. "To trace these calculations more exactly," he says on the point about production corresponding to consumption "and to simplify the question, we have hitherto completely excluded foreign trade; we have presupposed an isolated nation; human society itself is such an isolated nation, and whatever relates to a nation without foreign trade is equally true of the human race" (I, 115).
** N.-on, p. 205.
page 164
* Cf. Sieber, David Ricardo, etc., St. Petersburg, 1885, p. 466, footnote.
page 165
* Cf. later: Rede über die Frage des Freihandels (Karl Marx, On Free Trade. -- Ed.).
** I am speaking here only of the appraisal of capitalism and not of an understanding of it. In the latter respect the romanticists, as we have seen, stand no higher than the classical economists.
page 166
page 167
* The mistaken conception of "accumulation of individual capital" held by Adam Smith and the economists who came after him is connected with the theory that the total product in capitalist economy consists of two parts. It was they who taught that the accumulated part of profit is spent entirely on wages, whereas actually it is spent on: 1) constant capital and 2) wages. Sismondi repeated this mistake of the classical economists as well.
page 168
page 169
* Das Kapital, II. Band, S. 304.[53] Russ. trans., p. 232. Our italics.
** "About Knowledge of the Market." -- Ed.
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* In The Development of Capitalism (pp. 16 and 19) (see present edition, Vol. 3, The Development of Capitalism in Russia, chap. I , section VI. -- Ed.) I have already noted Mr. Tugan-Baranovsky's inexactitudes and errors which subsequently led him to go right over to the camp of the bourgeois economists. (Author's footnote to the 1908 edition. -- Ed.)
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* Cf. Sismondi, loc. cit., I, 8.
** Rodbertus. Incidentally, let us mention that Bernstein, who in general is restoring the prejudices of bourgeois political economy, has introduced confusion into this problem too by asserting that Marx's theory of crises does not differ very much from the theory of Rodbertus (Die Voraussetzungen, etc. Stuttg. 1899, S. 67) (E. Bernstein, The Premises of Socialism and the Tasks of Social-Democracy. Stuttgart, 1899, p. 67. -- Ed.), and that Marx contradicts himself by recognising the ultimate cause of crises to be the limited consumption of the masses. (Author's footnote to the 1908 edition. -- Ed.)
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* His very system of exposition is characteristic: Book III treats of "territorial wealth" (richesse territoriale), of wealth in the shape of land, i.e., of agriculture. The next book, Book IV, treats of "commercial wealth" (de la richesse commerciale), of industry and commerce. As though the produce of the land, and land itself, have not also become commodities under the rule of capitalism! For this reason, there is no harmony between these two books. Industry is dealt with only in its capitalist form as it existed in Sismondi's time. Agriculture, however, is described in the form of a motley enumeration of all sorts of systems of exploiting the land: patriarchal, slave, half-crop, corvée, quit-rent, capitalist farming and emphyteutic (the granting of land on a perpetual hereditary lease). The result is utter confusion: the author gives us neither a history of agriculture, for all these "systems" are unconnected, nor an analysis of agriculture under capitalist economy although the latter is the real subject of his work, and though he speaks of industry only in its capitalist form.
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* Ricardo, Works, Sieber's (Russian) translation, p. 35: "Does nature do nothing for man in manufactures? Are the powers of wind and water, which move our machinery, and assist navigation, nothing? The pressure of the atmosphere and the elasticity of steam, which enable us to work the most stupendous engines -- are they not the gifts of nature? To say nothing of the effects of the matter of heat in softening and melting metals, of the decomposition of the atmosphere in the process of dyeing and fermentation. There is not a manufacture which can be mentioned, in which nature does not give her assistance to man, and give it too, generously and gratuitously."
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* Incidentally, we make the reservation that we cannot know for certain whom Ephrucy has in mind when he speaks of "the most Outstanding modern economist," the representative of a certain school which is absolutely alien to romanticism, or the author of the bulkiest Handbuch.
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* As far as we know, this point of view about the surplus population was first expressed by Engels in Die Lage der arbeitenden Klasse in England (1845) (The Condition of the Working Class in England. -- Ed.). After describing the ordinary industrial cycle of English industry the author says:
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* Cf. Sieber's David Ricardo, etc., pp. 552-53. St. Petersburg, 1885.
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