Chapter XI: Section III: is broader, more vigorous and in general more rewarding than (7)

One thing or the other! Either we regard the aggregate social product in a capitalist economy simply as a mass, a conglomeration of commodities of a certain value, seeing under conditions of accumulation, a mere increase in this undifferentiated mass of commodities and in the bulk of its value. Then all we need say is that a corresponding quantity of money is required for circulating this bulk of value, that with an increasing bulk of value the quantity of money must also increase, unless this growth of value is offset by acceleration of, and economy in, the traffic. And the final question, where does all money originally come from, could then be answered on Marx's recipe: from the gold mines. This, of course, is one way of looking at things, that of simple commodity circulation. But in that case there is no need to drag in concepts such as constant and variable capital, or surplus value, which have no place in simple commodity circulation, belonging essentially to the circulation of capitals and to social reproduction; nor is there need to inquire for sources of money for the realisation of the social surplus value under conditions of first simple, and then enlarged, reproduction. Under the aspect of simple commodity circulation puzzles of this kind are without meaning or content. But once these questions have been raised, once the course has been set for an investigation into the circulation of capitals and social reproduction, there can be no appealing to the sphere of simple commodity circulation, where there is no such problem at all, and consequently no solution to it. There can be no looking for the answer there, and then saying triumphantly that the problem has long been solved and in fact never really existed.

All this time, it appears, Marx has been tackling the problem from a wrong approach. No intelligent purpose can be served by asking for the source of the money needed to realise the surplus value. The question is rather where the demand can arise--to find an effective demand for the surplus value. If the problem had been put in this way at the start, no such long-winded detours would have been needed to show whether it can be solved or not. On the basis of simple reproduction, the matter is easy enough: since all surplus value is consumed by the capitalists, they themselves are the buyers and provide the full demand for the social surplus value, and by the same token they must also have the requisite cash in hand for circulation of the surplus value. But in this showing it is quite evident that under conditions of accumulation, i.e. of capitalisation of part of the surplus value, it cannot, _ex hypothesi_, be the capitalists themselves who buy the entire surplus value, that they cannot possibly realise it. True, if the capitalised surplus value is to be realised at all, money must be forthcoming in adequate quantities for its realisation. But it is quite impossible that this money should come from the purse of the capitalist class itself. Just because accumulation is postulated, the capitalists cannot buy their surplus value themselves, even though they might, _in abstracto_, have the money to do so. But who else could provide the demand for the commodities incorporating the capitalised surplus value?

'Apart from this class (the capitalists), there is, according to our assumption--the general and exclusive domination of capitalist production--no other class but the working class. All that the working class buys is equal to the sum total of its wages, equal to the sum total of the variable capital advanced by the entire capitalist class.'[144]

The workers, then, are even less able than the capitalist class to realise the capitalised surplus value. Somebody must buy it, if the capitalists are still to be able to recover the capital they have accumulated and advanced; and yet--we cannot think of any buyers other than capitalists and workers. 'How can the entire capitalist class accumulate money under such circumstances?'[144]

Realisation of the surplus value outside the only two existing classes of society appears as indispensable as it looks impossible. The accumulation of capital has been caught in a vicious circle. At any rate, the second volume of _Capital_ offers no way out.

If we should now ask why Marx's _Capital_ affords no solution to this important problem of the accumulation of capital, we must bear in mind above all that this second volume is not a finished whole but a manuscript that stops short half way through.

The external form of its last chapters in particular proves them to be in the nature of notes, intended to clear the author's own mind, rather than final conclusions ready for the reader's enlightenment. This fact is amply authenticated by the man best in the position to know: Friedrich Engels, who edited the second volume. In his introduction to the second volume he reports in detail on the conditions of the preliminary studies and the manuscripts Marx had left, which were to form the basis of this volume:

'The mere enumeration of the manuscripts left by Marx as a basis for Volume II proves the unparalleled conscientiousness and strict self-criticism which he practised in his endeavour to fully elaborate his great economic discoveries before he published them. This self-criticism rarely permitted him to adapt his presentation of the subject, in content as well as in form, to his ever widening horizon, which he enlarged by incessant study.

'The material ... consists of the following parts: First, a manuscript entitled "A contribution to the Critique of Political Economy", containing 1,472 quarto pages in 23 divisions, written in the time from August, 1861, to June, 1863. It is a continuation of the work of the same title, the first volume of which appeared in Berlin, in 1859.... This manuscript, valuable though it is, could not be used in the present edition of Volume II.

'The manuscript next following in the order of time is that of Volume III....

'The period after the publication of Volume I, which is next in order, is represented by a collection of four manuscripts for Volume II, marked I-IV by Marx himself. Manuscript I (150 pages) presumably written in 1865 or 1867, is the first independent, but more or less fragmentary, elaboration of the questions now contained in Volume II. This manuscript is likewise unsuited for this edition. Manuscript III is partly a compilation of quotations and references to the manuscripts containing Marx's extracts and comments, most of them relating to the first section of Volume II, partly an elaboration of special points, particularly a critique of Adam Smith's statements as to fixed and circulating capital and the source of profits; furthermore, a discussion of the relations of the rate of surplus-value to the rate of profit, which belongs in Volume III. The references furnished little that was new, while the elaborations for Volumes II and III were rendered valueless through subsequent revisions and had to be ruled out for the greater part. Manuscript IV is an elaboration, ready for printing, of the first section and the first chapters of the second section of Volume II, and has been used in its proper place. Although it was found that this manuscript had been written earlier than Manuscript II, yet it was far more finished in form and could be used with advantage for the corresponding part of this volume. I had to add only a few supplementary parts of Manuscript II. This last manuscript is the only fairly completed elaboration of Volume II and dates from the year 1870. The notes for the final revision, which I shall mention immediately, say explicitly: "The second elaboration must be used as a basis."

'There is another interruption after 1870, due mainly to ill health. Marx employed this time in his customary way, that is to say he studied agronomics, agricultural conditions in America and especially Russia, the money market and banking institutions, and finally natural sciences, such as geology and physiology. Independent mathematical studies also form a large part of the numerous manuscripts of this period. In the beginning of 1877, Marx had recovered sufficiently to resume once more his chosen life's work. The beginning of 1877 is marked by references and notes from the above named four manuscripts intended for a new elaboration of Volume II, the beginning of which is represented by Manuscript V (56 pages in folio). It comprises the first four chapters and is not very fully worked out. Essential points are treated in footnotes. The material is rather collected than sifted, but it is the last complete presentation of this most important first section. A preliminary attempt to prepare this part for the printer was made in Manuscript VI (after October, 1877, and before July, 1878), embracing 17 quarto pages, the greater part of the first chapter. A second and last attempt was made in Manuscript VII, dated July 2, 1878, and consisting of 7 pages in folio.

'About this time Marx seems to have realised that he would never be able to complete the second and third volume in a manner satisfactory to himself, unless a complete revolution in his health took place. Manuscripts V-VIII show traces of hard struggles against depressing physical conditions far too frequently to be ignored. The most difficult part of the first section had been worked over in Manuscript V. The remainder of the first, and the entire second section, with the exception of Chapter 17, presented no great theoretical difficulties. But the third section, dealing with the reproduction and circulation of social capital, seemed to be very much in need of revision. Manuscript II, it must be pointed out, had first treated of this reproduction without regard to the circulation which is instrumental in effecting it, and then taken up the same question with regard to circulation. It was the intention of Marx to eliminate this section and to reconstruct it in such a way that it would conform to his wider grasp of the subject. This gave rise to Manuscript VIII, containing only 70 pages in quarto. A comparison with Section III, as printed after deducting the paragraphs inserted out of Manuscript II, shows the amount of matter compressed by Marx into this space.

'Manuscript VIII is likewise merely a preliminary presentation of the subject, and its main object was to ascertain and develop the new points of view not set forth in Manuscript II, while those points were ignored about which there was nothing new to say. An essential part of Chapter 17, Section II, which is more or less relevant to Section III, was at the same time drawn into this discussion and expanded. The logical sequence was frequently interrupted, the treatment of the subject was incomplete in various places, and especially the conclusion was very fragmentary. But Marx expressed as nearly as possible what he intended to say on the subject.

'This is the material for Volume II, out of which I was supposed "to make something", as Marx said to his daughter Eleanor shortly before his death.'[145]

We cannot but admire this 'something' which Engels managed to 'make' from material of such a kind. As far as our present problem is concerned, however, this detailed report makes it clear that no more than the first two of the three sections that make up volume ii were anything like ready for print in the manuscripts Marx left: the section 'On the Circulation of Money and Commodity Capital' and on 'The Causes of Circulation and the Turnover of Capital'. The third section which treats of the reproduction of total capital is merely a collection of fragments which Marx himself considered to be 'very much in need of revision.' Yet it is the last part of this section, i.e. chapter 21, 'On Accumulation and Enlarged Reproduction', which is of primary importance in the present context, and of the whole book this is the most incomplete. It comprises thirty-five pages of print in all and breaks off right in the middle of the analysis.

Besides this extraneous circumstance, we would suggest another point of great influence. Marx's investigation of the social reproductive process starts off, as we have seen, from the analysis of Adam Smith which came to grief, among other reasons, because of the erroneous doctrine that the price of all commodities is composed of _v + s_. Polemics against this dogma dominated Marx's entire analysis of the reproductive process. He devoted all his attention to proving that the total capital of society must serve, not only for consumption to the full amount of the various sources of revenue, but also for renewal of the constant capital. And inasmuch as the purest theoretical form for this line of reasoning is given, not by enlarged reproduction, but by simple reproduction, Marx tends to consider reproduction mainly from a point of view that is the very opposite of accumulation, from the assumption that the entire surplus value is consumed by the capitalists. How greatly these polemics influenced his analysis is proved by his returning time and again in the course of his work to the attack on Adam Smith from the most various angles. So already in volume i, the following pages are devoted to it: vol. i, sect. 7, chap. 24, (2), pp. 588-602, and in vol. ii, pp. 417-56, p. 473, pp. 504-8, and pp. 554 f.

Marx again takes up the question of total reproduction in volume iii but from the start becomes once more involved with the problem set by Smith to which he devotes the whole of his 49th chapter and most of chapter 50 (pp. 968-92 and 992-1022). Finally, in _Theorien ueber den Mehrwert_, we again find detailed polemics against Smith's dogma: pp. 164-253 in vol. i, and pp. 92, 95, 126, 233, and 262 in vol. ii, part 2. Marx repeatedly stressed and emphasised the fact that he considered replacement of the constant capital from the aggregate social product the most difficult and important problem of reproduction.[146] The other problem, that of accumulation, i.e. realisation of the surplus value for the purpose of capitalisation, was thus pushed into the background, so that in the end Marx hardly touched upon it.

This problem being of such paramount importance for capitalist economy, it is not surprising that bourgeois economists have dealt with it again and again. Attempts to grapple with this vital question for capitalist economy, with the question whether capital accumulation is possible in practice, come up time and again in the history of economic theory. To these historical attempts, before and after Marx, at solving this problem we shall now turn.

FOOTNOTES:

[133] _Capital_, vol. ii, p. 572.

[134] _Capital_, vol. ii, pp. 380-1.

[135] Ibid., p. 381.

[136] _Capital_, vol. ii, pp. 381-3.

[137] Ibid., p. 383.

[138] _Capital_, vol. ii, pp. 384-5.

[139] Ibid., p. 385.

[140] _Capital_, vol. ii, p. 387.

[141] Ibid., p. 397.

[142] Ibid., p. 397.

[143] Ibid., pp. 397-8.

[144] _Capital_, vol. ii, p. 401.

[145] _Capital_, vol. ii, pp. 8 ff.

[146] Cf. e.g. _Capital_, vol. ii, pp. 430, 522, and 529.

_SECTION TWO_

HISTORICAL EXPOSITION
OF THE PROBLEM

FIRST ROUND

SISMONDI-MALTHUS _v._

SAY-RICARDO--MACCULLOCH

_CHAPTER_ X

SISMONDI'S THEORY OF REPRODUCTION

The first grave doubts as to the divine character of the capitalist order came to bourgeois economists under the immediate impact of the first crises of 1815 and 1818-19 in England. Even then it had still been external circumstances which led up to these crises, and they appeared to be ephemeral. Napoleon's blockade of the Continent which for a time had cut off England from her European markets and had favoured a considerable development of home industries in some of the continental countries, was partly responsible; for the rest the material exhaustion of the Continent, owing to the long period of war, made for a smaller demand for English products than had been expected when the blockade was lifted. Still, these early crises were enough to reveal to the contemporary world the sinister aspects of this best of all social orders. Glutted markets, shops filled with goods nobody could buy, frequent bankruptcies--and on the other hand the glaring poverty of the toiling masses--for the first time all this starkly met the eyes of theorists who had preached the gospel of the beautiful harmonies of bourgeois _laissez-faire_ and had sung its praises in all keys. All contemporary trade reports, periodicals and travellers' notes told of the losses sustained by English merchants. In Italy, Germany, Russia, and Brazil, the English disposed of their commodity stocks at a loss of anything between 25 per cent and 33 1/3 per cent. People at the Cape of Good Hope in 1818 complained that all the shops were flooded with European goods offered at lower prices than in Europe and still unmarketable. From Calcutta there came similar complaints. From New Holland whole cargoes returned to England. In the United States, a contemporary traveller reports, 'there was no town nor hamlet from one end to the other of this immense and prosperous continent where the amount of commodities displayed for sale did not considerably exceed the means of the purchasers, although the vendors tried to attract custom by long-term credits, all sorts of facilities for payment, payment by instalments and acceptance of payment in kind'.

At the same time, England was hearing the desperate outcry of her workers. The _Edinburgh Review_ of 1820[147] quotes an address by the Nottingham frame-work knitters which contained the following statements:

'After working from 14 to 16 hours a day, we only earn from 4_s._ to 7_s._ a week, to maintain our wives and families upon; and we farther state, that although we have substituted bread and water, or potatoes and salt, for that more wholesome food an Englishman's table used to abound with, we have repeatedly retired, after a heavy day's labour, and have been under the necessity of putting our children supperless to bed, to stifle the cries of hunger. We can most solemnly declare, that for the last eighteen months we have scarcely known what it was to be free from the pangs of hunger.'[148]

Then Owen in England, and Sismondi in France, almost simultaneously raised their voices in a weighty indictment of capitalist society. Owen, as a hard-headed Englishman and citizen of the leading industrial state, constituted himself spokesman for a generous social reform, whereas the petty-bourgeois Swiss rather lost himself in sweeping denunciations of the imperfections of the existing social order and of classical economics. And yet, by so doing, Sismondi gave bourgeois economics a much harder nut to crack than Owen, whose fertile practical activities were directly applied to the proletariat.

Sismondi explained in some detail that the impetus for his social criticism came from England, and especially her first crisis. In the second edition of his _Nouveaux Principes d'Économie Politique Ou De La Richesse Dans Ses Rapports Avec La Population_,[149] eight years after the publication of the first edition in 1819, he writes as follows:

'It was in England that I performed the task of preparing the new edition. England has given birth to the most celebrated Political Economists: the science is cultivated even at this time with increased ardour.... Universal competition or the effort always to produce more and always cheaper, has long been the system in England, a system which I have attacked as dangerous. This system has used production by manufacture to advance with gigantic steps, but it has from time to time precipitated the manufacturers into frightful distress. It was in presence of these convulsions of wealth that I thought I ought to place myself, to review my reasonings and compare them with facts.--The study of England has confirmed me in my "New Principles". In this astonishing country, which seems to be subject to a great experiment for the instruction of the rest of the world, I have seen production increasing, whilst enjoyments were diminishing. The mass of the nation here, no less than philosophers, seems to forget that the increase of wealth is not the end in political economy, but its instrument in procuring the happiness of all. I sought for this happiness in every class, and I could nowhere find it. The high English aristocracy has indeed arrived to a degree of wealth and luxury which surpasses all that can be seen in other nations; nevertheless it does not itself enjoy the opulence which it seems to have acquired at the expense of the other classes; security is wanting and in every family most of the individuals experience privation rather than abundance.... Below this titled and not titled aristocracy, I see commerce occupy a distinguished rank; its enterprises embrace the whole world, its agents brave the ices of the poles, and the heats of the equator, whilst every one of its leading men, meeting on Exchange, can dispose of thousands. At the same time, in the streets of London, and in those of the other great towns of England, the shops display goods sufficient for the consumption of the world.--But have riches secured to the English merchant the kind of happiness which they ought to secure him? No: in no country are failures so frequent, nowhere are those colossal fortunes, sufficient in themselves to supply a public loan to uphold an Empire, or a republic, overthrown with as much rapidity. All complain that business is scarce, difficult, not remunerative. Twice, within an interval of a few years, a terrible crisis has ruined part of the bankers, and spread desolation among all the English manufacturers. At the same time another crisis has ruined the farmers, and been felt in its rebound by retail dealers. On the other hand, commerce, in spite of its immense extent, has ceased to call for young men who have their fortunes to make; every place is occupied, in the superior ranks of society no less than in the inferior; the greater number offer their labour in vain, without being able to obtain remuneration.--Has, then, this national opulence, whose material progress strikes every eye, nevertheless tended to the advantage of the poor? Not so. The people of England are destitute of comfort now, and of security for the future. There are no longer yeomen, they have been obliged to become day labourers. In the towns there are scarcely any longer artisans, or independent heads of a small business, but only manufacturers. The operative, to employ a word which the system has created, does not know what it is to have a station; he only gains wages, and as these wages cannot suffice for all seasons, he is almost every year reduced to ask alms from the poor-rates.--This opulent nation has found it more economical to sell all the gold and silver which she possessed, to do without coin, and to depend entirely on a paper circulation; she has thus voluntarily deprived herself of the most valuable of all the advantages of coin: stability of value. The holders of the notes of the provincial banks run the risk every day of being ruined by frequent and, as it were, epidemic failures of the bankers; and the whole state is exposed to a convulsion in the fortune of every individual, if an invasion or a revolution should shake the credit of the national bank. The English nation has found it more economical to give up those modes of cultivation which require much hand-labour, and she has dismissed half the cultivators who lived in the fields. She has found it more economical to supersede workmen by steam-engines; she has dismissed ... the operatives in towns, and weavers giving place to power-looms, are now sinking under famine; she has found it more economical to reduce all working people to the lowest possible wages on which they can subsist, and these working people being no longer anything but a rabble, have not feared plunging into still deeper misery by the addition of an increasing family. She has found it more economical to feed the Irish with potatoes, and clothe them in rags; and now every packet brings legions of Irish, who, working for less than the English, drive them from every employment. What is the fruit of this immense accumulation of wealth? Have they had any other effect than to make every class partake of care, privation and the danger of complete ruin? Has not England, by forgetting men for things, sacrificed the end to the means?'[150]

This mirror, held up to capitalist society almost a century before the time of writing, is clear and comprehensive enough in all conscience. Sismondi put his finger on every one of the sore spots of bourgeois economics: the ruin of small enterprise; the drift from the country; the proletarisation of the middle classes; the impoverishment of the workers; the displacement of the worker by the machine; unemployment; the dangers of the credit system; social antagonisms; the insecurity of existence; crises and anarchy. His harsh, emphatic scepticism struck a specially shrill discord with the complacent optimism, the idle worship of harmony as preached by vulgar economics which, in the person of MacCulloch in England and of Say in France, was becoming the fashion in both countries. It is easy to imagine what a deep and painful impression remarks like the following were bound to make:

'There can only be luxury if it is bought with another's labour; only those will work hard and untiringly who have to do so in order to get not the frills but the very necessities of life.'[151]

'Although the invention of the machine which increases man's capacity, is a blessing for mankind, it is made into a scourge for the poor by the unjust distribution we make of its benefits.'[152]

'The gain of an employer of labour is sometimes nothing if not despoiling the worker he employs; he does not benefit because his enterprise produces much more than it costs, but because he does not pay all the costs, because he does not accord the labourer a remuneration equal to his work. Such an industry is a social evil, for it reduces those who perform the work to utmost poverty, assuring to those who direct it but the ordinary profits on capital.'[153]

'Amongst those who share in the national income, one group acquires new rights each year by new labours, the other have previously acquired permanent rights by reason of a primary effort which makes a year's labour more advantageous.'[154]

'Nothing can prevent that every new discovery in applied mechanics should diminish the working population by that much. To this danger it is constantly exposed, and society provides no remedy for it.'[155]

'A time will come, no doubt, when our descendants will condemn us as barbarians because we have left the working classes without security, just as we already condemn, as they also will, as barbarian the nations who reduced those same classes to slavery.'[156]

Sismondi's criticism thus goes right to the root of the matter; for him there can be no compromise or evasion which might try to gloss over the dark aspects of capitalist enrichment he exposed, as merely temporary shortcomings of a transition period. He concludes his investigation with the following rejoinder to Say:

'For seven years I have indicated this malady of the social organism, and for seven years it has continuously increased. I cannot regard such prolonged suffering as the mere frictions which always accompany a change. Going back to the origin of income, I believe to have shown the ills we experience to be the consequence of a flaw in our organisation, to have shown that they are not likely to come to an end.'[157]

The disproportion between capitalist production and the distribution of incomes determined by the former appears to him the source of all evil. This is the point from which he comes to the problem of accumulation with which we are now concerned.

The main thread of his criticism against classical economics is this: capitalist production is encouraged to expand indefinitely without any regard to consumption; consumption, however, is determined by income.

'All the modern economists, in fact, have allowed that the fortune of the public, being only the aggregation of private fortunes, has its origin, is augmented, distributed and destroyed by the same means as the fortune of each individual. They all know perfectly well, that in a private fortune, the most important fact to consider is the income, and that by the income must be regulated consumption or expenditure, or the capital will be destroyed. But as, in the fortune of the public, the capital of one becomes the income of another, they have been perplexed to decide what was capital, and what income, and they have therefore found it more simple to leave the latter entirely out of their calculations. By neglecting a quality so essential to be determined, Say and Ricardo have arrived at the conclusion, that consumption is an unlimited power, or at least having no limits but those of production, whilst it is in fact limited by income.... They announced that whatever abundance might be produced, it would always find consumers, and they have encouraged the producers to cause that glut in the markets, which at this time occasions the distress of the civilised world; whereas they should have forewarned the producers that they could only reckon on those consumers who possessed income.'[158]

Sismondi thus grounds his views in a theory of income. What is income, and what is capital? He pays the greatest attention to this distinction which he calls 'the most abstract and difficult question of political economics'. The fourth chapter of his second book is devoted to this problem. As usual, Sismondi starts his investigation with Robinson Crusoe. For such a one, the distinction between capital and income was still 'confused'; it becomes 'essential' only in society. Yet in society, too, this distinction is very difficult, largely on account of the already familiar myth of bourgeois economics, according to which 'the capital of one becomes the income of another', and _vice versa_. Adam Smith was responsible for this confusion which was then elevated to an axiom by Say in justification of mental inertia and superficiality. It was loyally accepted by Sismondi.

'The nature of capital and of income are always confused by the mind; we see that what is income for one becomes capital for another, and the same object, in passing from hand to hand, successively acquires different denominations; the value which becomes detached from an object that has been consumed, appears as a metaphysical quantity which one expends and the other exchanges, which for one perishes together with the object itself and which for the other renews itself and lasts for the time of circulation.'[159]

After this promising introduction, Sismondi dives right into the difficult problem and declares: all wealth is a product of labour; income is part of wealth, and must therefore have the same origin. However, it is 'customary' to recognise three kinds of income, called rent, profit and wage respectively, which spring from the three sources of 'land, accumulated capital and labour'. As to the first thesis, he is obviously on the wrong tack. As the wealth of a society, i.e. as the aggregate of useful objects, of use-values, wealth is not merely a product of labour but also of nature who both supplies raw materials and provides the means to support human labour. Income, on the other hand, is a concept of value. It indicates the amount to which an individual or individuals can dispose over part of the wealth of society or of the aggregate social product. In view of Sismondi's insistence that social income is part of social wealth, we might assume him to understand by social income the actual annual fund for consumption. The remaining part of wealth that has not been consumed, then, is the capital of society. Thus we obtain at least a vague outline of the required distinction between capital and income on a social basis. At the very next moment, however, Sismondi accepts the 'customary' distinction between three kinds of income, only one of which derives exclusively from 'accumulated capital' while in the other two 'land' or 'labour' are conjoined with capital. The concept of capital thus at once becomes hazy again. However, let us see what Sismondi has to say about the origin of these three kinds of income which betray a rift in the foundations of society. He is right to take a certain development of labour productivity as his point of departure.

'By reason of the advances both in industry and science, by which man has subjugated the forces of nature, every worker can produce more, far more, in a day than he needs to consume.'[160]

Sismondi thus rightly stresses the fact that the productivity of labour is an indispensable condition for the historical foundation of exploitation. Yet he goes on to explain the actual origin of exploitation in a way typical of bourgeois economics: 'But even though his labour produces wealth, this wealth, if he is called upon to enjoy it, will make him less and less fit for work. Besides, wealth hardly ever remains in the possession of the man who must live by the work of his hands.'[160]

Thus he makes exploitation and class antagonism the necessary spur to production, quite in accord with the followers of Ricardo and Malthus. But now he comes to the real cause of exploitation, the divorce of labour power from the means of production.

'The worker cannot, as a rule, keep the land as his own; land, however, has a productive capacity which human labour but directs to the uses of man. The master of the land on which labour is performed, reserves a share in the fruits of labour to which his land has contributed, as his remuneration for the benefits afforded by this productive capacity.'[161]

This is called rent. And further: 'In our state of civilisation, the worker can no longer call his own an adequate fund of objects for his consumption, enough to live while he performs the labours he has undertaken--until he has found a buyer. He no longer owns the raw materials, often coming from far away, on which he must exercise his industry. Even less does he possess that complicated and costly machinery which facilitates his work and makes it infinitely more productive. The rich man who possesses his consumption goods, his raw materials and his machines, need not work himself, for by supplying the worker with all these, he becomes in a sense the master of his work. As reward for the advantages he has put at the worker's disposal, he takes outright the greater part of the fruits of his labour.'[162]

This is called capital profits. What remains of wealth, after the cream has been taken off twice, by landlord and capitalist, is the wage of labour, the income of the worker. And Sismondi adds: 'He can consume it without reproduction.'[163]

Thus, Sismondi makes the fact of non-reproduction the criterion of income as distinct from capital for wages as well as for rent. In this, however, he is only right with regard to rent and the consumed part of capital profits; as for the part of the social product which is consumed in form of wages, it certainly does reproduce itself; it becomes the labour power of the wage labourer, for him a commodity by whose sale he lives, which he can bring to market again and again; for society it becomes the material form of variable capital which must reappear time and again in the aggregate reproduction of a year, if there is to be no loss.

So far so good. Hitherto we have only learned two facts: the productivity of labour permits of the exploitation of the workers by those who do not work themselves, and exploitation becomes the actual foundation of the distribution of income owing to the divorce of the worker from his means of production. But we still do not know what is capital and what income, and Sismondi proceeds to clarify this point, starting as usual with Robinson Crusoe:

'In the eyes of the individual all wealth was nothing but a provision prepared beforehand for the time of need. Even so, he already distinguished two elements in this provision ... one part which he budgets to have at hand for immediate or almost immediate use, and the other which he will not need until it is to afford him new production. Thus one part of his corn must feed him until the next harvest, another part, reserved for sowing, is to bear fruit the following year. The formation of society and the introduction of exchange, permit to increase this seed, this fertile part of accumulated wealth, almost indefinitely, and this is what is called capital.'[164]

Balderdash would be a better name for all this. In using the analogy of seed, Sismondi here identifies means of production and capital, and this is wrong for two reasons. First, means of production are capital not intrinsically, but only under quite definite historical conditions; secondly, the concept of capital covers more than just the means of production. In capitalist society--with all the conditions Sismondi ignores--the means of production are only a part of capital, i.e. they are constant capital.

Sismondi here lost his thread plainly because he tried to establish a connection between the capital concept and the material aspects of social reproduction. Earlier, so long as he was concerned with the individual capitalist, he listed means of subsistence for the workers together with means of production as component parts of capital--again a mistake in view of the material aspects of the reproduction of individual capitals. Yet as soon as he tries to focus the material foundations of social reproduction and sets out to make the correct distinction between consumer goods and means of production, the concept of capital dissolves in his hands.

However, Sismondi well knows that the means of production are not the sole requisites for production and exploitation; indeed, he has the proper instinct that the core of the relation of exploitation is the very fact of exchange with living labour. Having just reduced capital to constant capital, he now immediately reduces it exclusively to variable capital:

'When the farmer has put in reserve all the corn he expects to need till the next harvest, he will find a good use for the surplus corn: he will feed what he has left over to other people who are going to work for him, till his land, spin and weave his hemp and wool, etc.... By this procedure, the farmer converts a part of his income into capital, and in fact, this is the way in which new capital is always formed.... The corn he has reaped over and above what he must eat while he is working, and over and above what he will have to sow in order to maintain the same level of exploitation, is wealth which he can give away, squander and consume in idleness without becoming any poorer; it was income, but as soon as he uses it to feed producers, as soon as he exchanges it for labour, or for the fruits to come from the work of his labourers, his weavers, his miners, it is a permanent value that multiplies and will no longer perish; it is capital.'[165]

Here there is some grain mixed up with quite a lot of chaff. Constant capital seems still required to maintain production on the old scale, although it is strangely reduced to circulating capital, and although the reproduction of fixed capital is completely ignored. Circulating capital apparently is also superfluous for the expansion of reproduction, for accumulation: the whole capitalised part of the surplus value is converted into wages for new workers who evidently labour in mid-air, without material means of production. The same view is expressed even more clearly elsewhere:

'When the rich man cuts down his income in order to add to his capital, he is thus conferring a benefit on the poor, because he himself shares out the annual product; and whatever he calls income, he will keep for his own consumption; whatever he calls capital, he gives to the poor man to constitute an income for him.'[166]

Yet at the same time Sismondi gives due weight to the 'secret of profit-making' and the origin of capital. Surplus value arises from the exchange of capital for labour, from variable capital, and capital arises from the accumulation of surplus value.

With all this, however, we have not made much progress towards a distinction between capital and income. Sismondi now attempts to represent the various elements of production and income in terms of the appropriate parts of the aggregate social product.

'The employer of labour, as also the labourer, does not use all his productive wealth for the sowing; he devotes part of it to buildings, mills and tools which render the work easier and more productive, just as a share of the labourer's wealth had been devoted to the permanent work of making the soil more fertile. Thus we see how the different kinds of wealth successively come into being and become distinct. One part of the wealth accumulated by society is devoted by every one who possesses it to render labour more profitable by slow consumption, and make the blind forces of nature execute the work of man; this part is called _fixed capital_ and comprises reclaiming, irrigation, factories, the tools of trade, and mechanical contrivances of every description. A second part of wealth is destined for immediate consumption, to reproduce itself in the work it gets done, to change its form, though not its value, without cease. This part is called _circulating capital_ and it comprises seed, raw materials for manufacture, and wages. Finally, a third part of wealth becomes distinguishable from the second: it is the value by which the finished job exceeds the advances which had to be made: this part is called _income_ on capitals and is destined to be consumed without reproduction.'[167]

After this laborious attempt to achieve a division of the aggregate social production according to incommensurable categories, fixed capital, circulating capital, and surplus value, Sismondi soon shows unmistakable signs that he means constant capital when he speaks of fixed capital, and variable capital when he speaks of circulating capital. For 'all that is created', is destined for human consumption, though fixed capital is consumed 'mediately' while the circulating capital 'passes into the consumption fund of the worker whose wage it forms'.[168] Thus we are a little nearer to the division of the social product into constant capital (means of production), variable capital (provisions for the workers) and surplus value (provisions for the capitalists). But so far Sismondi's explanations are not particularly illuminating on the subject which he himself describes as 'fundamental'. In this welter of confusion, at any rate, we cannot see any progress beyond Adam Smith's 'massive thought'.

Sismondi feels this himself and would clarify the problem 'by the simplest of all methods', sighing that 'this movement of wealth is so abstract and requires such great power of concentration to grasp it properly'.[168] Thus again we put on blinkers with a focus on Robinson [Crusoe], who in the meantime has changed to the extent that he has produced a family and is now a pioneer of colonial policy:

'A solitary farmer in a distant colony on the border of the desert has reaped 100 sacks of corn this year; there is no market where to bring them; this corn, in any case, must be consumed within the year, else it will be of no value to the farmer; yet the farmer and his family eat only 30 sacks of it; this will be his expenditure, constituting the exchange of his income; it is not reproduced for anybody whatever. Then he will call for workers, he will make them clear woods, and drain swamps in his neighbourhood and put part of the desert under the plough. These workers will eat another 30 sacks of corn: this will be their expenditure; they will be in a position to afford this expenditure at the price of their revenue, that is to say their labour; for the farmer it will be an exchange: he will have converted his 30 sacks into fixed capital. In the end, he is left with 40 sacks. He will sow them that year, instead of the 20 he had sown the previous year; this constitutes his circulating capital which he will have doubled. Thus the 100 sacks will have been consumed, but of these 100 sacks 70 are a real investment for him, which will reappear with great increase, some of them at the very next harvest, and the others in all subsequent harvests.--The very isolation of the farmer we have just assumed gives us a better feeling for the limitations of such an operation. If he has only found consumers for 60 of the 100 sacks harvested in that year, who is going to eat the 200 sacks produced the following year by the increase in his sowing? His family, you might say, which will increase. No doubt; but human generations do not multiply as quickly as subsistence. If our farmer had hands available to repeat this assumed process each year, his corn harvest will be doubled every year, and his family could at the most be doubled once in 25 years.'[169]

Though the example is naïve, the vital question stands out clearly in the end: where are the buyers for the surplus value that has been capitalised? The accumulation of capital can indefinitely increase the production of the society. But what about the consumption of society? This is determined by the various kinds of income. Sismondi explains this important subject in chapter v of book ii, 'The Distribution of the National Income Among the Various Classes of Citizens', in a resumed effort to describe the components of the social product.

'Under this aspect, the national income is composed of two parts and no more; the one consists in annual production ... the profit arising from wealth. The second is the capacity for work which springs from life. This time we understand by wealth both territorial possessions and capital, and by profit the net income accruing to the owners as well as the profit of the capitalist.'[170]

Thus all the means of production are separated from the national income as 'wealth', and this income is divided into surplus value and labour power, or better, its equivalent, the variable capital. This, then, though still far too vague, is our division into constant capital, variable capital and surplus value. But 'national income', it soon transpires, means for Sismondi the annual aggregate product of society:

'Similarly, annual production, or the result of all the nation's work in the course of a year, is composed of two parts: one we have just discussed--the profit resulting from wealth; the other is the capacity for work, which is assumed to equal the part of wealth for which it is exchanged, or the subsistence of the workers.'[171]

The aggregate social product is thus resolved, in terms of value, into two parts: variable capital and surplus value--constant capital has disappeared. We have arrived at Smith's dogma that the commodity price is resolved into _v + s_ (or is composed of _v + s_)--in other words, the aggregate product consists solely of consumer goods for workers and capitalists.

Sismondi then goes on to the problem of realising the aggregate product. On the one hand, the sum total of incomes in a society consists of wages, capital profits and rents, and is thus represented by _v + s_; on the other hand, the aggregate social product, in terms of value, is equally resolved into _v + s_ 'so that national income and annual production balance each other (and appear as equal quantities)', i.e. so that they must be equal in value.

'Annual production is consumed altogether during the year, but in part by the workers who, by exchanging their labour for it, convert it into capital and reproduce it; in part by the capitalists who, exchanging their income for it, annihilate it. The whole of the annual income is destined to be exchanged for the whole of annual production.'[172]

This is the basis on which, in the sixth chapter of book ii, 'On Reciprocal Determination of Production and Consumption', Sismondi finally sets up the following precise law of reproduction: 'It is the income of the past year which must pay for the production of the present year.'[173]

If this is true, how can there be any accumulation of capital? If the aggregate product must be completely consumed by the workers and capitalists, we obviously remain within the bounds of simple reproduction, and there can be no solution to the problem of accumulation. Sismondi's theory in fact amounts to a denial of the possibility of accumulation. The aggregate social demand being the bulk of wages given to the workers and the previous consumption of the capitalists, who will be left to buy the surplus product if reproduction expands? On this count, Sismondi argues that accumulation is objectively impossible, as follows:

'What happens after all is always that we exchange the whole of production for the whole production of the previous year. Besides, if production gradually increases, the exchange, at the same time as it improves future conditions, must entail a small loss every year.'[174]

In other words, when the aggregate product is realised, accumulation is bound each year to create a surplus that cannot be sold. Sismondi, however, is afraid of drawing this final conclusion, and prefers a 'middle course', necessitating a somewhat obscure subterfuge: 'If this loss is not heavy, and evenly distributed, everyone will bear with it without complaining about his income. This is what constitutes the national economy, and the series of such small sacrifices increases capital and common wealth.'[174]

If, on the other hand, there is ruthless accumulation, this surplus residue becomes a public calamity, and the result is a crisis. Thus a petty-bourgeois subterfuge becomes the solution of Sismondi: putting the dampers on accumulation. He constantly polemises against the classical school which advocates unrestricted development of the productive forces and expansion of production; and his whole work is a warning against the fatal consequences of giving full rein to the desire to accumulate.

Sismondi's exposition proves that he was unable to grasp the reproductive process as a whole. Quite apart from his unsuccessful attempt to distinguish between the categories of capital and income from the point of view of society, his theory of reproduction suffers from the fundamental error he took over from Adam Smith: the idea that personal consumption absorbs the entire annual product, without leaving any part of the value for the renewal of society's constant capital, and also, that accumulation consists merely of the transformation of capitalised surplus value into variable capital. Yet, if later critics of Sismondi, e.g. the Russian Marxist Ilyin,[175] think that pointing out this fundamental error in the analysis of the aggregate product can justify a cavalier dismissal of Sismondi's entire theory of accumulation as inadequate, as 'nonsense', they merely demonstrate their own obtuseness in respect of Sismondi's real concern, his ultimate problem. The analysis of Marx at a later date, showing up the crude mistakes of Adam Smith for the first time, is the best proof that the problem of accumulation is far from solved just by attending to the equivalent of the constant capital in the aggregate product. This is proved even more strikingly in the actual development of Sismondi's theory: his views involved him in bitter controversy with the exponents and popularisers of the classical school, with Ricardo, Say and MacCulloch. The two parties to the conflict represent diametrically opposed points of view: Sismondi stands for the sheer impossibility, the others for the unrestricted possibility, of accumulation. Sismondi and his opponents alike disregard constant capital in their exposition of reproduction, and it was Say in particular who presumed to perpetuate Adam Smith's confused concept of the aggregate product as _v + s_ as an unassailable dogma.

The knowledge we owe to Marx that the aggregate product must, apart from consumer goods for the workers and capitalists (_v + s_), also contain means of production to renew what has been used, that accumulation accordingly consists not merely in the enlargement of variable but also of constant capital, is not enough, as amply demonstrated by this entertaining turn of events, to solve the problem of accumulation. Later we shall see how this stress on the share of constant capital in the reproductive process gave rise to new fallacies in the theory of accumulation. At present it will suffice to put on record that the deference to Smith's error about the reproduction of aggregate capital is not a weakness unique to Sismondi's position but is rather the common ground on which the first controversy about the problem of accumulation was fought out. Scientific research, not only in this sphere, proceeds in devious ways; it often tackles the upper storeys of the edifice, as it were, without making sure of the foundations; and so this conflict only resulted in that bourgeois economics took on the further complicated problem of accumulation without even having assimilated the elementary problem of simple reproduction. At all events, Sismondi, in his critique of accumulation, had indubitably given bourgeois economics a hard nut to crack--seeing that in spite of his transparently feeble and awkward deductions, Sismondi's opponents were still unable to get the better of him.

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