The Accumulation Of Capital Part 2

Thus capitalist production and reproduction imply a constant s.h.i.+fting between the place of production and the commodity market, a shuttle movement from the private office and the factory where unauthorised persons are strictly excluded, where the sovereign will of the individual capitalist is the highest law, to the commodity market where n.o.body sets up any laws and where neither will nor reason a.s.sert themselves. But it is this very licence and anarchy of the commodity market which brings home to the individual capitalist that he is dependent upon society, upon the entirety of its producing and consuming members. The individual capitalist may need additional means of production, additional labour and provisions for these workers in order to expand reproduction, but whether he can get what he needs depends upon factors and events beyond his control, materialising, as it were, behind his back. In order to realise his increased aggregate of products, the individual capitalist requires a larger market for his goods, but he has no control whatever over the actual increase of demand in general, or of the particular demand for his special kind of good.

The conditions we have enumerated here, which all give expression to the inherent contradiction between consumption and private production and their social interconnection, are nothing new, and it is not only at the stage of reproduction that they become apparent. These conditions express the general contradiction inherent in capitalist production.

They involve, however, particular difficulties as regards the process of reproduction for the following reasons. With regard to reproduction, especially expanding reproduction, the capitalist method of production not only reveals its general fundamental character, but, what is more, it shows, in the various periods of production, a definite rhythm within a continuous progression--the characteristic interplay of individual wills. From this point of view, we must inquire in a general way how it is possible for every individual capitalist to find on the market the means of production and the labour he requires for the purpose of realising the commodities he has produced, although there exists no social control whatever, no plan to harmonize production and demand.

This question may be answered by saying that the capitalist's greed for surplus value, enhanced by compet.i.tion, and the automatic effects of capitalist exploitation, lead to the production of every kind of commodity, including means of production, and also that a growing cla.s.s of proletarianised workers becomes generally available for the purposes of capital. On the other hand, the lack of a plan in this respect shows itself in the fact that the balance between demand and supply in all spheres can be achieved only by continuous deviations, by hourly fluctuations of prices, and by periodical crises and changes of the market situation.

From the point of view of reproduction the question is a different one.

How is it possible that the unplanned supply in the market for labour and means of production, and the unplanned and incalculable changes in demand nevertheless provide adequate quant.i.ties and qualities of means of production, labour and opportunities for selling which the individual capitalist needs in order to make a sale? How can it be a.s.sured that every one of these factors increases in the right proportion? Let us put the problem more precisely. According to our well-known formula, let the composition of the individual capitalist's production be expressed by the proportion _40c + 10v + 10s_. His constant capital is consequently four times as much as his variable capital, and the rate of exploitation is 100 per cent. The aggregate of commodities is thus represented by a value of 60. Let us now a.s.sume that the capitalist is in a position to capitalise and to add to the old capital of this given composition half of his surplus value. In this case, the formula _44c + 11v + 11s = 66_ would apply to the next period of production.

Let us a.s.sume now that the capitalist can continue the annual capitalisation of half his surplus value for a number of years. For this purpose it is not sufficient that means of production, labour and markets in general should be forthcoming, but he must find these factors in a proportion that is strictly in keeping with his progress in acc.u.mulation.

FOOTNOTES:

[58] 'If production be capitalistic in form, so, too, will be reproduction' (_Capital_, vol. i, p. 578).

[59] Surplus value in our exposition is identical with profit. This is true for production as a whole, which alone is of account in our further observations. For the time being, we shall not deal with the further division of surplus value into its component parts: profit of enterprise, interest, and rent, as this subdivision is immaterial to the problem of reproduction.

_CHAPTER II_

QUESNAY'S AND ADAM SMITH'S a.n.a.lYSES OF THE PROCESS OF REPRODUCTION

So far we have taken account only of the individual capitalist in our survey of reproduction; he is its typical representative, its agent, for reproduction is indeed brought about entirely by individual capitalist enterprises. This approach has already shown us that the problem involves difficulties enough. Yet these difficulties increase to an extraordinary degree and become even more complicated, when we turn our attention from the individual capitalist to the totality of capitalists.

A superficial glance suffices to show that capitalist reproduction as a social whole must not be regarded simply as a mechanical summation of all the separate processes of individual capitalist reproduction. We have seen, for instance, that one of the fundamental conditions for enlarged reproduction by an individual capitalist is a corresponding increase of his opportunities to sell on the commodity market. But the individual capitalist may not always expand because of an absolute increase in the absorptive capacity of the market, but also as a result of the compet.i.tive struggle, at the cost of other individual capitalists. Thus one capitalist may win what another or many others who have been shouldered from the market must write off as a loss. This process will enable one capitalist to increase his reproduction by the amount that it compels others by losses to restrict their own. One capitalist will be able to engage in enlarged reproduction because others cannot even achieve simple reproduction. In the same way, one capitalist may enlarge his reproduction by using labour power and means of production which another's bankruptcy, that is his partial or complete retirement from reproduction, has set free.

These commonplaces prove that reproduction of the social capital as a whole is not the same as the reproduction of the individual capitalist raised to the _n_th degree. They show that the reproductive activities of individual capitalists ceaselessly cut across one another and to a greater or smaller degree may cancel each other out.

Therefore we must clarify our concept of reproduction of capital as a whole, before we examine the laws and mechanisms of capitalist total reproduction. We must raise the question whether it is even possible to deduce anything like total reproduction from the disorderly jumble of individual capitals in constant motion, changing from moment to moment according to uncontrollable and incalculable laws, partly running a parallel course, and partly intersecting and cancelling each other out.

Can one actually talk of total social capital of society as an ent.i.ty, and if so, what is the real meaning of this concept? That is the first question a scientific examination of the laws of reproduction has to consider. At the dawn of economic theory and bourgeois economics, Quesnay, the father of the Physiocrats, approached the problem with cla.s.sical fearlessness and simplicity and took it for granted that total capital exists as a real and active ent.i.ty. In his famous _Tableau economique_, so intricate that no one before Marx could understand it, Quesnay demonstrated the phases of the reproduction of aggregate capital with a few figures, at the same time taking into account that it must also be considered from the aspect of commodity exchange, that is as a process of circulation.[60]

Society as Quesnay sees it consists of three cla.s.ses: the productive cla.s.s of agriculturists; the sterile cla.s.s containing all those who are active outside the sphere of agriculture--industry, commerce, and the liberal professions; and lastly the cla.s.s of landowners, including the Sovereign and the collectors of t.i.thes. The national aggregate product materialises in the hands of the productive cla.s.s as an aggregate of provisions and raw materials to the value of some 5,000 million livres.

Of this sum, 2,000 millions represent the annual working capital of agriculture, 1,000 millions represent the annual wear and tear of fixed capital, and 2,000 millions are the net revenue accruing to the landowners. Apart from this total produce, the agriculturists, here conceived quite in capitalist terms as tenant farmers, have 2,000 million livres cash in hand. Circulation now takes place in such a way that the tenant cla.s.s pay the landowners 2,000 millions cash as rent (as the cost of the previous period of production). For this money the landowning cla.s.s buy provisions from the tenants for 1,000 millions and industrial products from the sterile cla.s.s for the remaining 1,000 millions. The tenants in their turn buy industrial products for the 1,000 millions handed back to them, whereupon the sterile cla.s.s buy agricultural products for the 2,000 millions they have in hand: for 1,000 millions raw materials etc., to replace their annual working capital, and provisions for the remaining 1,000 millions. Thus the money has in the end returned to its starting point, the tenant cla.s.s; the product is distributed among all cla.s.ses so that consumption is ensured for everyone; at the same time the means of production of the sterile as well as of the productive cla.s.s have been renewed and the landowning cla.s.s has received its revenue. The prerequisites of reproduction are all present, the conditions of circulation have all been fulfilled, and reproduction can start again on its regular course.[61]

We shall see later in the course of our investigation that this exposition, though showing flashes of genius, remains deficient and primitive. In any case, we must stress here that Quesnay, on the threshold of scientific economics, had not the slightest doubt as to the possibility of demonstrating total social capital and its reproduction.

Adam Smith, on the other hand, while giving a more profound a.n.a.lysis of the relations of capital, laid out what seems like a maze when compared with the clear and sweeping outlines of the Physiocrat conception. By his wrong a.n.a.lysis of prices, Smith upset the whole foundation of the scientific demonstration of the capitalist process as a whole. This wrong a.n.a.lysis of prices ruled bourgeois economics for a long time; it is the theory which maintains that, although the value of a commodity represents the amount of labour spent in its production, yet the price consists of three elements only: the wage of labour, the profit of capital, and the rent.

As this obviously must also apply to the aggregate of commodities, the national product, we are faced with the startling discovery that, although the value of the aggregate of commodities manufactured by capitalist methods represents all paid wages together with the profits of capital and the rents, that is the aggregate surplus value, and consequently can replace these, there is no component of value which corresponds to the constant capital used in production. According to Smith, _v + s_ is the formula expressing the value of the capitalist product as a whole. Demonstrating his view with the example of corn, Smith says as follows:

These three parts (wages, profit, and rent) seem either immediately or ultimately to make up the whole price of corn. A fourth part, it may perhaps be thought, is necessary for replacing the stock of the farmer, or for compensating the wear and tear of his labouring cattle, and other instruments of husbandry. But it must be considered that the price of any instrument of husbandry, such as a labouring horse, is itself made up of the same three parts: the rent of the land upon which he is reared, the labour of tending and rearing him, and the profits of the farmer who advances both the rent of this land and the wages of this labour. Though the price of the corn, therefore, may pay the price as well as the maintenance of the horse, the whole price still resolves itself either immediately or ultimately into the same three parts of rent, of labour and profit.'[62]

Sending us in this manner 'from pillar to post', as Marx has put it, Smith again and again resolved constant capital into _v + s_. However, he had occasional doubts and from time to time relapsed into the contrary opinion. He says in the second book:

'It has been shown in the first Book, that the price of the greater part of commodities resolves itself into three parts, of which one pays the wages of the labour, another the profits of the stock, and a third the rent of the land which had been employed in producing and bringing them to market.... Since this is the case ... with regard to every particular commodity, taken separately; it must be so with regard to all the commodities which compose the whole annual produce of the land and labour of every country, taken complexly. The whole price or exchangeable value of that annual produce must resolve itself into the same three parts, and be parcelled out among the different inhabitants of the country, either as the wages of their labour, the profits of their stock, or the rent of their land.'[63]

Here Smith hesitates and immediately below explains: 'But though the whole value of the annual produce of the land and labour of every country is thus divided among and const.i.tutes a revenue to its different inhabitants, yet as in the rent of a private estate we distinguish between the gross rent and the neat rent, so may we likewise in the revenue of all the inhabitants of a great country.

'The gross rent of a private estate comprehends whatever is paid by the farmer; the neat rent, what remains free to the landlord after deducting the expense of management, of repairs, and all other necessary charges; or what, without hurting his estate, he can afford to place in his stock reserved for immediate consumption, or to spend upon his table, equipage, the ornaments of his house and furniture, his private enjoyments and amus.e.m.e.nts. His real wealth is in proportion, not to his gross, but to his neat rent.

'The gross revenue of all the inhabitants of a great country comprehends the whole annual produce of their land and labour; the neat revenue, what remains free to them after deducting the expense of maintaining, first, their fixed, and secondly, their circulating capital, or what, without encroaching upon their capital, they can place in their stock reserved for immediate consumption, or spend upon their subsistence, conveniences, and amus.e.m.e.nts. Their real wealth too is in proportion, not to their gross, but to their neat revenue.'[64]

Here Smith introduces a portion of value which corresponds to constant capital, only to eliminate it the very next moment by resolving it into wages, profits, and rents. And in the end, the matter rests with this explanation:

'As the machines and instruments of trade, etc. which compose the fixed capital either of an individual or of a society, make no part either of the gross or the neat revenue of either, so money, by means of which the whole revenue of the society is regularly distributed among all its different members, makes itself no part of that revenue.'[65]

Constant capital, the fixed capital of Adam Smith, is thus put on the same level as money and does not enter into the total produce of society, its gross revenue. It does not exist within this total product as an element of value.

You cannot get blood out of a stone, and so circulation, the mutual exchange of the total product const.i.tuted in this manner, can only lead to realisation of the wages (_v_) and of the surplus value (_s_).

However, as it cannot by any means replace the constant capital, continued reproduction evidently must become impossible. Smith indeed knew quite well, and did not dream of denying, that every individual capitalist requires constant capital in addition to his wages fund, his variable capital, in order to run his enterprise. Yet the above a.n.a.lysis of commodity prices, when it comes to take note of capitalist production as a whole, allows constant capital to disappear without a trace in a puzzling way. Thus the problem of the reproduction of capital is completely muddled up. It is plain that if the most elementary premise of the problem, the demonstration of social capital as a whole, were on the rocks, the whole a.n.a.lysis was bound to fail. Ricardo, Say, Sismondi and others took up this erroneous theory of Adam Smith, and they all stumbled in their observations on the problem of reproduction over this most elementary difficulty: the demonstration of social capital.

Another difficulty is mixed up with the foregoing from the very outset of scientific a.n.a.lysis. What is the nature of the total capital of a society? As regards the individual producer, the position is clear: his capital consists of the expenses of his enterprise. a.s.suming capitalist methods of production, the value of his product yields him a surplus over and above his expenses, that surplus value which does not replace his capital but const.i.tutes his net income, which he can consume completely without encroaching upon his capital and which is thus his fund of consumption. It is true that the capitalist may save part of this net income, not consuming it himself but adding it to his capital.

But that is another matter, a new step, the formation of a new capital which again must be replaced by subsequent reproduction and must again yield him a surplus. In any case, the capital of an individual always consists of what he requires for production, together with his advances on the running of his enterprise, and his income is what he himself actually consumes or may consume, his fund of consumption. If we ask a capitalist: 'What are the wages you pay your workers?' his answer will be: 'They are obviously part of my working capital.' But if we ask: 'What are these wages for the workers who have received them?'--it is impossible that he should describe them as capital, for wages received are not capital for the workers but income, their fund of consumption.

Let us now take another example. A manufacturer of machinery produces machines in his factory. The annual output is a certain number of machines. In its value, however, this annual output contains the capital advanced by the manufacturer as well as the net income that has been earned. Part of the manufactured machines thus represent income for the manufacturer and are destined to realise this income in the process of circulation and exchange. But the person who buys these machines from the manufacturer does not buy them as income but in order to use them as a means of production; for him they are capital.

These examples make it seem plausible that an object which is capital for one person may be income for another and _vice versa_. How can it be possible under these circ.u.mstances to construct anything in the nature of a total capital of society? Indeed almost every scientific economist up to the time of Marx concluded that there is no social capital.[66]

Smith was still doubtful, undecided, vacillating about this question; so was Ricardo. But already Say declared categorically:

'It is in this way, that the total value of products is distributed amongst the members of the community; I say, the _total_ value, because such part of the whole value produced, as does not go to one of the consuming producers, is received by the rest. The clothier buys wool of the farmer, pays his workmen in every department, and sells the cloth, the result of their united exertion, at a price that reimburses all his advances, and affords himself a profit. He never reckons as profit, or as the revenue of his own industry, anything more than the _net_ surplus, after deducting all charges and outgoings; but those outgoings are merely an advance of their respective revenues to the previous producers, which are refunded by the _gross_ value of the cloth. The price paid to the farmer for his wool is the compound of the several revenues of the cultivator, the shepherd and the landlord. Although the farmer reckons as _net_ produce only the surplus remaining after payment of his landlord and his servants in husbandry, yet to them these payments are items of revenue--rent to the one and wages to the other--to the one, the revenue of the land, to the other, the revenue of his industry. The aggregate of all these is defrayed out of the value of the cloth, the whole of which forms the revenue of some one or other, and is entirely absorbed in that way.--Whence it appears that the term _net_ produce applies only to the individual revenue of each separate producer or adventurer in industry, but that the aggregate of individual revenue, the total revenue of the community, is equal to the _gross_ produce of its land, capital and industry, which entirely subverts the system of the economists of the last century, who considered nothing but the net produce of the land as farming revenue, and therefore concluded, that this net produce was all that the community had to consume; instead of closing with the obvious inference, that the whole of what had been created, may also be consumed by mankind.'[67]

Say proves his theory in his own peculiar fas.h.i.+on. Whereas Adam Smith tried to give a proof by referring each private capital unit to its place of production in order to resolve it into a mere product of labour, but conceived of every product of labour in strictly capitalist terms as a sum of paid and unpaid labour, as _v + s_, and thus came to resolve the total product of society into _v + s_; Say, of course, is c.o.c.ksure enough to 'correct' these cla.s.sical errors by inflating them into common vulgarities. His argument is based upon the fact that the entrepreneur at every stage of production pays other people, the representatives of previous stages of production, for the means of production which are capital for him, and that these people in their turn put part of this payment into their own pockets as their income and partly use it to recoup themselves for expenses advanced in order to provide yet another set of people with an income. Say converts Adam Smith's endless chain of labour processes into an equally unending chain of mutual advances on income and their repayment from the proceeds of sales. The worker appears here as the absolute equal of the entrepreneur. He has his income advanced in the form of wages, paying for it in turn by the labour he performs. Thus the final value of the aggregate social product appears as the sum of a large number of advanced incomes and is spent in the process of exchange on repayment of all these advances. It is characteristic of Say's superficiality that he ill.u.s.trates the social connections of capitalist reproduction by the example of watch manufacture--a branch of production which at that time and partly even to-day is pure 'manufacture' where every worker is also an entrepreneur on a small scale and the process of production of surplus value is masked by a series of successive acts of exchange typical of simple commodity production.

Thus Say gives an extremely crude expression to the confusion inaugurated by Adam Smith. The aggregate of annual social produce can be completely resolved as regards its value into a sequence of various incomes. Therefore it is completely consumed every year. It remains an enigma how production can be taken up again without capital and means of production, and capitalist reproduction appears to be an insoluble problem.

If we compare the varying approaches to the problem from the time of the Physiocrats to that of Adam Smith, we cannot fail to recognise partial progress as well as partial regression. The main characteristic of the economic conception of the Physiocrats was their a.s.sumption that agriculture alone creates a surplus, that is surplus value, and that agricultural labour is the only kind of labour which is productive in the capitalist sense of the term. Consequently we see in the _Tableau economique_ that the unproductive cla.s.s of industrial workers creates value only to the extent of the same 2,000 million livres which it consumes as raw materials and foodstuffs. Consequently, too, in the process of exchange, the total of manufactured products is divided into two parts, one of which goes to the tenant cla.s.s and the other to the landowning cla.s.s, while the manufacturing cla.s.s does not consume its own products. Thus in the value of its commodities, the manufacturing cla.s.s reproduces, strictly speaking, only that circulating capital which has been consumed, and no income is created for the cla.s.s of entrepreneurs.

The only income of society that comes into circulation in excess of all capital advances, is created in agriculture and is consumed by the landowning cla.s.s in the form of rents, while even the tenant cla.s.s do no more than replace their capital: to wit, 1,000 million livres interest from the fixed capital and 2,000 million circulating capital, two-thirds being raw materials and foodstuffs, and one-third industrial products.

Further it is striking that it is in agriculture alone that Quesnay a.s.sumes the existence of fixed capital which he calls _avances primitives_ as distinct from _avances annuelles_. Industry, as he sees it, apparently works without any fixed capital, only with circulating capital turned over each year, and consequently does not create in its annual output of commodities any element of value for making good the wear and tear of fixed capital (such as premises, tools, and so on).[68]

In contrast with this obvious defect, the English cla.s.sical school shows a decisive advance above all in proclaiming every kind of labour as productive, thus revealing the creation of surplus value in manufacture as well as in agriculture. We say: the English cla.s.sical school, because on this point Adam Smith himself occasionally relapses quietly into the Physiocrat point of view. It is only Ricardo who develops the theory of the value of labour as highly and logically as it could advance within the limits of the bourgeois approach. The consequence is that we must a.s.sume all capital investment to produce annual surplus value, in the manufacturing part of social production as a whole no less than in agriculture.[69]

On the other hand, the discovery of the productive, value-creating property of every kind of labour, alike in agriculture and in manufacture, suggested to Smith that agricultural labour, too, must produce, apart from the rent for the landowning cla.s.s, a surplus for the tenant cla.s.s over and above the total of their capital expenses. Thus, in addition to the replacement of capital, an annual income of the tenant cla.s.s comes into being.[70]

Lastly, by a systematic elaboration of the concepts of _avances primitives_ and _avances annuelles_ introduced by Quesnay, which he calls fixed and circulating capital, Smith has made clear, among other things, that the manufacturing side of social production requires a fixed as well as a circulating capital. Thus he was well on the way to restoring to order the concepts of capital and revenue of society, and to describing them in precise terms. The following exposition represents the highest level of clarity which he achieved in this respect:

'Though the whole annual produce of the land and labour of every country is, no doubt, ultimately destined for supplying the consumption of its inhabitants and for procuring a revenue to them, yet when it first comes either from the ground or from the hands of the productive labourer, it naturally divides itself into two parts. One of them, and frequently the largest, is, in the first place, destined for replacing a capital, or for renewing the provisions, materials, and finished work, which had been withdrawn from a capital; the other for const.i.tuting a revenue either to the owner of this capital, as the profit of his stock, or to some other person, as the rent of his land.'[71]

'The gross revenue of all the inhabitants of a great country comprehends the whole annual produce of their land and labour; the neat revenue, what remains free to them after deducting the expense of maintaining, first, their fixed, and secondly, their circulating capital; or what, without encroaching upon their capital, they can place in their stock reserved for immediate consumption, or spend upon their subsistence, conveniencies, and amus.e.m.e.nts. Their real wealth too is in proportion, not to their gross, but to their neat revenue.'[72]

The concepts of total capital and income appear here in a more comprehensive and stricter form than in the _Tableau economique_. The one-sided connection of social income with agriculture is severed and social income becomes a broader concept; and a broader concept of capital in its two forms, fixed and circulating capital, is made the basis of social production as a whole. Instead of the misleading differentiation of production into two departments, agriculture and industry, other categories of real importance are here brought to the fore: the distinction between capital and income and the distinction, further, between fixed and circulating capital.

Now Smith proceeds to a further a.n.a.lysis of the mutual relations of these categories and of how they change in the course of the social process, in production and circulation--in the reproductive process of society. He emphasises here a radical distinction between fixed and circulating capital from the point of view of the society:

'The whole expense of maintaining the fixed capital must evidently be excluded from the neat revenue of the society. Neither the materials necessary for supporting their useful machines and instruments of trade, their profitable buildings, etc., nor the produce of the labour necessary for fas.h.i.+oning those materials into the proper form, can ever make any part of it. The price of that labour may indeed make a part of it; as the workmen so employed may place the whole value of their wages in their stock reserved for immediate consumption. But in other sorts of labour, both the price and the produce go to this stock, the price to that of the workmen, the produce to that of other people whose subsistence, convenience and amus.e.m.e.nts are augmented by the labour of those workmen.'[73]

Here Smith comes up against the important distinction between workers who produce means of production and those who produce consumer goods.

With regard to the former he remarks that they create the value--destined to replace their wages and to serve as their income--in the form of means of production such as raw materials and instruments which in their natural form cannot be consumed. With regard to the latter category of workers, Smith observes that conversely the total product, or better that part of value contained in it which replaces the wages, the income of the workers together with its other remaining value, appears here in the form of consumer goods. (The real meaning latent in this conclusion, though Smith does not say so explicitly, is that the part of the product which represents the fixed capital employed in its production appears likewise in this form.) In the further course of our investigation we shall see how close Smith has here come to the vantage point from which Marx tackled the problem. The general conclusion, however, maintained by Smith without any further examination of the fundamental question, is that, in any case, whatever is destined for the preservation and renewal of the fixed capital of society cannot be added to society's net income.