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 competitive 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 entity,
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
classical fearlessness and simplicity and took it for granted that total
capital exists as a real and active entity. In his famous _Tableau
Économique_, 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 classes: the productive
class of agriculturists; the sterile class containing all those who are
active outside the sphere of agriculture--industry, commerce, and the
liberal professions; and lastly the class of landowners, including the
Sovereign and the collectors of tithes. The national aggregate product
materialises in the hands of the productive class 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 class pay the landowners 2,000 millions cash as rent (as
the cost of the previous period of production). For this money the
landowning class buy provisions from the tenants for 1,000 millions and
industrial products from the sterile class 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 class 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 class; the
product is distributed among all classes so that consumption is ensured
for everyone; at the same time the means of production of the sterile as
well as of the productive class have been renewed and the landowning
class 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 analysis 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 analysis of prices, Smith upset the whole foundation of the
scientific demonstration of the capitalist process as a whole. This
wrong analysis 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 constitutes 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 amusements. 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 amusements. 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 constituted 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 analysis
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 analysis 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 analysis. 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. Assuming 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 constitutes 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 circumstances 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 fashion. 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
cocksure enough to 'correct' these classical 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
illustrates 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 assumption 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
Économique_ that the unproductive class 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 class and the other to the
landowning class, while the manufacturing class does not consume its own
products. Thus in the value of its commodities, the manufacturing class
reproduces, strictly speaking, only that circulating capital which has
been consumed, and no income is created for the class 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 class in the form of rents, while even the tenant class 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
assumes 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 classical 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 classical 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
assume 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 class, a surplus for the
tenant class over and above the total of their capital expenses. Thus,
in addition to the replacement of capital, an annual income of the
tenant class 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 constituting 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 amusements. 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 Économique_. 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 analysis 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 fashioning 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 amusements 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.
The position is different with regard to circulating capital. 'But
though the whole expenses of maintaining the fixed capital is thus
necessarily excluded from the neat revenue of the society, it is not the
same case with that of maintaining the circulating capital. Of the four
parts of which this latter capital is composed, money, provisions,
materials and finished work, the three last, it has already been
observed, are regularly withdrawn from it and placed either in the fixed
capital of the society, or in their stock reserved for immediate
consumption. Whatever portion of those consumable goods is not employed
in maintaining the former, goes all to the latter, and makes a part of
the neat revenue of the society, besides what is necessary for
maintaining the fixed capital.'[74]
We see that Smith here simply includes in this category of circulating
capital everything but the fixed capital already employed, that is to
say, foodstuffs and raw materials and in part commodities which,
according to their natural form, belong to the replacement of fixed
capital. Thus he has made the concept of circulating capital vague and
ambiguous. But a further and most important distinction crops up and
cuts right through this conception: 'The circulating capital of a
society is in this respect different from that of an individual. That of
an individual is totally excluded from making any part of his neat
revenue, which must consist altogether in his profits. But though the
circulating capital of every individual makes a part of that of the
society to which he belongs, it is not upon that account totally
excluded from making a part likewise of their neat revenues.'[75]
In the following illustration Smith expounds what he means: 'Though the
whole goods in a merchant's shop must by no means be placed in his own
stock reserved for immediate consumption, they may in that of other
people, who, from a revenue derived from other funds, may regularly
replace their value to him, together with its profits, without
occasioning any diminution either of his capital or theirs.'[76]
Here Smith has established fundamental categories with regard to the
reproduction and movement of circulating social capital. Fixed and
circulating capital, private and social capital, private and social
revenue, means of production and consumer goods, are marked out as
comprehensive categories, and their real, objective interrelation is
partly indicated and partly drowned in the subjective and theoretical
contradictions of Smith's analysis. The concise, strict, and classically
clear scheme of the Physiocrat theory is dissolved here into a
disorderly jumble of concepts and relations which at first glance
appears an absolute chaos. But we may already perceive new connections
within the social process of reproduction, understood by Smith in a
deeper, more modern and vital way than was within Quesnay's grasp,
though, like Michelangelo's slave in the unhewn block of marble, they
are still inchoate.
This is the only illustration Smith gives of this problem. But at the
same time he attacks it from another angle--by an analysis of value.
This very same theory which represents an advance beyond the
Physiocrats--the theory that it is an essential quality of all labour to
create value; the strictly capitalist distinction between paid labour
replacing wages, and unpaid labour creating surplus value; and, finally,
the strict division of surplus value into its two main categories, of
profit and rent--all this progress from the analysis of the Physiocrats
leads Smith to the strange proposition that the price of every commodity
consists of wages, plus profits, plus rent, or, in Marx's shorthand, of
_v + s_. In consequence, the commodities annually produced by society as
a whole can be resolved completely, as to value, into the two
components: wages and surplus value. Here the category of capital has
disappeared all of a sudden; society produces nothing but income,
nothing but consumer goods, which it also consumes completely.
Reproduction without capital becomes a paradox, and the treatment of the
problem as a whole has taken an immense backward step against that of
the Physiocrats.
The followers of Adam Smith have tackled this twofold theory from
precisely the wrong approach. Before Marx nobody concerned himself with
the important beginnings of an exact exposition of the problem in
Smith's second book, while most of his followers jealously preserved
Smith's radically wrong analysis of prices, accepting it, like Ricardo,
without question, or else, like Say, elaborating it into a trite
doctrine. Where Smith raised fruitful doubts and stimulating
contradictions, Say flaunted the opinionated presumption of a
commonplace mind. Smith's observation that the capital of one person may
be the revenue of another induced Say to proclaim every distinction
between capital and income on the social scale to be absurd. The
absurdity, however, that income should completely absorb the total
value of annual production which is thus consumed completely, assumes in
Say's treatment the character of an absolutely valid dogma. If society
annually consumes its own total product completely, social reproduction
without any means of production whatever must become an annual
repetition of the Miracle of the Creation.
In this state the problem of reproduction remained up to the time of
Karl Marx.