The shortcomings of the diagram of simple reproduction are obvious: it
explains the laws of a form of reproduction which is possible only as an
occasional exception in a capitalist economy. It is not simple but
enlarged reproduction which is the rule in every capitalist economic
system, even more so than in any other.[96]
Nevertheless, this diagram is of real scientific importance in two
respects. In practice, even under conditions of enlarged reproduction,
the greater part of the social product can be looked on as simple
reproduction, which forms the broad basis upon which production in every
case expands beyond its former limits. In theory, the analysis of simple
reproduction also provides the necessary starting point for all
scientific exposition of enlarged reproduction. The diagram of simple
reproduction of the aggregate social capital therefore inevitably
introduces the further problem of the enlarged reproduction of the total
capital.
We already know the historical peculiarity of enlarged reproduction on a
capitalist basis. It must represent itself as accumulation of capital,
which is both its specific form and its specific condition. That is to
say, social production as a whole--which on a capitalist basis is the
production of surplus value--can in every case be expanded only in so
far as the social capital that has been previously active is now
augmented by surplus value of its own creation. This use of part of the
surplus value (and in particular the use of an increasing part of it)
for the purpose of production instead of personal consumption by the
capitalist class, or else the increase of reserves, is the basis of
enlarged reproduction under capitalist conditions of production.
The characteristic feature of enlarged reproduction of the aggregate
social capital--just as in our previous assumption of simple
reproduction--is the reproduction of individual capitals, since
production as a whole, whether regarded as simple or as enlarged
production, can in fact only occur in the form of innumerable
independent movements of reproduction performed by private individual
capitals.
The first comprehensive analysis of the accumulation of individual
capitals is given in volume i of Marx's _Capital_, section 7, chapters
22, 23. Here Marx treats of (_a_) the division of the surplus value into
capital and revenue; (_b_) the circumstances which determine the
accumulation of capital apart from this division, such as the degree of
exploitation of labour power and labour productivity; (_c_) the growth
of fixed capital relative to the circulating capital as a factor of
accumulation; and (_d_) the increasing development of an industrial
reserve army which is at the same time both a consequence and a
prerequisite of the process of accumulation. In the course of this
discussion, Marx deals with two inspired notions of bourgeois economists
with regard to accumulation: the 'theory of abstinence' as held by the
more vulgar economists, who proclaim that the division of surplus value
into capital, and thus accumulation itself, is an ethical and heroic act
of the capitalists; and the fallacy of the classical economists, their
doctrine that the entire capitalised part of the surplus value is used
solely for consumption by the productive workers, that is to say spent
altogether on wages for the workers employed year by year. This
erroneous assumption, which completely overlooks the fact that every
increase of production must manifest itself not only in the increased
number of employed workers but also in the increase of the material
means of production (premises, tools, and, certainly, raw materials) is
obviously rooted in that 'dogma' of Adam Smith which we have already
discussed. Moreover, the assumption that the expenditure of a greater
amount of capital on wages is sufficient to expand production, also
results from the mistaken idea that the prices of all commodities are
completely resolved into wages and surplus value, so that the constant
capital is disregarded altogether. Strangely enough, even Ricardo who
was, at any rate occasionally, aware of this element of error in Smith's
doctrine, subscribes most emphatically to its ultimate inferences,
mistaken though they were:
'It must be understood, that all the productions of a country are
consumed; but it makes the greatest difference imaginable whether they
are consumed by those who reproduce, or by those who do not reproduce
another value. When we say that revenue is saved, and added to capital,
what we mean is, that the portion of revenue, so said to be added to
capital, is consumed by productive, instead of unproductive
labourers.'[97]
If all the goods produced are thus swallowed up by human consumption,
there can clearly be no room to spare in the total social product for
such unconsumable means of production as tools and machinery, new
materials and buildings, and consequently enlarged reproduction, too,
will have to take a peculiar course. What happens--according to this odd
conception--is simply that staple foodstuffs for new workers will be
produced to the amount of the capitalised part of surplus value instead
of the choice delicacies previously provided for the capitalist class.
The classical theory of enlarged reproduction does not admit of any
variations other than those connected with the production of consumer
goods. After our previous observations it is not surprising that Marx
could easily dispose of this elementary mistake of both Ricardo and
Smith. Just as simple reproduction requires a regulated renewal of the
constant capital, the material means of production, quite apart from the
production of consumer goods in the necessary quantity for labourer and
capitalist, equally so in the case of expanding production must part of
the new additional capital be used to enlarge the constant capital, that
is to add to the material means of production. Another law, Marx
discovered, must also be applied here. The constant capital, continually
overlooked by the classical economists, increases relative to the
variable capital that is spent on wages. This is merely the capitalist
expression of the general effects of increasing labour productivity.
With technical progress, human labour is able to set in motion ever
larger masses of means of production and to convert them into goods. In
capitalist terms, this means a progressive decrease in expenses for
living labour, in wages, relative to the expenses for inanimate means of
production. Contrary to the assumption of Adam Smith and Ricardo,
enlarged reproduction must not only start with the division of the
capitalised part of the surplus value into constant and variable
capital, but, as the technique of production advances, it is bound to
allocate in this division ever increasing portions to the constant, and
ever diminishing portions to the variable capital. This continuous
qualitative change in the composition of capital is the specific
manifestation of the accumulation of capital, that is to say of enlarged
reproduction on the basis of capitalism.[98]
The other side of this picture of continual changes in the relation
between the portions of constant and variable capital is the formation
of a relative surplus population, as Marx called it, that is to say that
part of the working population which exceeds the average needs of
capital, and thus becomes redundant. This reserve of unemployable
industrial labour (taken here in a broader sense, and including a
proletariat that is dominated by merchant capital) is always present. It
forms a necessary prerequisite of the sudden expansion of production in
times of boom, and is another specific condition of capitalist
accumulation.[99]
From the accumulation of individual capitals we can therefore deduce the
following four characteristic phenomena of enlarged reproduction:
(1) The volume of enlarged reproduction is independent, within certain
limits, of the growth of capital, and can transcend it. The necessary
methods for achieving this are: increased exploitation of labour and
natural forces, and increased labour productivity (including increased
efficiency of the fixed capital).
(2) All real accumulation starts with that part of the surplus value
which is intended for capitalisation being divided into constant and
variable capital.
(3) Accumulation as a social process is accompanied by continuous
changes in the relation between constant and variable capital, whereby
that portion of capital which is invested in inanimate means of
production continually increases as compared with that expended on
wages.
(4) Concomitant with the accumulative process, and as a condition of the
latter, there develops an industrial reserve army.
These characteristics, derived from the reproductive process as it is
performed by the individual capitals, represent an enormous step
forward as compared with the analyses of bourgeois economists. Now,
however, our problem is to demonstrate the accumulation of the aggregate
capital which originates from these movements of individual capitals,
and on the basis of the diagram of simple reproduction to establish the
precise relations between the aspects of value prevalent in the
production of surplus value and the material considerations in the
production of consumer and producer goods, with a view to accumulation.
The essential difference between enlarged reproduction and simple
reproduction consists in the fact that in the latter the capitalist
class and its hangers-on consume the entire surplus value, whereas in
the former a part of the surplus value is set aside from the personal
consumption of its owners, not for the purpose of hoarding, but in order
to increase the active capital, i.e. for capitalisation. To make this
possible, the new additional capital must also find the material
prerequisites for its activity forthcoming. Here the concrete
composition of the aggregate social product becomes important. Marx says
already in volume i, when he considers the accumulation of individual
capitals:
'The annual production must in the first place furnish all those objects
(use-values) from which the material components of capital, used up in
the course of the year, have to be replaced. Deducting these there
remains the net or surplus-product, in which the surplus-value lies. And
of what does this surplus-product consist? Only of things destined to
satisfy the wants and desires of the capitalist class, things which,
consequently, enter into the consumption fund of the capitalists? Were
that the case, the cup of surplus-value would be drained to the very
dregs, and nothing but simple reproduction would ever take place.--To
accumulate it is necessary to convert a portion of the surplus-product
into capital. But we cannot, except by a miracle, convert into capital
anything but such articles as can be employed in the labour-process
(i.e. means of production), and such further articles as are suitable
for the sustenance of the labourer, (i.e. means of subsistence).
Consequently, a part of the annual surplus-labour must have been applied
to the production of additional means of production and subsistence,
over and above the quantity of these things required to replace the
capital advanced. In one word, surplus-value is convertible into
capital solely because the surplus-product, whose value it is, already
comprises the material elements of new capital.'[100]
Additional means of production, however, and additional consumer goods
for the workers alone are not sufficient; to get enlarged reproduction
really going, additional labour is also required. Marx now finds a
specific difficulty in this last condition:
'For this the mechanism of capitalist production provides beforehand, by
converting the working class into a class dependent on wages, a class
whose ordinary wages suffice, not only for its maintenance, but for its
increase. It is only necessary for capital to incorporate this
additional labour-power, annually supplied by the working class in the
shape of labourers of all ages, with the surplus means of production
comprised in the annual produce, and the conversion of surplus-value
into capital is complete.'[101]
This is the first solution which Marx gave to the problem of the
accumulation of the aggregate capital. Having dwelt on this aspect of
the question already in volume i of _Capital_, Marx returns to the
problem at the end of the second volume of his main work whose
concluding 21st chapter is devoted to accumulation and enlarged
reproduction of the aggregate capital.
Let us examine Marx's diagrammatic exposition of accumulation more
closely. On the model of the diagram of simple reproduction with which
we are already familiar, he devised a diagram for enlarged reproduction,
the difference appearing most clearly if we compare the two.
Assuming that society's annual aggregate product can be represented by
an amount to the value of 9,000 (denoting millions of working hours, or,
in capitalist monetary terms, any arbitrary amount of money), the
aggregate product is to be distributed as follows:
I. _4,000c + 1,000v + 1,000s = 6,000_
II. _2,000c + 500v + 500s = 3,000_
-----
Total: 9,000
Department I represents means of production, Department II consumer
goods. One glance at the proportion of the figures shows that in this
case simple reproduction alone is possible. The means of production made
in Department I equal the total of the means of production actually
used by the two departments. If these are merely renewed, production can
be repeated only on its previous scale. On the other hand, the aggregate
product of Department II equals the total of wages and surplus value in
both departments. This shows that the consumer goods available permit
only the employment of just as many workers as were previously employed,
and that the entire surplus value is similarly spent on consumer goods,
i.e. the personal consumption of the capitalist class.
Now let us take the same aggregate product of 9,000 in the following
equation:
I. _4,000c + 1,000v + 1,000s = 6,000_
II. _1,500c + 750v + 750s = 3,000_
-----
Total: 9,000
Here a double disproportion confronts us: 6,000 means of production are
created--more than those which are actually used by the society, i.e.
_4,000c + 1,500c_, leaving a surplus of 500. Similarly, less consumer
goods (3,000) are produced than the sum of what is paid out in wages
(i.e. _1,000v + 750v_, the requirement of the workers), plus the
aggregate of surplus value that has been produced (_1,000s + 750s_).
This results in a deficit of 500. Since our premises do not allow us to
decrease the number of workers employed, the consequence must be that
the capitalist class cannot consume the entire surplus value it has
pocketed. This proves fully consistent with the two material
preconditions of enlarged reproduction on a capitalist basis: part of
the appropriated surplus value is not to be consumed but is used for the
purposes of production; and more means of production must be produced so
as to ensure the use of the capitalised surplus value for the actual
expansion of reproduction.
In considering the diagram of simple reproduction, we saw that its
fundamental social conditions are contained in the following equation:
the aggregate of means of production (the product of Department I) must
be equivalent to the constant capital of both departments, but the
aggregate of consumer goods (the product of Department II) must equal
the sum of variable capitals _and_ surplus values of the two
departments. As regards enlarged reproduction, we must now infer a
precise inverse double ratio. The general precondition of enlarged
reproduction is that the product of Department I must be greater in
value than the constant capital of both departments taken together, and
that of Department II must be so much less than the sum total of both
the variable capital and the surplus value in the two departments.
This, however, by no means completes the analysis of enlarged
reproduction; rather has it led us merely to the threshold of the
question. Having deduced the proportions of the diagram, we must now
pursue their further activities, the flow of circulation and the
continuity of reproduction. Just as simple reproduction may be compared
to an unchanging circle, to be repeated time and again, so enlarged
reproduction, to quote Sismondi, is comparable to a spiral with ever
expanding loops. Let us begin by examining the loops of this spiral. The
first general question arising in this connection is how actual
accumulation proceeds in the two departments under the conditions now
known to us, i.e. how the capitalists may capitalise part of their
surplus value, and at the same time acquire the material prerequisites
necessary for enlarged reproduction.
Marx expounds the question in the following way:
Let us assume that half the surplus value of Department I is being
accumulated. The capitalists, then, use 500 for their consumption but
augment their capital by another 500. In order to become active, this
additional capital of 500 must be divided, as we now know, into constant
and variable capital. Assuming the ratio of 4 to 1 remains what it was
for the original capital, the capitalists of Department I will divide
their additional capital of 500 thus: they will buy new means of
production for 400 and new labour for 100. This does not present any
difficulties, since we know that Department I has already produced a
surplus of 500 means of production. Yet the corresponding enlargement of
the variable capital by 100 units of money is not enough, since the new
additional labour power must also find adequate consumer goods which can
only be supplied by Department II. Now the circulation between the two
large departments is shifting. Formerly, under conditions of simple
reproduction, Department I acquired 1,000 consumer goods for its own
workers, and now it must find another 100 for its new workers.
Department I therefore engages in enlarged reproduction as follows:
_4,400c + 1,100v_.
Department II, in turn, after selling these consumer goods to the value
of 100, is now in a position to acquire additional means of production
to the same amount from Department I. And in fact, Department I still
has precisely one hundred of its surplus product left over which now
find their way into Department II, enabling the latter to expand its own
reproduction as well. Yet here, too, the additional means of production
alone are not much use; to make them operate, additional labour power is
needed. Assuming again that the previous composition of capital has been
maintained, with a ratio of 2 to 1 as regards constant and variable
capital, additional labour to the tune of 50 is required to work the
additional 100 means of production. This additional labour, however,
needs additional consumer goods to the amount of its wages, which are in
fact supplied by Department II itself. This department must therefore
produce, in addition to the 100 additional consumer goods for the new
workers of Department I and the goods for the consumption of its own
workers, a further amount of consumer goods to the tune of 50 as part of
its aggregate product. Department II therefore starts on enlarged
reproduction at a rate of _1,600c + 800v_.
Now the aggregate product of Department I (6,000) has been absorbed
completely. 5,500 were necessary for renewing the old and used-up means
of production in both departments, and the remaining 500 for the
expansion of production: 400 in Department I and 100 in Department II.
As regards the aggregate product of Department II (3,000), 1,900 have
been used for the increased labour force in the two departments, and the
1,100 consumer goods which remain serve the capitalists for their
personal consumption, the consumption of their surplus value. 500 are
consumed in Department I, and 600 in Department II where, out of a
surplus value of 700, only 150 had been capitalised (100 being expended
on means of production and 50 on wages).
Enlarged reproduction can now proceed on its course. If we maintain our
rate of exploitation at 100 per cent, as in the case of the original
capital, the next period will give the following results: