We have left this theorist to the end, although he already developed his
views in Russian in 1894, i.e. before Struve and Bulgakov, partly
because he only gave his theories their mature form in German at a later
date,[316] and also because the conclusions he draws from the premises
of the Marxist critics are the most far-reaching in their implications.
Like Bulgakov, Tugan Baranovski starts from Marx's analysis of social
reproduction which gave him the clue to this bewildering maze of
problems. But while Bulgakov, the enthusiastic disciple of Marx, only
sought to follow him faithfully and simply attributed his own
conclusions to the master, Tugan Baranovski, on the other hand, lays
down the law to Marx who, in his opinion, did not know how to turn his
brilliant exposition of the reproductive process to good account. Tugan
Baranovski's most important general conclusion from Marx's principles,
the pivot of his whole theory, is that, contrary to the assumptions of
the sceptics, capitalist accumulation is not only possible under the
capitalist forms of revenue and consumption, but is, in fact, completely
independent of both. It is not consumption, he says, but production
itself which makes for the best market. Production and the market are
therefore the same, and since the expansion of production is unlimited
in itself, the market, the capacity to absorb its products, has no
limits either.
'The diagram quoted', he says, 'was to prove conclusively a postulate
which, though simple enough, might easily give rise to objections,
unless the process be adequately understood--the postulate, namely, that
capitalist production creates a market for itself. So long as it is
possible to expand social production, if the productive forces are
adequate for this purpose, the proportionate division of social
production must also bring about a corresponding expansion of the demand
inasmuch as under such conditions all newly produced goods represent a
newly created purchasing power for the acquisition of other goods.
Comparing simple reproduction of the social capital with its
reproduction on a rising scale, we arrive at the most important
conclusion that in capitalist economy the demand for commodities is in a
sense independent of the total volume of social consumption. Absurd as
it may seem to "common-sense", it is yet possible that the volume of
social consumption as a whole goes down while at the same time the
aggregate social demand for commodities grows.'[317]
And again further on: 'Arising from the abstract analysis of the
reproductive process of social capital we have formed the conclusion
that nothing will be left over of the social product in view of the
proportionate division of the social capital.'[318]
Accordingly Tugan Baranovski subjects Marx's theory of crises to a
revision which he claims to have developed from Sismondi's
'over-consumption'. 'Marx is in substantial agreement with the general
view that the poverty of the workers, i.e. of the great majority of the
population, makes it impossible to realise the products of an ever
expanding capitalist production, since it causes a decline in demand.
This opinion is definitely mistaken. We have seen that capitalist
production creates its own market--consumption being only one of the
moments of capitalist production. In a planned social production if the
leaders of production were equipped with all _information_ about the
demand and with the _power_ to transfer labour and capital freely from
one branch of production to another, then, however low the level of
social consumption, the supply of commodities would not exceed the
demand.'[319]
The only circumstance which periodically causes the market to be flooded
is a lack of proportion in the enlargement of production. On this
assumption, therefore, Tugan Baranovski describes the course of
capitalist accumulation as follows: 'What would the workers ... produce
if production were organised on proportionate lines? Obviously their own
means of subsistence and production. With what object? To expand
production in the second year. The production of what products? Again of
means of production and subsistence for the workers--and so on _ad
infinitum_.'[320]
This game of question and answer, mind you, is not a form of
self-mockery, it is meant in all seriousness. 'If the expansion of
production has no practical limits, then we must assume that the
expansion of markets is equally unlimited, for _if social production is
proportionately organised, there is no limit to the expansion of the
market other than the productive forces available_.'[321]
Since production thus creates its own demand, foreign commerce of
capitalist states is also assigned that peculiar mechanistic function we
have already met in Bulgakov. A foreign market, for instance, is an
absolute necessity for England. 'Does not this prove that capitalist
production creates a surplus product for which there is no room on the
internal market? Why, come to that, does England require an external
market? The answer is not difficult: because a considerable part of
England's purchasing power is expended on obtaining foreign commodities.
The import of foreign commodities for the English home market also makes
it essential to export English commodities abroad. Since England cannot
manage without importing from abroad, exports are a vital condition for
that country, since without them she would not be able to pay for her
imports.'[322]
Here again agricultural imports are described as a stimulating and
decisive factor, quite in accordance with the scheme of the German
professors.
What, then, is the general line of reasoning on which Tugan Baranovski
supports his daring solution of the problem of accumulation, the new
revelation on the problem of crises and a whole lot of others? Hard to
believe, but quite incontrovertible for all that, Tugan Baranovski's
proof consists exclusively and entirely--in Marx's diagram of enlarged
reproduction, no more no less. Although he repeatedly refers rather
pompously to his 'abstract analysis of the reproductive process of
social capital', to the 'conclusive logic' of his analysis, this entire
analysis is nothing but a copy of Marx's diagram of enlarged
reproduction, with a different set of figures. Nowhere in the entire
works of Tugan Baranovski shall we find a trace of any other argument.
In Marx's diagram, admittedly, accumulation, production, realisation and
exchange run smoothly with clockwork precision, and no doubt this kind
of 'accumulation' can continue _ad infinitum_, just as long, that is to
say, as ink and paper do not run out. And it is this harmless written
exercise with mathematical equations which Tugan Baranovski quite
seriously considers a _demonstration_ of such a course in real events.
'The diagrams we have adduced are bound to prove conclusively that....'
On another occasion he counters Hobson, who is convinced that
accumulation is impossible, with the following words: 'Diagram No. 2 of
the reproduction of social capital on a rising scale corresponds to the
case of capital accumulation Hobson has in mind. But does this diagram
show a surplus product to come into being? Far from it.'[323]
Hobson is refuted and the matter settled because 'in the diagram' no
surplus product comes into being.
Admittedly, Tugan Baranovski knows quite well that in hard fact things
do not work out so smoothly. There are continual fluctuations in the
exchange relations and periodical crises. But these crises happen only
because in the expansion of production the proper proportions are not
maintained, because, that is to say, the proportions of 'diagram No. 2'
are not observed in the first place. If they were, there would be no
crisis, and capitalist production could get along as nicely as it does
on paper, in every detail. Tugan Baranovski is committed to the view
that we can ignore the crises if we consider the reproductive process as
a continuous process. Although the 'proportion' may be upset at any
moment, yet on average it will always be re-established by different
deviations, by price-fluctuations from day to day, and in the long run
by periodical crises. That on the whole this 'proportion' is more or
less maintained is proved by the fact that capitalist economy is still
going strong--otherwise it would long ago have ended in chaos and
collapse. In the long run, then, Tugan Baranovski's 'proportion' is
observed by and large, and we must conclude that reality obeys 'diagram
No. 2'. And since this diagram can be indefinitely extended, it follows
that capitalist accumulation can also proceed _ad infinitum_.
What is striking in all this is not Tugan Baranovski's conclusion that
the diagram corresponds to the actual course of events--as we have seen,
Bulgakov also shared this belief; the really startling fact is that
Tugan Baranovski sees no necessity for as much as _inquiring_ whether
the diagram is correct, that, instead of proving the diagram, he
considers this, the arithmetical exercise on paper, as proof of the
actual state of affairs. Bulgakov honestly tried to project Marx's
diagram on the real concrete relations of capitalist economy and of
capitalist exchange; he endeavoured to overcome the difficulties
resulting from it, though without success, it is true, remaining to the
last involved with Marx's analysis, which he himself recognised to be
incomplete and fragmentary. But Tugan Baranovski does not need any
proof, he does not greatly exercise his brains: since the arithmetical
sums come out satisfactorily, and may be continued _ad lib._, this is to
him proof that capitalist accumulation can also proceed without let or
hindrance--provided the said 'proportion' obtains, which it will have to
do by hook or by crook, as he himself would not dream of denying.
Tugan Baranovski, however, has one indirect proof that the diagram with
its strange results corresponds to, and truly reflects, reality. This is
the fact that capitalist production, quite in accordance with Marx's
diagram, puts human consumption second to production, that it conceives
of the former as a means and of the latter as an end in itself, just as
it puts human labour, the 'worker', on a par with the machine.
'Technical progress is expressed by the fact that the means of labour,
the machine, increases more and more in importance as compared to living
labour, to the worker himself. Means of production play an ever growing
part in the productive process and on the commodity market. Compared to
the machine, the worker recedes further into the background and the
demand resulting from the consumption of the workers is also put into
the shade by that which results from productive consumption by the means
of production. The entire workings of capitalist economy take on the
character of a mechanism existing on its own, as it were, in which human
consumption appears as a simple moment of the reproductive process and
the circulation of capitals.'[324]
Tugan Baranovski considers this discovery as a fundamental law of the
capitalist mode of production, which is confirmed by a quite tangible
phenomenon: with the progress of capitalist development Department I
goes on growing relatively to, and at the expense of, Department II. It
was Marx himself who, as we all know, set up this law in which he
grounded the schematic exposition of reproduction, though in the further
development of his diagram he ignored subsequent alterations for
simplicity's sake. This, the automatic growth of the producer goods as
compared with the consumer goods department affords Tugan Baranovski the
only objective proof of his theory: that in capitalist society human
consumption becomes increasingly unimportant, and production more and
more an end in itself. This thesis forms the corner-stone of his entire
theoretical edifice.
'In all the industrial countries', he proclaims, 'we are confronted with
the same type of development--the development of national economy
everywhere follows the same fundamental law. The mining industry which
creates the means of production for modern industry comes more and more
to the fore. The relative decrease in the export of immediately
consumable manufactured goods from Britain is thus also an expression of
the fundamental law governing capitalist development. The further
technical progress advances, the more do consumer goods recede as
compared with producer goods. Human consumption plays an ever decreasing
part as against the productive consumption of the means of
production.'[325]
Although this 'fundamental law' like all his other 'fundamental' laws,
in so far as they mean anything at all, is borrowed ready-made from
Marx, Baranovski does not rest content with this and immediately
proceeds to preach the Marxist gospel to Marx himself. Scrabbling about
like a blind hen, Marx has turned up another pearl--Tugan will give him
that--only he does not know what to do with it. It needed a Tugan
Baranovski to know how to make it useful to science, and in his hand the
newly discovered law suddenly throws a new light on the whole workings
of capitalist economy. This law of the expansion in the department of
producer goods at the cost of that of consumer goods reveals clearly,
concisely, exactly, and in measurable terms, that capitalist society
attaches progressively less importance to human consumption, putting man
on the same level as the means of production, and that Marx was
therefore completely wrong both in assuming that man alone, not the
machine, too, can be the creator of surplus value, and in saying,
further, that human consumption represents a limit for capitalist
production which is bound to cause periodical crises in the present, and
the collapse and terrible end of capitalist economy in the near future.
In short, the 'fundamental law' governing the increase of producer as
compared to consumer goods reflects the singular nature of capitalist
society as a whole which Marx had not understood and which to interpret
happily fell to the lot of Tugan Baranovski.
We have seen above the decisive part played by the 'fundamental law' of
capital in the controversy between the Russian Marxists and the
sceptics. Bulgakov's remarks we already know; another Marxist already
referred to, Vladimir Ilyin, expresses himself in similar terms in his
polemics against the 'populists':
'It is well known that the law of capitalist production consists in the
fact that the constant capital grows more rapidly than the variable
capital, that is to say an ever increasing part of the newly formed
capital falls to the department of social production which creates
producer goods. In consequence, this department is absolutely bound to
grow more rapidly than the department creating consumer goods, that is
to say, the very thing happens which Sismondi declared to be
"impossible", "dangerous", etc. In consequence, consumer goods make up a
smaller and smaller share of the total bulk of capitalist production,
and this is entirely in accordance with the historical "mission" of
capitalism and its specific social structure: the former in fact
consists in the development of the productive forces of society
(production as an end in itself), and the latter prevents that the mass
of the population should turn them to use.'[326]
In this respect, of course, Tugan Baranovski goes even farther. With his
love of paradox he actually permits himself the joke of submitting a
mathematical proof that accumulation of capital and expansion of
production are possible even if the absolute volume of production
decreases. In this connection, Karl Kautsky has pointed out, he had
recourse to a somewhat dubious scientific subterfuge, namely that he
shaped his daring deductions exclusively for a specific moment: the
transition from simple to enlarged reproduction--a moment which is
exceptional even in theory, but certainly of no practical significance
whatever.[327]
As to Tugan Baranovski's 'fundamental law', Kautsky declares it to be a
mere illusion due to the fact that Tugan Baranovski considered the
organisation of production only in the old countries of capitalist big
industry.
'It is correct', Kautsky says, 'that with a progressive division of
labour, there will be comparatively fewer and fewer factories etc. for
the production of goods direct for personal consumption, together with a
relative increase in the number of those which supply both the former
and one another with tools, machines, raw materials, transport
facilities and so on. While in original peasant economy an enterprise
that cultivated the flax also made the linen with its own tools and got
it ready for human consumption, nowadays hundreds of enterprises may
share in the manufacture of a single shirt, by producing raw cotton,
iron rails, steam engines and railway trucks that bring it to port, and
so on. With international division of labour it will happen that some
countries--the old industrial countries--can only slowly expand their
production for personal consumption, while making large strides in their
production of producer goods which is much more decisive for the
heartbeat of economic life than the production of consumer goods. From
the point of view of the nation concerned, we might easily form the
opinion that producer goods can be turned out on a constantly rising
scale with a more rapid rate of increase than in the production of
consumer goods, and that their production is not bound up with that of
the latter.'
The opinion, that producer goods can be produced independent of
consumption, is of course a mirage of Tugan Baranovski's, typical of
vulgar economics. Not so the fact cited in support of this fallacy: the
quicker growth of Department I as compared with Department II is beyond
dispute, not only in old industrial countries but wherever technical
progress plays a decisive part in production. It is the foundation also
of Marx's fundamental law that the rate of profit tends to fall. Yet in
spite of it all, or rather precisely for this reason, it is a howler if
Bulgakov, Ilyin and Tugan Baranovski imagine to have discovered in this
law the essential nature of capitalist economy as an economic system in
which production is an end in itself and human consumption merely
incidental.
The growth of the constant at the expense of the variable capital is
only the capitalist expression of the general effects of increasing
labour productivity. The formula _c_ greater than _v_ (_c > v_),
translated from the language of capitalism into that of the social
labour process, means only that the higher the productivity of human
labour, the shorter the time needed to change a given quantity of means
of production into finished products.[328]
This is a universal law of human labour. It has been valid in all
pre-capitalist forms of production and will also be valid in the future
in a socialist order of society. In terms of the material use-form of
society's aggregate product, this law must manifest itself by more and
more social labour time being employed in the manufacture of producer
than of consumer goods. In a planned and controlled social economy,
organised on socialist lines, this transformation would in fact be more
rapid even than it is in contemporary capitalist economy. In the first
place, rational scientific techniques can only be applied on the largest
scale when the barriers of private ownership in land are abolished. This
will result in an immense revolution in vast provinces of production
which will ultimately amount to a replacement of living labour by
machine labour, and which will enable us to tackle technical jobs on a
scale quite impossible under present day conditions. Secondly, the
general use of machinery in the productive process will be put on a new
economic basis. At present the machine does not compete with living
labour but only with that part of it that is paid. The cost of the
labour power which is replaced by the machine represents the lowest
limit of the applicability of the machine. Which means that the
capitalist becomes interested in a machine only when the costs of its
production--assuming the same level of performance--amount to less than
the wages of the workers it replaces. From the point of view of the
social labour process which is the only one to matter in a socialist
society, the machine competes not with the labour that is necessary to
maintain the worker but with the labour he actually performs. In other
words, in a society that is not governed by the profit motive but aims
at saving human labour, the use of machinery is economically indicated
just as soon as it can save more human labour than is necessary for
making it, not to mention the many cases where the use of machinery is
desirable even if it does not answer this economic minimum--for reasons
of health and similar considerations, in the interest of the workers
themselves. However that may be, the tension between the respective
economic usefulness of the machine in (_a_) a capitalist, and (_b_) a
socialist society is at least equal to the difference between labour and
that part of it that is paid; it is, in other words, the precise
equivalent of the whole capitalist surplus value. Consequently, if the
capitalist profit motive is abolished and a social organisation of
labour introduced, the marginal use of the machine will suddenly be
increased by the whole extent of the capitalist surplus value, so that
an enormous field, not to be gauged as yet, will be open to the
triumphal march of the machine. This would be tangible proof that the
capitalist mode of production, alleged to spur on to the optimum
technical development, in fact sets large social limits to technical
progress, in form of the profit motive on which it is based. It would
show that as soon as these limits are abolished, technical progress will
develop such a powerful drive that the technical marvels of capitalist
production will be child's play in comparison.
In terms of the composition of the social product, this technical
transformation can only mean that, compared to the production of
consumer goods, the production of producer goods--measured in units of
labour time--must increase more rapidly in a socialist society than it
does even to-day. Thus the relation between the two departments of
social production which the Russian Marxists took to reveal typical
capitalist baseness, the neglect of man's need to consume, rather proves
to be the precise manifestation of the progressive subjection of nature
to social labour, which will become even more striking when production
is organised solely with a view to human needs. The only objective proof
for Tugan Baranovski's 'fundamental law' thus collapses as a
'fundamental' confusion. His whole construction, including his 'new
theory of crises', together with the 'lack of proportion', is reduced to
its foundations on paper: a slavish copy of Marx's diagram of enlarged
reproduction.