Comments of V I Lenin concerning Rosa Luxemburg's book Accumulation of Capital

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‘I want to find the cause of imperialism. I am following up the economic aspects of this concept … it will be a strictly scientific explanation of imperialism and its contradictions.’

Rosa Luxemburg to Konstantin Zetkin, November 1911

'I have read Rosa’s new book Die Akkumulation des Kapitals. She has got into a shocking muddle. She has distorted Marx.'

Lenin to Kamenev, March 1913

“Herein lies the peculiar character of reproduction in a capitalist society, which differs from all other known forms of production. In the first place, every branch of production develops independently within certain limits, in a way that leads to periodical interruptions of production of shorter or longer duration. Secondly, the individual branches of reproduction show deviations from social requirements amounting 35: «all-round disparity» NB (crisis)to all-round disparity and thus resulting in a general interruption of reproduction.” (p35)

“It is very important, however, to establish quite firmly and from the very outset that this cyclical movement of boom, slump, and crisis, does not represent the whole problem of capitalist reproduction, although it is an essential element of it. Periodical cycles and crises are specific phases of reproduction in a capitalist system of economy, but not the whole of this process. In order to demonstrate the pure implications of capitalist reproduction we must rather consider it quite 35: «apart from crises» must NBapart from the periodical cycles and crises. Strange as this may appear, the method is quite rational; it is indeed the only method of inquiry that is scientifically tenable.” (p35)

“However, if we consider a 36: «longer period»; crisis and boom balancedlonger period, a whole cycle with its alternating phases of prosperity and depression, of boom and slump, that is if we consider reproduction at its highest and lowest volume, including the stage of suspension, we can set off boom against slump and work out an average, a mean volume of reproduction for the whole cycle. This average is not only a theoretical figment of thought, it is also a real objective fact. (p36)

When we speak of capitalist reproduction in the following exposition, we shall always understand by this term a36-7: «we bear in mind exactly the mean» always mean volume of productivity which is an average taken over the various phases of a cycle.” (36-7)

“Expanding reproduction is not a new discovery of capital. On the contrary, it had been the rule since time immemorial in every form of society that displayed economic and cultural progress. It is true, of course, that simple reproduction as a mere continuous repetition of the process of production on the same scale as before can be observed over long periods of social history. In the ancient agrarian and communist village communities, for instance, increase in population did not lead to a gradual expansion of production, but rather to the new generation being expelled and the subsequent founding of equally small and self-sufficient colonies. 41: Simple reproduction in China and primitive communismThe old small handicraft units of India and China provide similar instances of a traditional repetition of production in the same forms and on the same scale, handed down from generation to generation. But simple reproduction is in all these cases the source and unmistakable sign of a general economic and cultural stagnation. No important forward step in production, no memorial of civilisation, such as the great waterworks of the East, the pyramids of Egypt, the military roads of Rome, the Arts and Sciences of Greece, or the development of craftsmanship and towns in the Middle Ages would have been possible without expanding reproduction; for the basis and also the social incentive for a decisive advancement of civilisation lies solely in the gradual expansion of production beyond immediate requirements, and in a continual growth of the population itself as well as of its demands.

41. Under capitalism expanded reproduction takes on a new character.Exchange in particular, which brought about a class society, and its historical development into the capitalist form of economy, would have been unthinkable without expanding reproduction. In a capitalist society, moreover, expanding reproduction acquires certain characteristics.” (p41)

“This question may be answered by saying that the capitalist’s greed for surplus value, enhanced by competition, 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 class of proletarianised workers becomes generally available for the purposes of capital. On the other hand, the 46. «Planlessness» - Criseslack 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 quantities and qualities of means of production, labour and opportunities for selling which the 46 Incorrect formulation: individual. This is not the object of analysisindividual capitalist needs in order to make a sale? How can it be assured 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 assume 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 assume 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 accumulation.” (p46-47)

“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:

51. Quote from Adam Smith cribbed from Development of Capitalism

NB p48.‘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.’“ (p51)

54. Capital for one, income for another(compare word for word p64 of Development of Capitalism)“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.(5) Smith was still doubtful, undecided, vacillating about this question; so was Ricardo.” (p54)

“The following exposition represents the highest level of clarity which he [Adam Smith] achieved in this respect:

58: Quote from Adam Smith = p49 of Development of Capitalism 52 and 58-9 the same quotation‘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.’(10)

‘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.’ “ (p58-9)

“He emphasises here a radical distinction between fixed and circulating capital from the point of view of the society:

59: Quote from Adam Smith = p50 Development of Capitalism (!!)‘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.’ “ (p 59-60)

“Sismondi’s exposition proves that he was unable to grasp the reproductive process as a whole. Quite apart from his unsuccessful attempt to distinguish between the categories of capital and income from the point of view of society his theory of reproduction suffers from the fundamental error he took over from Adam Smith: the idea that personal consumption absorbs the entire annual products without leaving any part of the value for the renewal of society constant capitals and also, that accumulation consists merely of the transformation of capitalised surplus value into variable capital. Yet, if later critics of Sismondi e.g., the Russian Marxist 189: V Ilyin «failed to notice» the real problems with SismondiIlyin,(4) think that pointing out this fundamental error in the analysis of the aggregate product can justify a cavalier dismissal of Sismondi’s entire theory of accumulation as inadequate, as ‘nonsense’, they merely demonstrate their own obtuseness in respect of Sismondi’s real concern, his ultimate problem. The analysis of Marx at a later date, showing up the crude mistakes of Adam Smith for the first time, is the best proof that the problem of accumulation is far from solved just by attending to the equivalent of the constant capital in the aggregate product. This is proved even more strikingly in the actual development of Sismondi’s theory: his views involved him in bitter controversy with the exponents and popularisers of the classical school, with Ricardo, Say and MacCulloch. The two parties to the conflict represent diametrically opposed points of view: Sismondi stands for the sheer impossibility, the others for the unrestricted possibility, of accumulation. Sismondi and his opponents alike disregard constant capital in their exposition of reproduction, and it was Say in particular who presumed to perpetuate Adam Smith’s confused concept of the aggregate product as v+s as an unassailable dogma.” (pp188-89)

"MacCulloch's whole position in truth stands or falls with the statement that exchange is actually an interchange of commodities; every commodity accordingly represents not only supply but demand. The dialogue then continues as follows:

"Demand and supply are truly correlative and convertible terms. The supply of one set of commodities constitutes the demand for another. Thus, there is a demand for a given quantity of agricultural produce, when a quantity of wrought goods equal thereto in productive cost is offered in exchange for it; and conversely, there is an effectual demand for this quantity of wrought goods, when the supply of agricultural produce which it required the same expense to raise, is presented as its equivalent."

The Ricardian's 193. «dodge» of the Ricardian

(forgot m: C-M-C)

not the main pointdodge is obvious: he has chosen to ignore the circulation of money and to pretend that commodities are immediately bought and paid for by commodities.

From the conditions of highly developed capitalist production, we are thus suddenly taken to a stage of primitive barter such as we might find still flourishing at present in Central Africa. There is a distant element of truth in this trick since money, in a simple circulation of commodities, plays merely the part of an agent. But of course, it is just the intervention of an agent which separates the two transactions of circulation, sale and purchase, and makes them independent of one another in respect of both time and place. That is why a further purchase need not follow hard upon a sale for one thing; and secondly, sale and purchase are by no means bound up with the same people: in fact, they will involve the same performers only in rare and exceptional cases. MacCulloch, however, makes just this baseless assumption by confronting, as buyer and seller, industry on the one hand and agriculture on the other. The universality of these categories, qua total categories of exchange, obscures the actual splitting up of this social division of labour which results in innumerable private exchange transactions where the sale and purchase of two commodities rarely come to the same thing. MacCulloch's simplified conception of commodity exchange in general which immediately turns the commodity, into money and pretends that, it can be directly exchanged, makes it impossible to understand the economic significance of money, its historical appearance." (pp193-4)

"The question had been what happens to the capitalist surplus, that surplus which is used not for the capitalist's own consumption but for the expansion of production. MacCulloch solves it on the one hand by ignoring the production of surplus value altogether, and on the other, by using all surplus value in the production of luxury goods. What buyers, then, does he advance for this new luxury production? The capitalists, evidently; the farmers and manufacturers, since, apart from these, there are only workers in MacCulloch's model. Thus the entire surplus value is consumed for the personal satisfaction of the capitalists, that is to say, simple reproduction takes place. The answer to the problem of the capitalisation of surplus value is, according to MacCulloch, either to ignore surplus value altogether, or to assume simple reproduction instead of accumulation as soon as surplus value comes into being. He still pretends to speak of expanding reproduction, but again, as before when he pretended to deal with the surplus', he uses a trick, viz first setting out an impossible species of capitalist production without any surplus value, and then persuading the reader that the subsequent debut of the surplus value constitutes an expansion of production.

Sismondi is not quite up to these Scottish acrobatics. He had up to now succeeded in pinning his Mac down, proving him to be obviously absurd'. But now he himself becomes confused with regard to the crucial point at issue. On the above rantings of his opponent, he should have declared coldly: 197. Sismondi should have responded to MacCulloch

Ha! respected - rogue...Sir, with all respect for the flexibility of your mind, you are dodging the issue. I keep on asking, who will buy the surplus product, if the capitalists use it-for the purpose of accumulation; i.e. to expand production, instead of squandering it altogether? And you reply: Oh well, they will expand their production of luxury goods, which they will, of course, eat up themselves.' But this is a conjuring trick, seeing that the capitalists consume the surplus value in so far as they spend it on their luxuries-they do not accumulate at, all.. My question is about the possibility of accumulation, not whether the personal luxuries of the capitalists are possible. Answer this clearly, if you can, or else go play with your wine and tobacco, or go to blazes for all I care." (pp197-8)

"One of the two champions of the "populist" movement. Vorontsov, known in Russia mainly under the nom de plume V. V, (his initials), was an odd customer. His economics were completely muddled, and as an expert on theory he cannot be taken seriously at all. The other, Nikolayon (Danielson), however, was a man of wide education, and thoroughly conversant with Marxism. He had edited the Russian translation of the first volume of Capital and was a personal friend of Marx and Engels, with both of whom he kept up a lively correspondence (published in the Russian language in 5908). Nevertheless it was Vorontsov who influenced public opinion among the Russian intelligentsia in the eighties, and Marxists in Russia had to fight him above all. As for our problem: the general prospects of capitalist development, a new generation of Russian Marxists, who had learned from the historical experience and knowledge of Western Europe, joined forces with George Plekhanov in opposition to the above-mentioned two representatives of scepticism in the nineties. They were amongst others 275: russian marxists: Issayev!! Kablukov, Manuilov!!! ha-ha!Professor Kablukov, Professor Manuilov, Professor Issayev, Professor Skvortsov, Vladimir Ilyin [Lenin], Peter v. Struve; Bulgakov, and Professor Tugan Baranovski. In the further course of our investigation we shall, however, confine ourselves to the last three of these, since every one of them furnished a more or less finished critique of this theory on the point with which we are here concerned. This battle of wits, brilliant in parts, which kept the socialist intelligentsia spellbound in the nineties and was only brought to an end by the walkover of the Marxist school, officially inaugurated the infiltration into Russian thought of Marxism as an economic-historical theory. 275: From the legal marxists not a single socialist (with one exception) found themselves in the revolution on the side of the proletariat'Legalist' Marxism at that time publicly took possession of the Universities, the Reviews and the economic book market in Russia-with all the disadvantages of such a position. Ten years later, when the revolutionary risings of the proletariat demonstrated in the streets the darker side of this optimism about capitalist development, none of this Pleiad of Marxist optimists, with but a single exception [Lenin], was to be found in the camp of the proletariat." (p275)

287fn2, Fn: V Ilyin shows the kinship between Nikolayon and Sismondi"Vladimir Ilyich [Lenin] has given detailed proof of the striking similarity between the position of the Russian "populists" and the views of Sismondi in his essay On the Characteristics of Economic Romanticism (1897)." (p287, fn2)

"Bulgakov faithfully reproduces Marx's well-known diagram of simple reproduction, adding comments which do credit to his insight. He further cites Marx's equally familiar diagram of enlarged reproduction-and this indeed is the proof we have been so anxious to find.

"Consequent upon what we have said, it will not be difficult now to determine the very essence of accumulation. The means of-production department I must produce additional means of production necessary for enlarging both its own production and that of Department II. II, in its turn, will have to supply additional consumption goods to enlarge the variable capital in both departments. Disregarding the circulation of money, the expansion of production is reduced to an exchange of additional products of I needed by II against additional products of II needed by I.'

Loyally following Marx's deductions, Bulgakov does not notice that so far his entire thesis is nothing but words. He believes that these mathematical formulae solve, the problem of accumulation. No doubt we can easily imagine proportions such as those he has copied from Marx, and f there is expanding production, these formulae will apply. Yet 'Bulgakov overlooks the principal problem: who exactly is to profit by an expansion such as that whose mechanism ,he examines? Is it explained just because we can put the mathematical proportions of accumulation on paper? Hardly, because just as soon as Bulgakov has declared the matter settled and goes on to introduce: the circulation of money into the analysis, he right away comes up against the question: where are I and II to get the money for the purchase of additional products? When we dealt with Marx,, time and again the weak point in his analysis, the question really of consumers in enlarged reproduction, cropped up in a perverted form as the question of additional money sources. Here Bulgakov quite 299 i.f. Bulgakov slavishly! follows Marx's schemaslavishly follows Marx's approach, accepting his misleading formulation of the problem without noticing that it is not straightforward, although he knows perfectly well that Marx himself did not answer this question in the drafts which were used to compile the second volume of Capital." (p299)

"Bulgakov’s arguments about foreign commerce again imply a fundamental misconception. Against the sceptics, from Sismondi to Nikolayon, who believed that they had to take recourse to outside markets for the realisation of capitalist surplus value, he chiefly argues as follows:

‘These experts obviously consider external commerce as a “bottomless pit” to swallow up in all eternity the surplus value which cannot be got rid of inside the country.’

Bulgakov for his part triumphantly points out that foreign commerce is indeed not a pit and certainly not a bottomless one, but rather appears as a double-edged sword, that exports always belong with imports, and that the two usually counterbalance one another. Thus, whatever is pushed out over one border, will be brought back, in a changed use-form, over another. ‘We must find room for the commodities that have been imported as an equivalent of those exported, within the bounds of the given market, and as this is impossible, ex hypothesi, it would only generate new difficulties to have recourse to an external demand.’

On another occasion he says that the way to realise the surplus value found by the Russian ‘populists’, viz. external markets, is much less favourable than that discovered by Malthus, v. Kirchmann and Vorontsov himself when he wrote the essay On Militarism and Capitalism’." (p309)

"A quite uncompromising version of the same view is given by 309. Fn «In other respects» V Ilyin gives a «more correct» explanation of the foreign market than Struve or Bulgakov

(vague) the Oracle has spoken!V. Ilyin [Lenin]; ‘The romanticists (as he calls the sceptics) argue as follows; the capitalists cannot consume the surplus value; therefore they must dispose of it abroad. I ask; Do the capitalists perhaps give away their products to foreigners for nothing, throw it into the sea, maybe? If they sell it, it means that they obtain an equivalent. If they export certain goods, it means that they import others’ (Economic Studies and Essays, p. 2). As a matter of fact, his explanation of the part played by external commerce in capitalist production is far more correct than that of Struve and Bulgakov." (p309, n2)

" 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:

317. Quote from Ilyin

about c/v NB‘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.’" (p317)

" 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 320. Huge error of Bulgakov, Tugan-Baranovsky

and Ilyin (NB)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.

321 i.f. «only the capitalist expression»

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,321. What nonsense!! 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.(4)

This is a 322: universal law for all social formationsuniversal 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 322 greater application of labour time to means of production than means of consumption (a mess)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 economic-aims 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, the323. Under socialism means of production : means of consumption grows even more rapidly (must) 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. " (p320-323)

III Section

329. At the root of mistakes!In the first section, we ascertained that Marx's diagram of accumulation does not solve the question of who is to benefit in the end by enlarged reproduction. If we take the diagram literally as it is set out at the end of volume 2, it appears that capitalist production would itself realise its entire surplus value, and that it would use the capitalised surplus value exclusively for its own needs. This impression is confirmed by Marx's analysis of the diagram where he attempts to reduce the circulation within the diagram altogether to terms of money, that is to say to the effective demand of capitalists and workers-an attempt which in the end leads him to introduce the producer of money' as a deus ex machina.” (p329)

“The following conditions of accumulation are here laid down: (1) The surplus value to be capitalised first comes into being in the natural form of capital (as additional means of production and additional means of subsistence for the workers). (2) The expansion of capitalist production is achieved exclusively by means of capitalist products, i.e. its own means of production and subsistence. (3) The limits of this expansion are each- time determined in advance by the amount of surplus value which is to be capitalised in any given case; they cannot be extended, since they depend on the amount of the means of production and subsistence which make up the surplus product; neither can they be reduced, since a part of the surplus value could not then be employed in its natural form. Deviations in either direction (above and below) may give rise to periodical fluctuations and crises-in this context, however, these may be ignored, because in general the surplus product to be capitalised must be equal to actual accumulation; 330. §4 NB against R.Luxemburg(4) Since capitalist production buys up its entire surplus product, there is no limit to the accumulation of capital.” (p330)

330-1. An assortment of quotes from Marx against R.Luxemburg“Considered in isolation, Marx's diagram does indeed permit of such an interpretation since he himself explicitly states time and again that he aims at presenting the process of accumulation of the aggregate capital in a society consisting solely of capitalists and workers. Passages to this effect can be found in every volume of Capital.

In volume 1, in the very chapter on 'The Conversion of Surplus-Value into Capital', he says:

"In order to examine the object of our investigation in its integrity, free from all disturbing subsidiary circumstances, we must treat the whole world as one nation, and assume that capitalist production is everywhere established and has possessed itself of every branch of industry."

In volume 2, the assumption repeatedly returns; thus in chapter 17 on 'The Circulation of Surplus-Value': 'Now, there are only two points of departure: The capitalist and the labourer. All third classes of persons must either receive money for their services from these two classes, or, to the extent that they receive it without any equivalent services, they are joint owners of the surplus-value in the form of rent, interest, etc.... The capitalist class, then, remains the sole point of departure of the circulation of money.'?

Further, in the same chapter 'On the Circulation of Money in Particular under Assumption of Accumulation': 'But the difficulty arises when we assume, not a partial, but a general accumulation of money-capital on the part of the capitalist class. Apart from this class, there is, according to our assumption the general and exclusive domination of capitalist production -no other class but the working class.'3

And again in chapter 20: ". . . there are only two classes in this case, the working class disposing of their labour-power, and the capitalist class owning the social means of production and the money."

In volume 3, Marx says quite explicitly, when demonstrating the process of capitalist production as a whole: 'Let us suppose that the whole society is composed only of industrial capitalists and wage workers. Let us furthermore make exceptions of fluctuations of prices which prevent large portions of the total capital from reproducing themselves under average conditions and which, owing to the general interrelations of the entire process of reproduction, such as are developed particularly by credit, must always call forth general stoppages of a transient nature. Let us also make abstraction of the bogus transactions and speculations, which the credit system favours. In that case, a crisis could be explained only by a disproportion of production in various branches, and by a disproportion of the consumption of the capitalists and the accumulation of their capitals. But as matters stand, the reproduction of the capitals invested in production depends largely upon the consuming power of the non producing classes; while the consuming power of the labourers is handicapped partly by the laws of wages, partly by the fact that it can be exerted only so long as the labourers can be employed at a profit for the capitalist class.'(2)

This last quotation refers to the question of crises with which we are not here concerned. It can leave no doubt, however, that the movement of the total capital, as matters stand'; depends in Marx's view on three categories of consumers only the capitalists, the workers and the non-productive classes', i.e. the hangers-on of the capitalist class (king, parson, professor,. prostitute, mercenary), of whom he quite rightly disposes in volume 2 as the mere representatives of a derivative purchasing power, and thus the parasitic joint consumers of the surplus value or of the wage of labour.

Finally, in: Theories of Surplus Value,(3) Marx formulates his general presuppositions with regard to accumulation as follows: 'Here we have only to consider the forms through which capital passes during the various stages of its development. Thus we do not set out the actual conditions of the real process of production, but always assume that the commodity is sold for what it is worth. We ignore the competition of capitalists and the credit system; we also leave out of account the actual constitution of society which never consists exclusively of the classes of workers and industrial capitalists, and where there is accordingly no strict division between producers and consumers. The first category (of consumers, whose revenues are partly of a secondary, not a primitive nature, derived from profits and the wage of labour) is much wider than the second category (of producers). Therefore the manner in which it spends its income, and the extent of such income, effects very large modifications in the economic household, and especially so in the process of circulation and reproduction of capital.'

Speaking of the 'actual constitution of society', Marx here also considers merely the parasitic joint consumers of surplus value and of the wage of labour, i.e. only the hangers-on of the principal categories of capitalist production.

There can be no doubt, therefore, that Marx wanted to demonstrate the process of accumulation in a society consisting exclusively of workers and capitalists, under the universal and exclusive domination of the capitalist mode of production. On this assumption, however, his diagram does not permit of any other interpretation than that of production for production's sake.” (pp330-333)

“In accordance with Marx's assumption in volume I of Capital, the capitalised part of the surplus value first comes into being as additional means of production and as means of subsistence for the workers, both serving the purpose of an ever expanding production in the two departments. 334. «cannot be discovered» in Marx «for whom»It cannot be discovered from the assumptions of Marx's diagram for whose sake production is progressively expanded.” (p334)

“Who, then, realises the permanently increasing surplus value? The diagram answers: the capitalists themselves and they alone. And what do they do with this increasing surplus value? -The diagram replies: They use it for an ever greater expansion of their production. These capitalists are thus fanatical supporters of an expansion of production for production's sake. They see to it that ever more machines are built for the sake of building-with their help-ever more new machines. Yet the upshot of all this is not accumulation of capital but an increasing production of producer goods to no purpose whatever. Indeed, one must be as reckless as Tugan-Baranovski, and rejoice as much in paradoxical statements, to assume that this untiring merry-go-round in thin air could be a faithful reflection in theory of capitalist reality, a true deduction from Marx's doctrine.'(4)

Besides the analysis of enlarged reproduction roughed out in Capital, volume 2, the whole of Marx's work, volume 2 in particular, contains a most elaborate and lucid exposition of his general views regarding the typical course of capitalist accumulation. If we once fully understand this interpretation, the deficiencies of the diagram at the end of volume 2 are immediately evident.

335: «schema contradict Marx's theory» fanatic etc. (source) mere verbiageIf we examine critically the diagram of enlarged reproduction in the light of Marx's theory, we find various contradictions between the two.” (pp334-335)

“On the basis of what is actually happening, namely a greater yearly increase of constant capital as against that of variable capital,, as well as a growing rate of surplus value, discrepancies must arise between the material' composition of the social product and the composition of capital in terms of value. If, instead of the unchanging proportion of 5 to 1 between constant and variable capital, proposed by Marx's diagram, we assume for instance that this increase of capital is accompanied by a progressive readjustment of its coin- position, the proportion between constant and variable in the second year being 6 to 1, in the third year 7 to 1, and in the fourth year 8 to 1 - if we further assume that the rate of surplus value also increases progressively in accordance with the higher productivity of labour so that, in each case, we have the same amounts as those of the diagram, although, because of the relatively decreasing variable capital, the rate of surplus value does not remain constant at the original 100 per cent-and if finally we assume that one-half of the appropriated surplus value is capitalised in each case (excepting Department II where capitalisation exceeds 50 per cent, 184 out of 285 being capitalised during the first year), the result will be as follows:

1st year:

I. 5,000c + 1,000v + 1,000s = 7,000 means of production

II. 1,430c + 285v + 285s = 2,000 means of subsistence

2nd year:

I. 5,428 4/7c + 1,071 3/7v + 1,083s = 7,583 means of production

II. 1,587 5/4c + 311 2/7v + 316s = 2,215 means of subsistence

3rd year:

I. 5,903c + 1,139v + 1,173s = 8,215 means of production

II. 1,726c + 331v + 342s = 2,399 means of subsistence

4th year:

I. 6,424c + 1,295v + 1,271s = 8,900 means of production

II. 1,879c + 350v + 371s = 2,600 means of subsistence

If this were a true picture of the accumulative process, the means of production (constant capital) would show 337 i.f. example «does not tally»a deficit of 16 in the second year, of 45 in the third year and of 88 in the fourth year; similarly, the means of subsistence would show a surplus of 16 in the second year, of 45 in the third year and of 88 in the fourth year. ” (pp336-337)

“We may put our point in yet another way: it is clear that a quicker growth of constant as compared with variable capital, i.e. the progressive metamorphosis of the organic composition of capital, must take the material form of faster expansion of production in Department I as against production in Department II. 340. in f. in Marx «directly excludes» > increase of I over IIYet Marx's diagram, where strict conformity of the two departments is axiomatic, precludes any such fluctuations in the rate of accumulation in either department. It is quite -legitimate to- -suppose -that — under- -the- technical conditions' of progressive accumulation, society would invest ever increasing portions of the surplus value earmarked for accumulation in Department I rather than in Department II. Both departments being only branches of the same social production-supplementary enterprises, if you like, of the aggregate capitalist', such a progressive transfer, for technical reasons, from one department to the other of a part of the accumulated surplus value would be wholly feasible, especially as it corresponds to the actual practice of capital. Yet this assumption is possible only so long as we envisage the surplus value earmarked for capitalisation purely in terms of value. The diagram, however, implies that this part of the surplus value appears in a definite material form which prescribes its capitalisation. Thus the surplus value of Department II exists as means of subsistence, and since it is as such to be only realised by Department I, this intended, transfer of part of the capitalised surplus value from Department II to Department I is ruled out, first because the material form of this surplus value is obviously useless to Department I, and secondly because of the relations of exchange between the two departments which would in turn necessitate an equivalent transfer of the products of Department I into Department II. 341. [> growth I over II.] «downright impossible» ???It is therefore downright impossible to achieve a faster expansion of Department I as against Department II within the limits of Marx's diagram.

However we may regard the technological alterations of the mode of production in the course of accumulation, they cannot be accomplished without upsetting the fundamental relations of Marx's diagram. ” (pp340-341)

“In one passage of his Theories,(6) Marx explains in so many words that he is not at all concerned in this connection with an accumulation of capital greater than can be used in the productive process and might lie idle in the banks in monetary form, with the consequence of lending abroad'. Marx refers these phenomena to the section on competition. Yet it is important to establish that his diagram veritably precludes the formation of such additional capital. Competition, however wide we may make the concept, obviously cannot create values, nor can it create capitals which are not themselves the result of the reproductive process.

342. Schema excludes expansion by leaps and bounds !??The diagram thus precludes the expansion of production by leaps and bounds. It only allows of a gradual expansion which keeps strictly in step with the formation of the surplus value and is based upon the identity between realisation and capitalisation of the surplus value. ” (p342)

[343]. contradicts book III!!!Finally, the diagram contradicts the conception of the capitalist total process and its course as laid down by Marx in Capital, volume iii. This conception is based on the inherent contradiction between the unlimited expansive capacity of the productive forces and the limited expansive capacity of social consumption under conditions of capitalist distribution. Let us see how Marx describes this contradiction in detail in chapter 15 on ‘Unravelling the Internal Contradictions of the Law’ (of the declining profit rate):

343-5. Quote from III,1,p224 = Development of Capitalism p57.

‘The creation of surplus-value, assuming the necessary means of production, or sufficient accumulation of capital, to be existing, finds no other limit but the labouring population, when the rate of surplus-value, that is, the intensity of exploitation, is given; and no other limit but the intensity of exploitation, when the labouring population is given. And the capitalist process of production consists essentially of the production of surplus-value, materialised in the surplus-product, which is that aliquot portion of the produced commodities, in which unpaid labour is materialised. It must never be forgotten, that the production of this surplus-value—and the re-conversion of a portion of it into capital, or accumulation, forms an indispensable part of this production of surplus-value—is the immediate purpose and the compelling motive of capitalist production. It will not do to represent capitalist production as something which it is not, that is to say, as a production having for its immediate purpose the consumption of goods, or the production of means of enjoyment for the capitalists. (And, of course, even less for the worker. R. L.) This would be overlooking the specific character of capitalist production, which reveals itself in its innermost essence. The creation of this surplus-value is the object of the direct process of production, and this process has no other limits than those mentioned above. As soon as the available quantity of surplus-value has been materialised in commodities, surplus value has been produced. But this production of surplus-value is but the first act of the capitalist process of production, it merely terminates the act of direct production. Capital has absorbed so much unpaid labour. With the development of the process, which expresses itself through a falling tendency of the rate of profit, the mass of surplus-value thus produced is swelled to immense dimensions. Now comes the second act of the process. The entire mass of commodities, the total product, which contains a portion which is to reproduce the constant and variable capital as well as a portion representing surplus-value, must be sold. If this is not done, or only partly accomplished, or only at prices which are below the prices of production, the labourer has been none the less exploited, but his exploitation does not realise as much for the capitalist. It may yield no surplus-value at all for him, or only realise a portion of the produced surplus-value, or it may even mean a partial or complete loss of his capital. The conditions of direct exploitation and those of the realisation of surplus-value are not identical. They are separated logically as well as by time and space. The first are only limited by the productive power of society, the last by the proportional relations of the various lines of production and by the consuming power of society. This last-named power is not determined either by the absolute productive power or by the absolute consuming power, but by the consuming power based on antagonistic conditions of distribution, which reduces the consumption of the great mass of the population to a variable minimum within more or less narrow limits. The consuming power is furthermore restricted by the tendency to accumulate, the greed for an expansion of capital and a production of surplus value on an enlarged scale. This is a law of capitalist production imposed by incessant revolutions in the methods of production themselves, the resulting depreciation of existing capital, the general competitive struggle and the necessity of improving the product and expanding the scale of production, for the sake of self-preservation and on penalty of failure. The market must, therefore, be continually extended, so that its interrelations and the conditions regulating them assume more and more the form of a natural law independent of the producers and become ever more uncontrollable. This eternal contradiction seeks to balance itself by an expansion of the outlying fields of production. But to the extent that the productive power develops, it finds itself at variance with the narrow basis on which the conditions of consumption rest. On this self-contradictory basis it is no contradiction at all that there should be an excess of capital simultaneously with an excess of population. For while a combination of these two would indeed increase the mass of the produced surplus-value, it would at the same time intensify the contradiction between the conditions under which this surplus-value is produced and those under which it is realised.’

(pp343-5)

“In yet another passage, Marx clearly shows that Tugan-Baranovski's notion of production for production's sake is wholly alien to him: 346. Quote from III,1,p289 = Development of Capitalism, top p55.'Besides, we have seen in volume 2 part iii that a continuous circulation takes place between constant capital and constant capital (even without considering any accelerated accumulation), which is in so far independent of individual consumption, as it never enters into such consumption, but which is nevertheless definitely limited by it because the production of constant capital never takes place for its own sake, but solely because more of this capital is needed in those spheres of production whose products pass into individual consumption. '” (p346)

“Now, however, the question arises whether the assumptions which were decisive in the case of individual capital, are also legitimate for the consideration of aggregate capital.

'We must now put the problem in this form: given universal accumulation, that is to say provided that in all branches of production there is greater or less accumulation of capital-which in fact is a condition of capitalist production, and which is just as natural to the capitalist qua capitalist as it is natural to the miser to amass money (but which is also necessary for the perpetuation of capitalist production)-what are the conditions of this universal accumulation, to what elements can it be reduced?'

And the answer: 'The conditions for the accumulation of capital are precisely those which rule its original production and reproduction in general: these conditions being that one part of the money buys labour and the other commodities (raw materials, machinery, etc.) ... Accumulation of new capital can only proceed therefore under the same conditions under which already existing capital is reproduced."(2)

In real life the actual conditions for the accumulation of the aggregate capital are quite different from those prevailing for individual capitals and for simple reproduction. The problem amounts to this: If an increasing part of the surplus value is not consumed by the capitalists but employed in the expansion of production, what, then, are the forms of social reproduction? What is left of the social-product after deductions for the replacement of the constant capital cannot, ex hypothesis, be absorbed by the consumption of the workers and capitalists-this being the main aspect of the problem-nor can the workers and capitalists themselves realise the aggregate product. They can always only realise the variable capital, that part of the constant capital which will be used up, and the part of the surplus value which will be consumed, but in this way they merely ensure that production can be renewed on its previous scale.350: against Marx

N.B. particularly i.f. The workers and capitalists themselves cannot possibly realise that part of the -surplus value-which is to be capitalised. Therefore, the realisation of the surplus value for the purposes of accumulation is an 350 NB «impossible task»impossible task for a society which consists solely of workers and capitalists.” (pp349-50)

“The salient feature of the problem of accumulation, and the vulnerable point of earlier attempts to solve it, has only been shown up by Marx's more profound analysis, his precise diagrammatic demonstration of the total reproductive process, and especially his inspired exposition of the problem of simple reproduction. Yet he could not supply immediately a finished solution either, partly because he broke off his analysis almost as soon as he had begun it, and partly because he was then preoccupied, as we have shown, with denouncing the analysis of Adam Smith and thus rather lost sight of the main problem. In fact, he made the solution even more difficult by assuming the capitalist mode of production to prevail universally. Nevertheless, a solution of the problem of accumulation, in harmony both with other parts of Marx's doctrine and with the historical experience and daily practice of capitalism, is implied in Marx's complete analysis of simple reproduction and his characterisation of the capitalist process as a whole which shows up its immanent contradictions and their development (in Capital, Vol. 3). In the light of this, the deficiencies of the diagram can be 351: «corrected»!!corrected. All the relations being, as it were, incomplete, a closer study of the diagram of enlarged reproduction will reveal that it points to some sort of organisation more advanced than purely capitalist production and accumulation.” (pp351)

“Realisation of the surplus value is doubtless a vital question of capitalist accumulation. It requires as its prime condition ignoring, for simplicity's sake, the capitalists' fund of consumption altogether-that there should be strata of buyers outside capitalist society. Buyers, it should be noted, not consumers, since the material form of the surplus value is quite irrelevant to its realisation. The decisive fact is that the surplus value cannot be [351-2] consumed by neither capitalists nor workers, non-capitalist producersrealised by sale either to workers or to capitalists, but only if it is sold to such social organisations or strata whose own mode of production is not capitalistic. Here we can conceive of two different cases:

(1) Capitalist production supplies consumer goods over and above its own requirements, the demand of its workers and capitalists, which are bought by non-capitalist strata and countries. The English cotton industry, for instance, during the first two-thirds of the nineteenth century, and to some extent even now, has been supplying cotton textiles to the peasants and petty-bourgeois townspeople of the European continent, and to the peasants of India, America, Africa and so on. The enormous expansion of the English cotton industry was thus founded on consumption by non-capitalist strata and countries.(3) ” (pp351-2)

“As we have seen, this conception, which is based upon the self-sufficiency and isolation of capitalist production, falls down as soon as we consider the realisation of the 354 Surplus value to non-capitalist producers

= V. V.! ..surplus value. If we assume, however, that the surplus value is realised outside the sphere, of capitalist production, then its material form is independent of the requirements of capitalist production itself. Its material form conforms to the requirements of those non-capitalist circles who help to realise it, that is to say, capitalist surplus value can take the form of consumer goods, e.g. cotton fabrics, or of means of production, e.g. materials for railway construction,, as the case may be.” (pp354)

“In addition, there is no obvious reason why means of production and consumer goods should be produced by 357: not only capitalist!!!capitalist methods alone. This assumption, for all Marx used it as the corner-stone of his thesis, is in conformity neither with the daily practice, and the history, of capital, nor with the specific character of this mode of production.” (pp357)

358. «Capitalist mode of production» limited mainly to «industrial activity»

Ha-ha!!“In general, capitalist production has hitherto been confined mainly to the countries in the temperate zone, whilst it made comparatively little progress in the East, for instance, and the South.” (pp358)

“It must be noted that, when we assumed above that only the surplus product of the first or the second department is realized in a non-capitalist milieu, we were taking the most favourable case for examining Marx’s schemes, a case which shows the conditions of reproduction in its purity. In reality, nothing forces us to assume that there is not a fraction of the constant and variable capital which is also realized out of the capitalist realm. Accordingly, the expansion of production as well as the replacement in kind of the materials consumed in production may be undertaken by means of products from the non-capitalist sphere. What should be clear from the above-mentioned examples is the [359***]. Impossibility of capitalist realisation of surplus-value!!fact that, at least, it is impossible that the capitalized surplus value and the corresponding part of the capitalist output can be realized within the capitalist realm; this part must be sold out of the capitalist sphere, in social strata and forms which do not produce in capitalist way.” [translated by Alejandro Ramos-Martinez]

“In his analysis of the accumulation of individual capital, Marx gives the following answer: 'Now in order to allow of these elements actually functioning as capital, the capitalist class requires additional labour. If the exploitation of the labourers already employed does not increase, either extensively or intensively, then additional labour-power must be found. 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."(7)

Thus the increase in the variable capital is directly and exclusively attributed to the natural physical increase of a working class already dominated by capital. This is in strict conformity with the diagram of enlarged reproduction which recognises only the social classes of capitalists and workers, and regards the capitalist mode of production as exclusive and absolute. On these assumptions, the natural increase of the working class is the only source of extending the labour supply commanded by capital. 361. Growth through increase in population «contradicts the law of accumulation»This view, however, is contrary to the laws governing the process of accumulation. The natural propagation of the workers and the requirements of accumulating capital are not correlative in respect of time or quantity. Marx himself has most brilliantly shown that natural propagation cannot keep up with the sudden expansive needs of capital. If natural propagation were the only foundation for the development of capital, accumulation, in its periodical swings from overstrain to exhaustion, could not continue, nor could the productive sphere expand by leaps and bounds, and accumulation itself would become impossible. The latter requires an unlimited freedom of movement in respect of the growth of variable capital equal to that which it enjoys with regard to the elements of constant capital-that is to say it must needs dispose over the supply of labour power without restriction. Marx considers that this can be achieved by an industrial reserve army of workers'. His diagram of simple reproduction admittedly does not recognise such an army, nor could it have room for it, since the natural propagation of the capitalist wage proletariat cannot provide an industrial reserve army. Labour for this army is recruited from social reservoirs outside the dominion of capital -it is drawn into the wage proletariat only if need arises. Only the existence of non-capitalist groups and countries can guarantee such a supply of additional labour power for capitalist production. Yet in his analysis of the industrial reserve Marx only allows for (a) the displacement of older workers by machinery, (b) an influx of rural workers into the towns in consequence of the ascendancy of capitalist production in agriculture, (c) occasional labour that has dropped out of industry, and (d) finally the lowest residue of relative over-population, the paupers. All these categories are cast off by the capitalist system of production in some form or other, they constitute a wage proletariat that is worn out and made redundant one way or another. Marx, obviously influenced by English conditions involving a high level of capitalist development, held that the rural workers who continually migrate to the towns belong to the wage proletariat, since they were formerly dominated by agricultural capital and now become subject to industrial capital. He ignores, however, the problem which is of paramount importance for conditions on the continent of Europe, -namely the sources from which this urban and rural proletariat is recruited: the continual process by which the rural and urban middle strata become proletarian with the decay of peasant economy and of small artisan enterprises, the very process, that is to say, 362: What a mess!!!of incessant transition from non-capitalist to capitalist conditions of a labour power that is cast off by pre-capitalist, not capitalist, modes of production in their progressive breakdown and disintegration. Besides the decay of European peasants and artisans we must here also mention the disintegration of the most varied primitive forms of production and of social organisation in non-European countries.” (pp360-362)

“The interrelations of accumulating capital and non-capitalist forms of production extend over values as well as over material conditions, for constant capital, variable capital and surplus value alike. The non-capitalist mode of production is the given historical setting for this process. Since the accumulation of capital becomes 365: Root of errors ... «inconceivable» NBimpossible in all points without non-capitalist surroundings, we cannot gain a true picture of it by assuming the exclusive and absolute domination of the capitalist mode of production. Sismondi and his school, [365] Sismondi's correct instinctwhen they attributed their difficulties entirely to the problem of realising the surplus value, indeed revealed a proper sense for the conditions vital to accumulation. Yet the conditions for augmenting the material elements of constant and variable capital are quite a different matter from those which govern the realisation of surplus value. Capital needs the means of production and the labour power of the whole globe for untrammelled accumulation; it cannot manage without the natural resources and the labour power of all territories. Seeing that the overwhelming majority of resources and labour power is in fact still in the orbit of precapitalist production-this being the historical milieu of accumulation-capital must go all out to obtain ascendancy over these territories and social organizations. There is no a priori reason why rubber plantations, say, run on capitalist lines, such as have been laid out in India, might not serve the ends of capitalist production just as well. Yet if the countries of those branches of production are predominantly non-capitalist, capital will endeavour to establish domination over these countries and societies. And in fact, primitive conditions allow of a greater drive and of far more ruthless measures than could be tolerated under purely capitalist social conditions.

It is quite different with the realisation of the surplus value. Here outside consumers qua other-than-capitalist are really essential. Thus the immediate and vital conditions for capital and its accumulation is the existence of non-capitalist buyers of the surplus value, which is decisive to this extent for the problem of capitalist accumulation.

Whatever the theoretical aspects, the accumulation of capital as an historical process, depends in every respect upon non-capitalist social strata and forms of social organisation.

366: solution to the problem between both extremesThe solution to this problem which for almost a century has been the bone of contention in economic theory thus lies between the two extremes of the petty-bourgeois scepticism preached by Sismondi, v.. Kirchmann, Vorontsov and Nikolayon, who flatly denied accumulation, and the crude optimism advocated by Ricardo, Say and Tugan-Baranovski who believed in capital's unlimited capacity . for parthenogenesis, with the logical corollary of capitalism-in-perpetuity. The solution envisaged by Marx lies in the dialectical conflict that capitalism needs non-capitalist social organisations as the setting for its development, that it proceeds by assimilating the very conditions which alone can ensure its own existence.

At this point we should revise the conceptions of internal and external markets which were so important in the controversy about accumulation. They are both vital to capitalist development and yet fundamentally different, though they must, be conceived in terms of social economy rather than of political geography. In this light, the internal market is the capitalist market, production itself buying its own products and supplying its own elements of production. 366 external market = non-capitalist social environment!!!The external market is the non-capitalist social environment which absorbs the products of capitalism and supplies producer goods and labour power for capitalist production. Thus, from the point of view of economics, Germany and England traffic in commodities chiefly on' an internal, capitalist market, whilst the give and take between German industry and German peasants is transacted on an external market as far as German capital is concerned.” (pp365-366)

“The existence and development of capitalism requires an environment of non-capitalist forms of production, but not every one of these forms will serve its ends. 368: Market for surplus-value in non-capitalist environment

rubbish Capitalism needs non-capitalist social strata as a market for its surplus value, as a source of supply for its means of production and as a reservoir of labour power for its wage system.” (pp368)

“The method of violence, then, is the immediate consequence of the clash between capitalism and the organisations of a natural economy which would restrict accumulation. Their means of production and their labour power no less than their demand for idem 371 («surplus product»)surplus products is necessary to capitalism.” (pp371)

Amusing! «Chapter 28 Introduction of Commodity Economy»

In the beginning: «realizing» surplus-value (s.359, 2nd paragraph of chapter), - and account of forced introduction of opium to China!!! Account very very interesting, detailed. How many junks sunk 7.IX.1839 etc.!! What erudition!

Chapter 29 Opium in China Quotes from Nikolayon - concerns «bonanza farms» etc - boers, torturers of negroes in South Africa and so on. Sensational, flashy, empty.

“The general result of the struggle between capitalism and simple commodity production is this after, substituting commodity economy for natural economy, capital takes the place of simple commodity economy. Non-capitalist organisations provide a fertile soil for capitalism; more strictly: capital feeds on the ruins of such organisations, and, although this non-capitalist milieu is indispensable for accumulation, the latter proceeds, at the cost of this medium nevertheless, by eating it up. Historically, the accumulation of capital is a kind of metabolism between capitalist economy and those pre-capitalist methods of production without which it cannot go on and which, in this light, it corrodes and assimilates. Thus capital cannot accumulate without the aid of non-capitalist organisations, nor, on the other hand, can it tolerate their continued existence side by side with itself. Only the continuous and progressive disintegration of non-capitalist organisations makes accumulation of capital possible.

The premises which are postulated in Marx's diagram of accumulation accordingly represent no more than the historical tendency of the movement of accumulation and its logical conclusion. The accumulative process endeavours everywhere to substitute simple commodity economy for natural economy. Its ultimate aim, that is to say, is to establish the exclusive and universal domination of capitalist production in all countries and for all branches of industry.

Yet this argument does not lead anywhere. As soon as this final result is achieved-in theory, of course, because it can never actually happen-accumulation must come to a stop. The realisation and capitalisation of surplus value become impossible to accomplish. Just as soon as reality begins to correspond to Marx's diagram of enlarged reproduction, the end of accumulation is in sight, it has reached its limits, and capitalist production is in extremis. For capital, the standstill of accumulation means that the development of the productive forces is arrested, and the collapse of capitalism follows inevitably, as an objective historical necessity. This is the reason for the contradictory behaviour of capitalism in the final stage of its historical career: imperialism.

Marx's diagram of enlarged reproduction thus does not conform to the conditions of an accumulation in actual progress. Progressive accumulation cannot be reduced to static interrelations and interdependence between the two great departments of social production (the departments of producer and consumer goods), as the diagram would have it. Accumulation is more than an internal relationship between the branches of capitalist economy; it is primarily a relationship between capital and a non-capitalist environment, where the two great departments of production sometimes perform the accumulative process on their own, independently of each other, but even then at every step the movements overlap and intersect. 417 NB Ignorance of Marx and Engels False

-418 (essence)

RubbishFrom this we get most complicated relations, divergences in the speed and direction of accumulation for the two departments, different relations with non-capitalist modes of production as regards both material elements and elements of value, which we cannot possibly lay down in rigid formula. Marx's diagram of accumulation is only the theoretical reflection of the precise moment when the domination of capital has reached its limits, and thus it is no less a fiction than his diagram of simple reproduction, which gives the theoretical formulation for the point of departure of capitalist accumulation. The precise definition of capitalist accumulation and its laws lies somewhere in between these two fictions.” (pp416-418)

“These inherent conflicts of the international loan system are a classic example of spatio-temporal divergencies between the conditions for the realisation of surplus value and 421: «conditions of capitalisation and realisation of surplus-value (?). Not only surplus-value but also c+v!!the capitalisation thereof. While realisation of the surplus value requires only the general spreading of commodity production, its capitalisation demands the progressive supercession of simple commodity production by capitalist economy, with the corollary that the limits to both the realisation and the capitalisation of surplus value keep contracting ever more.” (pp421)

“Realised surplus value, which cannot be capitalised and lies idle in England or Germany, is invested in railway construction, water works, etc in the Argentine, Australia, the Cape Colony or Mesopotamia. Machinery, materials and the like are supplied by the country where the capital has originated, and the same capital pays for them. Actually, this process characterises capitalist conditions everywhere, even at home. Capital must purchase the elements of production and thus become productive capital before it can operate. Admittedly, the products are then used within the country, while in the former case they are used by foreigners. But then capitalist production does not aim at its products being enjoyed, but at the accumulation of surplus value. There had been no demand for the surplus product within the country, so capital had lain idle without the possibility of accumulating. But abroad, where capitalist production has not yet developed, there has come about, voluntarily or by force, a new demand of the non-capitalist strata. The consumption of the capitalist and working classes at home is irrelevant for the purposes of accumulation, and what matters to capital is the very fact that its products are 427: «consumption» by non-capitalist strata (railways in Asia etc)."used" by others. The new consumers must indeed realise the products, pay for their use, and for this they need money. They can obtain some of it by the exchange of commodities which begins at this point, a brisk traffic in goods following hard on the heels of railway construction and mining (gold mines, etc.). Thus the capital advanced for railroad building and mining, together with an additional surplus value, is gradually realised. It is immaterial to the situation as a whole whether this exported capital becomes share capital in new independent enterprises, or whether, as a government loan, it uses the mediation of a foreign state to find new scope for operation in industry and traffic, nor does it matter if in the first case some of the companies are fraudulent and fail in due course, or if in the second case the borrowing state finally goes bankrupt, i.e. if the owners sometimes lose part of their capital in one way or another. Even the country of origin is not immune, and individual capitals frequently get lost in crises. The important point is that capital accumulated in the old country should find elsewhere new opportunities to beget and realise surplus value, so that accumulation can proceed. In the new countries, large regions of natural economy are open to conversion into commodity economy, or existing commodity economy can be ousted by capital. Railroad construction and mining, gold mining in particular, are typical for the investment of capitals from old capitalist countries in new ones. They are pre-eminently qualified to stimulate a brisk traffic in goods under conditions hitherto determined by natural economy and both are significant in economic history as mile-stones along the route of rapid dissolution of old economic organisations, of social crises and of the development of modern conditions, that is to say of the development of commodity economy to begin with, and further of the production of capital.

For this reason, the part played by lending abroad as well as by capital investments in foreign railway and mining shares is a 428: «critical illustration in Marx's schema»... nonsense: in other countries capital and workers consume

c and v and m are not exchanged for this. The development of capitalism goes sometimes in breadth(foreign countries) sometimes in depthfine sample of the deficiencies in Marx's diagram of accumulation. In these instances, enlarged reproduction of capital capitalises a surplus value That has already been realised (in so far as the loans or foreign investments are not financed by the savings of the petty bourgeoisie or the semi-proletariat). It is quite irrelevant to the present field of accumulation, when, where and how the capital of the old countries has been realised so that it may flow into the new country. British capital which finds an outlet in Argentine railway construction might well in the past have been realised in China in the form of Indian opium. Further, the British capital which builds railways in the Argentine, is of English origin not only in its pure value-form, as money capital, but also in its material form, as iron, coal and machinery; the use-form of the surplus value, that is to say, has also come into being from the very beginning in the use-form suitable for the purposes of accumulation. The actual use-form of the variable capital, however, labour power, . is mainly foreign: it is the native labour of the new countries which is made a new object of exploitation by the capital of the old countries. If we want to keep our investigation all on one plane, we may even assume that the labour power, too, has the same country of origin as the capital. In point of fact new discoveries, of gold mines for instance, tend to call forth mass emigration from the old countries, especially in the first stages, and are largely worked by labour from those countries. It might well be, then, that in a new, country capital, labour power and means of production all come from the same capitalist country, say England. So it is really in England that all the material 428. conditions for accumulation exist-a realised surplus value as money capital, a surplus product in productive form, and lastly labour reserves. Yet accumulation cannot proceed here: England and her old buyers require neither railways nor an expanded industry. Enlarged reproduction, i.e. accumulation, is possible only if new districts with a non-capitalist civilisation, extending over large areas, appear on the scene and augment the number of consumers.” (pp426-429)

“It should now be clear that the transactions between European loan capital and European industrial, 438 -Egypt's Ruin very good by Rothstein etc. conclusion: «kourbash» [whip made from hippopotamus hide - tr]capital are based upon relations which are extremely rational and "sound" for the accumulation of capital, although they appear absurd to the casual observer because this loan capital pays for the orders from Egypt and the interest on one loan is paid out of a new loan. Stripped of all obscuring connecting links, (438). Precisely! Rosa Luxemburg whips herself. Not for the sake of «realisation of surplus-value» but for the sake of convenience of exploitation («whips», unpaid labour etc.) Migration of capital to backward countries. High returns! And that's all. Theft of land (without payment). Loans at 12-13% (433-4) etc. That's at the root. (State guarantees: 440) etc. etc.these relations consist in the simple fact that European capital has largely swallowed up the Egyptian peasant economy. Enormous tracts of land, labour, and labour products without number, accruing to the state as taxes, have ultimately been converted into European capital and have been accumulated. Evidently, only by use of the kourbash could the historical development which would normally take centuries be compressed into two or three decades, and it was just the primitive nature of Egyptian conditions which proved such fertile soil for the accumulation of capital.” (pp438)

“The more ruthlessly capital sets about the destruction of non-capitalist strata, at home and in the outside world, the more it lowers the standard of living for the workers as a whole, the greater also is the change in the day-to-day history of capital. It becomes a string of political and social disasters and convulsions, and under these conditions, punctuated by periodical economic catastrophes or crises, accumulation can go on no longer.

467. i.f. conclusion natural economic impasse «still markets»But even before this natural economic impasse of capital's own creating is properly reached it becomes a necessity for the international working class to revolt against the rule of capital.

467. i.f. «first mode of economy with the weapon of propaganda»!!Capitalism is the first mode of economy with the weapon of propaganda, a mode which tends to engulf the entire globe and to stamp out all other economies, tolerating no rival at its side. Yet at the same time it is also the first mode of economy which is unable to exist by itself, which needs other economic systems as a medium and soil.???- and «first, which cannot exist by itself without other economic systems» Although it strives to become universal, and, indeed, on account of this its tendency, it must break down -because it is immanently incapable of becoming a universal form of production.” (pp466-467)