Once More on the Theory of Realisation

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My “Note on the Question of the Market Theory (Concerning the Polemic of Messrs. Tugan-Baranovsky and Bulgakov)” was published in the number of Nauchnoye Obozreniye for January of the present year (1899) and was followed by P. B. Struve’s article, “Markets under Capitalist Production (Apropos of Bulgakov’s Book and Ilyin’s Article).” Struve “rejects, to a considerable extent, the theory proposed by Tugan-Baranovsky, Bulgakov, and Ilyin” (p. 63 of his article) and expounds his own conception of Marx’s theory of realisation.

In my opinion, Struve’s polemic against the above-mentioned writers is due not so much to an essential difference of views as to his mistaken conception of the content of the theory he defends. In the first place, Struve confuses the market theory of bourgeois economists who taught that products are exchanged for products and that production, there fore, should correspond to consumption, with Marx’s theory of realisation which showed by analysis how the reproduction and circulation of the aggregate social capital, i.e., the realisation of the product in capitalist society, takes place. Neither Marx nor those writers who have expounded his theory and with whom Struve has entered into a polemic deduced the harmony of production and consumption from this analysis, but, on the contrary, stressed forcefully the contradictions that are inherent in capitalism and that are bound to make their appearance in the course of capitalist realisation. Secondly, Struve confuses the abstract theory of realisation (with which his opponents dealt exclusively) with concrete historical conditions governing the realisation of the capitalist product in some one country and some one epoch. This is just the same as confusing the abstract theory of ground rent with the concrete conditions of the development of capitalism in agriculture in some one country. These two basic delusions of Struve engendered a whole series of misunderstandings which can only be cleared up by an analysis of the individual propositions of his article.

1. Struve does not agree with me when I say that in expounding the theory of realisation we must give Adam Smith special emphasis. “If it is a matter of going back to Adam,” he writes, “then we should not stop at Smith but at the physiocrats.” But this is not so. It was precisely Adam Smith who did not confine himself to admitting the truth (known also to the physiocrats) that products are exchanged for products but raised the question of how the different component parts of social capital and the product are replaced (realised) according to their value. For this reason Marx, who fully recognised that in the theory of the physiocrats, i.e., in Quesnay’s Tableau économique, some postulates were, “for their time, brilliant” ; who recognised that in the analysis of the process of reproduction Adam Smith had, in some respects, taken a step backwards as compared with the physiocrats (Das Kapital, I², 612, Anm. 32), nevertheless devoted only about a page and a half to the physiocrats in his review of the history of the question of realisation (Das Kapital, II¹, S. 350-51), whereas he devoted over thirty pages to Adam Smith (ibid., 351-83) and analysed in detail Smith’s basic error which was inherited by the entire subsequent political economy. It is, therefore, necessary to pay greater attention to Adam Smith in order to explain the bourgeois economists’ theory of realisation, since they all repeated Smith’s mistake.

2. Mr. Bulgakov quite correctly says in his book that bourgeois economists confuse simple commodity circulation with capitalist commodity circulation, whereas Marx established the difference between them. Struve believes that Mr. Bulgakov’s assertion is based on a misunderstanding. In my opinion it is just the opposite, the misunderstanding is not Mr. Bulgakov’s but Struve’s. And how, in deed, has Struve refuted Mr. Bulgakov? In a manner most strange: he refutes his postulate by repeating it. Struve says: Marx cannot be regarded as a champion of that theory of realisation according to which the product can be realised inside the given community, because Marx “made a sharp distinction between simple commodity circulation and capitalist circulation” (!! p. 48). But that is precisely what Mr. Bulgakov said! This is precisely why Marx’s Theory is not confined to a repetition of the axiom that products are ex changed for products. That is why Mr. Bulgakov is correct in regarding the disputes between bourgeois and petty-bourgeois economists on the possibility of over-production to be “empty and scholastic discussions”: the two disputants confused commodity and capitalist circulation; both of them repeated Adam Smith’s error.

3. Struve is wrong in giving the theory of realisation the name of the theory of proportional distribution. It is inaccurate and must inevitably lead to misunderstandings. The theory of realisation is an abstract theory that shows how the reproduction and circulation of the aggregate social capital takes place. The essential premises of this abstract theory are, firstly, the exclusion of foreign trade, of the foreign markets. But, by excluding foreign trade, the theory of realisation does not, by any means, postulate that a capitalist society has ever existed or could ever exist without foreign trade. Secondly, the abstract theory of realisation assumes and must assume the proportional distribution of the product between the various branches of capitalist production. But, in assuming this, the theory of realisation does not, by any means, assert that in a capitalist society products are always distributed or could be distributed proportionally. Mr. Bulgakov rightly compares the theory of realisation with the theory of value. The theory of value presupposes and must presuppose the equality of supply and demand, but it does not by any means assert that this equality is always observed or could be observed in capitalist society. The law of realisation, like every other law of capitalism, is “implemented only by not being implemented” (Bulgakov, quoted in Struve’s article, p. 56). The theory of the average and equal rate of profit assumes, in essence, the same proportional distribution of production between its various branches. But surely Struve will not call it a theory of proportional distribution on these grounds.

4. Struve challenges my opinion that Marx justly accused Ricardo of repeating Adam Smith’s error. “Marx was wrong,” writes Struve. Marx, however, quotes directly a passage from Ricardo’s work (II¹, 383). Struve ignores this passage. On the next page Marx quotes the opinion of Ramsay, who had also noted Ricardo’s error. I also indicated another passage from Ricardo’s work where he says forth rightly: “The whole produce of the land and labour of every country is divided into three portions: of these, one portion is devoted to wages, another to profits, and the other to rent” (here constant capital is erroneously omitted. See Ricardo’s Works, translated by Sieber, p. 221). Struve also passes over this passage in silence. He quotes only one of Ricardo’s comments which points out the absurdity of Say’s argument on the difference between gross and net revenue. In Chapter 49, Volume III of Capital, where deductions from the theory of realisation are expounded, Marx quotes precisely this comment of Ricardo, saying the following about it: “By the way, we shall see later”—apparently, this refers to the still unpublished Volume IV of Capital—“that Ricardo nowhere refuted Smith’s false analysis of commodity-price, its reduction to the sum of the values of the revenues (Revenuen). He does not bother with it, and accepts its correctness so far in his analysis that he ’abstracts’ from the constant portion of the value of commodities. He also falls back into the same way of looking at things from time to time” (i.e., into Smith’s way of looking at things. Das Kapital, III, 2, 377. Russian translation, 696). We shall leave the reader to judge who is right: Marx, who says that Ricardo repeats Smith’s error, or Struve, who says that Ricardo “knew perfectly well I? I that the whole social product is not exhausted by wages, profit, and rent,” and that Ricardo “unconsciously III wandered away from the parts of the social product that constitute production costs.” Is it possible to know perfectly well and at the same time unconsciously wander away?

5. Struve not only did not refute Marx’s statement that Ricardo had adopted Smith’s error, but repeated that very error in his own article. “It is strange ... to think,” he writes, “that any one division of the social product into categories could have substantial importance for the general comprehension of realisation, especially since all portions of the product that is being realised actually take on the form of revenue (gross) in the process of realisation and the classics regarded them as revenues” (p. 48). That is precisely the point—not all the portions of the product in realisation take on the form of revenue (gross); it was precisely this mistake of Smith that Marx explained when he showed that a part of the product being realised does not and cannot ever take on the form of revenue. That is the part of the social product which replaces the constant capital that serves for the production of means of production (the constant capital in Department I, to use Marx’s terminology). Seed grain in agriculture, for instance, never takes on the form of revenue; coal used for the extraction of more coal never takes on the form of revenue, etc., etc. The process of the reproduction and circulation of the aggregate social capital cannot be understood unless that part of the gross product which can serve only as capital, the part that can never take on the form of revenue, is separated from it. In a developing capitalist society this part of the social product must necessarily grow more rapidly than all the other parts of the product. Only this law will explain one of the most profound contradictions of capitalism: the growth of the national wealth proceeds with tremendous rapidity, while the growth of national consumption proceeds (if at all) very slowly.

6. Struve “cannot at all understand” why Marx’s differentiation between constant and variable capital “is essential to the theory of realisation” and why I “particularly insist” on it.

Struve’s lack of comprehension is, on the one hand, the result of a simple misunderstanding. In the first place, Struve himself admits one point of merit in this differentiation—that it includes not only revenues, but the whole product. Another point of merit is that it links up the analysis of the process of realisation logically with the analysis of the process of production of an individual capital. What is the aim of the theory of realisation? It is to show how the reproduction and circulation of the aggregate social capital takes place. Is it not obvious from the first glance that the role of variable capital must be radically different from that of constant capital? Products that replace variable capital must be exchanged, in the final analysis, for articles of consumption for the workers and meet their usual requirements. The products that replace constant capital must, in the final analysis, be exchanged for means of production and must be employed as capital for fresh production. For this reason the differentiation between constant and variable capital is absolutely essential for the theory of realisation. Secondly, Struve’s misunderstanding is due t.o his having, here also, arbitrarily and erroneously understood the theory of realisation as showing that the products are distributed proportionally (see, especially, pp. 50-51). We have said above and say again that such a conception of the content of the theory of realisation is fallacious.

Struve’s failure to understand is, on the other hand, due to the fact that he deems it necessary to make a distinction between “sociological” and “economic” categories in Marx’s theory and makes a number of general remarks against that theory. I must say, first, that none of this has anything whatsoever to do with the theory of realisation, and, secondly, that I consider Struve’s distinction to be vague and that I see no real use for it. Thirdly, that I consider not only debatable, but even directly incorrect, Struve’s assertions that “it is indisputable that the relation of the sociological principles” of his theory to the analysis of market phenomena “was not clear to Marx himself,” that “the theory of value, as expounded in Volumes I and III of Capital, undoubtedly suffers from contradiction.” All these statements of Struve are mere empty words. They are not arguments but decrees. They are the anticipated results of the criticism of Marx which the Neo-Kantians intend to undertake. If we live long enough we shall see what the criticism brings. In the meantime we assert that this criticism has provided nothing on the theory of realisation.

7. On the question of the significance of Marx’s Schemes In the third section of Capital II, Struve maintains that the abstract theory of realisation can be well explained by the most varied methods of dividing the social product. This amazing assertion is to be fully explained by Struve’s basic misunderstanding—that the theory of realisation “is completely exhausted” (??!) by the banality that products are exchanged for products. Only this misunderstanding could have led Struve to write such a sentence: “The role played by these masses of commodities [those being realised] in production, distribution, etc., whether they represent capital (sic!!) and what sort of capital, constant or variable, is of absolutely no significance to the essence of the theory under discussion” (51). It is of no significance to Marx’s theory of realisation, a theory that consists in the analysis of the re production and circulation of the aggregate social capital, whether or not commodities constitute capital I! This amounts to saying that as far as the essence of the theory of ground rent is concerned, there is no significance in whether or not the rural population is divided into landowners, capitalists, and labourers, since the theory is reduced, as it were, to an indication of the differing fertility of the different plots of land.

Only because of the same misunderstanding could Struve have asserted that the “natural relations between the elements of social consumption—social metabolism—can best be shown," not by the Marxian division of the product, but by the following division: means of production+articles of consumption+surplus-value (p. 50).

What is this social metabolism? Primarily it is the ex change of means of production for articles of consumption. How can this exchange be shown if surplus-value Is especially separated from means of production and from articles of consumption? After all, surplus-value is embodied either in means of production or in articles of consumption! Is it not obvious that such a division, which is logically groundless (in that it confuses division according to the natural form of the product with division by elements of value), obscures the process of social metabolism?

8. Struve says that I ascribed to Marx the bourgeois- apologetic theory of Say-Ricardo (52), the theory of harmony between production and consumption (51), a theory that is in howling contradiction to Marx’s theory of the evolution and eventual disappearance of capitalism (51-52); that, therefore, my “perfectly correct argument” that Marx, in both the second and third volumes, stressed the contradiction, inherent in capitalism, between the unlimited expansion of production and the limited consumption on the part of the masses of the people, “jettisons that theory of realisation ... whose defender” I am “in other cases.”

This statement of Struve is likewise untrue and derives likewise from the above-mentioned misunderstanding to which he has become subject.

Whence comes Struve’s assumption that I do not understand the theory of realisation as an analysis of the process of reproduction and circulation of the aggregate social capital but as a theory which says only that products are exchanged for products, a theory which preaches the harmony of production and consumption? Struve could not have shown by an analysis of my articles that I understand the theory of realisation in the second way, for I have stated definitely and directly, that I understand it in the first way. In the article, “A Characterisation of Economic Romanticism,” in the section devoted to an explanation of Smith’s and Sismondi’s error, I say: “The whole question is how realisation takes place—that is, the replacement of all parts of the social product. Hence, the point of departure in discussing social capital and revenue—or, what is the same thing, the realisation of the product in capitalist society—must be the distinction between ... means of production and articles of consumption” (Studies, 17). “The problem of realisation consists in analysing the replacement of all parts of the social product in terms of value and in terms of material form” (ibid., 26). Is not Struve repeating this when he says—supposedly against me—that the theory which interests us “shows the mechanism of realisation ... insofar as that realisation is effected” (Nauchnoye Obozreniye, 62)? Am 1 contradicting that theory of realisation which I defend when I say that realisation is effected “in the midst of difficulties, in the midst of continuous fluctuations, which become increasingly violent as capitalism grows, in the midst of fierce competition, etc.” (Studies, 27) ; when I say that the Narodnik theory “not only reveals a failure to under stand this realisation, but, in addition, reveals an extremely superficial understanding of the contradictions inherent in this realisation” (26-27) ; when 1 say that the realisation of the product, effected not so much on account of articles of consumption as on account of means of production, “is, of course, a contradiction, but the sort of contradiction that exists in reality, that springs from the very nature of capitalism” (24), a contradiction that “fully corresponds to the historical mission of capitalism and to its specific social structure: the former” (the mission) “is to develop the productive forces of society (production for production); the latter” (the social structure of capitalism) “precludes their utilisation by the mass of the population” (20) ?

9. Apparently there are no differences of opinion between Struve and me on the question of the relations between production and consumption in capitalist society. But if Struve says that Marx’s postulate (which asserts that consumption is not the aim of capitalist production) “bears the obvious stamp of the polemical nature of Marx’s whole system in general,” that “it is tendentious” (53), then I most decidedly challenge the appropriateness and justification of such expressions. It is a fact that consumption is not the aim of capitalist production. The contradiction between this fact and the fact that, in the final analysis, production is bound up with consumption, that it is also dependent on consumption in capitalist society—this contradiction does not spring from a doctrine but from reality. Marx’s theory of realisation has, incidentally, tremendous scientific value, precisely because it shows how this contradiction occurs, and because it puts this contradiction in the foreground. “Marx’s system” is of a “polemical nature,” not because it is “tendentious,” but because it provides an exact picture, in theory, of all the contradictions that are present in reality. For this reason, incidentally, all attempts to master “Marx’s system” without mastering its"polemical nature” are and will continue to be unsuccessful: the “polemical nature” of the system is nothing more than a true reflection of the “polemical nature” of capitalism itself.

10. “What is the real significance of the theory of realisation?” asks Mr. Struve and answers by quoting the opinion of Mr. Bulgakov, who says that the possible expansion of capitalist production is actually effected even if only by a series of crises. “Capitalist production is increasing through out the world,” says Mr. Bulgakov. “This argument,” objects Struve, “is quite groundless. The fact is that the real ’expansion of capitalist production’ is not by any means effected in that ideal and isolated capitalist state which Bulgakov presupposes and which, by his assumption, is sufficient unto itself, but in the arena of world economy where the most differing levels of economic development and differing forms of economic existence come into collision” (57).

Thus, Struve’s objection may be summed up as follows: In actual fact realisation does not take place in an isolated, self-sufficing, capitalist state, but “in the arena of world economy,” i.e., by the marketing of products in other countries. It is easy to see that this objection is based on an error. Does the problem of realisation change to any extent if we do not confine ourselves to the home market (“self-sufficing” capitalism) but make reference to the foreign market, if we take several countries instead of only one? If we do not think that the capitalists throw their goods into the sea or give them away gratis to foreigners—if we do not take individual, exceptional cases or periods, it is obvious that we must accept a certain equilibrium of export and import. If a country exports certain products, realising them “in the arena of world economy,” it imports other products in their place. From the standpoint of the theory of realisation it must necessarily be accepted that “foreign commerce only replaces home products [Artikel—goods] by articles of other use- or bodily form” (Das Kapital, II, 469. Quoted by me in Nauchnoye Obozreniye, p. 38 ). Whether we take one country or a group of countries, the essence of the process of realisation does not change in the slightest. In his objection to Mr. Bulgakov, therefore, Struve repeats the old error of the Narodniks, who connected the problem of realisation with that of the foreign market.

In actual fact these two questions have nothing in common. The problem of realisation is an abstract problem that is related to the general theory of capitalism. Whether we take one country or the whole world, the basic laws of realisation, revealed by Marx, remain the same.

The problem of foreign trade or of the foreign market is an historical problem, a problem of the concrete conditions of the development of capitalism in some one country and in some one epoch.

11. Let us dwell for a while on the problem that has “long Interested” Struve: what is the real scientific value of the theory of realisation?

It has exactly the same value as have all the other postulates of Marx’s abstract theory. If Struve is bothered by the circumstance that “perfect realisation is the ideal of capitalist production, but by no means its reality,” we must remind him that all other laws of capitalism, revealed by Marx, also depict only the ideal of capitalism and not its reality. “We need present,” wrote Marx, “only the inner organisation of the capitalist mode of production, in its ideal average (in ihrem idealen Durchschnitt), as it were” (Das Kapital, III, 2, 367; Russian translation, p. 688). The theory of capital assumes that the worker receives the full value of his labour-power. This is the ideal of capitalism, but by no means its reality. The theory of rent presupposes that the entire agrarian population has been completely divided into landowners, capitalists, and hired labourers. This is the ideal of capitalism, but by no means its reality. The theory of realisation presupposes the proportional distribution of production. This is the ideal of capitalism, but by no means its reality.

The scientific value of Marx’s theory is its explanation of the process of the reproduction and circulation of the aggregate social capital. Further, Marx’s theory showed how the contradiction, inherent in capitalism, comes about, how the tremendous growth of production is definitely not accompanied by a corresponding growth in people’s consumption. Marx’s theory, therefore, not only does not restore the apologetic bourgeois theory (as Struve fancies), but, on the contrary, provides a most powerful weapon against apologetics. It follows from the theory that, even with an ideally smooth and proportional reproduction and circulation of the aggregate social capital, the contradiction between the growth of production and the narrow limits of consumption is inevitable. But in reality, apart from this, realisation does not proceed in ideally smooth proportions, but only amidst “difficulties,” “fluctuations,” “crises,” etc.

Further, Marx’s theory of realisation provides a most powerful weapon against the petty-bourgeois reactionary criticism of capitalism, as well as against apologetics. It was precisely this sort of criticism against capitalism that our Narodniks tried to substantiate with their fallacious theory of realisation. Marx’s conception of realisation inevitably leads to the recognition of the historical progressiveness of capitalism (the development of the means of production and, consequently, of the productive forces of society) and, thereby, it not only does not obscure the historically transitory nature of capitalism, but, on the contrary, explains it.

12. “In relation to an ideal or isolated, self-sufficing capitalist society,” asserts Struve, extended reproduction would be impossible, “since the necessary additional workers can nowhere be obtained.”

I certainly cannot agree with Struve’s assertion. Struve has not proved, and it cannot be proved, that it is impossible to obtain additional workers from the reserve army. Against the fact that additional workers can be obtained from the natural growth of the population, Strove makes the unsubstantiated statement that “extended reproduction, based on the natural increase in the population, may not be arithmetically identical with simple reproduction, but from the practical capitalist standpoint, i.e., economically, may fully coincide with it.” Realising that the impossibility of obtaining additional workers cannot be proved theoretically, Struve evades the question by references to historical and practical conditions. “I do not think that Marx could solve the historical I?!] question on the basis of this absolutely abstract construction."... “Self-sufficing capitalism is the historically I!] inconceivable limit." ... “The intensification of the labour that can be forced on a worker is extremely limited, not only in actual fact, but also logically." ... “The constant raising of labour productivity cannot but weaken the very compulsion to work.”

The illogicality of these statements is as clear as day light! None of Struve’s opponents has ever or anywhere given voice to the absurdity that an historical question can be solved with the aid of abstract constructions. In the present instance Struve himself did not propound an historical question, but one that is an absolute abstraction, a purely theoretical question, “in relation to an ideal capitalist society” (57). Is it not obvious that he is simply evading the question? 1, of course, would not dream of denying that there exist numerous historical and practical conditions (to say nothing of the immanent contradictions of capitalism) that are leading and will lead to the destruction of capitalism rather than to the conversion of present-day capitalism into an ideal capitalism. But on the purely theoretical question “in relation to an ideal capitalist society” I still retain my former opinion that there are no theoretical grounds for denying the possibility of extended reproduction in such a society.

13. “Messrs. V. V. and N.—on have pointed out the contradictions and stumbling-blocks in the capitalist development of Russia, but they are shown Marx’s Schemes and told that capital is always exchanged for capital...” (Struve, op. cit., 62).

This is sarcasm in the highest degree. The pity is that matters are depicted in an absolutely false light. Anyone who reads Mr. V. V. ’s Essays on Theoretical Economics and Section XV of the second part of Mr. N.—on’s Sketches will see that both these writers raised precisely the abstract-theoretical question of realisation—the realisation of the product in capitalist society in general. This is a fact. There is another circumstance which is also a fact; other writers, those who opposed them, “deemed it essential to explain, first and foremost, the basic, abstract- theoretical points of the market theory” (as is stated in the opening lines of my article in Nauchnoye Obozreniye). Tugan-Baranovsky wrote on the theory of realisation in the chapter of his book on crises, which bears the subtitle, “The Market Theory.” Bulgakov gave his book the subtitle, “A Theoretical Study.” It is therefore a question of who confuses abstract-theoretical and concrete-historical questions, Struve’s opponents or Struve himself?

On the same page of his article Struve quotes my statement to the effect that the necessity for a foreign market is not due to the conditions of realisation but to historical conditions. “But,” Struve objects (a very typical “but”!), “Tugan-Baranovsky. Bulgakov, and Ilyin have examined only the abstract conditions of realisation and have not examined the historical conditions” (p. 62).

The writers mentioned did not explain historical conditions for the precise reason that they took it upon themselves to speak of abstract-theoretical and not concrete-historical questions. In my book, On the Question of the Development of Capitalism in Russia (“The Home Market for Large-Scale Industry and the Process of Its Formation in Russia”), the printing of which has now (March 1899) been completed. I did not raise the question of the market theory but of a home market for Russian capitalism. In this case, therefore, the abstract truths of theory play only the role of guiding principles, a means of analysing concrete data.

14. Struve “wholly supports” his “point of view” on the theory of “third persons” which he postulated in his Critical Remarks. I, in turn, wholly support what I said in this connection at the time Critical Remarks appeared.

In his Critical Remarks (p. 251) Struve says that Mr. V. V.’s argument “is based on a complete theory, an original one, of markets in a developed capitalist society.” “This theory,” says Struve, “is correct insofar as it confirms the fact that surplus-value cannot ho realised by consumption, either by the capitalists or the workers, and presupposes consumption by third persons.” By these third persons “in Russia” Struve “presumes the Russian agricultural peasantry” (p. 61 of the article in Nauchnoye Obozreniye).

And so, Mr. V. V. propounds a complete and original theory of markets in a developed capitalist society, and the Russian agricultural peasantry is pointed out to him! Is this not confusing the abstract-theoretical question of realisation with the concrete-historical question of capitalism in Russia? Further, if Struve acknowledges Mr. V. V.’s theory to be even partly correct, he must have overlooked Mr. V. V. ’s basic theoretical errors on the question of realisation, he must have overlooked the incorrect view that the “difficulties” of capitalist realisation are confined to surplus-value or are specially bound up with that part of the value of the product—he must have overlooked the incorrect view that connects the question of the foreign market with the question of realisation.

Struve’s statement that the Russian agricultural peasantry, by the differentiation within it, creates a market for our capitalism is perfectly correct (in the above-mentioned book I demonstrated this thesis in detail by an analysis of Zemstvo statistical data). The theoretical substantiation of this thesis, however, relates in no way to the theory of the realisation of the product in capitalist society, but to the theory of the formation of capitalist society. We must also note that calling the peasants “third persons” is not very fortunate and is likely to cause a misunderstanding. If the peasants are “third persons” for capitalist industry, then the industrial producers, large and small, the factory owners and workers, are “third persons” for capitalist farming. On the other hand, the peasant farmers (“third persons”) create a market for capitalism only to the extent that they are differentiated into the classes of capitalist society. (rural bourgeoisie and rural proletariat), i.e., only insofar as they cease to be “third” persons and become active persons in the capitalist system.

15. Struve says: “Bulgakov makes the very subtle remark that no difference in principle can be discerned between the home and the foreign market for capitalist production.” I fully agree with this remark: in actual fact a tariff or political frontier is very often quite unsuitable as a line drawn between the “home” and “foreign” markets. But for reasons lust indicated I cannot agree with Struve that “the theory asserting the necessity for third persons ... arises out of this.” One demand does arise directly out of this: do not stop at the traditional separation of the home and foreign markets when analysing the question of capitalism. This distinction, groundless from a strictly theoretical point of view, is of particularly little use for such countries as Russia. It could be replaced by another division which distinguishes, for instance, the following aspects of capitalist development: 1) the formation and development of capitalist relations within the bounds of a certain fully populated and occupied territory; 2) the expansion of capitalism to other territories (in part completely unoccupied and being colonised by emigrants from the old country, and in part occupied by tribes that remain outside the world market and world capitalism). The first side of the process might be called the development of capitalism in depth and the second its development in breadth. Such a division would include the whole process of the historical development of capitalism: on the one hand, its development in the old countries, where for centuries the forms of capitalist relations up to and including large-scale machine industry have been built up; on the other hand, the mighty drive of developed capitalism to expand to other territories, to populate and plough up new parts of the world, to set up colonies and to draw savage tribes into the whirlpool of world capitalism. In Russia this last-mentioned capitalist tendency has been and continues to be seen most clearly in our outlying districts whose colonisation has been given such tremendous impetus in the post-Reform, capitalist period of Russian history. The south and south-east of European Russia, the Caucasus, Central Asia, and Siberia serve as some thing like colonies for Russian capitalism and ensure its tremendous development, not only in depth but also in breadth.

Finally, the division proposed is convenient because it clearly determines the range of questions which precisely is embraced by the theory of realisation. It is clear that the theory applies only to the first side of the process, only to the development of capitalism in depth. The theory of realisation (i.e., the theory which examines the process of the reproduction and circulation of the aggregate social capital) must necessarily take an isolated capitalist society for its constructions, i.e., must ignore the process of capitalist expansion to other countries, the process of commodity exchange between countries, because this process does not provide anything for the solution of the question of realisation and only transfers the question from one country to several countries. It is also obvious that the abstract theory of realisation must take as a prerequisite an ideally developed capitalist society.

In regard to the literature of Marxism, Struve makes the following general remark: “The orthodox chorus still continues to dominate, but it cannot stifle the new stream of criticism because true strength in scientific questions is always on the side of criticism and not of faith.” As can be seen from the foregoing exposition, we have satisfied ourselves that the “new stream of criticism” is not a guarantee against the repetition of old errors. No, let us better remain"under the sign of orthodoxy"! Let us not believe that orthodoxy means taking things on trust, that orthodoxy precludes critical application and further development, that it permits historical problems to be obscured by abstract schemes. If there are orthodox disciples who are guilty of these truly grievous sins, the blame must rest entirely with those disciples and not by any means with orthodoxy, which is distinguished by diametrically opposite qualities.