[128] Ibid., p. 595.

[129] Ibid., p. 595.

[130] Ibid., p. 596.

[131] Ibid., p. 601.

[132] _Capital_, vol. ii, p. 610.

_CHAPTER IX_

THE DIFFICULTY VIEWED FROM THE ANGLE OF THE PROCESS OF CIRCULATION

The flaw in Marx's a.n.a.lysis is, in our opinion, the misguided formulation of the problem as a mere question of 'the sources of money', whereas the real issue is the effective demand, the use made of goods, not the source of the money which is paid for them. As to money as a means of circulation: when considering the reproductive process as a whole, we must a.s.sume that capitalist society must always dispose of money, or a subst.i.tute, in just that quant.i.ty that is needed for its process of circulation. What has to be explained is the great social transaction of exchange, caused by real economic needs. While it is important to remember that capitalist surplus value must invariably pa.s.s through the money stage before it can be acc.u.mulated, we must nevertheless try to track down the economic demand for the surplus product, quite apart from the puzzle where the money comes from. As Marx himself says in another pa.s.sage:

'The money on one side in that case calls forth expanded reproduction on the other, because the possibility for it exists without the money. For money in itself is not an element of actual reproduction.'[133]

And in a different context, Marx actually shows the question about the 'sources of money' to be a completely barren formulation of the problem of acc.u.mulation.

In fact, he had come up against this difficulty once before when examining the process of circulation. Still dealing with simple reproduction, he had asked, in connection with the circulation of the surplus value:

'But the commodity capital must be monetised before its conversion into productive capital, or before the surplus-value contained in it can be spent. Where does the money for this purpose come from? This question seems difficult at the first glance, and neither Tooke nor anyone else has answered it so far.'[134]

And he was then quite uncompromising about getting to the root of the matter: 'The circulating capital of 500 p.st. advanced in the form of money-capital, whatever may be its period of turn-over, may now stand for the total capital of society, that is to say, of the capitalist cla.s.s. Let the surplus-value be 100 p.st. How can the entire capitalist cla.s.s manage to draw continually 600 p.st. out of the circulation, when they continually throw only 500 p.st. into it?'[135]

All that, mind you, refers to simple reproduction, where the entire surplus value is used for the personal consumption of the capitalist cla.s.s. The question should therefore from the outset have been put more precisely in this form: how can the capitalists secure for themselves consumer goods to the amount of 100 surplus value on top of putting 500 into circulation for constant and variable capital? It is immediately obvious that those 500 which, in form of capital, always serve to buy means of production and to pay the workers, cannot simultaneously defray the expense of the capitalists' personal consumption. Where, then, does the additional money come from?--the 100 the capitalists need to realise their own surplus value? Thus all theoretical dodges one might devise for this point are summarily disposed of by Marx right away:

'It should not be attempted to avoid this difficulty by plausible subterfuges.

'For instance: So far as the constant circulating capital is concerned, it is obvious that not all invest it simultaneously. While the capitalist A sells his commodities so that his advanced capital a.s.sumes the form of money, there is on the other hand, the available money-capital of the buyer B which a.s.sumes the form of his means of production which A is just producing. The same transaction, which restores that of B to its productive form, transforms it from money into materials of production and labour-power; the same amount of money serves in the two-sided process as in every simple purchase C-M. On the other hand, when A reconverts his money into means of production, he buys from C, and this man pays B with it, etc., and thus the transaction would be explained.

'But none of the laws referring to the quant.i.ty of the circulating money, which have been a.n.a.lysed in the circulation of commodities (vol.

i, chap, iii), are in any way changed by the capitalist character of the process of production.

'Hence, when we have said that the circulating capital of society, to be advanced in the form of money, amounts to 500 p.st., we have already accounted for the fact that this is on the one hand the sum simultaneously advanced, and that, on the other hand, it sets in motion more productive capital than 500 p.st., because it serves alternately as the money fund of different productive capitals. This mode of explanation, then, a.s.sumes that money as existing whose existence it is called upon to explain.

'It may be furthermore said: Capitalist A produces articles which capitalist B consumes unproductively, individually. The money of B therefore monetises the commodity-capital of A, and thus the same amount serves for the monetisation of the surplus-value of B and the circulating constant capital of A. But in that case, the solution of the question to be solved is still more directly a.s.sumed, the question: Whence does B get the money for the payment of his revenue? How does he himself monetise this surplus-portion of his product?

'It might also be answered that that portion of the circulating variable capital, which A continually advances to his labourers, flows back to him continually from the circulation, and only an alternating part stays continually tied up for the payment of wages. But a certain time elapses between the expenditure and the reflux, and meanwhile the money paid out for wages might, among other uses, serve for the monetisation of surplus-value. But we know, in the first place, that, the greater the time, the greater must be the supply of money which the capitalist A must keep continually in reserve. In the second place, the labourer spends the money, buys commodities for it, and thus monetises to that extent the surplus-value contained in them. Without penetrating any further into the question at this point, it is sufficient to say that the consumption of the entire capitalist cla.s.s, and of the unproductive persons dependent upon it, keeps step with that of the labouring cla.s.s; so that, simultaneously with the money thrown into circulation by the labouring cla.s.s, the capitalists must throw money into it, in order to spend their surplus-value as revenue. Hence money must be withdrawn from circulation for it. This explanation would merely reduce the quant.i.ty of money required, but not do away with it.

'Finally it might be said: A large amount of money is continually thrown into circulation when fixed capital is first invested, and it is not recovered from the circulation until after the lapse of years, by him who threw it into circulation. May not this sum suffice to monetise the surplus-value? The answer to this is that the employment as fixed capital, if not by him who threw it into circulation, then by some one else, is probably implied in the sum of 500 p.st. (which includes the formation of a h.o.a.rd for needed reserve funds). Besides, it is already a.s.sumed in the amount expended for the purchase of products serving as fixed capital, that the surplus-value contained in them is also paid, and the question is precisely, where the money for this purpose came from.'[136]

This parting shot, by the way, is particularly noteworthy in that Marx here expressly repudiates the attempt to explain realisation of the surplus value, even in the case of simple reproduction, by means of a h.o.a.rd formed for the periodical renewal of fixed capital. Later on, with a view to realising the surplus value under the much more difficult conditions of acc.u.mulation, he makes more than one tentative effort to substantiate an explanation of this type which he himself dismissed as a 'plausible subterfuge'.

Then follows a solution which has a somewhat disconcerting ring: 'The general reply has already been given: When a ma.s.s of commodities valued at _x_ times 1,000 p.st. has to circulate, it changes absolutely nothing in the quant.i.ty of the money required for this circulation, whether this ma.s.s of commodities contains any surplus-value or not, and whether this ma.s.s of commodities has been produced capitalistically or not. In other words, _the problem itself does not exist_. All other conditions being given, such as velocity of circulation of money, etc., a definite sum of money is required in order to circulate the value of commodities worth _x_ times 1,000 p.st., quite independently of the fact how much or how little of this value falls to the share of the direct producers of these commodities. So far as any problem exists here, it coincides with the general problem: Where does all the money required for the circulation of the commodities of a certain country come from?'[137]

The argument is quite sound. The answer to the general question about the origin of the money for putting a certain quant.i.ty of commodities into circulation within a country will also tell us where the money for circulating the surplus value comes from. The division of the bulk of value contained in these commodities into constant and variable capital, and surplus value, does not exist from the angle of the circulation of money--in this connection, it is quite meaningless. But it is only from the angle of the circulation of money, or of a simple commodity circulation, that the problem has no existence. Under the aspect of social reproduction as a whole, it is very real indeed; but it should not, of course, be put in that misleading form that brings us back to simple commodity circulation, where it has no meaning. We should not ask, accordingly: Where does the money required for realising the surplus value come from? but: Where are the consumers for this surplus value? It is they, for sure, who must have this money in hand in order to throw it into circulation. Thus, Marx himself, although he just now denied the problem to exist, keeps coming back to it time and again:

'Now, there are only two points of departure: The capitalist and the labourer. All third cla.s.ses of persons must either receive money for their services from these two cla.s.ses, 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 fact that the surplus-value does not all stay in the pocket of the industrial capitalist, but must be shared by him with other persons, has nothing to do with the present question. The question is: How does he maintain his surplus-value, not, how does he divide the money later after he has secured it? For the present case, the capitalist may as well be regarded as the sole owner of his surplus-value. As for the labourer it has already been said that he is but the secondary point of departure, while the capitalist is the primary starting point of the money thrown by the labourer into circulation. The money first advanced as variable capital is going through its second circulation, when the labourer spends it for the payment of means of subsistence.

'The capitalist cla.s.s, then, remains the sole point of departure of the circulation of money. If they need 400 p.st. for the payment of means of production, and 100 p.st. for the payment of labour-power, they throw 500 p.st. into circulation. But the surplus-value incorporated in the product, with a rate of surplus-value of 100 per cent, is equal to the value of 100 p.st. How can they continually draw 600 p.st. out of circulation, when they continually throw only 500 p.st. into it? From nothing comes nothing. The capitalist cla.s.s as a whole cannot draw out of circulation what was not previously in it.'[138]

Marx further explodes another device which might conceivably be thought adequate to the problem, i.e. a more rapid turnover of money enabling a larger amount of value to circulate by means of a smaller amount of money. The dodge will not work, of course, since the velocity of money in circulation is already taken into account by equating the aggregate bulk of commodities with a certain number of pounds sterling. But then at last we seem in sight of a proper solution:

'Indeed, paradoxical as it may appear at first sight, it is the capitalist cla.s.s itself that throws the money into circulation which serves for the realisation of the surplus-value incorporated in the commodities. But, mark well, it is not thrown into circulation as advanced money, not as capital. The capitalist cla.s.s spends it for their individual consumption. The money is not advanced by them, although they are the point of departure of its circulation.'[139]

This lucid and comprehensive account is the best evidence that the problem is not just imaginary but very real. It provides a solution, not by disclosing a new 'source of money' for the realisation of the surplus value, but by pointing out at last the consumers of this surplus value.

We are still, on Marx's a.s.sumption, within the bounds of simple reproduction; the capitalist cla.s.s, that is to say, use the whole of their surplus value for personal consumption. Since the capitalists are the consumers of surplus value, it is not so much a paradox as a truism that they must, in the nature of things, possess the money for appropriating the objects of consumption, the natural form of this surplus value. The circulatory transaction of exchange is the necessary consequence of the fact that the individual capitalist cannot immediately consume his individual surplus value, and accordingly the individual surplus product, as could, for instance, the employer of slave labour. As a rule the natural material form of the surplus product tends to preclude such use. The aggregate surplus value of the capitalists in general is, however, contained in the total social product--as long as there is simple reproduction--as expressed by a corresponding quant.i.ty of consumer goods for the capitalist cla.s.s, just as the sum total of variable capital has its corresponding equivalent in the quant.i.ty of consumer goods for the working cla.s.s, and as the constant capital of all individual capitalists taken together is represented by material means of production in an equivalent quant.i.ty.

In order to exchange the unconsumable individual surplus values for a corresponding amount of consumer goods, a double transaction of commodity exchange is needed: first, the sale of one's own surplus product and then the purchase of consumer goods out of the surplus product of society. These two transactions can only take place among members of the capitalist cla.s.s, among individual capitalists, which means that their agent, the money, thereby merely changes hands as between one capitalist and another without ever being alienated from the capitalist cla.s.s in general. Since simple reproduction inevitably implies the exchange of equivalents, one and the same amount of money can serve year by year for the circulation of the surplus value, and only an excess of zeal will inspire the further query: where does the money which mediates the capitalists' own consumption come from in the first place? This, question, however, reduces to a more general one: how did money capital initially come into the hands of the capitalists, that money capital of which they always retain a certain part for their personal consumption, apart from what they use for productive investment? Put in this way, however, the question belongs in the chapter of so-called 'primitive acc.u.mulation', i.e. the historical genesis of capital, going beyond the framework of an a.n.a.lysis of the process of circulation as well as of reproduction.

Thus the fact is clear and unequivocal--so long as we remain within the bounds of simple reproduction. Here the problem is solved by the premises themselves; in fact, the solution is already antic.i.p.ated by the very concept of simple reproduction which indeed is based on the entire surplus value being consumed by the capitalist cla.s.s. This implies that it must also be the latter who buy it, that is to say, individual capitalists must buy it from each other.

'In the present case', Marx says himself, 'we had a.s.sumed, that the sum of money which the capitalist throws into circulation until the first surplus-value flows back to him, is exactly equal to the surplus-value which he is going to produce and monetise. This is obviously an arbitrary a.s.sumption, so far as, the individual capitalist is concerned.

But it must be correct when applied to the entire capitalist cla.s.s, when simple reproduction is a.s.sumed. It expresses the same thing that this a.s.sumption does, namely, that the entire surplus-value is consumed unproductively, but it only, not any portion of the original capital stock.'[140]

But simple reproduction on a capitalist basis is after all an imaginary quant.i.ty in economic theory: no more and no less legitimate, and quite as unavoidable as [sqrt](-1) in mathematics. What is worse, it cannot offer any help at all with the problem of realising the surplus value in real life, i.e. with regard to enlarged reproduction or acc.u.mulation.

Marx himself says so for a second time in the further development of his a.n.a.lysis.

Where does the money for realising the surplus value come from if there is acc.u.mulation, i.e. not consumption but capitalisation of part of the surplus value? Marx's first answer is as follows:

'In the first place, the additional money-capital required for the function of the increasing productive capital is supplied by that portion of the realised surplus-value which is thrown into circulation by the capitalists as money-capital, not as the money form of their revenue. The money is already present in the hands of the capitalists.

Only its employment is different.'[141]

Our investigation of the reproductive process has already made us familiar with this explanation, and we are equally familiar with its defects; for one thing, the answer rests on the moment of the first transition from simple reproduction to acc.u.mulation. The capitalists only yesterday consumed their entire surplus value, and thus had in hand an appropriate amount of money for their circulation. To-day they decide to 'save' part of the surplus value and to invest it productively instead of squandering it. Provided that material means of production were manufactured instead of luxury goods, they need only put part of their personal money fund to a different use. But the transition from simple reproduction to expanded reproduction is no less a theoretical fiction than simple reproduction of capital itself, for which reason Marx immediately goes on to say:

'Now, by means of the additional productive capital, its product, an additional quant.i.ty of commodities, is thrown into circulation. Together with this additional quant.i.ty of commodities, a portion of the additional money required for its circulation is thrown into circulation, so far as the value of this ma.s.s of commodities is equal to that of the productive capital consumed in their production. This additional quant.i.ty of money has precisely been advanced as an additional money-capital, and therefore it flows back to the capitalist through the turn-over of his capital. Here the same question reappears, which we met previously. Where does the additional money come from, by which the additional surplus-value now contained in the form of commodities is to be realised?'[142]

The problem could not be put more precisely. But instead of a solution, there follows the surprising conclusion:

'The general reply is again the same. The sum total of the prices of the commodities has been increased, not because the prices of a given quant.i.ty of commodities have risen, but because the ma.s.s of the commodities now circulating is greater than that of the previously circulating commodities, and because this increase has not been offset by a fall in prices. The additional money required for the circulation of this greater quant.i.ty of commodities of greater value must be secured, either by greater economy in the circulating quant.i.ty of money--whether by means of balancing payments, etc., or by some measure which accelerates the circulation of the same coins,--or by the transformation of money from the form of a h.o.a.rd into that of a circulating medium.'[143]

All this amounts to an exposition along these lines: under conditions of developing and growing acc.u.mulation, capitalist reproduction dumps ever larger ma.s.ses of commodity values on the market. To put this commodity ma.s.s of a continually increasing value into circulation requires an ever larger amount of money. This increasing amount of money must be found somehow or other. All this is, no doubt, plausible and correct as far as it goes, but our problem is not solved, it is merely wished away.

One thing or the other! Either we regard the aggregate social product in a capitalist economy simply as a ma.s.s, a conglomeration of commodities of a certain value, seeing under conditions of acc.u.mulation, a mere increase in this undifferentiated ma.s.s of commodities and in the bulk of its value. Then all we need say is that a corresponding quant.i.ty of money is required for circulating this bulk of value, that with an increasing bulk of value the quant.i.ty of money must also increase, unless this growth of value is offset by acceleration of, and economy in, the traffic. And the final question, where does all money originally come from, could then be answered on Marx's recipe: from the gold mines.

This, of course, is one way of looking at things, that of simple commodity circulation. But in that case there is no need to drag in concepts such as constant and variable capital, or surplus value, which have no place in simple commodity circulation, belonging essentially to the circulation of capitals and to social reproduction; nor is there need to inquire for sources of money for the realisation of the social surplus value under conditions of first simple, and then enlarged, reproduction. Under the aspect of simple commodity circulation puzzles of this kind are without meaning or content. But once these questions have been raised, once the course has been set for an investigation into the circulation of capitals and social reproduction, there can be no appealing to the sphere of simple commodity circulation, where there is no such problem at all, and consequently no solution to it. There can be no looking for the answer there, and then saying triumphantly that the problem has long been solved and in fact never really existed.

All this time, it appears, Marx has been tackling the problem from a wrong approach. No intelligent purpose can be served by asking for the source of the money needed to realise the surplus value. The question is rather where the demand can arise--to find an effective demand for the surplus value. If the problem had been put in this way at the start, no such long-winded detours would have been needed to show whether it can be solved or not. On the basis of simple reproduction, the matter is easy enough: since all surplus value is consumed by the capitalists, they themselves are the buyers and provide the full demand for the social surplus value, and by the same token they must also have the requisite cash in hand for circulation of the surplus value. But in this showing it is quite evident that under conditions of acc.u.mulation, i.e.

of capitalisation of part of the surplus value, it cannot, _ex hypothesi_, be the capitalists themselves who buy the entire surplus value, that they cannot possibly realise it. True, if the capitalised surplus value is to be realised at all, money must be forthcoming in adequate quant.i.ties for its realisation. But it is quite impossible that this money should come from the purse of the capitalist cla.s.s itself.

Just because acc.u.mulation is postulated, the capitalists cannot buy their surplus value themselves, even though they might, _in abstracto_, have the money to do so. But who else could provide the demand for the commodities incorporating the capitalised surplus value?

'Apart from this cla.s.s (the capitalists), there is, according to our a.s.sumption--the general and exclusive domination of capitalist production--no other cla.s.s but the working cla.s.s. All that the working cla.s.s buys is equal to the sum total of its wages, equal to the sum total of the variable capital advanced by the entire capitalist cla.s.s.'[144]

The workers, then, are even less able than the capitalist cla.s.s to realise the capitalised surplus value. Somebody must buy it, if the capitalists are still to be able to recover the capital they have acc.u.mulated and advanced; and yet--we cannot think of any buyers other than capitalists and workers. 'How can the entire capitalist cla.s.s acc.u.mulate money under such circ.u.mstances?'[144]