Sismondi then goes on to the problem of realising the aggregate product.

On the one hand, the sum total of incomes in a society consists of wages, capital profits and rents, and is thus represented by _v + s_; on the other hand, the aggregate social product, in terms of value, is equally resolved into _v + s_ 'so that national income and annual production balance each other (and appear as equal quant.i.ties)', i.e. so that they must be equal in value.

'Annual production is consumed altogether during the year, but in part by the workers who, by exchanging their labour for it, convert it into capital and reproduce it; in part by the capitalists who, exchanging their income for it, annihilate it. The whole of the annual income is destined to be exchanged for the whole of annual production.'[172]

This is the basis on which, in the sixth chapter of book ii, 'On Reciprocal Determination of Production and Consumption', Sismondi finally sets up the following precise law of reproduction: 'It is the income of the past year which must pay for the production of the present year.'[173]

If this is true, how can there be any acc.u.mulation of capital? If the aggregate product must be completely consumed by the workers and capitalists, we obviously remain within the bounds of simple reproduction, and there can be no solution to the problem of acc.u.mulation. Sismondi's theory in fact amounts to a denial of the possibility of acc.u.mulation. The aggregate social demand being the bulk of wages given to the workers and the previous consumption of the capitalists, who will be left to buy the surplus product if reproduction expands? On this count, Sismondi argues that acc.u.mulation is objectively impossible, as follows:

'What happens after all is always that we exchange the whole of production for the whole production of the previous year. Besides, if production gradually increases, the exchange, at the same time as it improves future conditions, must entail a small loss every year.'[174]

In other words, when the aggregate product is realised, acc.u.mulation is bound each year to create a surplus that cannot be sold. Sismondi, however, is afraid of drawing this final conclusion, and prefers a 'middle course', necessitating a somewhat obscure subterfuge: 'If this loss is not heavy, and evenly distributed, everyone will bear with it without complaining about his income. This is what const.i.tutes the national economy, and the series of such small sacrifices increases capital and common wealth.'[174]

If, on the other hand, there is ruthless acc.u.mulation, this surplus residue becomes a public calamity, and the result is a crisis. Thus a petty-bourgeois subterfuge becomes the solution of Sismondi: putting the dampers on acc.u.mulation. He constantly polemises against the cla.s.sical school which advocates unrestricted development of the productive forces and expansion of production; and his whole work is a warning against the fatal consequences of giving full rein to the desire to acc.u.mulate.

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 product, without leaving any part of the value for the renewal of society's constant capital, and also, that acc.u.mulation consists merely of the transformation of capitalised surplus value into variable capital. Yet, if later critics of Sismondi, e.g. the Russian Marxist Ilyin,[175] think that pointing out this fundamental error in the a.n.a.lysis of the aggregate product can justify a cavalier dismissal of Sismondi's entire theory of acc.u.mulation as inadequate, as 'nonsense', they merely demonstrate their own obtuseness in respect of Sismondi's real concern, his ultimate problem.

The a.n.a.lysis 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 acc.u.mulation 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 cla.s.sical 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 acc.u.mulation. 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 una.s.sailable dogma.

The knowledge we owe to Marx that the aggregate product must, apart from consumer goods for the workers and capitalists (_v + s_), also contain means of production to renew what has been used, that acc.u.mulation accordingly consists not merely in the enlargement of variable but also of constant capital, is not enough, as amply demonstrated by this entertaining turn of events, to solve the problem of acc.u.mulation. Later we shall see how this stress on the share of constant capital in the reproductive process gave rise to new fallacies in the theory of acc.u.mulation. At present it will suffice to put on record that the deference to Smith's error about the reproduction of aggregate capital is not a weakness unique to Sismondi's position but is rather the common ground on which the first controversy about the problem of acc.u.mulation was fought out. Scientific research, not only in this sphere, proceeds in devious ways; it often tackles the upper storeys of the edifice, as it were, without making sure of the foundations; and so this conflict only resulted in that bourgeois economics took on the further complicated problem of acc.u.mulation without even having a.s.similated the elementary problem of simple reproduction. At all events, Sismondi, in his critique of acc.u.mulation, had indubitably given bourgeois economics a hard nut to crack--seeing that in spite of his transparently feeble and awkward deductions, Sismondi's opponents were still unable to get the better of him.

FOOTNOTES:

[147] In the review of an essay on _Observations on the injurious Consequences of the Restrictions upon Foreign Commerce, by a Member of the late Parliament, London, 1820_ (_Edinburgh Review_, vol. lxvi, pp.

331 ff.). This interesting doc.u.ment, from which the following extracts are taken, an essay with a Free Trade bias, paints the general position of the workers in England in the most dismal colours. It gives the facts as follows: 'The manufacturing cla.s.ses in Great Britain ... have been suddenly reduced from affluence and prosperity to the extreme of poverty and misery. In one of the debates in the late Session of Parliament, it was stated that the wages of weavers of Glasgow and its vicinity which, when highest, had averaged about 25_s._ or 27_s._ a week, had been reduced in 1816 to 10_s._; and in 1819 to the wretched pittance of 5-6_s._ or 6_s._ They have not since been materially augmented.' In Lancashire, according to the same evidence, the direct weekly wage of the weavers was from 6_s._ to 12_s._ a week for 15 hours' labour a day, whilst half-starved children worked 12 to 16 hours a day for 2_s._ or 3_s._ a week. Distress in Yorkshire was, if possible, even greater. As to the address by the frame-work knitters of Nottingham, the author says that he himself investigated conditions and had come to the conclusion that the declarations of the workers 'were not in the slightest degree exaggerated'.

[148] Ibid., p. 334.

[149] Paris, 1827.

[150] Preface to the second edition. Translation by M. Mignet, in _Political Economy and the Philosophy of Government_ (London, 1847), pp.

114 ff.

[151] _Nouveaux Principes_ ... (2nd ed.), vol. i, p. 79.

[152] _Nouveaux Principes_ ... (2nd ed.), vol. i, p. xv.

[153] Ibid., p. 92.

[154] Ibid., pp. 111-12.

[155] Ibid., p. 335.

[156] Op. cit., vol. ii, p. 435.

[157] Ibid., p. 463.

[158] Op. cit., vol. i, p. xiii (pp. 120-1 of Mignet's translation).

[159] _Nouveaux Principes_ ... (2nd ed.), vol. i, p. 84.

[160] Ibid., p. 85.

[161] Ibid., p. 86.

[162] Ibid., pp. 86-7.

[163] _Nouveaux Principes_ ..., vol. i, p. 87.

[164] Ibid., pp. 87-8.

[165] Ibid., pp. 88-9.

[166] _Nouveaux Principes_ ..., vol. i, pp. 108-9.

[167] Ibid., pp. 93-4.

[168] Ibid., p. 95.

[169] _Nouveaux Principes_ ..., vol. i, pp. 95-6.

[170] Ibid., pp. 104-5.

[171] Ibid., p. 105.

[172] Ibid., pp. 105-6.

[173] Ibid., pp. 113, 120.

[174] _Nouveaux Principes_ ..., vol. i, p. 121.

[175] Vladimir Ilyich [Lenin], _Economic Studies and Essays_, _St.

Petersburg_, 1899.

_CHAPTER XI_

MACCULLOCH _v._ SISMONDI

Sismondi's emphatic warnings against the ruthless ascendancy of capital in Europe called forth severe opposition on three sides: in England the school of Ricardo, in France J. B. Say, the commonplace vulgariser of Adam Smith, and the St. Simonians. While Owen in England, profoundly aware of the dark aspects of the industrial system and of the crises in particular, saw eye to eye with Sismondi in many respects, the school of that other great European, St. Simon, who had stressed the world-embracing conception of large industrial expansion, the unlimited unfolding of the productive forces of human labour, felt perturbed by Sismondi's alarms. Here, however, we are interested in the controversy between Sismondi and the Ricardians which proved the most fruitful from the theoretical point of view. In the name of Ricardo, and, it seemed, with Ricardo's personal approval, MacCulloch anonymously published a polemical article[176] against Sismondi in the _Edinburgh Review_ in October 1819, i.e. immediately after the publication of the _Nouveaux Principes_.

In 1820, Sismondi replied in Rossi's _Annales de Jurisprudence_ with an essay ent.i.tled: 'Does the Power of Consuming Necessarily Increase with the Power to Produce? An Enquiry.'[177]

In his reply Sismondi[178] himself states that his polemics were conceived under the impact of the commercial crisis: 'This truth we are both looking for, is of utmost importance under present conditions. It may be considered as fundamental for economics. Universal distress is in evidence in the trade, in industry and, in many countries certainly, even in agriculture. Such prolonged and extraordinary suffering has brought misfortune to countless families and insecurity and despondency to all, until it threatens the very bases of the social order. Two contrasting explanations have been advanced for the distress that has caused such a stir. Some say: we have produced too much, and others: we have not produced enough. "There will be no equilibrium," say the former, "no peace and no prosperity until we consume the entire commodity surplus which remains unsold on the market, until we organise production for the future in accordance with the buyers'

demand."--"There will be a new equilibrium," say the latter, "if only we double our efforts to acc.u.mulate as well as to produce. It is a mistake to believe that there is a glut on the market; no more than half our warehouses are full; let us fill the other half, too, and the mutual exchange of these new riches will revive our trade."'[179]

In this supremely lucid way, Sismondi sets out and underlines the real crux of the dispute. 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: