_CHAPTER XXI_

STRUVE'S 'THIRD PERSONS' AND 'THREE WORLD EMPIRES'

We now turn to the criticism of the above opinions as given by the Russian Marxists.

In 1894, Peter v. Struve who had already given a detailed appraisal of Nikolayon's book in an essay 'On Capitalist Development in Russia',[292]

published a book in Russian,[293] criticising the theories of 'populism'

from various aspects. In respect of our present problem, however, he mainly confines himself to proving, against both Vorontsov and Nikolayon, that capitalism does not cause a contraction of the home market but, on the contrary, an expansion. There can be no doubt that Nikolayon has made a blunder--the same that Sismondi had made. They each describe only a single aspect of the destructive process, performed by capitalism on the traditional forms of production by small enterprise.

They saw only the resulting depression of general welfare, the impoverishment of broad strata of the population, and failed to notice that economic aspect of the process which entails the abolition of natural economy and the subst.i.tution of a commodity economy in rural districts. And this is as much as to say that, by absorbing further and further sections of formerly independent and self-sufficient producers into its own sphere, capitalism continuously transforms into commodity buyers ever new strata of people who had not before bought its commodities. In fact, the course of capitalist development is just the opposite of that pictured by the 'populists' on the model of Sismondi.

Capitalism, far from ruining the home market, really sets about creating it, precisely by means of a spreading money economy.

Struve in particular refutes the theory that the surplus value cannot possibly be realised on the home market. He argues as follows: The conviction that a mature capitalist society consists exclusively of entrepreneurs and workers forms the basis of Vorontsov's theory, and Nikolayon himself operates with this concept throughout. From this point of view, of course, the realisation of the capitalist aggregate product seems incomprehensible. And Vorontsov's theory is correct in so far as it states the fact that neither the capitalists' nor the workers'

consumption can realise the surplus value, so that the existence of 'third persons' must be presumed.[294] But then, is it not beyond any doubt that some such 'third persons' exist in every capitalist society?

The idea of Vorontsov and Nikolayon is pure fiction 'which cannot advance our understanding of any historical process whatever by a hair's breadth'.[295] There is no actual capitalist society, however highly developed, composed exclusively of capitalists and workers.

'Even in England and Wales, out of a thousand self-supporting inhabitants, 543 are engaged in industry, 172 in commerce, 140 in agriculture, 81 in casual wage labour, and 62 in the Civil Service, the liberal professions and the like.'

Even in England, then, there are large numbers of 'third persons', and it is they who, by their consumption, help to realise the surplus value in so far as it is not consumed by the capitalists. Struve leaves it open whether these 'third persons' consume enough to realise all surplus value--however that may be, 'the contrary would have to be proved'.[296]

This cannot be done, he claims, for Russia, that vast country with an immense population. She, in fact, is in the fortunate position to be able to dispense with foreign markets. In this--and here Struve dips into the intellectual treasures of Professors Wagner, Schaeffle, and Schmoller--she enjoys the same privileges as the United States of America. 'If the example of the N. American Union stands for anything, it is proof of the fact that under certain circ.u.mstances capitalist industry can attain a very high level of development almost entirely on the basis of the home market.'[297]

The negligible amount of industrial exports from the U.S.A. in 1882 is mentioned in support of this statement which Struve formulates as a general doctrine: 'The vaster the territory, and the larger the population of a country, the less does that country require foreign markets for its capitalist development.' He infers from this, in direct opposition to the 'populists', 'a more brilliant future (for Russia) than for the other countries'.

On the basis of commodity production, the progressive development of agriculture is bound to create a market wide enough to support the development of Russian industrial capitalism. This market would be capable of unlimited expansion, in step with the economic and cultural progress of the country, and together with the subst.i.tution of a monetary for a natural economy. 'In this respect, capitalism enjoys more favourable conditions in Russia than in other countries.'[298]

Struve paints a detailed and highly coloured picture of the new markets which, thanks to the Trans-Siberian Railway, are opening up in Siberia, Central Asia, Asia Minor, Persia and the Balkans. But his prophetic zeal blinds him to the fact that he is no longer talking about the 'indefinitely expanding' home market but about specific foreign markets.

In later years, he was to throw in his lot, in politics too, with this optimistic Russian capitalism and its liberal programme of imperialist expansion, for which he had laid the theoretical foundations when still a 'Marxist'.

Indeed, the tenor of Struve's argument is a fervent belief in the unlimited capacity for expansion of capitalist production, but the economic foundation of this optimism is rather weak. He is somewhat reticent as to what he means by the 'third persons' whom he considers the mainstay of acc.u.mulation, but his references to English occupational statistics indicate that he has in mind the various private and public servants, the liberal professions, in short the notorious _grand public_ so dear to bourgeois economists when they are completely at a loss. It is this 'great public' of which Marx said that it serves as the explanation for things which the economist cannot explain. It is obvious that, if we categorically refer to consumption by the capitalists and the workers, we do not speak of the entrepreneur as an individual, but of the capitalist cla.s.s as a whole, including their hangers-on--employees, Civil Servants, liberal professions, and the like. All such 'third persons' who are certainly not lacking in any capitalist society are, as far as economics is concerned, joint consumers of the surplus value for the greater part, in so far, namely, as they are not also joint consumers of the wages of labour. These groups can only derive their purchasing power either from the wage of the proletariat or from the surplus value, if not from both; but on the whole, they are to be regarded as joint consumers of the surplus value.

It follows that their consumption is already included in the consumption of the capitalist cla.s.s, and if Struve tries to reintroduce them to the capitalists by sleight-of-hand as 'third persons' to save the situation and help to realise the surplus value, the shrewd profiteer will not be taken in. He will see at once that this great public is nothing but his old familiar retinue of parasites who buy his commodities with money of his own providing. No, no, indeed! Struve's 'third persons' will not do at all.

Struve's theory of foreign markets and their significance for capitalist production is equally untenable. In this, he defers to the mechanist approach of the 'populists' who, along with the professors' textbooks, hold that a capitalist (European) country will first exploit the home market to the limit, and will only look to foreign markets when this is almost or completely exhausted. Then, following in the footsteps of Wagner, Schaeffle and Schmoller, Struve arrives at the absurd conclusion that a country with vast territories and a large population can make its capitalist production a 'self-contained whole' and rely indefinitely on the home market alone.[299] In actual fact, capitalist production is by nature production on a universal scale. Quite contrary to the bookish decrees issued by German scholars, it is producing for a world market already from the word _go_. The various pioneering branches of capitalist production in England, such as the textile, iron and coal industries, cast about for markets in all countries and continents, long before the process of destroying peasants' property, the decline of handicraft and of the old domestic industries within the country had come to an end. And again, is it likely that the German chemical or electrotechnical industries would be grateful for the sober advice not to work for five continents, as they have done from the beginning, but to confine themselves to the German home market which, being largely supplied from abroad, is evidently far from exhausted in respect of a whole lot of other German industries? Or that one should explain to the German machine industry, it should not venture yet upon foreign markets, since German import statistics are visible proof that a good deal of the demand in Germany for products of this branch is satisfied by foreign supplies? No, this schematic conception of 'foreign trade' does not help us at all to grasp the complexity of the world market with its uncounted ramifications and different shades in the division of labour.

The industrial development of the U.S.A. who have already at the time of writing become a dangerous rival to Britain both on the world market and even in England herself, just as they have beaten German compet.i.tion, e.g. in the sphere of electrotechnics, both in the world market and in Germany herself, has given the lie to Struve's inferences, already out-of-date when they were put on paper.

Struve also shares the crude view of the Russian 'populists' who saw hardly more than a merchant's sordid concern for his market in the international connections of capitalist economy, and its historical tendency to create a h.o.m.ogeneous living organism based on social division of labour as well as the countless variety of natural wealth and productive conditions of the globe. Moreover he accepts the Three Empire fiction of Wagner and Schmoller (the self-contained Empires of Great Britain, Russia and the U.S.A.) which completely ignores or artificially minimises the vital part played by an unlimited supply of means of subsistence, of raw and auxiliary materials and of labour power which is just as necessary for a capitalist industry computed in terms of a world market as the demand for finished products. Alone the history of the English cotton industry, a reflection in miniature of the history of capitalism in general, spreading over five continents throughout the nineteenth century, makes a mockery of the professors' childish pretensions which have only one real significance: to provide the theoretical justification for the system of protective tariffs.

FOOTNOTES:

[292] Published in _Sozialdemokratisches Zentralblatt_, vol. iii, No. 1.

[293] _Critical Comments on the Problem of Economic Development in Russia._

[294] Op. cit., p. 251.

[295] Ibid., p. 255.

[296] Ibid., p. 252.

[297] Ibid., p. 260. 'There can be no doubt that Struve's attempt to refute what he calls the pessimist outlook on the a.n.a.logy of the U.S.A.

is fallacious. He says that Russia can overcome the evil consequences of the most recent capitalism just as easily as the U.S.A. But what he forgets is that the U.S.A. from the first represent a new bourgeois state, that they were founded by a petty bourgeoisie and by peasants who had fled from European feudalism to set up a purely bourgeois society.

In Russia, on the other hand, we have a primitive communist foundation, a society of _gentes_, as it were, in the pre-civilised stage which, though it is already disintegrating, still serves as a material basis upon which the capitalist revolution (for it is in fact a social revolution) can take place and become effective. In America, a monetary economy had been stabilised more than a century ago, whereas a natural economy had until recently prevailed in Russia. It should be obvious therefore that this revolution in Russia is bound to be much more ruthless and violent, and accompanied by immensely more suffering than in America' (Engels to Nikolayon, October 17, 1893, _Letters_ ..., p.

85).

[298] _Critical Comments_ ..., p. 284.

[299] Professor Schmoller, amongst others, clearly reveals the reactionary aspect of the 'Three Empire Theory' (viz. Great Britain, Russia and the U.S.A.) evolved by the German professors. In his handbook of commercial policy (_Handelspolitische Sakularbetrachtung_), the venerable scholar dolefully frowns upon 'neo-mercantilism', that is to say upon the imperialist designs of the three arch-villains. 'In the interests of a higher intellectual, moral and aesthetic civilisation and social progress' he demands a strong German navy and a European Customs Union. 'Out of the economic tension of the world there arises the prime duty for Germany to create for herself a strong navy, so as to be prepared for battle in the case of need, and to be desirable as an ally to the World Powers'--which latter, however, Professor Schmoller says elsewhere, he does not wish to blame for again taking the path of large-scale colonial expansion. 'She neither can nor ought to pursue a policy of conquest like the Three World Powers, but she must be able, if necessary, to break a foreign blockade of the North Sea in order to protect her own colonies and her vast commerce, and she must be able to offer the same security to the states with whom she forms an alliance.

It is the task of the Three-Part.i.te Union (Germany, Austro-Hungary, and Italy) to co-operate with France towards imposing some restraint, desirable for the preservation of all other states, on the over-aggressive policy of the Three World Powers which const.i.tutes a threat to all smaller states, and to ensure moderation in conquests, in colonial acquisitions, in the immoderate and unilateral policy of protective tariffs, in the exploitation and maltreatment of all weaker elements. The objectives of all higher intellectual, moral and aesthetic civilisation and of social progress depend on the fact that the globe should not be divided up among Three World Empires in the twentieth century, that these Three Empires should not establish a brutal neo-mercantilism' (_Die Wandlungen der Europaischen Handelspolitik des 19. Jahrhunderts_, 'Changes in the European Commercial Policy During the 19th Century', in _Jahrb. fur Gesetzgebung, Verwaltung und Volkswirtschaft_, vol. xxiv, p. 381).

_CHAPTER XXII_

BULGAKOV AND HIS COMPLETION OF MARX'S a.n.a.lYSIS

The second critic of 'populist' scepticism, S. Bulgakov, is no respecter of Struve's 'third persons' and at once denies that they form the sheet-anchor for capitalist acc.u.mulation.

'The majority of economists before Marx', he declares, 'solved the problem by saying that some sort of "third person" is needed, as a _deus ex machina_, to cut the Gordian knot, i.e. to consume the surplus value.

This part is played by luxury-loving landowners (as with Malthus), or by indulgent capitalists, or yet by militarism and the like. There can be no demand for the surplus value without some such extraordinary mediators; a deadlock will be reached on the markets and the result will be over-production and crises.'[300]

'Struve thus a.s.sumes that capitalist production in its development, too, may find its ultimate mainstay in the consumption of some fantastic sort of "third person". But if this great public is essentially characterised as consuming the surplus value, whence does it obtain the means to buy?'[301]

For his part, Bulgakov centres the whole problem from the first in the a.n.a.lysis of the social aggregate product and its reproduction as given by Marx in the second volume of _Capital_. He has a thorough grasp of the fact that he must start with simple reproduction and must fully understand its working in order to solve the question of acc.u.mulation.

In this context, he says, it is of particular importance to obtain a clear picture of the consumption of surplus value and wages in such branches of production as do not turn out goods for consumption, and further, to understand fully the circulation of that portion of the social aggregate product which represents used-up constant capital.

This, he argues, is a completely new problem of which economists had not even been aware before Marx brought it up. 'In order to solve this problem, Marx divides all capitalistically produced commodities into two great and fundamentally different categories: the production of producer and consumer goods. There is more theoretical importance in this division than in all previous squabbles on the theory of markets.'[302]

Bulgakov, we see, is an outspoken and enthusiastic supporter of Marx's theory. The object of his study, as he puts it, is thus a critique of the doctrine that capitalism cannot exist without external markets. 'For this purpose, the author has made use of the most valuable a.n.a.lysis of social reproduction given by Marx in volume ii of _Capital_ which for reasons unknown has scarcely been utilised in economic theory. Though this a.n.a.lysis cannot be taken as fully completed, we are yet of opinion that even in its present fragmentary shape it offers an adequate foundation for a solution of the market problem that differs from that adopted by Messrs. Nikolayon, V. V. and others, and which they claim to have found in Marx.'[303]

Bulgakov gives the following formulation of his solution which he has deduced from Marx himself: 'In certain conditions, capitalism may exist solely by virtue of an internal market. It is not an inherent necessity peculiar to the capitalist mode of production that the outside market be able to absorb the surplus of capitalist production. The author has arrived at this conclusion in consequence of his study of the above-mentioned a.n.a.lysis of social reproduction.'

And now we are eager to hear the arguments Bulgakov has based on the above thesis.

At first sight, they prove surprisingly simple: 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 acc.u.mulation. 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 acc.u.mulation. No doubt we can easily imagine proportions such as those he has copied from Marx, and _if there is expanding production_, these _formulae_ will apply. Yet Bulgakov overlooks the princ.i.p.al 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 acc.u.mulation 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 a.n.a.lysis, 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 a.n.a.lysis, the question really of consumers in enlarged reproduction, cropped up in a perverted form as the question of additional money sources. Here Bulgakov quite slavishly 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_'. It should be all the more interesting to see what answer Marx's Russian pupil attempted to work out on his own.

'The following solution', Bulgakov says, 'seems to us to correspond best to Marx's doctrine as a whole: The new variable capital in money-form supplied by II for both departments has its commodity equivalent in surplus value II. With reference to simple reproduction, we have already seen that the capitalists themselves must throw money into circulation to realise their surplus value, money which ultimately reverts to the pocket of the very capitalist it came from. The quant.i.ty of money required for the circulation of the surplus value is determined in accordance with the general law of commodity circulation by the value of the commodities that contained it, divided by the average amount of money turnover. This same law must apply here; the capitalists of Department II must dispose of a certain amount of money for the circulation of their surplus value, and must consequently possess certain money reserves. These reserves must be ample enough for the circulation both of that portion of the surplus value which represents the consumption fund and of that which is to be acc.u.mulated as capital.'

Bulgakov further argues that it is immaterial to the question how much money is required to circulate a certain amount of commodities inside a country, whether or not some of these commodities contain any surplus value. 'In answer to the general question as to money sources inside the country, however, our solution is that the money is supplied by the producer of gold.'[304]

If a country requires more money consequent upon an 'expansion of production', the production of gold will have to be increased accordingly. So here we are again: the producer of gold is again the _deus ex machina_, just as he had been for Marx. In fact, Bulgakov has sadly disappointed us in the high hopes we had of his new solution. His 'solution' of the problem does not go a step beyond Marx's own a.n.a.lysis.

It can be reduced to three extremely simple statements as follows: (1) Question: How much money do we need for the realisation of capitalised surplus value? Answer: Just as much as is required in accordance with the general law of commodity circulation. (2) Q.: Where do the capitalists get the money for the realisation of capitalised surplus value? A.: They are supposed to have it. (3) Q.: How did the money come into the country in the first place? A.: It is provided by the producer of gold. The extreme simplicity of this method of explanation is suspicious rather than attractive.