_CHAPTER XXIV_

THE END OF RUSSIAN 'LEGALIST' MARXISM

The Russian 'legalist' Marxists, and Tugan Baranovski above all, can claim the credit, in their struggle against the doubters of capitalist acc.u.mulation, of having enriched economic theory by an application of Marx's a.n.a.lysis of the social reproductive process and its schematic representation in the second volume of _Capital_. But in view of the fact that this same Tugan Baranovski quite wrongly regarded said diagram as the solution to the problem instead of its formulation, his conclusions were bound to reverse the basic order of Marx's doctrine.

Tugan Baranovski's approach, according to which capitalist production can create unlimited markets and is independent of consumption, leads him straight on to the thesis of Say-Ricardo, i.e. a natural balance between production and consumption, between supply and demand. The difference is simply that those two only thought in terms of simple commodity circulation, whilst Tugan Baranovski applies the same doctrine to the circulation of capital. His theory of crises being caused by a 'lack of proportion' is in effect just a paraphrase of Say's old trite absurdity: the over-production of any one commodity only goes to show under-production of another; and Tugan Baranovski simply translates this nonsense into the terminology used in Marx's a.n.a.lysis of the reproductive process. Even though he declares that, Say notwithstanding, general over-production is quite possible in the light of the circulation of money which the former had entirely neglected, yet it is in fact this very same neglect, the besetting sin of Say and Ricardo in their dealings with the problem of crises which is the condition for his delightful manipulations with Marx's diagram. As soon as it is applied to the circulation of money, 'diagram No. 2' begins to bristle with spikes and barbs. Bulgakov was caught in these spikes when he attempted to follow up Marx's interrupted a.n.a.lysis to a logical conclusion. This compound of forms of thought borrowed from Marx with contents derived from Say and Ricardo is what Tugan Baranovski modestly calls his 'attempt at a synthesis between Marx's theory and cla.s.sical economics'.

After almost a century, the theory of optimism which holds, in the face of petty-bourgeois doubts, that capitalist production is capable of development, returns, by way of Marx's doctrine and its 'legalist'

champions, to its point of departure, to Say and Ricardo. The three 'Marxists' join forces with the bourgeois 'harmonists' of the Golden Age shortly before the Fall when bourgeois economics was expelled from the Garden of Innocence--the circle is closed.

There can be no doubt that the 'legalist' Russian Marxists achieved a victory over their opponents, the 'populists', but that victory was rather too thorough. In the heat of battle, all three--Struve, Bulgakov and Tugan Baranovski--overstated their case. The question was whether capitalism in general, and Russian capitalism in particular, is capable of development; these Marxists, however, proved this capacity to the extent of even offering theoretical proof that capitalism can go on for ever. a.s.suming the acc.u.mulation of capital to be without limits, one has obviously proved the unlimited capacity of capitalism to survive!

Acc.u.mulation is the specifically capitalist method of expanding production, of furthering labour productivity, of developing the productive forces, of economic progress. If the capitalist mode of production can ensure boundless expansion of the productive forces, of economic progress, it is invincible indeed. The most important objective argument in support of socialist theory breaks down; socialist political action and the ideological import of the proletarian cla.s.s struggle cease to reflect economic events, and socialism no longer appears an historical necessity. Setting out to show that capitalism is possible, this trend of reasoning ends up by showing that socialism is impossible.

The three Russian Marxists were fully aware that in the course of the dispute they had made an about-turn, though Struve, in his enthusiasm for the cultural mission of capitalism, does not worry about giving up a useful warrant.[329] Bulgakov tried to stop the gaps now made in socialist theory with another fragment of the same theory as best he could: he hoped that capitalist society might yet perish, in spite of the immanent balance between production and consumption, because of the declining profit rate. But it was he himself who finally cut away the ground from under this somewhat precarious comfort. Forgetting the straw he had offered for the salvation of socialism, he turned on Tugan Baranovski with the teaching that, in the case of large capitals, the relative decline in the profit rate is compensated by the absolute growth of capital.[330] More consistent than the others, Tugan Baranovski finally with the crude joy of a barbarian destroys all objective economic arguments in support of socialism, thus building in his own spirit 'a more beautiful world' on an ethical foundation. 'The individual protests against an economic order which transforms the end (man) into a means (production) and the means (production) into an end.'[331]

Our three Marxists demonstrated in person that the new foundations of socialism had been frail and jerry-built. They had hardly laid down the new basis for socialism before they turned their backs on it. When the ma.s.ses of Russia were staking their lives in the fight for the ideals of a social order to come, which would put the end (man) before the means (production), the 'individual' went into retreat, to find philosophical and ethical solace with Kant. In actual fact, the 'legalist' bourgeois Marxists ended up just where we should expect them to from their theoretical position--in the camp of bourgeois harmonies.

FOOTNOTES:

[329] Struve says in the preface to the collection of his Russian essays (published in 1901): 'In 1894, when the author published his "Critical Comments on the Problem of Economic Development in Russia", he inclined in philosophy towards positivism, in sociology and economics towards outspoken, though by no means orthodox, Marxism. Since then, the author no longer sees the whole truth in positivism and Marxism which is grounded in it (!), they no longer fully determine his view of the world. Malignant dogmatism which not only browbeats those who think differently, but spies upon their morals and psychology, regards such work as a mere "Epicurean instability of mind". It cannot understand that criticism in its own right is to the living and thinking individual one of the most valuable rights. The author does not intend to renounce this right, though he might constantly be in danger of being indicted for "instability"' (_Miscellany_, St. Petersburg, 1901).

[330] Bulgakov, op. cit., p. 252.

[331] Tugan Baranovski, _Studies on the Theory and History_ ..., p. 229.

_SECTION THREE_

THE HISTORICAL CONDITIONS OF ACc.u.mULATION

_CHAPTER XXV_

CONTRADICTIONS WITHIN THE DIAGRAM OF ENLARGED REPRODUCTION

In the first section, we ascertained that Marx's diagram of acc.u.mulation does not solve the question of who is to benefit in the end by enlarged reproduction. If we take the diagram literally as it is set out at the end of volume ii, it appears that capitalist production would itself realise its entire surplus value, and that it would use the capitalised surplus value exclusively for its own needs. This impression is confirmed by Marx's a.n.a.lysis of the diagram where he attempts to reduce the circulation within the diagram altogether to terms of money, that is to say to the effective demand of capitalists and workers--an attempt which in the end leads him to introduce the 'producer of money' as a _deus ex machina_. In addition, there is that most important pa.s.sage in _Capital_, volume i, which must be interpreted to mean the same.

'The annual production must in the first place furnish all those objects (use-values) from which the material components of capital, used up in the course of the year, have to be replaced. Deducting these there remains the net or surplus-product, in which the surplus-value lies. And of what does this surplus-value consist? Only of things destined to satisfy the wants and desires of the capitalist cla.s.s, things which, consequently, enter into the consumption fund of the capitalists? Were that the case, the cup of surplus-value would be drained to the very dregs, and nothing but simple reproduction would ever take place.

'To acc.u.mulate it is necessary to convert a portion of the surplus-product into capital. But we cannot, except by a miracle, convert into capital anything but such articles as can be employed in the labour-process (i.e. means of production), and such further articles as are suitable for the sustenance of the labourer (i.e. means of subsistence). Consequently, a part of the annual surplus-labour must have been applied to the production of additional means of production and subsistence, over and above the quant.i.ty of these things required to replace the capital advanced. In one word, surplus-value is convertible into capital solely because the surplus-product, whose value it is, already comprises the material elements of new capital.'[332]

The following conditions of acc.u.mulation are here laid down: (1) The surplus value to be capitalised first comes into being in the natural form of capital (as additional means of production and additional means of subsistence for the workers). (2) The expansion of capitalist production is achieved exclusively by means of capitalist products, i.e.

its own means of production and subsistence. (3) The limits of this expansion are each time determined in advance by the amount of surplus value which is to be capitalised in any given case; they cannot be extended, since they depend on the amount of the means of production and subsistence which make up the surplus product; neither can they be reduced, since a part of the surplus value could not then be employed in its natural form. Deviations in either direction (above and below) may give rise to periodical fluctuations and crises--in this context, however, these may be ignored, because in general the surplus product to be capitalised must be equal to actual acc.u.mulation. (4) Since capitalist production buys up its entire surplus product, there is no limit to the acc.u.mulation of capital.

Marx's diagram of enlarged reproduction adheres to these conditions.

Acc.u.mulation here takes its course, but it is not in the least indicated who is to benefit by it, who are the new consumers for whose sake production is ever more enlarged. The diagram a.s.sumes, say, the following course of events: the coal industry is expanded in order to expand the iron industry in order to expand the machine industry in order to expand the production of consumer goods. This last, in turn, is expanded to maintain both its own workers and the growing army of coal, iron and machine operatives. And so on _ad infinitum_. We are running in circles, quite in accordance with the theory of Tugan Baranovski.

Considered in isolation, Marx's diagram does indeed permit of such an interpretation since he himself explicitly states time and again that he aims at presenting the process of acc.u.mulation of the aggregate capital in a society consisting solely of capitalists and workers.

Pa.s.sages to this effect can be found in every volume of _Capital_.

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

'In order to examine the object of our investigation in its integrity, free from all disturbing subsidiary circ.u.mstances, we must treat the whole world as one nation, and a.s.sume that capitalist production is everywhere established and has possessed itself of every branch of industry.'[333]

In volume ii, the a.s.sumption repeatedly returns; thus in chapter 17 on 'The Circulation of Surplus-Value': 'Now, there are only two points of departure: The capitalist and the labourer. All third 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 capitalist cla.s.s, then, remains the sole point of departure of the circulation of money.'[334]

Further, in the same chapter 'On the Circulation of Money in Particular under a.s.sumption of Acc.u.mulation': 'But the difficulty arises when we a.s.sume, not a partial, but a general acc.u.mulation of money-capital on the part of the capitalist cla.s.s. Apart from this cla.s.s, 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.'[335]

And again in chapter 20: '... there are only two cla.s.ses in this case, the working cla.s.s disposing of their labour-power, and the capitalist cla.s.s owning the social means of production and the money.'[336]

In volume iii, Marx says quite explicitly, when demonstrating the process of capitalist production as a whole: 'Let us suppose that the whole society is composed only of industrial capitalists and wage workers. Let us furthermore make exceptions of fluctuations of prices which prevent large portions of the total capital from reproducing themselves under average conditions and which, owing to the general interrelations of the entire process of reproduction, such as are developed particularly by credit, must always call forth general stoppages of a transient nature. Let us also make abstraction of the bogus transactions and speculations, which the credit system favours. In that case, a crisis could be explained only by a disproportion of production in various branches, and by a disproportion of the consumption of the capitalists and the acc.u.mulation of their capitals.

But as matters stand, the reproduction of the capitals invested in production depends largely upon the consuming power of the non-producing cla.s.ses; while the consuming power of the labourers is handicapped partly by the laws of wages, partly by the fact that it can be exerted only so long as the labourers can be employed at a profit for the capitalist cla.s.s.'[337]

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

Finally, in _Theories of Surplus Value_,[338] Marx formulates his general presuppositions with regard to acc.u.mulation as follows: 'Here we have only to consider the forms through which capital pa.s.ses during the various stages of its development. Thus we do not set out the actual conditions of the real process of production, but always a.s.sume that the commodity is sold for what it is worth. We ignore the compet.i.tion of capitalists and the credit system; we also leave out of account the actual const.i.tution of society which never consists exclusively of the cla.s.ses of workers and industrial capitalists, and where there is accordingly no strict division between producers and consumers. The first category (of consumers, whose revenues are partly of a secondary, not a primitive nature, derived from profits and the wage of labour) is much wider than the second category (of producers). Therefore the manner in which it spends its income, and the extent of such income, effects very large modifications in the economic household, and especially so in the process of circulation and reproduction of capital.'

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

There can be no doubt, therefore, that Marx wanted to demonstrate the process of acc.u.mulation in a society consisting exclusively of workers and capitalists, under the universal and exclusive domination of the capitalist mode of production. On this a.s.sumption, however, his diagram does not permit of any other interpretation than that of production for production's sake.

Let us recall the second example of Marx's diagram of enlarged reproduction:

1st year: I. _5,000c + 1,000v + 1,000s = 7,000_ means of production II. _1,430c + 285v + 285s = 2,000_ means of subsistence ----- 9,000

2nd year: I. _5,417c + 1,083v + 1,083s = 7,583_ means of production II. _1,583c + 316v + 316s = 2,215_ means of subsistence ----- 9,798

3rd year: I. _5,869c + 1,173v + 1,173s = 8,215_ means of production II. _1,715c + 342v + 342s = 2,399_ means of subsistence ------ 10,614

4th year: I. _6,358c + 1,271v + 1,271s = 8,900_ means of production II. _1,858c + 371v + 371s = 2,600_ means of subsistence ------ 11,500

Here acc.u.mulation continues year after year without interruption, the capitalists in each case consuming half of the surplus value they have gained and capitalising the other half. In the process of capitalisation, the same technical foundation, that is to say the same organic composition or division into constant and variable capital and also the same rate of exploitation (always amounting to 100 per cent) is consecutively maintained for the additional capital as it was for the original capital. In accordance with Marx's a.s.sumption in volume i of _Capital_, the capitalised part of the surplus value first comes into being as additional means of production and as means of subsistence for the workers, both serving the purpose of an ever expanding production in the two departments. It cannot be discovered from the a.s.sumptions of Marx's diagram for whose sake production is progressively expanded.

Admittedly, production and consumption increase simultaneously in a society. The consumption of the capitalists increases (in terms of value, in the first year it amounts to 500 + 142, in the second year to 542 + 158, in the third year to 586 + 171, and in the fourth year to 635 + 185); the consumption of the workers increases as well; the variable capital increasing year after year in both departments precisely indicates this growth in terms of value. And yet, the growing consumption of the capitalists can certainly not be regarded as the ultimate purpose of acc.u.mulation; on the contrary, there is no acc.u.mulation inasmuch as this consumption takes place and increases; personal consumption of the capitalists must be regarded as simple reproduction. Rather, the question is: if, and in so far as, the capitalists do not themselves consume their products but 'practise abstinence', i.e. acc.u.mulate, for whose sake do they produce? Even less can the maintenance of an ever larger army of workers be the ultimate purpose of continuous acc.u.mulation of capital. From the capitalist's point of view, the consumption of the workers is a consequence of acc.u.mulation, it is never its object or its condition, unless the principles (foundations) of capitalist production are to be turned upside down. And in any case, the workers can only consume that part of the product which corresponds to the variable capital, not a jot more.

Who, then, realises the permanently increasing surplus value? The diagram answers: the capitalists themselves and they alone.--And what do they do with this increasing surplus value?--The diagram replies: They use it for an ever greater expansion of their production. These capitalists are thus fanatical supporters of an expansion of production for production's sake. They see to it that ever more machines are built for the sake of building--with their help--ever more new machines. Yet the upshot of all this is not acc.u.mulation of capital but an increasing production of producer goods to no purpose whatever. Indeed, one must be as reckless as Tugan Baranovski, and rejoice as much in paradoxical statements, to a.s.sume that this untiring merry-go-round in thin air could be a faithful reflection in theory of capitalist reality, a true deduction from Marx's doctrine.[339]

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

If we examine critically the diagram of enlarged reproduction in the light of Marx's theory, we find various contradictions between the two.

To begin with, the diagram completely disregards the increasing productivity of labour. For it a.s.sumes that the composition of capital is the same in every year, that is to say, the technical basis of the productive process is not affected by acc.u.mulation. This procedure would be quite permissible in itself in order to simplify the a.n.a.lysis, but when we come to examine the concrete conditions for the realisation of the aggregate product, and for reproduction, then at least we must take into account, and make allowance for, changes in technique which are bound up with the process of capital acc.u.mulation. Yet if we allow for improved productivity of labour, the material aggregate of the social product--both producer and consumer goods--will in consequence show a much more rapid increase in volume than is set forth in the diagram.