Now let us take the same aggregate product of 9,000 in the following equation:

I. _4,000c + 1,000v + 1,000s = 6,000_ II. _1,500c + 750v + 750s = 3,000_ ----- Total: 9,000

Here a double disproportion confronts us: 6,000 means of production are created--more than those which are actually used by the society, i.e.

_4,000c + 1,500c_, leaving a surplus of 500. Similarly, less consumer goods (3,000) are produced than the sum of what is paid out in wages (i.e. _1,000v + 750v_, the requirement of the workers), plus the aggregate of surplus value that has been produced (_1,000s + 750s_).

This results in a deficit of 500. Since our premises do not allow us to decrease the number of workers employed, the consequence must be that the capitalist cla.s.s cannot consume the entire surplus value it has pocketed. This proves fully consistent with the two material preconditions of enlarged reproduction on a capitalist basis: part of the appropriated surplus value is not to be consumed but is used for the purposes of production; and more means of production must be produced so as to ensure the use of the capitalised surplus value for the actual expansion of reproduction.

In considering the diagram of simple reproduction, we saw that its fundamental social conditions are contained in the following equation: the aggregate of means of production (the product of Department I) must be equivalent to the constant capital of both departments, but the aggregate of consumer goods (the product of Department II) must equal the sum of variable capitals _and_ surplus values of the two departments. As regards enlarged reproduction, we must now infer a precise inverse double ratio. The general precondition of enlarged reproduction is that the product of Department I must be greater in value than the constant capital of both departments taken together, and that of Department II must be so much less than the sum total of both the variable capital and the surplus value in the two departments.

This, however, by no means completes the a.n.a.lysis of enlarged reproduction; rather has it led us merely to the threshold of the question. Having deduced the proportions of the diagram, we must now pursue their further activities, the flow of circulation and the continuity of reproduction. Just as simple reproduction may be compared to an unchanging circle, to be repeated time and again, so enlarged reproduction, to quote Sismondi, is comparable to a spiral with ever expanding loops. Let us begin by examining the loops of this spiral. The first general question arising in this connection is how actual acc.u.mulation proceeds in the two departments under the conditions now known to us, i.e. how the capitalists may capitalise part of their surplus value, and at the same time acquire the material prerequisites necessary for enlarged reproduction.

Marx expounds the question in the following way:

Let us a.s.sume that half the surplus value of Department I is being acc.u.mulated. The capitalists, then, use 500 for their consumption but augment their capital by another 500. In order to become active, this additional capital of 500 must be divided, as we now know, into constant and variable capital. a.s.suming the ratio of 4 to 1 remains what it was for the original capital, the capitalists of Department I will divide their additional capital of 500 thus: they will buy new means of production for 400 and new labour for 100. This does not present any difficulties, since we know that Department I has already produced a surplus of 500 means of production. Yet the corresponding enlargement of the variable capital by 100 units of money is not enough, since the new additional labour power must also find adequate consumer goods which can only be supplied by Department II. Now the circulation between the two large departments is shifting. Formerly, under conditions of simple reproduction, Department I acquired 1,000 consumer goods for its own workers, and now it must find another 100 for its new workers.

Department I therefore engages in enlarged reproduction as follows:

_4,400c + 1,100v_.

Department II, in turn, after selling these consumer goods to the value of 100, is now in a position to acquire additional means of production to the same amount from Department I. And in fact, Department I still has precisely one hundred of its surplus product left over which now find their way into Department II, enabling the latter to expand its own reproduction as well. Yet here, too, the additional means of production alone are not much use; to make them operate, additional labour power is needed. a.s.suming again that the previous composition of capital has been maintained, with a ratio of 2 to 1 as regards constant and variable capital, additional labour to the tune of 50 is required to work the additional 100 means of production. This additional labour, however, needs additional consumer goods to the amount of its wages, which are in fact supplied by Department II itself. This department must therefore produce, in addition to the 100 additional consumer goods for the new workers of Department I and the goods for the consumption of its own workers, a further amount of consumer goods to the tune of 50 as part of its aggregate product. Department II therefore starts on enlarged reproduction at a rate of _1,600c + 800v_.

Now the aggregate product of Department I (6,000) has been absorbed completely. 5,500 were necessary for renewing the old and used-up means of production in both departments, and the remaining 500 for the expansion of production: 400 in Department I and 100 in Department II.

As regards the aggregate product of Department II (3,000), 1,900 have been used for the increased labour force in the two departments, and the 1,100 consumer goods which remain serve the capitalists for their personal consumption, the consumption of their surplus value. 500 are consumed in Department I, and 600 in Department II where, out of a surplus value of 700, only 150 had been capitalised (100 being expended on means of production and 50 on wages).

Enlarged reproduction can now proceed on its course. If we maintain our rate of exploitation at 100 per cent, as in the case of the original capital, the next period will give the following results:

I. _4,400c + 1,100v + 1,100s = 6,600_

II. _1,600c + 800v + 800s = 3,200_ ----- Total: 9,800

The aggregate product of society has grown from 9,000 to 9,800, the surplus value of Department I from 1,000 to 1,100, and of Department II from 750 to 800. The object of the capitalist expansion of production, the increased production of surplus value, has been gained. At the same time, the material composition of the aggregate social product again shows a surplus of 600 as regards the means of production (6,600) over and above those which are actually needed (4,400 + 1,600), and also a deficit in consumer goods as against the sum total made up by the wages previously paid (_1,100v + 800v_) and the surplus value that has been created (_1,100s + 800s_). And thus we again have the material possibility as well as the necessity to use part of the surplus value, not for consumption by the capitalist cla.s.s, but for a new expansion of production.

The second enlargement of production, and increased production of surplus value, thus follows from the first as a matter of course and with mathematical precision. The acc.u.mulation of capital, once it has started, automatically leads farther and farther beyond itself. The circle has become a spiral which winds itself higher and higher as if compelled by a natural law in the guise of mathematical terms. a.s.suming that in the following years there is always capitalisation of half the surplus value, while the composition of the capital and the rate of exploitation remain unchanged, the reproduction of capital will result in the following progression:

_2nd year:_ I. _4,840c + 1,210v + 1,210s = 7,260_ II. _1,760c + 880v + 880s = 3,520_ ------ Total: 10,780

_3rd year:_ I. _5,324c + 1,331v + 1,331s = 7,986_ II. _1,936c + 968v + 968s = 3,872_ ------ Total: 11,858

_4th year:_ I. _5,856c + 1,464v + 1,464s = 8,784_ II. _2,129c + 1,065v + 1,065s = 4,259_ ------ Total: 13,043

_5th year:_ I. _6,442c + 1,610v + 1,610s = 9,662_ II. _2,342c + 1,172v + 1,172s = 4,686_ ------ Total: 14,348

Thus, after five years of acc.u.mulation, the aggregate social product is found to have grown from 9,000 to 14,348, the social aggregate capital from (_5,500c + 1,750v = 7,250_) to (_8,784c + 2,782v = 11,566_) and the surplus value from (_1,000s + 500s = 1,500_) to (_1,464s + 1,065s = 2,529_), whereby the surplus value for personal consumption, being 1,500 at the beginning of acc.u.mulation, has grown to 732 + 958 = 1,690 in the last year.[102] The capitalist cla.s.s, then, has capitalised more, it has practised greater abstinence, and yet it has been able to live better.

Society, in a material respect, has become richer, richer in means of production, richer in consumer goods, and it has equally become richer in the capitalist sense of the term since it produces more surplus value. The social product circulates _in toto_ in society. Partly it serves to enlarge reproduction and partly it serves consumption. The requirements of capitalist acc.u.mulation correspond to the material composition of the aggregate social product. What Marx said in volume i of _Capital_ is true: the increased surplus value can be added on to capital because the social surplus product comes into the world from the very first in the material form of means of production, in a form incapable of utilisation except in the productive process. At the same time reproduction expands in strict conformity with the laws of circulation: the mutual supply of the two departments of production with additional means of production and consumer goods proceeds as an exchange of equivalents. It is an exchange of commodities in the course of which the very acc.u.mulation of one department is the condition of acc.u.mulation in the other and makes this possible. The complicated problem of acc.u.mulation is thus converted into a diagrammatic progression of surprising simplicity. We may continue the above chain of equations _ad infinitum_ so long as we observe this simple principle: that a certain increase in the constant capital of Department I always necessitates a certain increase in its variable capital, which predetermines beforehand the extent of the increase in Department II, with which again a corresponding increase in the variable capital must be co-ordinated. Finally, it depends on the extent of increase in the variable capital in both departments, how much of the total may remain for personal consumption by the capitalist cla.s.s. The extent of this increase will also show that this amount of consumer goods which remains for private consumption by the capitalist is exactly equivalent to that part of the surplus value which has not been capitalised in either department.

There are no limits to the continuation of this diagrammatic development of acc.u.mulation in accordance with the few easy rules we have demonstrated. But now it is time to take care lest we should only have achieved these surprisingly smooth results through simply working out certain fool-proof mathematical exercises in addition and subtraction, and we must further inquire whether it is not merely because mathematical equations are easily put on paper that acc.u.mulation will continue _ad infinitum_ without any friction.

In other words: the time has come to look for the concrete social conditions of acc.u.mulation.

FOOTNOTES:

[96] 'The premise of simple reproduction, that I(_v + s_) is equal to II_c_, is irreconcilable with capitalist production, although this does not exclude the possibility that a certain year in an industrial cycle of ten or eleven years may not show a smaller total production than the preceding year, so that there would not have been even a simple reproduction, compared to the preceding year. Indeed, considering the natural growth of population per year, simple reproduction could take place only in so far as a correspondingly larger number of unproductive servants would partake of the 1,500 representing the aggregate surplus-product. But acc.u.mulation of capital, actual capitalist production, would be impossible under such circ.u.mstances' (_Capital_, vol. ii, p. 608).

[97] Ricardo, _Principles_, chap. viii, 'On Taxes'. MacCulloch's edition of Ricardo's Works, p. 87, note. (Reference not given in original.)

[98] 'The specifically capitalist mode of production, the development of the productive power of labour corresponding to it, and the change thence resulting in the organic composition of capital, do not merely keep pace with the advance of acc.u.mulation, or with the growth of social wealth. They develop at a much quicker rate, because mere acc.u.mulation, the absolute increase of the total social capital, is accompanied by the centralisation of the individual capitals of which that total is made up; and because the change in the technological composition of the additional capital goes hand in hand with a similar change in the technological composition of the original capital. With the advance of acc.u.mulation, therefore, the proportion of constant to variable capital changes. If it was originally say 1 : 1, it now becomes successively 2 : 1, 3 : 1, 4 : 1, 5 : 1, 7 : 1, etc., so that, as the capital increases, instead of 1/2 of its total value, only 1/3, 1/4, 1/5, 1/6, 1/8, etc., is transformed into labour-power, and, on the other hand, 2/3, 3/4, 4/5, 5/6, 7/8 into means of production. Since the demand for labour is determined not by the amount of capital as a whole, but by its variable const.i.tuent alone, that demand falls progressively with the increase of the total capital, instead of, as previously a.s.sumed, rising in proportion to it. It falls relatively to the magnitude of the total capital, and at an accelerated rate, as this magnitude increases. With the growth of the total capital, its variable const.i.tuent or the labour incorporated in it, also does increase, but in a constantly diminishing proportion. The intermediate pauses are shortened, in which acc.u.mulation works as simple extension of production, on a given technical basis. It is not merely that an accelerated acc.u.mulation of total capital, accelerated in a constantly growing progression, is needed to absorb an additional number of labourers, or even, on account of the constant metamorphosis of old capital, to keep employed those already functioning. In its turn, this increasing acc.u.mulation and centralisation becomes a source of new changes in the composition of capital, of a more accelerated diminution of its variable, as compared with its constant const.i.tuent' (_Capital_, vol. i, pp. 642-3).

[99] 'The course characteristic of modern industry, viz., a decennial cycle (interrupted by smaller oscillations), of periods of average activity, production at high pressure, crisis and stagnation, depends on the constant formation, the greater or less absorption, and the re-formation of the industrial reserve army or surplus population. In their turn, the varying phases of the industrial cycle recruit the surplus population, and become one of the most energetic agents of its reproduction' (ibid., pp. 646-7).

[100] _Capital_, vol. i. pp. 593-4.

[101] Ibid., p. 594.

[102] Op. cit., vol. ii, pp. 596-601.

_CHAPTER VII_

a.n.a.lYSIS OF MARX'S DIAGRAM OF ENLARGED REPRODUCTION

The first enlargement of reproduction gave the following picture:

I. _4,400c + 1,100v + 1,100s = 6,600_ II. _1,600c + 800v + 800s = 3,200_ ----- Total: 9,800

This already clearly expresses the interdependence of the two departments--but it is a dependence of a peculiar kind. Acc.u.mulation here originates in Department I, and Department II merely follows suit.

Thus it is Department I alone that determines the volume of acc.u.mulation. Marx effects acc.u.mulation here by allowing Department I to capitalise one-half of its surplus value; Department II, however, may capitalise only as much as is necessary to a.s.sure the production and acc.u.mulation of Department I. He makes the capitalists of Department II consume 600_s_ as against the consumption of only 500_s_ by the capitalists of Department I who have appropriated twice the amount of value and far more surplus value. In the next year, he a.s.sumes the capitalists of Department I again to capitalise half their surplus value, this time making the capitalists of Department II capitalise more than in the previous year--summarily fixing the amount to tally exactly with the needs of Department I. 500_s_ now remain for the consumption of the capitalists of Department II--less than the year before--surely a rather queer result of acc.u.mulation on any showing. Marx now describes the process as follows:

'Then let Department I continue acc.u.mulation at the same ratio, so that 550_s_ are spent as revenue, and 55_s_ acc.u.mulated. In that case, 1,100 I_v_ are first replaced by 1,100 I_c_, and 550 I_s_ must be realised in an equal amount of commodities of II, making a total of 1,650 I(_v + s_). But the constant capital of II, which is to be replaced, amounts only to 1,600, and the remaining 50 must be made up out of 800 II_s_.

Leaving aside the money aspect of the matter, we have as a result of this transaction:

'I. _4,400c + 550s_ (to be capitalised); furthermore, realised in commodities of II for the fund for consumption of the capitalists and labourers of I, 1,650 (_v + s_).

'II. _1,650c + 825v + 725s_.

'In Department I, 550_s_ must be capitalised. If the former proportion is maintained, 440 of this amount form constant capital, and 110 variable capital. These 110 must be eventually taken out of 725 II_s_, that is to say, articles of consumption to the value of 110 are consumed by the labourers of I instead of the capitalists of II, so that the latter are compelled to capitalise these 110_s_ which they cannot consume. This leaves 615 II_s_ of the 725 II_s_. But if II thus converts these 110 into additional constant capital, it requires an additional variable capital of 55. This again must be taken out of its surplus value. Subtracting this amount from 615 II_s_, we find that only 560 II_s_ remain for the consumption of the capitalists of II, and we obtain the following values of capital after accomplishing all actual and potential transfers:

I. _(4,400c+440c) + (1,100v+110v) = 4,840c + 1,210v = 6,050_ II. _(1,600c+50c+110c) + (800v+25v+55v) = 1,760c + 88v = 2,640_ ----- Total: 8,690'[103]

This quotation is given at length since it shows very clearly how Marx here effects acc.u.mulation in Department I at the expense of Department II. In the years that follow, the capitalists of the provisions department get just as rough a deal. Following the same rules, Marx allows them in the third year to acc.u.mulate 264_s_--a larger amount this time than in the two preceding years. In the fourth year they are allowed to capitalise 290_s_ and to consume 678_s_, and in the fifth year they acc.u.mulate 320_s_ and consume 745_s_. Marx even says: 'If things are to proceed normally, acc.u.mulation in II must take place more rapidly than in I, because that portion of I(_v + s_) which must be converted into commodities of II_c_, would otherwise grow more rapidly than II_c_, for which it can alone be exchanged.'[104]

Yet the figures we have quoted fail to show a quicker acc.u.mulation in Department II, and in fact show it to fluctuate. Here the principle seems to be as follows: Marx enables acc.u.mulation to continue by broadening the basis of production in Department I. Acc.u.mulation in Department II appears only as a condition and consequence of acc.u.mulation in Department I: absorbing, in the first place, the other's surplus means of production and supplying it, secondly, with the necessary surplus of consumer goods for its additional labour.

Department I retains the initiative all the time, Department II being merely a pa.s.sive follower. Thus the capitalists of Department II are only allowed to acc.u.mulate just as much as, and are made to consume no less than, is needed for the acc.u.mulation of Department I. While in Department I half the surplus value is capitalised every time, and the other half consumed, so that there is an orderly expansion both of production and of personal consumption by the capitalists, the twofold process in Department II takes the following erratic course:

1st year: 150 are capitalised, 600 consumed 2nd 240 660 3rd 254 626 4th 290 678 5th 320 745

Here there is no rule in evidence for acc.u.mulation and consumption to follow; both are wholly subservient to the requirements of acc.u.mulation in Department I.