The same difficulty presents itself if we consider the matter from yet another aspect. In Marx's diagram of acc.u.mulation we a.s.sumed that the portion of the social surplus value intended for acc.u.mulation exists from the first in a natural form which demands it to be used for capitalisation.

'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.'[110]

In the figures of our diagram:

I. _5,000c + 1,000v + 1,000s = 7,000_ means of production II. _1,430c + 285v + 285s = 2,000_ means of consumption

Here, a surplus value of 570_s_ can be capitalised because from the very outset it consists in means of production. To this quant.i.ty of producer goods there correspond besides additional consumer goods to the amount of 114_s_ so that 684_s_ can be capitalised in all. But the process here a.s.sumed of simply transferring means of production to constant capital on the one hand, consumer goods to variable capital on the other, in commensurate quant.i.ties, is in contradiction with the very structure of capitalist commodity production. Whatever natural form the surplus value may have, there can be no immediate transfer to the place of production for the purpose of acc.u.mulation. It must first be realised, it must be turned into hard cash.[111]

Of the surplus value in Department I, 500 are fit to be capitalised, but not until they have first been realised; the surplus value has to shed its natural form and a.s.sume the form of pure value before it can be added to productive capital. This is true for each individual capitalist and also for the 'aggregate capitalist' of society, it being a prime condition for capitalist production that the surplus value must be realised in the form of pure value. Accordingly, regarding reproduction from the point of view of society as a whole--

'We must not follow the manner copied by Proudhon from bourgeois economy, which looks upon this matter as though a society with a capitalist mode of production would lose its specific historical and economic characteristics by being taken as a unit. Not at all. We have, in that case, to deal with the aggregate capitalist.'[112]

The surplus value must therefore shed its form as surplus product before it can re-a.s.sume it for the purpose of acc.u.mulation; by some means or other it must first pa.s.s through the money stage. So the surplus product of Departments I and II must be bought--by whom? On the above showing, there will have to be an effective demand outside I and II, merely in order to realise the surplus value of the two departments, just so that the surplus product can be turned to cash. Even then, we should only have got to the stage where the surplus value has become money. If this realised surplus value is further to be employed in the process of enlarging reproduction, in acc.u.mulation, an even larger demand must be expected for the future, a demand which is again to come from outside the two departments. Either the demand for the surplus product will therefore have to increase annually in accordance with the rate of increase of the acc.u.mulated surplus value, or--_vice versa_--acc.u.mulation can only proceed precisely in so far as the demand outside I and II is rising.

FOOTNOTES:

[103] _Capital_, vol. ii, pp. 598-9.

[104] Ibid., p. 599.

[105] _Capital_, vol. ii, pp. 600-1.

[106] Surplus consumption.

[107] _Capital_, vol. ii, p. 429.

[108] Ibid., pp. 531-2.

[109] Op. cit., vol. i, p. 594, note 1.

[110] Ibid., p. 594.

[111] Here we can leave out of account instances of products capable in part of entering the process of production without any exchange, such as coal in the mines. Within capitalist production as a whole such cases are rare (cf. Marx, _Theorien_ ..., vol. ii, part 2, pp. 255 ff.).

[112] _Capital_, vol. ii, p. 503.

_CHAPTER VIII_

MARX'S ATTEMPT TO RESOLVE THE DIFFICULTY

Complete abstraction from the circulation of money, though making the process of acc.u.mulation so smooth and simple in the diagram of enlarged reproduction, has great disadvantages of its own, we see. There was much to be said for this method in the a.n.a.lysis of simple reproduction, where consumption is the be-all and end-all of production. Money there had an ephemeral part, mediating the distribution of the social product among the various groups of consumers--the agent for the renewal of capital.

In the process of acc.u.mulation, however, the money form has an essential function: it no longer serves as a mere agent in the circulation of commodities--here it has come to be a feature of capital itself, an element in the circulation of capital. Even if the transformation of the surplus value is not essential to real reproduction, it is the economic _sine qua non_ of capitalist acc.u.mulation. In the transition from production to reproduction, the surplus product is thus subjected to two metamorphoses: first it casts off its use-form and then it a.s.sumes a natural form which is fit for the purpose of acc.u.mulation. The point here is not that the different cycles of production are counted off in units of years. It would be just as well to take the month; for that matter, the successive transformation of individual portions of the surplus value in Departments I and II may even intersect in time. Series of years here do not mean units of time but really intend the sequence of economic transformations. What matters is that this sequence must be observed if acc.u.mulation is to keep its capitalist character, whether it extends over a longer or a shorter period of time. This brings us back to the old question: How, and by whom, is the acc.u.mulated surplus value to be realised?

Marx was well aware that his seemingly water-tight scheme of acc.u.mulation did not cover this point adequately, and he himself kept reviewing the problem from various angles. What he says is this:

'It has been shown in volume i, how acc.u.mulation works in the case of the individual capitalist. By the conversion of the commodity-capital into money, the surplus-product, in which the surplus-value is incorporated, is also monetised. The capitalist reconverts the surplus-value thus monetised into additional natural elements of his productive capital. In the next cycle of production the increased capital furnishes an increased product. But what happens in the case of the individual capital, must also show in the annual reproduction of society as a whole, just as we have seen it does in the case of reproduction on a simple scale, where the successive precipitation of the depreciated elements of fixed capital in the form of money, acc.u.mulated as a h.o.a.rd, also makes itself felt in the annual reproduction of society.'[113]

He examines the mechanism of acc.u.mulation further from this very point of view, focusing on the fact that surplus value must pa.s.s through the money stage before it is acc.u.mulated.

'For instance, capitalist A, who sells during one year, or during a number of successive years, certain quant.i.ties of commodities produced by him, thereby converts that portion of the commodities, which bears surplus-value, the surplus-product, or, in other words, the surplus-value produced by himself, successively into money, acc.u.mulates it gradually, and thus makes for himself a new potential money-capital.

It is potential money-capital on account of its capacity and destination of being converted into the elements of productive capital. But practically he merely acc.u.mulates a simple h.o.a.rd, which is not an element of actual production. His activity for the time being consists only in withdrawing circulating money out of circulation. Of course, it is not impossible that the circulating money thus laid away by him was itself, before it entered into circulation, a portion of some other h.o.a.rd.'[114] 'Money is withdrawn from circulation and acc.u.mulated as a h.o.a.rd by the sale of commodities without a subsequent purchase. If this operation is conceived as one taking place universally, then it seems inexplicable where the buyers are to come from, since in that case everybody would want to sell in order to h.o.a.rd, and no one would want to buy. And it must be so conceived, since every individual capital may be in process of acc.u.mulation.

'If we were to conceive of the process of circulation as one taking place in a straight line between the various divisions of annual reproduction--which would be incorrect as it consists with a few exceptions of mutually retroactive movements--then we should have to start out from the producer of gold (or silver) who buys without selling, and to a.s.sume that all others sell to him. In that case, the entire social surplus-product of the current year would pa.s.s into his hands, representing the entire surplus-value of the year, and all the other capitalists would distribute among themselves their relative shares in his surplus-product, which consists naturally of money, gold being the natural form of his surplus-value. For that portion of the product of the gold producer, which has to make good his active capital, is already tied up and disposed of. The surplus-value of the gold producer, in the form of gold, would then be the only fund from which all other capitalists would have to derive the material for the conversion of their annual surplus-product into gold. The magnitude of its value would then have to be equal to the entire annual surplus-value of society, which must first a.s.sume the guise of a h.o.a.rd. Absurd as this a.s.sumption would be, it would accomplish nothing more than to explain the possibility of a universal formation of a h.o.a.rd at the same period.

It would not further reproduction itself, except on the part of the gold producer, by one single step.

'Before we solve this _seeming difficulty_, we must distinguish....'[115]

The obstacle in the way of realising the surplus value which Marx here calls a 'seeming difficulty' nevertheless is important enough for the whole further discussion in _Capital_, volume ii, to be concentrated on overcoming it. As a first attempt, Marx proffers the solution of a h.o.a.rd which, owing to the separation of the different individual constant capitals in the process of circulation, will inevitably be formed in a capitalist system of production. Inasmuch as different capital investments have different spans of life, and there is always an interval before the parts of a plant are due for renewal, at any given moment we may find that one individual capitalist is already busy renewing his plant, while another is still building up reserves from the proceeds yielded by the sale of his commodities against the day when he will have enough to renew his fixed capital.

'For instance, let A sell 600, representing _400c + 100v + 100s_ to B, who may represent more than one buyer. A sells 600 in commodities for 600 in money, of which 100 are surplus-value which he withdraws from circulation and h.o.a.rds in the form of money. But these 100 in money are but the money-form of the surplus-product in which a value of 100 was incorporated.'[116]

In order to comprehend the problem in complete purity, Marx here a.s.sumes the whole of the surplus value to be capitalised, for which reason he ignores altogether that part of the surplus value is used for the capitalists' personal consumption; in addition, A', A" and A"' as well as B', B" and B"' here belong to Department I.

'The formation of a h.o.a.rd, then, is not a production, nor is it an increment of production. The action of the capitalist consists merely in withdrawing from circulation 100 obtained by the sale of his surplus-product, in holding and h.o.a.rding this amount. This operation is carried on, not alone on the part of A, but at numerous points of the periphery of circulation by other capitalists named A', A", A"'....

However, A accomplishes the formation of a h.o.a.rd only to the extent that he acts as a seller, so far as his surplus-product is concerned, not as a buyer. His successive production of surplus-products, the bearers of his surplus-value convertible into money, is therefore a premise for the formation of his h.o.a.rd. In the present case, where we are dealing only with the circulation within Department I, the natural form of the surplus-product, and of the total product of which it is a part, is that of an element of constant capital of I, that is to say it belongs to the category of a means of production creating means of production. We shall see presently what becomes of it, what function it performs, in the hands of the buyers such as B, B', B", etc.

'It must particularly be noted at this point that A, while withdrawing money from circulation and h.o.a.rding it, on the other hand throws commodities into it without withdrawing other commodities in return. The capitalists, B, B', B", etc., are thereby enabled to throw only money into it and withdraw only commodities from it. In the present case, these commodities, according to their natural form and destination, become a fixed or circulating element of the constant capital of B, B', etc.'[117]

There is nothing new about this whole process. Marx had already described it extensively in connection with simple reproduction, since it alone can explain how a society is able to renew constant capital under conditions of capitalist reproduction. How this process can lay the besetting problem of our a.n.a.lysis of enlarged reproduction is far from self-evident. The difficulty had been that for the purpose of acc.u.mulation, part of the surplus value is not consumed by the capitalists but added to capital in order to expand production, giving rise to the question of buyers for this additional product. The capitalists do not want to consume it and the workers are not able to do so, their entire consumption being covered in every case by the available variable capital. Whence the demand for the acc.u.mulated surplus value? or, as Marx would have it: Whence the money to pay for the acc.u.mulated surplus value?

If, by way of answer, we are referred to the process of h.o.a.rding attendant upon the gradual renewal of the constant capital by the individual capitalists at various times, the connection between these two points remains obscure. As long as B, B' and B", etc., buy producer goods from their colleagues A, A' and A" in order to renew their constant capital that has in fact been used up, the limits of simple reproduction are not transcended, and the whole thing has nothing to do with our problem. The moment the producer goods purchased by B, B', B", etc., serve to increase their constant capital, however, for purposes of acc.u.mulation, a number of new questions clamour for attention. First and foremost where do the B's get the cash to buy an additional product from the A's? The only way they could have made their money is by sale of their own surplus product. Before they can acquire new means of production for expanding their enterprises, before they appear as buyers, that is to say, of the surplus product that is to be acc.u.mulated, they must first have disposed of their own surplus product--in a word, B, B', B", etc., must have been vendors themselves.

But who could have bought their surplus product? It is obvious that the difficulty is simply shifted from the A's to the B's without having been mastered.

At one stage of the a.n.a.lysis it really does seem for a time as if a solution were found at last. After a short digression, Marx returns to the main line of his investigation in the following words:

'In the present case, this surplus-product consists at the outset of means of production used in the creation of means of production. It is not until it reaches the hands of B, B', B", etc., (I), that this surplus-product serves as an additional constant capital. But it is virtually that even in the hands of the acc.u.mulators of h.o.a.rds, the capitalists A, A', A", (I), before it is sold. If we consider merely the volume of values of the reproduction on the part of I, then we are still moving within the limits of simple reproduction, for no additional capital has been set in motion for the purpose of creating this virtual additional capital (the surplus-product), nor has any greater amount of surplus-labour been performed than that done on the basis of simple reproduction. The difference is here only one of the form of the surplus-labour performed, of the concrete nature of its particularly useful service. It is expended in means of production for Department I_c_ instead of II_c_, in means of production of means of production instead of means of production of articles of consumption. In the case of simple reproduction it had been a.s.sumed that the entire surplus-value was spent as revenue in the commodities of II. Hence it consisted only of such means of production as restore the constant capital of II_c_ in its natural form. In order that the transition from simple to expanded reproduction may take place, the production in Department I must be enabled to create fewer elements for the constant capital of II and more for that of I.... Considering the matter merely from the point of view of the volume of values, it follows, then, that the material requirements of expanded reproduction are produced within simple reproduction. It is simply a question of the expenditure of the surplus-labour of the working cla.s.s of I for the production of means of production, the creation of virtual additional capital of I. The virtual additional money-capital, created on the part of A, A', A", by the successive sale of their surplus-product, which was formed without any capitalist expenditure of money, is in this case simply the money-form of the additional means of production made by I.'[118]

On this interpretation, the difficulty seems to dissolve into thin air at our touch. Acc.u.mulation requires no new sources of money at all.

Before, when the capitalists themselves consumed their surplus value, they had to have a corresponding money reserve in hand, the a.n.a.lysis of simple reproduction already having proved that the capitalist cla.s.s must itself put into circulation the money needed for the realisation of their surplus value. Now, instead of consumer goods, the capitalist cla.s.s, or rather B, B', and B", buy an equivalent amount of means of production in order to expand their production. In this way, money to the same value is acc.u.mulated in the hands of the other capitalist group, viz. A, A', A", etc.

'This h.o.a.rding ... does not in any way imply an addition to the wealth in precious metals, but only a change of function on the part of money previously circulating. A while ago it served as a medium of circulation, now it serves as a h.o.a.rd, as a virtual additional money-capital in process of formation.'[119]

And that is that! Yet this way out of the difficulty is open to us only on one condition, and that is not far to seek: Marx here takes acc.u.mulation in its first rudiments, _in statu nascendi_, as it begins to evolve from simple reproduction. In respect of the amount of value, production is not yet enlarged, it has only been rearranged so that its material elements are grouped in a different way. That the sources of money also seem adequate is therefore not surprising. This solution, however, is only true for one specific moment, the period of transition from simple reproduction to enlarged reproduction--in short, a moment that has no reference to reality and can only be conceived speculatively. Once acc.u.mulation has been established for some time, when increasing amounts of value are thrown upon the market in every period of production, buyers for these additional values cannot fail to become a problem. And on this point the proffered solution breaks down.

For that matter, it was never more than a seeming solution, _not a real one_. On closer scrutiny, it fails us even at the precise instant it appears to have smoothed the way for us. For if we take acc.u.mulation just at the very moment of its emergence from simple reproduction, the prime condition it demands is a decrease in the consumption of the capitalist cla.s.s. No sooner have we discovered a way to expand reproduction with the means of circulation already at hand, than we find previous consumers trickling away at the same rate. What, then, is the good of expanding production; who is there able to buy from B, B'

and B" this increased amount of products which they could turn out only by denying themselves the money they need for buying new means of production from A, A' and A"?

That solution, we see, was a mere illusion--the difficulty still persists. Marx himself at once re-opens the question where B, B' and B"

get the money to buy the surplus product of A, A' and A".

'To the extent that the products created by B, B', B", etc., (I) re-enter in their natural form into their own process, it goes without saying that a corresponding portion of their own surplus-product is transferred directly (without any intervention of circulation) to their productive capital and becomes an element of additional constant capital. To the same extent they do not help to convert any surplus-product of A, A', A" etc., (I) into money. Aside from this, where does the money come from? We know that they have formed their h.o.a.rd in the same way as A, A', etc., by the sale of their respective surplus-products. Now they have arrived at the point where their acc.u.mulated h.o.a.rd of virtual money-capital is to enter effectually upon its function as additional money-capital. But this is merely turning around in a circle. The question still remains: Where does the money come from, which the various B's (I) withdrew from the circulation and acc.u.mulated?'[120]

His prompt reply again seems surprisingly simple: 'Now we know from the a.n.a.lysis of simple reproduction, that the capitalists of I and II must have a certain amount of ready money in their hands, in order to be able to dispose of their surplus-products. In that case, the money which served only for the spending of revenue in articles of consumption returned to the capitalists in the same measure in which they advanced it for the purpose of disposing of their commodities. Here the same money reappears, but in a different function. The A's and B's supply one another alternately with the money for converting their surplus-product into virtual additional capital, and throw the newly formed money-capital alternately into circulation as a medium of purchase.'[121]

That is harking back to simple reproduction all over again. It is quite true, of course, that the capitalists A and the capitalists B are constantly acc.u.mulating a h.o.a.rd of money bit by bit so as to be able to renew their constant (fixed) capital from time to time, and in this way they really are a.s.sisting one another in realising their products. Yet this acc.u.mulating h.o.a.rd does not drop from the clouds--it is simply a natural precipitation of the fixed capital that is (in terms of value) continually being transferred in instalments to the products which are then one by one realised in the process of sale. Owing to its very nature, the acc.u.mulated h.o.a.rd can only cover the renewal of the old capital; there cannot possibly be enough to serve further for purchasing additional constant capital. That means that we are still within the limits of simple reproduction. Perhaps, though, that part of the medium of circulation which hitherto served the capitalists for their personal consumption, and is now to be capitalised, becomes a new source of additional money? For that to be true, however, we should have to be back at the unique and fleeting moment that has no more than theoretical existence--the period of transition from simple to enlarged reproduction. Beyond this gap acc.u.mulation cannot proceed--we are in truth going round in circles.