Conditions for “Continuous” Accumulation

C. Conditions for “Continuous” Accumulation

We shall have in mind throughout the following discussion of “extended repro- duction” (as it came to be called) a brief aside that net accumulation constituted “a fund for development, which the very increase of population makes necessary” (MECW 30: 412; emphasis added). This assumption of ongoing population expan- sion – and a wage rate exceeding subsistence – in Marx’s perception of the growing economy is confirmed in our present context: “If accumulation is to be a steady, continuous process, then this absolute growth in population – although it may

be decreasing in relation to the capital employed – is a necessary condition. An increasing population appears to be the basis of accumulation as a continuous pro- cess. But this presupposes an average wage which permits not only reproduction of the labouring population but also its constant growth” (MECW 32: 110; also 166). Again: “the whole process of accumulation . . . resolves itself into surplus production, which . . . corresponds to the natural growth of the population . . . ” (123). 8

In addition to the acquisition of additional “variable capital” or means of sub- sistence for labor, part of surplus value must be “converted” into constant capital. Marx considers the conditions for hitchless accumulation. Taking a linen weaver as representative, “what are the conditions in which he can uninterruptedly recon- vert the £5,000 surplus value into capital and steadily continue the process of accumulation year in, year out?” (115). The provisional response is that “[t]he

8 See more on natural population growth, Chapter 12, p. 370.

C. Conditions for “Continuous” Accumulation 335 accumulation of the £5,000 means nothing but the transformation of this money,

this amount of value, into capital,” so that “[t]he conditions for the accumulation of capital are . . . the very same as those for its original production or for reproduction in general.” Specifically:

Just as the production and reproduction of existing capital in one sphere presupposes parallel production and reproduction in other spheres, so accumulation or the forma- tion of additional capital in one trade presupposes simultaneous or parallel creation of additional production in other trades. Thus the scale of production in all spheres which supply constant capital must grow simultaneously (in accordance with the aver- age participation – determined by the demand – of each particular sphere in the general growth of production) and all spheres which do not produce finished produce for indi- vidual consumption, supply constant capital. Of the greatest importance, is the increase in machinery (tools), raw material, and mati`eres instrumentales, for, if these precon- ditions are present, all other industries into which they enter, whether they produce semifinished or finished goods, only need to set in motion more labour (117).

Marx adds that scale of activity favors satisfaction of the conditions for sim- ple reproduction: “The greater the capital, the more developed the productivity of labour and the scale of capitalist production in general, the greater is also the volume of commodities found on the market, in circulation, in transition between production and consumption (individual and industrial), and the greater the certainty that each particular capital will finds its conditions for reproduction readily available on the market” (115–6). On the other hand, it was “in the nature of capitalist production that . . . each particular capital operates on a scale which is not determined by indi- vidual demand (orders, etc., private needs), but by the endeavour to realise as much labour and therefore as much surplus labour as possible and to produce the largest possible quantity of commodities with a given capital”; and that “each individual capital strives to capture the largest possible share of the market and to supplant its competitors and exclude them from the market – competition of capitals” (116). Aggregate demand problems are, however, set aside. Since “[t]he accumulation of new capital can . . . proceed only under the same conditions as the reproduction of already existing capital,” analysis of steady growth implied that one provisionally “disregard the case in which more capital is accumulated than can be invested in production, and for example lies fallow in the form of money at the bank. . . . Nor do we consider the case in which it is impossible to sell the mass of commodities pro- duced, crises, etc. This belongs into the section on competition. Here we examine only the forms of capital in the various phases of its process, assuming throughout, that the commodities are sold at their value” (emphasis added; see also 124).

The procedure affirms the importance of “use value” in the sense of the physical properties of capital goods: “Whether . . . the surplus produce, consists of factory buildings which are built for a third party and are sold to them, or of factory buildings which the producer builds for himself – sells to himself – clearly makes no difference. The only thing that matters here is whether the kind of use value in which the surplus labour is expressed, can re-enter as condition of production into

1861–1863 II: Sectoral Analysis, Accumulation, and Stability the sphere of production of the capitalist to whom the surplus produce belongs”

(120). Here was “yet another example of how important is the analysis of use value for the determination of economic phenomena.” But this is qualified shortly afterwards – the context relates to obstacles to steady accumulation: “it is not only

a question of replacing the same quantity of use values of which capital consists, on the former scale or on an enlarged scale (in the case of accumulation), but of replacing the value of the capital advanced along with the usual rate of profit (surplus value)” (125). More generally: “It must never be forgotten, that in capitalist production what matters is not the immediate use value but the exchange value and, in particular, the expansion of surplus value. This is the driving motive of capitalist production, and it is a pretty conception that – in order to reason away the contradictions of capitalists production – abstracts from its very basis and depicts it as a production aiming at the direct satisfaction of the consumption of the producers” (126).

In discussing flawless accumulation from this perspective, under conditions of rising or unchanged organic composition, Marx again takes account of increasing labor supply:

If the productive power of labour has been increased through greater production of fixed capital in proportion to variable capital, then not only the amount, but also the value of reproduction will rise, since a part of the value of the fixed capital enters into the annual reproduction. This can occur simultaneously with the growth of the population and with an increase in the number of workers employed, although the number of workers steadily declines relatively, in proportion to the constant capital which they set in motion. There is therefore a growth, not only of wealth, but of value, and a larger quantity of living labour is set in motion, although the labour has become more productive and the quantity of labour in proportion to the quantity of commodities produced, has decreased. Finally, variable and constant capital can grow in equal degree with the natural, annual increase in population while the productivity of labour remains the same. In this case, too, capital will accumulate in volume and in value (166).

“These last points,” Marx complained, had been “disregarded” by Ricardo. And in this context too we find Marx again alluding to the increased “diversification of production” in the course of expansion, “the fact” – also disregarded by Ricardo – “that with the development of the productive forces, the number of spheres of pro- duction is also steadily increasing, thus creating possibilities for capital investment which previously did not exist at all. Production not only becomes cheaper in the course of the development, but it is also diversified ”(168).

The foregoing constitutes only an introduction to the more formal account of the inter-departmental relations required to satisfy the conditions for continuous growth. (The “extended reproduction” schemes of Capital 2 were composed at about the same time; see Chapter 2.F.) For all that, the account is important if only because it clarifies so well one of Marx’s primary concerns, which was to correct what he saw as a failure by both Smith and Ricardo to take proper account

C. Conditions for “Continuous” Accumulation 337 of constant capital in their representation of accumulation: “The conception that

accumulation of capital = conversion of revenue into wages, in other words, that it = accumulation of variable capital – is one-sided, that is, incorrect. This leads to a

wrong approach to the whole question of accumulation” (103). 9 And he alludes to Ricardo’s “antithetical proposition” regarding accumulation, according to which “capital is accumulated in amount and value, if a larger part of the revenue is withdrawn from individual consumption and directed to industrial consumption, if more productive labour is set in motion with the portion of revenue thus saved. In this case accumulation is brought about by parsimony” (166).

That at least part of surplus value could be transformed into capital without in any way entailing expenditure on labor demonstrated the invalidity of the orthodox perspective. This applied to the use of corn to produce corn: “This part of the surplus produce which falls to the share of the farmer as surplus value, as profit, can be at once transformed by him into a condition of production within his own branch of production, it is thus directly converted into capital. This part is not expended on wages; it is not transformed into variable capital. It is withdrawn from individual consumption without being consumed productively in the sense used by Smith and Ricardo. It is consumed industrially, but as raw material, not as means of subsistence either of productive or of unproductive workers” (118). Constant capital in the machine-producing industry constituted – on the basis of the discussion given above in Section B – a “second category of surplus produce which enters directly (or through exchange within the same sphere of production) as constant capital into the new production (accumulation), without having gone through the process of first being transformed into variable capital” (119). The main conclusion is that “a considerable portion of the surplus produce, and hinc of the surplus value . . . can and must be transformed directly into constant capital, in order to be accumulated as capital and without which no accumulation of capital can take place at all” (120). And, as explained, it undermined the Smith-Ricardo perception of accumulation as increasing the demand for productive labor: “a part of the existing surplus produce, that is, of the labour which has been newly added during the year, is transformed directly into constant capital, without first having been converted into variable capital. This demonstrates again that the industrial consumption of the surplus produce – or accumulation – is by no means identical with the conversion of the entire surplus produce into wages paid to productive workers”

(122). 10 The demonstration touched on the fundamental weakness attributed to

9 For all that, Marx benefited from McCulloch’s discussion (McCulloch 1825: 181–2) of a sinking fund as a means of accumulation (MECW 32: 112; see also 121). (See editorial note 29, MECW

32: 552). 10 Allowance for foreign trade reinforced the case against the orthodox view: “If a country cannot

itself produce the amount of machinery required for the accumulation of capital, then it buys it from abroad. Ditto, if it cannot itself produce a sufficient quantity of means of subsistence (for wages) and the raw material. As soon as international trade intervenes, it becomes quite obvious that a part of the surplus produce of a country – in so far as it is intended for

1861–1863 II: Sectoral Analysis, Accumulation, and Stability Smith-Ricardo national-income accounting: “The idea that, because the surplus

produce is solely the product of the labour newly added during the year, it can therefore only be converted into variable capital, i.e. only be laid out in wages, corresponds altogether to the false conception that because the product is only the result, or the materialisation, of labour, its value is resolved only into revenue – wages, profit, and rent – the false conception of Smith and Ricardo” (123).