First Round
Sismondi-Malthus v. Say-Ricardo-MacCulloch

THE first grave doubts as to the divine character of the capitalist order came to bourgeois economists under the immediate impact of the first crises of 1815 and 1818-19 in England. Even then it had still been external circumstances which led up to these crises, and they appeared to be ephemeral. Napoleon’s blockade of the Continent which for a time had cut off England from her European markets and had favored a considerable development of home industries, in some of the continental countries, was partly responsible; for the rest the material exhaustion of the Continent, owing to the long period of war, made for a smaller demand for English products than had been expected when the blockade was lifted. Still, these early crises were enough to reveal to the contemporary world the sinister aspects of this best of all social orders. Glutted markets, shops filled with goods nobody could buy, frequent bankruptcies – and on the other hand the glaring poverty of the toiling masses – for the first time all this starkly met the eyes of theorists who had preached the gospel of the beautiful harmonies of bourgeois laissez-faire and had sung its praises in all keys. All contemporary trade reports, periodicals and travelers’ notes told of the losses sustained by English merchants. In Italy, Germany, Russia, and Brazil, the English disposed of their commodity stocks at a loss of anything between 25 per cent and 33¹/3 per cent. People at the Cape of Good Hope in 1818 complained that all the shops were flooded with European goods offered at lower prices than in Europe and still unmarketable. From Calcutta there came similar complaints. From New Holland whole cargoes returned to England. In the United States, a contemporary traveler reports, ‘there was no town nor hamlet from one end to the other of this immense and prosperous continent where the amount of commodities displayed for sale did not considerably exceed the means of the purchasers, although the vendors tried to attract custom by long-term credits, all sorts of facilities for payment, payment by installments and acceptance of payment in kind’.

At the same time, England was hearing the desperate outcry of her workers. The Edinburgh Review of 1820⁽¹⁾ quotes an address by the Nottingham frame-work knitters which contained the following statements:

‘After working from 14 to 16 hours a day, we only earn from 4s. to 7s. a week, to maintain our wives and families upon; and we farther state, that although we have substituted bread and water, or potatoes and salt, for that more wholesome food an Englishman’s table used to abound with, we have repeatedly retired, after a heavy day’s labor, and have been under the necessity of putting our children supperless to bed, to stifle the cries of hunger. We can most solemnly declare, that for the last eighteen months we have scarcely known what it was to be free from the pangs of hunger.’⁽²⁾

Then Owen in England, and Sismondi in France, almost simultaneously raised their voices in a weighty indictment of capitalist society. Owen, as a hard-headed Englishman and citizen of the leading industrial state, constituted himself spokesman for a generous social reform, whereas the petty-bourgeois Swiss rather lost himself in sweeping denunciations of the imperfections of the existing social order and of classical economics. And yet, by so doing, Sismondi gave bourgeois economics a much harder nut to crack than Owen, whose fertile practical activities were directly applied to the proletariat.

Sismondi explained in some detail that the impetus for his social criticism came from England, and especially her first crisis. In the second edition of his Nouveaux Principes d’Economie Politique Ou De La Richesse Dans Ses Rapports Avec La Population,⁽³⁾ eight years after the publication of the first edition in 1819, he writes as follows:

‘It was in England that I performed the task of preparing the new edition. England has given birth to the most celebrated Political Economists: the science is cultivated even at this time with increased ardor ... Universal competition or the effort always to produce more and always cheaper, has long been the system in England, a system which I have attacked as dangerous. This system has used production by manufacture to advance with gigantic steps, but it has from time to time precipitated the manufacturers into frightful distress. It was in presence of these convulsions of wealth that I thought I ought to place myself, to review my reasonings and compare them with facts. – The study of England has confirmed me in my New Principles. In this astonishing country, which seems to be subject to a great experiment for the instruction of the rest of the world, I have seen production increasing, whilst enjoyments were diminishing. The mass of the nation here, no less than philosophers, seems to forget that the increase of wealth is not the end in political economy, but its instrument in procuring the happiness of all. I sought for this happiness in every class, and I could nowhere find it. The high English aristocracy has indeed arrived to a degree of wealth and luxury which surpasses all that can be seen in other nations; nevertheless it does not itself enjoy the opulence which it seems to have acquired at the expense of the other classes; security is wanting and in every family most of the individuals experience privation rather than abundance ... Below this titled and not titled aristocracy, I see commerce occupy a distinguished rank; its enterprises embrace the whole world, its agents brave the ices of the poles, and the heats of the equator, whilst every one of its leading men, meeting on Exchange, can dispose of thousands. At the same time, in the streets of London, and in those of the other great towns of England, the shops display goods sufficient for the consumption of the world. – But have riches secured to the English merchant the kind of happiness which they ought to secure him?, No: in no country are failures so frequent, nowhere are those colossal fortunes, sufficient in themselves to supply a public loan to uphold an Empire, or a republic overthrown with as much rapidity. All complain that business is scarce, difficult, not remunerative. Twice, within an interval of a few years, a terrible crisis has ruined part of the bankers, and spread desolation among all the English manufacturers. At the same time another crisis has ruined the farmers, and been felt in its rebound by retail dealers. On the other hand, commerce, in spite of its immense extent, has ceased to call for young men who have their fortunes to make; every place is occupied, in the superior ranks of society no less than in the inferior; the greater number offer their labor in vain, without, being able to obtain remuneration. – Has, then, this national opulence, whose material progress strikes every eye, nevertheless tended to the advantage of the poor? Not so. The people of England are destitute of comfort now, and of security for the future. There are no longer yeomen, they have been obliged to become day laborers. In the towns there are scarcely any longer artisans, or independent heads of a small business, but only manufacturers. The operative, to employ a word which the system has created, does not know what it is to have a station; he only gains wages, and as these wages cannot suffice for all seasons, he is almost every year reduced to ask alms from the poor-rates. – This opulent nation has found it more economical to sell all the gold and silver which she possessed, to do without coin, and to depend entirely on a paper circulation; she has thus voluntarily deprived herself of the most valuable of all the advantages of coin stability of value. The holders of the notes of the provincial banks run the risk every day of being ruined by frequent and, as it were, epidemic failures of the bankers; and the whole state is exposed to a convulsion in the fortune of every individual, if an invasion or a revolution should shake the credit of the national bank. The English nation has found it more economical to give up those nodes of cultivation which require much hand-labor, and she has dismissed half the cultivators who lived in the fields. She has found it more economical to supersede workmen by steam-engines; she has dismissed ... the operatives in towns, and weavers giving place to power-looms, are now sinking under famine; she has found it more economical to reduce all working people to the lowest possible wages on which they can subsist, and these working people being no longer anything but a rabble, have not feared plunging into still deeper misery by the addition of an increasing family. She has found it more economical to feed the Irish with potatoes, and clothe them in rags; and now every packet brings legions of Irish, who, working for less than the English, drive them from every employment. What is the fruit of this immense accumulation of wealth? Have they had any other effect than to make every class partake of care, privation and the danger of complete ruin? Has not England, by forgetting men for things, sacrificed the end to the means?’⁽⁴⁾

This mirror, held up to capitalist society almost a century before the time of writing, is clear and comprehensive enough in all conscience. Sismondi put his finger on every one of the sore spots of bourgeois economics: the ruin of small enterprise; the drift from the country; the proletarisation of the middle classes; the impoverishment of the workers; the displacement of the worker by the machine; unemployment; the dangers of the credit system; social antagonisms; the insecurity of existence; crises and anarchy. His harsh, emphatic skepticism struck a specially shrill discord with the complacent optimism, the idle worship of harmony as preached by vulgar economics which, in the person of MacCulloch in England and of Say in France, was becoming the fashion in both countries. It is easy to imagine what a deep and painful impression remarks like the following were bound to make:

‘There can only be luxury if it is bought with another’s labor; only those will work hard and untiringly who have to do so in order to get not the frills but the very necessities of life.’⁽⁵⁾

‘Although the invention of the machine which increases man’s capacity, is a blessing for mankind, it is made into a scourge for the poor by the unjust distribution we make of its benefits.’⁽⁶⁾

‘The gain of an employer of labor is sometimes nothing if not despoiling the worker he employs; he does not benefit because his enterprise produces much more than it costs, but because he does not pay all the costs, because he does not accord the laborer a remuneration equal to his work. Such an industry is a social evil, for it reduces those who perform the work to utmost poverty, assuring to those who direct it but the ordinary profits on capital.’⁽⁷⁾

‘Among those who share in the national income, one group acquires new rights each year by new labors, the other have previously acquired permanent rights by reason of a primary effort which makes a year’s labor more advantageous.’⁽⁸⁾

‘Nothing can prevent that every new discovery in applied mechanics should diminish the working population by that much. To this danger it is constantly exposed, and society provides no remedy for it.’⁽⁹⁾

‘A time will come, no doubt, when our descendants will condemn us as barbarians because we have left the working classes without security, just as we already condemn, as they also will, as barbarian the nations who reduced those same classes to slavery.’⁽¹⁰⁾

Sismondi’s criticism thus goes right to the root of the matter; for him there can be no compromise or evasion which might try to gloss over the dark aspects of capitalist enrichment he exposed, as merely temporary shortcomings of a transition period. He concludes his investigation with the following rejoinder to Say:

‘For seven years I have indicated this malady of the social organism, and for seven years it has continuously increased. I cannot regard such prolonged suffering as the mere frictions which always accompany a change. Going back to the origin of income, I believe to have shown the ills we experience to be the consequence of a flaw in our organization, to have shown that they are not likely to come to an end.’⁽¹¹⁾

The disproportion between capitalist production and the distribution of incomes determined by the former appears to him the source of all evil. This is the point from which he comes to the problem of accumulation with which we are now concerned.

The main thread of his criticism against classical economics is this: capitalist production is encouraged to expand indefinitely without any regard to consumption; consumption, however, is determined by income.

‘All the modern economists, in fact, have allowed that the fortune of the public, being only the aggregation of private fortunes, has its origin, is augmented, distributed and destroyed by the same means as the fortune of each individual. They all know perfectly well, that in a private fortune, the most important fact to consider is the income, and that by the income must be regulated consumption or expenditure, or the capital will be destroyed. But as in the fortune of the public, the capital of one becomes the income of another, they have been perplexed to decide what was capital, and what income, and they have therefore found it more simple to leave the latter entirely out of their calculations. By neglecting a quality so essential to be determined, Say and Ricardo have arrived at the conclusion, that consumption is an unlimited power, or at least having no limits but those of production, whilst it is in fact limited by income ... They announced that whatever abundance might be produced, it would always find consumers, and they have encouraged the producers to cause that glut in the markets, which at this time occasions the distress of the civilized world; whereas they should have forewarned the producers that they could only reckon on those consumers who possessed income.’⁽¹²⁾

Sismondi thus grounds his views in a theory of income. What is income, and what is capital? He pays the greatest attention to this distinction which he calls ‘the most abstract and difficult question of political economics’. The fourth chapter of his second book is devoted to this problem. As usual, Sismondi starts his investigation with Robinson Crusoe. For such a one, the distinction between capital and income was still ‘confused’; it becomes ‘essential’ only in society. Yet in society, too, this distinction is very difficult, largely on account of the already familiar myth of bourgeois economics, according to which ‘the capital of one becomes the income of another’, and vice versa. Adam Smith was responsible for this confusion which was then elevated to an atom by Say in justification of mental inertia and superficiality. It was loyally accepted by Sismondi.

‘The nature of capital and of income are always confused by the mind; we see that what is income for one becomes capital for another, and the same object, in passing from hand to hand, successively acquires different denominations; the value which becomes detached from an object that has been consumed, appears as a metaphysical quantity which one expends and the other exchanges, which for one perishes together with the object itself and which for the other renews itself and lasts for the time of circulation.’⁽¹³⁾

After this promising introduction, Sismondi dives right into the difficult problem and declares all wealth is a product of labor; income is part of wealth, and must therefore have the same origin. However, it is ‘customary’ to recognize three kinds of income, called rent, profit and wage respectively, which spring from the three sources of ‘land, accumulated capital and labor’. As to the first thesis, he is obviously on the wrong tack. As the wealth of a society, i.e. as the aggregate of useful objects, of use-values, wealth is not merely a product of labor but also of nature who both supplies raw materials and provides the means to support human labor. Income, on the other hand, is a concept of value. It indicates the amount to which an individual or individuals can dispose over part of the wealth of society or of the aggregate social product. In view of Sismondi’s insistence that social income is part of social wealth, we might assume him to understand by social income the actual annual fund for consumption. The remaining part of wealth that has not been consumed, then, is the capital of society. Thus we obtain at least a vague outline of the required distinction between capital and income on a social basis. At the very next moment, however, Sismondi accepts the ‘customary’ distinction between three kinds of income, only one of which derives exclusively from ‘accumulated capital’ while in the other two ‘land’ or ‘labor’ are conjoined with capital. The concept of capital thus at once becomes hazy again. However, let us see what Sismondi has to say about the origin of these three kinds of income which betray a rift in the foundations of society. He is right to take a certain development of labor productivity as his point of departure.

‘By reason of the advances both in industry and science, by which man has subjugated the forces of nature, every worker can produce more, far more, in a day than he needs to consume.’⁽¹⁴⁾

Sismondi thus rightly stresses the fact that the productivity of labor is an indispensable condition for the historical foundation of exploitation. Yet he goes on to explain the actual origin of exploitation in a way typical of bourgeois economics: ‘But even though his labor produces wealth, this wealth, if he is called upon to enjoy it, will make him less and less fit for work. Besides, wealth hardly ever remains in the possession of the man who must live by the work of his hands.’⁽¹⁵⁾

Thus he makes exploitation and class antagonism the necessary spur to production, quite in accord with the followers of Ricardo and Malthus. But now he comes to the real cause of exploitation, the divorce of labor power from the means of production.

‘The worker cannot, as a rule, keep the land as his own; land, however, has a productive capacity which human labor but directs to the uses of man. The master of the land on which labor is performed, reserves a share in the fruits of labor to which his land has contributed, as his remuneration for the benefits afforded by this productive capacity.’⁽¹⁶⁾

This is called rent. And further:

‘In our state of civilization, the worker can no longer call his own an adequate fund of objects for his consumption, enough to live while he performs the labors he has undertaken – until he has found a buyer. He no longer owns the raw materials, often coming from far away, on which he must exercise his industry. Even less does he possess that complicated and costly machinery which facilitates his work and makes it infinitely more productive. The rich man who possesses his consumption goods, his raw materials and his machines, need not work himself, for by supplying the worker with all these, he becomes in a sense the master of his work. As reward for the advantages he has put at the worker’s disposal, he takes outright the greater part of the fruits of his labor.’⁽¹⁷⁾

This is called capital profits. What remains of wealth, after the cream has been taken off twice, by landlord and capitalist; is the wage of labor, the income of the worker. And Sismondi adds: ‘He can consume it without reproduction.’⁽¹⁸⁾

Thus, Sismondi makes the fact of non-reproduction the criterion of income as distinct from capital for wages as well as for rent. In this, however, he is only right with regard to rent and the consumed part of capital profits; as for the part of the social product which is consumed inform of wages, it certainly does reproduce itself; it becomes the labor power of the wage laborer for him a commodity by whose sale he lives, which he can bring to market again and again; for society it becomes the material form of variable capital which must reappear time and again in the aggregate reproduction of a year, if there is to be no loss.

So far so good. Hitherto we have only learned two facts: the productivity of labor permits of the exploitation of the workers by those who do not work themselves, and exploitation becomes the actual foundation of the distribution of income owing to the divorce of the worker from his means of production. But we still do not know what is capital and what income, and Sismondi proceeds to clarify this point, starting as usual with Robinson Crusoe:

‘In the eyes of the individual all wealth was nothing but a provision prepared beforehand for the time of need. Even so, he already distinguished two elements in this provision ... one part which he budgets to have at hand for immediate or almost immediate use, and the other which he will not need until it is to afford him new production. Thus one, part of his corn must feed him until the next harvest, another part, reserved for sowing, is to bear fruit the following year. The formation of society and the introduction of exchange, permit to increase this seed, this fertile part of accumulated wealth, almost indefinitely, and this is what is called capital.’⁽¹⁹⁾

Balderdash would be a better name for all this. In using the analogy of seed, Sismondi here identifies means of production and capital, and this is wrong for two reasons. First, means of production are capital not intrinsically, but only under quite definite historical conditions; secondly, the concept of capital covers more than just the means of production. In capitalist society – with all the conditions Sismondi ignores – the means of production are only a part of capital, i.e. they are constant capital.

Sismondi here lost his thread plainly because he tried to establish a connection between the capital concept and the material aspects of social reproduction. Earlier, so long as he was concerned with the individual capitalist, he listed means of subsistence for the workers together with means of production as component parts of capital – again a mistake, in view of the material aspects of the reproduction of individual capitals. Yet as soon as he tries to focus the material foundations of social reproduction and sets out to make the correct distinction between consumer goods and means of production, the concept of capital dissolves in his lands.

However, Sismondi well knows that the means of production are not the sole requisites for production and exploitation; indeed, he has the proper instinct that the core of the relation of exploitation is the very fact of exchange with living labor. Having just reduced capital to constant capital, he now immediately reduces it exclusively to variable capital:

‘When the farmer has put in reserve all the corn he expects to need till the next harvest, he will find a good use for the surplus corn: he will feed what he has left over to other people who are going to work for him, till his land, spin and weave his hemp and wool, etc. ... By this procedure, the farmer converts a part of his income into capital, and in fact, this is the way in which new capital is always formed ... The corn he has reaped over and above what he must eat while he is working, and over and above what he will have to sow in order to maintain the same level of exploitation, is wealth which he can give away, squander and consume in idleness without becoming any poorer; it was income, but as soon as he uses it to feed producers, as soon as he exchanges it for labor, or for the fruits to come from the work of his laborers, his weavers, his miners, it is a permanent value that multiplies and will no longer perish; it is capital.’⁽²⁰⁾

Here there is some grain mixed up with quite a lot of chaff. Constant capital seems still required to maintain production on the old scale, although it is strangely reduced to circulating capital, and although the reproduction of fixed capital is completely ignored. Circulating capital apparently is also superfluous for the expansion of reproduction, for accumulation: the whole capitalized part of the surplus value is converted into wages for new workers who evidently labor in mid-air, without material means of production. The same view is expressed even more clearly elsewhere:

‘When the rich man cuts down his income in order to add to his capital, he is thus conferring a benefit on the poor, because he himself shares out the annual product; and whatever he calls income, he will keep for his own consumption; whatever he calls capital, he gives to the poor man to constitute an income for him.’⁽²¹⁾

Yet at the same time Sismondi gives due weight to the secret of profit-making and the origin of capital. Surplus value arises from the exchange of capital for labor, from variable capital, and capital arises from the accumulation of surplus value.

With all this, however, we have not made much progress towards a distinction between capital and income. Sismondi now attempts to represent the various elements of production and income in terms of the appropriate parts of the aggregate social product.

‘The employer of labor, as also the laborer, does not use all his productive wealth for the sowing; he devotes part of it to buildings, mills and tools which render the work easier and more productive, just a share of the laborer’s wealth had been devoted to the permanent work of making the soil more fertile. Thus we see how the different kinds of wealth successively come into being and become distinct. One part of the wealth accumulated by society is devoted by every one who possesses it to render labor more profitable by slow consumption, and make the blind forces of nature execute the work of man; this part is called fixed capital and comprises reclaiming, irrigation, factories, the tools of trade, and mechanical contrivances of every description. A second part of wealth is destined for immediate consumption, to reproduce itself in the work it gets done, to change its form, though not its value, without cease. This part is called circulating capital and it comprises seed, raw materials for manufacture, and wages. Finally, a third of wealth becomes distinguishable from the second: it is the value by which the finished job exceeds the advances which had to be made: this part is called income on capitals and is destined to be consumed without reproduction.’⁽²²⁾

After this laborious attempt to achieve a division of the aggregate social production according to incommensurable categories, fixed capital, circulating capital, and surplus value, Sismondi soon shows unmistakable signs that he means constant capital when he speaks of fixed capital, and variable capital when he speaks of circulating capital. For ‘all that is created’, is destined for human consumption, though fixed capital is consumed ‘mediately’ while the circulating capital ‘passes into the consumption fund of the worker whose wage it forms’. Thus we are a little nearer to the division of the social product into constant capital (means of production), variable capital (provisions for the workers) and surplus value (provisions for the capitalists). But so far Sismondi’s explanations are not particularly illuminating on the subject which he himself describes as ‘fundamental’. In this welter of confusion, at any rate, we cannot see any progress beyond Adam Smith’s ‘massive thought’.

Sismondi feels this himself and would clarify the problem ‘by the simplest of all methods’, sighing that ‘this movement of wealth is so abstract and requires such great power of concentration to grasp it properly’. Thus again we put on blinkers with a focus on Robinson [Crusoe], who in the meantime has changed to the extent that he has produced a family and is now a pioneer of colonial policy:

‘A solitary farmer in a distant colony on the border of the desert has reaped 100 sacks of corn this year; there is no market where to bring them; this corn, in any case, must be consumed within the year, else it will be of no value to the farmer; yet the farmer and his family eat only 30 sacks of it; this will be his expenditure, constituting the exchange of his income; it is not reproduced for anybody whatever. Then he will call for workers, he will make them clear woods, and drain swamps in his neighborhood and put part of the desert under the plow. These workers will eat another 30 sacks of corn: this will be their expenditure; they will be in a position to afford this expenditure at the price of their revenue, that is to say their labor; for the farmer it will be an exchange: he will have converted his 30 sacks into fixed capital. In the end, he is left with 40 sacks. He will sow them that year, instead of the 20 he had sown the previous year; this constitutes his circulating capital which he will have doubled. Thus the 100 sacks will have been consumed, but, of these 100 sacks 70 are a real investment for him, which will reappear with great increase, some of them at the very next harvest, and the others in all subsequent harvests. – The very isolation of the farmer we have just assumed gives us a better feeling for the limitations of such an operation. If he has only found consumers for 60 of the 100 sacks harvested in that year, who is going to eat the 200 sacks produced the following year by the increase in his sowing? His family, you might say, which will increase. No doubt; but human generations do not multiply as quickly as subsistence. If our farmer had hands available to repeat this assumed process each year, his corn harvest will be doubled every year, and his family could at the most be doubled once in 25 years.’⁽²³⁾

Though the example is naïve, the vital question stands out clearly in the end: where are the buyers for the surplus value that has been capitalized? The accumulation of capital can indefinitely increase the production of the society. But what about the consumption of society? This is determined by the various kinds of income. Sismondi explains this important subject in chapter v of book ii, The Distribution of the National Income Among the Various Classes of Citizens, in a resumed effort to describe the components of the social product.

‘Under this aspect, the national income is composed of two parts and no more; the one consists in annual production ... the profit arising from wealth. The second is the capacity for work which springs from life. This time we understand by wealth both territorial possessions and capital, and by profit the net income accruing to the owners as well as the profit of the capitalist.’⁽²⁴⁾

Thus all the means of production are separated from the national income as ‘wealth’, and this income is divided into surplus value and labor power, or better, its equivalent, the variable capital. This, then, though still far too vague, is our division into constant capital, variable capital and surplus value. But ‘national income’, it soon transpires, means for Sismondi the annual aggregate product of society:

‘Similarly, annual production, or the result of all the nation’s work in the course of a year, is composed of two parts: one we have just discussed – the profit resulting from wealth; the other is the capacity for work, which is assumed to equal the part of wealth for which it is exchanged, or the subsistence of the workers.’⁽²⁵⁾

The aggregate social product is thus resolved, in terms of value, into two parts: variable capital and surplus value – constant capital has disappeared. We have arrived at Smith’s dogma that the commodity price is resolved into v + s (or is composed of v + s) – in other words, the aggregate product consists solely of consumer goods for workers and capitalists.

Sismondi then goes on to the problem of realizing the aggregate product. On the one hand, the sum total of incomes in a society consists of wages, capital profits and rents, and is thus represented by v + s; on the other hand, the aggregate social product, in terms of value, is equally resolved into v + s ‘so that national income and annual production balance each other (and appear as equal quantities)’, i.e. so that they must be equal in value.

‘Annual production is consumed altogether during the year, but in part by the workers who, by exchanging their labor for it, convert it into capital and reproduce it; in part by the capitalists who, exchanging their income for it, annihilate it. The whole of the annual income is destined to be exchanged for the whole of annual production.’⁽²⁶⁾

This is the basis on which, in the sixth chapter of book ii, On Reciprocal Determination of Production and Consumption, Sismondi finally sets up the following precise law of reproduction: ‘It is the income of the past year which must pay for the production of the present year.’⁽²⁷⁾

If this is true, how can there be any accumulation of capital? If the aggregate product must be completely consumed by the workers and capitalists, we obviously remain within the bounds of simple reproduction, and there can be no solution to the problem of accumulation. Sismondi’s theory in fact amounts to a denial of the possibility of accumulation. The aggregate so social demand being the bulk of wages given to the workers and the previous consumption of the capitalists, who will be left to buy the surplus product if reproduction expands? On this count, Sismondi argues that accumulation is objectively impossible, as follows:

‘What happens after all is always that we exchange the whole of production for the whole production of the previous year. Besides, if production gradually increases, the exchange, at the same time as it improves, future conditions must entail a small loss every year.’⁽²⁸⁾

In other words, when the aggregate product is realized, accumulation is bound each year to create a surplus, that cannot be sold. Sismondi, however, is afraid of drawing this final conclusion, and prefers a ‘middle’, course necessitating a somewhat obscure subterfuge: ‘If this loss is not heavy, and evenly distributed, everyone will bear with it without complaining about his income. This is what constitutes the national economy, and the series of such small sacrifices increases capital and common wealth.’⁽²⁸⁾

If, on the other, hand, there is ruthless accumulation, this surplus residue becomes a public calamity, and the result is crisis. Thus a petty-bourgeois subterfuge becomes the solution of Sismondi: putting the dampers on accumulation. He constantly polemizes against the classical school which advocates unrestricted development of the productive forces and expansion of production; and his whole work is a warning against the fatal consequences of giving full rein to the desire to accumulate.

Sismondi’s exposition proves that he was unable to grasp the reproductive process as a whole. Quite apart from his unsuccessful attempt to distinguish between the categories of capital and income from the point of view of society his theory of reproduction suffers from the fundamental error he took over from Adam Smith: the idea that personal consumption absorbs the entire annual products without leaving any part of the value for the renewal of society constant capitals and also, that accumulation consists merely of the transformation of capitalized surplus value into variable capital. Yet, if later critics of Sismondi e.g., the Russian Marxist Ilyin,⁽²⁹⁾ think that pointing out this fundamental error in the analysis of the aggregate product can justify a cavalier dismissal of Sismondi’s entire theory of accumulation as inadequate, as ‘nonsense’, they merely demonstrate their own obtuseness in respect of Sismondi’s real concern, his ultimate problem. The analysis of Marx at a later date, showing up the crude mistakes of Adam Smith for the first time, is the best proof that the problem of accumulation is far from solved just by attending to the equivalent of the constant capital in the aggregate product. This is proved even more strikingly in the actual development of Sismondi’s theory: his views involved him in bitter controversy with the exponents and popularizers of the classical school, with Ricardo, Say and MacCulloch. The two parties to the conflict represent diametrically opposed points of view: Sismondi stands for the sheer impossibility, the others for the unrestricted possibility, of accumulation. Sismondi and his opponents alike disregard constant capital in their exposition of reproduction, and it was Say in particular who presumed to perpetuate Adam Smith’s confused concept of the aggregate product as v + s as an unassailable dogma.

The knowledge we owe to Marx that the aggregate product must, apart from consumer goods for the workers and capitalists (v + s), also contain means of production to renew what has been used, that accumulation accordingly consists not merely in the enlargement of variable but also of constant capital, is not enough, as amply demonstrated by this entertaining turn of events, to solve the problem of accumulation. Later we shall see how this stress on the share of constant capital in the reproductive process gave rise to new fallacies in the theory of accumulation. At present it will suffice to put on record that the deference to Smith’s error about the reproduction of aggregate capital is not a weakness unique to Sismondi’s position but is rather the common ground on which the first controversy about the problem of accumulation was fought out. Scientific research, not only in this sphere, proceeds in devious ways; it often tackles the upper stories of the edifice, as it were, without making sure of the foundations; and so this conflict only resulted in that bourgeois economics took on the further complicated problem of accumulation without even having assimilated the elementary problem of simple reproduction. At all events, Sismondi, in his critique of accumulation, had indubitably given bourgeois economics a hard nut to crack – seeing that in spite of his transparently feeble and awkward deductions, Sismondi’s opponents were still unable to get the better of him.

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Footnotes

⁽¹⁾ In the review of an essay on Observations on the injurious Consequences of the Restrictions upon Foreign Commerce, by a Member of the late Parliament, London 1820 (Edinburgh Review, vol.lxvi, pp.331ff.). This interesting document, from which the following extracts are taken, an essay with a Free Trade bias, paints the general position of the workers in England in the most dismal colors. It gives the facts as follows:

‘The manufacturing classes in Great Britain ... have been suddenly reduced from affluence and prosperity to the extreme of poverty and misery. In one of the debates in the late Session of Parliament, it was stated that the wages of weavers of Glasgow and its vicinity which, when highest, had averaged about 25s. or 27s. a week, had been reduced in 1816 to 10s.; had in 1819 to the wretched pittance of 5–6s. or 6s. They have not since been materially augmented.’

In Lancashire, according to the same evidence, the direct weekly wage of the weavers was from 6s. to 12s. a week for 55 hours’ labor a day, whilst half-starved children worked 12 to 16 hours a day for 2s. or 3s. a week. Distress in Yorkshire was, if possible, even greater. As to the address by the frame-work knitters of Nottingham, the author says that he himself investigated conditions and had come to the conclusion that the declarations of the workers ‘were not in the slightest degree exaggerated’.

⁽²⁾Ibid., p.334.

⁽³⁾ Paris 1827.

⁽⁴⁾Preface to the second edition. Translation by M. Mignet, in Political Economy and the Philosophy of Government (London 1847), pp.114ff.

⁽⁵⁾Nouveaux Principes ... (2nd ed), vol.i, p.79.

⁽⁶⁾Ibid., p.xv.

⁽⁷⁾Ibid., p.92.

⁽⁸⁾Ibid., pp.111-12.

⁽⁹⁾Ibid., p.335.

⁽¹⁾Op. cit., vol.ii, p.435.

⁽¹⁾Ibid., p.463.

⁽¹²⁾Op. cit., vol.i, p.xiii (pp.120-1 of Mignet’s translation).

⁽¹³⁾Ibid., p.84.

⁽¹⁴⁾Ibid., p.85.

⁽¹⁵⁾Ibid., p.86.

⁽¹⁶⁾Ibid., pp.86-7.

⁽¹⁷⁾Ibid., p.87.

⁽¹⁸⁾Ibid., pp.87-8.

⁽¹⁹⁾Ibid., pp.88-9.

⁽²⁰⁾Ibid., pp.108-9.

⁽²¹⁾Ibid., pp.93-4.

⁽²²⁾Ibid., p.95.

⁽²³⁾Ibid., pp.95-6.

⁽²⁴⁾Ibid., pp.104-5.

⁽²⁵⁾Ibid., p.105.

⁽²⁶⁾Ibid., pp.105-6.

⁽²⁷⁾Ibid., pp.113, 120.

⁽²⁸⁾Ibid., p.121.

⁽²⁹⁾ Vladimir Ilyich [Lenin], Economic Studies and Essays, St. Petersburg 1899.