MARX’S diagram of enlarged reproduction cannot explain the actual and historical process of accumulation. And why? Because of the very premises of the diagram. The diagram sets out to describe the accumulative process on the assumption that the capitalists and workers are the sole agents of capitalist consumption. We have seen that Marx consistently and deliberately assumes the universal and exclusive domination of the capitalist mode of production as a theoretical premise of his analysis in all three volumes of Capital. Under these conditions, there can admittedly be no other classes of society than capitalists and workers; as the diagram has it, all ‘third persons’ of capitalist society – civil servants, the liberal professions, the clergy, etc. – must, as consumers, be counted in with these two classes, and preferably with the capitalist class. This axiom, however, is a theoretical contrivance – real life has never known a self-sufficient capitalist society under the exclusive domination of the capitalist mode of production. This theoretical device is perfectly admissible so long as it merely helps to demonstrate the problem in its integrity and does not interfere with its very conditions. A case in point is the analysis of simple reproduction of the aggregate social capital, where the problem itself rests upon a fiction: in a society producing by capitalist methods, i.e. a society which creates surplus value, the whole of the latter is taken to be consumed by the capitalists who appropriate it. The object is to present the forms of social production and reproduction under these given conditions. Here the very formulation of the problem implies that production knows no other consumers than capitalists and workers and thus strictly conforms to Marx’s premise: universal and exclusive domination of the capitalist mode of production. The implications of both fictions are the same. Similarly, it is quite legitimate to postulate absolute dominance of capital in an analysis of the accumulation of individual capitals, such as is given in Capital, volume i. The reproduction of individual capitals is an element in total social reproduction but one which follows an independent course, contrary to the movements of the other elements. In consequence it will not do simply to take together the individual movements of the respective capitals in order to arrive at the total movement of social capital, since the latter is essentially different. The natural conditions of reproducing individual capitals therefore neither conform with one another, nor do they conform to the relations of the total capital. Under normal conditions of circulation, every individual capital engages in the process of circulation and of accumulation entirely on its own account, depending upon others only in so far, of course, as it is compelled to find a market for its product and must find available the means of production it requires for its specific activities. Whether the strata who afford this market and provide the necessary means of production are themselves capitalist producers or not is completely immaterial for the individual capital, although, in theory, the most favorable premise for analyzing the accumulation of individual capital is the assumption that capitalist production has attained universal and exclusive domination and is the sole setting of this process.⁽¹⁾

Now, however, the question arises whether the assumptions which were decisive in the case of individual capital, are also legitimate for the consideration of aggregate capital.

‘We must now put the problem in this form: given universal accumulation, that is to say provided that in all branches of production there is greater or less accumulation of capital – which in fact is a condition of capitalist production, and which is just as natural to the capitalist qua capitalist as it is natural to the miser to amass money (but which is also necessary for the perpetuation of capitalist production) – what are the conditions of this universal accumulation, to what elements can it be reduced?’

And the answer:

‘The conditions for the accumulation of capital are precisely those which rule its original production and reproduction in general: these conditions being that one part of the money buys labor and the other commodities (raw materials, machinery, etc.) ... Accumulation of new capital can only proceed therefore under the same conditions under which already existing capital is reproduced.’⁽²⁾

In real life the actual conditions for the accumulation of the aggregate capital are quite different from those prevailing for individual capitals and for simple reproduction. The problem amounts to this: If an increasing part of the surplus value is not consumed by the capitalists but employed in the expansion of production, what, then, are the forms of social reproduction? What is left of the social product after deductions for the replacement of the constant capital cannot, ex hypothesi, be absorbed by the consumption of the workers and capitalists – this being the main aspect of the problem – nor can the workers and capitalists themselves realize the aggregate product. They can always only realize the variable capital, that part of the constant capital which will be used up, and the part of the surplus value which will be consumed, but in this way they merely ensure that production can be renewed on its previous scale. The workers and capitalists themselves cannot possibly realize that part of the surplus value – which is to be capitalized. Therefore, the realization of the surplus value for the purposes of accumulation is an impossible task for a society which consists solely of workers and capitalists. Strangely enough, all theorists who analyzed the problem of accumulation, from Ricardo and Sismondi to Marx, started with the very assumption which makes their problem insoluble. A sure instinct that realization of the surplus value requires ‘third persons’, that is to say consumers other than the immediate agents of capitalist production (i.e. workers and capitalists) led to all kinds of subterfuges: ‘unproductive consumption’ as presented by Malthus in the person of the feudal landowner, by Vorontsov in militarism, by Struve in the ‘liberal professions’ and other hangers-on of the capitalist class; or else foreign trade is brought into play which proved a useful safety valve to all those who regarded accumulation with skepticism, from Sismondi to Nikolayon. Because of these insoluble difficulties, others like v. Kirchmann and Rodbertus tried to do without accumulation altogether, or, like Sismondi and his Russian ‘populist’ followers, stressed the need for at least putting the dampers on accumulation as much as possible.

The salient feature of the problem of accumulation, and the vulnerable point of earlier attempts to solve it, has only been shown up by Marx’s more profound analysis, his precise diagrammatic demonstration of the total reproductive process, and especially his inspired exposition of the problem of simple reproduction. Yet he could not supply immediately a finished solution either, partly because he broke off his analysis almost as soon as he had begun it, and partly because he was then preoccupied, as we have shown, with denouncing the analysis of Adam Smith and thus rather lost sight of the main problem. In fact, he made the solution even more difficult by assuming the capitalist mode of production to prevail universally. Nevertheless, a solution of the problem of accumulation, in harmony both with other parts of Marx’s doctrine and with the historical experience and daily practice of capitalism, is implied in Marx’s complete analysis of simple reproduction and his characterization of the capitalist process as a whole which shows up its immanent contradictions and their development (in Capital, vol.iii). In the light of this, the deficiencies of the diagram can be corrected. All the relations being, as it were, incomplete, a closer study of the diagram of enlarged reproduction will reveal that it points to some sort of organization more advanced than purely capitalist production and accumulation.

Up to now we have only considered one aspect of enlarged reproduction, the problem of realizing the surplus value, whose difficulties hitherto had claimed the skeptics’ whole attention. Realization of the surplus value is doubtless a vital question of capitalist accumulation. It requires as its prime condition – ignoring, for simplicity’s sake, the capitalists’ fund of consumption altogether – that there should be strata of buyers outside capitalist society. Buyers, it should be noted, not consumers, since the material form of the surplus value is quite irrelevant to its realization. The decisive fact is that the surplus value cannot be realized by sale either to workers or to capitalists, but only if it is sold to such social organizations or strata whose own mode of production is not capitalistic. Here we can conceive of two different cases:

1. Capitalist production supplies consumer goods over and above its own requirements, the demand of its workers and capitalists, which are bought by non-capitalist strata and countries. The English cotton industry, for instance, during the first two-thirds of the nineteenth century, and to some extent even now, has been supplying cotton textiles to the peasants and petty-bourgeois townspeople of the European continent, and to the peasants of India, America, Africa and so on. The enormous expansion of the English cotton industry was thus founded on consumption by non-capitalist strata and countries.⁽³⁾ In England herself; this flourishing cotton industry called forth large-scale development in the production of industrial machinery (bobbins and weaving-looms), and further in the metal and coal industries and so on. In this instance, Department II realized its products to an increasing extent by sale to non-capitalist social strata, and by its own accumulation it created on its part an increasing demand for the home produce of Department I, thus helping the latter to realize its surplus value and to increase its own accumulation.
2. Conversely, capitalist production supplies means of production in excess of its own demand and finds buyers in non-capitalist countries. English industry, for instance, in the first half of the nineteenth century supplied materials for the construction of railroads in the American and Australian states. (The building of railways cannot in itself be taken as evidence for the domination of capitalist production in a country. As a matter of fact, the railways in this case provided only one of the first conditions for the inauguration of capitalist production.) Another example would be the German chemical industry which supplies means of production such as dyes in great quantities to Asiatic, African and other countries whose own production is not capitalistic.⁽⁴⁾ Here Department I realizes its products in extra-capitalist circles. The resulting progressive expansion of Department I gives rise to a corresponding expansion of Department II in the same (capitalistically producing) country in order to supply the means of subsistence for the growing army of workers in Department I.

Each of these cases differs from Marx’s diagram. In one case, the product of Department II exceeds the needs of both departments, measured by the variable capital and the consumed part of the surplus value. In the second case, the product of Department I exceeds the volume of constant capital in both departments, enlarged though it is for the purpose of expanding production. In both cases, the surplus value does not come into being in that natural form which would make its capitalization in either department possible and necessary. These two prototypes continually overlap in real life, supplement each other and merge.

In this contest, one point seems still obscure. The surplus of consumer goods, say cotton fabrics, which is sold to non-capitalist countries, does not exclusively represent surplus value, but, as a capitalist commodity, it embodies also constant and variable capital. It seems quite arbitrary to assume that just those commodities which are sold outside the capitalist strata of society should represent nothing but surplus value. On the other hand, Department I clearly can in this case not only realize its surplus value but also accumulate, and that without requiring another market for its product than the two departments of capitalist production. Yet both these objections are only apparent. All we need remember is that each component of the aggregate product represents a proportion of the total value, that under conditions of capitalist production not only the aggregate product but every single commodity contains surplus value; which consideration does not prevent the individual capitalist, however, from computing that the sale of his specific commodities must first reimburse him for his outlay on constant capital and secondly replace his variable capital (or, rather loosely, but in accordance with actual practice: it must first replace his fixed, and then his circulating capital); what then remains will go down as profit. Similarly, we can divide the aggregate social product into three proportionate parts which, in terms of value, correspond to (1) the constant capital that has been used up in society, (2) the variable capital, and (3) the extracted surplus value. In the case of simple reproduction these proportions are also reflected in the material shape of the aggregate product: the constant capital materializes as means of production, the variable capital as means of subsistence for the workers, and the surplus value as means of subsistence for the capitalist. Yet as we know, the concept of simple reproduction with consumption of the entire surplus value by the capitalists is a mere fiction. As for enlarged reproduction or accumulation, in Marx’s diagram the composition of the social product in terms of value is also strictly in proportion to its material form the surplus value, or rather that part of it which is earmarked for capitalization, has from the very beginning the form of material means of production and means of subsistence for the workers in a ratio appropriate to the expansion of production on a given technical basis. As we have seen, this conception, which is based upon the self-sufficiency and isolation of capitalist production, falls down as soon as we consider the realization of the surplus value. If we assume, however, that the surplus value is realized outside the sphere of capitalist production, then its material form is independent of the requirements of capitalist production itself. Its material form conforms to the requirements of those non-capitalist circles who help to realize it, that is to say, capitalist surplus value can take the form of consumer goods, e.g. cotton fabrics, or of means of production, e.g. materials for railway construction, as the case may be. If one department realizes its surplus value by exporting its products, and with the ensuing expansion of production helps the other department to realize its surplus value on the home market, then the fact still remains that the social surplus value must yet be taken as realized outside the two departments, either mediately or immediately. Similar considerations enable the individual capitalist to realize his surplus value, even if the whole of his commodities can only replace either the variable or the constant capital of another capitalist.

Nor is the realization of the surplus value the only vital aspect of reproduction. Given that Department I has disposed of its surplus value outside, thereby starting the process of accumulation, and further, that it can expect a new increase in the demand in non-capitalist circles, these two conditions add up to only half of what is required for accumulation. There is many a slip twixt the cup and the lip. The second requirement of accumulation is access to material elements necessary for expanding reproduction. Seeing that we have just turned the surplus product of Department I into money by getting rid of the surplus means of production to non-capitalist circles, from where are these material elements then to come? The transaction which is the portal for realizing the surplus value is also, as it were, a backdoor out of which flies all possibility of converting this realized surplus value into productive capital – one leads to the nether regions and the other to the deep sea. Let us take a closer look.

Here we use c in both Departments I and II as if it were the entire constant capital in production. Yet this we know is wrong. Only for the sake of simplifying the diagram have we disregarded that the c which figures in Departments I and II of the diagram is only part of the aggregate constant capital of society, that is to say that part which, circulating during one year, is used up and embodied in the products of one period of production. Yet it would be perfectly absurd if capitalist production – or any other – would use up its entire constant capital and create it anew in every period of production. On the contrary, we assume that the whole mass of means of production, for the periodical total renewal of which the diagram provides in annual installments – renewal of the used-up part – lies at the back of production as presented in the diagram. With progressing labor productivity and an expanding volume of production, this mass increases not only absolutely but also relatively to the part which is consumed in production in every case, together with a corresponding increase in the efficiency of the constant capital. It is the more intensive exploitation of this part of the constant capital, irrespective of its increase in value, which is of paramount importance for the expansion of production.

‘In the extractive industries, mines, etc., the raw materials form no part of the capital advanced. The subject of labor is in this case not a product of previous labor, but is furnished by Nature gratis, as in the case of metals, minerals; coal, stone, etc. In these cases the constant capital consists almost exclusively of instruments of labor, which can very well absorb an increased quantity of labor (day and night shifts of laborers, e.g.). All other things being equal, the mass and value of the product will rise in direct proportion to the labor expended. As on the first day of production, the original produce-formers, now turned into the creators of the material elements of capital – man and Nature – still work together. Thanks to the elasticity of labor-power, the domain of accumulation has extended without any previous enlargement of constant capital. – In agriculture the land under cultivation cannot be increased without the advance of more seed and manure. But this advance once made, the purely mechanical working of the soil itself produces a marvelous effect on the amount of the product. A greater quantity of labor, done by the same number of laborers as before, thus increases the fertility, without requiring any new advance in the instruments of labor. It is once again the direct action of man on Nature which becomes an immediate source of greater accumulation, without the intervention of any new capital. Finally, in what is called manufacturing industry, every additional expenditure of labor presupposes a corresponding additional expenditure of raw materials, but not necessarily of instruments of labor. And as extractive industry and agriculture supply manufacturing industry with its raw materials and those of its instruments of labor, the additional product the former have created without additional advance of capital, tells also in favor of the latter. – General result: by incorporating with itself the two primary creators of wealth, labor-power and the land, capital acquires a power of expansion that permits it to augment the elements of its accumulation beyond the limits apparently fixed by its own magnitude, or by the value and the mass of the means of production, already produced, in which it has its being.’⁽⁵⁾

In addition, there is no obvious reason why means of production and consumer goods should be produced by capitalist methods alone. This assumption, for all Marx used it as the corner-stone of his thesis, is in conformity neither with the daily practice, and the history, of capital, nor with the specific character of this mode of production. In the first half of the nineteenth century, a great part of the surplus value in England was produced in form of cotton fabrics. Yet the material elements for the capitalization of this surplus value, although they certainly represented a surplus product, still were by no means all capitalist surplus value, to mention only raw cotton from the slave states of the American Union, or grain (a means of subsistence for the English workers) from the fields of serf-owning Russia. How much capitalist accumulation depends upon means of production which are not produced by capitalist methods is shown for example by the cotton crisis in England during the American War of Secession, when the cultivation of the plantations came to a standstill, or by the crisis of European linen weaving during the war in the East, when flax could not be imported from serf-owning Russia. We need only recall that imports of corn raised by peasants – i.e. not produced by capitalist methods – played a vital part in the feeding of industrial labor, as an element, that is to say, of variable capital, for a further illustration of the close ties between non-capitalist strata and the material elements necessary to the accumulation of capital.

Moreover, capitalist production, by its very nature, cannot be restricted to such means of production as are produced by capitalist methods. Cheap elements of constant capital are essential to the individual capitalist who strives to increase his rate of profit. In addition, the very condition of continuous improvements in labor productivity as the most important method of increasing the rate of surplus value, is unrestricted utilization of all substances and facilities afforded by nature and soil. To tolerate any restriction in this respect would be contrary to the very essence of capital, its whole mode of existence. After many centuries of development, the capitalist mode of production still constitutes only a fragment of total world production. Even in the small Continent of Europe, where it now chiefly prevails, it has not yet succeeded in dominating entire branches of production, such as peasant agriculture and the independent handicrafts; the same holds true, further, for large parts of North America and for a number of regions in the other continents. In general, capitalist production has hitherto been confined mainly to the countries in the temperate zone, whilst it made comparatively little progress in the East, for instance, and the South. Thus, if it were dependent exclusively, on elements of production obtainable within such narrow limits, its present level and indeed, its development in general would have been impossible. From the very beginning, the forms and laws of capitalist production aim to comprise the entire globe as a store of productive forces. Capital, impelled to appropriate productive forces for purposes of exploitation, ransacks the whole world, it procures its means of production from all corners of the earth, seizing them, if necessary by force, from all levels of civilization and from all forms of society. The problem of the material elements of capitalist accumulation, far from being solved by the material form of the surplus value that has been produced, takes on quite a different aspect. It becomes necessary for capital progressively to dispose ever more fully of the whole globe, to acquire an unlimited choice of means of production, with regard to both quality and quantity, so as to find productive employment for the surplus value it has realized.

The process of accumulation, elastic and spasmodic as it is, requires inevitably free access to ever new areas of raw materials in case of need, both when imports from old sources fall or when social demand suddenly increases. When the War of Secession interfered with the import of American cotton, causing the notorious ‘cotton famine’ in the Lancashire district, new and immense cotton plantations sprang up in Egypt almost at once, as if by magic. Here it was Oriental despotism, combined with an ancient system of bondage, which had created a sphere of activity for European capital. Only capital with its technical resources can effect such a miraculous change in so short a time – but only on the pre-capitalist soil of more primitive social conditions can it develop the ascendancy necessary to achieve such miracles. Another example of the same kind is the enormous increase in the world consumption of rubber which at present (1912) necessitates a supply of latex to the value of £50,000,000 per annum. The economic basis for the production of raw materials is a primitive system of exploitation practiced by European capital in the African colonies and in America; where the institutions of slavery and bondage are combined in various forms.⁽⁶⁾

Between the production of surplus value, then, and the subsequent period of accumulation, two separate transactions take place – that of realizing the surplus value, i.e. of converting it into pure value, and that of transforming this pure value into productive capital. They are both dealings between capitalist production and the surrounding non-capitalist world. From the aspect both of realizing the surplus value and of procuring the material elements of constant capital, international trade is a prime necessity for the historical existence of capitalism – an international trade which under actual conditions is essentially an exchange between capitalistic and non-capitalistic modes of production.

Hitherto we have considered accumulation solely with regard to surplus value and constant capital. The third element of accumulation is variable capital winch increases with progressive accumulation. In Marx’s diagram, the social product contains ever more means of subsistence for the workers as the material form proper to this variable capital. The variable capital, however, is not really the means of subsistence for the worker but is in fact living labor for whose reproduction these means of subsistence are necessary. One of the fundamental conditions of accumulation is therefore a supply of living labor which can be mobilized by capital to meet its demands. This supply can be increased under favorable conditions – but only up to a certain point – by longer hours and more intensive work. Both these methods of increasing the supply, however, do not enlarge the variable capital, or do so only to a small extent (e.g. payment for overtime). Moreover, they are confined to definite and rather narrow limits which they cannot exceed owing to both natural and social causes. The increasing growth of variable capital which accompanies accumulation must therefore become manifest in ever greater numbers of employed labor. Where can this additional labor be found?

In his analysis of the accumulation of individual capital, Marx gives the following answer:

‘Now in order to allow of these elements actually functioning as capital, the capitalist class requires additional labor. If the exploitation of the laborers already employed does not increase, either extensively or intensively, then additional labor-power must be found. For this the mechanism of capitalist production provides beforehand, by converting the working class into a class dependent on wages, a class whose ordinary wages suffice, not only for its maintenance, but for its increase. It is only necessary for capital to incorporate this additional labor-power, annually supplied by the working class in the shape of laborers of all ages, with the surplus means of production comprised in the annual produce, and the conversion of surplus-value into capital is complete.’⁽⁷⁾

Thus the increase in the variable capital is directly and exclusively attributed to the natural physical increase of a working class already dominated by capital. This is in strict conformity with the diagram of enlarged reproduction which recognizes only the social classes of capitalists and workers, and regards the capitalist mode of production as exclusive and absolute. On these assumptions, the natural increase of the working class is the only source of extending the labor supply commanded by capital. This view, however, is contrary to the laws governing the process of accumulation. The natural propagation of the workers and the requirements of accumulating capital are not correlative in respect of time or quantity. Marx himself has most brilliantly shown that natural propagation cannot keep up with the sudden expansive needs of capital. If natural propagation were the only foundation for the development of capital, accumulation, in its periodical swings from overstrain to exhaustion, could not continue, nor could the productive sphere expand by leaps and bounds, and accumulation itself would become impossible. The latter requires an unlimited freedom of movement in respect of the growth of variable capital equal to that which it enjoys with regard to the elements of constant capital – that is to say it must needs dispose over the supply of labor power without restriction. Marx considers that this can be achieved by an ‘industrial reserve army of workers’. His diagram of simple reproduction admittedly does not recognize such an army, nor could it have room for it, since the natural propagation of the capitalist wage proletariat cannot provide an industrial reserve army. Labor for this army is recruited from social reservoirs outside the dominion of capital – it is drawn into the wage proletariat only if need arises. Only the existence of non-capitalist groups and countries can guarantee such a supply of additional labor power for capitalist production.⁽⁸⁾ Yet in his analysis of the industrial reserve Marx only allows for (a) the displacement of older workers by machinery, (b) an influx of rural workers into the towns in consequence of the ascendancy of capitalist production in agriculture, (c) occasional labor that has dropped out of industry, and (d) finally the lowest residue of relative over-population, the paupers. All these categories are cast off by the capitalist system of production in some form or other, they constitute a wage proletariat that is worn out and made redundant one way or another. Marx, obviously influenced by English conditions involving a high level of capitalist development, held that the rural workers who continually migrate to the towns belong to the wage proletariat, since they were formerly dominated by agricultural capital and now become subject to industrial capital. He ignores, however, the problem which is of paramount importance for conditions on the continent of Europe, namely the sources from which this urban and rural proletariat is recruited: the continual process by which the rural and urban middle strata become proletarian with the decay of peasant economy and of small artisan enterprises, the very process, that is to say, of incessant transition from non-capitalist to capitalist conditions of a labor power that is cast off by pre-capitalist, not capitalist, modes of production in their progressive breakdown and disintegration. Besides the decay of European peasants and artisans we must here also mention the disintegration of the most varied primitive forms of production and of social organization in non-European countries.

Since capitalist production can develop fully only with complete access to all territories and climes, it can no more confine itself to the natural resources and productive forces of the temperate zone than it can manage with white labor alone. Capital needs other races to exploit territories where the white man cannot work. It must be able to mobilize world labor power without restriction in order to utilize all productive forces of the globe – up to the limits imposed by a system of producing surplus value. This labor power, however, is in most cases rigidly bound by the traditional pre-capitalist organization of production. It must first be ‘set free’ in order to be enrolled in the active army of capital. The emancipation of labor power from primitive social conditions and its absorption by the capitalist wage system is one of the indispensable historical bases of capitalism. For the first genuinely capitalist branch of production, the English cotton industry, not only the cotton of the Southern states of the American Union was essential, but also the millions of African Negroes who were shipped to America to provide the labor power for the plantations, and who late; as a free proletariat, were incorporated in the class of wage laborers in a capitalist system.⁽⁹⁾ Obtaining the necessary labor power from non-capitalist societies, the so-called ‘labor-problem’, is ever more important for capital in the colonies. All possible methods of ‘gentle compulsion’ are applied to solving this problem, to transfer labor from former social systems to the command of capital. This endeavor leads to the most peculiar combinations between the modern wage system and primitive authority in the colonial countries.⁽¹⁰⁾ This is a concrete example of the fact that capitalist production cannot manage without labor power from other social organizations.

Admittedly, Marx dealt in detail with the process of appropriating non-capitalist means of production as well as with the transformation of the peasants into a capitalist proletariat. Chapter xxiv of Capital, vol.i, is devoted to describing the origin of the English proletariat, of the capitalistic agricultural tenant class and of industrial capital, with particular emphasis on the looting of colonial countries by European capital. Yet we must bear in mind that all this is treated solely with a view to so-called primitive accumulation. For Marx, these processes are incidental, illustrating merely the genesis of capital, its first appearance in the world; they are, as it were, travails by which the capitalist mode of production emerges from a feudal society. As soon as he comes to analyze the capitalist process of production and circulation, he reaffirms the universal and exclusive domination of capitalist production.

Yet, as we have seen, capitalism in its frill maturity also depends in all respects on non-capitalist strata and social organizations existing side by side with it. It is not merely a question of a market for the additional product, as Sismondi and the later critics and doubters of capitalist accumulation would have it. The interrelations of accumulating capital and non-capitalist forms of production extend over values as well as over material conditions, for constant capital, variable capital and surplus value alike. The non-capitalist mode of production is the given historical setting for this process. Since the accumulation of capital becomes impossible in all points without non-capitalist surroundings, we cannot gain a true picture of it by assuming the exclusive and absolute domination of the capitalist mode of production. Sismondi and his school, when they attributed their difficulties entirely to the problem of realizing the surplus value, indeed revealed a proper sense for the conditions vital to accumulation. Yet the conditions for augmenting the material elements of constant and variable capital are quite a different matter from those which govern the realization of surplus value. Capital needs the means of production and the labor power of the whole globe for untrammeled accumulation; it cannot manage without the natural resources and the labor power of all territories. Seeing that the overwhelming majority of resources and labor power is in fact still in the orbit of pre-capitalist production – this being the historical milieu of accumulation – capital must go all out to obtain ascendancy over these territories and social organizations. There is no a priori reason why rubber plantations, say, run on capitalist lines, such as have been laid out in India, might not serve the ends of capitalist production just as well. Yet if the countries of those branches of production are predominantly non-capitalist, capital will endeavor to establish domination over these countries and societies. And in fact, primitive conditions allow of a greater drive and of far more ruthless measures than could be tolerated under purely capitalist social conditions.

It is quite different with the realization of the surplus value. Here outside consumers qua other-than-capitalist are really essential. Thus the immediate and vital conditions for capital and its accumulation is the existence of non-capitalist buyers of the surplus value, which is decisive to this extent for the problem of capitalist accumulation.

Whatever the theoretical aspects, the accumulation of capital as an historical process, depends in every respect upon non-capitalist social strata and forms of social organization.

The solution to this problem which for almost a century has been the bone of contention in economic theory thus lies between the two extremes of the petty-bourgeois skepticism preached by Sismondi, v. Kirchmann, Vorontsov and Nikolayon, who flatly denied accumulation, and the crude optimism advocated by Ricardo, Say and Tugan Baranovski who believed in capital’s unlimited capacity for parthenogenesis, with the logical corollary of capitalism-in-perpetuity. The solution envisaged by Marx lies in the dialectical conflict that capitalism needs non-capitalist social organizations as the setting for its development, that it proceeds by assimilating the very conditions which alone can ensure its own existence.

At this point we should revise the conceptions of internal and external markets which were so important in the controversy about accumulation. They are both vital to capitalist development and yet fundamentally different, though they must be conceived in terms of social economy rather than of political geography. In this light, the internal market is the capitalist market, production itself buying its own products and supplying its own elements of production. The external market is the non-capitalist social environment which absorbs the products of capitalism and supplies producer goods and labor power for capitalist production. Thus, from the point of view of economics, Germany and England traffic in commodities chiefly on an internal, capitalist market, whilst the give and take between German industry and German peasants is transacted on an external market as far as German capital is concerned. These concepts are strict and precise, as can be seen from the diagram of reproduction. Internal capitalist trade can at best realize only certain quantities, of value contained in the social product: the constant capital that has been used up, the variable capital, and the consumed part of the surplus value. That part of the surplus value, however, which is earmarked for capitalization, must be realized elsewhere. If capitalization of surplus value is the real motive force and aim of production, it must yet proceed within the limits given by the renewal of constant and variable capital (and also of the consumed part of the surplus value). Further, with the international development of capitalism the capitalization of surplus value becomes ever more urgent and precarious, and the substratum of constant and variable capital becomes an ever-growing mass – both absolutely and in relation to the surplus value. Hence the contradictory phenomena that the old capitalist countries provide ever larger markets for, and become increasingly dependent upon, one another, yet on the other hand compete ever more ruthlessly for trade relations with non-capitalist countries.⁽¹¹⁾ The conditions for the capitalization of surplus value clash increasingly with the conditions for the renewal of the aggregate capital – a conflict which, incidentally, is merely a counterpart of the contradictions implied in the law of a declining profit rate.

Footnotes

⁽¹⁾ ‘If capital and the productivity of labor advance and the standard of capitalist production in general is on a higher level of development, then there is a correspondingly greater mass of commodities passing through the market from production to individual and industrial consumption, greater certainty that each particular capital will find the conditions for its reproduction available in the market’ (Theorien ..., vol.ii, part 2, p.251).

⁽²⁾Ibid., p.250: Akkumulation von Kapital und Krisen (The Accumulation of Capital and the Crises). Marx’s italics.

⁽³⁾ The following figures plainly show the importance of the cotton industry for English exports:

• In 1893, cotton exports to the amount of £64,000,000 made up 23 per cent, and iron and other metal exports not quite 17 per cent of the total export of manufactured goods, amounting to £277,000,000 in all.
• In 1898, cotton exports to the amount of £J65,000,000 made up 28 per cent, and metal exports 22 per cent, of the total export of manufactured goods, amounting to £233,400,000 in all.

In comparison, the figures for the German Empire show the following result: In 1898, cotton exports to the amount of £1,595,000 made up 575 per cent of the total exports, amounting to £200,500,000. 5,250,000,000 yards of cotton bales were exported in 1898, 2,250,000,000 of them to India (E. Jaffe: Die englische Baumwollindustrie und die Organization des Exporthandels. Schmoller’s Jahrbücher, vol.xxiv, p.1033).

In 1908, British exports of cotton yarn alone amounted to £13,100,000 (Statist. Jahrb. für das Deutsche Reich, 1910).

⁽⁴⁾ One-fifth of German aniline dyes, and one-half of her indigo, goes to countries such as China, Japan, British India, Egypt, Asiatic Turkey, Brazil, and Mexico

⁽⁵⁾Capital, vol.i, pp.615-16.

⁽⁶⁾ The English Blue Book on the practices of the Peruvian Amazon Company, Ltd., in Putumayo, has recently revealed that in the free republic of Peru and without the political form of colonial supremacy, international capital can, to all intents and purposes, enthralled the natives, so that it may appropriate the means of production of the primitive countries by exploitation on the greatest scale. Since 1900, this company, financed by English and foreign capitalists, has thrown upon the London market approximately 4,000 tons of Putumayo rubber. During this time, 30,000 natives were killed and most of the 10,000 survivors were crippled by beatings.

⁽⁷⁾Capital, vol.i, p.594. Similarly in another passage:

‘One part of the surplus value, of the surplus means of subsistence produced, must then be converted into variable capital for the purpose of purchasing new labor. This can only be done if the number of workers grows or if their working time is prolonged ... This, however, cannot be considered a ready measure for accumulation. The working population can increase if formerly unproductive workers are transformed into productive ones, or if parts of the population who previously performed no work, such as women, children and paupers, are drawn into the process of production. Here, however, we shall ignore this aspect. Lastly, the working population can increase through an absolute increase in population. If accumulation is to proceed steadily and continuously, it must be grounded in an absolute growth of the population, though this may decline in comparison with the capital employed. An expanding population appears as the basis of accumulation conceived as a steady process. An indispensable condition for this is an average wage which is adequate not only to the reproduction of the working population but permits its continual increase’ (Theorien über den Mehrwert, vol.ii, part 2, in the chapter on Transformation of Revenue Into Capital (Verwandlung von Revenue in Kapital), p.243).

⁽⁸⁾Capital, vol.i, pp.642ff.

⁽⁹⁾ A table published in the United States shortly before the War of Secession contained the following data about the value of the annual production of the Slave States and the number of slaves employed for the greatest part on cotton plantations:

(Simons, Class Struggles in American History, Supplement to Neue Zeit (Klassenkämpfe in der Geschichte Amerikas, Ergänzungsheft der Neuen Zeit), Nr.7, p.39.)

⁽¹⁰⁾ Bryce, a former English Minister, describes a model pattern of such hybrid forms in the South African diamond mines:

‘The most striking sight at Kimberley, and one unique in the world, is furnished by the two so-called “compounds” in which the natives who work in the mines are housed and confined. They are huge enclosures, unroofed, but covered with a wire netting to prevent anything from being thrown out of them over the walls, and with a subterranean entrance to the adjoining mine. The mine is worked on the system of three eight-hour shifts, so that the workman is never more than eight hours together underground. Round the interior of the wall are built sheds or huts in which the natives live and sleep when not working. A hospital is also provided within the enclosure, as well as a school where the work-people can spend their leisure in learning to read and write. No spirits are sold ... Every entrance is strictly guarded, and no visitors, white or native, are permitted, all supplies being obtained from the store within, kept by the company. The De Beers mine compound contained at the time of my visit 2,600 natives, belonging to a great variety of tribes, so that here one could see specimens of the different native types from Natal and Pondoland, in the south, to the shores of Lake Tanganyika in the far north. They come from every quarter, attracted by the high wages, usually eighteen to thirty shillings a week, and remain for three months or more, and occasionally even for longer periods ... In the vast oblong compound one sees Zulus from Natal, Fingos, Pondos, Tembus, Basutos, Bechuanas, Gungunhana’s subjects from the Portuguese territories, some few Matabili and Makalaka; and plenty of Zambesi boys from the tribes on both sides of that great river, a living ethnological collection such as can be examined nowhere else in South Africa. Even Bushmen, or at least natives with some Bushman blood in them, are not wanting. They live peaceably together, and amuse themselves in their several ways during their leisure hours. Besides games of chance, we saw a game resembling “fox and geese” played with pebbles on a board; and music was being discoursed on two rude native instruments, the so-called “Kaffir piano” made of pieces of iron of unequal length fastened side-by side in a frame and a still ruder contrivance of hard bits of wood, also of unequal size, which when struck by a stick emit different notes, the first beginning of a tune. A very few were reading or writing letters, the rest busy with their cooking or talking to one another. Some tribes are incessant talkers, and in this strange mixing-pot of black men one may hear a dozen languages spoken as one passes from group to group’ (James Bryce, Impressions of South Africa, London 1897, pp.242ff.).

After several months of work, the negro as a rule leaves the mine with the wages he has saved up. He returns to his tribe, buying a wife with his money, and lives again his traditional life. Cf. also in the same book the most lively description of the methods used in South Africa to solve the ‘labor problem’. Here we are told that the negroes are compelled to work in the mines and plantations of Kimberley, Witwatersrand, Natal, Matabeleland, by stripping them of all land and cattle, i.e. depriving them of their means of existence, by making them into proletarians and also demoralizing them with alcohol. (Later, when they are already within the ‘enclosure’ of capital, spirits, to which they have just been accustomed, are strictly prohibited – the object of exploitation must be kept fit for use.) Finally, they are simply pressed into the wage system of capital by force, by imprisonment, and flogging.

⁽¹¹⁾ The relations between Germany and England provide a typical example.