“The net revenue of an individual consists of the value of the product to which he has contributed … less his disbursements; but as the disbursements that he has made are portions of revenue which he has paid to others, the totality of the value of the product has served to pay revenues. The total revenue of a nation is composed of its gross product, that is to say, of the gross value of all its products which are distributed among the producers.” (p 221)
But, as Marx has demonstrated, this is impossible. The value of the commodity, as with the Gross National Product, does not just comprise the new value created by labour, in the current year. It also comprises the value of the constant capital used in that production, in the form of vast quantities of materials, as well as the wear and tear of fixed capital. None of the value of constant capital, contained within the Gross National Product, is the result of labour expended in the current year. None of it, therefore, has an equivalent, in the form of revenue, as either wages, profit, interest or rent. It is all the product of previous year's labour. (That is if we take this product to be the actual value of national output, as opposed to the figure for GNP/GDP, used by governments, which is only a figure for the consumption fund, or national income).
Moreover, this constant capital comprises an ever growing proportion of the value of the Gross National Product, a proportion no part of which forms a revenue for anyone, and which likewise forms no part of consumption for anyone. It merely forms a growing portion of society's gross output that is simply withdrawn to replace the constant capital consumed in the production of constant capital, an exchange of capital with capital, not with revenue.
As Marx puts it with respect to Say's quote.
“The last sentence would be correct if expressed in this way:
The total revenue of a nation is composed of that part of its gross product, that is to say, of the gross value of all the products which are distributed as revenues among the producers, that is to say, less that portion of all the products which in each branch of industry had replaced the means of production. But so expressed, the sentence would negate itself.” (p 221)
Marx illustrates this point further by analysing Say's further comment. Say writes,
““This value, after many exchanges, would be entirely consumed in the year which saw its birth, but it would nonetheless be still the revenue of the nation; just as an individual who has 20,000 francs annual revenue has nonetheless 20,000 francs annual revenue, although he consumes it entirely each year. His revenue does not consist only of his savings.”” (p 221)
As Marx says, revenues never consist of savings, but savings consist of revenues. In other words, its from some form of revenue that savings can be accumulated. But, once accumulated as savings, this does not comprise revenue. If I consume my savings this does not amount to revenue, but a consumption of capital. This is at heart the confusion that has reigned in relation to the rise in asset prices, which has enabled the owners of these assets, including pension funds, to indulge in the illusion of covering current consumption out of capital gains on those assets rather than revenues. But, that process is self-defeating, because the rise in paper asset prices is a delusion, and the consumption of the assets to fund consumption, simply results in the capital itself being consumed.
If I have £200,000 of savings, on which I obtain 10% interest, the £200,000 represents capital, and the £20,000 of interest is revenue. I can consume the £20,000 of revenue without this affecting my capital. But, if I also consume the £200,000 of capital, or part thereof, I thereby remove the potential for obtaining revenue the following year. I can only continue to obtain the revenue if I abstain from consumption of the capital.
Of course, as Marx described in Capital III, the £200,000 of savings is only fictitious capital. It does not magically self-expand its value by £20,000, so as to provide £20,000 of revenue, as interest. It only expands in this way, because the £200,000 is loaned out to productive-capital, which does self expand, via the production process, and is able thereby to pay this interest out of the produced surplus value.
However, even if we consider the position that the £200,000 itself is 'consumed', in the sense that it leaves the possession of the money-capitalist, the process of consumption must also involve a process of reproduction, so that the 'consumed' capital is once more able to be thrown into circulation.
In other words, the saver has £200,000 of capital. It is consumed by being loaned out, and thereby leaves the possession of the saver. At the end of the year, it returns to the saver with an additional £20,000 of interest. But, it is only this £20,000 that can act as revenue. The other £200,000 that was consumed has been reproduced and returned, but it cannot be consumed as revenue. It is capital, and to continue to act as capital, it must again be thrown immediately into circulation.
The same is true of the physical capital. If a farmer has 1,100 kg of corn from last year's harvest, 100 kg of that may be used as seed required to produce corn this year on the same scale. The other 1,000 kg is available for consumption, by himself and his workers. It comprises their revenue, as wages and profit.
He could consume the other 100 kg. of corn, required as seed corn, but that would mean consuming his capital, thereby preventing him from growing corn this year, and thereby expanding his capital. But, by planting the 100 kg of seed, paying 800 kg of corn to his workers, and consuming the other 200 kg himself as profit, he is able to produce a further 1100 kg of corn, thereby reproducing out of it the 100 kg required to reproduce the constant capital, the 800 kg for wages, and the 200 kg for profit.
The same is true of the Gross National Product. Its value is always much greater than the National Income, because a large and growing part of the value of each year's output comprises a revenue for no one, and can be consumed by no one. It is the value transferred to current production by the consumed constant capital, and which must be taken from current production for its replacement, so that production can take place next year on at least the same scale.
The proportion continually grows because of the accumulation of capital. The accumulation takes place out of revenue, but once accumulated as capital, it is replaced from capital and must be replaced from capital for reproduction to occur on the same scale.
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