[4. On Accumulation as Extended Reproduction]
““Every accumulation of wealth provides the means for accelerating further accumulation” (op. cit., p. 29).” (p 379)
Ricardo and Smith wrongly believed that accumulation takes the form of an increase in expenditure on wages. This flows from Smith's “absurd dogma” that the value of commodities resolves entirely into revenues, and thereby into wages. It sees any additional expenditure on materials and means of production as itself ultimately resolving into wages, because those additional means of production are themselves seen as resolvable only into revenues, and thereby into wages, i.e. the additional profit, interest and rent is only a consequence of the additional labour expended, and thereby the additional wages.
As Marx has demonstrated, many times, Smith's absurd dogma is wrong, because the value of commodities/national output is not resolvable entirely into revenues/national income, because it comprises both capital and revenue, i.e. it comprises c + v + s, and only v + s represents revenue. A portion of the value of commodities/national output always comprises a component of capital that is not available as consumption/revenue, but which must always be reproduced, on a like for like basis, out of current production.
The obvious example of that is the farmer who produced grain. A portion of the value of the grain they produce comprises the grain used as seed. This portion is never available as revenue to be consumed, as wages by their workers, or as profit by themselves, but must be continually withdrawn from the current output, to be used as seed once again, for the next year's production. These situations, where a portion of output is set aside, in kind, to be used to replace the consumed constant capital, have been described by Marx in relation also to the coal producer, who sets aside coal to fuel their steam engines, or the machine maker, who uses some of the machines they produce to replace their own worn out machines.
But, Marx, in Capital II, and earlier in Theories of Surplus Value, showed, at length, that it is not only these instances where the constant capital is replaced, in kind, where this applies. All constant capital, consumed in the production of constant capital, has to be set aside from current production. As means of production, it is generally not suitable for consumption anyway, but it is its value that is also not available for consumption. That value is also removed from the value of current production, and set aside for this reproduction of the constant capital, on a like for like basis. Later, in the chapter, we will see what happens, when the portion of current production required to reproduce capital is reduced as a result of a rise in productivity, so that capital is thereby released to become revenue, and vice versa.
And, what applies in relation to the reproduction of capital, here, applies also to the accumulation of capital. Accumulation does not involve only the accumulation of additional labour, via the advance of additional wages, it involves the accumulation of additional buildings, machines, and materials.
“Ricardo’s view (derived from Smith) that all accumulation can be reduced to expenditure on wages, would be incorrect even if no accumulation in kind took place—which is the case, for example, when the farmer sows more seed, the stock-breeder increases his stock of cattle for breeding or for fattening, the owner of engineering works uses part of his surplus-value in the form of machine tools—and even if all producers who produce the elements of some part of capital did not over-produce regularly, counting on the fact of annual accumulation, i.e., the expansion of the general scale of production. Moreover, the peasant can exchange part of his surplus corn with the stock-breeder, who may convert this corn into variable capital while the peasant converts his corn into constant capital [by means of this exchange]. The flax-grower sells part of his surplus product to the spinner, who converts it into constant capital. With this money the flax-grower can buy tools and the tool-maker can then buy iron, etc., so that all these elements are turned directly into constant capital.” (p 379-80)
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