II - Sismondi’s Views On National Revenue And Capital
As Lenin says, Sismondi presents the problem he faces of distinguishing capital and revenue as one in which what is revenue for one appears as capital for another, but he never actually resolves this apparent contradiction. It was Marx, in Part III of Capital II that resolves this apparent contradiction. The problem can be described as follows. If we take something like a car, it constitutes part of final output that is consumed. As a consumption good, it forms part of revenue, i.e. it is consumed out of incomes – wages, profits, rent, interest, taxes – which are resolved out of v + s, the new labour undertaken during the year. But, the value of the car comprises more than v + s. It also comprises c, in the form of raw and auxiliary materials, such as steel, rubber, plastic and so on, and also in the form of wear and tear of fixed capital, such as the machines used to produce, the buildings in which production occurs, and so on.
All of these items that comprise its constant capital are then the products of other producers. For the producer of steel, they also produced revenues in the form of wages and profits etc. that are resolved out of the value of the steel produced, but again, only out of the v + s component of the value of the steel. Part of the value of the steel also comprises the value of raw and auxiliary materials, wear and tear of fixed capital, i.e. of constant capital. What is revenue for the steel producer, then appears as capital for the car producer. In turn, the steel producer buys coal, and what is revenue for the coal producer is capital for the steel producer.
All of the value of these commodities – coal, steel and so on – appears in the national accounts as “intermediate production”, and it results in widespread confusion for the same reason that Adam Smith, Sismondi and others were confused by it, because orthodox economics has continued to accept Adam Smith's absurd dogma ever since. But it also causes confusion amongst some Marxist economists too, precisely because of its appearance as “capital”. It leads them to believe that the value of all these “intermediate goods” that have the appearance of being “capital”, represent the element of c in the value of national output, i.e. it represents the c in c + v + s, that constitutes the value of total output. But, that is precisely the mistake that Smith made, and that economists have continued to make ever since.
Of course, as Marx set out, this value of “intermediate production”, shown in the national accounts does not represent constant capital, because, whilst it has the appearance of constant capital, in relation to final output, it is only comprised of the revenues of all the producers of those intermediate goods. Not one penny of value of constant capital is contained within it. So, if we were to total up all of the value of final output, it would be equal only to the total of revenues, i.e. to v + s, not to c + v + s. Indeed, that is precisely what is seen in the GDP figure, and is why GDP is nominally equal to National Income. It is what continues the myth of Smith's absurd dogma, and the basis of the continued belief in Say's Law.
The national accounts, i.e. GDP and National Income figures provide data on value added at each stage of production. In other words, they are a measure of the new value added by labour at each stage, i.e. v + s. (In reality, this is not true, because this added value is based upon market prices, not values, and under capitalism, market prices revolve around price of production not exchange-value, but, as the total of prices of production equals the total of exchange-values, this remains true overall.) This value added at each stage divides into revenues – wages, profits, interest, rent and taxes. There is no morsel of constant capital in the value of these intermediate goods (or, therefore, in the value of final output, as shown in the GDP data), and the fact that, at each stage of production, the fact that these goods appear as constant capital, for the next producer, does not change that.
The reality is that the national accounts give no measure for the value of constant capital consumed in production, because this consumed constant capital forms a revenue for no one, and is not included in the value of total output, which is calculated only on the basis of value added, i.e. v + s. It is also why all calculation of the rate of profit, and changes in it, calculated on those figures, are necessarily wrong (let alone the failure to take into account changes in the rate of turnover etc. that I have set out elsewhere.
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