A Characterisation of Economic Romanticism, Chapter 1 - Part 34

VI - The Foreign Market As the “Way Out of the Difficulty” of Realising Surplus-Value  

Lenin's argument against Sismondi and the Narodniks is based on the latter's claim that surplus value cannot be realised, which necessitates reliance on a foreign market for that purpose. The extension of the argument is that, ultimately, with a single global market this option ceases to exist, and so capitalism could not expand. As Lenin also rightly says, Ricardo could not properly refute this claim, because he also accepted Smith's absurd dogma that the value of output resolves entirely into revenues. Lenin is quite right in explaining that the value of output and the surplus value contained within it, can all be realised without introducing the question of the foreign market, if it is simply recognised that not all consumption is personal consumption. A portion of consumption is productive consumption, which simply replaces, on a like for like basis, the consumed means of production, whose value is transferred to current output. 

But, Lenin also steps over from this repudiation of the claim that the value of output cannot be realised, to a claim that it is realised, production creates its own market, and this most certainly does not follow, as Marx sets out in Capital III, Chapter 15, in distinguishing an overproduction of commodities, from an overproduction of capital. An overproduction of capital occurs where the expansion of capital results in the production of surplus value being reduced. But, there may be no overproduction of capital, i.e. the produced surplus value may rise, and yet, not be realised, because of an overproduction of commodities, i.e. the commodities produced do not find a market at prices that reproduce the consumed capital, and enable the realisation of the produced surplus value. 

“The creation of this surplus-value makes up the direct process of production, which, as we have said, has no other limits but those mentioned above. As soon as all the surplus-labour it was possible to squeeze out has been embodied in commodities, surplus-value has been produced. But this production of surplus-value completes but the first act of the capitalist process of production — the direct production process. Capital has absorbed so and so much unpaid labour. With the development of the process, which expresses itself in a drop in the rate of profit, the mass of surplus-value thus produced swells to immense dimensions. Now comes the second act of the process. The entire mass of commodities, i.e. , the total product, including the portion which replaces the constant and variable capital, and that representing surplus-value, must be sold. If this is not done, or done only in part, or only at prices below the prices of production, the labourer has been indeed exploited, but his exploitation is not realised as such for the capitalist, and this can be bound up with a total or partial failure to realise the surplus-value pressed out of him, indeed even with the partial or total loss of the capital. The conditions of direct exploitation, and those of realising it, are not identical.” 

An overproduction of capital always involves an overproduction of commodities, because the elements of capital are made up of commodities, but there may also be this overproduction of commodities, without there being an actual overproduction of capital. In this case, an overproduction of capital may result from the overproduction of commodities. 

“As regards the realisation of the product in general, the foregoing analysis shows that the “impossibility” is due entirely to the mistaken exclusion of constant capital and means of production. Once this error is corrected, the “impossibility” vanishes. The same, however, must be said in particular about surplus-value: this analysis explains how it too is realised. There are no reasonable grounds whatever for separating surplus-value from the total product so far as its realisation is concerned. Sismondi’s (and our Narodniks’) assertion to the contrary is simply a misunderstanding of the fundamental laws of realisation in general, an inability to divide the product into three (and not two) parts in terms of value, and into two kinds in terms of material form (means of production and articles of consumption).” (p 161-2) 

And, the same is true in relation to surplus value. Smith, and those that came after him, like Ricardo, posited accumulation only in terms of the allocation of profits to additional variable-capital. This follows from their mistaken view that the value of production resolves entirely into revenues. In other words, they believe that the accumulation of capital involves only accumulation of additional labour. They realise that the additional labour must also process additional materials, utilise additional machines, etc., but they view all of this additional constant capital as also only so much additional labour used for its production. They remove entirely the component of constant capital required for this process. 

“The proposition that the capitalists cannot consume surplus-value is merely a vulgarised repetition of Adam Smith’s perplexity regarding realisation in general. Only part of the surplus-value consists of articles of consumption; the other part consists of means of production (for example, the surplus-value of the ironmaster).” (p 162)

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