A Characterisation of Economic Romanticism, Chapter 1 - Part 33

As Lenin says, it is to Sismondi's credit that he was one of the first to recognise that the introduction of machines worsens the position of workers. As Marx says, it was also to Ricardo's credit that his scientific honesty led him to reverse his original position, and also accept that fact. But, here too there is contradiction. The introduction of machines undermines workers' position, and also lowers the value of labour-power, causing wages to fall, and profits to rise. But, the fall in wages is not the same as a fall in living standards, because the fall in the value of commodities means the same quantity can now be bought with those lower wages. The rise in profits leads to greater accumulation, and greater accumulation means the employment of more labour, which then leads to wages rising, and living standards along with it. Relatively less labour is employed, but absolutely more labour is employed. The increased accumulation, rising employment and rising living standards are a consequence of higher productivity, which is a result of the introduction of machines. It also leads to the release of labour and capital from existing spheres so that they can be used to establish entire new spheres of production, which is required to expand the range of goods and services that are available to consume which is fundamental to raising living standards, again as part of The Civilising Mission of Capital. 

At a certain point, wages rise again to a level where profits are squeezed, and a crisis of overproduction arises, and the cycle begins again, prompting another round of technological innovation, replacement of labour and so on. 

“Furthermore, in rejecting the theory of the advantages of free competition, Sismondi does not notice that, together with groundless optimism, he throws overboard the undoubted truth that free competition develops the productive forces of society, as is again evident from his own calculation. (Properly speaking, this is only another way of expressing the same fact that a special department of industry is created which manufactures means of production, and that this department develops with particular rapidity.)” (p 159-60) 

The Sismondists attempted to deny this apparent contradiction, which, in fact, conformed to reality. But, the same idea, which amounts to only sentimental phrases, was also put forward by the Narodniks. Lenin quotes an example from Danielson, from his “Sketches”. In the example, Danielson discusses the development of the large steam-powered flour mills, which brought a more than doubling in productivity. Lenin quotes Danielson, 

““the flour-milling industry has not developed, it has merely become concentrated in large enterprises”; he then applies this description to all industries (p. 243) and draws the conclusion that “in all cases without exception, a mass of workers are displaced and find no employment” (243), and that “capitalist production has developed at the expense of the people’s consumption” (241). We ask the reader: does this argument differ in any way from Sismondi’s argument just quoted?” (p 160) 

In fact, what Danielson's example shows is that capitalism develops the productive forces, and it does this first by developing the means of production. This is not entirely accurate. If we think about the motivation of capital it is to be able to produce more cheaply so as to gain competitive advantage. When capital first develops, the capitalist gains competitive advantage over individual handicraft producers, by utilising economies of scale, and cooperative labour, in the workshop, even if the means of production, initially, remain unchanged. Development of the means of production is always only a means to the end of obtaining competitive advantage. 

Even where, as with oligopolistic competition, the aim is no longer to gain market share via price competition, the competitive drive to produce more efficiently continues, but, now, the aim is of reducing costs, so as to increase profits at existing market prices, or else to be able to offer new, better products at existing prices, so gaining market share on the basis of quality rather than price. 

“This means that capitalism develops the productive forces of society.” (p 160-1) 

But, Danielson's example shows the contradictory nature of this development, as did Sismondi's. Danielson's example shows ₱100 million of production in means of production, which cannot be consumed personally, but which, thereby, constitute demand for consumption goods, as well as for additional means of production.

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