Lenin then turns to Sismondi's views on population.
“Ephrucy assures us that Sismondi agrees with Malthus only on the point that the population can multiply with exceeding rapidity, and be the cause of terrible suffering. “Beyond this they are poles apart. Sismondi puts the whole population problem on a socio-historical basis” (Russkoye Bogatstvo, No. 7, p. 148). In this formula, too, Ephrucy completely obscures Sismondi’s characteristic (namely, petty-bourgeois) point of view and his romanticism.” (p 177)
Studying population on a “socio-economic basis” means studying it in the context of a given mode of production. Sismondi studied capitalism, and so his study of population should be set in that context. Ephrucy assumes that Sismondi studied the capitalist law of population, and “There is a grain of truth in this assertion but only a grain.” (p 177) Ephrucy fails to examine what is lacking in Sismondi's study.
The creation of a relative surplus population is the result of the introduction of large-scale machine industry. But, the latter is itself the consequence of capitalist production. When the existing social-working day cannot be expanded, absolute surplus value cannot increase. The employment of additional capital produces no additional surplus value, meaning that capital has been overproduced. If this reaches a stage where this represents a crisis of overproduction of capital, then the demand for labour causes wages to rise, reducing relative surplus value, and squeezing profits. Capital responds by technological innovation, so that new machines are introduced that replace labour. The same or greater levels of output can be produced with less labour. The rise in wages is reversed and profits rise. The higher productivity reduces commodity values, so that the value of labour-power falls, and rate of surplus value rises.
The bourgeois economists refused to accept the possibility of any such contradictions, on the basis of Say's Law. Sismondi, however, recognised the potential for, and reality of such contradictions. Lenin says that Malthus also did not accept the existence of such contradictions, and closed his eye to them. This is not true. As Marx sets out in Theories of Surplus Value, Malthus essentially plagiarised Sismondi's analysis, including the recognition of these crises. Malthus posits the problem of a problem of realisation due to under-consumption. The workers can't consume all they produce – or there would be no profit – and the capitalists can't consume the rest, and even if they then consume productively (accumulate) this just results in more output and greater overproduction. If they accumulate machines, this displaces labour meaning the under-consumption by workers grows larger.
Malthus' answer to this is that the landed aristocracy and its lackeys in the state should consume more of the product so that it can be realised. Keynes put forward the same solution a century later.
Malthus' other argument is that, if capital expands and employs more labour, then this expansion places a greater demand on agriculture to produce more food for the growing number of workers, and more raw materials for processing. His argument is then that the population grows at a faster rate than the ability of agriculture to provide for it. This is the same argument put today by environmentalists. Ricardo accepted this argument, and, on the basis of his own theory of rent, which assumes diminishing returns to the land, concludes that, even as wages rise, food and raw material prices rise faster. The former means that workers living standards fall, even as wages rise. The rising wages, however, squeeze profits, and rising raw material prices result in a lower rate of profit.
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