A Characterisation of Economic Romanticism, Chapter 1 - Part 73

Postscript

In 1905, Kautsky's inadequate edition of Theories of Surplus Value appeared in Russian. In 1908, Lenin wrote a Postscript to this chapter, referring to Theories of Surplus Value, Chapter 9, and Marx's comments in respect of Ricardo's scientific objectivity as against Sismondi's moralism. Lenin ends the Postscript saying,

“It goes without saying that this appraisal applies only to a definite period, to the very beginning of the nineteenth century.” (p 208)

But, its not clear which appraisal this refers to. Does it refer to the appraisal of Ricardo's scientific method? If so then why only to that period, because, as Marx's comments, quoted by Lenin, makes clear, this concept applies to all societies, and is the basis of the theory of historical materialism. Indeed, if we consider Marx and Engels comments in Anti-Duhring, about the way primitive communes dissolved, as certain individuals/families were able to take advantage of changed conditions to promote their own separate interests, develop private property, etc., it is clear that the same kinds of material conditions enable certain individuals/families/groups to promote their own interests, and restore private property, in a post-capitalist society, unless society itself prevents them. The existence of Stalinism, and every other bureaucratic stratum illustrates that.

Of course, what Lenin fails to highlight, in quoting this paragraph, is the sentence that Sismondi was right as against Ricardo, in relation to the contradictions of capitalism and potential for crises of overproduction of commodities. That would have undermined a lot of Lenin's previous argument, which also followed Ricardo and Say's Law, in denying any such potential. A look at Theories of Surplus Value, Chapter 17 illustrates that. So, is Lenin, in this sentence, covering himself by suggesting that the appraisal referred to is Ricardo's acceptance of Say's Law, and that production for production's sake creates its own market/consumption?

Possibly, given that no generalised crises of overproduction occurred prior to 1825. But, then an analysis of this tends to support Sismondi not Ricardo. In Theories of Surplus Value, Chapter 17, Marx sets out that the potential for such crises arises with commodity production and exchange itself, more than 7,000 years ago. In other words, as soon as production and consumption are separated, supply and demand, value and use value become opposing poles of a single whole. What is produced by A may not be demanded by B, or vice versa. As soon as such trade arises, the development of money as an indirect measure of value inevitably follows, and then takes the form of a money commodity, followed by money tokens and credit.

Once money arises, the potential for production and consumption, supply and demand to fall apart is increased. A may sell a commodity to B, in exchange for money, but now holds on to the money, rather than exchanging it for B's commodity, or the commodity of some other producer. And, there are a variety of combinations, as Marx sets out, in Theories of Surplus Value, Chapter 20. In other words, A may exchange some money for part of B's production; A may be prepared to buy all of B's output, but only at a price below its value.

The reason this potential for commodities to be overproduced does not result in a generalised crisis – though repeatedly results in the ruin of individual commodity producers – is the scale of commodity production, and limits of the market, compared to direct production and consumption. The individual commodity producer only produces commodities to sell if they believe they can sell them. Commodity production, for them, is a means of obtaining money, which supplements their own direct production – as Engels describes in his Supplement to Capital III. If they cannot sell these commodities, they can hold on to them, and wait for the next market day. They do not buy additional means of production, and simply halt production. In the meantime, their own direct production enables them to subsist.

Even when there is capitalist production, it takes the form of the Putting Out System, or the handicraft workshop/manufactory. The labour undertaken continues in much the same way as under handicraft production by independent producers. The capitalist only expands that production in line with the growth of the market, and the market grows along with the growth of commodity production and an increasing social division of labour. So, in fact, these are the conditions Sismondi describes of preventing crises of overproduction, by production not expanding faster than consumption.

Unfortunately, for Sismondi, this process inevitably leads to each producer seeking to capture market share, by producing more efficiently, and to produce more efficiently means production on a larger scale, and to replace labour with machines. And, such large-scale machine production must then be undertaken both in advance of known sales, and continuously. Where the small, independent producer can stop production until their output is sold, the large scale machine capitalist cannot. And, so it is no surprise that, when a high price of labour, in the 18th century, promotes the introduction of machines, to replace labour, and when those machines no longer depend on the motive force of human or animal muscles, or of the wind or water, but can be driven, in large numbers, by steam, that productive capacity expands at a rapid pace, much faster than the capacity of the market to consume it.

If the appraisal that Lenin is referring to is Ricardo's appraisal of the impossibility of overproduction, then its correct to say that it ceased to apply after 1825, when the first such crisis occurs. But, this appraisal only applies to the inevitability of such crises under large-scale capitalist machine production. It does not change the fact that Say's Law is wrong, in relation to all commodity production, not just capitalist production. The potential for such overproduction arises with all commodity production and exchange in a money economy.

This argument was to be taken up later between Pigou and Keynes.

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