In everything other than Sismondi's view on rent, Lenin says, there is an identity with the views of Narodism. Lenin attacks Sismondi for his criticism of the classical economists, where he says,
““The economists, the most celebrated of them, devoted too little attention to consumption and to the market” (I, 124).” (p 201)
But, here, I think Lenin is wrong, as I have stated earlier. Lenin, when he wrote this, did not have the benefit of Theories of Surplus Value. Kautsky's inadequate edition of Theories of Surplus Value only appeared, in Russia, in 1905, and in 1908, Lenin added a Postscript to this chapter, referring to it. That Postcript is itself inadequate, and fails to correct Lenin's error in this regard. Its impossible to separate out Marx's comment in Theories of Surplus Value, Chapter 9, about Sismondi being correct as against Ricardo, in respect of the contradictions in capitalism without accepting this point about the role of consumption and the market, i.e. the role of competition and demand. Marx makes that explicitly clear in Theories of Surplus Value, Chapter 17, in demolishing Say's Law, and again in Chapter 20, when, in criticising one of Ricardo's followers, Marx notes specifically that they fail to distinguish between value and use value.
“It is quite incomprehensible, therefore, why industry A, because the value of its output has increased by 1 per cent while the mass of its products has grown by 20 per cent, must find a market in B where the value has likewise increased by 1 per cent, but the quantity of its output only by 5 per cent. Here, the author has failed to take into consideration the difference between use-value and exchange-value.”
(Theories of Surplus Value, Chapter 20)
Marx obviously recognised the importance of competition and demand, when it comes to the real economy, as opposed to the idealised versions of it required to cut away all superficial appearances, so as to expose its actual mechanisms. His method was to work back to those superficial appearances, the phenomenal forms, only after he had exposed the underlying mechanism, and, thereby, to bring his analysis closer and closer to the real world. Unfortunately, he did not live to be able to to complete that work and to undertake his planned analysis of competition and the role of demand etc. But, his comments on the importance and role of demand, and of use value, which is the determinant of demand, appear time and again in Capital, and Theories of Surplus Value.
Lenin fails to see this, because he had tied himself to Ricardo against Sismondi, and, in doing so, had tied himself to Ricardo's advocacy of Say's Law, which, in Lenin's formulation, becomes production creates its own market. That Lenin should arrive at this position, given his desires to counter the under-consumptionist arguments of the Narodniks, as the basis of their claims about the impossibility of Russian capitalism, is understandable, but it is still wrong. Lenin fails to understand what Marx sets out in Theories of Surplus Value, which is that the fundamental cause of overproduction of commodities, as opposed to overproduction of capital, is, indeed, the separation of production from consumption, of supply from demand, and so, of value and use value. As he sets out, in Theories of Surplus Value, Chapter 17, as soon as money intervenes, such crises become possible. Under simple commodity production and exchange, its only individual producers that suffer such crises, but, under large-scale, capitalist production, any such crisis can become a generalised crisis. What is more, the scale of capitalist production, in advance of consumption, makes such crises not just potentially possible, but inevitable.
Furthermore, in addition to such crises of overproduction of commodities, the specific nature of capitalism, as production for profit, makes inevitable an overproduction of capital. The overproduction of capital is also an overproduction of commodities, because the elements of capital – the machines, materials, labour-power – are comprised of commodities. An overproduction of capital occurs when capital accumulates faster than expansion of the social-working day. That means that absolute surplus value expands slower than the increase in capital, causing the rate of profit to fall. Eventually, absolute surplus value cannot be increased at all, and demand for labour causes wages to rise, squeezing relative surplus value. Now, any increase in capital does not result in an increase in profits. The additional capital does not act as capital, it has been overproduced.
“There would be absolute over-production of capital as soon as additional capital for purposes of capitalist production = 0. The purpose of capitalist production, however, is self-expansion of capital, i.e., appropriation of surplus-labour, production of surplus-value, of profit. As soon as capital would, therefore, have grown in such a ratio to the labouring population that neither the absolute working-time supplied by this population, nor the relative surplus working-time, could be expanded any further (this last would not be feasible at any rate in the case when the demand for labour were so strong that there were a tendency for wages to rise); at a point, therefore, when the increased capital produced just as much, or even less, surplus-value than it did before its increase, there would be absolute over-production of capital; i.e., the increased capital C + ΔC would produce no more, or even less, profit than capital C before its expansion by ΔC. In both cases there would be a steep and sudden fall in the general rate of profit, but this time due to a change in the composition of capital not caused by the development of the productive forces, but rather by a rise in the money-value of the variable capital (because of increased wages) and the corresponding reduction in the proportion of surplus-labour to necessary labour.”
(Capital III, Chapter 15)
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