To make it clear, and, thereby, also set out why National Income cannot be equal to National Output, Marx notes,
“... one should distinguish gross output and net output from gross income and net income.
The gross output, or gross product, is the total reproduced product. With the exception of the employed but not consumed portion of fixed capital, the value of the gross output, or gross product, equals the value of capital advanced and consumed in production, that is, constant and variable capital plus surplus-value, which resolves itself into profit and rent. Or, if we consider the product of the total social capital instead of that of an individual capital, the gross output equals the material elements forming the constant and variable capital, plus the material elements of the surplus-product in which profit and rent are represented.
The gross income is that portion of value and that portion of the gross product measured by it which remains after deducting that portion of value and that portion of the product of total production measured by it which replaces the constant capital advanced and consumed in production. The gross income, then, is equal to wages (or the portion of the product destined to again become the income of the labourer) + profit + rent. The net income, on the other hand, is the surplus-value, and thus the surplus-product, which remains after deducting wages, and which, in fact, thus represents the surplus-value realised by capital and to be divided with the landlord, and the surplus-product measured by it.” (p 840)
Again, its clear that what is involved in the process of social reproduction is the reproduction of these material balances “on a like for like basis”. The clearest statement of that is Marx's comment in relation to wages that it is not the “historic price” of that labour that is involved, but “the portion of the product destined to again become the income of the labourer”, i.e. its current reproduction cost. That is merely the same method applied as previously stated in relation to the physical replacement of the consumed constant capital “on a like for like basis”, i.e. its physical replacement on the basis of current reproduction cost. And, again, here, Marx repeats that its not the historic price of the consumed constant capital that must be replaced, but it use value at current reproduction cost, “The gross income is that portion of value and that portion of the gross product measured by it which remains after deducting that portion of value and that portion of the product of total production measured by it which replaces the constant capital advanced and consumed in production.”
And, this is also quite at odds with Smith's absurd dogma, and Say's Law.
“On the other hand, the fantasy of men like Say, to the effect that the entire yield, the entire gross output, resolves itself into the net income of the nation or cannot be distinguished from it, that this distinction therefore disappears from the national viewpoint, is but the inevitable and ultimate expression of the absurd dogma pervading political economy since Adam Smith, that in the final analysis the value of commodities resolves itself completely into income, into wages, profit and rent.” (p 841)
The whole of orthodox economics since has adopted this absurd dogma of Smith, and its extension into Say's Law, but, then, how can the constant capital be replaced “when the value of the entire product is consumable in the form of revenue; and how the value of the product of each individual capital can be equal to the value sum of the three revenues plus C, constant capital, whereas the sum of the values of the products of all capitals is equal to the value sum of the three revenues plus 0 — this appears, of course, as an insoluble riddle and must be solved by declaring that the analysis is completely incapable of unravelling the simple elements of price, and must be content to go around in a vicious circle making a spurious advance ad infinitum. Thus, that which appears as constant capital may be resolved into wages, profit and rent, but the commodity-values in which wages, profit and rent appear, are determined in their turn by wages, profit and rent, and so forth ad infinitum.” (p 842)
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