Anti-Duhring, Part III – Socialism, I – Historical - Part 6

The failure to address that property question, indeed even to understand it, has left the working-class effectively leaderless. On the one hand, social-democracy and social-democratic parties, in the 20th century, emphasised the common interest of labour and capital. Indeed, as Marx sets out in Wage-Labour and Capital, so long as you assume the continued existence of capital, that is true. The workers interest is that of capital too, for a continued accumulation of capital, so that more labour is employed, which creates the best conditions for their wages to rise, not only from the fact of being fully employed, but also because of rising social productivity and an expansion of the range of goods and services they can consume, as Marx describes in The Civilising Mission of Capital. It also means that, as their employment expands towards full employment, their bargaining position is strengthened, so that not only do nominal and real wages rise, but also relative wages.

However, as Marx describes, in Wage-Labour and Capital, and in Capital III, Chapter 15, it is, then, precisely this rise in relative wages, whose concomitant is a fall in relative profits, i.e. a profits squeeze, as seen in the 1960's/70's, which creates a crisis of overproduction of capital. The first consequence is that the smaller, least efficient capitals, the plethora of petty bourgeois producers – whose profit margins were already below the average – go bust. To the extent they employ workers, they are laid off. The consequence is, the, also, an overproduction of commodities, even where none existed previously, because the firms that have gone bust no longer buy from their suppliers (as Marx puts it, capital itself is physically composed of commodities), and their workers no longer have wages to finance their own consumption.

So, the affluence of the workers, in these best of all conditions, turns, for many of them, into the cause of their own misery. Moreover, the underlying cause of the crisis of overproduction of capital was the shortage of labour, causing relative wages to rise, and so relative profits to fall. To respond to it, capital is led to engage in a technological revolution, to raise productivity, and to replace labour with machines. Again, that was seen in the 1970's, with the microchip revolution. Consequently, as long as capitalism continues, and so long as the working-class does not have control over its own collective property – the large-scale socialised capital – it is doomed to repeat the cycle of prosperity, full employment/boom, crisis, and unemployment.

Social-democracy, and reformist socialism/Menshevism, cannot offer any solution, therefore, but, at the other pole there are the “revolutionary” sects, who can only offer the illusion of some repeat of the Bolshevik Revolution of 1917, or worse a version of the Peasant Wars, such as that in China in 1949, of Vietnam, Cuba, and so on. All of which are based on the interests of the petty-bourgeoisie and not the industrial proletariat. But, that petty-bourgeoisie and peasantry can never form the ruling-class, because of its atomised and heterogeneous nature. It always results in chaos, crisis and Bonapartism. It can be see as a result of Brexit and Trump, today. But, the victory of Trump, Brexit and other petty-bourgeois nationalist movements is, itself, a consequence of the failure of Marxists to offer a real analysis and solution to the property question, turning themselves, simply, into more militant wings of social-democracy, and proponents of bourgeois, trades union consciousness.

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Anti-Duhring, Part III – Socialism, I – Historical - Part 5

The 1832 Reform Act was a victory for the bourgeoisie as a whole, but the workers were left to pursue their own interests and demands for political rights and freedoms via the Chartist Movement. The large-scale, industrial capitalists, again, required the support of the workers to consolidate their victory, in 1848, against the other sections of the bourgeoisie – the commercial bourgeoisie and financial oligarchy – and its political reflection was the creation of the Liberal Party, in which the big industrial capitalists sat side by side with the trades union representatives of the workers.

The same was true in France, but its political revolution was far more thoroughgoing than its British equivalent. The Monarchy, and large sections of the aristocracy faced the criticism of the guillotine.

“To be sure, the bourgeoisie had already developed rapidly during the Revolution, partly by speculation in the lands of the nobility and of the Church which had been confiscated and then sold, and partly by frauds on the nation by means of army contracts. It was precisely the domination of these swindlers that brought France and the Revolution to the verge of ruin under the Directorate, and thus gave Napoleon the pretext for his coup d'etat.” (p 331)

For Saint-Simon, rather like with the Physiocrats, the “workers” were not just the labourers, but also the capitalists, be they industrial capitalists or the merchants and bankers. The Revolution set this mass of “the people” against the idlers of the old aristocracy, but the idlers were not confined to them, but, also, all those that simply lived off their incomes without taking any part in production. At a time when capitalist production was still relatively undeveloped, compared to the later large-scale production, it is easy to see why this distinction was made.

For Saint-Simon, The Reign of Terror showed that the actual workers, the great mass of labourers and petty-bourgeois, did not have the capacity to lead the country.

“Who then was to lead and command? According to Saint-Simon, science and industry, both united by a new religious bond destined to restore that unity of religious ideas which had been broken since the Reformation – a necessarily mystical and rigidly hierarchical “new Christianity”. But science was the scholars; and industry was, in the first place, the active bourgeois, manufacturers, merchants and bankers. Of course, these bourgeois were to transform themselves into public officials, into trustees of society, of a sort; but they were still to hold a commanding and even economically privileged position vis-a-vis the workers. The bankers especially were to be called upon to direct the whole of social production by the regulation of credit. This conception was in exact keeping with a time when large-scale industry and with it the chasm between bourgeoisie and proletariat were only just coming into existence in France.” (p 331-2)

Here can clearly be seen, even before the development of large-scale, socialised capital/imperialism, the basic outlines of social-democracy. A shared interest between capital and labour, but with the professional middle-class representatives of capital “functioning capitalists”, managing national production on behalf of “society”. Along with it goes the required planning and regulation of production and credit. All of this is contained in the statist ideas of Lassaleanism and Fabianism.

“But what Saint-Simon especially lays stress on is this: what interests him first and above all other things is the lot of “the largest and poorest class” (la classe la plus nombreuse et las plus pauvre).” (p 332)

Unfortunately, that same kind of moralism pervades much of today's Left. It confuses “the poorest” with the working-class, just as it confuses “the rich”, by which if often means the affluent, with the bourgeoisie, and worse, the owners of capital. As Marx set out in relation to the hand-loom weavers, and Lenin set out in relation to the poorest peasants, the poorest (actually the least affluent, i.e. least net income) are not the workers but, setting aside the paupers and chronically unemployed, the great mass of the petty-bourgeoisie. These layers, the breeding ground of reaction and fascism, and which, today, is the foundation of Trumpism, Faragism, Starmerism, Bolsonarism, and all the other reactionary nationalist movements, can never be the prime concern of Marxists.

Our concern, today, can only be with the organised working-class, which is, itself, now, the collective owner of all the socialised capital that dominates production, and, via its pension funds, also, the collective owners of a large part of the fictitious capital, which draws its revenues from that socialised capital's profit. But, in neither case is the working-class allowed, by law, to exercise control over its own property. That, today, is the property question that Marxists must address in their programmes.

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Anti-Duhring, Part III – Socialism, I – Historical - Part 4

Marx makes the same point in Value, Price and Profit.

“They ought, therefore, not to be exclusively absorbed in these unavoidable guerrilla fights incessantly springing up from the never ceasing encroachments of capital or changes of the market. They ought to understand that, with all the miseries it imposes upon them, the present system simultaneously engenders the material conditions and the social forms necessary for an economical reconstruction of society. Instead of the conservative motto: “A fair day's wage for a fair day's work!” they ought to inscribe on their banner the revolutionary watchword: “Abolition of the wages system!"” (p 93)

The contradictions arising from capitalist production were only taking shape, in 1800, when the utopians were setting forth their observations. The first, generalised crisis of overproduction of commodities did not occur until 1825. It was another quarter of a century before large-scale industrial capital asserts its dominance, and another quarter century before that large-scale industrial capital, predominantly, takes the form of socialised capital, in the shape of the co-operatives and limited liability companies that flourished after the passing of the Limited Liability Act of 1855. So, the Utopians could not see such development, and the means of achieving their goals. Rather, they relied still on the pervasive power of reason and belief that, if only society could have its eyes opened to such reason, a harmonious development could be undertaken.

“During the Reign of Terror, the propertyless masses of Paris were able to gain the mastery for a moment [and thus to lead the bourgeois revolution to victory against the bourgeoisie itself]. But, in doing so they only proved how impossible [it] was [for] their domination [to last] under the conditions then obtaining. The proletariat, which was only just separating itself from these propertyless masses as the nucleus of a new class, and was as yet quite incapable of independent political action, appeared as an oppressed, suffering estate, to which, in its incapacity to help itself, help could, at best, be brought in from without from above down.” (p 329-30)

The Utopias dreamed up were incapable of becoming real, not because the productive forces were not developed sufficiently, but because there was no reason that the capitalists were going to voluntarily abandon their own advantages and position as ruling-class. In 1800, it was still the case that many of the private industrial capitalists were former skilled labourers themselves. The majority of production was undertaken, still, by petty-bourgeois, independent commodity producers, like the hand-loom weavers But, as the fate of the latter showed, described by Marx in Capital I, those conditions were rapidly changing, as machine industry drove them out of production, and concentrated the means of production in the hands of private capitalist families, whose lifestyles were transformed along with it.

Marxist theory is not a theory that starts from the individual seeking to turn each one into a clone of another. So, of course, some of these individuals caught a glimpse of the future, but Marxist theory, historical materialism, is a theory based on the interests of given forms of property, and so the behaviour, in aggregate, of the social classes based on it. That some of these individuals did obtain a glimpse of the future, albeit expressed in their various fantastical forms, is still a mark of their own genius.

“Saint-Simon was a son of the great French Revolution, at the outbreak of which he was not yet thirty.” (p 330)

That revolution was carried out against the old aristocratic ruling class, a class of parasites and idlers that leached off the great mass of society engaged in the production of the nation's wealth – the Third Estate. But, this Third Estate was soon revealed to, in fact, be a contradictory whole, comprising, at one pole, the rising bourgeoisie, and, at the other, the emerging proletariat. Much as with the political revolution in Britain, in which the bourgeoisie conducted its struggle for political rights and freedoms, whilst drawing behind it a large mass of petty-bourgeois producers, and the emerging proletariat, as symbolised by the gathering in St. Peter's Fields in Manchester, it soon became apparent that this political revolution was one that the bourgeoisie sought to contain within strict limits.

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Anti-Duhring, Part III – Socialism, I – Historical - Part 3

As Engels sets out in his later Prefaces to The Condition of The Working Class, it is only the growth, and subsequent triumph, of large-scale, industrial capital that puts an end to most of these vices.

“in proportion as this increase took place, in the same proportion did manufacturing industry become apparently moralised. The competition of manufacturer against manufacturer by means of petty thefts upon the workpeople did no longer pay. Trade had outgrown such low means of making money; they were not worth while practising for the manufacturing millionaire, and served merely to keep alive the competition of smaller traders, thankful to pick up a penny wherever they could. Thus the truck system was suppressed, the Ten Hours’ Bill( was enacted, and a number of other secondary reforms introduced — much against the spirit of Free Trade and unbridled competition, but quite as much in favour of the giant-capitalist in his competition with his less favoured brother. Moreover, the larger the concern, and with it the number of hands, the greater the loss and inconvenience caused by every conflict between master and men; and thus a new spirit came over the masters, especially the large ones, which taught them to avoid unnecessary squabbles, to acquiesce in the existence and power of Trades’ Unions, and finally even to discover in strikes — at opportune times — a powerful means to serve their own ends. The largest manufacturers, formerly the leaders of the war against the working-class, were now the foremost to preach peace and harmony. And for a very good reason. The fact is that all these concessions to justice and philanthropy were nothing else but means to accelerate the concentration of capital in the hands of the few, for whom the niggardly extra extortions of former years had lost all importance and had become actual nuisances; and to crush all the quicker and all the safer their smaller competitors, who could not make both ends meet without such perquisites. Thus the development of production on the basis of the capitalistic system has of itself sufficed — at least in the leading industries, for in the more unimportant branches this is far from being the case — to do away with all those minor grievances which aggravated the workman’s fate during its earlier stages.”

(Preface to the English Edition of “The Condition of the Working Class in England)

This victory of large-scale, industrial capital, which, in the second half of the 19th century is inevitably socialised capital, and inextricably linked to the state, forms the material basis for the ideology of social-democracy, which replaces the earlier liberal democracy. But, the ideas upon which it is based, of a coincidence of interests between capital and labour, were to be found at the start of the 19th century, in the economics of Ricardo, but, also, in the ideas of the Utopian Socialists, such as Saint-Simon, Fourier and Owen. Indeed, Owen was the precursor of the later “functioning capitalist”, the day to day professional manager, that replaces the private capitalist owners. Social-democracy simply reflects in the realm of ideas this change in material conditions, represented by the dominance of socialised capital.

“At this time, however, the capitalist mode of production, and with it the antagonism between the bourgeoisie and the proletariat, was still very incompletely developed. industry, which had just arisen in England, was still unknown in France. But on the one hand large-scale industry promotes, the conflicts which make a revolution in the mode of production [and the abolition of its capitalist character] absolutely necessary - conflicts not only between the classes begotten of it, but also between precisely the productive forces and the forms of exchange created by it. On the other hand, it is in these gigantic productive forces themselves that it promotes the means of resolving these conflicts.” (p 329)

The sentiments expressed, here, are those expressed, also, in Capital III, Chapter 27, in relation to the development of large-scale, socialised capital, as a progressive and transitional form of property, a transition period within the confines of a continuation of capital and capitalist production, but in which its capitalist character is dissolved.

“2) The capital, which in itself rests on a social mode of production and presupposes a social concentration of means of production and labour-power, is here directly endowed with the form of social capital (capital of directly associated individuals) as distinct from private capital, and its undertakings assume the form of social undertakings as distinct from private undertakings. It is the abolition of capital as private property within the framework of capitalist production itself.

3) Transformation of the actually functioning capitalist into a mere manager, administrator of other people's capital, and of the owner of capital into a mere owner, a mere money-capitalist. Even if the dividends which they receive include the interest and the profit of enterprise, i.e., the total profit (for the salary of the manager is, or should be, simply the wage of a specific type of skilled labour, whose price is regulated in the labour-market like that of any other labour), this total profit is henceforth received only in the form of interest, i.e., as mere compensation for owning capital that now is entirely divorced from the function in the actual process of reproduction, just as this function in the person of the manager is divorced from ownership of capital.”

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Anti-Duhring, Part III – Socialism, I – Historical - Part 2

Everywhere, that was the case. In Britain, the period after The Glorious Revolution was a period of Liberal Democracy, in which the greatest freedom was the freedom of property. Only those with property had the right to vote, under a regime that was a model for the kind of benevolent despotism described by the Classical Liberals, like Lord Acton, admired so much by the 20th century Libertarians such as Hayek. The protected home market, together with the expansion of the colonial empire, gave a spur to domestic industry, and leads to the Industrial Revolution. But it, in turn, accelerates the competition amongst the domestic producers, and incentivized production on a larger scale, expropriating not only the former small producers, but also the small capitalists themselves. As industrial production increases, its demands for agricultural products rises sharply, and the old feudal agriculture cannot meet its needs. Agriculture must become larger-scale, and capitalist itself, resulting in land clearances, enclosures and so on.

The same was true in France. The bourgeois revolution carried through the agrarian revolution, breaking up the old landed estates, and distributing land to the peasants. But, now, those peasants were drawn into commodity production and increasing competition with each other. They took on loans and mortgages to improve their farms, to be more competitive, and found, now, as Marx sets out in The Eighteenth Brumaire, that they had exchanged exploitation at the hands of the landlords to an even more onerous exploitation at the hands of money-lenders.

In Russia, The Emancipation of The Serfs, had the same result, as, in order to pay the loans to cover the redemption payments, etc., they had to engage in commodity production and increasing competition between themselves, leading to an accelerated differentiation into winners and losers, bourgeois and proletarians.

The likes of William Morris and the Arts & Crafts Movement, sought to resist the inevitable progress towards large-scale industrial production, by promoting the old, skilled artisan production. But, such production is, inevitably, inefficient, and its products, thereby, costly. It can form a niche market for the affluent, middle-class, but their affluence and ability to engage in such consumption is, itself, only possible because of the wealth created by the large-scale capitalist production they look down their noses at.

Proudhon put forward similar ideas in France, and the Narodniks did, in Russia. But, as Marx set out against Proudhon, and Lenin set out against the Narodniks, for all of their intentions to resist that inevitable, and progressive, forward march of history, their proposals to foster the development of the small producer/petty-bourgeoisie only further led to the advance of that large-scale production. The greater the mass of those small producers, the greater the ferocity of the competition between them, the more miserable their condition – a miserable condition they only lessen by even more cruelly exploiting any workers they employed – and the more subordinated they are to to the dominance of the large-scale producers. The more, indeed, does their condition deteriorate, even compared to that of the workers employed by large-scale capital.

Engels sets out the conditions pertaining in that initial period of Liberal Democracy, and rampant free market competition, idealised by the petty-bourgeois Libertarians, in which, today, we see it demanded that workers cannot be paid even a living wage, if their small business employers are to exist, as though the latter have some natural right to exist.

“The rapid growth of industry on a capitalistic basis raised the poverty and misery of the working masses to a condition of existence of society. (Cash payment increasingly became, in Carlyle's phrase, the sole social nexus.) The number of crimes increased from year to year. Though not eradicated, the feudal vices which had previously been flaunted in broad daylight were now at any rate thrust into the background. In their stead, the bourgeois vices, hitherto nursed in secret, began to blossom all the more luxuriantly. Trade developed more and more into swindling. The “fraternity” of the revolutionary slogan was realized in the chicanery and envy of the battle of competition. Oppression by force was replaced by corruption; the sword, as the prime social lever, by money. “The right of the first night” passed from the feudal lords to the bourgeois manufacturers. Prostitution assumed hitherto unheard of proportions. Marriage itself remained as before the legally recognised form, the official cloak of prostitution, and, moreover, was copiously supplemented by adultery.” (p 328-9)

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Anti-Duhring, Part III – Socialism, I – Historical - Part 1

The Enlightenment philosophers appealed to Pure Reason. Only the rational was real.

“A rational state, a rational society, were to be founded; everything running counter to eternal reason was to be remorselessly done away with.” (p 327)

But, what appeared to be rational was only a manifestation of the world view of the rising bourgeoisie. A premature, and inevitably confused, example of that came with the English Civil War. But, the consequence of the, as yet, immature condition of the bourgeoisie meant that, having seized power, it did not know what to do with it, and soon resorted to the Protectorate of Cromwell, as an uncrowned King. It was another 100 years before the bourgeoisie had developed enough to take control of the state, and to install its own constitutional monarch via The Glorious Revolution.

Even then, this was not a total victory for the bourgeoisie. It was a victory for the the commercial bourgeoisie and financial oligarchy, in alliance with the landed aristocracy, based on Mercantilism, and the creation of a colonial empire. As Engels points out, it was only after 1848 that the industrial bourgeoisie asserts its dominance, and, in alliance with the industrial workers, defeats that old alliance of the landed aristocracy, commercial bourgeoisie and financial oligarchy. A similar pattern emerges in France, later, but in a more condensed sequence.

“The state based upon reason completely collapsed. Rousseau’s Social Contract had found its realization in the Reign of Terror, from which the bourgeoisie, after losing faith in its own political capacity, had taken refuge first in the corruption of the Directorate, and, finally, under the wing of the Napoleonic despotism. The promised eternal peace was turned into an endless war of conquest. The society based on reason had fared no better. Instead of dissolving into general prosperity, the antagonism between rich and poor had become sharpened by the elimination of the guild and other privileges, which had bridged over it, and of the charitable institutions of the Church, which had mitigated it.” (p 327-8)

It was these birth pangs of the new bourgeois society that enabled sections of the old feudal ruling class not only to effectively snipe at their successors, but to periodically appeal to the workers and petty-bourgeoisie against them. It was what enabled the likes of Sismondi to expose in stark tones the inevitability of an overproduction of commodities, in turn, plagiarised by Malthus, to justify his calls for the parasites of the landed aristocracy, church and state to have greater revenues, for the benefit of society, to avert such overproduction. The role of the guilds formed the basis of other forms of reactionary socialism, as with William Morris and the Guild Socialists.

“As far as the small capitalists and small peasants were concerned, the “freedom of property” from feudal fetters, which had now become a reality, proved to be the freedom to sell their small property, which was being crushed under the overpowering competition of big capital and big landed property to these very lords, so that freedom of property turned into “freedom from property” for the small capitalists and peasant proprietors.” (p 328)

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 39 of 39

Engels returns to British political economy.

“Just as the bold stroke drawn through the years 1691 to 1752 removed all of Hume’s predecessors, so another stroke obliterated Sir James Steuart, who came between Hume and Adam Smith. There is not a syllable in Herr Dühring's “enterprise” on Steuart’s great work, which, apart from its historical importance, permanently enriched the domain of political economy.” (p 323)

Duhring uses past theorists in one of two ways.

“either as “pegs” of Herr Dühring's “authoritative” and deeper foundations, or, still more because of their badness, as a foil to him.” (p 323)

In relation to Steuart, he says nothing of his work, but falsely states that “he was “a professor” in Adam Smith’s time.” (p 323)

Steuart was not a professor but a large landowner in Scotland. Having been banished from Britain, he used his extensive travels in Europe to familiarise himself with the economic conditions there.

“Nevertheless, there are also a few heroes of political economy who represent not only the “pegs” of the “deeper foundations”, but the “principles” out of which these “foundations”, are not “developed” but actually “composed”, as prescribed in the natural philosophy - for example, the “ eminent and incomparable” List, who, puffed up the “more subtle” mercantilistic teachings of a Ferrier and others into “mightier” words for the benefit of German manufacturers”. (p 323-4)

The more the superficial nature of Duhring is considered, and his attraction to the likes of List, the more the image of Trump, also, comes into mind. List was one of those early advocates of economic nationalism, and protectionism, of the kind that, today, admires and appoints such as Peter Navarro.

Another theorist used by Duhring in this way is the American economist Carey, who wrote of Ricardo's system,

“the true manual of the demagogue, who seeks power by means of agrarianism, war, and plunder” (p 324)

Finally, in that category Engels cites Macleod, “the Confucius of the London City” (p 324)

Engels summarises what has been learned from Duhring's exposition, and concludes that it is nothing. As with Duhring's philosophy, we have a lot of big words, but very little illumination. Duhring's theory of value resulted in him putting forward five different, contradictory definitions of value.

“The “natural laws of all economics”, ushered in with such pomp, prove to be merely the worst kind of universally familiar platitudes, and often even these are wrongly grasped.” ( p 324-5)

His theory fails to explain how class society arises, and how one form of class society is replaced by another, just as his theory of Natural Philosophy was unable to explain how nothing becomes something, or how a condition of stasis becomes one of motion. In relation to exploitation, he can only resort to the claim that it is the product of force, but is unable to say how this condition of superior force is produced.

“Compelled to give further elucidations of the capitalist exploitation of labour, he first represents it in general as based on taxes and price surcharges, thus completely appropriating the Proudhonian “prior deduction” (prélèvement), and he then proceeds to explain this exploitation in particular by means of Marx’s theory of surplus-labour, surplus-product and surplus-value. In this way he manages to bring about a happy reconciliation of two totally contradictory outlooks, by copying down both without taking his breath.” (p 325)

That, of course, having first lambasted and lied about Marx's theories, just as, in relation to Philosophy, he vilified Hegel, before plagiarising him, and presenting a diluted version of his ideas. Throughout, Duhring shows a staggering lack of knowledge in relation to the things he writes about, even in relation to his own profession – Law. It displays a narrow Prussian parochialism. In history, his claim that it was the large landed proprietor that stands at the dawn of civilisation “is oblivious of the common ownership of land in the tribal and village communities, which is the real starting-point of all history — this ignorance, which is nowadays almost inconceivable, is well-nigh surpassed by that of the Kritische Geschichte, which immoderately glories in “the universal breadth of its historical survey”, and of which we have given only a few deterrent examples. In a word: first the colossal “input” of self-praise, of charlatan blasts on his own trumpet, of promises each surpassing the other; and then the “output” — exactly nil.” (p 325-6)

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 38 of 39

“ But, according to Quesnay, this fund of one milliard serves, for the most part to cover the repairs which become necessary in the course of the year and the partial renewals of invested capital; further, as a reserve fund against accidents, and lastly, where possible, for the enlargement of the invested and working capital, as well as for the improvement of the soil and the extension of cultivation.” (p 321)

In part, this is true. The capitalist farmer, in so far as they undertake labour, covers their own personal consumption out of the wage fund (variable-capital), as with other labour. It is part of the working-capital. But, the repair and renewal of capital should, also, form part of that working-capital. The amount to cover accidents, and for capital accumulation are valid elements of this “interest”. The same categories are listed by Marx, in The Critique of the Gotha Programme, in his explanation of why, even under communism, the workers could never receive “the full fruits of their labour”. Indeed, because workers, under communism, would want to develop production and productivity as much, and as quickly, as possible, so as to raise living standards for all, they would need to expand the amount of surplus-value going to this accumulation of capital, i.e. to raise the rate of surplus-value.

Whilst Quesnay's argument may have had validity at the time, and similar arguments were made in relation to the industrial capitalists, at the start of the Industrial Revolution, it soon ceased having any such validity. As profits expanded, the capitalists, also, expanded their own personal consumption, including conspicuous consumption of luxury goods.

“The whole process is certainly “pretty simple”. There enter into circulation: from the farmers, two milliards in money for the payment of rent, and three milliards in products, of which two-thirds are means of subsistence and one-third raw materials; from the sterile class, two milliards in manufactured goods. Of the means of subsistence amounting to two milliards, one half is consumed by the landlords and their retainers, the other half by the sterile class in payment for its labour. The raw materials to the value of one milliard replace the working capital of this latter class. Of the manufactured goods in circulation, amounting to two milliards, one half goes to the landlords and the other to the farmers, for whom it is only a converted form of the interest on their invested capital which accruing at first hand from agricultural reproduction. But the money thrown into circulation by the farmer in payment of rent flows back to him through the sale of his products, and thus the same process can take place afresh in the next economic year.” (p 321-2)

Engels, having given this explanation of the Tableau, then returns to Duhring, and his “truly critical” exposition of it. Duhring had admitted that he did not understand what happened to the net product, and had also, falsely, claimed that the Tableau contained only money values. But,

“We have seen that the Tableau — this description of the annual process of reproduction through the medium of circulation which was as simple as for its time inspired — gives a very exact answer to the question of what becomes of this net product in the course of economic circulation. Thus once again it is with Herr Dühring alone that the “mysticism” and the “confusion and arbitrariness” remain as “the most dubious aspect” and the sole “net product” of his study of Physiocracy.” (p 322)

Engels notes Duhring's other claims about the Physiocrats and their historical influence.

““With Turgot,” he teaches us, “Physiocracy in France came to an end both in practice and in theory”.” (p 322)

That Mirabeau was essentially a Physiocrat in his economic views, a leading authority in the Constituent Assembly of 1789, and this assembly put a large part of Physiocratic principles into practice, including a heavy tax on ground-rent, “all this does not exist for “a” Dühring.” (p 323)

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 37 of 39

Adam Smith had abandoned his Labour Theory of Value, because he saw that wages did not equal the new value created by labour. He argued that, as soon as landed property and capital arise, the owners of these factors of production will demand a price for allowing their use. As Marx sets out, he need not have abandoned his Labour Theory of Value, and, in places, where he is being analytical, he reverts to it. Ricardo, indeed, did not abandon it, but was, then, presented with the same contradiction faced by Smith that wages did not equal the new value created by labour.

Smith had, in fact, done all the work required to understand, as the Physiocrats did, that surplus-value is created in production, and only realised in exchange. His error was in not distinguishing between the use-value/commodity labour-power, and the value creating activity labour. Had he done so, he would have seen that there is no need to abandon the LTV. The value of labour-power, bought by the capitalist, is, like every other commodity, equal to the labour required for its reproduction. The capitalist does not exploit labour-power, does not cheat the worker in the price they pay for it, but pays the worker its full price. The capitalist does not exploit labour-power, but exploits rather labour.

The value of a day's labour-power may be, say, 8 hours labour, and that is what the capitalist pays to the worker for that labour-power, as wages. But, having bought that labour-power for a day the capitalist can utilise it for a day, and that day might be 10, 12, or more hours in duration. In other words, the labour creates 10, 12 or more hours of new value. The difference between that and the 8 hours of necessary labour (value of labour-power) then forms the surplus-value/profit.

Smith, basically, took over the Physiocratic advances but went further with the LTV, in recognising that value is labour. But, like the Physiocrats, he recognises the contradiction seen in the fact that wages do not equal the new value created by labour, by arguing, as they did, that the owners of the factors of production – land, labour and capital – demand a price for their supply. Because capital is scarce, and labour plentiful, he says, capital is sold above its value, and labour below. His explanation of the falling rate of profit flows from this, as he says that, as capitalism progresses, and capital is accumulate, the supply of capital will rise relative to demand, and the supply of labour will fall.

I have examined these arguments of Smith and Ricardo and Marx's critique of them, elsewhere, in examining Marx's explanation of that tendency.

But, as Marx notes, by the second half of the 19th century, the functional role of the private capitalist had also disappeared, just as it had, earlier, for the landlord class. As the scale of industrial capital grew, it could only be managed and administered by a growing professional, middle-class army of managers, administrators, accountants, technicians and so on. They were drawn from the working-class, requiring an expansion of free, public education. They became the functioning capitalists, just as the industrial capital, itself became “socialised capital”, as the collective property of the “associated producers”, i.e. the workers and managers. The monopoly ownership of capital by private capitalists had become a fetter on the development of capital. The expropriators were expropriated.

The former capitalist owners were relegated to the role of suppliers of money-capital, owners of fictitious-capital, with no social role in production, as had happened to the landlords. They were, now, just a parasitic excrescence living off their ownership of money-capital. As with the landlords before them, if they ceased to exist, production would continue as before, but, now, with their revenues being used productively to accumulate additional capital.

The bourgeoisie and its ideologists, who recognised this, in respect of the old ruling-class – the landed aristocracy – of course, do not admit it when it comes to the redundancy of their own position.

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 36 of 39

“If it were not for this interest, the farmer—the chief agent in agriculture—would not advance the capital for investment in it. Already from this standpoint, the appropriation by the farmer of that portion of the agricultural surplus proceeds which represents interest is, according to the Physiocrats, as necessary a condition of reproduction as the farmer class itself; and hence this element cannot be put in the category of the national “net product” or “net income”; for the latter is characterised precisely by the fact that it is consumable without any regard to the immediate needs of national reproduction.” (p 321)

In other words, to use Marx's formulation, gross output is equal to c + v + s. C, the consumed constant capital (raw and auxiliary materials, and wear and tear of fixed capital) plus the variable-capital (the physical wage goods), must all be reproduced on a “like for like basis”, so that reproduction can occur. Only what is left over after that represents the net or surplus product. Of course, in class societies, the exploiting classes do not see things that way. They, after all, must consume to live, and they justify their consumption on the basis of their functional role in society. Landlords provide land, without which production could not take place; capitalists provide capital, without which production could not occur; money-capitalists provide money, without which some industrial capitalists could not accumulate capital.

The Physiocrats represented the ideas of the rising French bourgeoisie, and, in particular, the capitalist farmers. Like the rising productive-capitalists everywhere, they recognised that the old, aristocratic, landlord class no longer had any functional role. They played no part in agricultural production, as that function was now undertaken by the capitalist farmer. If the landlords didn't exist, then, what the Physiocrats saw as the mystical power of the land to create a surplus product (output greater than inputs) would still exist. If the farmers did not have to hand over that rent to landlords to consume unproductively, production not only would still take place on the same scale, but those rents could be used productively, to cultivate additional land.

In Britain, this same perception led the bourgeoisie's ideologists to argue for land nationalisation. If land was nationalised, they argued, rents paid to the aristocracy would instead go to the capitalist state, so that it would not need to levy as much in tax, which is a deduction from profit. That would leave more profit, and so a greater potential for capital accumulation and economic growth. This is the opposite to the Keynesian argument set out earlier, which argues that increased taxes by the state used, for example, in arms spending can act to increase capital accumulation, employment and growth. Keynes' argument was just a 20th century version of the argument put forward by Malthus as paid apologist of the landed aristocracy. Malthus plagiarised Sismondi's arguments in relation to the inevitability of an overproduction of commodities, and put forward as the solution, increases in the revenues of the landlords, clergy and state, so that the capitalists had less to use to increase production, and all of these other parasitic and unproductive classes had more to spend to increase demand.

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 35 of 39

Above, I set out that the real explanation for the existence of surplus value is the surplus labour undertaken by labourers. That surplus value is produced in industry as well as in agriculture, contrary to the belief of the Physiocrats. On the one hand, they could only explain the unequal exchange between town and country by claiming that it was a result of the town selling its output above its value. However, they have a similar problem with the surplus value produced in agriculture. Its output was 5 milliards, and only 2 milliards was required to replace its working-capital, which it did in natura. That left a surplus product of 3 milliards, of which only 2 milliards is handed over as rent to landlords.

“The third milliard of the surplus constitutes the interest on the total invested capital of the farmers, that is, ten per cent on ten milliards. They do not receive this interest—this should be carefully noted—from circulation; it exists in natura in their hands, and they realize it only in circulation, by thus converting it into manufactured goods of equal value.” (p 320-21)

The argument of the Physiocrats is that, were it not for this interest, the farmers would not advance the 10 milliard of capital required for production. In this, already, however, we see the need to distinguish within the productive class between the capitalist farmer and the labourers employed by them. It is the capitalist farmer that advances the capital not the labourer, who, in fact, is exploited by it. As Marx sets out in Capital and Theories of Surplus Value, however, this begs the question of where the surplus value of 1 milliards, which takes the form of this “interest” comes from. Moreover, why is it only this 1 milliard that is required as “interest”, rather than 2 milliard or ½ milliard?

According to the Physiocrats, the surplus product arises as a free gift of the land. Its on that basis that the landowner claims the 2 milliard of rent, but, again, why not, then, the whole 3 milliards? In fact, the argument is like that put forward by Duhring, which is stood on its head from the real situation. It would mean that the whole surplus of 3 milliards is due to the landlords, but that they “pay” to the capitalist farmer 1 milliard as the required interest to advance their capital!

The reality, of course, as Marx sets out in Capital III, is that the surplus value is produced by the agricultural labourers, and appropriated as profit by the capitalist farmer. Because of the lower organic composition of capital in agriculture/primary production, it produces surplus profits, i.e. profits above the average annual industrial rate of profit. This makes possible Absolute Rent. In addition, because some land is more fertile than others it produces even greater surplus profits, which are the basis of Differential Rent.

The capitalist farmers, having appropriated the profits produced by their workers, hand over a portion of it, the surplus profit, to the landlord. There is nothing, then, arbitrary in this amount, but, as Marx sets out, is now objectively determined. The landlord obtains these revenues, but without giving anything of equal value in exchange. That the landlord, or the state and church, then, hand back some of these revenues to the farmer, in exchange for actual commodities, does not change that situation. It is the original version of the ridiculous Keynesian argument, used today, that claims that economic expansion can be produced by having the state engage in arms spending. The opposite is the truth.

The state finances arms spending by taxes (even if it borrows to finance it, it must eventually repay the loan plus interest on it out of its tax revenues). Taxes, like rent and interest, are a deduction from surplus value/profit. So, that spending reduces the amount of profit available for capital accumulation, and capital accumulation is the basis of economic expansion. That the state spends some of that tax buying arms from some arms companies, who may, then, employ additional workers, does not change the fact that it has done so by reducing the profits available for capital accumulation in the rest of the economy.

What is more, unlike real capital accumulation, which creates new value (because more labour is employed), which goes back into the economy, arms spending does not create any new value that goes back into the economy. That is particularly the case, where, say, the UK government uses those taxes to buy US arms, fighter jets and so on, which creates jobs in the US, not Britain.

If the government uses tax revenue to build a bridge, the bridge itself is a use-value. It raises productivity, by reducing the time required to transport commodities. It feeds back into the economy. The same is true if the government uses tax revenue to build a new school or hospital. It takes part in the production and maintenance of labour-power, just as much as the food produced by a farmer that is then sold to workers.

But, at best, tax spent on arms, results in a stockpile of weapons that sit there and rust away! Non-use values. At worst, it is used destructively – means of destruction, negative use-values – and so further damages real capital accumulation. Obviously, as Marx sets out, in Theories of Surplus Value, states, sometimes, need to spend money on arms, and employing workers unproductively, as soldiers, where they fear invasion. But such diversion of resources is a reduction in its potential capital accumulation and growth forced on it, and the opposite of being a means of stimulating growth.

If Robinson Crusoe had the choice of spending his surplus labour hours building additional animal pens and stocking them, or building sea defences against an unlikely invasion, what do you think his rational choice would be? The ridiculous claims of the British government about the possibility of a Russian invasion of Britain – the same Russia that has spent more than 3 years just trying to advance a few dozen miles into Eastern Ukraine – are simply a means of it justifying its own additional arms spending, as part of NATO's global imperialist ambitions. The suggestion that such spending would have the benefit of creating jobs and spurring the economy is equally ludicrous. The money would be better spent on repairing the crumbling roads, rail network, schools and hospitals, which is where the real threat to the well being of British workers is to be found.

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 34 of 39

Engels proceeds, then, to look at these series of exchanges, starting from the initial material balances in the hands of the three classes, and the 2 milliards in money in the hands of farmers.

The farmers, out of their production of 5 milliards, in the previous year, replace their working-capital of 2 milliards directly from that production, just as a farmer replaces seed corn out of their output of corn. That leaves them with 3 milliards of output. They also have the 2 milliards of money. They pay this to the landlords as rent.

“Circulation passing between only two of these three classes is called imperfect by the Physiocrats; circulation which takes place between all three classes is called perfect.” (p 319)

The landlords buy 1 milliard of means of subsistence from the farmers (imperfect), thus handing back half of the rent they had received. Quesnay does not refer any further to the state or church, which received a portion of these revenues as taxes and tithes, so all of this is subsumed under the heading of the transactions with the landlords.

“In regard to the landlord class proper, however, he says that its expenditure (in which that of all its retainers is included) is unfruitful expenditure, at least as regards the great bulk of it with the exception of that small portion which is used “for the maintenance and improvement of their lands and the raising of their standard of cultivation”. But by “natural law” their proper function consists precisely in “the provision of good management and expenditures for the maintenance of their patrimony”, or, as is explained further on, in making the avances foncieres, that is, outlays for the preparation of the soil and for the provision of all equipment needed by the farms, which enable the farmer to devote his whole capital exclusively to the business of actual cultivation.” (p 319-20)

A parallel could be drawn with the ruling-class of, today, whose revenues come from their renting out of money-capital, i.e. coupon payments on bonds, and dividends on shares. The vast majority of capital accumulation comes from reinvested, realised profits, not from additional financing from the issue of new shares. Only a tiny fraction of the shares traded on stock markets is of new shares issued to raise finance for capital investment. The majority of trading is just speculation – the buying and selling of existing bonds and shares.

And, of course, in relation to that portion of capital accumulation that is financed by the issue of new shares or bonds, the owners of money-capital that buy these shares and bonds do so with money previously paid to them (revenues) as interest/dividends out of realised profits. In other words, a payment of a revenue to them for which nothing was provided of equal value.

The landlords use the second milliard of rent to buy manufactured goods from the sterile class to buy means of subsistence from the farmers (perfect). The farmers, now, have the full 2 milliards of money, paid in rent, back in their hands. At the same time, of the 3 milliards of products they had, they have now sold 2 milliards – 1 milliard to landlords, and 1 milliard to the sterile class.

The farmers, now, use 1 milliard of the money returned to them to buy manufactured goods from the sterile class, which it sells from its initial stock.

“... a large part of these goods consists of agricultural implements and other means of production required in agriculture.” (p 320)

The sterile class, then, uses this same 1 milliard of money to buy raw materials from the farmers to replace its own working-capital consumed in the previous year's production (imperfect).

“Thus the two milliards expended by the farmers in payment of rent have flowed back to them, and the movement is closed. So this is the solution of the great riddle,

“What becomes of the net product, which has been appropriated as rent, in the course of economic circulation?”” (p 320)

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 33 of 39

For the reasons set out earlier, because the Physiocrats equate use-value with value, they also equate the value created by labour with the value of labour-power, and they equate the value of labour-power with the value of the agricultural products consumed by the labourer. That is why they cannot see the possibility of the industrial labourer producing a surplus value. In other words, industry obtains agricultural products as raw materials and food, and the value of the output of industry cannot be greater than the value of these agricultural inputs. It simply transforms them into industrial products.

“Although it is itself divided into capitalists and wage-workers, according to Quesnay's basic conception, it forms an integral class which is in the pay of the productive class and of the landlords.” (p 318)

The landlords are included, here, because, as set out earlier, industry does not just sell to the farmers, but also to the landlords. The landlords, however, buy from industry with 1 milliard of the rent received from the farmers. As will be seen, this 1 milliard, eventually, finds its way back to the farmers, by way of industry, which buys agricultural products with it.

“The total industrial production, and consequently also its total circulation, which is distributed over the year following the harvest, is likewise combined into a single whole. It is therefore assumed that the annual commodity production of the sterile class is entirely in its hands, at the beginning of the movement set out in the Tableau, and consequently that its whole working capital, consisting of raw materials to the value of one milliard, has been converted into goods to the value of two milliards, one-half of which represents the price of the means of subsistence consumed during this transformation.” (p 318)

So, as described earlier, for the Physiocrats, the value of the industrial production resolves into the value of the raw materials plus the value of the labour expended on processing them. But, in fact, the value of “labour”, here, is actually the value of the labour-power, i.e. the cost of reproducing the labourer. The actual value added to the raw material in the process of production is equal not to the value of labour-power, but to the amount of labour undertaken. Indeed, that is the case with agricultural production as well as industrial production. It is the fact that this quantity of labour undertaken is greater than the necessary labour required to reproduce the labourer that results in the creation of surplus value, both in agricultural production and industrial production.

It is this that explains what might appear as an objection, and which the Physiocrats could only explain by arguing that the “sterile class” sells part of its output to the farmers above its value. In other words, the sterile class consumes part of its own production. If the value of its total production is equal to the value of raw materials and food obtained from the farmers, it should sell all of its output to the farmers – an exchange of equal values. But, it doesn't. It consumes part itself. So, the other part, sold to farmers, must be sold above its value – an unequal exchange. In reality, the towns did sell commodities to rural areas above their values, but that is not the real explanation, here. The real explanation is that the value of the industrial production is greater than the value of raw materials and wages. It is greater by the amount of surplus value created by the industrial labour.

“This, however, does not affect the figures of the Tableau, for the two other classes receive manufactured goods only to the value of their total production.” (p 319)

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 32 of 39

Similarly, therefore, the farmers pay 2 milliards in rent to the landlords, but the landlords, having consumed their own stock of food, during the year, must replace it at the end of the year, which they do by handing back to the farmers 2 milliards in exchange for the food they require for the following year.

“This, then, is how the money paid by the farmer class to the landlords as rent for the year 1757 amounting to two milliards, flows back to it at the close of the year 1758 (the Tableau itself will show how this comes about), so that the farmer class can again throw this sum into circulation in 1759. But since, however, as Quesnay observes, this sum is much larger than is actually required for the total circulation of the country (France), in which payments are constantly being repeated piecemeal, the two milliard livres in the hands of the farmers represent the total money in circulation in the nation.” (p 317)

In other words, as described earlier, if the farmers bought industrial commodities 10 times during the year, rather than one large purchase, they only require a money hoard of £100 rather than £1,000. The reality of multiple, simultaneous purchases, not only by the three classes in aggregate, but, also, of individuals within each of the classes means that money hoards are required by individuals within each class. For example, industrial producers would not be waiting to obtain £100 from farmers, before making their own purchases of commodities, and so would require their own separate money hoards for that purpose. As Engels describes, the 2 milliards is the sum total of the money hoards required, but placed, initially, in the hands of the farmers, in the Tableau, for the purposes of exposition.

“The class of landlords drawing rent first appears in the role of receivers of payments, which incidentally is the case even today. On Quesnay's assumption the landlords proper receive only four-sevenths of the two milliards of rent: two-sevenths go to the government, and one-seventh to the receivers of tithes. In Quesnay's day the Church was the biggest landlord in France and in addition received the tithes on all other landed property.” (p 317)

The landlords (and the state and church), having received this 2 milliards in rent, at the start of the year, then use it to buy commodities, replacing their own consumed material stocks. But, they do not consume only agricultural products. They also consume industrial commodities bought from the sterile class. Not all of the 2 milliards in rents, therefore, returns, directly, to the farmers.

“The working capital (avances annuelles) expended by the “sterile” class in the course of a whole year consists of raw materials to the value of one milliard—only raw materials, because tools, machinery, etc., are included among the products of that class itself. But the many different roles, played by such products in the industrial enterprises of this class do not concern the Tableau any more than the circulation of commodities and money which takes place exclusively within this sphere.” (p 317-8)

In other words, the sterile class (industry) has a working-capital consisting of agricultural products (food and raw materials) and industrial products (machines, intermediate goods etc.), but the Tableau is only concerned with the exchanges between agriculture and industry. Within the sterile class, different producers of machines and intermediate goods will exchange with each other, as described earlier. They will also produce industrial commodities for personal consumption, such as clothes consumed by industrial capitalists and workers. The Tableau assumes that these industrial products for personal consumption are not bought by the productive class, which meets its own requirements, in that regard, from its own direct production.

So, the numerous exchanges of industrial products, either for productive or personal consumption, by the sterile class, are outside the concern of the Tableau, and it is only its aggregate exchanges with the farmer and the landlords that are analysed.

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 31 of 39

The production of the current year, assuming simple reproduction, i.e. no accumulation of capital, must first replace those material balances, i.e. must replace the physical use-vales that comprise the means of production (c), and of consumption, (v + s). The physical replacement of these use-values is effected by labour undertaken in the current year, but its value is necessarily greater than the value newly created in the current year, precisely because it includes the value of the consumed constant capital produced in the previous year/s. It does not include the value of the consumed means of consumption, produced in the previous year, because it forms no part of the output of the current year. It is consumed by workers and exploiters to reproduce themselves, but it is not a part of new value production itself.

It is not labour-power that creates new value, but labour. Only the new value created by labour in the current year forms a part of the value of output (v + s), in addition to the preserved value of the consumed constant capital.

So, at the starting point of the Tableau, there are existing material balances of stocks of food and raw materials. Part of these are in the hands of the farmers – the 2 milliards of working-capital. Another part is in the hands of the landlords, who must also consume prior to current production and the payment of their rent out of it. Finally, a part is in the hands of the “sterile class”, the industrial capitalists and workers, in the form of food and raw materials.

Similarly, there are material balances of industrial products. Because the Physiocrats assumed that the “productive class” met its consumption needs from direct production, its stocks of industrial products comprise only means of production. The sterile class also holds stocks of industrial products, both as means of production and consumption. As with Marx's analysis in Capital II, III and Theories of Surplus Value, there are, of course, material balances existing, also, in the form of fixed capital. But, the large part of this fixed capital does not need to be replaced during the year, because only a small part of the fixed capital is consumed, i.e. wear and tear. So, if there are 10 ploughs comprising the fixed capital, and the average life of a plough is 10 years, only 1 plough per year, on average, needs to be replaced out of current production.

Marx sets out that the circuit of industrial capital begins and ends with material balances.  In between, production transforms them into new commodities.  The surplus product and surplus value is the result of surplus labour being undertaken in that process.

In the current year, the gross product of agriculture was 5 milliards, and 2 milliards replaced the working-capital (consumed c + v). Of the remaining 3 milliards, 2 are in food, and 1 in raw materials. The productive class must, however, replace the material balances of agricultural products in the hands of the landlords and sterile class. The farmers pay 2 milliards to the landlords as rent. Because the Physiocrats only see agricultural labour as productive, and the source of the surplus product/value, arising from the land, they see only this 2 milliard as “Net Income”. In other words, it is equal to the surplus product, gifted by the land, and the landowners appropriate it as rent.

“But before the movement described in the Tableau begins, there is also the whole "pécule", two milliards of cash in the hands of the farmers, in addition to the “total reproduction” of agriculture amounting to five milliards in value, of which three milliards enter into general circulation.” (p 316)

As I have set out, elsewhere, if there is only one transaction a year, for example, the farmers buy £1,000 of industrial products from the sterile class, then, the farmers must have this £1,000 as a money hoard. The fact that the sterile class, then, buys £1,000 of agricultural products from the farmers does not change that, but, simply, means that, now, the farmers receive back this same £1,000, replacing their initial cash balance. However, if the farmers buy £100 of industrial products, they only need £100 in cash. Then, this £100 comes back to them, and they can use it again to buy £100 of industrial products. So, instead of 1 transaction per year, 10 transactions per year means that only £100 of money is required. It is why Marx notes that the velocity of circulation of currency is inextricably tied to the rapidity of transactions, i.e. PT = MV.

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 30 of 39

Revenue is equal to the labour undertaken in the year/National Income, which is equal to v + s, i.e. wages and profit (the latter dividing into rent, interest, taxes, and profit of enterprise), which is also equal to GDP, which measures not the value of output, but only the amount of value added by labour during the year. The total value of output, as Marx sets out, however, is equal not to v + s, but c + v + s, i.e., it also includes the value of all of that consumed constant capital – raw and auxiliary materials, energy, and wear and tear of fixed capital – produced in the previous year/s.

“Since, as we have seen, constant prices and simple reproduction on a given scale are assumed, the money value of the portion which is thus taken from the gross product is equal to two milliard livres. This portion, therefore, does not enter into general circulation. For, as we have noted, circulation which takes place merely within a particular class, and not between one class and another, is excluded from the Tableau.” (p 316)

In other words, the 2 milliards is the amount of consumed means of production/constant capital that must be replaced to maintain production on the same scale – simple reproduction. Given that in simple reproduction, all surplus value is consumed unproductively, the fallacy of the argument put forward by Michael Roberts, set out earlier, is obvious. If all surplus value is consumed unproductively, then, where would the demand for constant capital come from, according to Robert's schema, in which it all comes from profit?

In reality, as Marx sets out in Capital II, and Theories of Surplus Value, there are numerous exchanges – circulation – between producers, but the net effect is they cancel out so that it is the same as if each producer replaces their consumed constant capital, in natura, from their own production, in the same way that a farmer replaces seed from their own production of corn. For example, a coal producer replaces the coal consumed in their steam engines out of the coal they produce, using those steam engines. But, the coal producer also has to replace steel for worn out rails, and so on. They exchange coal for steel. Similarly, the steel producer replaces their own worn out equipment with steel from their own output, but they also replace the coal consumed in their furnaces with coal from the coal producer, exchanged for steel.

As Marx puts it, if all constant capital were produced by one enterprise, it would replace all of its consumed means of production, directly, from its own output. There would be no exchange with revenue/Department II, in respect of this part of its production. There would only be exchange with revenue/Department II, in respect of the replacement of Department II's constant capital, i.e. Department II (c) = Department I (v + s).

“After the replacement of the working capital out of the gross product there remains a surplus of three milliards, of which two milliards are in foodstuffs and one in raw materials. But, the rent which the farmers have to pay the landlords is only two-thirds of this sum, equal to two milliards. It will soon be seen why it is only these two milliards which figure under the heading of “net product” or “net income”.” (p 316)

Again, contrary to Duhring, the importance of analysing the Tableau, and the same applies to Marx's schemas of reproduction, in terms of material balances, and their replacement, is seen, here. Each cycle must begin with existing material balances, be they of raw materials, machines, buildings, and so on, required for production. You cannot produce unless you have something to produce with. It cannot be produced just by an act of current labour. Similarly, workers – and exploiters – cannot wait until production has taken place, before they can consume. At the very least, there must be existing material balances of food, available to consume, whilst production is undertaken.

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