Written: Written in May 1899
Published: Published in December 1899 in the magazine Zhizn. Signed: Vladimir Ilyin. Published according to the text in the magazine.
Source: Lenin Collected Works, Progress Publishers, 1964, Moscow, Volume 4, pages 160-166.
Transcription\Markup: R. Cymbala and D. Walters
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In Issue No. 4 of Zhizn, Mr. P. Nezhdanov examined articles by me and other authors on the market theory. I intend to reply to only one of Mr. Nezhdanov’s assertions— that in my article in Nauchnoye Obozreniye, issue No. I for this year, I “distorted my struggle against the theory of third persons.” As far as the other questions are concerned, those raised by Mr. P. Nezhdanov in respect of the market theory and, in particular, of P. B. Struve’s views, I shall confine myself to a reference to my article in reply to Struve (“Once More on the Theory of Realisation”; the delay in its publication in Nauchnoye Obozreniye was due to circumstances over which the author had no control).
Mr. P. Nezhdanov maintains that “capitalist production does not suffer from any contradiction between production and consumption.” From this he concludes that Marx, in recognising this contradiction, “suffered from a serious internal contradiction” and that I am repeating Marx’s error.
I believe Mr. Nezhdanov’s opinion to be a mistaken one (or one based on a misunderstanding) and cannot see any contradiction in Marx’s views.
Mr. P. Nezhdanov’s assertion that there is no contradiction between production and consumption in capitalism is so strange that it is only to be explained by the very special meaning that he attaches to the concept “contradiction.” Mr. P. Nezhdanov is of the opinion that “if there really were a contradiction between production and consumption that contradiction would provide a regular surplus-product” (p. 301; the same in the final theses, p. 316). This is an utterly arbitrary and, in my opinion, utterly incorrect interpretation. In criticising my assertions on the contradiction between production and consumption in capitalist society, Mr. P. Nezhdanov should (I think) have told the reader how I understand that contradiction and should not have limited himself to an exposition of his own views on the essence and significance of that contradiction. The whole essence of the question (which has given rise to Mr. P. Nezhdanov’s polemic against me) is that I understand the contradiction under discussion quite differently from the way in which Mr. P. Nezhdanov wishes to understand it. I did not say anywhere that this contradiction should regularly produce a surplus-product; I do not think so and such a view cannot be deduced from Marx’s words. The contradiction between production and consumption that is inherent in capitalism is due to the tremendous rate at which production is growing, to the tendency to unlimited expansion which competition gives it, while consumption (individual), if it grows at all, grows very slightly; the proletarian condition of the masses of the people makes a rapid growth of individual consumption impossible. It seems to me that any one reading carefully pages 20 and 30 of my Studies (the article on the Sismondists cited by Mr. P. Nezhdanov) and page 40 of Nauchnoye Obozreniye (1899, No. 1) can convince himself that, from the outset, I gave only this meaning to the contradiction between production and consumption in capitalism. Indeed, no other meaning can be ascribed to this contradiction by one who adheres strictly to Marx’s theory. The contradiction between production and consumption that is inherent in capitalism consists only in this, that the growth of the national wealth proceeds side by side with the growth of the people’s poverty; that the productive forces of society increase without a corresponding increase in consumption by the people, without the employment of these productive forces for the benefit of the working masses. The contradiction under discussion, understood in this sense, is a fact that does not. admit of any doubt and that is confirmed by the daily experience of millions of people, and it is the observation of this fact that leads the working men to the views that have found a full scientific expression in Marx’s theory. This contradiction does not, by any means, lead inevitably to the regular production of a surplus-product (as Mr. Nezhdanov would like to think). We can quite well imagine (if we argue from a purely theoretical standpoint about an ideal capitalist society) the realisation of the entire product in a capitalist society without any surplus-product, but we cannot imagine capitalism without a disparity between production and consumption. This disparity is expressed (as Marx has demonstrated clearly in his Schemes) by the fact that the production of the means of production can and must out strip the production of articles of consumption.
Mr. Nezhdanov, therefore, was completely mistaken in his deduction that the contradiction between production and consumption must regularly provide a surplus-product, and this mistake led to his unjustly accusing Marx of inconsistency. Marx, on the contrary, remains consistent when he shows:
1) that the product can be realised in a capitalist society (it goes without saying that this is true if proportionality between the various branches of industry is assumed); that it would be incorrect to introduce foreign trade or “third persons” to explain this realisation;
2) that the theories of the petty-bourgeois economists (à la Proudhon) on the impossibility of realising surplus-value are based on a complete misunderstanding of the very process of realisation in general;
3) that even with fully proportional, ideally smooth realisation we cannot imagine capitalism without a contradiction between production and consumption, without the tremendous growth of production being accompanied by an extremely slow growth (or even stagnation and worsening) of consumption by the people. Realisation is due more to means of production than to articles of consumption—this is obvious from Marx’s Schemes; and from this, in turn, it follows inevitably that “the more productiveness develops, the more it finds itself at variance with the narrow basis on which the conditions of consumption rest” (Marx). it is obvious from all the passages in Capital devoted to the contradiction between production and consumption that it is only in this sense that Marx understood the contradiction between production and consumption.
Incidentally, Mr. P. Nezhdanov is of the opinion that Mr. Tugan-Baranovsky also denies the contradiction between production and consumption in a capitalist society. I do not know whether this is true. Mr. Tugan-Baranovsky himself introduced into his book a scheme showing the possibility of the growth of production accompanied by a contraction of consumption (which, of course, is possible and actual under capitalism). How can one deny that we see here a contradiction between production and consumption, although there is no surplus-product?
In charging Marx (and me) with inconsistency, Mr. P. Nezhdanov also lost sight of the fact that he should have explained, as a basis for his viewpoint, how one should understand the “independence” of the production of means of production from the production of articles of consumption. According to Marx, this “independence” is limited to the following: a certain (and constantly growing) part of the product which consists of means of production is realised by ex changes within the given department, i.e., exchanges of means of production for means of production (or the use of the product obtained, in natura, for fresh production); but in the final analysis the manufacture of means of production is necessarily bound up with that of articles of consumption, since the former are not manufactured for their own sake, but only because more and more means of production are demand ed by the branches of industry manufacturing articles of consumption. The views of the petty-bourgeois economists, therefore, do not differ from those of Marx because the former recognised in general the connection between production and consumption in a capitalist society while the latter denied in general that connection (which would be absurd). The difference is that the petty-bourgeois economists considered this connection between production and consumption to be a direct one, that they thought production follows consumption. Marx showed that this connection is an indirect one, that it only makes itself felt in the final analysis, because in capitalist society consumption follows production. But the connection nevertheless exists, even if it is indirect; consumption must, in the final analysis, follow production, and. if the productive forces are driving towards an unlimited growth of production, while consumption is restricted by the proletarian condition of the masses of the people, there is undoubtedly a contradiction present. This contradiction does not signify the impossibility of capitalism, but it does signify that its transformation to a higher form is a necessity: the stronger this contradiction becomes, the more developed become the objective conditions for this transformation, as well as the subjective conditions, i.e., the workers’ consciousness of this contradiction.
The question now arises: what position could Mr. Nezhdanov adopt on the question of the “independence” of the means of production as regards articles of consumption? One of two: either he will completely deny any dependence between them, will assert the possibility of realising means of production that are in no way connected with articles of consumption, that are not connected even in “the final analysis”—in which case he will inevitably descend to the absurd, or he will admit, following Marx, that in the final analysis means of production are connected with articles of consumption, in which case he must admit the correctness of my understanding of Marx’s theory.
In conclusion, let me take an example to illustrate these abstract arguments with concrete data. It is known that in any capitalist society exceptionally low wages (=the low level of consumption by the masses of the people) often hinder the employment of machinery. What is more, it even happens that machines acquired by entrepreneurs are in disuse because the price of labour drops so low that manual labour becomes more profitable to the owner! The existence of a contradiction between consumption and production, between the drive of capitalism to develop the productive forces to an unlimited extent and the limitation of this drive by the proletarian condition, the poverty and unemployment of the people, is, in this case, as clear as daylight. But it is no less clear that it is correct to draw one single conclusion from this contradiction—that the development of the productive forces themselves must, with irresistible force, lead to the replacement of capitalism by an economy of associated producers. It would, on the other hand, be utterly incorrect to draw from this contradiction the conclusion that capitalism must regularly provide a surplus-product, i.e., that capitalism cannot, in general, realise the product, and can, therefore, play no progressive historical role, and so on.
 I stress regularly because the irregular production of a surplus-product (crises) is inevitable in capitalist society as a result of the disturbance in proportion between the various branches of industry. But a certain state of consumption is one of the elements of proportion. —Lenin
 See present edition, Vol. 2, pp. 155 and 167 and pp. 58-59 of the present volume.—Ed.
 These passages are quoted in my article in Nauchnoye Obozreniye, 1899, No. I (see present volume, p. 56, et seq.—Ed.) and are repeated in the first chapter of The Development of Capitalism in Russia, pp. 18-19. (See present edition, Vol. 3, p. 5657.—Ed.) —Lenin
 In its natural form.—Ed.
 Das Kapital, III, 1, 289.  Quoted by me in Nauchnoye Obozreniye, p. 40 (see present volume, p. 59.—Ed.), and in The Development of Capitalism, 17. (See present edition, Vol. 3, p. 55.—Ed.) —Lenin
 Studies, p. 20 (see present edition, Vol. 2, p. 155.—Ed.); Nauchnoye Obozreniye, No. 1, p. 41 (see present volume, p. 60.—Ed.); The Development of Capitalism, pp. 19-20. (See present edition, Vol. 3, p. 58.—Ed.) If this contradiction were to lead to “a regular surplus product,” it would signify precisely the impossibility of capitalism. —Lenin
 I bring an instance of this phenomenon in the sphere of Russian capitalist agriculture in The Development of Capitalism In Russia, page 165. (See present edition, Vol. 3, p. 234.—Ed.) Similar phenomena are not individual instances but are the usual and inevitable consequences of the basic features of capitalism, —Lenin
 Karl Marx, Capital, Vol. III, Moscow, 1959, p. 240.
 Karl Marx, Capital, Vol. III, Moscow, 1959, p. 299.