The arguments adduced by Sismondi to prove that capitalism is impossible and that it cannot develop are not confined- to this. He also drew the same conclusions from his revenue theory. It must be said that Sismondi took over in its entirety Adam Smith’s labour theory of value and three forms-of revenue: rent, profit and wages. Here and there he even attempts to group together the first two forms of revenue and contrast them to the third: thus, he sometimes combines them and opposes them to wages (I, 104-05); sometimes he even uses the term mieux-value (surplus-value) to describe them (I, 103). We must not, however, exaggerate the importance of this terminology as, we think, Ephrucy does when he says that “Sismondi’s theory stands close to the theory of surplus-value” (Russkoye Bogatstvo, No. 8, p. 41). Properly speaking, Sismondi did not advance a single step beyond Adam Smith, who also said that rent and profit are “deductions from the produce of labour,” the share of the value which the worker adds to the product (see An Inquiry into the Nature and Causes of the Wealth of Nations, Russian translation by Bibikov, Vol. I, chap. VIII: “Of the Wages of Labour,” and chap. VI: “Of the Component Parts of the Price of Commodities”). Nor did Sismondi go further than this. But he tried to link up this division of the newly-created product into surplus-value and wages with the theory of the social revenue, the home market and the realisation of the product in capitalist-society. These attempts are extremely important for an appraisal of Sismondi’s scientific significance, and for an understanding of the connection between his doctrine and that of the Russian Narodniks. It is therefore worth while analysing them in greater detail.
In everywhere pushing into the forefront the question of revenue, of its relation to production, to consumption and to the population, Sismondi was also naturally obliged to analyse the theoretical basis of the concept “revenue.” And so at the very beginning of his work we find three chapters devoted to the question of revenue (l. II, ch. IV-VI). Chapter IV, entitled “How Revenue Originates from Capital,” deals with the difference between capital and revenue. Sismondi begins straight away to deal with this subject in relation to the whole of society. “Inasmuch as each works for all,” he says, “what is produced by all must be consumed by all. . . . The difference between capital and revenue is material for society” (I, 83). But Sismondi has a feeling that this “material” difference is not as simple for society as it is for the individual entrepreneur, “We are approaching,” he makes the reservation, “the most abstract and most difficult problem of political economy. The nature of capital and that of revenue are constantly interwoven in our minds: we see that what is revenue for one becomes capital for another, and the same object, in passing from hand to hand, successively acquires different names” (I, 84), i.e., is called “capital” at one moment and “revenue” at another. “But to confuse them,” asserts Sismondi, “is ruinous” (leur confusion est ruineuse, p. 477). “The task of distinguishing between the capital and revenue of society is as important as it is difficult” (I, 84).
The reader has probably noticed wherein lies the difficulty which Sismondi speaks of: if the revenue of the individual entrepreneur is his profit, which he spends on various kinds of articles of consumption, and if the revenue of the individual worker is his wages, can these two forms of revenue be added together to form the “revenue of society”? What, then, about those capitalists and workers who produce machines, for example? Their product exists in a form that cannot be consumed (i.e., consumed personally). It cannot be added to articles of consumption. These products are meant to serve as capital. Hence, while being the revenue of their producers (that is, that part which is the source of profit and wages) they become the capital of their purchasers. How can we straighten out this confusion, which prevents us from defining the concept of social revenue?
As we have seen, Sismondi merely approached the question and at once shrank from it, limiting himself to stating the “difficulty.” He says plainly that “usually, three kinds of revenue are recognised: rent, profit and wages” (I, 85), and then goes on to expound Adam Smith’s doctrine concerning each. The question of the difference between the capital and the revenue of society remained unanswered. The exposition now proceeds without any strict division between social revenue and individual revenue. But Sismondi reverts once again to the question he abandoned. He says that, as there are different kinds of revenue, so there are “different kinds of wealth” (1, 93), namely, fixed capital—machines, implements, etc., circulating capital— which, unlike the former, is consumed quickly and changes its form (seed, raw materials, wages) and, lastly, revenue from capital, which is consumed without being reproduced. Here it is not important to us that Sismondi repeats all the mistakes Adam Smith made in the theory of fixed and circulating capital, that he confuses these categories, which belong to the process of circulation, with the categories which spring from the process of production (constant and variable capital). What interests us is Sismondi’s theory of revenue. And on this question, he draws the following conclusion from the division of wealth into three kinds that has just been made.
“It is important to note that these three kinds of wealth go similarly into consumption; for everything that has been produced is of value to man only insofar as it serves his needs, and these needs are satisfied only by consumption. But fixed capital serves this purpose indirectly (d’une manière indirecte ); it is consumed slowly, helping man to reproduce what serves for his consumption” (I, 94-95), whereas circulating capital (Sismondi already identifies it with variable capital) is converted into the “worker’s consumption fund” (I, 95). It follows, therefore, that, as distinct from individual consumption, there are two kinds of social consumption. These two kinds differ very greatly. What matters, of course, is not that fixed capital is consumed slowly, but that it is consumed without forming revenue (a consumption fund) for any class of society, that it is not used personally, but productively. But Sismondi fails to see this, and realising that he has again strayed from the path in quest of the difference between social capital and revenue, he helplessly exclaims: “This movement of wealth is so abstract, it requires such considerable attention to grasp it fully (pour le bien saisir ), that we deem it useful to take the simplest example” (I, 95). And indeed, he does take the “simplest” example: a single farmer (un fermier solitaire ) harvested a hundred sacks of wheat; part of the wheat he consumed himself, part went for sowing, and part was consumed by the workers he hired. Next year he harvested two hundred sacks. Who is to consume them? The farmer’s family cannot grow so quickly. Using this extremely ill-chosen example to show the difference between fixed capital (seed), circulating capital (wages) and the farmer’s consumption fund, Sismondi says:
“We have seen three kinds of wealth in an individual family; let us now examine each kind in relation to the whole nation and see how the national revenue can result from this distribution” (I, 97). But all he says after this is that in society, too, it is necessary to reproduce the same three kinds of wealth: fixed capital (and Sismondi emphasises that a certain amount of labour has to be expended on it, but he does not explain how fixed capital will exchange for the articles of consumption required by both the capitalists and the workers engaged in this production); then come raw materials (Sismondi isolates these especially); then the workers’ maintenance and the capitalists’ profit. This is all we get from chapter IV. Obviously, the question of the national revenue remained open, and Sismondi failed to analyse, not only distribution, but even the concept of revenue. He immediately forgets the theoretically extremely important reference to the need to reproduce also the fixed capital of society; and in his next chapter, in speaking of the “distribution of the national revenue among the different classes of citizens” (ch. V), he goes straight on to speak of three kinds of revenue and, combining rent and profit, he says that the national revenue consists of two parts: profit from wealth (i.e., rent and profit in the proper sense) and the workers’ means of subsistence (I, 104-05). He says, moreover, that:
“Similarly, the annual product, or the result of all the work done by the nation during the year, consists of two parts: one is . . . the profit that comes from wealth; the other is the capacity to work (la puissance de travailler) which is assumed to equal the part of wealth for which it is exchanged, or the means of subsistence of those who work. . . . Thus, the national revenue and the annual product balance each other and represent equal magnitudes. The entire annual product is consumed in the course of the year, but partly by the workers, who, giving their labour in exchange, turn the product into capital and reproduce it, and partly by the capitalists, who, giving their revenue in exchange, destroy it” (I, 105).
Thus, Sismondi simply thrusts aside the question of distinguishing between national capital and revenue, which he himself so definitely considered to be extremely important and difficult, and forgets entirely what he had said a few pages previously! And then he does not see that by thrusting this question aside, he reduced the problem to utter absurdity: how can the annual product be to tally consumed by the workers and capitalists in the shape of revenue, if production needs capital, or, to be more exact, means and instruments of production? They have to be produced, and they are produced every year (as Sismondi himself has only just admitted). And now all these instruments of production, raw materials, etc., are suddenly discarded and the “difficult” problem of the difference between capital and revenue is settled by the absolutely incongruous assertion that the annual product equals the national revenue.
This theory, that the entire product of capitalist society consists of two parts—the workers’ part (wages, or variable capital, to use modern terminology) and the capitalists’ part (surplus-value), is not peculiar to Sismondi. It does not belong to him. He borrowed it in its entirety from Adam Smith, and even took a step backward from it. The whole of subsequent political economy (Ricardo, Mill, Proudhon and Rodbertus) repeated this mistake, which was disclosed only by the author of Capital, in Part III of Volume II. We shall expound the principles underlying his views later on. At present let us observe that this mistake is repeated by our Narodnik economists. It is of special interest to compare them with Sismondi, because they draw from this fallacious theory the very same conclusions that Sismondi himself drew : the conclusion that surplus-value cannot be realised in capitalist society; that social wealth cannot be expanded; that the foreign market must be resorted to because surplus-value cannot be realised within the country; and lastly, that crises occur because the product, it is alleged, cannot be realised through consumption by the workers and the capitalists.
 To be more exact: that part of profit which is not used for accumulation. —Lenin
 Sismondi had only just separated capital from revenue. The first goes to production, the second to consumption. But we are talking about society, and society also “consumes” fixed capital. The distinction drawn falls to the ground, and the social-economic process which transforms “capital for one” into “revenue for another” remains unexplained.—Lenin —Lenin
 And which were prudently avoided by the other economists who repeated Adam Smith ‘s mistake. —Lenin