V. I.   Lenin

A Characterisation of Economic Romanticism




Accumulation in Capitalist Society

The first erroneous conclusion from the fallacious theory relates to accumulation. Sismondi did not in the least understand capitalist accumulation, and in his heated   controversy on this subject with Ricardo truth was really on the side of the latter. Ricardo asserted that production creates a market for itself, whereas Sismondi denied this, and based his theory of crises on this denial. True, Ricardo was also unable to correct the above-mentioned fundamental mistake of Adam Smith, and, therefore, was unable to solve the problem of the relation between social capital and revenue and of the realisation of the product (nor did Ricardo set himself these problems); but he instinctively characterised the quintessence of the bourgeois mode of production by noting the absolutely indisputable fact that accumulation is the excess of production over revenue. From the viewpoint of the modern analysis that is how matters stand. Production does indeed create a market for itself: production needs means of production, and they constitute a special department of social production, which occupies a certain section of the workers, and produces a special product, realised partly within this same department and partly by exchange with the other department, which produces articles of consumption. Accumulation is indeed the excess of production over revenue (articles of consumption). To expand production (to “accumulate” in the categorical meaning of the term) it is first of all necessary to produce means of production,[1] and for this it is consequently necessary to expand that department of social production which manufactures means of production, it is necessary to draw into it workers who immediately present a demand for articles of consumption,too. Hence, “consumption” develops after “accumulation,” or after “production”; strange though it may seem, it cannot be otherwise in capitalist society. Hence, the rates of development of these two departments of capitalist production do not have to be proportionate, on the contrary, they must inevitably be disproportionate. It is well known that the law of development of capital is that constant capital grows faster   than variable capital, that is to say, an ever larger share of newly-formed capital is turned into that department of the social economy which produces means of production. Hence, this department necessarily grows faster than the department which manufactures articles of consumption, i.e., what takes place is exactly that which Sismondi declared to be “impossible,” “dangerous,” etc. Hence, products for personal consumption occupy an ever-diminishing place in the total mass of capitalist output. And this fully corresponds to the historical “mission” of capitalism and to its specific social structure: the former is to develop the productive forces of society (production for production); the latter precludes their utilisation by the mass of the population.

We can now fully appraise Sismondi’s view of accumulation. His assertion that rapid accumulation leads to disaster is absolutely wrong and is solely the result of his failure to understand accumulation, as are his repeated statements and demands that production must not outstrip consumption, because consumption determines production. Actually, the very opposite is the case, and Sismondi simply turns his back on reality in its specific, historically determined form and substitutes petty-bourgeois moralising for an analysis. Particularly amusing are Sismondi’s attempts to clothe this moralising in a “scientific” formula. “Messrs. Say and Ricardo,” he says in his preface to the second edition of Nouveaux Principes, “came to believe . . . that consumption had no other limits than those of production, whereas actually it is limited by revenue. . . . They should have warned producers that they must count only on consumers who have a revenue” (I, XIII).[2] Nowadays, such naïveté only raises a smile. But are not the writings of our contemporary romanticists, like Messrs. V.V. and N.-on, replete with the same sort of thing? “Let the banking entrepreneurs ponder well”... over whether they will find a market for their commodities (II, 101-02).   “When it is assumed that the aim of society is to increase wealth, the aim is always sacrificed for the means” (II, 140). “If, instead of expecting an impetus from the demand created by labour” (i.e., an impetus to production from the workers’ demand for products), “we expect it to come from preceding production, we shall be doing almost the same thing as we would do to a clock if, instead of turning back the wheel that carries the chain (la roue qui porte la chainette), we turn back another wheel—we would thereby break the whole machine and stop it” (II, 454). Sismondi says that. Let us now hear what Mr. Nikolai-on has to say. “We have overlooked the factors due to which this development” (i.e., the development of capitalism) “is taking place; we have also forgotten the aim of all production . . . an extremely fatal blunder. . .” (N.-on, Sketches on Our Post-Reform Social Economy, 298). Both these authors talk about capitalism, about capitalist countries; both reveal their complete inability to understand the essence of capitalist accumulation. But would one believe that the latter is writing seventy years after the former?

An example which Sismondi quotes in chapter VIII: “The Results of the Struggle to Cheapen Production” (Book IV, Of Commercial Wealth) vividly demonstrates how failure to understand capitalist accumulation is linked up with the error of reducing all production to the production of articles of consumption.

Let us assume, says Sismondi, that the owner of a manufactory has a circulating capital of 100,000 francs, which brings him 15,000, of which 6,000 represent interest on capital and are paid to the capitalist, and 9,000 constitute the profit obtained by the manufacturer as the entrepreneur. Let us assume that he employs the labour of 100 workers, whose wages total 30,000 francs. Further, let there be an increase in capital, an expansion of production (“accumulation”). Instead of 100,000 francs the capital will be=200,000 francs invested in fixed capital and 200,000 francs in circulating capital, making a total of 400,000 francs; profit and interest=32,000 + 16,000 francs, for the rate of interest has dropped from 6% to 4%. The number of workers employed has doubled, but wages have dropped from 300 francs to 200 francs, hence, making a   total of 40,000 francs. Thus, production has grown fourfold.[3] And Sismondi counts up the results: “revenue,” or “consumption,” in the first case amounted to 45,000 francs (30,000 wages + 6,000 interest + 9,000 profit); it is now 88,000 francs (40,000 wages + 16,000 interest + 32,000 profit). “Production has increased fourfold,” says Sismondi, “but consumption has not even doubled. The consumption of the workers who made the machines should not be counted. It is covered by the 200,000 francs which have been used for this purpose; it is already included in the accounts of another manufactory, where the facts will be the same” (I, 405-06).

Sismondi’s calculation shows a diminution of revenue with an increase in production. The fact is indisputable. But Sismondi does not notice that the example he gives defeats his own theory of the realisation of the product in capitalist society. Curious is his observation that the consumption of the workers who made machines “should not be counted.” Why not? Because, firstly, it is covered by the 200,000 francs. Thus, capital is transferred to the department which manufactures means of production—this Sismondi does not notice. Hence, the “home market,” which “shrinks,” as Sismondi says, does not consist solely of articles of consumption, but also of means of production. These means of production constitute a special product which is not “realised” by personal consumption; and the more rapidly accumulation proceeds, the more intense, consequently, is the development of that department of capitalist production which manufactures products not for personal but for productive consumption. Secondly, answers Sismondi, it is the workers of the other manufactory, where the facts will be the same (où les mêcmes faits pourront se représenter).   As you see, Sismondi repeats Adam Smith in sending the reader “from Pontius to Pilate.” But this “other manufactory” also consumes constant capital, and its production also provides a market for that department of capitalist production which manufactures means of production! However much we shift the question from one capitalist to another, and then to a third—this department does not disappear, and the “home market” does not reduce itself just to articles of consumption. Therefore, when Sismondi says that “this calculation refutes . . . one of the axioms that has been most insisted upon in political economy, namely, the freer competition, the more profitable the development of industry” (I, 407), he does not notice that “this calculation” also refutes what he himself says. It is an undisputed fact that by displacing workers the introduction of machines worsens their conditions; and it is indisputably to Sismondi’s credit that he was one of the first to point to this. But this does not in the least prevent his theory of accumulation and of the home market from being absolutely incorrect. His own calculation clearly indicates the very phenomenon which Sismondi not only denied but even turned into an argument against capitalism, when he said that accumulation and production must correspond to consumption, otherwise a crisis will ensue. His calculation shows, precisely, that accumulation and production outstrip consumption, and that it cannot be otherwise, for accumulation takes place mainly through means of production which do not enter into “consumption.” What seemed to Sismondi to be simply an error, a contradiction in Ricardo’s doctrine—that accumulation is excess of production over revenue—actually corresponds in full to reality and expresses the contradiction inherent in capitalism. This excess is necessary for all accumulation, which opens a new market for means of production without correspondingly expanding the market for articles of consumption, and even contracting this market.[4] Furthermore,   in rejecting the theory of the advantages of free competition, Sismondi does not notice that, together with groundless optimism, he throws overboard the undoubted truth that free competition develops the productive forces of society, as is again evident from his own calculation. (Properly speaking, this is only another way of expressing the same fact that a special department of industry is created which manufactures means of production, and that this department develops with particular rapidity.) This development of the productive forces of society without a corresponding development of consumption is, of course, a contradiction, but the sort of contradiction that exists in reality, that springs from the very nature of capitalism, and that cannot be brushed aside by means of sentimental phrases.

But this is just how the romanticists try to brush it aside. And to give the reader no grounds for suspecting us of levelling unsupported charges against contemporary economists in connection with the mistakes of such an “obsolete” author as Sismondi, let us quote a little sample of the writings of that “modern” author Mr. N.-on. On page 242 of his Sketches he discusses the development of capitalism in the Russian flour-milling industry. Referring to the appearance of large steam flour-mills with improved implements of production (since the seventies about 100 million rubles have been spent on reconstructing the flour mills) and with a more than twofold increase in the productivity of labour, the author describes this phenomenon as follows: “the flour-milling industry has not developed, it has merely become concentrated in large enterprises”; he then applies this description to all industries (p. 243) and draws the conclusion that “in all cases without exception, a mass of workers are displaced and find no employment” (243), and that “capitalist production has developed at the expense of the people’s consumption” (241). We ask the reader: does this argument differ in any way from Sismondi’s argument just quoted? This “modern” author registers two facts, those very facts which, as we have seen, were used by Sismondi, and brushes both these facts aside with exactly the same sentimental phrase. Firstly, the example he gives shows that capitalism develops through the means of production. This means that capitalism develops the   productive forces of society. Secondly, his example shows that this development proceeds along the specific road of contradictions that is typical of capitalism: there is a development of production (an expenditure of 100 million rubles constitutes a home market for products realised by non-personal consumption) without a corresponding development of consumption (the people’s food deteriorates), i.e., what we have is production for the sake of production. And Mr. N.-on thinks that this contradiction will vanish from life if he, with old Sismondi’s naïvetée, presents it merely as a contradiction in doctrine, merely as “a fatal blunder”: “we have forgotten the aim of production”!! What can be more characteristic than the phrase: “has not developed, it has merely become concentrated”? Evidently, Mr. N.-on knows of a capitalism in which development could proceed otherwise than by concentration. What a pity he has not introduced us to this “original” capitalism, which was unknown to all the political economists who preceded him!


[1] We would remind the reader how Sismondi approached this; he distinctly singled out these means of production for an individual family and tried to do the same for society, too. Properly speaking it was Smith who “approached,” and not Sismondi, who only related what Smith had said. —Lenin

[2] As we know, on this question (as to whether production creates a market for itself) the modern theory fully agrees with the classical economists, who answered this question in the affirmative, in opposition to romanticism, which answered it in the negative. “The real barrier of capitalist production is capital itself” (Das Kapital, III, I, 231).[5]Lenin

[3] “The first result of competition,” says Sismondi, ... Lenin

[4] From the above analysis it automatically follows that such a case is also possible, depending upon the proportion in which the new capital is divided up into a constant and a variable part, and the extent to which the diminution of the relative share of the variable capital affects the old industries. —Lenin

[5] Karl Marx, Capital, Vol. III, Moscow, 1959, p. 245.

  Wherein Lies the Error of Adam Smith’s and Sismondi’s Theories of National Revenue? | The Foreign Market As the “Way Out of the Difficulty” of Realising Surplus-Value  

Works Index   |   Volume 2 | Collected Works   |   L.I.A. Index
< backward   forward >