V. I.   Lenin

A Characterisation of Economic Romanticism

(SISMONDI and OUR NATIVE SISMONDISTS)


 

VII

Crises

Sismondi’s third mistaken conclusion, drawn from the wrong theory which he borrowed from Adam Smith, is the theory of crises. Sismondi’s view that accumulation (the growth of production in general) is determined by consumption, and his incorrect explanation of the realisation of the aggregate social product (which he reduces to the workers’ share and the capitalists’ share of revenue) naturally and inevitably led to the doctrine that crises are to be explained by the discrepancy between production and consumption. Sismondi fully agreed with this theory. It was also adopted by Rodbertus, who formulated it somewhat differently: he explained crises by saying that with the growth of production the workers’ share of the product diminishes, and wrongly divided the aggregate social product, as Adam Smith did, into wages and “rent” (according to his terminology “rent” is surplus-value,   i.e., profit and ground-rent together). The scientific analysis of accumulation in capitalist society[1] and of the realisation of the product undermined the whole basis of this theory, and also indicated that it is precisely in the periods which precede crises that the workers’ consumption rises, that underconsumption (to which crises are allegedly due) existed under the most diverse economic systems, whereas crises are the distinguishing feature of only one system—the capitalist system. This theory explains crises by another contradiction, namely, the contradiction between the social character of production (socialised by capitalism) and the private, individual mode of appropriation. The profound difference between these theories would seem to be self-evident, but we must deal with it in greater detail because it is the Russian followers of Sismondi who try to obliterate this difference and to confuse the issue. The two theories of which we are speaking give totally different explanations of crises. The first theory explains crises by the contradiction between production and consumption by the working class; the second explains them by the contradiction between the social character of production and the private character of appropriation. Consequently, the former sees the root of the phenomenon outside of production (hence, for example, Sismondi’s general attacks on the classical economists for ignoring consumption and occupying themselves only with production); the latter sees it precisely in the conditions of production. To put it more briefly, the former explains crises, by underconsumption (Unterkonsumption ), the latter by the anarchy of production. Thus, while both theories explain crises by a contradiction in the economic system itself, they differ entirely on the nature of the contradiction, But the question is: does the second theory deny the fact of a contradiction between production and consumption,   does it deny the fact of underconsumption? Of course not. It fully recognises this fact, but puts it in its proper, subordinate, place as a fact that only relates to one department of the whole of capitalist production. It teaches us that this fact cannot explain crises, which are called forth by another and more profound contradiction that is fundamental in the present economic system, namely, the contradiction between the social character of production and the private character of appropriation. What, then, should be said of those who, while they adhere essentially to the first theory, cover this up with references to the point that the representatives of the second theory note the existence of a contradiction between production and consumption? Obviously, these people have not pondered over the essence of the difference between the two theories, and do not properly understand the second theory. Among these people is, for example, Mr. N.-on (not to speak of Mr. V. V.). That they are followers of Sismondi has already been indicated in our literature by Mr. Tugan-Baranovsky (Industrial Crises, p. 477, with the strange reservation relative to Mr. N.-on: “evidently”). But in talking about “the shrinking of the home market” and “the decline in the people’s consuming capacity” (the central points of his views), Mr. N.-on, nevertheless, refers to the representatives of the second theory who note the fact of the contradiction between production and consumption, the fact of underconsumption. It goes without saying that such references merely reveal the ability, characteristic in general of this author, to cite inappropriate quotations and nothing more. For example, all readers who are familiar with his Sketches will, of course, remember his “citation” of the passage where it says that “the labourers as buyers of commodities are important for the market. But as sellers of their own commodity—labour-power—capitalist society tends to keep them down to the minimum price” (Sketches, p. 178), and they will also remember that Mr. N.-on wanted to deduce from this both “the shrinkage of the home market” (ibid., p. 203 et. al.) and crises (p. 298 et. al.). But while quoting this passage (which, as we have explained, proves nothing), our author, moreover, leaves out the end of the footnote from which his quotation was   taken. This quotation was from a note inserted in the manuscript of Part II of Volume II of Capital. It was inserted “for future amplification” and the publisher of the manuscript put it in as a footnote. After the words quoted above, the note goes on to say: “However, this pertains to the next part,”[2] i.e., to the third part. What is this third part? It is precisely the part which contains a criticism of Adam Smith’s theory of two parts of the aggregate social product (together with the above-quoted opinion about Sismondi), and an analysis of “the reproduction and circulation of the aggregate social capital,” i.e., of the realisation of the product. Thus, in confirmation of his views, which are a repetition of Sismondi’s, our author quotes a note that pertains “to the part” which refutes Sismondi: “to the part” in which it is shown that the capitalists can realise surplus-value, and that to introduce foreign trade in an analysis of realisation is absurd....

Another attempt to obliterate the difference between the two theories and to defend the old romanticist nonsense by referring to modern theories is contained in Ephrucy’s article. Citing Sismondi’s theory of crises, Ephrucy shows that it is wrong (Russkoye Bogatstvo, No. 7, p. 162); but he does so in an extremely hazy and contradictory way. On the one hand, he repeats the arguments of the opposite theory and says that national demand is not limited to articles of direct consumption. On the other hand, he asserts that Sismondi’s explanation of crises “points to only one of the many circumstances which hinder the distribution of the national product in conformity with the demand of the population and with its purchasing power.” Thus, the reader is invited to think that the explanation of crises is to be found in “distribution,” and that Sismondi’s mistake was only that he did not give a full list of the causes which hinder this distribution! But this is not the main thing . “Sismondi,” says Ephrucy, “did not confine himself to the above-mentioned explanation. Already in the first edition of Nouveaux Principes we find a highly enlightening chapter entitled ‘De la connaissance du marché.’[3]   In this chapter Sismondi reveals to us the main causes that disturb the balance between production and consumption” (note this!) “with a clarity that we find among only a few economists” (ibid.). And quoting the passages which say that the manufacturer cannot know the market, Ephrucy says: “Engels says almost the same thing” (p. 163), and follows this up with a quotation saying that the manufacturer cannot know the demand. Then, quoting some more passages about “other obstacles to the establishment of a balance between production and consumption” (p. 164), Ephrucy assures us that “these give us the very explanation of crises which is becoming increasingly predominant”! Nay, more: Ephrucy is of the opinion that “on the question of the causes of crises in the national economy, we have every right to regard Sismondi as the founder of the views which were subsequently developed more consistently and more clearly” (p. 168).

But by all this Ephrucy betrays a complete failure to understand the issue! What are crises? Overproduction, the production of commodities which cannot be realised, for which there is no demand. If there is no demand for commodities, it shows that when the manufacturer produced them he did not know the demand. The question now arises: is this indication of the condition which makes crises possible an explanation of the crises? Did Ephrucy really not understand the difference between stating the possibility of a phenomenon and explaining its inevitability? Sismondi says: crises are possible, because the manufacturer does not know the demand; they are inevitable, because under capitalist production there can be no balance between production and consumption (i.e., the product cannot be realised). Engels says: crises are possible, because the manufacturer does not know the demand; they are inevitable, but certainly not because the product cannot be realised at all. For it is not true: the product can be realised. Crises are inevitable because the collective character of production comes into conflict with the individual character of appropriation. And yet we find an economist who assures us that Engels says “almost the same thing”; that Sismondi gives the “very same explanation of crises”! “I am therefore surprised,” writes Ephrucy, “that Mr. Tugan-Baranovsky . . . lost sight   of this most important and valuable point in Sismondi’s doctrine” (p. 168). But Mr. Tugan-Baranovsky did not lose sight of anything.[4] On the contrary, he pointed very exactly to the fundamental contradiction to which the new theory reduces matters (p. 455 et. al.), and explained the significance of Sismondi, who at an earlier stage indicated the contradiction which reveals itself in crises, but was unable to give it a correct explanation (p. 457—Sismondi, before Engels, pointed to the fact that crises spring from the contemporary organisation of the economy; p. 491—Sismondi expounded the conditions which make crises possible, but “not every possibility becomes a fact”). Ephrucy, however, completely misunderstood this, and after lumping everything together he is “surprised” that what he gets is confusion! “True,” says the economist of Russkoye Bogatstvo, “we do not find Sismondi using the terms which have now received universal right of citizenship, such as ‘anarchy of production,’ ‘unplanned production’ (Planlosigkeit ); but the substance behind these terms is noted by him quite clearly” (p. 168). With what ease the modern romanticist restores the romanticist of former days! The problem is reduced to one of a difference in terms! Actually, the problem boils down to the fact that Ephrucy does not understand the meaning of the terms he repeats. “Anarchy of production,” “unplanned production”—what do these expressions tell us? They tell us about the contradiction between the social character of production and the individual character of appropriation. And we ask every one who is familiar with the economic literature we are examining: did Sismondi, or Rodbertus, recognise this contradiction? Did they deduce crises from this contradiction? No, they did not, and could not do so, because neither of them had any understanding of this contradiction. The very idea that the criticism of capitalism cannot be based on phrases   about universal prosperity, [5] or about the fallacy of “circulation left to itself,”[6] but must be based on the character of the evolution of production relations, was absolutely alien to them.

We fully understand why our Russian romanticists exert every effort to obliterate the difference between the two theories of crises mentioned. It is because fundamentally different attitudes towards capitalism are most directly and most closely linked with the theories mentioned Indeed, if we explain crises by the impossibility of realising products, by the contradiction between production and consumption, we are thereby led to deny reality, the soundness of the path along which capitalism is proceeding; we proclaim this path to be a “false one,” and go out in quest of “different paths.” In deducing crises from this contradiction we are bound to think that the further it develops the more difficult will be the way out of the contradiction. And we have seen how Sismondi, with the utmost naïveté, expressed exactly this opinion when he said that if capital accumulated slowly it was tolerable; but if it accumulated rapidly, it would become unbearable.—On the other hand, if we explain crises by the contradiction between the social character of production and the individual character of appropriation, we thereby recognise that the capitalist road is real and progressive and reject the search for “different paths” as nonsensical romanticism. We thereby recognise that the further this contradiction develops the easier will be the way out of it, and that it is the development of this system which provides the way out.

As the reader sees, here, too, we meet with a difference in “points of view.” . . .

It is quite natural that our romanticists should seek   theoretical confirmation of their views. It is quite natural that their search should lead them to the old rubbish which Western Europe has discarded long, long ago. It is quite natural that, feeling this to be so, they should try to renovate this rubbish, some times by actually embellishing the romanticists of Western Europe, and at others by smuggling in romanticism under the flag of inappropriate and garbled citations. But they are profoundly mistaken if they think that this sort of smuggling will remain unexposed.

With this we bring to a close our exposition of Sismondi’s basic theoretical doctrine, and of the chief theoretical conclusions he drew from it; but we must make a slight addition, again relating to Ephrucy. In his other article about Sismondi (a continuation of the first), he says: “Still more interesting (than the theory on revenue from capital) are Sismondi’s views on the different kinds of revenue” (Russkoye Bogatstvo, No. 8, p. 42). Sismondi, he says, like Rodbertus, divides the national revenue into two parts: “one goes to the owners of the land and instruments of production, the other goes to the representatives of labour” (ibid.). Then follow passages in which Sismondi speaks of such a division, not only of the national revenue, but of the aggregate product: “The annual output, or the result of all the work done by the nation during the year, also consists of two parts,” and so forth (Nouveaux Principes, I, 105, quoted in Russkoye Bogatstvo, No. 8, p. 43). “The passages we have quoted,” concludes our economist, “clearly show that Sismondi fully assimilated (!) the very same classification of the national revenue which plays such an important role in the works of the modern economists, namely, the division of the national revenue into revenue from labour and non-labour revenue—arbeitsloses Einkommen. Although, generally speaking, Sismondi’s views on the subject of revenue are not always clear and definite, we nevertheless discern in them a consciousness of the difference that exists between private revenue and national revenue” (p. 43).

The passage quoted, say we in answer to this, clearly shows that Ephrucy has fully assimilated the wisdom of the German textbooks, but in spite of that (and, perhaps, just because of it), he has completely overlooked the theoretical   difficulty of the question of national revenue as distinct from individual revenue. Ephrucy expresses himself very carelessly. We have seen that in the first part of his article he applied the term “modern economists” to the theoreticians of one definite school. The reader would be right in thinking that he is referring to them this time too. Actually, however, the author has something entirely different in mind. It is now the German Katheder Socialists[7] who figure as the modern economists. The author’s defence of Sismondi consists in closely identifying his theory with theirs. What is the theory of these “modern” authorities that Ephrucy quotes? That the national revenue is divided into two parts.

But this is the theory of Adam Smith and not of the “modern economists”! In dividing revenue into wages, profit and rent (Book I, chap. VI of The Wealth of Nations; Book II, chap. II), Adam Smith opposed the two latter to the former precisely as non-labour revenue; he called them both deductions from the produce of labour (Book I, chap. VIII) and challenged the opinion that profit is also wages for a special kind of labour (Book I, chap. VI). Sismondi, Rodbertus and the “modern” authors of German textbooks simply repeat Smith’s doctrine. The only difference between them is that Adam Smith was aware that he was not quite successful in his efforts to separate the national revenue from the national product; he was aware that by excluding constant capital (to use the modern term) from the national product after having included it in the individual product, he was slipping into a contradiction. The “modern” economists, however, in repeating Adam Smith’s mistake, have merely clothed his doctrine in a more pompous phrase (“classification of the national revenue”) and lost the awareness of the contradiction which brought Adam Smith to a halt. These methods may be scholarly, but they are not in the least scientific.


Notes

[1] The mistaken conception of “accumulation of individual capital” held by Adam Smith and the economists who came after him is connected with the theory that the total product in capitalist economy consists of two parts. It was they who taught that the accumulated part of profit is spent entirely on wages, whereas actually it is spent on: 1) constant capital and 2) wages. Sismondi repeated this mistake of the classical economists as well. —Lenin

[2] Das Kapital, II. Band, S. 304.[8] Russ. trans., p. 232. Our italics. —Lenin

[3] “About Knowledge of the Market.”—Ed.

[4] In The Development of Capitalism (pp. 16 and 19) (see present edition, Vol. 3, The Development of Capitalism in Russia, chap. I , section VI.—Ed.) I have already noted Mr. Tugan-Baranovsky’s inexactitudes and errors which subsequently led him to go right over to the camp of the bourgeois economists. (Author’s footnote to the 1908 edition.—Ed.) —Lenin

[5] Cf. Sismondi, loc. cit., I, 8. —Lenin

[6] Rodbertus. Incidentally, let us mention that Bernstein, who in general is restoring the prejudices of bourgeois political economy, has introduced confusion into this problem too by asserting that Marx’s theory of crises does not differ very much from the theory of Rodbertus (Die Voraussetzungen, etc. Stuttg. 1899, S. 67) (E. Bernstein, The Premises of Socialism and the Tasks of Social-Democracy. Stuttgart, 1899, p. 67.—Ed.), and that Marx contradicts himself by recognising the ultimate cause of crises to be the limited consumption of the masses. (Author’s footnote to the 1908 edition.—Ed.) —Lenin

[8] [PLACEHOLDER.]

[7] Katheder-Socialists—representatives of a trend in bourgeois political economy of the 1870s and 1880s who, under the guise of socialism, advocated bourgeois-liberal reformism from university chairs. (Katheder in German). The fear aroused among the exploiting classes by the spread of Marxism in the working-class movement and the growth of that movement brought Katheder-Socialism into being; it united the efforts of bourgeois ideologists to find fresh means of keeping the working people in subjugation.

Among the Katheder-Socialists were A. Wagner, G. Schmoller, L. Brentano, and V. Sombart who asserted that the bourgeois state is above classes, can reconcile mutually hostile classes, and can gradually introduce “socialism” without affecting the interests of the capitalists but at the same time taking the demands of the working people as far as possible Into consideration. They suggested the legalisation of police-regulated wage-labour, and the revival of the medieval guilds. Marx and Engels exposed Katheder-Socialism, showing how essentially reactionary it was. Lenin called the Katheder-Socialists the bed bugs of “police-bourgeois university science” who hated Marx’s revolutionary teachings. In Russia the views of the Katheder-Socialists. were advocated by the “legal Marxists.”

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