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The New International, October 1943

V.I. Lenin

Origin of Capitalism in Russia

An Old Essay by Lenin



From The New International, Vol. IX No. 9, October 1943, pp. 278–281.
Transcribed & marked up by Einde O’Callaghan for ETOL.


The market is a category of commodity production, which, in its development, is transformed into capitalist production, and only under the latter circumstance acquires complete domination and general prevalence. Therefore, in order to examine the fundamental theoretical postulates about the home market, we must proceed from simple commodity production and follow its gradual transformation into capitalist production.

I. The Social Division of Labor

The social division of labor is the basis of commodity production. In it, manufacturing industry is separated from extractive industry. Both of these are divided into subordinate classifications and sub-classifications, which produce particular products in the form of commodities and exchange them with those of all other industries. The development of commodity production thus leads to an increase in the number of separate and independent branches of industry. The tendency of this development consists in this: to convert into a separate branch of industry not only the production of specific products, but also of separate parts of the product; and not only the production of a product, but also the various operations in the processing of the raw materials for use in the product. Under natural economy, society was comprised of groups of generally similar household units (patriarchal peasant families, primitive rural communes, feudal estates) and each of these units performed all phases of economic life, beginning with the production of various types of raw materials and ending with their final preparation for use. Under commodity production, there are created dissimilar economic units, the number of separate branches of economy increases, and the number of economic units which perform the same economic function decreases. This progressive development of the social division of labor is the primary factor in the process of the home market for capitalism:

... On the basis of a production of commodities and its absolute form, capitalist production ... [says Marx] these products are commodities, use-values, which have an exchange-value which can be realized, converted into money, only to the extent that other products face them as commodities and values. They have an exchange-value to the extent that they are not produced as immediate means of subsistence for the producers themselves, but as commodities, as products which become use-values only by their conversion into exchange-values (money), by being got rid of. The market for these commodities develops through the social division of labor; the separation of the productive labor into various departments transforms their respective products mutually into commodities, into mutual equivalents, makes them serve mutually as markets. (Das Kapital, III, 2, 177–8. Russian translation, page 526. The emphasis is ours, as is the case with all quotations, unless it is specifically stated otherwise.) [1]

It is self-evident that this separation of manufacturing from extractive industry, of manufacture from agriculture, transforms agriculture itself into an industry, i.e., into a branch of economy which produces commodities. This process of specialization, which separates various phases of the manufacture of products from one another, creating an ever greater number of branches of industry, develops also in agriculture, creating regions of specialized agriculture (and the system of agricultural economy [1*]) which causes exchange not only between the products of agriculture and industry but between various products of rural economy. This specialization of commodity (capitalist) agriculture appears in all capitalist countries, manifests itself in the international division of labor and also appears in post-reform Russia, as we shall show in detail below.

Thus, the social division of labor is the basis of the whole process of the development of commodity production and capitalism. It is quite natural, therefore, that our Narodnik theoreticians declared this (latter) process in Russia to be the result of artificial measures, a result “of a deviation from the path,” etc., etc., tried to gloss over the fact of the social division of labor in Russia, or to minimize its significance. V.V., in his article, The Division of Agricultural and Industrial Labor in Russia (The European Courier, 1884, No. 7), “denied” “the domination in Russia of the principle of the social division of labor” (page 347), declared that with us the social division of labor “did not arise fundamentally from the mode of life of the people, but attempted to slip in through the crevices” (page 338). N—on, in his Outlines, deliberated thus about the increase in the quality of grain destined for sale: “This phenomenon could mean that the grain produced is divided more evenly throughout the nation, that the Archangel fisherman now eats Samar bread, and the Samar farmer’s dinner is made appetizing with Archangel fish. In reality, nothing of the sort occurs.” (Outlines of Our Post-Reform Social Economy, St. P., 1893, page 37.) Without any supporting data and contrary to generally known facts, he here directly decrees the absence of the social division of labor in Russia! The Narodnik theory about the “artificiality” of capitalism in Russia could not indeed be established, except by denying the very basis of commodity economy – the social division of labor – or by declaring it to be “artificial.”

II. The Growth of the Industrial Population at the Expense of the Agricultural Population

Since, in the economic epoch which preceded commodity economy, manufacturing industry was united with extractive industry, chief of which is agriculture, the development of commodity production is represented by the separation from agriculture of one branch of industry after another. The population of a country with a poorly developed (or completely undeveloped) commodity production is almost exclusively agricultural. However, we need not construe this to mean that the population is concerned only with agriculture. It signifies only that the population engaged in agriculture itself processes the products of agriculture, that exchange and division of labor are almost completely absent. The development of commodity production, consequently, signifies eo ipso the separation of an ever greater part of the population from agriculture, i.e., the growth of the industrial population at the expense of the agricultural population:

It is the nature of capitalist production to reduce the agricultural population continually as compared to the non-agricultural, because in industry (strictly speaking) the increase of the constant capital compared to the variable capital goes hand in hand with an absolute increase, though relative decrease, of the variable capital; whereas in agriculture the variable capital required for the exploitation of a certain piece of land decreases absolutely and cannot increase, unless new land is taken into cultivation, which implies a still greater previous growth of the non-agricultural population. (Das Kapital, III, 3, 177. Russian translation, page 526.) [2]

Thus it is impossible to imagine capitalism without an increase of the commercial-industrial population at the expense of the agricultural population, and everyone knows that this phenomenon is revealed in high relief in all capitalist countries. It is hardly necessary to demonstrate the tremendous significance of this circumstance, because it is indissolubly connected both with the evolution of industry and with the evolution of agriculture. The establishment of industrial centers, the increase in their number and the attraction they hold for the population can only have a most profound influence on the entire organization of the village, can only promote the growth of commercial and capitalist agriculture. All the more remarkable is the fact that the representatives of Narodnik economics completely ignore this law, both in their purely theoretic discussions and in their discussions about capitalism in Russia (about the peculiarities of the manifestations of this law in Russia we will treat in a more detailed manner below, in Ch. VIII). In the theories of V.V. and N—on about the home market for capitalism, there is omitted this vital detail: the withdrawal of the population from agriculture to industry and the influence this exerts upon agriculture. [2*]

III. The Disintegration of the Small Producers

Until now we dealt with simple commodity production. Now we proceed to capitalist production, i.e., we assume that instead of simple commodity owners we now face, on the one hand, the owners of the means of production, and, on the other, the wage worker, the seller of labor power. The transformation of the small producer into a wage laborer presupposes his loss of the means of production – the earth, instruments of labor, shop, etc. – i.e., his “impoverishment,” “ruin.” There is a view that this disintegration “lessens the buying capacity of the population,” “contracts the home market” for capitalism. (N—on, l.c., page 185. Also, 203, 275, 287, 339–40 and others. This viewpoint is also held by V.V. in the majority of his works.) We are not concerned here with the factual data about the course of this process in Russia – in the succeeding chapters we will examine these data in detail. At the present time the question is posed purely theoretically, i.e., with reference to commodity production in general during its transformation into capitalist production. The writers mentioned above pose this question also theoretically, i.e., from the single fact of the disintegration of the small producers they deduce the contraction of the home market. Such a viewpoint is entirely incorrect; its stubborn survival in our economic literature can be explained only by the romantic prejudices of Narodnism (as to this, cf. footnotes to the article [3*]). They forget that the “freeing” of one segment of the producers from the means of production necessarily presupposes the transfer of these means of production into other hands – their transformation into capital. It presupposes, consequently, that the new owners of these means of production now produce in the form of commodities products which formerly were consumed by the producer himself, i.e., they expand the home market. It presupposes, furthermore, that, in expanding their production, these new owners create a demand in the market for new instruments, raw materials, means of transportation, etc., and also for means of consumption (the enrichment of these new owners naturally presupposes an increase in their consumption). They also forget that it is by no means the well-being of the producers that is of importance for the market, but the fact that he has money. A decrease in the well-being of the patriarchal peasant, who previously existed in a predominantly natural economy, is completely in consonance with the increase in his hands of a sum of money, because the greater the ruination of such a peasant, the more must he resort to the sale of his labor power and the greater is the portion (although absolutely smaller) of article of consumption that he must purchase on the market.

With the setting free of a part of the agricultural population, therefore, their former means of nourishment were also set free. They were now transformed into material elements of variable capital [capital spent in the purchase of labor power]. (Das Kapital, I, 776) [3]

The expropriation and eviction of a part of the agricultural population not only set free for industrial capital, the laborers, their means of subsistence, and material for labor; it also created the home market. (Ibid., 778) [4]

Thus, from the abstract-theoretic point of view, the disintegration of the small producers in a society o£ a developing commodity production and of capitalism signifies exactly the opposite of that which the Messrs. N—on and V.V. wish to deduce from it; it signifies the creation, and not the contraction, of the home market. If this same Mr. N—on, who declares a priori that the ruin of the Russian small producers signifies the contraction of the home market, quotes at the same time the contradictory assertions of Marx cited above (Outlines, pages 71 and 114), it merely demonstrates the remarkable capacity of these writers to confound themselves with quotations from Capital.

IV. The Narodnik Theory of the Impossibility of Realizing Surplus Value

A further question in the theory of the home market consists in the following. It is well known that the value of a product in capitalist production falls into the following three parts: (1) the first replaces constant capital, i.e., the value which existed previously in the form of raw and auxiliary materials, machines and instruments of production, etc., and which is only partly reproduced in the new product; (2) the second part replaces variable capital, i.e., covers the wages of the worker, and, finally (3) the third part consists of surplus value, which belongs to the capitalist. It is commonly assumed (we present this question in the spirit of Messrs. N—on and V.V.) that the realization (i.e., finding a corresponding equivalent, a sale on the market) of the first two parts presents no difficulties because the first part goes for production and the second part for consumption by the working class. But how is the third part – surplus value – realized? It cannot be wholly consumed by the capitalists! And our economists come to the conclusion that “the way out of the difficulty” in the realization of surplus value is “the acquisition for a foreign market” (N—on, Outline, Part II and XV in general and page 205 in particular; V.V., Oversupply of the Market by Commodities in From the West, 1883, and Outlines of Economic Theory, St. P., 1895, page 179ff.). The necessity of a foreign market for a capitalist nation is postulated by these writers in this manner – that the capitalists cannot otherwise realize the products. The home market in Russia, they assert, contracts as a result of the disintegration of the peasantry and as a consequence of the impossibility of realizing surplus value wthout a foreign market. Since a foreign market is not within reach of a young country that so lately came to the path of capitalist development, the lack of foundation and still-birth of Russian capitalism are declared by them to be proved on the basis of these a priori (and theoretically incorrect at that) considerations!

Mr. N—on, discussing realization, evidently had in mind the Marxist theory on this question (although he does not mention Marx by so much as a word in that part of the Outlines) but he failed utterly to understand it and perverted it to non-recognition, as we shall presently see. Therefore a curious thing occurred: his views coincided in all essentials with the views of V.V., whom no one can accuse of “non-understanding” of the theory because it would be the greatest untruth to suspect him even of the slightest acquaintance with it. Both authors present their doctrines as if they were the first to discuss this subject, drawing certain conclusions as if they came “out of their own heads.” In the most Olympian manner, both ignore the discussion of the old economists on the subject, and both repeat the old mistakes which were refuted in a most detailed manner by Marx in the second volume of Capital. [4*] Both authors reduce the whole question of the realization of the product to the question of the realization of surplus value, evidently assuming that the realization of constant capital does not present any difficulty. This naive view encompasses a profound error, from which flowed all subsequent mistakes in the Narodnik doctrine of realization. In reality, the difficulty in the question of explaining realization arises precisely in the explanation of the realization of constant capital. In order to be realized, constant capital must again be returned to production and this realization occurs directly only when the products of such capital are means of production. If the product that replaces the constant part of capital consists of means of consumption, then its direct return to production is impossible. Exchange becomes necessary between that department of social production which produces means of production and that which produces articles of consumption. In precisely this fact lies the whole difficulty of the question, unnoticed by our economists.

V.V. represents the question in general as if the aim of capitalist production would not be accumulation, but consumption. Deeply philosophical, Mr.N—on states that “in the hands of a minority there is a mass of material objects, which exceeds the consuming capacity of the organism (sic!) at the given moment of their development” (l.c., 149); “not the modesty and abstention of the manufacturers serve as the reason for the surplus production, but the limitations or insufficient elasticity of the human organism [!!], which has not succeeded in expanding its consuming capacity with “a rapidity equal to the growth of surplus value” (Ibid., 161). He tries to present the matter as if he did not consider consumption to be the aim of capitalist production, as if he took into consideration the rôle and significance of the means of production in the question of realization. In actuality, he did not at all clarify to himself the process of circulation and reproduction of the whole social capital, and thus entangled himself in a whole series of contradictions. We will not stop to examine all these contradictions in detail. (Cf. pp. 203–5, Outlines, by V.V.) That is a very thankless task (partly fulfilled now by Bulgakov [5*] in his book, About Markets Under Capitalist Production, M., 1897, pages 237–245). Furthermore, to prove this criticism of the discussions of Mr.N—on, it is sufficient to analyze his final conclusion, namely, that the foreign market is the solution to the problem of the realization of surplus value. This conclusion of Mr. N—on (in essence, only a repetition of the conclusions of V.V.) shows in the most graphic manner that he has not understood at all either the question of realization of the product in capitalist society (i.e., the theory of the home market) or the rôle of the foreign market. In fact, is there an ounce of common sense in dragging the foreign market into the question of realization?

The question of realization consists in this: How to find in the market the different elements of the product to replace the value components of the capitalist product (constant capital, variable capital and surplus value) and the material components of the product (means of production and means of consumption, which are in part articles of necessity and in part articles of luxury). It is clear that foreign trade should be abstracted from this problem, because introducing it not only does not by a hair’s breadth advance the solution, but rather pushes the solution further away, transferring the question from one country to several countries. The same Mr.N—on, who finds in foreign trade “the way out of the difficulty” of realization of surplus value, deals with the question of wages, for example, thus: by that part of the annual product which they receive in the form of wages, the direct producers – the workers – “can withdraw from circulation only that part of the means of existence which in value equals the gross sum of wages” (203). It may be asked: how does our economist know that the capitalists of the given country produce precisely that much and precisely that kind of articles of consumption that can be realized by wages? How does he know that, in this instance, one can get along without a foreign market? Obviously, he cannot know that. He has merely eliminated the question of the foreign market because, in the discussion of realization of variable capital, what is important is the replacement of one part of the social product by another, and it is not at all important whether this occurs within one country or within two countries. In relation to surplus value, however, he shifts from this necessary postulate and instead of offering a solution, he simply shirks the question and shifts to the question of foreign markets.

Sale of the product in a foreign market itself calls for an explanation, i.e., the necessity to find an equivalent for the portion of the social product sold, finding one type of capitalist product that can replace the one sold. That is why Marx states that “it is not at all necessary to take into consideration” [5] the foreign market and foreign trade in the analysis of realization, because: “The introduction of foreign commerce into the analysis of the annually reproduced value of products can, therefore, produce only confusion, without furnishing any new point in the aspect or solution of the problem.” (Das Kapital, II, page 469)

Messrs. V.V. and N—on stated that they fully appreciated the contradictions of capitalism, and pointed to the difficulty of realizing surplus value. In actuality, their appreciation of the contradictions of capitalism is extremely superficial because, if we are to speak of “difficulties” of realization, and about crises flowing from these difficulties, etc., then we must acknowledge that these “difficulties” are possible not alone in relation to the surplus value, and that they are not only possible but are necessary, as regards all parts of the capitalist product. Difficulties of this sort, depending upon the disproportionality in the division of different branches of production, constantly arise not only in the realization of surplus value, but also in the realization of variable and constant capital; not only in the realization of the product in articles of consumption but also in means of production. Without such “difficulties” and crises, capitalist production in general, the production of individual producers for an unknown market, cannot exist.

[Continued in next issue]


1. Capital, III, 747. – Tr.

1*. Thus, for example, I.A. Stebut, in his Basis of Field Culture, distinguishes the systems of agricultural economy according to the principal market products. The major systems of economy are three: (1) husbandry (“grain,” according to the terminology of A. Skvortsov); (2) cattle breeding (chief market product – the products of cattle) and (3) industrial (“technical,” according to the terminology of A. Skvortsov), the chief market products – agricultural products destined for technical transformation. Cf. A. Skvortsov: The Influence of Steam Transportation on Rural Economy, Warsaw, 1890, page 68ff.

2. Capital, III, pages 746–7. [All emphasis, except when otherwise stated, is Lenin’s, the reader will recall. – Tr.]

2*. We pointed out an identical attitude toward the question of the growth of the industrial population on the part of the West-European romanticists and the Russian Narodniki in the article, Toward a Characterization of Economic Romanticism. Sismondi and our own Sismondists.

3*. Lenin is referring to his article, Toward a Characterization of Economic Romanticism, referred to above. – Tr.

3. Capital, I, 817. – Tr.

4. Ibid., page 819, Lenin’s emphasis. – Tr.

4*. Particularly astounding under the circumstances is the audacity of V.V., which transcends all literary license. In explaining his doctrine, he reveals a complete ignorance of the second volume of Capital, where the question of realization is dealt with. V.V. here brazenly declares that he “utilized the Marxist theory for his schemata” (!!). (Outlines of Economic Theory, III, The Capitalist Law (sic!!!) of Production, Distribution and Consumption, page 102)

5*. It is not superfluous to remind the contemporary reader that Mr. Bulgakov and also the oft-quoted Messrs. Struve and Tugan-Baranovsky had tried to be Marxists in 1899. Now they have all safely turned from being “critics of Marx” into ordinary bourgeois economists. (Remark to the second edition)

5. The paragraph from which Lenin quotes the above phrase and the following sentence reads: “Capitalist production does not exist at all without foreign commerce. But when we assume annual reproduction on a given scale, we also assume that foreign commerce replaces home products only by articles of other use-value, or natural form, without affecting the relations of value, such as those of the two categories known as means of production and articles of consumption and their transactions, nor the relations of constant capital, variable capital and surplus value, into which the value of the products of each of these categories mar be dissolved. The introduction of foreign commerce,” etc., as above. (Capital, II, page 548) – Tr.

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