A Textbook issued by the Economics Institute of the Academy of Sciences of the U.S.S.R




Production and Reproduction

If it is to live and develop, society must produce material wealth. It cannot stop producing, as it cannot stop consuming.

From day to day and year to year people consume bread, meat and other foodstuffs, and wear out clothes and footwear but at the same time fresh masses of bread, meat, cloth footwear and other products are being produced by human labour. Coal is being burnt in stoves and furnaces but at the same time fresh masses of coal are being drawn from the bowels of the earth. Machine-tools gradually wear out, locomotives sooner or later become decrepit, but fresh machine-tools are being built in the factories and fresh locomotives are being made. Under any system of social relations the process production must continually be renewed.

This continued renewal and ceaseless repetition of the production-process is reproduction. “When viewed, therefore, as a connected whole, and as flowing on with incessant renewal, every social process of production is at the same time a process of reproduction." (Marx, Capital, Kerr edition, vol. 1, p. 620) Whatever the conditions of production are, so also are the conditions of reproduction. If production is capitalist in form, then reproduction takes this form too.

The process of reproduction consists not only in people making ever fresh masses of products in place of, and in excess of, those consumed, but also in the fact that the corresponding production-relations in society are constantly being renewed.

Two types of reproduction must be distinguished: simple and extended.

Simple reproduction means repetition of the production-process on the same scale as before, the newly-produced products merely replacing the means of production and consumer goods which have been expended.

Extended reproduction means repetition of the production-process on an enlarged scale, when society does not merely replace the material wealth which has been consumed but also produces additional means of production and consumer goods over and above this.

Before the rise of capitalism the productive forces developed very slowly. The dimensions of social production changed little from year to year and from decade to decade. Under capitalism the former scarcely-moving, stagnant state of social production gave place to a much more rapid development of productive forces. Typical of the capitalist mode of production is extended reproduction which is interrupted by economic crises, when production falls off.

Capitalist Simple Reproduction

Under capitalist simple reproduction the production-process is renewed without change of volume, the surplus-value being spent entirely on personal consumption by the capitalists.

An examination even of simple reproduction enables one to look more closely into some of the essential features of capitalism.

In the process of capitalist reproduction it is not only the products of labour that are incessantly being renewed but also the relations of capitalist exploitation. On the one hand, in the course of reproduction wealth is constantly being created; this belongs to the capitalist and he uses it to appropriate surplus-value. At the expiration of each production-process the employer appears, again and again, as the owner of capital which enables him to enrich himself by exploiting workers. On the other hand, the worker constantly emerges from the production-process as a propertyless proletarian and is therefore obliged, if he is not to die of hunger, again and again to sell his labour-power to the capitalist. Reproduction of hired labour-power always remains a necessary condition for the reproduction of capital.

“Capitalist production therefore, of itself reproduces the separation between labour-power and the means of labour. It thereby reproduces and perpetuates the condition for exploiting the worker. It incessantly forces him to sell his labour-power in order to live, and enables the capitalist to purchase labour-power in order that he may enrich himself." (Marx, Capital, Kerr edition, vol. 1, p. 623.)

Thus, the fundamental relationship of capitalism is continually renewed in the process of production: the capitalist on the one hand and the wage-worker on the other. Even before he sells his labour-power to one employer or another, the worker already belongs to the combination of capitalists, i.e., to the class of capitalists as a whole. When the proletarian changes his place of work, he only exchanges one exploiter for another. The worker is chained for life to the chariot of capital.

If we examine a single process of production, it seems at first sight as though the capitalist, when he buys labour-power, is advancing money to the worker from his own funds, since at the time when he pays the worker his wages the capitalist may not yet have had time to sell the commodity which the worker has produced in the period for which he is paid (a month, say). But if we take the buying and selling of labour-power, not in isolation but as an element of reproduction, as a continually repeated relationship, then the true character of this transaction is revealed.

First of all, while the worker’s labour is creating new value, including surplus-value, in this period the product turned out by the worker in the preceding period is being realised on the market and transformed into money. Hence, it is clear that the capitalist pays the worker his wages not out of his own pocket but out of the value which the worker’s labour has created in the preceding period of production (e.g., during the previous month). To use Marx’s expression, the capitalist class acts on the time-honoured principle of the conqueror: it buys commodities from the conquered with their own money, of which it has robbed them.

Secondly, unlike what happens with other commodities, labour-power is paid for by the capitalist only after the worker has performed a certain amount of labour. So it turns out that it is not the capitalist who makes an advance to the proletarian, but, on the contrary, it is the proletarian who makes an advance to the capitalist. For this reason employers endeavour to pay wages at as long intervals as possible, so prolonging the time during which they are receiving free credit from the workers.

The capitalist is continually supplying the workers, in the form of wages, with money for purchasing the means of subsistence, i.e., with a certain part of the product which the workers’ labour has created and which has been appropriated by the exploiters. This money the workers no less regularly give back to the capitalists, receiving in exchange for it the means of subsistence which the working class itself has produced.

An examination of capitalist relations in the course of reproduction reveals not only the real source of wages but also the real source of all capital.

Let us suppose that a capital of £100,000 invested by an entrepreneur brings in annually surplus-value to the amount of £10,000, and that the whole of this sum is spent entirely by the capitalist on his personal consumption. If the entrepreneur did not appropriate the worker’s unpaid labour, his capital would be completely exhausted after ten years had elapsed. This does not happen because the sum of £100,000 which is spent by the capitalist on his personal consumption during this period is completely renewed from the surplus-value created by the unpaid labour of the workers.

Consequently, whatever might be the original source of a given capital, in the course of simple reproduction itself this capital becomes within a certain period value created by the workers’ labour and appropriated without compensation by the capitalist. This exposes the absurdity of the assertions made by bourgeois economists that capital is wealth created by the employer’s own labour.

Simple reproduction is a constituent part or element of extended reproduction. The relations of exploitation which are inherent in capitalist simple reproduction become still accentuated under conditions of capitalist extended reproduction.

Capitalist Extended Reproduction. Accumulation of Capital

Under extended reproduction a part of the surplus-value is put back by the capitalist in order to increase the scale of production: for the purchase of additional means of production and the hiring of additional workers. Thus, part of the surplus-value is amalgamated with already existing capital, i.e., is accumulated.

The accumulation of capital means the addition of part of the surplus-value to capital, or the transformation of part of the surplus-value into capital. Thus it is surplus-value that provides the source of accumulation. Capital grows through the exploitation of the working class, and along with it capitalist production-relations are reproduced on an extended basis.

Among the compelling motives for accumulation of capital is, first and foremost, the striving to increase surplus-value. Under the capitalist mode of production greed for gain knows no limits. As the extent of production grows, so grows the mass of surplus-value appropriated by the capitalist, and consequently, so also grows that part of it which goes to satisfy the personal requirements and whims of the capitalists. On the other hand, the capitalists are enabled, at the expense of the growing amount of surplus-value, to extend production more and more, to exploit an ever greater number of workers and to , appropriate an ever-increasing mass of surplus-value.

Another motive force in the accumulation of capital is the ferocious competitive struggle, in the course of which the larger capitalists find themselves in a better position than the others and strike down the small ones. Competition forces every capitalist, under penalty of ruin, to improve his technique and extend production. To stop the growth of technique and the extension of production means to lag behind, and those who lag behind are conquered by their competitors. Thus, the competitive struggle compels every capitalist to increase his capital, and he can increase his capital only by continually accumulating part of the surplus-value.

The accumulation of capital is the source of extended reproduction.

Organic Composition of Capital. Concentration and Centralisation of Capital

In the course of capitalist accumulation the total mass of capital grows, but the different parts into which it is divided do not change at the same rate and consequently the composition of capital changes.

When he accumulates surplus-value and extends his enterprise, the capitalist usually introduces new machinery and technical improvements, because these promise him an increase in his profits. The development of technique means a more rapid growth of that part of capital which exists in the form of means of production-machinery, buildings, raw materials, i.e., constant capital. On the other hand, that part of capital which is spent on the purchase of labour-power, i.e., variable capital, grows much more slowly.

The proportion between constant and variable capital, being determined by the proportion between the mass of means of production and of living labourpower, is called the organic composition of capital. Let us take, for example, a capital of £100,000. Suppose that of this sum £80,000 is spent on buildings, machinery, raw materials, etc., and £20,000 on wages. The organic composition of this capital is, then, 80 c : 20 v, or 4 : 1.

In different branches of industry and in different enterprises within one and the same branch the organic composition of capital varies: it is higher where there are more complex and costly machines and more worked up material per worker; it is lower where living labour predominates and the amount of machinery and material per worker is less and is comparatively inexpensive. With the accumulation of capital the organic composition of capital grows: the share of variable capital declines while that of constant capital increases. Thus, in the industry of the U.S.A. the organic composition of-capital, which in 1889 was 4.4 : 1, was 5.7 : 1 in 1904, 6.1 : 1 in 1929, and 6.5 : 1 in 1939.

The size of individual capitals grows in the course of capitalist reproduction. This occurs through the concentration and centralisation of capital.

The concentration of capital means the growth in the size of capital as a result of the accumulation of surplus-value obtained in the given enterprise. The capitalist becomes, through investing in his enterprise part of the surplusvalue which he has appropriated, the owner of an ever larger capital. The centralisation of capital means the growth in the size of capital as a result of fusing several capitals into one larger capital. In the competitive struggle large capital ruins and devours smaller and medium capitalist enterprises which cannot stand up to competition. By buying up the enterprises of his ruined competitor at low prices, or annexing them to his own by some other method (e.g., by means of loans), the large-scale factory-owner increases the amount of capital in his possession. The union of many capitals into one is effected also by the forming of joint-stock companies, etc.

Concentration and centralisation of capital mean the concentrating of monstrous amounts of wealth in the hands of a few persons. The enlargement of capitals opens wide possibilities for the concentration of production, i.e., for the gathering together of production in large-scale enterprises.

Large-scale production has decisive advantages over small. Large-scale enterprises can introduce machinery and technical improvements, and can apply a broad division and specialisation of labour which is beyond the resources of small concerns. This results in products being turned out more cheaply in large-scale enterprises than in small-scale ones. The competitive struggle involves great expenses and losses. A large-scale concern can bear these losses and later recover them with interest; whereas small and even medium ones are ruined by them. Large capitalists are able to obtain loans with comparatively much greater ease, and on more favourable conditions; and credit is one of the chief weapons used in the competitive struggle. Owing to all these advantages which they possess it is large concerns, equipped with powerful technique, that increasingly come to the forefront in the capitalist countries, while a multitude of small and medium concerns go down in ruin. As a result of the concentration and centralisation of capital a few capitalists, the owners of enormous fortunes, become masters of the fate of tens and hundreds of thousands of workers.

Capitalist concentration in agriculture leads to the land and other means of production becoming increasingly concentrated in the hands of large propertyowners, while broad strata of small and middle peasants, deprived of land, draught animals and implements, fall into debt-bondage to capital. Masses of peasants and craftsmen are ruined and transformed into proletarians.

The concentration and centralisation of capital thus lead to sharpening of class contradictions, to deepening of the gulf between the bourgeois, exploiting minority and the propertyless, exploited majority of society. The concentration of production also results in ever greater masses of the proletariat being concentrated in large capitalist enterprises, in industrial centres. This facilitates the welding together of the workers and their organisations for the struggle against capital.

The Industrial Reserve Army

The growth of production under capitalism, as mentioned already, is accompanied by a rise in the organic composition of capital. The demand for labour-power is determined by the size, not of capital as a whole, but only of its variable part. But the variable part of capital declines, compared with constant capital, as technical progress advances. Therefore as capital accumulates and its organic composition increases, the demand for workers relatively contracts, although the total numbers of the proletariat grow in proportion as capitalism develops.

As a result, a substantial mass of workers are unable to find application for their labour. Part of the working population becomes “redundant", forming the so-called relative surplus-population. This surplus-population is relative because part of the labour-power available is surplus only in relation to the requirements of the accumulation of capital. Thus, in bourgeois society, as social wealth grows, one section of the working class is doomed to ever heavier and more excessive labour while the other section is doomed to compulsory unemployment.

The following main forms of relative surplus-population must be distinguished:

The fluctuating surplus-population is made up of workers who lose their jobs for a certain period as a result of a contraction of production, introduction of new machinery or the closing down of enterprises. As production is extended, a section of these unemployed workers find work, just as do some of the workers newly coming forward from the rising generation. The total number of workers employed grows, but in constantly diminishing proportion compared with the scale of production.

The latent surplus-population consists of ruined small producers, predominantly poor peasants and landworkers, who are employed in agriculture during only a small part of the year, cannot find application for their labour in industry and drag out a miserable existence in the countryside living from hand to mouth somehow or other. In contrast to what happens in industry, in agriculture the growth of technique leads to the demand for labour declining absolutely.

The stagnant surplus-population is formed by these numerous groups of people who have lost regular work, are employed extremely irregularly and are paid a great deal less than theusual rate of wages. These consist of the extensive strata of the working people employed in capitalist domestic industry and also those living by casual day-today work.

Finally, the lowest stratum of relative surplus-population is constituted by people who have been pushed out of productive life over a long period, without any hope of recovering their position, and live by casual earnings. A section of these people get their living by begging.

Workers squeezed out of production constitute the industrial reserve armythe army of unemployed. This army is a necessary appendage of capitalist economy, without which it can neither exist nor develop. In periods of industrial boom, when a rapid extension of production is required, there is a sufficient number of unemployed at the disposal of the employers. As a result of the extension of production unemployment is temporarily reduced. But later a crisis of overproduction occurs, and once again considerable masses of workers are thrown on to the street, to reinforce the reserve army of the unemployed.

The existence of the industrial reserve army enables the capitalists to intensify their exploitation of the workers. Unemployed workers have to accept the most onerous conditions of work. The presence of unemployment creates an unstable situation for the employed workers and sharply reduces the standard of life of the working class as a whole. That is why the capitalists are not interested in abolishing the industrial reserve army, which exercises pressure on the labour market and ensures them a supply of cheap labour power.

As the capitalist mode of production develops, the army of unemployed, which declines in periods of boom and grows in periods of crisis, on the whole increases.

In Britain the percentage of unemployed among members of trade unions was: in 1853-1.7 per cent, in 1880-5.5 per cent, in 1908-7.8 per cent, in 1921-16.6 per cent. In the U.S,A., according to official figures, the percentage of unemployed in the working class as a whole was: in 1890-5.1 per cent, in 1900-10 per cent, in 1915-15.5 per cent, in 1921-23.1 per cent. In Germany the percentage of trade unionists out of work grew from 0.2 per cent in 1887 to 2 per cent in 1900 and 18 per cent in 1926. The volume of the relative surplus-population is enormous in the countries of the colonial and semi-colonial East.

As capitalism develops, partial unemployment, under which a worker is employed in production for only part of the day or only part of the working week, assumes bigger and bigger proportions.

Unemployment is a real scourge to the working class. The worker can only live by selling his labour-power. Workers dismissed from the factories face starvation. Often the unemployed have to go without shelter because they have not the means to pay for a night’s lodging. Thus, the bourgeoisie shows itself unable to guarantee the wage-slaves of capital a slave’s standard of living.

Bourgeois economists try to justify the existence of unemployment under capitalism by references to eternal laws of nature. This was the aim served by the pseudo-scientific fabrications of Malthus a reactionary British economist who flourished at the end of the eighteenth century and the beginning ‘of the nineteenth century. According to the “law of population" invented by Malthus, the population, from the very beginning of human society has increased in geometrical progression (as 1, 2, 4, 8, etc). but the means of subsistence, owing to the limitations of natural resources, have grown only in arithmetical progression (as 1, 2, 3, 4, etc.) This, said Malthus, was the fundamental cause of the existence of surplus-population and of starvation and want among the masses of the people. The proletariat, in Malthus’s opinion; can free itself from poverty and hunger not by abolishing the capitalist system but by abstaining from marriage and artificially restricting childbearing. Malthus considered wars and epidemics beneficial, since they cut down the working population. The theory of Malthus is profoundly reactionary. It is a means whereby the bourgeoisie justifies the incurable taints of capitalism. Malthus’s fabrications have nothing in common with reality. The mighty technique which mankind has at its disposal is capable of increasing the amount of means of life at rates which cannot be overtaken by even the fastest growth of population, But this is prevented by the capitalist system, which is the real Cause of the poverty of the masses.

Marx discovered the capitalist law of population, which is that in bourgeois society the accumulation of capital leads to a section of the workers inevitably becoming relatively surplus and being thrust out of employment and doomed to suffer poverty and want. The capitalist law of population is engendered by the production relations of bourgeois society.

Agrarian Surplus-Population

As already mentioned, one of the forms of the relative surplus-population is the latent, or agrarian surplus-population.

The agrarian surplus-population is the excess population in the agricultural economy of the capitalist countries, which arises as a result of the ruin of masses of the peasantry; these people can find only partial employment in agricultural production and cannot be absorbed into industry.

As capitalism develops, the differentiation among the peasantry is intensified. A numerous army of agricultural workers and poor peasants is formed. Large-scale capitalist economy creates a demand for wage-workers. But in proportion as capitalist production lays hold of one branch of agriculture after another and the use of machinery becomes widespread, the mass of the peasants are more and more ruined and the demand for agricultural wageworkers is reduced. The ruined sections of the rural population are continually being transformed into industrial proletarians or reinforce the army of unemployed in the cities. A considerable part of the rural population, unable to find work in industry, remain in the country, where only occasionally do they find employment in agriculture.

The latent character of the agrarian surplus-population consists in the fact that surplus labour-power in the countryside is always connected in some degree or another with small and very small peasant economy. The agricultural wage-worker usually has a small holding which serves as a means of supplementing his earnings when he is in employment, or as the source of a miserable livelihood when the is out of it. Such holdings are needed by capitalism, so that it may have cheap labourers at its disposal.

The agrarian surplus-population attains huge dimensions under capitalism. In Tsarist Russia at the end of the nineteenth century latent unemployment in the countryside embraced 13,000,000 persons. In Germany in 1907, out of 5,000,000 peasant households, 3,000,000 petty ones formed a reserve army of labour. In the U.S.A. in the 1930’s official data, obviously tending towards under-estimation, showed 2,000,000 “superfluous" farmers. Every year in the summer months between 1,000,000 and 2,000,000 American agricultural workers, taking their families and household goods with them wander about the country in search of work.

The size of the agrarian surplus-population is especially large in the colonial countries. Thus, in India, where about three-quarters of the population are engaged in agriculture, the agrarian surplus-population constitutes an army many millions strong. A considerable section of the rural population is made up of people who are in a state of chronic semi-starvation; every year several millions of people die of hunger and epidemics.

The General Law of Capitalist Accumulation.
Relative and Absolute Impoverishment of the Proletariat

The development of capitalism leads, with the accumulation of capital, to enormous wealth being concentrated in few hands at one pole of bourgeois society, with a growth in luxury and parasitism, dissipation and idleness among the exploiting classes; while at the other pole the burden of exploitation becomes continually more intense, and unemployment and poverty increases among those whose labour is the creator of all wealth.

“The greater the social wealth, the functioning capital, the extent and energy of its growth, and therefore also the absolute mass of the proletariat and the productiveness of its labour, the greater is the industrial reserve army.... The relative mass of the industrial reserve army increases therefore with the potential energy of wealth. But the greater this reserve army in proportion to the active labour army, the greater is the mass of a consolidated surplus-population whose misery is in inverse ratio to its torment of labour... This is the absolute, general law of capitalist accumulation." (Marx, Capital, Kerr edition, vol. 1, p. 707.)

The general law of capitalist accumulation gives concrete expression to the operation of the basic economic law of capitalism-the-law of surplus-value. The striving to increase surplus-value leads to an accumulation of wealth in the hands of the exploiting classes and to the growth of impoverishment and degradation of the propertyless classes.

As capitalism develops, a process of relative and absolute impoverishment of the proletariat takes place.

Relative impoverishment of the proletariat means that in bourgeois society the working class’s share of the total national income steadily decreases, while at the same time the share 01 the exploiting classes steadily grows.

Notwithstanding the absolute growth of social wealth, the relative weight of the incomes received by the working class sharply declines. Workers’ wages in American industry, shown as a percentage of capitalists’ profits, were in 1889-70 per cent, in 1918-61 per cent, in 1929-47 per cent and in 1939-45 per cent.

In Tsarist Russia the total amount of nominal wages grew by nearly 80 per cent between 1900 and 1913 as a result of the increase in the number of industrial workers (real wages falling the while), but the profits of the industrialists grew more than threefold.

According to bourgeois economists’ figures, in the U.S.A. in the 1920’s 1 per cent of the property-owners possessed 59 per cent of all the wealth, while the poorest sections which made up 87 per cent of the population owned only 8 per cent of the national wealth.

In 1920-1 the largest property-owners of Britain, who made up less than 2 per cent of the total number of property-owners, concentrated 64 per cent of all the country’s national wealth in their hands, while 76 per cent of the population possessed only 7.6 per cent of it.

Absolute impoverishment of the proletariat means the direct lowering of its standard of living.

“The worker is impoverished absolutely, i.e., becomes directly poorer than before, is forced to live worse, to eat more meagrely, to go without food for longer periods, to be coop up in cellars and garrets… “Wealth increases in capitalist society with incredible speed-alongside the impoverishment of the working masses." (Lenin, “Impoverishment in Capitalist Society, Works, Russian edition, vol. XIII, pp. 405-6.)

Seeking to whitewash capitalist reality, bourgeois political economy tries to deny the absolute impoverishment of the proletariat. Facts, however, prove that under capitalism workers’ standard of living continually declines. This is shown in many ways.

Absolute impoverishment is expressed in the fall in real wages. As mentioned above, the increase in the prices of articles of mass consumption, the rise in rents and the growth of taxes cause the real wages of the workers to fall.

Absolute impoverishment of the proletariat is expressed in the increase in the amount of unemployment and in its duration.

Absolute impoverishment of the proletariat is expressed in the growth in the intensity of labour and deterioration of working conditions, which lead to the worker ageing rapidly, losing his capacity for work, and becoming disabled. In connection with the growth in the intensity of labour and the absence of needful measures for ensuring safety at work an increase takes place in the number of accidents and injures at work.

Absolute impoverishment of the proletariat is shown in the acute deterioration in the nutrition and housing conditions of the working people, which results in the undermining of their health, an increase in the death-rate and a reduction in the expectation of life among the working-class people.

In the coal industry of the U.S.A. between 1878 and 1914 the number of accidents at work entailing fatal consequences increased by 71.5 per cent. In the course of 1952 alone about 15,000 persons were killed and over 2,000,000 injured in the U.S.A. in the course of their employment. In the British coal industry before the war one miner in every six was every year the victim of an accident, but for 1949-53 the figure was one miner in every three.

According to the official data provided by the housing census, about 40 per cent of all dwelling-houses in the U.S.A. fail to come up to the minimum standards of sanitation and safety. The mortality rate among the working-class population is much higher than that amongst the ruling classes. Infant mortality in the slums of Detroit is six times greater than the average for the U.S.A.

The standard of living of the proletariat is particularly low in the colonial countries, where extreme poverty and the extraordinarily high mortality among the workers as a result of their exhausting labour and chronic hunger take on a mass character.

The living standard of the poorest peasantry under capitalism is not higher but often even lower, than that of the wage-workers. In capitalist society there takes place not only the absolute and relative impoverishment of the proletariat but also the ruin and impoverishment of the basic masses of the peasantry. In Tsarist Russia there were several tens of millions of starving rural poor. According to the data of American censuses, during recent decades about two-thirds of the farm population of the U.S.A., as a rule, has lacked the minimum needed for subsistence. For this reason, the vital interests of the peasants themselves impel the latter to join forces with the working class.

The path of development of capitalism is one of impoverishment and semistarvation for the great majority of the working people. Under the bourgeois order the growth in the productive forces brings the working class not an easing of their position but increased poverty and privations.

At the same time the struggle of the working class against the bourgeoisie, to overthrow the yoke of capital, develops, and its consciousness and degree of organisation grows. The mass of the peasantry are increasingly drawn into this struggle.

The Basic Contradiction of the Capitalist Mode of Production

In proportion as capitalism develops, it links together the labour of multitudes of people ever more closely. The social division of labour increases. Separate, more or less independent branches of industry are transformed into a whole series of mutually connected and inter-dependent branches. The economic connections between separate enterprises, districts and entire countries grow to an enormous extent.

Capitalism creates large-scale production both in industry and in agriculture. The development of the productive forces engenders such instruments and methods of production that they demand the joint labour of many hundreds and thousands of workers. Production becomes continually more concentrated. In this way capitalist socialisation of labour and of production takes place.

This growing socialisation of labour occurs, however, in the interests of a few private entrepreneurs who strive to increase their own profits. The product of the social labour of millions of people becomes the private property of the capitalists.

Consequently, a profound contradiction is inherent in the capitalist system:production is a social matter, whereas the ownership of the means of production remains private, capitalistic, and so is incompatible with the social character of production. The contradiction between the social character of production and the private, capitalist form of appropriation of the results of production is the basic contradiction of the capitalist mode of production, and becomes continually more acute as capitalism develops. This contradiction is expressed in the intensified anarchy of capitalist production, in the growth of class antagonisms between the proletariat and the working masses as a whole, on the one hand, and the bourgeoisie on the other.


(1) Reproduction is the continual renewal and ceaseless repetition of the production-process. Simple reproduction means renewal of production on an unchanged scale. Extended reproduction means renewal of production on an enlarged scale. Typical of capitalism is extended reproduction, interrupted by periodical economic crises, when production declines. Capitalist extended reproduction means continual renewal and deepening of the relations of exploitation.

(2) Extended reproduction under capitalism presupposes accumulation of capital. Accumulation of capital means the fusion of part of surplus-value with capital, or the transformation of part of surplus-value into capital. Capitalist accumulation leads to an increase in the organic composition of capital, i.e., to the more rapid growth of constant capital as compared with variable capital. During capitalist reproduction the concentration and centralisation of capital takes place. Large-scale production has decisive advantages over small, by virtue of which the large and very large enterprises oust and subject to themselves the small and medium capitalist concerns.

(3) With the accumulation of capital and the growth in its organic composition the demand for workers is relatively reduced. An industrial reserve army of unemployed is formed. The excess of labour-power in capitalist agriculture produced by the ruin of the basic masses of the peasantry leads to the creation of an agrarian surplus-population. The general law of capitalist accumulation is the concentration of wealth in the hands of the exploiting minority and the growth of poverty among the working people, i.e., the overwhelming majority of society. Extended reproduction under capitalism leads inevitably to relative and absolute impoverishment of the working class. Relative impoverishment means the decline in the share taken by the working class of the national income in the capitalist countries. Absolute impoverishment is the direct lowering of the standard of living of the working class.

(4) The fundamental contradiction of capitalism is the contradiction between the social character of production and the private, capitalist form of appropriation. As capitalism develops, this contradiction becomes more and more acute, deepening the class antagonisms between bourgeoisie and proletariat.