Chapter 7. Analysis of Marx’s Schema of Expanded Reproduction

The first expansion of production went as follows:

I. 4,400c + 1,100v + 1,100s	=	6,600
II. 1,600c + 800v + 800s	=	3,200
Total:		9,800

Here the interdependence of accumulation in both departments is clearly expressed. However, this relation of dependence is of a peculiar nature. Accumulation proceeds from Department I, and Department II merely follows its movement, and in effect the scale of reproduction is solely determined by Department I. Marx effects accumulation here by having half of the surplus value in Department I be capitalized, whereas only the precise proportion of the surplus value in Department II is capitalized that is necessary to secure production and accumulation in Department I. In so doing, Marx has the capitalists of Department II consume 600s, whereas the capitalists of the first department, who appropriate twice as much value and much more surplus value, only consume 500s. In the following year, he has the capitalists of Department I capitalize half their surplus value once again, and this time he “compels” the capitalists of Department II arbitrarily to capitalize more than the previous year, in accordance with the requirements of Department I, such that only 560s remains for the consumption of the capitalists of Department II this time—less than the previous year, which is at any rate a rather strange result of accumulation. Marx outlines the process as follows:

Let accumulation now continue in Department I in the proportions; i.e. 550s is spent as revenue, and 550s accumulated. To start with, then, 1,100 Iv is replaced by 1,100 IIc, and 550 Is, remains to be realized in an equal amount of commodities II; i.e. altogether 1,650 I(v + s). But the constant capital in Department II that has to be exchanged is only 1,600, so that the remaining 50 must be supplemented from the 800 IIs. If we initially leave aside the money here, then the result of this transaction is:

I. 4,400c + 550s (to be capitalized); as well as 1,650(v + s) in the consumption fund for capitalists and workers, realized in commodities IIc.

II. 1,650c (with 50 being added as above from IIs) + 825v + 725s (capitalists’ consumption fund).

But if the former ratio of v to c in Department II remains unchanged, then a further 25v must be laid out for 50c; this has to be taken from the 750s; we therefore get:

II. 1,650c + 825v + 725s.

In Department I, 550s has to be capitalized. If the earlier ratio remains the same, then 440 of this form constant capital and 110 variable capital. This 110 is ultimately obtained from the 725 IIs, so that means of consumption to the value of 110 are consumed by the workers in Department I instead of by the capitalists in Department II, the latter being forced to capitalize these 110s, instead of consuming it. This leaves 615 IIs, over out of the 725 IIs. But if Department II transforms this 110 into additional constant capital, it needs a further additional variable capital of 55. This has again to come out of its surplus value; deducted from the 615 IIs, it leaves 560 for the consumption of the capitalists in Department II, and we now get, after the completion of all actual and potential transfers, the following capital value:

I. (4,400c + 440c) + (1,100v + 110v) = 4,840c + 1,210v = 6,050

II. (1,600c + 50c + 110c) + (800v + 25v + 55v) = 1,760c + 880v = 2,640

Total: 8,690⁴⁵

This passage is quoted at length here because it is a graphic illustration of how Marx achieves accumulation in Department I at the expense of Department II. He continues the harsh treatment of the capitalists of the department producing means of consumption in the following years. In the third year, according to the same rule, he has them accumulate 264s and consume 616s, this time more than in the two preceding years. In the fourth year he has them capitalize 290s and consume 678s, and in the fifth they accumulate 320s and consume 745s. Marx even comments:

If things are to proceed normally, accumulation in Department II must take place quicker than in Department I, since the part of I(v + s) that has to be exchanged for commodities IIc, would otherwise grow more rapidly than IIc, which is all it can be exchanged for.⁴⁶

Yet the figures cited here do not merely fail to show a more rapid accumulation in Department II; they in fact demonstrate a fluctuating one. This is governed by the following rule: Marx extends accumulation ever further by having Department I produce on a broader basis; accumulation in the second department appears only as the consequence of, and condition for, accumulation in the other one: first, to absorb the excess means of production, and second, to provide the necessary increase in means of consumption for the additional workforce. In this movement, it is always Department I that retains the initiative; Department II is no more than a passive satellite. Thus, at all times, the capitalists of Department II may only accumulate so much and must consume as much as is required for accumulation in Department I. Whereas Department I continually capitalizes half of its surplus value and consumes the other half, which results in a regular expansion of production as well as of the personal consumption of the capitalist class, the dual movement in Department II proceeds in the following erratic manner:

1^st year: 150s is capitalized, 600s consumed

2^nd year: 240s is capitalized, 660s consumed

3^rd year: 254s is capitalized, 626s consumed

4^th year: 290s is capitalized, 678s consumed

5^th year: 320s is capitalized, 745s consumed

There is no visible rule to this accumulation and consumption; both merely serve the requirements of accumulation in Department I. It goes without saying that the absolute figures in every equation of the schema are arbitrary; this does not detract from its scientific value. What is at issue are the relative magnitudes: these are supposed to express precise relations. The proportions of accumulation in Department I, which are clearly law-governed, now seem to have been gained at a price: the completely arbitrary construction of the proportions in Department II. This circumstance is sufficient grounds for a re-examination of the inner connections of the analysis.

It might be presumed, however, that this is merely a case of an ill-chosen example. Marx himself is not satisfied with the schema cited above, and indeed he proceeds to give a second example in order to elucidate the movement of accumulation. The figures of the equations are now arranged as follows:

I. 5,000c + 1,000v + 1,000s	=	7,000
II. 1,430c + 285v + 285s	=	2,000
Total:		9,000

Here it can be observed that, in contrast with the former example, the same composition of capital exists in both departments, i.e. a ratio of constant to variable capital of 5:1. This presupposes an already significant development of capitalist production and, correspondingly, of the productive power of social labor; a considerable prior expansion of the scale of production; and finally, the development of all those circumstances that produce a relative surplus population in the working class. Here it is no longer a case of the initial transition from simple to expanded reproduction (which at any rate merely has an abstract, theoretical value) as in the first example; rather the movement of accumulation is grasped in full flow, at an already advanced stage of development. In themselves, these assumptions are completely admissible, and they do not alter anything of the rules that must guide the analysis of the development of the individual loops of the spiral of reproduction. Here Marx again takes as his starting point the capitalization of half of the surplus value of Department I:

Let us again take it that the capitalist class in Department I consumes one half of the surplus value, or 500, and accumulates the other half. In that case (1,000v + 500s) I = 1,500 would need to be exchanged with 1,500 IIc. But since IIc is here only 1,430, 70 of surplus value has to be added; and this, when deducted from the 285 IIs, leaves 215 IIs. We thus get:

I. 5,000c + 500s (to be capitalized) + 1,500(v + s) in the consumption fund for capitalists and workers.

II. 1,430c + 70s (to be capitalized) + 285v + 215s.

Since 70 IIs has been directly annexed here to the IIc, a variable capital of 70:5, or 14, is required to set this extra constant capital in motion; this 14 has to come out of the 215 IIs, leaving 201 IIs, and we have:

II. (1,430 + 70c + (285v + 14v) + 201s.⁴⁷

After these preliminary specifications, capitalization can proceed. It is effected as follows. In Department I, the 500s that is capitalized is divided into ⅚ = 417c, and ⅙ = 83v. The 83v withdraws a similar amount from IIs, which in turn buys elements of constant capital, and is thus transformed into IIc. An increase of 83 in IIc entails a corresponding increase of ⅕ of 83 = 17. Thus, after these transactions, the following results are obtained:

I. (5,000c + 417s) + (1,000v + 83s)v = 5,417c + 1,083v	=	6,500
II. (1,500c + 83s) + (299v + 17s) = 1,538c + 316v	=	1,899
Total:		8,399

The capital in Department I has increased from 6,000 to 6,500, or by , and in Department II from 1715 to 1899, or by just under ⅑.

Reproduction on this basis gives the following results after one year:

I. 5,417c + 1,083v + 1,083s	=	7,583
II. 1,583c + 316v + 316s	=	2,215
Total:		9,798

If accumulation proceeds in the same proportions, then at the end of the second year the following equations obtain:

I. 5,869c + 1,173v + 1,173s	=	8,215
II. 1,715c + 342v + 342s	=	2,399
Total:		10,614

Similarly, by the end of the third year:

I. 6,358c + 1,271v + 1,271s	=	8,900
II. 1,858c + 371v + 371s	=	2,600
Total:		11,500

In three years the total social capital has increased from 6,000 I + 1,715 II = 7,715 to 7,629 I + 2,229 II = 9,858, and the total product has risen from 9,000 to 11,500.

Here accumulation proceeds uniformly in the two departments, unlike in the first example: from the second year on, half of the surplus value is capitalized, and half consumed, in Department I, as in Department II. Thus the arbitrariness of the first example would now appear to be due to the poorly chosen series of figures. Yet it still remains to be ascertained whether the smooth progress of accumulation in the present case represents something more than mathematical operations with cleverly chosen figures.

The general rule of accumulation that emerges from the first and second examples alike is the following: in order for accumulation to proceed at all, the second department must at all times expand its constant capital by as much as Department I increases (a) the portion of its surplus value that is consumed, and (b) its variable capital. This can be illustrated using the first year as an example. First of all, the constant capital of Department II must be increased by 70. What is the reason for this? It is due to the fact that this capital so far represents a value of only 1,430. If the capitalists of Department I wish to accumulate half of their surplus value and to consume the other half, then they require means of consumption for themselves and for their workers to the value of 1,500. They can obtain these from Department II only by exchanging their own product—i.e. means of production. However, since Department II could previously meet its requirements with means of production to the value of its constant capital (1,430), the exchange can only occur if Department II decides to increase its constant capital by 70, i.e. to expand its own production, which cannot be achieved other than through the capitalization of a corresponding part of its surplus value, which amounts to 285s in total. Of this sum, 70 must be transformed into constant capital. Here, then, the first step in the expansion of production in Department II is determined as the condition for and consequence of an expansion in the consumption of the capitalists in Department I. The analysis can now be continued. Thus far, the capitalist class of Department I was only authorized to spend half of its surplus value on its personal consumption. In order to capitalize the other half (500), it must divide it up at least according to the previous composition—i.e. it must transform 417 into constant capital, and 83 into variable capital. The first operation presents no difficulties: the capitalists of Department I possess an excess of 500 in their own product, which consists of means of production, whose natural form thus enables them to be incorporated directly into the process of production; thus an expansion of the constant capital of Department I is effected by drawing on a corresponding amount, in value terms, of this department’s own product. In order to make the corresponding 83 function as variable capital, however, means of subsistence to the same value are required for the newly employed workers. Here it becomes apparent for the second time that accumulation in Department I depends on Department II: Department I must obtain additional means of consumption for its workers to a value of 83 from Department II. Since this in turn can only take place through the exchange of commodities, this requirement of Department I can only be satisfied on the condition that Department II, for its part, undertakes to accept products from Department I, i.e. means of consumption, to the value of 83. Since it has no use for means of production other than to employ them in the production process, the upshot is that Department II in turn has an opportunity that simultaneously confronts it as a necessity: it can and must expand its constant capital, and more precisely by a value of 83, whereby a similar amount of the surplus value of this department is in turn withdrawn from the personal consumption of the capitalists and is instead used for capitalization. The second step in the expansion of the production of Department II is conditioned by the expansion of the variable capital in Department I. Now all the material conditions for accumulation in Department I are at hand, and expanded reproduction can proceed. By contrast, in Department II there has for now merely been a twofold expansion of constant capital. A corresponding increase in its workforce is therefore required if the newly acquired means of production are actually to be used. Assuming the previous ratio is maintained, a new variable capital of 31 is necessary for the new constant capital of 153. This means that a similar quantity must in turn be capitalized from surplus value. Accordingly, the personal consumption fund of the capitalists of Department II now consists of the remainder of the surplus value (285s) after deductions for the twofold increase of constant capital (70 + 83) and for the corresponding increase in variable capital (31)—i.e. in total, 184 in deductions, such that a value of 101 remains. After similar operations in the second year of accumulation, Department II divides its surplus value into 158 for capitalization and 158 for the consumption of the capitalists, in the third year these amounts are 172 and 170 respectively.

This process has been examined in such detail and retraced step by step because it demonstrates clearly that accumulation in Department II is completely dependent on and dictated by accumulation in Department I. Although this dependence is no longer expressed in arbitrary alterations in the division of the surplus value of Department II, as was the case in Marx’s first example of his schema, the fact of this dependence itself remains, even if surplus value is now neatly divided up into two halves—one-half for the purposes of capitalization, and one-half for personal consumption. Despite the fact that the capitalists of both departments have been put on an equal footing in numerical terms, it is clearly apparent that the whole movement of accumulation is initiated and actively driven by Department I, while Department II merely participates passively. This dependence is also expressed in the following precise rule: accumulation can only proceed in both departments simultaneously under the condition that the department of means of consumption increases its constant capital in a manner precisely corresponding to the expansion of the variable capital and the personal consumption fund of the capitalists of the department of means of production. This proportion (the increase in IIc = the increase in Iv + the increase in Isc)^* is the mathematical foundation of Marx’s schema of accumulation, regardless of which numerical proportions are chosen to exemplify it.

It must now be verified whether this strict rule of capitalist accumulation corresponds to the actual relations.

Let the analysis first return to simple reproduction. Marx’s schema, it will be recalled, went as follows:

I. 4,000c + 1,000v + 1,000s	=	6,000 means of production
II. 2,000c + 500v + 500s	=	3,000 means of consumption
Total:		9,000 total social production

Here, too, determinate proportions were established upon which simple reproduction rests. These proportions were the following:

1) The product of Department I equals (in value) the sum of the constant capitals of Departments I and II.

2) It follows from 1) that the constant capital of Department II equals the sum of the variable capital and the surplus value of Department I.

3) It follows from 1) and 2) that the product of Department II is equal to the sum of the variable capitals and the surplus value of both departments.

These relations of the schema correspond to the conditions of capitalist commodity production (reduced to simple reproduction, however). Thus, for example, proportion (2) is determined by commodity production, i.e. by the circumstance that the entrepreneurs of each department can only obtain the products of the other one through the exchange of equivalents. The variable capital and the surplus value of Department I are the expressions of this department’s requirements in means of consumption. These requirements must be satisfied from the product of Department II, yet they can only be obtained in exchange against products of Department I to the same value—i.e. means of production. Since Department II can do nothing else with this equivalent, owing to its natural form, than to use it as constant capital in the production process, this exchange determines the magnitude of the constant capital of Department II. If there were a disproportion here, e.g. if the constant capital of Department II (as a magnitude of value) were larger than I(v + s), then it could not be entirely transformed into means of production, for Department I’s requirements in terms of means of consumption would be too small. If the constant capital of Department II were less than I(v + s), then the workforce of this department could not be employed on the same scale as previously, or alternatively the capitalists would not be able to consume all of their surplus value. In each of these cases, the presuppositions of simple reproduction would be violated.

________________

*Surplus consumption.

These proportions are not mere mathematical exercises, however, nor are they merely conditioned by the commodity-form of production. A simple means can be employed to demonstrate this, imagining for a moment the socialist mode of production instead of the capitalist one, i.e. an economy regulated by planning, in which the social division of labor has come to replace exchange. In this society there would likewise be a division of labor into the production of means of production and the production of means of consumption. Let it be further assumed that the technical development of labor entails the following division: two-thirds of social labor is used for the production of means of production, and one-third for the production of means of consumption. Let it be also assumed that 1,500 units of labor (e.g. working-days, working-months, or working-years) are sufficient annually under these conditions for the maintenance of the entire part of society consisting of those who work, and more precisely, according to the following assumption: 1,000 of these units are allocated to the department of means of production, and 500 to that of means of consumption, such that each year means of production from preceding periods of labor are used that themselves represent the product of 3,000 labor units. This workload would not be sufficient for society, however, since the maintenance of all non-working members of society (in the material, productive sense)—children, the elderly, the sick, state officials, artists, and scientists—requires a significant additional quantity of labor. Furthermore, every civilized society requires a certain insurance fund as protection against natural disasters. Let it be assumed that the maintenance of all non-workers, together with the insurance fund, requires precisely as much labor again as for the maintenance of those who work, and thus also as many means of production. On the assumption of the figures given above, the following schema of regulated production is then obtained:

I. 4,000c + 1,000v + 1,000s = 6,000 means of production

II. 2,000c + 500v + 500s = 3,000 means of consumption

Here c stands for the material means of production used up, expressed in social labor-time; v expresses the labor-time socially necessary for the maintenance of those who work; and s expresses the labor-time socially necessary for the maintenance of non-workers and for the insurance fund.

An examination of the proportions of the schema now gives the following results. Commodity production does not exist here, and thus nor does exchange, although there is indeed a social division of labor. The products of Department I are allocated in the requisite quantities to those who work in Department II; the products of Department II are distributed to all working and non-working people (in both departments) and to the insurance fund—not, however, because the exchange of equivalents takes place, but because social organization directs the whole process through planning, because existing needs must be met, and because production indeed knows no other purpose than the satisfaction of social needs.

Nonetheless, the quantitative proportions retain their full validity. The product in Department I must equal Ic + IIc; this means simply that all the means of production used up annually by society in the labor process must be annually replaced by Department I. The product of Department II must equal the sum of I(v + s) + II(v + s): this signifies that as many means of consumption are produced annually by society as correspond to the needs of all of its working and non-working members, alongside reserves for the insurance fund. The proportions of the schema show themselves to be as natural and as necessary in a type of economy regulated by planning as in the capitalist economy, which is founded on commodity exchange and anarchy. This demonstrates the objective social validity of the schema—even if, as mere simple reproduction, it can only be conceived theoretically, and in practice can only occur exceptionally, both in capitalist society as in the regulated one.

A similar examination of the schema of expanded reproduction can now be attempted, imagining a socialist society, and basing the inquiry on the schema as given in Marx’s second example. From the standpoint of the regulated society, the question must naturally not be approached from Department I, but Department II. Let it be assumed that this society grows rapidly, with a concomitant increase in the means of consumption required by working and non-working people. These requirements grow so quickly, that—leaving temporarily to one side progress in the productivity of labor—a constantly growing amount of labor is necessary for the production of means of consumption. Let the requisite volume of means of consumption, expressed in terms of the social labor that they contain, increase year on year, say in the ratio 2,000—2,215—2,399—2,600, etc. Let it be assumed that, in order to produce this growing volume of means of consumption, means of production are technically required in increasing quantities, which, measured in social labor time, rise year on year in the following ratios: 7,000—7,583—8,215—8,900, etc. Let it be further assumed that for this expansion of production, the annual labor required is 2,570—2,798—3,030—3,284. {The figures correspond to the respective sums of I(v + s) + II(v + s).}^* Finally, let the labor performed annually be allocated such that half of it is always used for maintaining working people themselves, a quarter for maintaining those who do not work, and the final quarter for the purpose of expanding production the following year. In this way, the proportions of Marx’s second schema of expanded reproduction are obtained for a socialist society. In fact, an expansion of production in any society, even a planned economy, is only possible on the following three conditions, namely that:

1) The society has an increasing quantity of labor-power at its disposal.

2) The immediate maintenance of society does not take up the whole of its labor time in any given period of labor, so that part of this time can be devoted to making provisions for the future and its increasing requirements.

3) Means of production are produced in sufficiently increasing quantities year on year, without which a progressive expansion of production cannot be achieved.

________________

*This bracketed sentence is by Luxemburg.

In terms of these general considerations, Marx’s schema of expanded reproduction thus has objective validity—mutatis mutandis—for the regulated society, too.

The validity of the schema for the capitalist economy can now be examined. Here, the following question must be posed above all: what is the starting point for accumulation? It is from this standpoint that the interdependence of the accumulation process in both departments of production must be retraced. There can be no doubt that, in a capitalist economy, too, Department II is dependent on Department I insofar as the former’s accumulation relies upon the availability of a corresponding additional amount of means of production. Conversely, accumulation in Department I is contingent upon a corresponding additional quantity of means of consumption for the increased workforce. However, it in no way follows from this that it is sufficient that both conditions be met for accumulation to proceed in practice and to occur year on year quite automatically, as is the impression given by the Marxian schema. The conditions for accumulation given above are merely conditions without which accumulation cannot take place. The will to accumulate may well be as present in Department I as it is in Department II. However, the will to accumulate and the technical preconditions for accumulation are not sufficient in a capitalist commodity economy. For accumulation to actually occur—i.e. for production to be expanded—another condition must be fulfilled: the expansion of effective demand for commodities (i.e. demand backed by the ability to pay). What is the source of the constantly increasing demand underlying the progressive expansion of production in the Marxian schema?

This much is clear at once: it cannot come from the capitalists of Departments I and II themselves, i.e. from their own personal consumption. On the contrary, accumulation consists precisely in the fact that they do not consume a part of surplus value themselves (indeed this part is a constantly growing one, at least in absolute terms), but rather produce goods with it to be used by others. It is true that the personal consumption of the capitalists increases with accumulation, and it may even grow in value terms. In any case, however, only a part of surplus value is used for the consumption of the capitalists. The foundation of accumulation is precisely the non-consumption of surplus value by the capitalists. For whom is production by this other, accumulated part of surplus value? According to the Marxian schema, the movement has Department I as its starting point, the production of means of production. Who needs these additional means of production? The schema answers: Department II needs them, in order to be able to produce more means of consumption. Yet who needs these additional means of consumption? The schema answers: it is in fact Department I, because it now employs more workers. The argument is apparently going round in a circle. The production of more means of consumption merely in order to maintain more workers, and the production of more means of production merely in order to employ these additional workers, is an absurdity from the capitalist standpoint. For the individual capitalist, the worker is admittedly as good a consumer, i.e. a buyer of his commodity—in the case that he can pay for it—as a capitalist or anybody else. The individual capitalist realizes his surplus value just as much in the price of the commodity that he sells to the worker as he does in the price of the commodity that he sells to any other given purchaser. This is not so from the point of view of the capitalist class as a whole. The latter allocates to the working class a precisely determined part of the total social product that corresponds to the value of variable capital. When the workers buy means of consumption, then, they merely recompense the capitalist class for the sum of wages received from it, i.e. for their allocation corresponding to the value of variable capital. They cannot give back a brass farthing more, in fact they might instead give back a lesser amount, namely if they are able to “save” in order to become small entrepreneurs, which is, however, the exception rather than the rule. The capitalist class itself consumes a part of surplus value in the form of means of consumption and retains possession of the money reciprocally exchanged for these. Who, then, purchases the products from the capitalists in which the other capitalized part of surplus value is incorporated? The schema answers that a part is taken by the capitalists themselves insofar as they produce new means of production for the purposes of expanding production, and a part by the new workers required for the operation of these new means of production. However, in order to make new workers operate with new means of production, there must be—in a capitalist economy—a prior purpose for the expansion of production, a new demand for the products that are to be manufactured.

The answer might be given that the natural increase of the population creates this increasing demand. Indeed, the increase of the population and its needs formed the starting point of the hypothetical investigation of expanded reproduction in a socialist society. There, the needs of society provided sufficient foundation for expanded reproduction: the only purpose of production was to satisfy these needs. In capitalist society, the problem is a different one. In referring to an increasing population, exactly which population is meant? The Marxian schema supposes the existence of only two classes: capitalists and workers. The growth of the capitalist class is already implied in the increasing absolute magnitude of the part of surplus value entering into consumption. In any case, it cannot consume the surplus value entirely, for this would imply a reversion to simple reproduction. Only the workers remain. The working class grows naturally, too. Yet in itself, this growth, and the basis for increasing needs that it provides, does not concern the capitalist economy at all.

The production of means of consumption corresponding to Iv and IIv is not an end in itself, as it is in a society where working people and the satisfaction of their needs form the foundation of the economic system. In a capitalist economy, means of consumption are not produced in Department II because the working class of departments I and II must be fed. The opposite is true. The workers in departments I and II are able to feed themselves to the extent that their labor power can be valorized under the given market conditions. This means that it is not a given number of workers and their needs that form the starting point for capitalist production, but rather that these entities are themselves constantly fluctuating “dependent variables”—i.e. variables dependent on capitalist expectations of profit. The question is therefore whether the natural increase in the working population also implies an increase in effective demand over and above variable capital. This cannot be the case. In the above schema, the only source of money for the working class is variable capital. The increase in the workforce is thus already implicit in variable capital. It is one of two things, then: either wages are calculated such that they feed the next generation of workers, in which case this next generation cannot be counted again as the foundation for expanded reproduction; or this is not the case, and young workers, the next generation, must themselves work in order to receive wages and means of subsistence. Yet in this case the next generation of workers is in fact already included in the number of workers employed. The natural increase of the population thus cannot explain the accumulation process in the Marxian schema.

An objection can be made here, however. Society under the domination of capitalism does not consist merely of capitalists and wage-laborers. Apart from these two classes there remains a large mass of the population: landowners, salaried employees, the liberal professions (doctors, lawyers, artists, scientists), the Church with its servants, the clergy, and finally the state with its officials and armed forces. None of these strata of the population can be included under the categories of capitalists or wage-laborers. They must, however, be fed and maintained by society. It might be argued that it is the demand of these strata, apart from that of capitalists and workers, that makes expanded reproduction necessary. Yet, on further inspection, this way out is only an apparent one. The landowners are, as consumers of rent (i.e. of a part of capitalist surplus value), obviously to be counted as part of the capitalist class, since, as surplus value is being considered here in its undivided, primary form, their consumption is already accounted for in the consumption of the capitalist class. The liberal professions receive their monetary means—i.e. their allocation of a part of the social product—mostly directly or indirectly from the capitalist class, which compensates them with slivers of its surplus value. To this extent, the practitioners of these professions can be counted, in their capacity as consumers of surplus value, as part of the capitalist class. The same applies to the clergy, with the qualification that it also partly receives its means from the workers, or from the wages of workers. Finally, the state, with its officials and its armed forces, is maintained by taxes, but these are levied either on surplus value or on workers’ wages. In general, only two sources of revenue in society are acknowledged here—i.e. within the limits of the Marxian schema—workers’ wages and surplus value. Accordingly, all the strata of the population apart from the capitalists and the workers mentioned here can be considered merely as parasites on these two types of revenue. Marx himself rejects any reference to these “third parties” as purchasers as an attempt to evade the problem:

All members of society who do not figure directly in the reproduction process, whether as workers or not, can receive their share of the annual commodity product—i.e. their means of consumption—in the first instance only from the hands of those classes to whom this product firstly accrues—productive workers, industrial capitalists, and landlords. To this extent, their revenues are, in a material sense, derived from wages (the wages of the productive laborers), profit, and ground rent, and hence appear, in contrast to these original revenues, as derivative. On the other hand, however, the recipients of these derivative revenues, in the sense just given, draw them by way of their social functions as king, priest, professor, prostitute, soldier, etc., and they can therefore view these functions of theirs as the original source of their revenue.⁴⁸

Marx comments on the reference to the consumers of interest and ground rent as purchasers as follows:

If the part of the surplus value in commodities that the industrial capitalist has to deduct as ground rent or interest for other persons with a claim on surplus value cannot be realized in the long run by the sale of the commodities themselves, there is then an end to the payment of rent and interest, and the landlords or the recipients of interest cannot serve as dei ex machina for the arbitrary realization of certain portions of annual reproduction. It is just the same with the expenditures of all so-called unproductive laborers, state officials, doctors, lawyers, etc., and others who, in the form of the “general public,” perform “services” for the political economists by explaining what they leave unexplained.⁴⁹

Since in this manner there are absolutely no obvious purchasers to be found within capitalist society for the commodities containing the accumulated part of surplus value, only one outlet remains: foreign trade. However, several objections arise to this method of considering foreign trade as a convenient dumping ground for commodities that are otherwise superfluous in the reproduction process. The recourse to foreign trade merely attempts to circumvent the problem confronted in the analysis by transferring it from one country to another, without solving it. The analysis of the process of reproduction does not refer to a single capitalist country alone, but to the capitalist world market, which encompasses all countries as its internal market. Marx underscores this emphatically in the first volume of Capital in dealing with accumulation: “Here we take no account of the export trade, by means of which a nation can change articles of luxury either into means of production or means of subsistence, and vice versa. In order to examine the object of our investigation in its integrity, free from all disturbing subsidiary circumstances, we must treat the whole world as one nation, and assume that capitalist production is established everywhere and has taken possession of every branch of industry.”⁵⁰

The analysis presents the same difficulty if the question is approached from another angle. The Marxian schema of accumulation presupposes that the part of social surplus value that is to be capitalized comes into the world already in the natural form that determines and permits its use for the purposes of accumulation: “In a word, surplus value can be transformed into capital only because the surplus product, whose value it is, already comprises the material components of a new quantity of capital.”⁵¹ Expressed in the figures of the schema:

I. 5,000c + 1,000v + 1,000s = 7,000 means of production

II. 1,430c + 285v + 285s = 2,000 means of consumption

Here 570s of surplus value can be capitalized, because it already consists of means of production; this amount of means of production corresponds to an additional quantity of means of consumption to the value of 114s, however, such that a sum of 684s can be capitalized. Yet here the assumed process, which simply converts the corresponding means of production into constant capital and means of consumption into variable capital, contradicts the foundations of capitalist commodity production. Surplus value, in whichever natural form it might be contained, cannot be directly transferred to the point of production for accumulation, but it must first be realized, transformed into money.⁵² The 500s surplus value of Department I could be capitalized, but it must first be realized; it must first shed its natural form and assume its pure value-form, before it can be transformed into capital once more. This applies to every individual capitalist, but is also valid for the total social capitalist, for the realization of surplus value in a pure value-form is one of the fundamental conditions of capitalist production, and in considering reproduction from the point of view of society,

It is necessary to avoid falling into the habits of bourgeois economists, as imitated by Proudhon, i.e. to avoid looking at things as if a society based on the capitalist mode of production lost its specific historical and economic character when considered en bloc, as a totality. This is not the case at all. What we have to deal with is the collective capitalist.⁵³

Thus surplus value must necessarily pass through the money-form, it must first divest itself of its form as surplus product, before it assumes the latter once more for the purposes of accumulation. Who and what are the purchasers of the surplus product of departments I and II? Merely to realize the surplus value of departments I and II, there must be a market beyond these departments, according to the arguments presented above. Without this additional market, surplus value could not be transformed into money. So that this realized surplus value can also be used for the expansion of production, i.e. for accumulation, there must be the prospect of an even bigger market, which must likewise lie outside of departments I and II. This market for the surplus product must thus expand each year by the rate at which surplus value is accumulated each year. Alternatively, to put it the other way round: accumulation can only occur in proportion to the growth in the market beyond departments I and II.