Defense and Development of Theory of Reproduction of Social Capital

Lenin expounded on the theory of reproduction of social capital in the struggle against Russian Narodnism and against “Legal Marxism”.

In the 1890s, the liberal Narodniks and “Legal Marxists” in Russia, launched a fierce debate on the so-called market issue, centering on the fate of capitalism in Russia, they have distorted and attacked Marx’s reproduction theory, which caused great theoretical confusion. According to the needs of the Russian proletarian revolution at that time, Lenin refuted all kinds of absurd arguments of both Narodniks and “Legal Marxists” in his works such as “On the So-called Market Question”, “A Characterisation of Economic Romanticism”, “The Development of Capitalism in Russia”, “A Note on the Question of Market Theory” and “Once More on the Theory of Realization” basing himself on Marx’s reproduction theory.

The problems of the composition of total social products, the principle of faster (or preferential) growth of means of production, the realization of total social products and foreign market problems, the contradictions and economic crisis in the process of capitalist reproduction, and so on. On the significance of Marx’s theory of social capital reproduction, Lenin defended and creatively developed Marxist reproduction theory.

Liberal Narodniks regarded the value of total social products as variable capital and surplus value, and regarded them as consumer goods. Lenin argued that the principle of the composition of total social products is the basic premise and important component of Marx’s theory of reproduction, and the key to correctly explain the reproduction and circulation process of social capital. In his work “The Development of Capitalism in Russia”, Lenin pointed out that Marx’s theory is based on two principles: Firstly, the total social product of capitalist countries, like each individual commodity, is composed of three parts: (1) constant capital; (2) variable capital; (3) surplus-value.

The second principle is that capitalist production must be divided into two categories. The first category is the production of means of production, that is, the production of goods used for production and consumption, which are not used for human consumption, but for capital consumption; The second category is consumer goods, that is, the production of goods for personal consumption.

He also pointed out in “Once More on the Theory of Realization”: “Marx divides the aggregate social product into two departments according to the natural form of the product: I—means of production and II—articles of consumption. In each of these departments the product is divided into three parts according to elements of value: (1) constant capital, (2) variable capital, (3) surplus-value.” Lenin’s clear and brief summary of Marx’s principle of the composition of the total products of capitalist society is a powerful criticism of the erred views of the Narodniks on this issue.

When studying and analyzing the capitalist expansion of reproduction, Lenin introduced the social reproduction theory into the situation that the organic composition of capital increased due to technological progress, and drew the conclusion that the growth rate of means of production is faster than that of consumption. Lenin divided the first category of means of production into means of production for means of production and means of production for means of consumption, and at the same time, it is pointed out that the means of production of the means of production which makes the means of production grow faster than that of the means of production which makes the means of consumption. With the development of capitalist productive forces and the progress of technology, machine production replaces manual labor. In the process of social capital expansion and reproduction, the demand for means of production is bound to be more and more. It is an objective law that people’s subjective will does not change. “The whole meaning and significance of this law of the more rapid growth of means of production lies in the one fact that the replacement of hand by machine labor — in general the technical progress that accompanies machine industry — calls for the intense development of the production of coal and iron, those real ‘means of production as means of production’.” As a result, “an ever larger place is taken in the country’s total production by machines and the articles needed for their manufacture”. Lenin also further discussed the dialectical relationship between production of means of production and production of means of consumption. It is considered that the production of means of production cannot be isolated from the corresponding growth of means of consumption, and one-sided and faster growth, with the growth of the means of production, only when the means of consumption increase correspondingly can the reproduction of social capital proceed smoothly.

The Narodniks and the “Legal Marxists” advovated that the realization of the total product of capitalist society must have foreign market, otherwise the surplus value occupied by capitalists cannot be realized, and thus the total social product cannot be realized. In response to these erroneous views, Lenin pointed out: “If we are not limited to the domestic market (‘self-sufficient’ capitalism), but based on the foreign market, if we are not thinking of one country but several countries, then what changes will happen to the realization problem? If we think that capitalists will not throw their goods into the sea or give them to foreigners for nothing, if we leave aside individual, special circumstances or periods, then it is obvious that we should recognize that there is a considerable balance between output and import. If a country exports a certain product and realizes it on the world economic stage, it will also import other products. From the standpoint of the theory of realisation it must necessarily be accepted that ‘foreign commerce only replaces home products [Artikel—goods] by articles of other use or bodily form’. Whether we take one country or a group of countries, the essence of the process of realisation does not change in the slightest”. He also pointed out that the realization of total social products has nothing in common with foreign markets. The abstract problems related to the whole theory of capitalism, whether in a country or in the world, the basic law of realization revealed by Marx is still the same. But “the problem of foreign trade or of the foreign market is an historical problem, a problem of the concrete conditions of the development of capitalism in some one country and in some one epoch”. That is to say, the realization of social products and foreign markets are two problems that are different from each other. The introduction of foreign market into the theory of realization does not change the essence of the problem of realization. It will only expand the scope of realization from one country to the world. Lenin pointed out that the reason why capitalism needs foreign markets is to realize surplus value or total social products. From the perspective of the emergence and development of capitalism, social reproduction objectively requires that all departments must maintain a certain proportion. However, the capitalist production under the state of competition and anarchy will inevitably destroy this proportion relationship. Therefore, the more developed production departments have to seek foreign markets. At the same time, capitalist reproduction is characterized by the unlimited expansion of production scale under the condition of continuous technological progress. It is bound to break through the boundaries of local and domestic markets and seek foreign markets. Lenin answered the question that the realization of the total products of capitalist society must be separated from the foreign market, and affirmed that the foreign market is necessary for the development of capitalist economy. This not only maintains the scientific nature of Marx’s theory of reproduction, but also correctly explains the reality of capitalism and defends and develops Marx’s theory of reproduction.

Marx’s theory of reproduction and circulation of social capital is a comprehensive analysis of the internal restriction and interdependence of capitalist production and reproduction, as well as the contradictions in the process of commodity circulation and realization, revealing the antagonistic contradictions in capitalist reproduction. When talking about the conditions of reproduction under the capitalist system, Marx said that these conditions would “change into the same number of conditions causing process disorder, and into the same possibility of crisis; for in this spontaneous form of production, balance itself is an accidental phenomenon”. Aiming at the attack and misinterpretation of Marxist economic crisis theory by liberal Narodniks and “Legal Marxists”, Lenin pointed out: “Inherent in capitalism, on the one hand, is the tendency toward the limitless expansion of productive consumption, toward the limitless expansion of accumulation and production, and, on the other, the proletarisation of the masses of the people that sets quite narrow limits for the expansion of individual consumption. It is obvious that we have here a contradiction in capitalist production.” In the process of capitalist expansion and reproduction, the means of production grew faster than the means of consumption. On the one hand, it provided favourable conditions for the development of capitalist production, on the other hand, it further deepened the contradiction between capitalist production and consumption, “the indication of these contradictions merely explains to us the historically transitory nature of capitalism, explains the conditions and causes of its tendency to go forward to a higher form”. This means that capitalism must be transformed into a higher social form.