On the So-Called Market Question

Lenin elaborated on the “market question” debate between Russian Marxists and liberal Narodniks, written in the fall of 1893, published in the 1937 issue of the journal Bolshevik issue No. 21. Chinese translation was included in Vol. 2, the second revised edition of Complete Works of Lenin.

The period of 1890s was the most intense period of debate between Russian Marxists and liberal Narodniks. The debate on “market issues” was based on the assumption that “capitalist mode of production achieves complete domination on a global basis” therefore “the issue” was whether it was “possible” for capitalism to develop fully in Russia. Narodnik theorists generally question whether capitalism can develop in Russia. They believe that the development of capitalism needs an extensive domestic market, while the increasing poverty of Russian people means the complete shut-down of the market, rendering the capitalist mode of production impossible to implement. Relying on the poor remnants of the natural economy of indigent peasants, it is impossible to develop the powerful capitalist production in Russia like that in Western Europe. Their conclusion is that capitalism in Russia is a weak, groundless vision, which can not cover all domestic production and become the economic basis of Russian society. Lenin argued that “the absence of a market is one of the principal arguments invoked against the possibility of applying the theory of Marx to Russia.” In his polemic against Narodniks, L.B. Krasin wrote the article “The Market Question”, trying to explain Marx’s reproduction theory and market principles, but he deviated from the Marxist position and adopted a dogmatic attitude. In order to refute the wrong views of Narodniks and correctly explain Marx’s theory of reproduction of social capital, comprehensively describe the relationship between market and production, and the social structure of Russia, Lenin wrote the article “On the So-Called Market Question”, later the viewpoints in this article were more fully elaborated in the later article titled “The Development of Capitalism in Russia”.

The book is divided into eight sections, the first section of which puts forward the relationship between market problems and the development of Russian capitalism. Section 2 and section 3, while correcting Krasin’s wrong views, expound Marx’s theory on reproduction and circulation of social capital. From section 4 to section 7, the author criticizes Krasin’s wrong views on the formation of capitalism, discusses how and where capitalism came into being in Russia, and described the transformation process from natural economy to capitalist economy and its relationship with the market. Section 8 criticizes the Narodnik economist Nikolai Danielson’s fallacy about the shrinkage of Russia’s domestic market.

The book mainly involves three theoretical issues: The theory of social capital reproduction, the theory of market and the development of Russian capitalism.

In relation to the theory of the reproduction of social capital, Lenin elaborated on the difference between his understanding of Marx’s “formula for exchange between the two main categories in the process of the reproduction of total social capital” and that of Krasin, the author of “The Market Question”. Krasin cut off the relationship between production and consumption, arguing that capital accumulation did not depend on any direct consumers and that social production would grow without any stagnation in the production of the means of consumption, relying solely on the means of production that produced the means of production. Lenin argued that this understanding was wrong, and that the only correct conclusion to be drawn from Marx’s formula was that in capitalist society the production of the means of production grows faster than the production of the means of consumption, a conclusion based directly on the principle that “capitalist production attains an immeasurably higher technical level than production in previous times”.

In response to the Narodik views on the “market question”, Lenin pointed out that understanding how capitalism develops in general, and universally cannot solve the problem of the possibility (and inevitibility) of the development of Russian capitalism. Krasin has developed his own diagram of “capitalism developing in breadth” in Russia but since it starts from an abstract and universalist approach, Krasin’s critique against the Narodnik ideas cannot succeed instead his conclusions arrive at a point which is completely consistent with the prevalent Narodnik views. By examining the six historical stages of division of labor, Lenin explained the relationship between division of labor and market, in consecutive periods: (1) In the era of natural economy, products do not enter the market at all; (2) The emergence of social division of labor inevitably leads to commodity production; (3) The strengthening of the division of labor leads to the expansion of the market; (4) The formation of capitalist production and labor becoming commodity goes hand in hand; (5) The differentiation of commodity producers also spreads to the agricultural industry sector, and the agricultural product market expands; (6) The specialisation of occupations, i.e., the division of social labor, is completed. All branches of industry have separated, and have become the speciality of separate producers. The wage-workers have completely lost their independent farms and subsist entirely on wage-labor.

The result is the development of capitalism and independent farming on one’s own account has been fully eliminated. It is pointed out that the concept of “market” is completely inseparable from the concept of social division of labor. Where there is social division of labor and commodity production, there is market; where there is social division of labor and commodity production, there is market. There is an inseparable relationship between market expansion and on the other side the degree of specialization of social labor.

Lenin discussed the development of capitalism in Russia from many aspects.

Lenin disagreed with Krasin’s view that the development of capitalism would be hindered when the direct producer turned into the commodity producer, and that Krasin’s view obliterated the fact that the capitalist factors originate from the small commodity economy. Lenin expounded the concepts of commodity production and capitalist production, pointed out to the inherent relations and differences between them, and demonstrated the principles of transformation from natural economy to commodity economy and from commodity economy to capitalist economy. Lenin pointed out that in the historical development of capitalism, there are two important keys: Firstly, the natural economy of direct producers is transformed into commodity economy; second, the commodity economy changes to capitalist economy. The first transformation occurs due to the emergence of social division of labor; the second transformation occurs due to the capitalist differentiation caused by the relationship between the law of value and competition when individual producers produce goods for the market, which causes the rise of a few people who become rich peasants or factory owners, while the majority of people are bankrupt and become wage laborers. Lenin elucidated the process of the formation of capitalism in Russia, taking into account the actual situation and materials of the Russian social economy, thus making Marx’s doctrine of the emergence of capitalism more concrete.

Lenin pointed out that “the impoverishment of the masses” (that indispensable point in all the Narodnik arguments about the market) not only does not hinder the development of capitalism, but, on the contrary, is the expression of that development, is a condition of capitalism and strengthens it. Capitalism needs the “free laborer”, and impoverishment consists in the petty producers being converted into wage-workers.

In response to the populist claim that the “impoverishment of the masses” was making capitalism untenable in Russia, Lenin pointed out that this not only did not hinder the development of capitalism, but on the contrary, it itself reflected the development of capitalism, was a condition for its existence and was strengthening it. Capitalism needs “free workers” and impoverishment lies in the transformation of small producers into wage workers. The masses became poor while a few exploiters became rich, small enterprises went bankrupt and declined while larger ones strengthened and developed; both processes contributed to the expansion of the market. Lenin dismissed as “nonsense” the populist view that Russian capitalism was absurd, that it could only bankrupt the people and not provide a superior organisation of production. Lenin argued that the replacement of manual labor by machine labor was not only not “absurd” but, on the contrary, was an expression of the whole progressive role of human technology.

Lenin refuted the Narodnik view that capitalism cannot become universal in Russia, and pointed out that the main phenomenon in Russia’s contemporary social economy is the differentiation of small producers. It is the commodity economy which splits Russian “community” peasants, too, into a bourgeoisie and a proletariat. This shows that capitalism and mass impoverishment, far from precluding, actually conditions each other, and irrefutably proves that capitalism is already the main background of the economic life of Russia.

The “On the So-Called Market Question” is an important work of Lenin’s early period. Based on the fundamental theory of Marx, combined with the reality of Russian economic and social life, the full text analyzes and criticizes the views of Narodniks on various levels, which is of great significance to understand the social structure of Russia at that time.