A Note on the Question of the Market Theory (Apropos of the Polemic of Messrs. Tugan-Baranovsky and Bulgakov)

Lenin’s work on the mistaken views of the “legal Marxists”. written at the end of 1898 and published in the first issue of the Scientific Review Magazine in January of the following year, the article was signed as Vladimir Ilyin. The Chinese translation is included in Vol. 4 of the second edition of the Complete Works of Lenin.

“Legal Marxists” opposed the Tsarist autocratic system and criticized Narodnism in their early days; Revolutionary Marxists (including Lenin) once cooperated with them temporarily and conditionally to jointly oppose Narodnism and in order to expand the influence of Marxism. Later, “legal Marxists” accepted Bernstein’s doctrine one after another, and theoretically denied the independence of socialism, and they tried their best to control the labor movement and serve the interests of the bourgeoisie. “Legal Marxists” put on the cloak of Marxism, adopted certain Marxist phrases and literature, but in fact they moved towards the opposite of Marxism — distorting and denying the basic theories of Marxism; their representatives included Tugan-Baranovsky and Bulgakov who respectively discussed in their books the Industrial Crises in Modern England and the Markets Under Capitalist Production which discussed the “market question”, and criticized the Narodniks’ market theory. At the same time, there was also a fierce debate between the two (Tugan-Baranovsky and Bulgakov), in which there was the phenomenon of distorting and denying the principles of Marxist political economy. Lenin firmly refuted “legal Marxists” when he was in the Siberian exile, and his critique was presented in A Note on the Question of the Market Theory (Apropos of the Polemic of Messr.s Tugan-Baranovsky and Mr. Bulgakov).

There are seven sections in this article, and the main points are as follows:

Whether Tugan-Baranovsky copied Marx’s theory of the role of foreign markets in capitalist economies. Tugan-Baranovsky talked about the role of foreign markets in the capitalist countries, and claimed that “this exposition is not copied from Marx”, because Marx “did not touch at all on the question of foreign markets in Vol. 2 of Capital. Lenin compares the original passages of Marx’s Capital with Tugan-Baranovsky’s point of view, and points out that in the second Vol. of Capital, “Product Realization”, that is the third chapter, Marx “very definitely explains the relationship of foreign trade and, consequently, of the foreign market, to this question “the realization of the product”: “Capitalist production does not exist at all without foreign commerce.” Tugan-Baranovsky said that each and every country that exports products abroad have an absolute need for foreign markets. In fact, Marx said that in analyzing realization, foreign trade must not be taken into consideration, since it only replaces one article by another; while Tugan-Baranovsky said that a country importing goods must export them, that is, this country must have a foreign market. Lenin argued that Tugan-Baranovsky made only simple changes in terms of Marx’s principle, which was a plagiarism from Marx’s theory.

On how to evaluate Marx’s Capital. According to Tugan-Baranovsky, Vol. 2 and Vol. 3 of Capital are far from complete manuscripts, and no conclusion can be drawn from Vol. 3. Lenin retorted that in Vol. 3, the chapter “Concerning the analysis of the process of production” is the conclusion of Vol. 2. The analysis result is used to solve the important question of the forms of social revenue in capitalist society. Tugan-Baranovsky said that the explanations of the realization theory (and market theory) in Vol. 3 and Vol. 2 are contradictory and conflicting. which Lenin refuted. Lenin argued that in the contradiction as understood by Tugan-Baranovsky, “Marx is here merely substantiating that inherent contradiction of capitalism which he indicated in other places in Capital”. “that is, the contradiction between the tendency toward the unlimited expansion of production and the inevitability of limited consumption (as a consequence of the proletarian condition of the mass of the people)”, which is also the only conclusion drawn from the analysis of the reproduction and circulation process of the total capital in the capitalist society in the second and third Volumes of Capital, and this contradiction is inherent in the capitalist society. We have no right to look for some other meaning in his words Lenin pointed out that this contradiction is not interpreted as the lack of progress in capitalism like the Narodniks. It just shows us the temporary nature of capitalism and the inevitability of its replacement by higher forms.

On how to understand the theoretical problems of those economists before Marx. Bulgakov accused Tugan-Baranovsky, saying that his evaluation of the pre-Marx market theories of economists was incorrect; Tugan-Baranovsky, on the other hand, accused Bulgakov for uprooting Marx’s ideas from the scientific soil in which they grew and of picturing matters as though Marx’s views had no connection with those of his predecessors. Lenin argued that “this accusation by Tugan-Baranovsky is absolutely groundless.” He also pointed out that Tugan-Baranovsky and Bulgakov both ignored Adam Smith’s theoretical views when discussing this issue of market theory. Lenin added: it was before Marx that A. Smith had divided the social product into variable capital and surplus-value according their values when he talked about the market theory (he missed constant capital, mistakenly), and divided them into means of production and articles of consumption according to material form, which is the important and deep-rooted theory that must be mentioned when talking about realization. In fact, it was precisely because Tugan-Baranovsky ignored A. Smith’s theory that he undermined the major mistakes when describing the views of the later subsequent economists.

On the question of how to understand the numerical formula and its meaning. Bulgakov asserted that Tugan-Baranovsky’s formula “due to its departure from the scheme”, that is from Marx’s scheme, “to a great extent lose its power of conviction and do not explain the process of social reproduction”. Tugan-Baranovsky argued that Bulgakov did not properly understand the real intentions of such schemes. But, Lenin argued that it was Mr. Bulgakov who was on the right side on this issue. Tugan-Baranovsky put forward far less convincing formulas than Marx, but lacked the theoretical explanation of the elements of the process that they were supposed to illustrate or Tugan-Baranovsky could not correctly understand Marx’s principles of political economy. On the contrary, Bulgakov’s exposition of Marx’s theory was much clearer and more correct than Tugan-Baranovsky’s.

On the question of how to understand the “differences in the turnover of capital” and the “wage fund”. Lenin thought that the issues of “differences in the turnover of capital” and the “wage fund” discussed in Bulgakov’s book were the least successfully written. This is because Bulgakov either adds to or modifies Marx’s theory in his conclusions on these two issues, and his judgement on these issues runs counter to Marx. By commenting on the polemics between Bulgakov and Tugan-Baranovsky, Lenin criticized their distortion and falsification of Marxist political and economic theory and expounded on Marx’s scientific market theory. After that, Lenin published his articles such as the “Once More on the Theory of Realisation” and “Reply to Mr. P. Nezhdanov” in the journals of Nauchnoye Obozreniye and Zhizn respectively and continued to refute the distortion of Marxist economic theory by “legal Marxists”.

For example, in the article “Once More on the Theory of Realization”, Lenin pointed out that Struve confused Marx’s theory of realization with the market theory of bourgeois economists, Struve also confuses their abstract theory of realization (with which his opponents has dealt exclusively) with concrete historical conditions governing the realization of the capitalist product in a certain country and in a certain epoch, as well as Struve wrongly names Marx’s theory of realization as the theory of  proportional distribution, and so on. It was in this struggle against the thoughts of the petty bourgeoisie and the bourgeoisie in all its forms that Lenin upheld and adhered to the principles of Marxist political economy.