The Accumulation of Capital. Rosa Luxemburg
these, there is no component of value which corresponds to the constant capital used in production. According to Smith, v + s is the formula expressing the value of the capitalist product as a whole. Demonstrating his view with the example of corn, Smith says as follows:
‘These three parts (wages, profit, and rent) seem either immediately or ultimately to make up the whole price of corn. A fourth part, it may perhaps be thought, is necessary for replacing the stock of the farmer, or for compensating the wear and tear of his labouring cattle, and other instruments of husbandry. But it must be considered that the price of any instrument of husbandry, such as a labouring horse, is itself made up of the same three parts: the rent of the land upon which he is reared, the labour of tending and rearing him, and the profits of the farmer who advances both the rent of this land and the wages of this labour. Though the price of the corn, therefore, may pay the price as well as the maintenance of the horse, the whole price still resolves itself either immediately or ultimately into the same three parts of rent, of labour and profit.’[62]
Sending us in this manner ‘from pillar to post’, as Marx has put it, Smith again and again resolved constant capital into v + s. However, he had occasional doubts and from time to time relapsed into the contrary opinion. He says in the second book:
‘It has been shown in the first Book, that the price of the greater part of commodities resolves itself into three parts, of which one pays the wages of the labour, another the profits of the stock, and a third the rent of the land which had been employed in producing and bringing them to market.... Since this is the case ... with regard to every particular commodity, taken separately; it must be so with regard to all the commodities which compose the whole annual produce of the land and labour of every country, taken complexly. The whole price or exchangeable value of that annual produce must resolve itself into the same three parts, and be parcelled out among the different inhabitants of the country, either as the wages of their labour, the profits of their stock, or the rent of their land.’[63]
Here Smith hesitates and immediately below explains: ‘But though the whole value of the annual produce of the land and labour of every country is thus divided among and constitutes a revenue to its different inhabitants, yet as in the rent of a private estate we distinguish between the gross rent and the neat rent, so may we likewise in the revenue of all the inhabitants of a great country.
‘The gross rent of a private estate comprehends whatever is paid by the farmer; the neat rent, what remains free to the landlord after deducting the expense of management, of repairs, and all other necessary charges; or what, without hurting his estate, he can afford to place in his stock reserved for immediate consumption, or to spend upon his table, equipage, the ornaments of his house and furniture, his private enjoyments and amusements. His real wealth is in proportion, not to his gross, but to his neat rent.
‘The gross revenue of all the inhabitants of a great country comprehends the whole annual produce of their land and labour; the neat revenue, what remains free to them after deducting the expense of maintaining, first, their fixed, and secondly, their circulating capital, or what, without encroaching upon their capital, they can place in their stock reserved for immediate consumption, or spend upon their subsistence, conveniences, and amusements. Their real wealth too is in proportion, not to their gross, but to their neat revenue.’[64]
Here Smith introduces a portion of value which corresponds to constant capital, only to eliminate it the very next moment by resolving it into wages, profits, and rents. And in the end, the matter rests with this explanation:
‘As the machines and instruments of trade, etc. which compose the fixed capital either of an individual or of a society, make no part either of the gross or the neat revenue of either, so money, by means of which the whole revenue of the society is regularly distributed among all its different members, makes itself no part of that revenue.’[65]
Constant capital, the fixed capital of Adam Smith, is thus put on the same level as money and does not enter into the total produce of society, its gross revenue. It does not exist within this total product as an element of value.
You cannot get blood out of a stone, and so circulation, the mutual exchange of the total product constituted in this manner, can only lead to realisation of the wages (v) and of the surplus value (s). However, as it cannot by any means replace the constant capital, continued reproduction evidently must become impossible. Smith indeed knew quite well, and did not dream of denying, that every individual capitalist requires constant capital in addition to his wages fund, his variable capital, in order to run his enterprise. Yet the above analysis of commodity prices, when it comes to take note of capitalist production as a whole, allows constant capital to disappear without a trace in a puzzling way. Thus the problem of the reproduction of capital is completely muddled up. It is plain that if the most elementary premise of the problem, the demonstration of social capital as a whole, were on the rocks, the whole analysis was bound to fail. Ricardo, Say, Sismondi and others took up this erroneous theory of Adam Smith, and they all stumbled in their observations on the problem of reproduction over this most elementary difficulty: the demonstration of social capital.
Another difficulty is mixed up with the foregoing from the very outset of scientific analysis. What is the nature of the total capital of a society? As regards the individual producer, the position is clear: his capital consists of the expenses of his enterprise. Assuming capitalist methods of production, the value of his product yields him a surplus over and above his expenses, that surplus value which does not replace his capital but constitutes his net income, which he can consume completely without encroaching upon his capital and which is thus his fund of consumption. It is true that the capitalist may save part of this net income, not consuming it himself but adding it to his capital. But that is another matter, a new step, the formation of a new capital which again must be replaced by subsequent reproduction and must again yield him a surplus. In any case, the capital of an individual always consists of what he requires for production, together with his advances on the running of his enterprise, and his income is what he himself actually consumes or may consume, his fund of consumption. If we ask a capitalist: ‘What are the wages you pay your workers?’ his answer will be: ‘They are obviously part of my working capital.’ But if we ask: ‘What are these wages for the workers who have received them?’—it is impossible that he should describe them as capital, for wages received are not capital for the workers but income, their fund of consumption.
Let us now take another example. A manufacturer of machinery produces machines in his factory. The annual output is a certain number of machines. In its value, however, this annual output contains the capital advanced by the manufacturer as well as the net income that has been earned. Part of the manufactured machines thus represent income for the manufacturer and are destined to realise this income in the process of circulation and exchange. But the person who buys these machines from the manufacturer does not buy them as income but in order to use them as a means of production; for him they are capital.
These examples make it seem plausible that an object which is capital for one person may be income for another and vice versa. How can it be possible under these circumstances to construct anything in the nature of a total capital of society? Indeed almost every scientific economist up to the time of Marx concluded that there is no social capital.[66] Smith was still doubtful, undecided, vacillating about this question; so was Ricardo. But already Say declared categorically:
‘It is in this way, that the total value of products is distributed amongst the members of the community; I say, the total value, because such part of the whole value produced, as does not go to one of the consuming producers, is received by the rest. The clothier buys wool of the farmer, pays his workmen in every department, and sells the cloth, the result of their united exertion, at a price that reimburses all his advances, and affords himself a profit. He never reckons as profit, or as the revenue of his own industry, anything more than the net surplus, after deducting all charges and outgoings; but those outgoings are merely an advance of their respective revenues to the previous producers, which are refunded by the gross value of the cloth. The price paid to the farmer for his wool is the compound of the several revenues of the cultivator, the shepherd and the landlord. Although the farmer reckons as net produce only the