p Lenin investigates the problem of capitalist reproduction in, for example: "On the So-Called Market Question”, "A Characterisation of Economic Romanticism”, "The Development of Capitalism in Russia”, "Once More on the Theory of Realisation”, and "Reply to Mr. P. Nezhdanov".

p Lenin’s first approach to the market question is already distinguished by its creative character and his deep understanding of the way the Marxist theory of realisation should be applied to the concrete historical conditions of the Russia of the 18905.

p Lenin makes a clear distinction between market conditions under full capitalism and those obtaining when capitalism is only just developing. In the concrete conditions of Russia in the early nineties, the question was not only that of the relationship between the two departments of social production but, first and foremost, it was a question of whether or not fully developed capitalism was “possible” in Russia.

p The economist G. B. Krasin, though he made use of Chapter 2 i of Volume II of Capital and Marx’s well-known scheme showing the conditions of simple and extended reproduction under developed capitalism, could get no nearer the solution of the main question occupying the minds of Russian Marxists and their adversaries, namely, the question of the destiny of development of capitalism in Russia. Lenin, in his polemics with G. B. Krasin in "On the So-Called Market Question”, wrote, "evidently, the explanation of how capitalism develops in general does not in the least help to clear up the question of the ’possibility’ (and necessity) of the development of capitalism in Russia".  [82•1 

p In order to solve this central question Lenin turns to the problem of the social division of labour that provides the basis for all commodity production. He first of all shows the dependence of the size of the market on the degree of specialisation of social labour. Lenin draws up his own scheme to illustrate not the relationship between the two departments of social production but that between the two stages in the development of capitalism: i) the transformation of the natural economy of direct producers into a commodity economy, and 2) the transformation of simple commodity production into capitalist production. Lenin’s scheme  [82•2  shows that the disintegration of natural economy and the transformation of a certain section of simple producers into capitalists and of a much larger section into hired hands, led, even with the same volume of production, to a sixfold increase in the size of the market (from 6 units to 36 units), and the share of production covered by the market grew from 1/9 to 2/3.  [82•3 

p These facts led Lenin to the following conclusion: "...the limits of the development of the market, in capitalist society, are set by the limits of the specialisation of social labour. But this specialisation, by its very nature, is as infinite as technical developments."  [82•4 

p Lenin based his analysis of the realisation, or market question, on the following four premises:

p 1) The social division of labour is the basis of the development of both simple commodity and capitalist production.

p 2) The development of commodity production means the separation of an ever larger part of the population from 83 agriculture, that is, the growth of the industrial population at the expense of the agricultural population.

p 3) The ruin of small producers by the development of commodity production and capitalism results in the expansion of the home market, rather than in its shrinking. The ruined peasant who used to live by working on his farm, lives now by selling his hands, and has to buy necessary consumer goods (though of lower quality and in less quantity). As for the means of production which the peasant is forced to relinquish, they are concentrated in the hands of a minority, turned into capital and their products sent to the market. Thus the impoverishment of the people and the development of capitalism not only do not exclude one another but necessarily entail one another.

p 4) The growth of capitalist production and, consequently, of the home market does not so much involve the growth of consumer goods as the growth of means of production. In other words the growth of the production of means of production exceeds that of consumer goods.

p Lenin constantly stressed that the Marxist theory of reproduction is based on the fact that the part of the social product which compensates for the constant capital used up in the production of means of production (the constant capital in Department I, to use Marx’s terminology) can only serve as capital, and can never take on the form of revenue. Moreover, technical progress under capitalism inevitably means that this part of the social product grows faster than the other parts going to meet the personal consumption needs of workers and capitalists.

p Lenin writes:

p "In a developing capitalist society this part of the social product must necessarily grow more rapidly than all the other parts of the product. Only this law will explain one of the most profound contradictions of capitalism: the growth of the national wealth proceeds with tremendous rapidity, while the growth of national consumption proceeds (if at all) very slowly."  [83•1 

p In Capital, Marx pinpoints the dominating significance of means of production in the gross product. "Capitalist society employs more of its available annual labour in the production of means of production (ergo, of constant capital) which are not resolvable into revenue in the form of wages or surplus-value, but can function only as capital."  [83•2 

p Lenin, referring to this statement of Marx’s in "On the SoCalled Market Question”, says: "On this point specifically Marx expresses himself quite definitely only in one passage, and that passage fully confirms the correctness of the formula given. . . ."  [84•1  Lenin gives this formula as: "in capitalist society, the production of means of production increases faster than the production of means of consumption."  [84•2  Lenin not only gives a formulation of this thesis, but also substantiates it by connecting the necessarily faster growth of the production of means of production with Marx’s law of the faster growth of constant capital (as against variable capital).

p The Marxist theory of realisation is based on the indisputable fact that the entire product of a capitalist country (gross or national product), like any one individual product, consists of the following three parts: i) constant capital, 2) variable capital, 3) surplus value.

p In accordance with the conditions of simple reproduction formulated by Marx, the variable capital and the surplus value of Department I, produced in the form of means of production, must be equal to the constant capital of Department II taking the form of articles of consumption. Marx’s equation for this is: I (zrfvw) = II c. But according to the law of the more rapid growth of c compared to v, II c increases faster than II (»+;«), and I c faster than I (v+tri). Hence, as I c outstrips I (v+m), it also outstrips II c [equal to I (u+wz)], and II (v+m) increases more slowly than both II c and I (v \ m).

p Lenin gives the following explanation for this: "Indeed, we have seen that constant capital in articles of consumption ( Department II) is exchanged for variable capital + surplus value in means of production (Department I). According, however, to the general law of capitalist production, constant capital grows faster than variable capital. Hence, constant capital in articles of consumption has to increase faster than variable capital and surplus value in articles of consumption, while constant capital in means of production has to increase fastest of all, outstripping both the increase of variable capital (+ surplus value) in means of production and the increase of constant capital in articles of consumption. The department of social production which produces means of production has, consequently, to grow faster than that producing articles of consumption."  [84•3 

p Lenin considered this tht only correct conclusion to be derived from Marx’s investigations, while pointing out, however, that "that conclusion could have been arrived at, without Marx’s investigation in Volume II of Capital, on the basis of the law that constant capital tends to grow faster than variable: the proposition that means of production grow faster is merely a paraphrase of this law as applied to social production as a whole."  [85•1 

p When Lenin wrote these lines he was not acquainted with one remarkable statement of Marx’s published many years later in his Theories of Surplus-Value: "While for the individual capital the fall in the variable part of the capital as compared with the constant part takes the direct form of a reduction in the part of the capital expended in wages, for the total capital—in its reproductiont\\K—necessarily takes the form that a relatively greater part of the total labour employed is engaged in the reproduction of means of production than is engaged in the production of products themsclves—that is, in the reproduction of machinery. . . , of auxiliary materials . . . and of plants which form the raw material for industrial products."  [85•2  The thought expressed by Lenin in "On the So-Called Market Qucstion"—one of his earliest works—is identical to this statement of Marx’s in Theories of Surplus-Value.

p The dependence of the increasing ratio of the production of means of production to that of articles of consumption on the growth of the organic structure of capital finds expression in the schematic representation of the process of accumulation to be found in Capital, Vol. II. Marx gives two examples to illustrate this process. In the first example, the ratio of constant capital to variable capital is 4:I  [85•3 ; and in the second, 5:I.  [85•4  The increase in this ratio "presupposes a considerable development of capitalist production and accordingly of the productivity of social labour, a considerable previous increase in the scale of production. . . ."  [85•5  However, Marx leaves the organic structure of capital unchanged in his representation of the process of simple and extended reproduction over a brief period of time. Hence both Departments of social production in Marx’s model have parallel development.

p Lenin introduced changes into the organic structure of capital with time, and devised his own graphic representation to show 86 the more rapid increase of the production of means of production over that of articles of consumption. He gives the rate of growth of the various component parts of the social product in a table summing up a four-year period of extended reproduction during which the ratio of constant to variable capital increases from 4:1 to 5:1. This shows means of production of means of production growing fastest of all (+36.7 per cent), followed by means of production of means of consumption (+9.5 per cent), and finally, means of consumption (+6 per cent).  [86•1  In the four years, the share of means of production in the social product rose from 66.7 per cent to 70.7 per cent, while the share of articles of consumption fell from 33.3 per cent to 29.3 per cent.

p Lenin not only formulated and explained the law of the more rapid rate of growth of the means of production, but also defined its limits. Technical progress and accumulation in Department II restrict or restrain the increase of the share of the means of production in the social product. Also acting in the same direction is the tendency for technical progress to lower the amount of capital and materials consumed in the manufacture of a unit of production. Recent US statistics confirm both the dominance of Department I and the tendency for the rates of growth of the two Departments to draw closer to one another.

The development of capitalist production largely as a result of the growth of the production of means of production follows not only from the fact that capitalism is characterised by production for production’s sake, i.e., by the extension of production without any corresponding extension of consumption, but also from the determining role played by the means of production in the life of society.