In the early part of this century a debate erupted among Russian and German economists. It was started by Rosa Luxemburg’s Accumulation of Capital , which asked the question: how can capitalism reproduce itself? It was continued by many, including Nikolai Bukharin, whose reply, seven years after her death and widely considered definitive, sums up the modern approach to this question. In essence, he asserted an equilibrium growth condition which the equations would have to satisfy in order for capitalism to exist on the basis of Marx’s equations for simple and for expanded reproduction. The debate is not confined to Marxists: in essence, the same solution as Bukharin’s is to be found in von Neumann’s growth theory and in most accounts of expansion with constant proportions including modern post-Sraffian writings. If one confines oneself to the constant proportions of inputs, it is however impossible to represent the most fundamental phenomenon of capitalism, namely technical change as the driving force of accumulation. The effect of technical progress is not only to increase the output achieved by a given mix of inputs but also to change the mix. The difficulty is hence that we cannot reproduce, within the confines of expansion in constant proportions, one of the most central features of the way capitalism actually accumulates and expands. This process of accumulation is moreover ‘temporal’: an economy does not skip seamlessly from one technical structure to another, as envisaged in the equilibrium studies of this question. Instead, the surplus left over at the end of any given period in fact constitutes the stock available for investment in the next. If it is not made available, it cannot be invested, and conversely, if it is not invested (or consumed) it cannot be sold. The ‘condition of reproduction’ proposed by Marx in Volume II of Capital is built around this identity: it asks how (and to what extent), at the end of a period of reproduction, society can produce the outputs that are to be consumed in the next. This is a temporal, not an equilibrium, condition. It states the logical prerequisite of transition from one period to the next, and does not require the presupposition that the proportions of production are preserved through this transition. Marx succeeded in demonstrating that this transition could be achieved under the limited circumstances where proportions are constant, and all subsequent development (except Luxemburg) imposed this condition. It is however not only unnecessary but incapable of exhibiting how reproduction can combine with technical change – that is, it cannot exhibit or explain the most fundamental fact of capitalism. This article attempts to expand and generalise the discussion by combining ‘reproduction’ with Marx’s category of relative surplus value – in essence, the investment of accumulated surplus to raise the productivity of capital. It provides a detailed numerical example which combines technical change with growth, applying the toolbox of analytical constructs which Marx constructed in the early 1860s to study technical change – relative surplus value, the release and tie-up of capital, and moral depreciation – and arrive at a fuller and more general statement of the question.
Foto: Sylvia John