1 Economic reproduction
In every economic system, goods and services are produced by employing means of production and labour power. For this production to be repeated, the economic system has to reproduce itself. This holds true for all types of economic system: slave economy, feudal economy and full-blown capitalist economy. How this reproduction takes place, however, differs from system to system, with the economic classes in the system – workers, peasants, craftsmen, commercial intermediaries, etc. – all playing their own specific role. The reproduction of an economic system relates to the workings of the so-called economic circuit, which was first conceptualised and coherently analysed by the French Physiocrat, François Quesnay (1694–1774), in his Tableau économique. The economic circuit concept was further developed and applied by Marx in Volume 2 of Das Kapital, where he uses his famous schemes of reproduction.1
In this chapter we begin our assessment of the economic theory of Karl Marx. It will become evident that Marx’s concept of the reproduction process leads logically to his theory of value, which we consider in Chapter 2. We will therefore portray this process as a set of relationships between spheres of production, which evolve on the basis of given proportions and can be analysed according to a reproduction scheme.
1.1 Production and reproduction
In order to analyse the economic circuit and a fortiori the way in which an economic system reproduces itself, we will consider – for the sake of simplicity – an economy in which only two goods are produced: iron and wheat. It is assumed that iron ore is up for grabs, i.e. a free gift of nature, but is mined using an iron tool (e.g. a shovel).2
The iron ore is then transformed into a plough, using other iron tools (e.g. an oven, a hammer and an anvil). In this example, the iron ore, being a free gift of nature, has no value. Therefore, it can be stated that 50 kg of iron is needed to produce a plough of 150 kg, as well as 50 hours of labour time (used in the mining of the ore, the production of the tools and the forging of the plough), as follows:
One can say that in this production process, the tools are produced together with the plough.
The plough is used in the wheat farming sector. At this point in our argument, we assume that the plough is used entirely for wheat cultivation, i.e. used up only during one production period. With inputs of 50 hours of labour time and 40 kg of wheat (used for sowing the seed), the sector produces 100 kg of wheat:
150 kg iron + 40 kg wheat + 50 hours labour → 100 kg wheat
(1 plough) (sowing seed)
In this imaginary economy, a total of 200 kg of iron means of production are produced, which serve to replace the 200 kg of iron means of production that are used up in the production of both means of production and wheat. The next production period will thus start at the same level as before. Apart from this, 100 kg of wheat are cultivated, of which 40 kg can be used in the next production period to sow the seed. What remains – 60 kg wheat – is the net product (the term “le produit net” goes back to the Physiocrats) and is available, in terms of the above example, as consumer goods. It might well be that this quantity of wheat exceeds what is needed to reproduce the labour power, i.e. to support the workers and their families, such that in the next production period 100 hours of labour can be extracted. This surplus of wheat will allow an increase in consumption by the workers and their families, or alternatively, it will be consumed by those who are not directly related to the two production processes but are providing other services (artists, priests, warriors . . . ). The “surplus approach” in economic theory goes back to François Quesnay and was very prevalent among the classical economists (Dobb, 1973, pp. 62ff.; also Garegnani, 1984, pp. 291–325).3
In summary, the following scheme can be written:
leaving a net product of 60 kg of wheat. Let us now assume that each working hour is compensated by supplying 0.5 kg of wheat to the workers. In the means of production sector, 50 hours of labour were spent, with the result that the workers receive 25 kg of wheat. Similarly, in the consumer goods sector, 50 kg in total (2 × 25 kg) of the net product of 60 kg of wheat is used to reproduce the labour power, which will allow its use in the next production period. Therefore, a surplus of 10 kg of wheat remains (60 kg of wheat as net product, minus 50 kg of wheat consumed by the workers). Marx calls this the surplus product, which is available for additional workers’ consumption and/or as compensation for the above-mentioned services.
One thing is clear, however: in our imaginary economy, no expansion is possible. With the wheat surplus, nothing can be put aside to produce a second plough or additional tools in the next production period since a surplus of iron is lacking. Hence, only simple reproduction is possible.
This can be summarised in the following scheme:
leaving a surplus product of 10 kg of wheat.
1.2 The Marxist schemes of reproduction: introduction
In reality, the economic system in evidence today is much more complex than our imaginary economy as with the former, a multitude of goods and services is produced. However, if we can value and aggregate the many goods and services used in production, then the economic system can be represented by two aggregated sectors: a sector that produces means of production and a sector that manufactures consumer goods. This is, in fact, the process followed by Marx in Volume 2 of Das Kapital. For the valuation of the means of production, the respective prices (which reflect their respective values) can be used. Where these prices come from is the subject of Chapter 2.
The value of the means of production, thus aggregated, which are used in the production of means of production and of consumer goods, is called constant capital by Marx, whereas the value of the consumer goods that serve the reproduction needs of labour power is called variable capital.4
In the sector where the means of production are produced (sector 1), these are C1 and V1, respectively, while in the consumer goods sector (sector 2), these are C2 and V2. The value of this constant and variable capital is found at the end of the production period, in the value of the output produced in both sectors: W1 and W2. The difference between W1 and the used-up constant and variable capital C1 + V1 is called the surplus value M1, while the difference between W2 and the used-up constant and variable capital C2 + V2 is called the surplus value M2.
In value terms, the following scheme can be presented:
This is a reproduction scheme, as developed and used by Marx in his analysis of the conditions of reproduction of any arbitrarily chosen economic system. From such a reproduction scheme, the following conditions of simple reproduction can be derived:
Since the first condition is C1 + V1 + M1 = W1, it follows that:
And since C2 + V2 + M2 = W2, the second condition can be rewritten as: V1 + V2 + M1 + M2 = C2 + V2 + M2, or V1 + M1 = C2, which produces the same result.
It should be very evident to the reader that at the start of the next production period, producers will be able to start producing the same quantities as before. In other words, if the above condition is met, then the economic circuit is closed. Once again, sector 1 has C1 at its disposal, as well as the labour power that can function for another 50 hours. Similarly, C2 and the required labour power are back in sector 2. At the end of the second production period, the reproduction scheme will show exactly the same values as at the end of the first production period. For this reason, this type of reproduction process is called simple reproduction.
Simple r...