Appendices

Summary

Chapter 2: Objections to Smithian National-Income Accounting

In Capital 1, Marx phrases objections to Adam Smith's national-income accounting thus:

Adam Smith, by a fundamentally perverted analysis, arrives at the absurd conclusion, that even though each individual capital is divided into a constant and a variable part, the capital of society resolves itself only into variable capital, i. e., is laid out exclusively in payment of wages. For instance, suppose a cloth manufacturer converts £2,000 into capital. One portion he lays out in buying weavers, the other in woollen yarn, machinery, &c. But the people, from whom he buys the yarn and the machinery, pay for labour with a part of the purchase money, and so on until the whole £2,000 are spent in the payment of wages, i. e., until the entire product represented by the £2,000 has been consumed by productive labourers. It is evident that the whole gist of this argument lies in the words “and so on,” which send us from pillar to post. In truth, Adam Smith breaks his investigation off, just where its difficulties begin (MECW 35: 586).