Collected Works of V. I. Lenin - Vol. 3 - From Marx to Mao

THE DEVELOPMENT OF CAPITALISM IN RUSSIA
accumulated part of surplus-value, the part converted
into capital, is entirely consumed by the productive workers,
i.e., goes entirely in wages, whereas actually the accumulated
part of surplus-value is expended on constant capital
(instruments of production, raw and auxiliary materials)
plus wages. Criticising this view of Smith (and also of
Ricardo, Mill and others) in Capital, Volume I (Part VII,
“The Accumulation of Capital,” Chapter 22, “Conversion of
Surplus-Value into Capital,” §2, “Erroneous Conception,
by Political Economy, of Reproduction on a Progressively
Increasing Scale”), Marx there states that in Volume II
“it will be shown that Adam Smith’s dogma, inherited by all
his successors, prevented political economy from understanding
even the most elementary mechanism of the process of
social reproduction” (I, 612). 22 Adam Smith committed this
error because he confused the value of the product with
the newly created value: the latter does indeed resolve itself
into variable capital and surplus-value, whereas the former
includes constant capital in addition. This error had been
earlier exposed by Marx in his analysis of value, when he
drew a distinction between abstract labour, which creates
new value, and concrete, useful labour, which reproduces
the previously existing value in the new form of a useful
product. 23
An explanation of the process of the reproduction and
circulation of the total social capital is particularly necessary
to settle the problem of the national revenue in capitalist
society. It is extremely interesting to note that, when
dealing with the latter problem, Adam Smith could no longer
cling to his erroneous theory, which excludes constant capital
from the country’s total product. “The gross revenue
of all the inhabitants of a great country comprehends the
whole annual produce of their land and labor; 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, conveniencies,
and amusements” (A. Smith, Wealth of Nations, Book II.
“Of the Nature, Accumulation, and Employment of Stock,”
Chapter II, Vol. II, p. 18. Russ. trans., II, p. 21). Thus, from
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