The second theorist of populist criticism, Nikolayon, brings quite a different economic training and knowledge to his work. One of the best-informed experts on Russian economic relations, he had already in 1880 attracted attention by his treatise on the capitalisation of agricultural incomes, which was published in the review Slovo. Thirteen years later, spurred on by the great Russian famine of 1891, he pursued his inquiries further in a book entitled Outlines of Our Social Economy Since the Reform. Here he gives a detailed exposition, fully documented by facts and figures, of how capitalism developed in Russia, and on this evidence proceeds to show that this development is the source of all evil, and so of the famine, also, so far as the Russian people are concerned. His views about the destiny of capitalism in Russia are grounded in a definite theory about the conditions of the development of capitalist production in general, and it is this with which we must now deal.

Since the market is of decisive importance for the capitalist mode of economy, every capitalist nation tries to make sure of as large a market as possible. In the first place, of course, it relies on its home market. But at a certain level of development, the home market is no longer sufficient for a capitalist nation, and this for the following reasons: all that social labour newly produces in one year can be divided into two parts—the share received by the workers in the form of wages, and that which is appropriated by the capitalists. Of the first part, only so many means of subsistence as correspond, in value, to the sum total of the wages paid within the country can be withdrawn from circulation. Yet capitalist economy decidedly tends to depress this part more and more. Its methods are a longer working day, stepping up the intensity of labour, and increasing output by technical improvements which enable the substitution of female and juvenile for male labour and in some cases displace adult labour altogether. Even if the wages of the workers still employed are rising, such increase can never equal the savings of the capitalists resulting from these changes. The result of all this is that the working class must play an ever smaller part as buyers on the home market. At the same time, there is a further change: capitalist production gradually takes over even the trades which provided additional employment to an agricultural people; thus it deprives the peasants of their resources by degrees, so that the rural population can afford to buy fewer and fewer industrial products. This is a further reason for the continual contraction of the home market. As for the capitalist class, we see that this latter is also unable to realise the entire newly created product, though for the opposite reason. However large the requirements of this class, the capitalists will not be able to consume the entire surplus product in person. First, because part of it is needed to enlarge production, for technical improvements which, to the individual entrepreneur, will be a necessary condition of existence in a competitive society. Secondly, because an expanding capitalist production implies an expansion in those branches of industry which produce means of production (e.g. the mining industry, the machine industry and so forth) and whose products from the very beginning take a use-form that is incapable of personal consumption and can only function as capital. Thirdly and lastly, the higher labour productivity and capital savings that can be achieved by mass production of cheap commodities increasingly impel society towards mass production of commodities which cannot all be consumed by a mere handful of capitalists.

Although one capitalist can realise his surplus value in the surplus product of another capitalist and vice versa, this is only true for products of a certain branch, for consumer goods. However, the incentive of capitalist production is not the satisfaction of personal wants, and this is further shown by the progressive decline in the production of consumer as compared to that of producer goods.

‘Thus we see that the aggregate product of a capitalist nation must greatly exceed the requirements of the whole industrial population employed, in the same way as each individual factory produces vastly in excess of the requirements of both its workers and the entrepreneur, and this is entirely due to the fact that the nation is a capitalist nation, because the distribution of resources within the society does not aim to satisfy the real wants of the population but only the effective demand. Just as an individual factory-owner could not maintain himself as a capitalist even for a day if his market were confined to the requirements of his workers and his own, so the home market of a developed capitalist nation must also be insufficient.’

At a certain level, capitalist development thus has the tendency to impede its own progress. These obstacles are ultimately due to the fact that progressive labour productivity, involving the severance of the immediate producer from the means of production, does not benefit society as a whole, but only the individual entrepreneur; and the mass of labour power and men-hours which has been ‘set free’ by this process becomes redundant and thus is not only lost to society but will become a burden to it. The real wants of the masses can only be satisfied more fully in so far as there can be an ascendancy of a ‘populist’ mode of production based upon the union between the producer and his means of production. It is the aim of capitalism, however, to gain possession of just these spheres of production, and to destroy in the process the main factor which makes for its own prosperity. The periodical famines in India, for instance, recurring at intervals of ten or eleven years, were thus among the causes of periodical industrial crises in England. Any nation that sets out on capitalist development will sooner or later come up against these contradictions inherent in this mode of production. And the later a nation embarks on the capitalist venture, the more strongly will these contradictions make themselves felt, since, once the home market has been saturated, no substitute can be found, the outside market having already been conquered by the older competing countries.

The upshot of it all is that the limits of capitalism are set by the increasing poverty born of its own development, by the increasing number of redundant workers deficient in all purchasing power. Increasing labour productivity which can rapidly satisfy every effective demand of society corresponds to the increasing incapacity of ever broader masses of the population to satisfy their most vital needs; on the one hand, a glut of goods that cannot be sold—and on the other, large masses who lack the bare necessities. These are Nikolayon’s general views.[288] He knows his Marx, we see, and has turned the two first volumes of Capital to excellent use. And still, the whole trend of his argument is genuinely Sismondian. It is capitalism itself which brings about a shrinking home market since it impoverishes the masses; every calamity of modern society is due to the destruction of the ‘populist’ mode of production, that is to say the destruction of small-scale enterprise. That is his main theme. More openly even than Sismondi, Nikolayon sets the tenor of his critique by an apotheosis of small-scale enterprise, this sole approach to grace.[289] The aggregate capitalist product cannot, in the end, be realised within the society, this can only be done with recourse to outside markets. Nikolayon here comes to the same conclusion as Vorontsov, in spite of a quite different theoretical point of departure. Applied to Russia, it is the economic scientific ground for a sceptical attitude towards capitalism. Capitalist development in Russia has been without access to foreign markets from the first, it could only show its worst aspects—it has impoverished the masses of the people. In consequence, it was a ‘fatal mistake’ to promote capitalism in Russia.

On this point, Nikolayon fulminates like a prophet of the Old Testament: ‘Instead of keeping to the tradition of centuries, instead of developing our old inherited principle of a close connection between the immediate producer and his means of production, instead of usefully applying the scientific achievements of W. Europe to their forms of production based on the peasants’ ownership of their means of production, instead of increasing their productivity by concentrating the means of production in their hands, instead of benefiting, not by the forms of production in W. Europe, but by its organisation, its powerful co-operation, its division of labour, its machinery, etc., etc.—instead of developing the fundamental principle of a landowning peasantry and applying it to the cultivation of the land by the peasants, instead of making science and its application widely accessible to the peasants—instead of all this, we have taken the opposite turning. We have failed to prevent the development of capitalist forms of production, although they are based on the expropriation of the peasants; on the contrary, we have promoted with all our might the upsetting of our entire economic life which resulted in the famine of 1891.’

Though the evil is much advanced, it is not too late even now to retrace our steps. On the contrary, a complete reform of economic policy is just as urgently needed for Russia in view of the threatening proletarisation and collapse, as Alexander’s reforms after the Crimean war were necessary in their time.

Now a social reform as advocated by Nikolayon is completely Utopian. His attitude exhibits an even more blatant petty-bourgeois and reactionary bias than Sismondi’s ever did, considering that the Russian ‘populist’ writes after a lapse of seventy years. For in his opinion, the old obshchina, the rural community founded on the communal ownership of the soil, is the raft to deliver Russia from the flood of capitalism. On it, the discoveries of modern big industry and scientific technique are to be grafted by measures which remain his own secret—so that it can serve as the basis of a ‘socialised’ higher form of production. Russia can choose no other alternative: either she turns her back upon capitalist development, or she must resign herself to death and decay.[290] After a crushing criticism of capitalism Nikolayon thus ends up with the same old ‘populist’ panacea which had as early as the fifties, though at that time with greater justification, been hailed as the ‘peculiarly Russian’ guarantee of a higher social development, although its reactionary character as a lifeless relic of ancient institutions had been exposed in Engels’ Fluechtlingsliteratur in Volksstaat (1875). Engels wrote at the time:

‘A further development of Russia on bourgeois lines would gradually destroy communal property there too, quite apart from any interference of the Russian government “with the knout and with bayonets” (as the revolutionary populists imagined). Under the pressure of taxes and usury, communal landownership is no longer a privilege, it becomes an irksome chain. The peasants frequently run away from it, either with or without their families, to seek their living as itinerant labourers, and leave the land behind. We see that communal ownership in Russia has long since passed its flower and there is every indication that its decay is approaching.’ With these words, Engels hits right on the target of the obshchina problem—eighteen years before the publication of Nikolayon’s principal work. If Nikolayon subsequently with renewed courage again conjured up the ghost of the obshchina, it was a bad historical anachronism inasmuch as about a decade later the obshchina was given an official burial by the state. The absolutist government which had for financial reasons tried during half a century artificially to keep the machinery of the rural community going was compelled to give up this thankless task on its own accord. The agrarian problem soon made it clear how far the old ‘populist’ delusion was lagging behind the actual course of economic events, and conversely, how powerfully capitalist development in Russia, mourned and cursed as still-born, could demonstrate with lightning and thunder its capacity to live and to multiply. Once again, and for the last time, this turn of events demonstrates in quite a different historical setting how a social critique of capitalism, which begins by doubting its capacity for development, must by a deadly logic lead to a reactionary Utopianism—both in the France of 1819 and in the Russia of 1893.[291]