The DEVELOPMENT of CAPITALISM in RUSSIA

Chapter VI. Capitalist Manufacture and Capitalist Domestic Industry

VI. Merchant’s and Industrial Capital In Manufacture. The
“Buyer-Up” and the “Factory Owner”

From the data given above it is evident that along with big capitalist
workshops we always find an extremely large number of small establishments
at this stage of capitalist development; numerically, these, as a rule,
even predominate, although they play a quite subordinate role in the
sum-total of production. This retention (and even, as we have seen above,
development) of small establishments under manufacture is quite a natural
phenomenon. Under hand production, the large establishments have no
decisive advantage over the small ones; division of labour, by creating
the simplest detailed operations, facilitates the rise of small
workshops. For this reason, a typical feature of capitalist
manufacture is precisely the small number of relatively large
establishments side by side with a considerable number of small establishments. Is there any connection between the one
and the other? The data examined above leave no doubt that the connection
between them is of the closest, that it is out of the small establishments
that the large ones grow, that the small establishments are sometimes
merely outside departments of the manufactories, that in the overwhelming
majority of cases the connection between them is maintained by
merchant’s capital, which belongs to the big masters and holds sway
over the small ones. The owner of the big workshop has to buy raw
materials and sell his wares on a large scale; the bigger his turnover,
the smaller (per unit of product) are his expenses on the purchase and
sale of goods, on sorting, warehousing, etc., etc.; and so there arises
the retail reselling of raw materials to small masters, and the purchase
of their wares, which the manufactory owner resells as his own. [1]

If (as is often the case) bondage and usury are linked with these transactions in the sale of
raw materials and the purchase of wares, if the small master gets
materials on credit and delivers wares in payment of debt, the big
manufactory owner obtains a high level of profit on his capital such as he
could never obtain from wage-workers. Division of labour gives a fresh
impetus to the development of such relations of dependence of the small
masters upon the big ones: the latter either distribute materials in the
homes for making up (or for the performance of certain detailed
operations), or buy up from the “handicraftsmen” parts of
products, special sorts of products, etc. In short, the closest and most inseparable tie between merchant’s and industrial capital is
one of the most characteristic features of manufacture. The
“buyer-up” nearly always merges here with the manufactory
owner (the “factory owner,” to use the current but wrong term,
which classifies every workshop of any size as a “factory”). That is why, in the overwhelming majority of
cases, data on the scale of production of the big establishments in themselves give no idea of their real significance in our
“handicraft industries,” [2] for the owners of such establishments have at
their command the labour, not only of the workers employed in their
establishments, but of a mass of domestic workers, and even ( de facto ) of a mass of quasi-independent small masters, in relation to whom
they are “buyers-up.” [3]

The data on Russian manufacture thus bring out in striking relief the law established by the author of Capital ,
namely, that the degree of development of merchant’s capital is
inversely proportional to the degree of development of industrial capital. [4] And
indeed, we may characterise all the industries described in § II as
follows: the fewer the big workshops in them, the more is
“buying-up” developed, and vice versa; all that changes is the
form of capital that dominates in each case and that places the “independent” handicraftsman in conditions which
often are incomparably worse than those of the wage-worker.

The fundamental error of Narodnik economics is that it ignores, or glosses
over, the connection between the big and the small establishments, on the
one hand, and between merchant’s and industrial capital, on the
other. “The factory owner of the Pavlovo area is nothing more than a
complex type of buyer-up,” says Mr. Grigoryev ( loc . cit ., p. 119). That is true, not only of Pavlovo,
but of the majority of industries organised on the lines of capitalist
manufacture; the reverse is likewise true: the buyer-up in manufacture is
a complex type of “factory owner”; this, incidentally, is one
of the fundamental differences between the buyer-up in manufacture and the
buyer-up in the small peasant industries. But to see in this fact of the
connection between the “buyer-up” and the “factory owner” some argument in favour of small industry (as Mr. Grigoryev
and many other Narodniks do) means drawing absolutely arbitrary
conclusions and distorting facts to fit preconceived notions. A host of
facts testify, as we have seen, to the point that the combination of
merchant’s capital with industrial capital makes the position of the
direct producer considerably worse than that of the wage-worker, lengthens
his working day, reduces his earnings, and retards economic and cultural
development.

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Notes:
[1]
Let us supplement the above by one other example. In the furnishing
industry of Moscow Gubernia (information dated 1876, from
Mr. Isayev’s book), the biggest industrialists are the Zemns, who
introduced the making of costly furniture and “trained generations
of skilled artisans.” In 1845 they established a sawmill of their
own (in 1894-95 – 12,000 rubles output, 14 workers, steam-engine). Let us
note that altogether in this industry there were 708 establishments, 1,979
workers, of whom 846, or 42.7%, were hired, and an output totalling
459,000 rubles. In the beginning of the 60s the Zenins began to buy raw
materials wholesale in Nizhni-Novgorod. They bought timber in waggon-loads
at 13 rubles per hundred planks and sold it to small handicraftsmen at
18-20 rubles. In 7 villages (where 116 are at work) the majority sell
furniture to Zenin, who has a furniture and plywood warehouse in Moscow
(established in 1874) with a turnover reaching 40,000 rubles. About 20
one-man jobbers are working for the Zenins.— Lenin

[2]
Here is an example illustrating what has been said above. In the village
of Negino, Trubchevsk Uyezd, Orel Gubernia, there is an oil works
employing 8 workers, with an output of 2,000 rubles ( Directory
for 1890). This small works would seem to indicate that the role of
capital in the local oil-pressing industry is very slight But the slight
development of industrial capital is merely indicative of an enormous
development of merchant’s and usurer’s capital. From the
Zemstvo statistical returns we learn of this village that of 186
households 160 are completely in the grip of the local factory owner, who
even pays all their taxes for them , lends them all they need (and that over many, many years), receiving help at a reduced
price in payment of debt. The mass of the peasants in Orel Gubernia are in
a similar state of bondage. Can one, under such circumstances, rejoice
over the slight development of industrial capital?— Lenin

[3]
One can therefore imagine what sort of picture one gets of the economic
organisation of such “handicraft industries” if the big
manufactory owners are left out of account (after all, this is not
handicraft, but factory industry!), while the “buyers-up” are
depicted as being “virtually quite superfluous and called into being
solely by the failure to organise the sale of products” (Mr. V. V.,
Essays on Handicraft Industry , 150)!— Lenin

[4]
Karl Marx, Capital , Vol. III, Moscow, 1959, p. 323. [p.440]