Melt butter in a large saucepan and sauté onion until tender. Add potatoes, cover with water, add bouillon and stir. Cover and simmer until potatoes are tender, about 15 minutes for raw potatoes.
Puree mixture in a blender until smooth. If the mixture is too thick to blend easily, add some of the milk to thin it. Return mixture to pot, add remaining ingredients and simmer, stirring occasionally until cabbage is tender and soup is hot.
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