Economic Growth Rates and the Luxemburg Theory of Pre-cap markets.

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Economic Growth Rates and the Luxemburg Theory of Pre-cap markets.
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Comrades may remember I wrote a criticism of markets theory some time ago based on a re-read of the Accumulation of Capital by Rosa Luxemburg.   I would like to follow that up again as quite accidentally I recently came across this chart of historical growth in the world economy as used by Thomas Piketty in his book  (Capital in the Twenty-First Century). 

It is not what I expected to see because it implies that economic growth rate was higher post 1914 than in capitalism ascendance period  whereas i would have expected a high growth rate in ascendancy preceding a plateauing of growth rates in decadence.  It indicates however a much higher growth in the global economy in decadence at least until the latter part of the 20th Century     The explanation for lower growth rate in ascendancy must be that production in that period was low tech and inefficient, and limited in scale to a relatively few countries.  As the capitalist economy has developed and established a complete hold over national markets globally post 1914 then the drive to improve productive technology and increase efficiency has really taken hold and productive capacity grows absolutely but also more rapidly - as per Piketty’s chart above.

Being based on GDP measures, these figures presumably include waste production such as armaments, insurance etc but excluding them would not make a significant alteration to the growth curve of the chart even if the absolute levels of GDP were reduced.

The significance of this chart is clear, economic growth rate ie accumulation cannot be dependant on pre-capitalist markets as per the Luxemburgist theory.  To support her theory the growth rate ( as opposed to absolute levels) would have been higher during ascendancy and slowing down post 1914 .  We don’t need to answer the question of just how much pre-capitalist market remains at any given time in this period, its just clear that market growth must be diminishing for this hypothesis to be valid

 

 

I have often wondered how to incorporate into decadence theory the fact that the population has grown so rapidly during the last century.  Again a growth rate that has also been almost exponential over the 20th century.  Comparing this second chart with the first,  it seems there is a correlation.  It would appear that capitalisms economic growth has facilitated the population growth as a ‘reserve labour force’.

In the Accumulation of Capital, Luxemburg suggests the opposite would be true: ”The natural propagation of workers and the requirements of accumulating capital are not correlative in respect of time or quantity.  Marx himself has most brilliantly shown that natural propagation cannot keep up with the sudden expansive needs of capital. If natural propagation were the only foundation for the development of capital, accumulation, in its periodical swings from overstrain to exhaustion, could not continue, nor could the productive sphere expand by leaps and bounds, and accumulation itself would become impossible.”  

Luxemburg’s argument here is that the pre-capitalist areas provide the labour that capitalism needs for accumulation to take place but it seems completely absurd to suggest that pre capitalist markets have grown exponentially in decadence prior to being incorporated into capitalism.  In the real world of the 20th Century it would appear that the opposite to what Luxemburg hypothesized 100 years ago is true.
 

 

This third chart used by Piketty also adds to the picture.    The drop in the rate of return on capital correlates to the Marxism concept of the rate of profit and it does indeed show a higher level during the period of ascendancy of capitalism and then drop post WW1 down to a low point around at the time of WW2. Whilst it has increased since as we would expect during the period of reconstruction after the war, we do once again we will need to exclude waste production (but also state costs and social wage costs) from the calculation but in this case, there will be a significant impact reducing the rate of profit indicated in the chart. 

The overall implications it seems to me are that the FROP theory is given justifying factors whereas Luxemburg’s pre capitals markets theory is not.

I would like to bring in a little more of how Luxemburg justifies her theory that “accumulation of capital becomes impossible in all points without non-capitalist surroundings,”

Instead of developing the  link between extra capitalist markets and capitalism's growth in ascendancy as her analysis in Accumulation of Capital clearly establishes, Luxemburg makes the rather doubtful leap of logic and says that without pre-capitalism markets Capitalism cannot accumulate.  Our experience of decadence appears to contradict these interpretations anyway.   We have certainly seen the expansion of credit being used to facilitate ongoing accumulation process and we have seen how the destruction of war is used to devalue capital and stimulate new cycles of accumulation.

The other element of the problem of accumulation for Luxemburg lies in the equation, C+V+S.  Basically if this equation represents the product of once cycle of accumulation then she is suggesting that within capitalism from the only sufficient financial capital exists at the end of the previous cycle of accumulation to be able capitalize c+v.  For her, Surplus Value (s) must be sold out of the capitalist sphere, in social strata and forms which do not produce in capitalist and consequently “accumulation of capital becomes impossible in all points without non-capitalist surroundings,”.  This appears to be based on the idea that c+v, the pre-existing level of capital accumulation is matched by a equal value of financial capital being available in circulation and that there is no financial capital remaining to purchase the equivalent value of s.  However is this not a fallacy. There is never a full amount of money in circulation to match accumulated wealth.  Fixed capital does not need to have to be matched by money is circulation, that is the point, it is already fixed. 

Given that Luxemburg wrote the Accumulation of Capital in 1913, should we not with hindsight be interpreting her analysis  as having more to say more to say about how the economy in ascendancy functions rather than about decadence. 

I would be very interesting to hear what others have to say about this as either my interpretations are faulty and/or Piketty's statistics are incorrect or Luxemburg was wrong on this issue

d-man
2 critiques

The graphs don't show in your post.

As to Rosa's analysis being perhaps more valid for the period before 1914, that is indeed really the only question (and so all discussion on later phenomena is a red herring, including your graphs). To reject her theory in fact means to reject it precisely for the period before 1914. Your other objections are familiar, so unless you want to be more specific, I don't know what to add (perhaps just disagree on war destruction's stimulating effect - I recall this was a subject of debate between ICC and ICT).

I'll repost here this good critique (from 1934) of her theory: https://libcom.org/library/critical-introduction-rosa-luxemburgs-economic-works-wolf-motylev

And some shorter critique: http://www.ruthlesscriticism.com/rosa.htm

Link
Missing Graphs

Oh well i tried.  Thanks for letting me know dman, i had a go a following your guidance on putting in photos and interestingly enough the graphs do show up on my  computer when i access the forum  so i guess the technology has defeated me.

Not sure if anybody will make the effort now but the graphs are on this site

http://piketty.pse.ens.fr/en/capital21c2

and included in the document: 'the set of figures and tables (pdf)'

Graph 1 is Fig 2.5

Graph 2 is Fig 2.2

Graph 3 if Fig 10.10

 

As for your other comments d-man i dont understand them - are you saying her theory is valid post 1914 but not prior???   I will however have a look at the text you suggest.

With the post i was aiming to question the ICCs interpretation of luxemburgism and the need for pre-cap markets rather than anybody elses interpretation

 

 

 

d-man
If you reject her theory (as

If you reject her theory (as I do) it is on the basis of its faulty analysis of capitalism and imperialism prior to 1914. And so, having rejected her theory, discussion of phenomena post-1914 (like your graphs) becomes superfluous.

Perhaps the simplest point against her theory (that pre-capitalist markets realise/absorb the capitalist surplus) is that market demand is another word for money, ie gold and silver, not capitalist credit. So she generalises the case of primitive accumulation (stealing gold from the Americas) into a constitutive feature of capitalism. It is true that the California and Australian gold rush still had a character of simple commodity production and they provided a great boost for the development of capitalism. And still in the 20th century the slave labour in the gold mines of Stalinist Russia and South-Africa also gave capitalism a lease of life. But clearly pre-capitalist societies (including for instance simple commodity producers in the West like the peasants in France) could not and did not ever continously provide enough of such amounts of gold/silver in exchange for the capitalist surplus goods.

MH
A few brief points

Link, I’m not going to deal with your main arguments against ‘Luxemburgism’ here but a few brief points on your post…

Growth

The graph of historical growth in Piketty’s book appears to refute not only ‘Luxemburgism’ but our whole position on capitalist decadence. And yet you don’t comment on this. Surely we need to deal with this issue first?

Link wrote:

“Being based on GDP measures, these figures presumably include waste production such as armaments, insurance etc but excluding them would not make a significant alteration to the growth curve of the chart even if the absolute levels of GDP were reduced.”

Oh really? Where is your evidence for this? Research by the ICC has shown that “industrial production in decadence reaches 60% of what it could have been, in short that the braking power of capitalist social relations on the forces of production is in the order of 40%. Again, this is underestimated…” (See “Understanding the Decadence of Capitalism, Part 4”, http://en.internationalism.org/ri/054_decadence_part04.html)

Population

Your quote from Luxemburg simply shows her agreeing with Marx that population growth cannot keep up with capitalism’s need for self-expansion. The question of population growth is dealt with in more detail in the Anti-Critique, where she argues that “In general, the influence of capitalist development leads, sooner or later, to a slowing down of the population growth”, but who would disagree with this as a general statement? I agree there is a discussion to be had here about growth in decadence but if you look at Piketty’s graph it actually shows population growth falling since 1950.

Rate of profit

Whether Piketty’s third chart really does show the fall in the rate of profit I’ll leave to others to comment on but you yourself admit we need to exclude waste production, etc, so my first comment about growth rates in decadence again applies.

 

MH
Fall in the rate of profit

I haven’t read Picketty’s book but according to the CWO review he categorically denies the Marxist conception of the falling rate of profit: “Although he finds the rate of profit falls from the 1950s when it is about 11% to 4.5% in 2010, over the 200 year period this appears as an anomaly. He finds a steady rate of profit of between 4% and 5% for the last 200 years.” (http://www.leftcom.org/en/articles/2015-08-07/piketty-marx-and-capitalism%E2%80%99s-dynamics).

It may be better to ignore Picketty altogether and engage with what the ICC actually says about Luxemburg’s theory. But first I think you need to address the issue you’ve raised about growth rates in decadence.
 

Link
Dman, I had not realised you

Dman, I had not realised you rejected luxemburgs idea for pre 1914 nor seen anyone argue that on this forum.  I am interested to hear why you don’t consider extra capitalist markets a source of input of wealth into an emerging capitalism.  Capitalism phase of colonialism was to search out riches for trade and this includes gold silver but is not just about that, it was also about new produce, labour, raw materials and land itself.  Ultimately it became also about migration to build new enterprise.  These all contributed to the growth of capitalism and in Luxemburg's terms acted as inputs into the system.  If it wasn't significant for the then existing markets, then why were the colonial nations so keen on pursuing these policies?  I cant see much argument with this but do please explain your interpretation

d-man
why foreign trade

But those raw materials, labour etc. of pre-capitalist areas cannot realise, ie monetize, the surplus value. The necessity for colonialism lies not in Rosa's realisation problem. So what is the explanation? I refer again to the 1934 soviet intro to her works:

Quote:
If the rate of profit in the sale of goods within the country and abroad were equal, if capitalism did not develop unevenly, if always the proportionality is kept, then the need for external trade could be really explained only by the geographical division of labor. But capitalism would not be capitalism then.

The possibility of realization by means of foreign trade of high rates of return follows primarily from differences in the level of the national market values (i.e., the socially necessary labor time), from the fact, that an advanced country, selling goods to a backward (albeit capitalist) country even below the market value of that country, sells them all the same above its market value, i.e., appropriates the unpaid labor of a backward country, and realizes thereby superprofit. The backward country is exposed in this case to exploitation, despite the fact that the exchange is profitable for it, since it gets the goods cheaper, than it could produce them itself.

It goes on futher with quotes from Marx, etc.

For an article-series on the world market see here (it's written by a member of the Decist opposition group).

Link
Thanks for your comments MH

Thanks for your comments MH and persevering with the graphs.   Im not trying to justify Piketty’s analysis – which seems to be that levels of inequality relate to capacity to grow!! - but I was interested in his financial data.  Agreed the growth of the world economy is apparently peaking during the reconstruction period after WW2 and starting to level out (and even drop if Pikettys projections are valid?)  This still implies significant growth in the overall size of the world economy during the first half of the 20th and indicates a higher rate of overall growth even now than was achieved in ascendancy.    This I can understand in the sense that the world is now a much larger place. It is comprised off a large number of capitalist nation economies competing intensely for market shares.   Pre 1914 there were economies in the capitalist heartlands operating at a much lower level of production plus small and undeveloped capitalist economies in the rest of the world amid research rich pre-cap economies.

Are his statistics on this topic valid?  Please say if you have other figures that contradict these but I don’t think we should just ignore them if they don’t quite fit theory.     I can add another link for world growth (still cant get the graph up on the forum however !!!)

https://ourworldindata.org/economic-growth#globally-over-the-last-two-millennia-until-today

The next section of this document is saying that GDP per capita has also similarly in the 20th Century which must link into the population growth issue too.  Also your point about population growth falling is correct but total population still continues to grow and flatten off according to the projections only in the 21st century  World population appears to have more than doubled since the 1960s and approx 5x since 1900.  How do rate the signifance of this and why has it happened?  Is it the population within capitalist society growing so much, if so why or is it pre capitalist population growing in the undeveloped world, in which case how is that possible?  For me only linking that pop growth to those figures on  the growth of world economy make any sense but im happy to hear other explanations.

https://ourworldindata.org/world-population-growth/#key-changes-in-population-growth

(it may be that Piketty is using  OurWorld in Data as a source?)

I don’t think that these figures questions the ascendancy-decadency concept however but rather the question of how we look at crisis theory.  The key period is the period around WW1 period when we agree that capitalism created a genuine world market and moved into its imperialist phase.  This is the key change determining the onset of decadence. 

 

There has been a problem with explaining decadence in terms of permanent crisis as though everybody is absolutely worse off at all times.   Its clear however that significant economic development has taken place in decadence, crisis theory needs to better address the impact of crises within decadence.  That was where my criticism of luxemburgism came from, its incapacity in my view and with hindsight of course,  to explain the process of  any accumulation in decadence

In terms of the impact of waste production on the gdp figures of the economic graph my point was that it was the plotting of the graph that would change not its overall shape and not the relative growth in decadence over and above the period of ascendancy.   As you say 40% waste production is very high but if you take that 40% of every years level growth then the chart would still show a standard deviation curve ( sorry, is that the right mathematical term I cant remember ) indicating that growth is higher in the 20th century than in the 19th. 

In terms of the falling rate of profit,  I don’t think there is anything in the theory that says there must be a lower rate of profit in decadence than in ascendancy.  The rate of profit would be going up and down during both ascendancy and decadency depending on conjunctural crises and their impact.   In fact I would think that exploitation of pre cap markets would increase the ROP in ascendancy .  In decadence capitalism has then had to find ways to compensate for the loss of this option through increased exploitation, war and credit.   Perhaps I should emphasise here I don’t see the FROP of profit as a theory antagonistic to the idea of increased competition for markets. Sure you are right though about taking up the cwo's view of Piketty

The increase level of production is a reflection of the impact  increased size of market place and the frop a reflection of inability of cap to achieve profits from that market.

MH
Picketty, FROP and decadence

Link, I think you a being a bit disingenuous about your use of Picketty’s graphs. In you first post you explicitly claim they refute Luxemburg’s theory and ‘prove’ the falling rate of profit:

Link wrote:

The significance of this chart is clear, economic growth rate ie accumulation cannot be dependant on pre-capitalist markets as per the Luxemburgist theory.

The overall implications it seems to me are that the FROP theory is given justifying factors whereas Luxemburg’s pre capitals markets theory is not.

Also, on the FROP in decadence:

Link wrote:

“In terms of the falling rate of profit, I don’t think there is anything in the (FROP) theory that says there must be a lower rate of profit in decadence than in ascendancy.”

Really? The CWO, who obviously defend the FROP as the sole explanation of decadence, argue that this is precisely the case; read their review of Picketty:

“…the effect of the 1930s slump and World War 2 was to raise the rate of profit but thereafter the falling trend reasserts itself. The higher rate of profit in the peripheral countries has raised the global rate but again the downward trend remains. The rate of profit in the peripheral countries though higher than that in the core countries tends to fall more steeply.”

They even produce a graph showing the rate of profit falling since 1860:

http://www.leftcom.org/files/2015-08-07-profit-graph-2.png

But to come back to the main issue, you seem to imply the ICC believes there is no economic growth in decadence:

Link wrote:

“There has been a problem with explaining decadence in terms of permanent crisis as though everybody is absolutely worse off at all times. Its clear however that significant economic development has taken place in decadence…”

In the bilan of 40 years of its existence the ICC openly admitted that it has tended to defend a ‘catastrophist’ vision and consistently overestimate the pace of the economic crisis, which led it to underestimate the growth of China etc. But where has it ever argued that decadence means no economic growth?

So I think you've raised some real issues abour Luxemburg's theory, which I'd still like to come back on,  but it also seems like you've set up a bit of a straw man on the question of growth in decadence?

jk1921
growth

MH wrote:

In the bilan of 40 years of its existence the ICC openly admitted that it has tended to defend a ‘catastrophist’ vision and consistently overestimate the pace of the economic crisis, which led it to underestimate the growth of China etc. But where has it ever argued that decadence means no economic growth?

So I think you've raised some real issues abour Luxemburg's theory, which I'd still like to come back on,  but it also seems like you've set up a bit of a straw man on the question of growth in decadence?

 

I always thought the issue with decadence was not that economic growth stops or even that growth rates can't be higher than ascendance, but that captialist social relations no longer serve the objective development of humanity, which isn't something that can reduced to growth rates.

Link
Shall we start again MH. I

Shall we start again MH. I prefer to think i was showing some ingenuity in my arguments but so it goes,  I apologise for all sloppy expressions.  However where you criticise me for saying the ICC says no economic growth in decadence but what i said was 'There has been a problem with explaining decadence......' and you criticise me for saying that Piketty's statistics 'prove the falling rate of profit' whereas what i said was they give 'the FROP theory is given justifying factors...'  I think the term pot and kettle come to mind as much as strawman.

So starting again lets agree with JK's statement above '... the issue with decadence was not that economic growth stops or even that growth rates can't be higher than ascendance, but that captalist social relations no longer serve the objective development of humanity, which isn't something that can reduced to growth rates.'    I think this is well stated but what i was trying to get at before was that it was not always as clearly expressed ie the ICC and all of us took a somewhat catastrophist view of decadence in the past.

Is that the best starting point.  I went over your EXCELLENT article on decadence again in which you very pointedly argued that the level of growth in decadence is much less than what it could have been.  

I think both MH and JK have explained things very well but what i was trying to get at before was that it was not always as clearly expressed.

I think the key points I wanted to make are that i was genuinely surprised by Pikettys chart on growth and the levels that were achieved during what we conceive of as decadence.  (Also I note that my second source - our world in data - was also used in that EXCELLENT article on decadence so maybe the figures arent to be discarded.)   So are these figures wrong?  My next key point is my objection to the luxemburgist theory that accumulation is dependant solely on the existence of pre-capitalist markets - because how can growth be increasing in a period when pre-capitalist markets must be at least diminishing if not reduced to very low levels.  

Now i think i am correct that the ICC does not reject that luxemburgist theory (and clearly Luxemburg had a 'catastrophist vision') and its a discussion of that that i wish to contribute too.  Neither does the ICC stick strictly to that theory either and has been making some re-evaluation of crises in decadence and has commented on the issue of growth of China.  I havent gone back to find quotes to this effect so do tell me if im wrong 

So MH you agree that i have raised real issues with luxemburg's theory and i look forward very much to what you have to say about them.  I am sure what you say will be very interesting and thoughtful and I promise to take it seriously. I know im creeping but i am just hoping it will persuade you to overlook my weaknesses 

 

MH
Luxemburg's theory

Link if I’ve seemed deliberately argumentative I apologise but I was just trying to clear the decks of false arguments.

So firstly on growth in decadence I think we’re all now agreed there has been a ‘somewhat catastrophist view’ in the past, and our position has not always been clearly expressed. Marxism is an empirical method and we need to be able to show empirically exactly how and why capitalist social relations are fettering the productive forces today. This would allow us to show how and why Picketty’s graphs are wrong or misleading, but maybe someone with more understanding than me can contribute on this issue?

Secondly, on Luxemburg’s theory. You’ve picked up on her statement that “the accumulation of capital becomes impossible in all points without non-capitalist surroundings”. Taken literally, this appears to fly in the face of 100 years of capitalist decadence. Of course, strictly there are still ‘non-capitalist surroundings’ in the world, but as these are progressively destroyed in decadence one would expect to see a correspondingly deepening crisis in graphs of economic growth. As you quite rightly point out, this does not appear to be the case.

But the thing is, I don’t think this is meant to be taken literally. Why? Partly because Marx makes similar-sounding statements in Capital about the contradictions of capitalism leading to its eventual “dissolution”. Marx, I think like Luxemburg, is talking here at the level of the objective laws of the capitalist system, in order to demonstrate that at this level its contradictions are indeed fatal. But Luxemburg herself makes it quite clear she is not arguing that capitalism will somehow automatically collapse:

The more ruthlessly capitalism sets about the destruction of non-capitalist strata at home and in the outside world, the more it lowers the standard of living for the workers as a whole, the greater also is the change in the day-to-day history of capital. It becomes a string of political and social disasters and convulsions, and under these conditions, punctuated by periodic economic catastrophes or crises, accumulation can go on no longer. But even before this natural economic impasse of capital’s own creating is properly reached it becomes a necessity for the international working class to revolt against the rule of capital” (Accumulation, chapter 32)

So I don’t think it’s true to say that Luxemburg had a 'catastrophist vision'. Whether you are correct to say the ICC doesn’t stick strictly to her theory needs to be answered by a member of the ICC but I suspect it relates to the point above and how we interpret her theory….

 

Link
I agree there is a real

I agree there is a real problem in determining exactly what the Luxemburg and indeed Lenin said about the future of capitalism a century ago.  Both will have accepted the potential of either socialism or barbarism  They were making predictions based on their experience up till WW1 and its not a criticism  of them to say things have turned out differently  Lenin saw imperialism as the highest phase (the final phase?) of capitalism and suggested that it 'is the transition from capitalism to a higher system' and Luxemburg i think saw the war as the starting point of a 'period of political and social disasters and convulsions'  My interpretation is she meant barbarism is a more explicit sense than we would apply it to the current period.  However i can accept that she could have been less catastrophist than i implied so let me have a bit of time to read up on chapter 32 and i will comment on that later.  I will also have a look at the cwo text you mentioned

My reading of Chapter 26 however is that the inability of capitalism to accumulate without  pre-capitalism markets is absolutely central to her thesis.  The whole of the previous chapters in  Accumulation of Capital is working up to this one point and the a lot of the rest is justification of this point just as the Anti-critique is.  At this point in the book she is quite clearly focussing on this one idea, that capitalism needs external markets as the only means by which it can accumulate; that surplus value cannot be realised within capitalism but has to be realised outside capitalism in those unconverted non-capitalist internal and external markets.  She repeats the point sufficiently and in different ways to be able to say that it must be taken literally.   Having said this i am not clear on the point you are making about Marx's statement about the dissolution of capital.  Re Luxemburg though is the failure of accumulation then not her view of how barbarism comes about?

What are the implications?   Here  i am outside my comfort zone already.   I think it becomes possible  to clarify our understanding of the process of decadence and becomes possible to explain decadence more clearly without the implication of catastrophe.   I dont think it eliminates the concept of saturated markets but I would say it put more emphasis on the driving force of competition and its limitations. The focus of understanding crises and ruling class responses goes onto issues of state capitallism, war, credit, technological and social change.  It think it leads to possible correlation between an understanding of markets and the FROP.  Sorry feeling guilty now cos this just me musing now and im busy for the next couple of days.  I am clearly going to have to come back later in the week when i have some time to think and read some more

d-man
pro-Luxemburg article

Erwin Reiner, Some Remarks on Automation, Science and Society 28 (4):432 - 447 (1964). Reiner seems to have been a philologue (specialised in French).

 

[And a reference to some article on the law of the tendency of the rate of profit to fall, from the post-war boom era by the French marxist Henri Denis: Rate of Profit and National Income, Science and Society 23 (4):298 - 316 (1959).]

Alf
1914 and the extra-capitalist world

It may be that in various articles the ICC itself has given the impression that decadence begins when capitalism has conquered the world and there are no more, or very few extra-captalist markets left. But if we look at what Rosa herself said, she was clear that, in 1915 (when she wrote the passage below, from the Anti-Critique) capitalism still had a very large field of expansion in front of it: 

"In reality, there are in all capitalist countries, even in those with the most developed large-scale industry, numerous artisan and peasant enterprises which are engaged in simple commodity production. In reality, alongside the old capitalist countries there are still those even in Europe where peasant and artisan production is still strongly predominant, like Russia, the Balkans, Scandinavia and Spain. And finally, there are huge continents besides capitalist Europe and North America, where capitalist production has only scattered roots, and apart from that the people of these continents have all sorts of economic systems, from the primitive Communist to the feudal, peasantry and artisan" (Anticritique, chapter 1)

This is important because those who say that capitalism's survival and development since 1914 make a nonsense of Luxemburg's theory haven't read Luxemburg very carefully. In different phases of the 20th century, in particular post World War Two and in the more recent phase referred to as "globalisation" (really only the latest phase of capitalism's historic process of globalisation) the capitalisation of formerly extra-capitalist zones has continued - aided of course by the mechanisms of state capitalism and credit which have become no less crucial to the survival and development of the system in decadence. 

What does this imply? That the onset of decadence, marked by the first world war, was not the immediate product of an economic crisis or the definitive exhaustion of further possibilities of expansion, but of political-military rivalries aimed at securing access to these possibilities. The first imperialist world war broke out in the "golden afternoon" of the Edwardian era, a period when economic crisis in the most obvious sense was not a major preoccupation of the ruling class. 

 

baboon
I think that the quote above

I think that the quote above from the Anticritique goes a long way to clearing up and avoiding any confusion about Rosa Luxemburg's position and the position of the ICC of capitalist decadence. I think that certain weaknesses in the defence of this position gave room for a mechanical analysis of decadence that represented a misunderstanding of what it is. Apart from the global existence of pre-capitalist markets - still largely existing as identified by Luxemburg - we have the example of China right up to elements of proletarian self-organisation and the mass strike and the nation's place on the world table. Against this there are also growing elements of deindustrialisation, decay and destruction.

Alf's post is a clarification on the question of the "fluid" nature of globalisation, today's being only the latest phase of the globalisation of capital accompanied, as it is, by credit and state capitalism. It wasn't a once-and-for-all globalisation of capital around the early 1900's because decadence isn't a static phenomenom and the bourgeoisie have adapted, maintained and defended itself at the expense of others and of the working class throughout the whole period. What happened to provoke the first world war was that in crucial areas across the world military competition, imperialism is another thing that Luxemburg is very clear about, reached such a point between the major nations that it exploded into global warfare. It was this development, rooted in the fundamental economic contradictions of capitalism, that give rise to the new period and a distinct possibillity of class war.

jk1921
I think its hard to

I think its hard to understand the outbreak of WWI in economic terms alone even if these were a factor. One also has to consider the development of the European state system up to that point: the decadence of the old empires (Russian, Habsburg, Ottoman, Prussian, etc.), but especially the inability of the state system to produce many viable "new states"--which is another factor that must be taken into consideration in understanding the decadence of the capitalist world system itself (something else Rosa wrote about). So, here is an empircal question: How many "viable" new national states have been formed in the period we generally consider to correspond to decadence? Of course, answering that would require specifiying what we mean by "viable."

baboon
If we start from now and look

If we start from now and look back at the creation of the latest capitalist state, South Sudan around the mid-1990's, we can see that it embodies many of the aspects of the decomposition of the system: imperialist rivalry and war, gangsterism, corruption and terror and not least a developing famine. The US and Britain, the latter even mobilising the Anglican Church in the process, has fought a low-level war here for decades in order to pursue their interests in the region which has also attracted a certain implantation by China. The viability of this nation state speaks for itself: imperialist imposition, lack of any "national" dynamic or coherence, some economic activity but dwarfed by corruption and military spending from all protaganists.

Following the collapse of the eastern bloc there was a number of new states, just over 30 and many, without going into detail, the direct result of the USSR's implosion, emphasing the centrifugal tendencies of decomposition. The dissolution of Czechoslavakia in 1993, into the Czech and Slovak Republics was, if I remember correctly, the result of American and British pressure to stop a German expansionism which they feared at the time. While both countries remain economically viable to some extent it's an overall backward step. That's clearer in the countries of ex-Yugoslavia that have generally descended into corruption and gangsterism and where nationalism and inter-ethnic hatreds have been stirred up in the defence of the "new" nation states. They are not economically healthy.

After WWII, there were no new nations in Europe but there was the wave of decolonisations in Africa and Asia, with some having some economic weight and activity. After WWI, there were six new countries: Poland, Latvia, Estonia(?), Finland, Austria and Czechoslavakia. As important as they are none of these countries was born out of an internal dynamic that we see in the nation states of capitalism's rise.They have their specificities, particularly Poland and Austria, but they are in effect elements from imperialist war.
And the borders constructed by the victors of that war in and around the Middle East, the Caucasus and central Asia particularly, have become permanent imperialist running sores where, for example, Iraq and Syria have ceased to become countries and are imperialist battlegrounds favouring the emergence of backwards ideologies and criminality. It doesn't at all look good for the masses in this region although there is still some small elements of protest, as for example in Ghouta in Syria recently against the jihadis.

The problem with the decadence by numbers theory is that it is restrictive and one can see this in the CWO's on-going attempts to fit any war or imperialist tension into an economic issue. It doesn't help an analysis and doesn't stop errors such as the organisation heading an article on a US attack on Syria recently as "It's War".
 

Link
Comrades

Alf seems to be suggesting that I haven’t read Luxemburg carefully enough but I  am quite willing to learn more of the theory if you can relate her actual economic theory on accumulation to todays economy.  I note though the ICC has also admitted to errors in its understanding and application of luxemburg’s ideas. 

(http://en.internationalism.org/international-review/201601/13788/resolution-international-situation)

I don’t think that Alf or Baboon have addressed the points I have been making.  MH has said that I have raised questions about Luxemburgs theory but hasn’t yet commented on those questions.

The quote from Anti-critique is clear but that is not what I was questioning.  The concept I understood from the ICC is that decadence was a product of diminishing pre-capitalist markets.  I never thought that the pre-cap markets were eliminated by 1914 and I still wouldn’t argue there are none left now.  However I thought the ICC was implying  that these markets were diminishing significantly during decadence and that this was linked to the phenomenon of the saturation of markets.

From the Int Sit document mentioned earlier and dated as recently as Jan 16:  “The denial, in some of our key texts, of any possibilities of expansion for capitalism in its decadent phase also made it difficult for the organisation to explain the dizzying growth of China and other ‘new economies’ in the period since the downfall of the old blocs”  So what is the position now?

I am making specific criticisms of central arguments in her theory relating capitalist accumulation to pre-capitalist markets so If I may repeat the key points Ive made that I don’t think have been answered yet:-

On Luxemburg theoretical analysis, is she correct to suggest that the product of a cycle of accumulation, c+v+s, must be equated fully in value by available cash liquid finances ie cash in order for it to be realized?

Are the statistics that I quoted on economic growth and population growth during the 20th and 21st century correct?

(the 2 sources I provided are:
https://ourworldindata.org/economic-growth#globally-over-the-last-two-millennia-until-today & https://ourworldindata.org/world-population-growth/#key-changes-in-population-growth)

If correct, is that escalating growth of the capitalist global economy during 20th and 21st centuries solely a product of pre-cap sectors as Luxemburg says? 

Does that mean that pre-capitalist markets have also been growing (ie the population growth) to facilitate capitalist expansion?

 

 

Link
comrades are being defensive about Luxemburg and luxemburgism

Alf seems to be suggesting that I haven’t read Luxemburg carefully enough but I  am quite willing to learn more of the theory if you can relate her actual economic theory on accumulation to todays economy.  I note though the ICC has also admitted to errors in its understanding and application of luxemburg’s ideas. 

(http://en.internationalism.org/international-review/201601/13788/resolution-international-situation)

I don’t think that Alf or Baboon have addressed the points I have been making.  MH has said that I have raised questions about Luxemburgs theory but hasn’t yet commented on those questions.

The quote from Anti-critique is clear but that is not what I was questioning.  The concept I understood from the ICC is that decadence was a product of diminishing pre-capitalist markets.  I never thought that the pre-cap markets were eliminated by 1914 and I still wouldn’t argue there are none left now.  However I thought the ICC was implying  that these markets were diminishing significantly during decadence and that this was linked to the phenomenon of the saturation of markets.

From the Int Sit document mentioned earlier and dated as recently as Jan 16:  “The denial, in some of our key texts, of any possibilities of expansion for capitalism in its decadent phase also made it difficult for the organisation to explain the dizzying growth of China and other ‘new economies’ in the period since the downfall of the old blocs”  So what is the position now?

I am making specific criticisms of central arguments in her theory relating capitalist accumulation to pre-capitalist markets so If I may repeat the key points Ive made that I don’t think have been answered yet:-

On Luxemburg theoretical analysis, is she correct to suggest that the product of a cycle of accumulation, c+v+s, must be equated fully in value by available cash liquid finances ie cash in order for it to be realized?

Are the statistics that I quoted on economic growth and population growth during the 20th and 21st century correct?

(the 2 sources I provided are:
https://ourworldindata.org/economic-growth#globally-over-the-last-two-millennia-until-today & https://ourworldindata.org/world-population-growth/#key-changes-in-population-growth)

If correct, is that escalating growth of the capitalist global economy during 20th and 21st centuries solely a product of pre-cap sectors as Luxemburg says? 

Does that mean that pre-capitalist markets have also been growing (ie the population growth) to facilitate capitalist expansion?

 

 

Alf
long haul...

It won't be possible to respond to all the questions posed on this thread in one go. I'm still trying to catch up with some of the ones posed earlier, in particular by d-man who seems to think that not only were the extra-capitalist zones not necessary for the realisation of surplus value, they weren't even possible outlets for it. We responded to a similar criticism made by the CWO back in the 70s, in the article 'Marxism and Crisis Theory' in International Review 13 (http://en.internationalism.org/node/2639):

*************************************

"As Luxemburg explains in Accumulation when Marx talks about "expanding the outlying fields of production", or "foreign trade", he means expansion into and trade with non-capitalist areas, since, simply for the sake of his abstract model of accumul­ation, Marx treats the entire capitalist world as one nation, composed exclusively of workers and capitalists. Contrary to the assumptions of the CWO, who can't see how surplus value can be realized by such trade (Revolutionary Perspectives, no.6, pps.15-­16), Marx clearly recognized the possibility of such trade:

"Within its process of circulation, in which industrial capital functions either as money or as commodities, the circuit of industrial capital, whether as money capital or as commodity capital, crosses the commodity circ­ulation of the most diverse modes of social production. No matter whether commodities are the output of product­ion based on slavery, of peasants (Chinese, Indian ryots), of communes (Dutch East Indies), of state enter­prises (such as existed in former ep­ochs of Russian history on the basis of serfdom) or of half-savage hunting tribes, etc -- as commodities and money they come face-to-face with the money and commodities in which the industrial capital presents itself and enter as much into its circuit as into that of the surplus value borne in the commod­ity capital, provided the surplus value is spent as revenue; hence they enter into both branches of circulat­ion of commodity capital. The char­acter of the process from which they originate is immaterial." (Capital, Volume II, p.113)

Marx not only accepts the possibility of such trade; he also glimpses its necessity, since the process of trading with, destroy­ing, and absorbing pre-capitalist markets is none other than the way capitalism "continually expanded its market" during the ascendant phase.

"As soon as act M-MP is completed, the commodities (MP) cease to be such and become one of the modes of existence of industrial capital in its function­al form of P, productive capital. Thereby however their origin is oblit­erated. They exist henceforth only as forms of existence of industrial capital, are embodied in it. However it still remains true that to replace them they must be reproduced and to this extent the capitalist mode of production is conditional on modes of production lying outside its own stage of development. But it is the tenden­cy of the capitalist mode of production to transform all production as much as possible into commodity production. The mainspring by which this is accom­plished is precisely the involvement of all production into the capitalist circulation process. And developed commodity production is capitalist commodity production. The intervent­ion of industrial capital promotes this transformation everywhere, but with it also the transformation of all direct producers into wage laborers." (ibid. first emphasis ours).

*********************************************

For Marx, as for Luxemburg, the relationship between capitalism and the non-capitalist zones was not one of peaceful co-existence, a kind of stable or static trade relation; the real heart of capitalist expansion is the capitalisation of these outlying zones, which of course then demands further expansion of the market to absorb the commodities produced in these newly capitalist areas. Hence capitalism is the "moving contradiction" as Marx put it, and hence “the universality towards which it irresistibly strives encounters barriers in its own nature, which will, at a certain stage of its development, allow it to be recognised as being itself the greatest barrier to this tendency, and hence will drive towards its own suspension”  (Grundrisse, notebook IV, chapter on capital))

I note that the passage written by us in the 70s still tended to see this process as the way capitalism expanded in the ascendant era, which is an illustration of our underestimation of the degree to which capitalism has continued to expand (ie continue this process of capitalisation in previously extra-capitalist zones) in the decadent epoch. 

d-man
But in your quotes Marx is

But in your quotes Marx is speaking about input (of non-capitalist commodities), not the sale of capitalist commodities. My simple point was that a non-capitalist market realises the surplus value only when it delivers actual money (gold/silver). We should not conceive of foreign trade as barter (not saying you do, but let's always keep this in mind). And if the capitalist world grants credit to the non-capitalist world, then obviously it has excess money, which it could just as well loan to capitalists.

Regarding my earlier remarks on capitalism's need for gold (and how this often came from non-capitalist sources), there was in fact someone in Marxist tradition who based himself on this for a theory of decadence, namely Lafargue in 1907:

Quote:
La quantité mondiale de l'or est limitée ; elle est estimée à une vingtaine de milliards ; elle a jusqu'ici suffi comme moyen d'échange et de circulation. Pourra-t-elle toujours suffire ?

L'exploitation de nouvelles mines augmentera la masse mondiale de l'or : mais l'expérience prouve que la production de l'or marche d'un pas beaucoup plus lent que la production agricole et industrielle et plus celle-ci se perfectionnera et plus elle distancera la production de l'or. Il arrivera un moment où la quantité mondiale de l'or sera insuffisante. Les nations capitalistes, par le fait des progrès de la production des marchandises, sont donc destinées, ainsi que les Etats-Unis, à être ébranlées par des crises de l'or qui, si elles éclatent en Amérique et en Europe en même temps qu'une crise de surproduction, comme c'est probable, occasionneront de telles perturbations sociales que le Parti socialiste international pourra s'emparer du pouvoir politique et commencer la Révolution sociale, ainsi que le pensaient Marx et Engels.

L'or, qui, importé d'Amérique, nouvellement découverte, hâta au seizième siècle l'éclosion de la Bourgeoisie moderne, est peut-être prédestiné à précipiter sa chute du pouvoir politique et économique.

https://www.marxists.org/francais/lafargue/works/1907/11/lafargue_19071125.htm--It's quite a common (bourgeois) idea that the shift away from the gold standard (1914, 1931, 1971) was due to the insufficiency of gold production. Perhaps this nevertheless reflects some recognition of its flip slide, namely overproduction.  

MH
Link wrote: I don’t think

Link wrote:

I don’t think that Alf or Baboon have addressed the points I have been making.  MH has said that I have raised questions about Luxemburgs theory but hasn’t yet commented on those questions.

Actually Link I did reply on your interpretation of Luxemburg’s theory – see my post #13

Link #21 wrote:

Are the statistics that I quoted on economic growth and population growth during the 20th and 21st century correct?

If correct, is that escalating growth of the capitalist global economy during 20th and 21st centuries solely a product of pre-cap sectors as Luxemburg says? 

Does that mean that pre-capitalist markets have also been growing (ie the population growth) to facilitate capitalist expansion?

Franky I don’t know what if anything the graphs ‘prove’, I'm not a statistician. You clearly see them as a (potential?) refutation of Luxemburg’s theory but I’ve already suggested that the issues raised in the graphs relate to the whole question of growth in decadence because on the face of it they contradict not just Luxemburg’s theory but the FROP as well (which is why I referred to the CWO’s argument that the ROP falls in decadence).

I say ‘on the face of it’ because in reality these graphs mask a whole mass of issues which would all need unpicking, not least of which is the nature of what constitutes ‘growth’ in decadence (waste, armaments, state expenditure, etc). In other words, this is not specifically about Luxemburg’s theory at all.

Even more fundamentally, decadence is not defined by particular rates of economic growth. The graph in the ICC’s Decadence pamphlet showing the slackening of industrial growth compared to what would be possible if capitalist relations were not a fetter on the productive forces is a crude indicator, a proxy and nothing more, because for Marxism the ‘productive forces’ include not only factories and machines, science and technology, etc., but the relations of production themselves and above all the working class as the revolutionary class in society. If you find a graph of all that, let me know! For me decadence is more about a qualitative change in the growth of the productive forces in this wider sense and the increasing destruction of capital (above all human capital).

fwiw I think Luxemburg provides the most coherent explanation for the entry of capitalism into decadence as a result of the rise of imperialism, which is the key factor in completing the world market and precipitating the first world war. But the saturation of markets (ie the problem of realisation of surplus value) is not the only fatal contradiction of capitalism and the tendency for the rate of profit to fall is also a significant factor in certain periods.

 

Link
Its taken me a long time but

Its taken me a long time but I finally understand what dman is s aying about pre-cap markets.   He is correct to point out that Alf’s quote from Marx, good that it is,  is talking more about inputs to capitalism from pre-cap markets rather than sales to pre-cap markets.   It seems valid to discuss trade in both directions as both must have been contributing to the expansion of capital but in different ways. 

The input of goods from pre-cap markets is clearly a contribution to the growth of capital in that the enthusiasm that capital went in search of colonies to extract raw materials, subsistence commodities, land etc .  This gain for capital though isn’t production of surplus value – unless it is valid to consider the exploitation of pre-cap areas as a project in which there are inputs of fixed and variable capital that produce an assortment of fixed and variable capital which incorporates surplus value as the profit gained from the project.  Is this a valid view?  If not then the colonies must be simply said input value into capital. 

The output of capital into pre-cap areas is interesting but difficult as its not straight sales but barter,  credit, monopolisation of the colonies as well as being profiteering.  I think dman question is valid, how can the whole of surplus value generated by global capitalism ( sorry less the value of waste production altho that is not surplus value anyway) be traded ie sold to pre-cap markets?  Is this possible, would anybody care to argue that?

This brings us back to one of the core points of luxemburgs argument.  C+V+S  must be represented by financial capital and the surplus value being generated by capital must be traded with pre-capitalist markets in order to create an equivalent value of capital accumulation

So Alfs quotes from Marx are very good but by and large do not address the hypothesis identified by Luxemburg as the means of achieving capital accumulation!! 

I was very interested in the section that Alf highlighted where Marx says”  … and to this extent the capitalist mode of production is conditional on modes of production lying outside its own stage of development.”   I looked up the section in Kapital vol 2 to have  quick hunt for the context and had a problem doing so.  So Alf could you explain how this comment is supported in the text please.  I could find nothing else in that section that linked to this quote as the rest is purely about how trade functions with no attempt (as far as I could see anyway)to expand on this idea of being conditional on external modes of production.  Obviously that is a key point relating well to Luxemburg so would appreciate a bit more insight here.

Lastly, on the graphs, I am not taking them as proof of anything but as a potential refutation, as MH does suggest.  I does worry me that  MH wishes us to discount these stats when he used the same source for stats in his article on decadence.    I would prefer to see some alternate facts maybe if that’s the appropriate phrase nowadays!? Certainly I havent yet investigate the point about the FROP yet but I will come back on that at some point soonish. 

Finally I fully agree that decadence should not be seen as being defined by particular rates of growth or shrinkage.  I emphasised jk’s quote earlier in this thread.  If we start from that view however we have to see the onset of decadence as a political stage marked by imperialism, war and social revolution just as Luxemburg and Lenin etc were saying.  Alf didn’t like me criticising Luxemburg but I don’t want to do that in general, just on this specific issue of applying and sticking to Luxemburgs hypothesis about capitalism’s total dependence on pre-cap markets for accumulation.  

Being honest I had forgotten about this point made by MH: … on Luxemburg’s theory. You’ve picked up on her statement that “the accumulation of capital becomes impossible in all points without non-capitalist surroundings”. Taken literally, this appears to fly in the face of 100 years of capitalist decadence. Of course, strictly there are still ‘non-capitalist surroundings’ in the world, but as these are progressively destroyed in decadence one would expect to see a correspondingly deepening crisis in graphs of economic growth. As you quite rightly point out, this does not appear to be the case.

I note that the ICC has said in the Int Sit report from 2016 that  it needs to review its understanding of economic development in decadence.   I think that the above statement by Luxemburg has to be taking literally and that this is one of the reasons that a review is necessary.

MH
A belated response to Link...

Link wrote:

You’ve picked up on her statement that “the accumulation of capital becomes impossible in all points without non-capitalist surroundings”. Taken literally, this appears to fly in the face of 100 years of capitalist decadence. Of course, strictly there are still ‘non-capitalist surroundings’ in the world, but as these are progressively destroyed in decadence one would expect to see a correspondingly deepening crisis in graphs of economic growth. As you quite rightly point out, this does not appear to be the case.

Link, having gone away and thought about this for six months (!), I wanted to have another go at responding to your questions. These are my thoughts…

First of all Luxemburg does indeed say that accumulation becomes impossible without non-capitalist surroundings. I take this to have the same status as Marx’s well-known statement that the tendency for the rate of profit to fall is proof that capitalism is a historically transitory system.

The logical conclusion of the FROP, although Marx I don’t think makes this point, is the full automation of capitalism, which is of course impossible because it would be the end of accumulation. In other words, it’s a ‘theoretical fiction’. The existence of the tendency alone is enough to show that capitalism is not the finally discovered form of production for humanity’s needs.

For Luxemburg capital’s need for external buyers is exactly the same. It’s proof that capitalism cannot go on forever. Both the FROP and the need for non-capitalist areas are inherent contradictions that drive the system towards its destruction. 

But long before the last non-capitalist areas are destroyed and assimilated capitalism will enter its epoch of decadence, as the result of imperialism…

“Of course, strictly there are still ‘non-capitalist surroundings’ in the world, but as these are progressively destroyed in decadence one would expect to see a correspondingly deepening crisis in graphs of economic growth. As you quite rightly point out, this does not appear to be the case.”

This is a good point…. But if you read Luxemburg’s explanation for decadence it is not simply on the basis of the non-capitalist areas remaining (she actually states that the majority of the world is still non-capitalist), but on a very specific set of circumstances: the insufficiency of these remaining areas compared to the accumulation needs of the most advanced capitalist states given their high level of development of the productive forces.

Once this point is reached, and WW1 ensues, these non-capitalist areas necessarily remain insufficient; in fact they must become even more insufficient given capital's need to expand. So the whole history of decadence is primarily capital’s search for palliative measures to deal with this global insufficiency, above all through the use of credit leading to mounting piles of debt, but also state capitalism and the war economy, etc. It is these palliatives, which of course can only worsen the situation in the longer term, which mask the  insufficiency of non-capitalist areas, and enable the semblance of growth in decadence.

Does this seem reasonable?

(edited)

 

jk1921
Interesting contribution from

Interesting contribution from MH. I think it raises, again, the specter of Trotsky's theory of  "combined and uneven development," the implications of which I am not sure have been fully integrated into our understanding of decadence.

On FROP being a "theoretical fiction": is it not possible to conceive of a situation in which there is a "negative accumulation" of capital? Certainly, it may be possible for the profit rate to be 0 or even negative in a given enterprise or sector, if that is attentuated by higher profit rates in other areas of the economy (via the transforamtion of labor values into prices), but is it possible for such a situation to obtain at the level of different geographic regions of the world economy? Is that what we are experiencing today?

Demogorgon
Capitalism's super growth?

Very quickly, on the graphs on economic growth referred to earlier. I don't think that these really capture the reality of economic growth under capitalism.

You can generate a graph of similar shape with any compound interest formula. See here. The longer the period is set, the sharper the peak at the end of the graph looks. But % growth doesn't change at all. It is % growth that matters for capitalism, rather than volume. Volume growth, outside of absolute contraction, will always increase exponentially, but % growth can slow to a crawl. A mature economy can post volume growth many times that of a totality of a smaller economy, yet the latter is more dynamic in capitalist terms.

So I think we should avoid being dazzled too much by that graph.

MH
jk could you clarify?

jk1921 wrote:

Interesting contribution from MH. I think it raises, again, the specter of Trotsky's theory of  "combined and uneven development," the implications of which I am not sure have been fully integrated into our understanding of decadence.

On FROP being a "theoretical fiction": is it not possible to conceive of a situation in which there is a "negative accumulation" of capital? Certainly, it may be possible for the profit rate to be 0 or even negative in a given enterprise or sector, if that is attentuated by higher profit rates in other areas of the economy (via the transforamtion of labor values into prices), but is it possible for such a situation to obtain at the level of different geographic regions of the world economy? Is that what we are experiencing today?

jk I seem to remember you’ve made this point before about uneven development but could you clarify why you see it as an apparent threat (?) to our view of decadence? Presumably what is at stake is our understanding of decadence as a global condition of the capitalist economy? Worth pointing out that Luxemburg was able to conclude that capitalism was a decadent social system with WW1 even while the majority of the world was still non-capitalist; presumably because her whole theory was based on the intimate relationship between the development of capitalism and the non-capitalist world from the very beginning...

On the FROP I don’t feel qualified to answer but I thought in general the trend since the 1980s has been for profit rates to rise, or at least to recover from their historic fall, as capital increases exploitation rates?
 

Link
MH, Good to hear from you

MH, Good to hear from you again on this topic.  I find it interesting because it relates to how we  analyse  the current period, its not just an academic economics topic then.

I do generally agree with the last paragraph.  It is the basic approach that we absorbed from the ICC certainly in the early days isnt it.

I understand why you suggest that both theories are similar in that the ultimate conclusion of both theories is a theoretical fiction.  Luxemburg recognized this and identified social and political consequences that would prevent the tendency reaching that conclusion (and if I read her correctly applied it to the FROP too).   However in relation to the process each describes I think there is a major difference. the FROP analysis demonstrates a tendency and countertendencies based on the core abstraction of capitalism - the basic definitions of c+v+s.   I don’t think this quite the same for the concept of accumulation being based on extra capitalist markets which is based on a premise that is her re-interpretation of how c+v+s works ‘in the real world’. This is not the core abstration and is open to debate.

In The Accumulation of Capital, Luxemburg aims to investigate the mechanism by which capital grows:  ‘How in terms of capitalism does society create out of its annual labour a great amount of capital than it formerly possessed??’ Chapter 5.   

Fair enough but her approach to this is dubious.  Hope you don’t mind a long quote from Chapter 9 which acts as a statement of the problem

All this time, it appears, Marx has been tackling the problem from
a wrong approach. No intelligent purpose can be served by asking for
the source of the money needed to realise the surplus value. The
question is rather where the demand can arise—to find an effective
demand for the surplus value. If the problem had been put in this
way at the start, no such long-winded detours would have been
needed to show whether it can be solved or not. On the basis of
simple reproduction, the matter is easy enough: since all surplus
value is consumed by the capitalists, they themselves are the buyers
and provide the full demand for the social surplus value, and by the
same token they must also have the requisite cash in hand for circulation
of the surplus value. But on this showing it is quite evident that
under conditions of accumulation, i.e. of capitalisation of part of the
surplus value, it cannot, ex hypothesi, be the capitalists themselves who
buy the entire surplus value, that they cannot possibly realise it. True,
if the capitalised surplus value is to be realised at all, money must be
forthcoming in adequate quantities for its realisation. But it is quite
impossible that this money should come from the purse of the capitalist
class itself. Just because accumulation is postulated, the capitalists
cannot buy their surplus value themselves, even though they might,
in abstracto, have the money to do so. But who else could provide the
demand for the commodities incorporating the capitalised surplus
value?

So according to this even if the capitalist have the cash they cannot provide the demand for purchase of the entirety of surplus value generated!!

She goes on to argue that only extra capitalist markets enable the accumulation of capital – in capital’s ascendancy let alone in decadence (MH please could you let me know where Luxemburg explains decadence – I am not sure what you are referring to here). 

‘Internal capitalist trade (ie within capitalism) can at best realise only certain quantities of value contained in the social product: the constant capital that has been used, the variable capital, and the consumed part of the surplus value.  That part of the surplus value, however which is earmarked for capitalisation, must be realised elsewhere.’ Chap 26

This analysis is repeated again and again different forms

Yet, as we have seen, capitalism in its full maturity also depends in all
respects on non-capitalist strata and social organisations existing side
by side with it. It is not merely a question of a market for the additional
product, as Sismondi and the later critics and doubters of capitalist
accumulation would have it. The interrelations of accumulating capital
and non-capitalist forms of production extend over values as well as
over material conditions, for constant capital, variable capital and surplus
value alike. The non-capitalist mode of production is the given
historical setting for this process. Since the accumulation of capital
becomes impossible in all points without non-capitalist surroundings,
we cannot gain a true picture of it by assuming the exclusive and
absolute domination of the capitalist mode of production
chap 26

(It seems to me chapters 25 and 26 are the key sections of  the Accumulation of Capital where she summarises the way capital functions and leaps to her conclusion of the absolute necessity of extra capitalism markets. 

So because capitalism is growing in the ‘real world’ in an environment of extra capitalist markets, Luxemburg jumps to a conclusion that these markets must be the source of growth, indeed the only source. I find this a leap of logic that is just not credible.  Furthermore the logic of her analysis must be that as extra capitalist markets decline then so does accumulation – it has to be a progressive decline! 

Credit, war, state capitalism,  can absolutely not  play any role in her theory.  It is quite clear cut and absolute – there are not countertendencies allowable here.  This is why I would suggest the ICC revises her theory rather substantially 

Link
Thanks Demo.  You are right

Thanks Demo.  You are right about graphs, its the percentage changes that matter and we do as you say need to avoid being dazzled by graphs suggesting exponential growth.  I looked at the graph of UK gdp and it does indeed show approx the same percentage growth rate from 1800 to 1900 as from 1900 to 2000.  Not so dramatic as it first appears.  

However looking at the world gdp levels the figures are 1820 - $1.2 Trillion; 1900 - $3.42 tr; 2000 - $63.1 tr.   I think this is still a significant set figures in that growth rate in 20th century is very much higher than in the 19th.  Its not what i would have expected because growth in the 19th was from a much smaller base (perhaps like China today).   

I therefore feel the need to keep asking what the significance is here.  Are these figures quoted just rubbish or, if not, how do we interpret them

Link
Labour supply from pre-capitalist countries

Please excure all the quotes but i think it important to return to what Luxemburg actually said for this  discussion.  From Chapter 26 again:

 

On these (Marx’s) assumptions, the natural increase of
the working class is the only source of extending the labour supply
commanded by capital. This view, however, is contrary to the laws
governing the process of accumulation. The natural propagation of the
workers and the requirements of accumulating capital are not correlative
in respect of time or quantity. Marx himself has most brilliantly
shown that natural propagation cannot keep up with the sudden
expansive needs of capital. If natural propagation were the only foundation
for the development of capital, accumulation, in its periodical
swings from overstrain to exhaustion, could not continue, nor could
the productive sphere expand by leaps and bounds, and accumulation
itself would become impossible. The latter requires an unlimited
freedom of movement in respect of the growth of variable capital equal
to that which it enjoys with regard to the elements of constant
capital—that is to say it must needs dispose over the supply of labour
power without restriction. Marx considers that this can be achieved by
an ‘industrial reserve army of workers’. His diagram of simple reproduction
admittedly does not recognise such an army, nor could it have
room for it, since the natural propagation of the capitalist wage proletariat
cannot provide an industrial reserve army. Labour for this army is
recruited from social reservoirs outside the dominion of capital—it is
drawn into the wage proletariat only if need arises. Only the existence
of non-capitalist groups and countries can guarantee such a supply of
additional labour power for capitalist production

 

It is not just markets and raw materials that are drawn from pre- capitalist markets.  This is why i previously raised the issue of the increase in world population in the 20th century.  Does this  mean that there  has been a growth in pre-capitalist markets?

jk1921
MH, I don't think that

MH, I don't think that "combined and uneven development" is a "threat" to decadence theory necessarily. I do wonder however if the implications of this have been fully integrated into an understanding of the political realtiies of decadence where capitalism has still not sufficiently universalized conditions among the proletariat, such that meaningful differences in the cost of labour power based on geography, etc. can still be found. Is this a permanent condition of capitalism or is it still something we are waiting for development (or anti-development) to address? For some reason, your post made me think about this (again).

jk1921
Okishio's Theorem?

MH wrote:

On the FROP I don’t feel qualified to answer but I thought in general the trend since the 1980s has been for profit rates to rise, or at least to recover from their historic fall, as capital increases exploitation rates?
 

Okishio's Theorem? Or is this a different argument based on the wage share? In any event, for profit rates to rise across the economy as a whole, exploitation rates must be dramtically higher in labour-centric sectors to counteract the fall elsewhere. What accounts for capital to be able to accomplish this. Obviously, the development fo neo-liberalism/globalizations as a mode of regulation has something to do wtih it, but I wonder if there isn't something more fundamental to the process of accumulation at play here itself on the historical level--I am thinking here about Trotsky's theory, but also the "underdevelopment" literature of the 70s. I also realize this probably has nothing to do with with your orginal post. 

Demogorgon
Having lost () two hours of

Having lost (angry) two hours of work involving graphs, data extraction, high-level mathematics, and poring over various books, I will content myself with saying that Link is right about the higher growth rates in the 20th century as opposed to the 19th. This does require some thought.

MH
Link wrote:So because

Link wrote:

So because capitalism is growing in the ‘real world’ in an environment of extra capitalist markets, Luxemburg jumps to a conclusion that these markets must be the source of growth, indeed the only source. I find this a leap of logic that is just not credible.  Furthermore the logic of her analysis must be that as extra capitalist markets decline then so does accumulation – it has to be a progressive decline! 

The starting point for Luxemburg’s theory is Marx’s analysis of capitalism’s contradictions in Capital Volume Three. The need for external buyers is rooted in the fundamental contradiction of capitalism identified by Marx: that the only motive and purpose of capital is its own self-expansion.

There is certainly no lack of evidence in the ‘real world’ to support her basic argument that this drive towards limitless self-expansion is expressed in an intimate relationship between capital and pre-/non-capitalist social formations, ever since capitalism first arose from within feudalism.

As for the ‘source’ of capital’s growth, Marx emphasises capital’s need to continually expand the market and extend the field of production; in a sense you could say all Luxemburg does is identify the specifically non-capitalist element of this need. And it is Marx who points out that the external market has geographical limits...

Re the 'logic' of her argument being that accumulation must progressively decline, I think this is only true in an abstract, theoretical sense. Accumulation did not progressively 'decline' in the 19th century, but it only 'grew' through the development of imperialism leading to world war, ie. through becoming a catastrophe, as Luxemburg so brilliantly describes. And in the 'real world' of decadence the palliative measures I referred to in my last post serve to mask this decline (although I realise this is a bit of an assertion!). 

This is also connected to your point about countertendencies...

Link wrote:

Credit, war, state capitalism, can absolutely not play any role in her theory. It is quite clear cut and absolute – there are not countertendencies allowable here. This is why I would suggest the ICC revises her theory rather substantially.

You have a point here; Luxemburg does not deal with possible countertendencies (although she does mistakenly identify militarism as a new field of accumulation). But unless you can show me evidence I don’t believe this is down to the ‘absolutism’ of her theory, rather to the fact that she hoped and expected capitalism to be imminently overthrown. If she had lived, she would certainly have had to revise her theory in the light of capitalism’s survival. As it is, she left this task to her 'heirs' in the Communist Left.

PS Luxemburg’s conclusion that capitalism is now a decadent system is in the Junius Pamphlet.

Our necessity enters into its full rights the moment that the other - bourgeois class domination – ceases to be the bearer of historical progress, when it becomes an obstacle, a danger to the further development of society. The capitalist world order, as revealed by the world war, has today reached this point.”

 

Link
MH wrote

MH wrote:

You have a point here; Luxemburg does not deal with possible countertendencies (although she does mistakenly identify militarism as a new field of accumulation). But unless you can show me evidence I don’t believe this is down to the ‘absolutism’ of her theory, rather to the fact that she hoped and expected capitalism to be imminently overthrown. If she had lived, she would certainly have had to revise her theory in the light of capitalism’s survival. As it is, she left this task to her 'heirs' in the Communist Left.

 

MH, Im not quite sure here what you mean by evidence of absolutism of her theory.  If you mean what she says in her theory, then the quotes I have provided are very clear.  I would say the Accumulation of Capital does not in any way address the issue of the change of period ie decadence but focuses on justifying her contention that the accumulation process only happens when there are extra-capitalist markets - in whatever period.

Let me repeat part of the quote from earlier

But on this showing it is quite evident that
under conditions of accumulation, i.e. of capitalisation of part of the
surplus value, it cannot, ex hypothesi, be the capitalists themselves who
buy the entire surplus value, that they cannot possibly realise it. True,
if the capitalised surplus value is to be realised at all, money must be
forthcoming in adequate quantities for its realisation. But it is quite
impossible that this money should come from the purse of the capitalist
class itself. Just because accumulation is postulated, the capitalists
cannot buy their surplus value themselves, even though they might,
in abstracto, have the money to do so. But who else could provide the
demand for the commodities incorporating the capitalised surplus
value? (AofC)

This theory is ‘absolutist’  therefore and I do agree that she would have had to revise it but I am equally sure she would have provided evidence of how it could be revised.

Frankly, it appears to me that today’s arguments in favour of Luxemburgism and the importance of extra-cap markets are usually based on interpretations and assumptions explained entirely without reference to Luxemburg’s explanation of her theory in Accumulation of Capital. 

If you mean that her theory can be revised to allow for countertendencies then I would love to see the evidence for this based on an analysis of her actual arguments

My argument is not against revision of theory.  I am quite happy with the idea that extra capitalist markets facilitate the growth of capitalism and is one of there is absolutely no argument from me that decadence is not related to the achievement of a world market and to onset of imperialism something that Marx Luxemburg and Lenin addressed in their own ways.   It’s a while since ive read The Junius Pamphlet so it looks like I should go back to that.  My quick review of it gives the impression though that she is arguing there for a change of period in a more political sense and less focused on the accumulation process – so perhaps we are disagreeing because she presents a different argument in these 2 texts???  Do you think this is possible?

MH
Differences on Luxemburg

Link wrote:

MH, Im not quite sure here what you mean by evidence of absolutism of her theory.  If you mean what she says in her theory, then the quotes I have provided are very clear. 

The quotes you provide are from a section where Luxemburg is dealing with the apparent contradictions of Marx’s reproduction schemas in Capital Volume Two. It is inevitably an argument at a high level of abstraction about ‘theoretical fictions’ as Luxemburg calls them.

But I can only repeat that to me the quotes you have provided are not evidence of ‘absolutism’, any more than what Marx says about his theory in Capital, or, for that matter, what Grossman or Mattick say about the fall in the rate of profit leading to capitalism’s collapse.

Link wrote:

I would say the Accumulation of Capital does not in any way address the issue of the change of period ie decadence but focuses on justifying her contention that the accumulation process only happens when there are extra-capitalist markets - in whatever period.

In Chapter 31 she says imperialism is “the political expression of the accumulation of capital in its competitive struggle for what remains still open of the non-capitalist environment”. Far from heralding a new phase of expansion, the intensifying competition amongst the capitalist states for control of non-capitalist areas is a symptom of the growing crisis of capitalist reproduction.

By the time of the Anti-Critique (only three years later) this analysis allows her to conclude that the return of the decisive struggle of capital for expansion from the colonies to the heartlands of the system in Europe signifies the beginning of the end for the system:

The expansion of capital, which for four centuries had given the existence and civilization of all non-capitalist peoples in Asia, Africa, America and Australia over to ceaseless convulsions and general and complete decline, is now plunging the civilized peoples of Europe itself into a series of catastrophes whose final result can only be the decline of civilization or the transition to the socialist mode of production.”

This seems pretty clear to me. In fact I’m wondering why it is apparently so difficult to accept that there is a clear and demonstrable link between Luxemburg’s analysis of capital’s need for external buyers, her analysis of imperialism that clearly flows from this, and her conclusion, with the first world war, that capitalism was now a decadent social system? Even if you disagree with her analysis? In fact the unity between these three theoretical elements is startlingly clear in Luxemburg's case - and with her practice as an (imprisoned) anti-war activist in WW1. 

PS Link I'm sorry, I should first of all have acknowledged your agreement on the role of extra capitalist markets in capitalism's growth and the completion of the world market as a factor in imperialism and capitalism's decadence. 

(edited)

 

Link
Ive just written 2 completely

Ive just written 2 completely different responses to your last comment MH. I agree that there is a continuity in the theories of markets imperialism and wars and rev but yourself and the ICC make a better job of it than Luxemburg. Also what you say about militarism makes a bit of a mess of my argument that Luxemburg’s theory allows no room for countertendencies. Id like to go further into imperialism and FROP and crisis but in you don’t mind Id like to have one more go to explain my central point about Luxemburg’s theory as expressed in A of C. being faulty logically and hope you can see why. I note however that I have been basing my criticism of Luxemburgism simply on what she wrote in AofC because I saw this as the main exposition of Luxemburg economics but I don’t think you are doing the same.

What I have put together is a series of selected quotes from Chapter 1 of the Anticritique where she runs through her theory from AofC clearly and without lots of economic equations. They are all in order so that they should explain her theory concisely.

At the start she suggests thinking of total capitalist production as one big heap and then dividing it up. Workers and Capitalists first of all take their subsistence out of the heap and then items that are used to renew the existing means of production.

"In our assumed total stock of commodities in capitalist society we must accordingly find a third portion, which is destined neither for the renewal of used means of production nor for the maintenance of workers and capitalists. It will be a portion of commodities which contains that invaluable part of the surplus value that forms capital’s real purpose of existence: the profit destined for capitalization and accumulation. What sort of commodities are they, and who in society needs them?"

"workers are not, like others, customers for their commodities, but simply the labour force, whose maintenance out of part of its own produce is an unfortunate necessity, reduced to the minimum society allows."

"COULD THE CAPITALISTS THEMSELVES PERHAPS BE THE CUSTOMERS FOR THAT LATTER PORTION OF COMMODITIES BY EXTENDING THEIR OWN PRIVATE CONSUMPTION? THAT MIGHT BE POSSIBLE, ALTHOUGH. THERE IS ENOUGH FOR THE RULING CLASS IN ANY CASE, EVEN WITH ITS LUXURIOUS WHIMS. BUT IF THE CAPITALISTS THEMSELVES WERE TO SPEND THE TOTAL SURPLUS VALUE LIKE WATER THERE WOULD BE NO ACCUMULATION."

"Who then could be the buyer and consumer of that portion of commodities whose sale is only the beginning of accumulation? So far as we have seen, it can be neither the workers nor the capitalists."

Also it can’t be other "sorts of strata in society like civil servants, military, clerics, academics and artists which can neither be counted among the workers nor the employers?"

"Those goods which fulfil this purpose must not consist of luxurious articles for the private consumption of the capitalists, but must be composed of various means of production (new constant capital) and provisions for the workers (variable capital]."

"All right, but such a solution only pushes the problem from this moment to the next. After we have assumed that accumulation has started and that the increased production throws an even bigger amount of commodities on to the market the following year, the same question arises again: where do we then find the consumers for this even greater amount of commodities? Will we answer: well, this growing amount of goods will again be exchanged among the capitalists to extend production again, and so forth, year after year? Then we have the roundabout that revolves around itself in empty space. That is not capitalist accumulation, i.e. the amassing of money capital, but its contrary: producing commodities for the sake of it; from the standpoint of capital an utter absurdity. If the capitalists as a class are the only customers for the total amount of commodities, apart from the share they have to part with to maintain the workers – if they must always buy the commodities with their own money, and realize the surplus value, then amassing profit, accumulation for the capitalist class, cannot possibly take place."

"They must find many other buyers who receive their means of purchase from an independent source, and do not get it out of the pocket of the capitalist like the labourers or the collaborators of capital, the government officials, officers, clergy and liberal professions. They have to be consumers who receive their means of purchase on the basis of commodity exchange, i.e. also production of goods, but taking place outside of capitalist commodity production. They must be producers, whose means of production are not to be seen as capital, and who belong to neither of the two classes – capitalists or workers – but who still have a need, one way or another, for capitalist commodities."

"Thus capitalism expands because of its mutual relationship with non capitalist social strata and countries, accumulating at their expense and at the same time pushing them aside to take their place. The more capitalist countries participate in this hunting for accumulation areas, the rarer the non-capitalist places still open to the expansion of capital become and the tougher the competition; its raids turn into a chain of economic and political catastrophes: world crises, wars, revolution."

"But by this process capital prepares its own destruction in two ways. As it approaches the point where humanity only consists of capitalists and proletarians, further accumulation will become impossible. At the same time, the absolute and undivided rule of capital aggravates class struggle throughout the world and the international economic and political anarchy to such an extent that, long before the last consequences of economic development, it must lead to the rebellion of the international proletariat against the existence of the rule of capital."

I believe the above gives a short and accurate review of her theory on why extra cap markets are essential to accumulation. Hope you agree. I suggest however that her logic is wrong. I don’t disagree with the points she makes about workers and other strata. But I cant see why, in the section i have capitalised, she only considers capitalists as able to purchase means of subsistence for themselves? Why do capitalists not exist as employers buying the means of production and able to use it to expand production. She uses this argument to say that the full value of the surplus value generated can never be realised within capitalism. Why can that only happen through trade outside capitalism? I cannot see this as a reasonable argument but this argument is absolute central to her theory of why external markets are the only way to accumulate.

I would absolutely agree that this external trade is used by capitalism to expand itself and to make it self more profitable. It clearly brings resources of all types into the capitalist world. Hence the drive to colonise. I absolutely agree that the lack of these markets will therefore have an impact on capitalism capacity to grow. But I cant see why she decides this to be the only way to accumulate. Her discussion generally about relationships with non-capitalist society does however set a good context for sess extra capitalist trade as a benefits and stimulation of growth of capital.

MH
artificial models and real contradictions

Link wrote:

I would absolutely agree that this external trade is used by capitalism to expand itself and to make it self more profitable. It clearly brings resources of all types into the capitalist world. Hence the drive to colonise. I absolutely agree that the lack of these markets will therefore have an impact on capitalism capacity to grow. But I cant see why she decides this to be the only way to accumulate. Her discussion generally about relationships with non-capitalist society does however set a good context for extra capitalist trade as a benefits and stimulation of growth of capital.

Again it’s worth emphasising the level of agreement here. And I agree it would be good to widen this discussion out, to look at alternative theories of capitalist decadence.

Link wrote:

But I cant see why, in the section i have capitalised, she only considers capitalists as able to purchase means of subsistence for themselves? Why do capitalists not exist as employers buying the means of production and able to use it to expand production. She uses this argument to say that the full value of the surplus value generated can never be realised within capitalism. Why can that only happen through trade outside capitalism? I cannot see this as a reasonable argument but this argument is absolute central to her theory of why external markets are the only way to accumulate.

Capitalists do exist as employers buying the means of production in Luxemburg’s theory. But her argument is that if they consume the full amount of the surplus value generated they would have nothing left to expand production:

“If the capitalists as a class are the only customers for the total amount of commodities, apart from the share they have to part with to maintain the workers – if they must always buy the commodities with their own money, and realize the surplus value, then amassing profit, accumulation for the capitalist class, cannot possibly take place.” (Anti-Critique, Chapter 1)

The central problem for capital is to continually expand itself. Luxemburg’s central argument is that this is not possible in a world consisting of only capitalists and workers.

Of course such a world is not real. She is dealing here with Marx’s reproduction schemas which are based on the assumption that capitalism is the only mode of production in the world and consists only of capitalists and workers. She is trying to reconcile these schemas, which are perfectly valid within their own logical limits, with Marx’s analysis of capitalism’s inherent contradictions and specifically its inbuilt tendency to overproduce, which demands the continual extension of the market and expansion of production... The only logical conclusion for her is that there must be buyers outside of this artificial world; this is the only possible solution that is consistent with capitalism’s (real) inbuilt drive towards its own self-expansion.

(Incidentally I think the ‘abolutism’ that you see in Luxemburg’s theory is actually a reflection of the 'absolutism’ of the mathematical models she is interrogating.)

You can reject her solution to this problem of course but then surely you have to find an explanation that avoids concluding that capitalism can simply create its own market? Is this where the FROP comes in? Grossman of course denied that capitalism had any problem of realising surplus value...

Link
Reasons Why

Mh I think we are getting to the core of this issue or maybe my issues with it. I agree that your quote from RL (getting fed up of typing the name in full) is what she is arguing. Please could you explain why though (even though I presume you are repeating her argument rather than fully agreeing with her)

RL explanation in Ch 1 of the Anticritique makes no sense to me: “Will we answer: well, this growing amount of goods will again be exchanged among the capitalists to extend production again, and so forth, year after year? Then we have the roundabout that revolves around itself in empty space. That is not capitalist accumulation, i.e. the amassing of money capital, but its contrary: producing commodities for the sake of it; from the standpoint of capital an utter absurdity. If the capitalists as a class are the only customers for the total amount of commodities, apart from the share they have to part with to maintain the workers – if they must always buy the commodities with their own money, and realize the surplus value, then amassing profit, accumulation for the capitalist class, cannot possibly take place.”

Can you explain please why, according to her analysis, although sv generated includes a portion for workers as subsistence, a portion for capitalists as subsistence, a portion for capitalists for the renewal of existing capital and finally a portion destined to expand capital, capitalists can realise that portion for renewal of existing capital machinery etc but not realise that portion for expansion of existing capital machinery etc. I can see no reason for this argument! Why if the capitalist buy this last portion of sv can it only be as luxury goods and hence personal subsistence?

Another interesting point you make is that capitalism cant create its own markets and I need an explain for that too because I don’t see why not. Surely the use of credit and demand management tools are means for creating new markets by borrowing against future production. Arent these part of the mechanisms that state capitalism has come up with that helps capital deal with its limitations and manage growth. Isn’t that something we all agree on! In addition my point about the population expansion since the start of the 20th century is surely relevant here. Is this not a factor facilitating the expansion of capital.? Remembering Demo’s point about statistics, I checked and world pop grew by approx 40% in C18th, 50% in C19th, and 400% in C20th, so surely this is a sign of capitalism’s growth rather than the growth of pre-capitalist markets.

I think its correct to say that the FROP theory accepts this notion that capitalism creates its own markets. This would be because the ROP ‘calculation’ (or approximation as it is very hard to determine specific numbers) is made following all mechanisms, policies, events that occur to either expand or contract the accumulation process. This is a point Grossman makes somewhere in ‘The Law of Accumulation … ’ about FROP in relation the RL’s market theory ie whatever external markets provide towards increased accumulation, the ROP must still fall over time. We would agree I think that this is a longer term result as all accumulation through higher technology, increased exploitation and expanding markets are only temporary countermeasures against the FROP.

Demogorgon
Some comments

MH wrote:
Capitalists do exist as employers buying the means of production in Luxemburg’s theory. But her argument is that if they consume the full amount of the surplus value generated they would have nothing left to expand production

Except that this cannot be true. The argument seems based on a failure to understand what accumulation actually is. Capitalists expand production by buying additional commodities: machines, raw materials, labour, etc. This is productive consumption.

Luxemburg, from memory, actually does acknowledge this but asks the question as to why capitalists would buy additional means of production. For Luxemburg, this comes down to demand. But she fails to understand that capitalists do not care about demand in the totality.

A capitalist confronted with a "saturated market" does not inevitably throw in the towel. On the contrary, he attempts to cheapen his products to better compete on the market and this involves increasing investment in machinery and expanding her industrial base. This enables him to undercut his rivals but his own investment also provides an enlarged market.

As long as surplus value is sufficient for the capitalist to continue the accumulation process, markets will remain sufficient. If surplus value cannot meet expansion requirements, then capitalists will not buy new factories, no new demand is created and this appears on the market as a shortage of demand for producer goods. At this point, a crisis ensues. It is also worth noting that even if a crisis is avoided only the profitable capitalists can do this - the less profitable ones are driven from the market.

As for realisation, the original schemas by Marx show that surplus value extracted at one point in the system can, indeed must, be exchanged with surplus value extracted at another. There is no need for external markets in the core mechanic of the system.

Of course, the real process is much more complex and unstable than this slightly abstract presentation suggests. For one, it requires that surplus value is accumulated in the appropriate amounts at the right points in the system. In real capitalism, no regulator exists that is capable of ensuring that capitalism accumulates evenly (although, in the era of state capitalism, the bourgeoisie attempts this).

I still find Luxemburg's logic on this deeply questionable and it is clear to me that there are answers to the problems she raises that do not require extra-capitalist markets.

jk1921
Rationality

Demogorgon wrote:

A capitalist confronted with a "saturated market" does not inevitably throw in the towel. On the contrary, he attempts to cheapen his products to better compete on the market and this involves increasing investment in machinery and expanding her industrial base. This enables him to undercut his rivals but his own investment also provides an enlarged market.

As long as surplus value is sufficient for the capitalist to continue the accumulation process, markets will remain sufficient. If surplus value cannot meet expansion requirements, then capitalists will not buy new factories, no new demand is created and this appears on the market as a shortage of demand for producer goods. At this point, a crisis ensues. It is also worth noting that even if a crisis is avoided only the profitable capitalists can do this - the less profitable ones are driven from the market.

Isn't this a way of stating a central contradiction of capitalism that what may be good for a particular capitalist may not be an indicator of health for the system as a whole? Such that it may be be possible for one capitalist to increase market share, even in a situation of globally insolvent markets, such that for some capitalists--or some sectors--or even some states, there are still "market opportunities"? This would seem to lead to a discussion of imperialism. Also, the last part seems to raise the question of the development of monopolies, a question which has preoccupied some Marxist economists in the past--and something that the system may be tending towards at the current juncture.

Demogorgon wrote:

As for realisation, the original schemas by Marx show that surplus value extracted at one point in the system can, indeed must, be exchanged with surplus value extracted at another. There is no need for external markets in the core mechanic of the system.

Of course, the real process is much more complex and unstable than this slightly abstract presentation suggests. For one, it requires that surplus value is accumulated in the appropriate amounts at the right points in the system. In real capitalism, no regulator exists that is capable of ensuring that capitalism accumulates evenly (although, in the era of state capitalism, the bourgeoisie attempts this).

I still find Luxemburg's logic on this deeply questionable and it is clear to me that there are answers to the problems she raises that do not require extra-capitalist markets.

(From memory) Wasn't this the central point of Luxemburg's critique of Marx's reproduction schemas--that it worked in theory, but the real world of accumulation was of a different order of complexity? That may not be a terribly convincing critique, but that is where she started, right? This reminds me of the current academic economists' discussions about rational choice and efficient markets, where it is assumed markets operate efficiently and produce rational behavior by their own logic, but obviously recent economic history suggests that isn't case--the housing bubble, etc.

Demogorgon
Quote:Isn't this a way of

Quote:
Isn't this a way of stating a central contradiction of capitalism that what may be good for a particular capitalist may not be an indicator of health for the system as a whole? Such that it may be be possible for one capitalist to increase market share, even in a situation of globally insolvent markets, such that for some capitalists--or some sectors--or even some states, there are still "market opportunities"?

Except I'm not looking at from the point of view of one capitalist, but of each capitalist as a component in the wider system. As long as enough capitalists can extract the requisite surplus value to continue expansion, the system as a whole expands. This may or may not be the case at any particular moment, but I see no reason to to make the assumption that this is not possible.

Quote:
Wasn't this the central point of Luxemburg's critique of Marx's reproduction schemas--that it worked in theory, but the real world of accumulation was of a different order of complexity?

Yes, of course, but the schemas were never meant to describe that fully complex world but to elucidate how certain mechanisms of the capitalist "mechanism" functioned. The problem with the schemas is that they've been interpreted as proving some of the very assumptions they are based on. At many points in Capital, Marx assumes products exchange at value (i.e. supply and demand perfectly balance). This is, of course, total fiction but nobody ever believes that Marx thought value and price actually coincided in the real world!

Nonetheless, just as value is as real as (and more important than) price in the functioning of capitalism, even if only the latter can actually be observed, so too can we derive certain conclusions from the reproduction schema. Namely, that capitalism can and does overcome the realisation problem at the level of social reproduction. It is only during crises - which none of the schemas actually describe, not even Grossman's - that the underlying contradictions come to the surface.

MH
The core of the issue

Link wrote:
Mh I think we are getting to the core of this issue or maybe my issues with it.

I agree.

Link wrote:
Another interesting point you make is that capitalism cant create its own markets and I need an explain for that too because I don’t see why not.

And there we have it.

You ask why the capitalists cannot realise the portion of surplus value needed to ensure the expansion of capital as well as the portion for their own subsistence?

And the next year, when as a result of the increase in productivity they have produced an even greater mass of commodities, why can they not themselves realise this too? And then the next year, having expanded the market, why can they not buy up the even greater mass of commodities, in order to increase production in the following year and expand the market again….?

Do you not see the problem here? The workers, as wage-labourers, must by definition always be overproducers. The inherent contradiction of capitalism is that as a result of its own social relations it must overproduce. But if as you claim the capitalists can realise the full portion of surplus value produced, why can't capitalism continue to create its own market and develop the productive forces indefinitely, as the bourgeois political economists and the revisionists argued?

All along I’ve been emphasising that the starting point for Luxemburg’s theory is Marx’s analysis of capitalism’s inherent contradictions – not his reproduction schemas. The problem with so many critiques of Luxemburg is that they fixate on her analysis of the latter and forget the former, so they end up not seeing the wood for the trees. Unfortunately, in apparently denying that capitalism faces an insuperable problem of overproduction, I think you've fallen into the same trap.

For Marx, as I'm sure you know, this problem is rooted in the private ownership of the means of production,

“which reduces the consumption of the bulk of society to a minimum varying within more or less narrow limits. It is furthermore restricted by the tendency to accumulate, the drive to expand capital and produce surplus-value on an extended scale. This is law for capitalist production, imposed by incessant revolutions in the methods of production themselves, by the depreciation of existing capital always bound up with them, by the general competitive struggle and the need to improve production and expand its scale merely as a means of self-preservation and under penalty of ruin. THE MARKET MUST, THEREFORE, BE CONTINUALLY EXTENDED, so that its interrelations and the conditions regulating them assume more and more the form of a natural law working independently of the producer, and become ever more uncontrollable. THIS INTERNAL CONTRDICTION SEEKS TO RESOLVE ITSELF THROUGH THE EXPANSION OF THE OUTLYING FIELD OF PRODUCTION. BUT THE MORE PRODUCTIVENESS DEVELOPS, THE MORE IT FINDS ITSELF AT VARIANCE WITH THE NARROW BASIS ON WHICH THE CONDITIONS OF CONSUMPTION REST…" (Capital lll, Ch 15, my emphasis).

So continue to question Luxemburg’s theory by all means; I'm still willing to be proved wrong here, but if you really don’t see why the capitalists can’t realise the total amount of surplus value produced you are also going to have to tell me exactly why Marx was wrong to identify an inherent problem of overproduction for capitalism.

In fact I think it is becoming clear here that the issue is not so much your doubts about Luxemburg’s theory, which are perfectly reasonable, but the fact that you apparently defend the theory of the falling rate of profit as the sole explanation of the roots of capitalism’s historic crisis. What is helpful is that we have now uncovered one of the central problems of that theory: the denial of capital's problem of overproduction.

Over to you…

(admin: all the formatting options seem to have disappeared...?)

Link
Aww come on MH!!

I think you have been talking to Lbird too much and have picked up his bad habits. I asked 2 key questions and you’ve ignored one and given a part answer to the other. I will come back to you about the points that you raise but first how about having a proper go at answering my question on RL markets theory. From my point of view its becoming clear that it is standard practice for luxemburgists to avoid talking about her analysis in AoC that is the basis for her theory on markets, although i suppose there is good reason for that?

Demogorgon
Coping with Frustration

As is often usual in debates about economics, comrades seem to be getting frustrated. Like Link, I was a bit perplexed by the tone of MH's reply. It is simply not true that comrades that defend FROP theory deny the problem of overproduction. The point at issue is the nature and cause of overproduction. Yes, FROPists argue that capitalists can create their own markets but only when certain conditions apply - for example, as I argued above, when surplus value (really, the mass of profit, my bad) is sufficient to continue expansion.

In fact, even Luxemburgists believe capitalism creates its own markets with respect to the majority of commodities and capital in circulation (C + V in the schemas). It is only surplus value where they believe there is an issue of realisation.

Yes, the core issue is around the issue of markets, but this needs to be properly approached and I don't think MH does this. It's more than possible that MH feels the same about the FROPists.

However, I think comparing MH with LBird is uncalled for. I may not agree with MH's arguments but I see no wanton intellectual dishonesty on his part, only genuine error (in my opinion, of course). Nor has he responded with political smears.

I think it would be good, perhaps, to get back to basics and for MH to give us an idiot's guide to what he thinks is Luxemburg's core argument. Comrades can feel free to disregard this if they wish, but there is a need to take a step back and try to understand and critique what both sides are really saying.

Edit: there is a problem with formatting and I'm afraid I've no idea why!

LBird
LINKing 'bad habit' of not reading Marx to elitism

Link wrote:
I think you have been talking to Lbird too much and have picked up his bad habits. I asked 2 key questions and you’ve ignored one and given a part answer to the other. I will come back to you about the points that you raise but first how about having a proper go at answering my question ...

The only 'bad habit' being displayed here, is yours, Link.
That is, the inability to engage with what other comrades say, without being dismissive (and/or insulting).
I've always answered any questions put to me by 'materialists', like you. But you just don't like the answers, backed up by quotes from Marx, which show that your 'materialist' ideology is nothing to do with Marx, but is an elitist bourgeois ideology, which allows a small minority to claim that they, and they alone, 'know matter', and that this so-called 'knowledge' cannot be voted upon by the working class.
Put simply, Link, I'm a democrat, as was Marx, and you're not. You're a 'bad habit materialist', which you incomprehendingly picked up from Engels (and/or Lenin).
So, carry on 'ignoring' this answer, and good luck with 'Knowing Better' than the other several billion workers.

LBird
Demo, MH and Link - more alike than different?

Demogorgon wrote:

However, I think comparing MH with LBird is uncalled for.

How true, Demo!
For example, I can read and quote Marx, about who the 'active side' is.
It's 'workers', not 'an elite party'.
MH (like you) doesn't agree with "Workers' Power", but with "Matter Power". That's why you and MH call yourselves 'Materialists' about 'Science', rather than 'Communists'.
Thus, you never talk about the class nature of any so-called 'Science'.
The revolutionary proletariat has to create a 'Science-For-Us', which we democratically control, and thus can change, according to OUR interests, needs, purposes, and designs.
'Materialists' want 'Eternal Truth' (a myth propagated by Bourgeois Science), which only they 'know', a 'Truth' that pre-exists its creation by the revolutionary proletariat, and so can't be changed.

LBird
Back to the mud-pies and rocks of "Rosa's Reality"?

I should say that I've done my best to keep out of your ill-informed discussion about Rosa Luxemburg, which I'm sure that you all appreciate, but if you're going to badmouth me, I'm always here to defend Marx and Democratic Communism, and oppose Elitist Materialism, which pretends to 'Know Better' than the vast majority of workers.
Now, leave me out of your 100-year-old, out of date, battles, and I'll return the compliment, and only engage in the more interesting discussions, of current relevance to workers in the 21st century.

MH
Yeah

I really must cut down on my caffeine intake... Sorry.

The LBird insult was uncalled for though - now look what you've done.:-)

However, I still think I have provided an answer to Link's question about why capitalism can't create its own markets, based on Marx's analysis of the problem of realisation, which is hopefully a productive basis for further discussion. I look forward to seeing a more detailed response to this.

But I don't feel like writing an idiots' guide to Luxemburg's theory just at the moment - maybe another contributor would like to have a go? - because I've already provided what I feel is a reasonable statement of what I think is her basic position in my posts, especially #26 and #26. And, more importantly, I suspect if I did, it would simply set off a further round of very similar questions again. But if someone is happy to write one on the FROP I may have a go at reciprocating.

One of the sources of (my) frustration in this discussion is that I don't think comrades who are critical of Luxemburg always sufficiently differentiate between the necessary abstraction of the reproduction schemas and the conclusions that are to be drawn from them, and the real historical development of capitalism. Luxemburg's conclusion, for example, that accumulation is impossible without external buyers I see as a necessarily abstract conclusion drawn from an abstract model of capitalism. If I were to (re-)state the core of her theory, it is that capitalist accumulation depends on the existence of sufficient non-capitalist areas/strata/social and economic formations to ensure its self-expansion, and that when these are no longer sufficient compared to its global needs, it can no longer develop the productive forces in a progressive way.

In conclusion, as Link has suggested I think this discussion really needs to widen out into looking at alternative theories of decadence and explanations for imperialism. You can view my last post as a (poor) attempt to do exactly this. I look forward to hearing how the theory of the falling rate of profit is able to explain capitalist decadence...

LBird
Defence of MH, but not 'Great War' economics

MH wrote:

The LBird insult was uncalled for though - now look what you've done.:-)

Oh, I wouldn't call it an 'insult' to be compared to you, MH.
I just think it's important to show that you're not using Marx to understand Luxemburg, but using Engels' mangling of Marx's revolutionary views.
As such, your present debate about Luxemburg's 'economic' views is doomed from the start. But, I didn't want to interfere, because I already know, only too well, how angry you all get about me using Marx to point out your mistaken political outlook.
Anyway, just get back to your Edwardian discussion (which was out of date then, because of Einstein's work), leave me out of it, and I'll leave you to it.
PS. do you still wear the straw boaters, so fashionable then?

Demogorgon
Creating markets - idiot's guide

Basically, it comes down to this: surplus value is produced by capitalist A and is exchanged against an equal amount of surplus value produced by capitalist B. It really is that simple. As long as the surplus value in question remains proportionate, there is no conceptual reason why a realisation problem should emerge at this level of analysis.

At a more concrete level, the following factors complicate the process:

- Disproportionate growth in various sections (this is the root, I think, of the disproportionality theory of crisis)
- Money (Rosa seems to confuse money with value at certain points)
- Deviation of price from value (abstracted from in the schemas which assume, rather demonstrate, equilibrium of supply and demand)
- The reality of thousands of capitalists producing and exchanging rather than Marx's two hypothetical Departments
- Rising organic composition (I think Rosa was the first to discover this one)

Any one of these factors introduce elements of instability into the schemas. So it's not true that FROPists see the process of accumulation as harmonious. We just think the specific problem posed by Luxemburg is false.

Link
Definitely uncalled for!

Apologies all round.

KT
Health Warning: an economic illiterate is writing

That would be me, by the way, no-one else in this discussion.

Demogorgon wrote:
Basically, it comes down to this: surplus value is produced by capitalist A and is exchanged against an equal amount of surplus value produced by capitalist B. It really is that simple.

a) Errr. Sorry. That sounds like exchange. Not accumulation. What have I misunderstood?

b) Just to state a fact hiding in plain sight: capitalism, historically and today, has never existed without 'external' markets, whether defined geographically or 'internally', whether perfectly adequate or increasingly restrictive to the accumulation process. This mode of production was born and developed in a vast sea of existing and potential 'external' markets. Whether these markets were or are necessary for the process of expanded reproduction, and the role of 'solvent buyers' who are not the capitalists themselves is what we're discussing. I think...

Demogorgon
Economic Illiterate Responding

a) You're right it is exchange. That's because the issue in question is how the surplus value destined for accumulation is realised. Realisation is a problem of exchange.

b) No-one disputes this empirical, historical fact. The question is how relevant it is. In real capitalism, prices rarely - if ever - conform to values. But Marx makes this simplifying assumption, as well as others, to show how the core mechanisms function, stripped of other "disturbing influences".

Only when these are properly understood, can capitalism's concrete reality be understood.

Link
More alike than different. Truly spoken

MH I think your quote from Marx is excellent and im definitely want to see more of what you consider important from Marx. I don’t feel clear on the differentiation you draw between Marx’s reproduction schemas and his analysis of inherent contraditions but I do note that you now appear to be agreeing with my suggestion that there are 2 differing standpoints expressed by RL. One, the reproduction schema, which I presume is expressed by the AoC and which is to be ignored and the other which is the element that has been developed by the ICC. If this is the case please say so, because I have been focusing on the AoC thinking it represents the core of her analysis.

Furthermore, I don’t see why you should get frustrated cos I disagree about RL’s abstractions and conclusions drawn. I agree RL’s hypothesis is an abstraction based on Marx’s abstraction c+v+s. An abstraction has to be a logical generalisation of a complex real life process to make it comprehensible but it has to be valid and apply in all situations and I am saying that RLs isn’t valid, it is not logically justified. I therefore don’t agree with the conclusions drawn from it either. This is why I have asked for an explanation why SV destined for capital creation cannot be realised within capitalism whereas SV for capital replacement, capitalist subsistence and worker subsistence can (Demo’s point also)! My frustration is that you don’t appear to want to answer the question ive posed even if it is in the form of an idiots guide (why does everyone jump to give lbird protection but not help poor old Link!!!!!)

I don’t know why you would think I was saying that markets could grow indefinitely. It seems to me you were just avoiding giving direct answers to the questions I posed. Remember the question I put is why capitalism cannot create its own market and am genuinely looking for an explanation. I wasn’t being rhetorical. The point you make is good though, it cannot grow indefinitely, I agree, but that is not what I suggested and its not suggested by the FROP theory either – an analysis that also has its roots in Marx’s writing if im not wrong!

Again I don’t think I suggested that the FROP is the only explanation for capital’s problems and to be honest I am not sure how to characterise my opinions anyway. I see the FROP as sound because it’s a direct product of Marx’s most fundamental analysis of capital accumulation, however I do not feel comfortable when people say the FROP analysis is ‘about production and that’s the main issue when analysing capitalism’. Its not , its about realised and realisable capital and about the need of capital has to continuously expand and accumulate and ultimately the problems it causes itself in doing this. This is hence about overproduction as well as the creation of too little surplus value to maintain production levels and is a counterpart to market limitations. KT, I think for both theories exchange and accumulation are intimately linked as elements of the same process, in capitalism anyway.

Furthermore, and frankly not unexpectedly, the FROP is entirely compatible with the quote from Marx that you provided

As I said earlier I am quite happy to agree that “the drive to expand capital and produce surplus-value on an extended scale” is a factor in the colonialist policies of the ascendant period seeking new markets and new cheap resources incl labour for capital accumulation. This would have been, at the same time, a significant means of improving the profitability of capital too so it is also a countertendency for the FROP. The FROP also generates a drive to expand accumulation and hence markets. Through this process a greater mass of profit is generated for capital as a whole. This increases the rate of profit in the short term but in the end is unable to prevent a tendency for the ROP to fall and so ultimately exacerbating capitals internal contradictions incl the relative lack of SV.

As to the point about decadence, I don’t think that the FROP does explain decadence as such but it appears to be a litmus test of some sort. As you said, the CWO see the ROP in decadence as generally lower than in the ascendant period. I think it would have been far more logical of RL to use her analysis of real life conditions in capitalisms ascendant period ie capitalism emerging into an environment of internal and external pre-cap markets, and to identify those pre-cap markets as an major element in facilitating capitals growth in that period (ie not the sole cause). It seems to be that decadence would then be related squarely to the creation of a world market and its domination by imperialism (and not lead to very unclear discussions about what proportion of pre-cap markets have to be left to bring in decadence )

Returning to your criticisms, even if capitalists can realise the total amount of surplus value (and im up for hearing this is not true if you can explain RL’s theory), this cannot in any situation mean indefinite growth because the ROP must eventually fall. I therefore I don’t see a contradiction between FROP and overproduction. The latter is a commentary on the capacity to produce rather than an description of the mass stockpiling of unsold goods, a view which complements your view of decadence as a contrast of what it is possible but prevented by capitalism. The FROP is a product of a drive to expand and ultimately overproduce but faced by an internal contradiction of too little sv to allow that expansion – is that not simply another perspective on a lack of markets for both capital and subsistence commodities?

OK im pushing to establish common ground between economic theories so I am not sure if anyone else at all will agree with me here. I am hopeful this would give a better analysis of capitalism development in over the past century. I would be nice to get a better agreement on the strengths and weaknesses of the economic theories.

Alf
Marx and overproduction

Apologies for jumping in. I will probably have to jump out again because of the vast amount of time potentially involved in this discussion.

Link: I am in favour of pushing for common ground. Two contributions to this noble ideal:

http://en.internationalism.org/node/2639

http://en.internationalism.org/ir/139/decadence

Followers of Luxemburg often pay insufficient attention to the problem of the FROP. Both of the above articles are an attempt to show the interconnection between the two fundamental contradictions of the capitalist production

At the same time, I remain baffled, after all these years, by all the comrades and tendencies in the revolutionary movement who seem so committed to showing that, for Marx, there is no fundamental problem of realisation, ie one inherent in the wage labour relation itself.

The articles referred to above try to demonstrate that this was not the case, with the aid of copious quotes, some of which MH has used already. But the following two are particularly relevant to the debate we are having here. One, from Grundrisse, criticises the bourgeois illusion that the working class can constitute a sufficient demand for capitalist production:

"The relation of one capitalist to the workers of another capitalist is none of our concern here. It only shows every capitalist's illusion, but alters nothing in the relation of capital in general to labour. Every capitalist knows this about his worker, that he does not relate to him as producer to consumer, and he therefore wishes to restrict his consumption, i.e. his ability to exchange, his wage, as much as possible. Of course he would like the workers of other capitalists to be the greatest consumers possible of his own commodity. But the relation of every capitalist to his own workers is the relation as such of capital and labour, the essential relation. But this is just how the illusion arises - true for the individual capitalist as distinct from all the others - that apart from his workers the whole remaining working class confronts him as consumer and participant in exchange, as money spender, and not as worker. It is forgotten that, as Malthus says, ‘the very existence of a profit upon any commodity pre-supposes a demand exterior to that of the labourer who has produced it', and hence the demand of the labourer himself can never be an adequate demand. Since one production sets the other into motion and hence creates consumers for itself in the alien capital's workers, it seems to each individual capital that the demand of the working class posited by production itself is an ‘adequate demand'. On one side, this demand which production itself posits drives it forward, and must drive it forward beyond the proportion in which it would have to produce with regard to the workers; on the other side, if the demand exterior to the demand of the labourer himself disappears or shrinks up, then the collapse occurs."

Another, from Capital, which criticises the idea that the realisation problem can be solved by capitalists exchanging their products among themselves:

"Since the aim of capital is not to minister to certain wants, but to produce profit, and since it accomplishes this purpose by methods which adapt the mass of production to the scale of production, not vice versa, a rift must continually ensue between the limited dimensions of consumption under capitalism and a production which forever tends to exceed this immanent barrier. Furthermore, capital consists of commodities, and therefore over-production of capital implies over-production of commodities. Hence the peculiar phenomenon of economists who deny over-production of commodities, admitting over-production of capital. To say that there is no general over-production, but rather a disproportion within the various branches of production, is no more than to say that under capitalist production the proportionality of the individual branches of production springs as a continual process from disproportionality, because the cohesion of the aggregate production imposes itself as a blind law upon the agents of production, and not as a law which, being understood and hence controlled by their common mind, brings the productive process under their joint control. It amounts furthermore to demanding that countries in which capitalist production is not developed, should consume and produce at a rate which suits the countries with capitalist production. If it is said that over-production is only relative, this is quite correct; but the entire capitalist mode of production is only a relative one, whose barriers are not absolute. They are absolute only for this mode, i.e., on its basis. How could there otherwise be a shortage of demand for the very commodities which the mass of the people lack, and how would it be possible for this demand to be sought abroad, in foreign markets, to pay the labourers at home the average amount of necessities of life? This is possible only because in this specific capitalist interrelation the surplus-product assumes a form in which its owner cannot offer it for consumption, unless it first reconverts itself into capital for him. If it is finally said that the capitalists have only to exchange and consume their commodities among themselves, then the entire nature of the capitalist mode of production is lost sight of; and also forgotten is the fact that it is a matter of expanding the value of the capital, not consuming it. In short, all these objections to the obvious phenomena of over-production (phenomena which pay no heed to these objections) amount to the contention that the barriers of capitalist production are not barriers of production generally, and therefore not barriers of this specific, capitalist mode of production. The contradiction of the capitalist mode of production, however, lies precisely in its tendency towards an absolute development of the productive forces, which continually come into conflict with the specific conditions of production in which capital moves, and alone can move" Capital, Vol. 3, chapter 15, part III,

jk1921
Brainstorming

Demogorgon wrote:
a) You're right it is exchange. That's because the issue in question is how the surplus value destined for accumulation is realised. Realisation is a problem of exchange.

b) No-one disputes this empirical, historical fact. The question is how relevant it is. In real capitalism, prices rarely - if ever - conform to values. But Marx makes this simplifying assumption, as well as others, to show how the core mechanisms function, stripped of other "disturbing influences".

Only when these are properly understood, can capitalism's concrete reality be understood.

Brainstorming here: perhaps herein lies a problem. Perhaps the issue of prices vs. labor values is not really a "disturbing influence" on an otherwise unproblematic realization process, but is really a central contradiction (the famous "Transformation Problem") that cannot really be abstracted from in such a way?

Demogorgon
Fundamental problem

Quote:
At the same time, I remain baffled, after all these years, by all the comrades and tendencies in the revolutionary movement who seem so committed to showing that, for Marx, there is no fundamental problem of realisation, ie one inherent in the wage labour relation itself.

It was Marx who made this effort - in Grundrisse, and a third of Volume II no less - in order to counter the crude underconsumptionism of Proudhon and Malthus, and the more noble effort by Sismondi.

Quote:
One, from Grundrisse, criticises the bourgeois illusion that the working class can constitute a sufficient demand for capitalist production.

It is ironic to quote from Grundrisse, when it was here that Marx developed his first reproduction scheme as a direct counter to Proudhon's theory - which found a limit to aggregate consumption in the limited consumption of the working class. Marx shows that realisation is possible through exchange between capitalists, but that slight deviations result in overproduction.

So the questions isn't whether the working class can absorb the whole product of capitalism. It can never do this. And this is a structural limit to consumption that makes capitalism vulnerable to all sorts of instabilities. But ... this does not lead inevitably to a theory of crisis, or an inevitable realisation problem, although it certainly poses the possibilities of these things.

It is worth considering for a moment that, in order for accumulation to happen at all, each capitalist has to produce surplus product beyond what is necessary for mere replacement of the constant and variable capital consumed in production. Otherwise there are no new machines to buy. This is not yet "overproduction" and does not become so unless some of the surplus product doesn't find a buyer. The question is why this surplus product finds a buyer one minute but not the next.

Secondly, even actual overproduction can be a stimulus to accumulation as much as it is a barrier. As I outlined earlier, the inevitable result of overproduction is competition and it is competition that forces each capitalist to continually revolutionise and expand his productive base. This enlarges the market and provides outlet for additional product.

The key quote that appears to contradict my position is this: "If it is finally said that the capitalists have only to exchange and consume their commodities among themselves, then the entire nature of the capitalist mode of production is lost sight of; and also forgotten is the fact that it is a matter of expanding the value of the capital, not consuming it."

But that entire passage begins with this: "On the other hand, a fall in the rate of profit connected with accumulation necessarily calls forth a competitive struggle."

Marx is describing a scenario where overproduction has arisen due to the fall in the ROP - exactly the scenario that I alluded to in earlier posts. In this case, overproduction cannot be overcome by mere exchange because capitalists do not consume productively unless there is sufficient profit available to buy surplus product and/or enough future profit anticipated to justify investment.

Lastly, it is true that the "ultimate reason for all real crises always remains the poverty and restricted consumption of the masses". But this is nothing to do with a crisis theory based on the lack of consumption of the working class. Firstly, this "ultimate reason" is the one left after Marx specifically excludes disproportionality and a lack of consumption from capitalists, as he does so in the previous sentence.

In other words, when capitalist consumption fails - which it periodically and inevitably does - the working class is unable to pick up the slack in consumption that results due to the structural limits imposed upon the class by its position in capitalist society. Crises arise when the system has reached the limits of profitability which is, simultaneously, also the limit of consumption.

MH
Once more on Luxemburg...

Link wrote:

I do note that you now appear to be agreeing with my suggestion that there are 2 differing standpoints expressed by RL. One, the reproduction schema, which I presume is expressed by the AoC and which is to be ignored and the other which is the element that has been developed by the ICC. If this is the case please say so, because I have been focusing on the AoC thinking it represents the core of her analysis.

No this is not what I am saying Link. I certainly don’t think the reproduction schemas are to be ‘ignored’; they just need to be kept in their proper context as abstract models.

The starting point for The Accumulation of Capital is the contradiction between Marx’s analysis of capitalism’s inherent contradictions in Capital Volume Three and his reproduction scheme in Volume 2. RL explicitly addresses this in Chapter 25:

“Finally, the diagram contradicts the conception of the capitalist total process and its course as laid down by Marx in Capital, volume iii. This conception is based on the inherent contradiction between the unlimited expansive capacity of the productive forces and the limited expansive capacity of social consumption under conditions of capitalist distribution.”

A lengthy quote from Marx’s analysis of the falling rate of profit in Volume Three follows, and then Luxemburg concludes:

“If we compare this description with the diagram of enlarged reproduction, the two are by no means in conformity. According to the diagram, there is no inherent contradiction between the production of the surplus value and its realisation, rather, the two are identical.”

This I think is the crux of Luxemburg’s argument:

“In the process described by the diagram there is no need for a continual extension of the market beyond the consumption of capitalists and workers, nor is the limited social capacity for consumption an obstacle to the smooth course of production and its unlimited capacity for expansion. The diagram does indeed permit of crises but only because of a lack of proportion within production, because of a defective social control over the productive process. It precludes, however, the deep and fundamental antagonism between the capacity to consume and the capacity to produce in a capitalist society, a conflict resulting from the very accumulation of capital which periodically bursts out in crises and spurs capital on to a continual extension of the market.”

And this is why I also think those who reject Luxemburg’s theory also have to demonstrate either how they still defend Marx’s analysis of capitalism’s realisation problem, or explain why they reject it.

Link wrote:

This is why I have asked for an explanation why SV destined for capital creation cannot be realised within capitalism whereas SV for capital replacement, capitalist subsistence and worker subsistence can (Demo’s point also)!

My apparent failure to answer this is clearly a source of frustration. Maybe I’m missing something here, but surely if we conclude that surplus value destined for the expansion of production can be realised within capitalism then there is no inherent problem of realisation? To put it another way, how does capital as a whole make a profit if it buys the means to expand itself?

Link wrote:

The question I put is why capitalism cannot create its own market and am genuinely looking for an explanation. I wasn’t being rhetorical. The point you make is good though, it cannot grow indefinitely, I agree, but that is not what I suggested and its not suggested by the FROP theory either – an analysis that also has its roots in Marx’s writing if im not wrong!

Capitalism cannot create its own market fundamentally because of the inherent contradiction of the wage-labour relationship; that is what I believe Marx is saying in the quote I used. That’s not quite the same as saying that the market cannot grow indefinitely; I think we’re all agreed on that, because capitalism can’t grow indefinitely, ie. its decline is inevitable.

I’m going to leave it there for now and then come back on the FROP, but I think this discussion has raised a wider issue about the method we use to discuss these issues, which shows itself in the frustrations apparently being expressed on all sides. I referred to this frustration earlier but I think it has become even clearer with the interventions of Demo and KT's questions; basically we're all sympathetic to the same political positions and yet it seems sometimes we're talking a completely different language. Why is this?

Demogorgon
RL wrote:If we compare this

RL wrote:
If we compare this description with the diagram of enlarged reproduction, the two are by no means in conformity. According to the diagram, there is no inherent contradiction between the production of the surplus value and its realisation, rather, the two are identical

This is also the crux of one of her mistakes. The schemas of VII are not attempting to describe the phenomena of VIII. She's attempting to force the schemas to say something that they were never designed to do. There is no contradiction between the two. The contradictions elucidated in V3 do not arise at the level of abstraction used in V2.

Luxemburg approaches both descriptions as if Marx is describing a fully developed reality. If you read it in that way, then naturally they appear to contradict.

I'll try an analogy. If one wants to analyse the function of gravity when you drop a 1 kilo weight, you can work out what it should be via Newton's laws, calculate velocity achieved, etc. In reality, air resistance will prevent the weight reaching that velocity. If you introduce that factor into your description of the weight's behaviour, it appears to contradict Newton's Law. But this is not true - Newton's law is only attempting to describe gravity. It's neither intended to or capable of describing atmospheric resistance. And, to make things worse, neither description fully captures the empirical reality of a falling weight because there are all sorts of other factors to consider.

Marx is using the same approach. Using abstraction and various assumptions, he attempts to isolate particular elements of the capitalist social relationship. After that, he begins integrating more factors into the analyis thus coming closer to the concrete functioning of capitalism.

So, just because no innate tendency to crisis is revealed in the reproduction schemas, but appears later in consideration of the ROP, does not mean there is some sort of contradiction between the two.

Quote:
My apparent failure to answer this is clearly a source of frustration. Maybe I’m missing something here, but surely if we conclude that surplus value destined for the expansion of production can be realised within capitalism then there is no inherent problem of realisation? To put it another way, how does capital as a whole make a profit if it buys the means to expand itself?

Surplus value can be realised within capitalism. Marx demonstrated this quite adequately. You have not yet demonstrated why, in principle, Capitalist A cannot exchange his surplus with Capitalist B. This is a far cry from saying this will always happen, which is what you're trying to suggest we are saying. All sorts of things can prevent it, some of which have been illustrated already.

Capital-as-a-whole (CW) does not have the same characteristics as individual capitals. It exists as an aggregate of the activity of its components. Capitalist A and Capitalist B must exchange. But CW doesn't have to exchange with anyone.

Again, an analogy. To create a child, a man and woman must have intercourse. Using your method, you are forced to conclude that the couple (a collective entity) must have sex with someone else to produce a child. This is obviously not true: the couple are perfectly capable of producing a child by themselves without interacting with anyone else.

jk1921
Can't vs. Doesn't

Demogorgon wrote:

Surplus value can be realised within capitalism. Marx demonstrated this quite adequately. You have not yet demonstrated why, in principle, Capitalist A cannot exchange his surplus with Capitalist B. This is a far cry from saying this will always happen, which is what you're trying to suggest we are saying. All sorts of things can prevent it, some of which have been illustrated already.

Is it that it can't happen or that it doesn't happen, because the factors that you acknowledge prevents it, but when accumulation occurs in the context of extra-capitalist markets these factors are mitigated? Does the existence of extra-capitalist markets perform any function at all in the accumulation process?

Demogorgon
Only partial answers

Quote:
Is it that it can't happen or that it doesn't happen, because the factors that you acknowledge prevents it, but when accumulation occurs in the context of extra-capitalist markets these factors are mitigated?

I'm not quite sure I've understood the question here, at least the first bit. What I am saying is that, at the level of abstraction analysed by the schemas, there is no specific problem of realisation. What Marx is demonstrating is that, when certain conditions are met, the whole product is successfully exchanged and capital accumulates. He also points out numerous vulnerabilities where deviations from the right proportions can result in overproduction. This is besides the issues around the ROP in V3. As he goes through the schemas he points out all sorts of points where overproduction can occur, even in simple reproduction. But, there is no impossibility of accumulation, and the whole point is to demonstrate this.

And even when overproduction occurs, this is not necessarily fatal - as I pointed out above, limited overproduction is pretty much permanent in reality, but acts as a spur to further expansion.

Quote:
Does the existence of extra-capitalist markets perform any function at all in the accumulation process?

I don't see them as fulfilling a special function. Nonetheless, historically, they existed and capitalists interacted with them and that would have certainly had some impact on the nascent capitalist system. In all honesty, I haven't given the question that much thought. Instinctively, I think that they would probably be a stimulus. Certainly, excess demand would raise prices and thus the general rate of profit. I think their importance would diminish as the system grew, though.

On the other hand, one former comrade of the organisation thought they both regulated capitalism while also constituting a drag on growth! See here: http://en.internationalism.org/ir/135/economic-debate-postwar-prosperity especially footnote 24.

I don't necessarily agree with that analysis - there's at least one obvious objection I can think of - but it does raise interesting questions. Ones which I'm not going to embarrass myself by developing here!

jk1921
Issues

Demogorgon wrote:

I'm not quite sure I've understood the question here, at least the first bit. What I am saying is that, at the level of abstraction analysed by the schemas, there is no specific problem of realisation. What Marx is demonstrating is that, when certain conditions are met, the whole product is successfully exchanged and capital accumulates. He also points out numerous vulnerabilities where deviations from the right proportions can result in overproduction. This is besides the issues around the ROP in V3. As he goes through the schemas he points out all sorts of points where overproduction can occur, even in simple reproduction. But, there is no impossibility of accumulation, and the whole point is to demonstrate this.

I suppose my question (pardon the incoherence) is whether or not the critique of Marx's schemas is that they are wrong on their face or is it that while they may be theoretically consistent there are too many countervailing tendencies in the real world of accumulation that expanded reproduction does not occur without sufficient extra capitalist markets? You have argued/shown that within the schemas there is no realization problem, but acknowledge the existence of other factors that lead to real world realization issues-- but are these merely "transactional" issues or are they more central to the accumulation process?

Demogorgon wrote:

And even when overproduction occurs, this is not necessarily fatal - as I pointed out above, limited overproduction is pretty much permanent in reality, but acts as a spur to further expansion.

This seems to answer my last question, but overproduction as a spur to expansion? That's a new argument for me.

MH
artificial models and theories of decadence

Demogorgon wrote:

so too can we derive certain conclusions from the reproduction schema. Namely, that capitalism can and does overcome the realisation problem at the level of social reproduction. It is only during crises - which none of the [reproduction] schemas actually describe, not even Grossman's - that the underlying contradictions come to the surface.

jk has already picked up on some of the issues with the reproduction schemas. For me this highlights the inherent problem in using these models to try to derive a theory of decadence.

For Marx, the aim of the schemas was to demonstrate that, even in a hypothetical state of equilibrium, the system still had an inherent tendency towards crisis. They were never intended to demonstrate how the contradictions of capitalism would inevitably result in its breakdown. How could they when they are based on the assumption that there is no inherent problem of realisation?

One of the strengths of Luxemburg's approach is that she recognises this obvious limitation of the schemas from the start:

“The diagram does indeed permit of crises but only because of a lack of proportion within production, because of a defective social control over the productive process. It precludes, however, the deep and fundamental antagonism between the capacity to consume and the capacity to produce in a capitalist society, a conflict resulting from the very accumulation of capital which periodically bursts out in crises and spurs capital on to a continual extension of the market.” (AoC Chapter 25)

From this perspective of the "deep and fundamental antagonisms" of the system, capitalism clearly cannot overcome its realisation problem, and its inherent problem of overproduction is seen not simply as a “spur to expansion” but dialectically as the contradiction that drives it towards its destruction. Marx's models do not and cannot show this. It is by examining the historical development of capitalist accumulation as a totality that Luxemburg is able to confirm Marx’s analysis of capital’s inherent contradictions and derive a theory of capitalism's inevitable decadence.

Demogorgon
Quote:You have argued/shown

Quote:
You have argued/shown that within the schemas there is no realization problem, but acknowledge the existence of other factors that lead to real world realization issues-- but are these merely "transactional" issues or are they more central to the accumulation process?

Ah, I see. No, I don't see any reason in theory or reality supporting the contention that extra-capitalist markets are essential for accumulation. I think all the elements for necessary to explain capitalism's law of motions are contained within Marx's description of capitalist mechanisms, with no need to appeal to external factors.

Quote:
This seems to answer my last question, but overproduction as a spur to expansion? That's a new argument for me.

It only acts as a spur in certain circumstances. But overproduction is an essential element of competition, which is the driver for the continual revolution of the forces of production. This process results in increased demand for the means of production. However, the increase in productivity aggravates overproduction in its turn. This is what is meant about capitalism being compelled to increase production with no regard for the market. Overproduction is the cause and consequence of capitalism's dynamic nature, but it is also the millstone around its neck. Nonetheless, the real limit to production in capitalism is not the market but profitability.

MH wrote:
For Marx, the aim of the schemas was to demonstrate that, even in a hypothetical state of equilibrium, the system still had an inherent tendency towards crisis. They were never intended to demonstrate how the contradictions of capitalism would inevitably result in its breakdown. How could they when they are based on the assumption that there is no inherent problem of realisation?

What? One minute the schemas demonstrate inherent tendency towards crisis, the next they don't? What am I missing here?

Quote:
It is by examining the historical development of capitalist accumulation as a totality that Luxemburg is able to confirm Marx’s analysis of capital’s inherent contradictions and derive a theory of capitalism's inevitable decadence.

Except that she locates these contradictions in completely the wrong place. In her defence though, she did show that integrating other elements into the schemas introduced instability. Bauer demonstrated handily, though, that these instabilities could still be overcome within the system. It was left to Grossman to complete this process and it is his contribution which offers a true synthesis between the analysis of V2 and V3, by integrating the analytical gains of both, as well as preserving the core of Marx's theory, that capitalism has a permanent and secular tendency towards crisis and breakdown.

Luxemburg fails because she sets the two analyses against each other - Grossman shows how they fuse into a cohesive whole. Nonetheless, we still have Luxemburg to thank for initiating a debate which ultimately leads to a far richer understanding of Marx's system and the ultimate defeat of the revisionists.

MH
crises and decadence

MH wrote:

For Marx, the aim of the schemas was to demonstrate that, even in a hypothetical state of equilibrium, the system still had an inherent tendency towards crisis. They were never intended to demonstrate how the contradictions of capitalism would inevitably result in its breakdown. How could they when they are based on the assumption that there is no inherent problem of realisation?

Demogorgon wrote:
What? One minute the schemas demonstrate inherent tendency towards crisis, the next they don't? What am I missing here?

For Marx the reproduction schemas prove that periodic crises are inherent in the system due to the anarchy of capitalist production, nothing more I would argue. And they do not prove that these crises will lead inevitably to capitalism’s decadence because they don’t reflect the deeper, more fundamental contradictions of the system. Again, how could they, given the assumptions that they are based on?

However I assume that you DO see capitalism’s periodic crises leading inevitably to its breakdown, and that you equate this with decadence? That would make sense if you are following Grossman’s theory (but obviously correct me if I’m misrepresenting your position here), and that is why my statement above appears to make no sense.

To really deal with this issue we would need to start looking at theories of the falling rate of profit, especially Grossman’s, to determine the extent to which they are capable of explaining decadence on the basis of capitalism's periodic crises. For me, his theory is deeply flawed to say the least and is unable to do this.

In conclusion it's worth pointing out again that Luxemburg's theory of decadence, while rooting capital's contradictions in the accumulation process, is explicitly not based on capital's periodic crises.

Demogorgon
Quote:For Marx the

Quote:
For Marx the reproduction schemas prove that periodic crises are inherent in the system due to the anarchy of capitalist production, nothing more I would argue. And they do not prove that these crises will lead inevitably to capitalism’s decadence because they don’t reflect the deeper, more fundamental contradictions of the system. Again, how could they, given the assumptions that they are based on?

Agreed. But they also demonstrate that capitalism can overcome the realisation problem. If the reproduction schemas are correct in themselves - and you've provided no reasons to doubt this - this means that the tendency to crisis, etc. (other than those linked to disproportionality) are located elsewhere.

Marx's reproduction schemes were an astounding advance in relation to bourgeois political economy precisely because they annihilated the underconsumptionist arguments of Proudhon, Malthus, Duhring, Lassalle, etc. They enabled Marx to establish overproduction and crisis in the dynamic movements of capital and its accumulation process, as well as correctly identify its secular development as having revolutionary implications.

Quote:
However I assume that you DO see capitalism’s periodic crises leading inevitably to its breakdown, and that you equate this with decadence? That would make sense if you are following Grossman’s theory (but obviously correct me if I’m misrepresenting your position here), and that is why my statement above appears to make no sense.

I would equate decadence to the secular tendency of worsening crisis, barriers to the development of productive forces, the need to restrain local competition through the use of cartels, state capitalism, etc. while intensifying it globally, and the social consequences accompanying this: war, instability, social dislocation and collapse. Grossman's theory adequately accounts for this. So does Luxemburg, of course, but Grossman's also allows for periods of growth and even accelerating accumulation even when the ROP is falling (something he makes very clear in his book). I have yet to see how Luxemburg's theory can do this in the context of her theory.

Quote:
To really deal with this issue we would need to start looking at theories of the falling rate of profit, especially Grossman’s, to determine the extent to which they are capable of explaining decadence on the basis of capitalism's periodic crises. For me, his theory is deeply flawed to say the least and is unable to do this.

Okay. It will be interesting to see a critique of Grossman.

Quote:
In conclusion it's worth pointing out again that Luxemburg's theory of decadence, while rooting capital's contradictions in the accumulation process, is explicitly not based on capital's periodic crises.

Indeed, she explicitly rejects this, but I don't think the problem is as inseperable as might be first thought.

Firstly, how else are the consequences of the problem she identified to be expressed in anything else other than a crisis? If If Luxemburg is correct to locate the driver for increased production in consumption, and this consumption can only come from outside of the system, then her theory predicts capitalism in a default state of impossible accumulation (i.e. crisis!), one that is only overcome by the constant availability of external markets. As these markets are saturated or destroyed, accumulation becomes impossible once again.

Let us assume for a moment, with Luxemburg, that the cyclical crises of the 19th century were caused by other factors other than a lack of markets (which are adequate for accumulation). These other causes might be the ROP or the general anarchy of the market, which I think was what Luxemburg thought.

Nevertheless, regardless of cause, the manifestation of all crises is ... overproduction. These external markets seem able to absorb the excess product to overcome capitalism's supposed lack of consumption with respect to secular accumulation, but not the overproduction that arises from cyclical crises? This seems to lack consistency to me and reduces the consumptive power of these external markets to special pleading with regard to one cause of overproduction but not the other.

There are still more problems. For Luxemburg's solution to work, her external markets will have to continually buy more from the system than they sell into it (as the latter would only saturate the market for capitalists still further). But early capitalist production had to buy much of its inputs from external actors, at least until they were themselves capitalised or expropriated through outright plunder (e.g. in the colonies). Where did these external markets get all this ever increasing revenue from? This is a question even in the colonial period, but even more so today when the mass of surplus value that needs to be accumulated is incomparably greater while those social strata outside the system are characterised mainly by grinding, absolute poverty.

Separating cyclical from historic crisis, it seems to me, opens up just as many problems as it might solve.

Tagore2
Bad unities

According to Marx, the substance of the value is work. Its measure is the socially necessary working time, and its unity is the hour, the day, the week, and so on.

It is understood time is expressed for a single average worker. If two average workers work for one hour, this is equivalent to an average worker working for two hours.

Thus, the unit for measuring value must take the form:

Number of workers x time.

Thus the world GDP expressed in value is equal to:

Labor force x 1 year

As long as you do not understand the concept of socially necessary working time, average workers, etc. All your reasonings are non-Marxist. They are eventually neoclassical.

MH
decadence as catastrophe

Demogorgon wrote:
Firstly, how else are the consequences of the problem she identified to be expressed in anything else other than a crisis?

In catastrophe! Decadence for Luxemburg is characterised above all by “catastrophes from start to finish” (Anti-C). Imperialism extends this ‘vital element’ of capitalism from the experience of non-capitalist societies to the capitalist heartlands. In this way “the day-to-day history of capital accumulation on the world stage changes into an endless chain of political and social catastrophes and convulsions” (AoC), together with “periodic economic catastrophes in the shape of crises”, the final result of which can only be “the decline of civilization or the transition to the socialist mode of production”.(Anti-C)

This for me is the strength of Luxemburg’s theoretical approach. It doesn’t exclude the expression of decadence in periodic economic crises – nor, significantly, does it exclude the appearance of economic growth. This last point hadn’t struck me before, but, although I suspect Luxemburg would never in her worst nightmares have expected capitalism to prolong itself for another century, her vision of decadence as a series of mounting disasters actually provides a framework for understanding this – which is presumably why the ICC now seems to make frequent references to it as an antidote to past immediatism.   

Your other point about exactly how non-capitalist areas 'solve' the problem of realisation requires more thought - at least from me - maybe someone else has a response?