The New Silk Road and Luxemburg's Explanation of Accumulation

33 posts / 0 new
Last post
Link
The New Silk Road and Luxemburg's Explanation of Accumulation
Printer-friendly version

Ive started a new thread to ask a few questions about luxemburg’s thesis rather than continue the discussion on the decomposition thread.

Alf wrote: ‘A final word about Rosa Luxemburg's analysis. Link seems to imply that we have sidelined Luxemburg's thesis, or at least jettisoned its more "dogmatic" aspects. On the contrary, the self-critical discussions we have been having about crisis and decadence have led us towards a deeper understanding of Luxemburg's theory, not least a rejection of the idea that the extra-capitalist milieu was exhausted in 1914, which was not at all the thesis of The Accumulation of Capital. And as the recent contribution on the Silk Road also reminds us, capitalism's dynamic rapport with the extra-capitalist milieu is not only a question of markets, but also of the exploitation of new sources of labour power and natural resources, and their integration into the capitalist system’

Of course its not wrong to revise and re-interpret what Luxemburg said as Alf suggests, but the article mentioned by Alf, The New Silk Road, suggests that only now is capitalism exhausting extra capitalist markets:

“In principle, however, once the producers outside capitalism have been transformed into proletarians or capitalists, they constitute part of the existing capitalist market, no longer providing new outlets for capitalist expansion ... This is why capitalism cannot expand and accumulate eternally. At the latest when the great majority of humankind has been turned into either wage labourers or their “employers”, the system reaches its expansion limits. This is not yet completely the case today at the planetary level. But the “leveling off” of the expansion of China today is a clear sign that, although this expansion has not yet reached this limit, it is coming close enough to it to markedly slow things down”

This is quite an amendment to luxemburg’s thesis and may itself be thought to question the basis of decadence?

 

So first question on population

China’s population in 1914 was about 430m, 1950 was 540m whereas the population now is 1.4bn. World pop in 1914 was 1.6bn, in 1950 2.5bn, and in 2020 7.8bn

Why am I quoting figures again? Population growth doesn’t happen independently to the economy. To indicate the increase in market size obviously but if it is being said that the growth of the economy during decadence is related to the exploitation of new extra-capitalist markets then it appears that its not extra capitalist markets that have been around since 1914 but that they have been expanding and particularly since 1950,

Is this what the ICC is theorising or do you have a different interpretation?

This is an expansion at a far greater rate than the pre-capitalist economies achieved even at their height. . In fact if it is considered that the growth of China is a tumour, a product of the decomposition of capital, then presumable the theory must be that decadence is causing extra-capitalist markets to grow in order to enable capitalism to grow further. In itself that sounds extremely clever organisation, not really decomposition.

 

Second question on economic growth.

I think its correct to say that in The Accumulation of Capital Luxemburg did not suggest the extra capitalist markets were exhausted in 1914, but she does say this:

"Imperialism is the political expression of the accumulation of capital in its competitive struggle for what remains still open of the non-capitalist environment. Still the largest part of the world in terms of geography, this remaining field for the expansion of capital is yet insignificant as against the high level of development already attained by the productive forces of capital; witness the immense masses of capital accumulated in the old countries which seek an outlet for their surplus product and strive to capitalize their surplus value, and the rapid change-over to capitalism of the pre-capitalist civilisations.”

and in The Junius Pamphlet she goes further:

“Reduced to its objective historic significance, the present world war as a whole is a competitive struggle of fully developed capitalism for world supremacy, for the exploitation of the last remnant of non-capitalist world zones.” The Junius Pamphlet

World gdp % increase in period

1870-1913                        147

1913-1950                        97

1950-1970                        158

1970-2010                        282

These figures on economic growth also suggests that the extra capitalist markets must have been growing rather than diminishing as Luxemburg expected. This also poses the question, how has capital been able to achieve far higher growth rates in decadence, during the imperialist phase of decadence than in the ascendant phase when there were clearly far more extra cap markets available? Doesn’t this suggests economic growth is in fact dependant on something other than extra capitalist markets?

 

Last but not least, a question on Luxemburg’s theoretical basis.

Luxemburg states in The Accumulation of Capital:

In real life the actual conditions for the accumulation of the aggregate capital are quite different from those prevailing for individual capitals and for simple reproduction. The problem amounts to this: If an increasing part of the surplus value is not consumed by the capitalists but employed in the expansion of production, what, then, are the forms of social reproduction? What is left of the social product after deductions for the replacement of the constant capital cannot, ex hypothesi, be absorbed by the consumption of the workers and capitalists— this being the main aspect of the problem—nor can the workers and capitalists themselves realise the aggregate product. They can always only realise the variable capital, that part of the constant capital which will be used up, and the part of the surplus value which will be consumed, but in this way they merely ensure that production can be renewed on its previous scale. The workers and capitalists themselves cannot possibly realise that part of the surplus value which is to be capitalised. Therefore, the realisation of the surplus value for the purposes of accumulation is an impossible task for a society which consists solely of workers and capitalists."

Would someone please explain what this means? I genuinely cannot work out the rationale for her conclusion here.

This is one of the 2 key points of Luxemburg’s thesis. However, we know that the money in circulation is only a small percentage of actual value of physical and financial assets so how does it matter how much money is in existence in order to be able to purchase/realise the whole of the surplus value? Ok, its correct that the element of surplus value destined to increase production shouldn’t by purchased by workers or capitalists for their own personal subsistence, but why on earth cannot the growth element of surplus value be purchased by productive industry and services or even the state. Why can it only be sold/realised in extra-capitalist markets?

Without this factor, her whole thesis falls down, so it is actually very important.

d-man
Not to be glib (or just a

Not to be glib (or just a little), but in response to "we know that the money in circulation is only a small percentage of actual value of physical and financial assets so how does it matter how much money is in existence in order to be able to purchase/realise the whole of the surplus value?" - if the amount of money doesn't matter at all, I could retort, that then 1 ounce of gold, or 1-dollar note, should suffice to realise the entire (surplus-)value. Perhaps just an exageration. Or if your point is that only a little money is essential to keep the entire economy chruning, then conversely, only a little shortage in essential money can make all the difference.

btw, for interest of Luxemburgist friends (access it via the sci-hub site):

Golden Howlers: Grossmann's Attack on Luxemburg

Alf
Marx and Luxemburg

 

Link's question:

 

Last but not least, a question on Luxemburg’s theoretical basis.

Luxemburg states in The Accumulation of Capital:

“In real life the actual conditions for the accumulation of the aggregate capital are quite different from those prevailing for individual capitals and for simple reproduction. The problem amounts to this: If an increasing part of the surplus value is not consumed by the capitalists but employed in the expansion of production, what, then, are the forms of social reproduction? What is left of the social product after deductions for the replacement of the constant capital cannot, ex hypothesi, be absorbed by the consumption of the workers and capitalists— this being the main aspect of the problem—nor can the workers and capitalists themselves realise the aggregate product. They can always only realise the variable capital, that part of the constant capital which will be used up, and the part of the surplus value which will be consumed, but in this way they merely ensure that production can be renewed on its previous scale. The workers and capitalists themselves cannot possibly realise that part of the surplus value which is to be capitalised. Therefore, the realisation of the surplus value for the purposes of accumulation is an impossible task for a society which consists solely of workers and capitalists."

Would someone please explain what this means? I genuinely cannot work out the rationale for her conclusion here.

 

Rosa Luxemburg was convinced that “her” theory was entirely in continuity with Marx’s theory of overproduction, even if she felt that the reproduction tables in Volume 2 of Capital seemed to contradict Marx’s own thinking on this point. We have written at least two articles which also argue that Rosa’s theory of accumulation is essentially the same as Marx’s[1]: that because capitalism is the production and realisation of surplus value, it must constantly extend the market; if we take as a starting point total capital, capitalism as a whole, and not simply a part of the working class or the individual capitalist, this could only mean extension into the surrounding non-capitalist milieu. Marx, in a number of passages, insists that neither the working class nor the capitalists (again, taken as a whole) can realise all the surplus value produced. The passage from Vol 3 of Capital, below, seems particularly clear about this, and is also interesting because it touches on the relationship between the falling rate of profit and the problem of overproduction:

 

[1] https://en.internationalism.org/content/2639/marxism-and-crisis-theory

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

 

 

 

"On the other hand, a fall in the rate of profit connected with accumulation necessarily calls forth a competitive struggle. Compensation of a fall in the rate of profit by a rise in the mass of profit applies only to the total social capital and to the big, firmly placed capitalists. The new additional capital operating independently does not enjoy any such compensating conditions. It must still win them, and so it is that a fall in the rate of profit calls forth a competitive struggle among capitalists, not vice versa. To be sure, the competitive struggle is accompanied by a temporary rise in wages and a resultant further temporary fall of the rate of profit. The same occurs when there is an over-production of commodities, when markets are overstocked. 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".

Link
Thanks Alf for the reading. I

Thanks Alf for the reading. I have found the source of the Marx quote to read round it and I continued looking through chapters of theories of surplus value and accumulation

In doing so I found this quote:

“With accumulation, and the development of the productiveness of labour that accompanies it, the power of sudden expansion of capital grows also; it grows, not merely because the elasticity of the capital already functioning increases, not merely because the absolute wealth of society expands, of which capital only forms an elastic part, not merely because credit, under every special stimulus, at once places an unusual part of this wealth at the disposal of production in the form of additional capital; it grows, also, because the technical conditions of the process of production themselves — machinery, means of transport, &c. — now admit of the rapidest transformation of masses of surplus-product into additional means of production” Capital 1 chapt 25

I can see the point of the quote you were making but the one above seems to be saying something quite different. My problem with them both is that Marx is making assertions in the course of going into detailed explanations about intricate functions of capital but he is not here providing an explanation of the question I posed. Both quotes seem to me to be therefore rather superficial in this respect

I come back therefore to my original point that still needs explanation. If I may rewrite sections of the long quote I used from Luxemburg in the first contribution:

- capitalists can capitalise that part of sv to be used to replaced used and worn capital, ie depreciation

- workers can realise that variable capital and that part of sv which will increase vc

- capitalists can realise the part of sv to be used for their own subsistence.

And finally

- The workers and capitalists themselves cannot possibly realise that part of the surplus value which is to be capitalised and accumulated

Well we know workers can’t by definition realise that part of sv due to expand capital otherwise it would be part of vc and capitalist can’t use all the remaining sv for their own subsistence, that would just make a nonsense of what capitalism is and does. However why cannot this remaining part of sv that is destined to increase capital be realised by capitalist firms?

I havent found anything in the Accumulation of Capital to explain or justify this further and the texts from the ICC that your referenced simply accept the statement on face value. So can I ask if you have anything more in Marx that gets to grips with this precise problem?

MH
Luxemburg or Marx?

Link wrote:
Ok, its correct that the element of surplus value destined to increase production shouldn’t by purchased by workers or capitalists for their own personal subsistence, but why on earth cannot the growth element of surplus value be purchased by productive industry and services or even the state. Why can it only be sold/realised in extra-capitalist markets?

Link, I'm puzzled, if the capitalists can in effect sell to each other, if that is what you are arguing, what happens to the inherent problem of overproduction identified by Marx, in the section quoted from by Alf?  

“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."

And if there is an inherent limit to the consumption of both capitalists and workers, as Marx surely argues, doesn't this point to the need for consumers outside of capitalist relations of production? In other words, the basic problem was posed by Marx even before Luxemburg’s thesis?

Link
I dont think overproduction

I dont think overproduction need to come into the issue here MH. It exists obviously but for me you seems to be suggesting that there is no overproduction without extra capitalist markets just as there is no accumulation without extra capitalist markets.

Growth in production is driven by the falling rate of profit and overproduction comes in when the ROP is low and the scale of production is so high as firms compete for profit that the markets cannot absorb it. I have no problem with that although I would agree there remain issues to analyse here. But I don’t see it relevant to the issue of accumulation as described by luxemburg and as you say by Marx in that quote. In simple terms of how does capital accumulates (even before overproduction is reached),my question still remains to be answered.

So, dare I say it, is this Marx quote correct or clear and is it relevant to how accumulation takes place.

I agree there is a limit to the personal consumption ie subsistence of capitalist and workers. Isnt there are confusion here though between the capitalist as a consumer and the capitalist as a producer. I mean limited companies have been around for centuries so the capitalist as a business has separate accounting to capitalist as a private consumer. Surely we should distinguish these 2 ‘purchasers’ when it comes to the division of surplus value?

MH
What is the starting point for this discussion?

Link wrote:

I dont think overproduction need to come into the issue here MH. It exists obviously but for me you seem to be suggesting that there is no overproduction without extra capitalist markets just as there is no accumulation without extra capitalist markets.

 

Growth in production is driven by the falling rate of profit and overproduction comes in when the ROP is low and the scale of production is so high as firms compete for profit that the markets cannot absorb it. I have no problem with that although I would agree there remain issues to analyse here. But I don’t see it relevant to the issue of accumulation as described by luxemburg and as you say by Marx in that quote. In simple terms of how does capital accumulates (even before overproduction is reached),my question still remains to be answered.

Link, when we have discussed Luxemburg before, we were forced to acknowledge a certain amount of mutual incomprehension, which I think led me eventually to joke that ‘FROPists seem to be from Mars and Luxemburgists are from Venus…’

I know you want to discuss Luxemburg’s theory but I am more than ever convinced that first we have to understand what Marx actually argued.

Since capitalism produces for profit of course production is related to the rate of profit. But you seem to be saying –and correct me if I’m wrong – that overproduction only occurs in specific conditions: “when the ROP is low and the scale of production is so high as firms compete for profit that the markets cannot absorb it”.

And Marx indeed describes this scenario, “when there is an over-production of commodities, when markets are overstocked”. But he appears to identify a more fundamental problem:

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”.

So it is the limited dimensions of consumption under capitalism that constitutes the “imminent barrier” here, and why is consumption limited in this way? Because of the specific conditions of capitalist production, ie. the appropriation of unpaid labour, which determines that the working class can never consume the full value of what it produces. It is this specific condition of capitalist production that underlies the rate of profit and thus determines the problem of overproduction.

So Marx, it seems to me, and obviously to the ICC as well, is saying that the phenomenon of overproduction is inherent in capitalism:

In short, all these objections to the obvious phenomena of over-production (…) 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.”

If we can agree with Marx on this, then hopefully we can better understand the problem Luxemburg was trying to address?

(all quotes from Ch 15, Capital Vol 3)

Link
MH, i do agree that this

MH, i do agree that this mutual incomprehension is a real thing and a real problem.  Also  am quite happy to follow your lead on what Marx had to say to see what you are getting at.

However could i first ask what you mean by overproduction ie back to basics.  Do you mean to say that capitalism always overproduces at all times because that seems to follow from what u have said as well as fom the Marx quote a rift between limits on comsumption and an expanding production?  Alternatively does overproduction only come into play on the occasions when there is a crisis of markets being overstocked? 

Re the question in yr last paragraph, I guess i should make it clear that i am not objecting to the concept of overproduction.  But my problem particularly regarding the quotes Alf and both of us have used,  is that they are statements within a general discussion without specific evidence and explanations as proof.   If you can find quotes that give detailed support that would be great.   Otherwise i can give simple quotes like my earlier response to Alf which the creation of surplus value is sufficient to grow capital. 

Also are you agreeing that the TROPF drives the need for more profit and hence production growth so this is also one side of the drive for overproduction and has to be taken into account.

d-man
What relegates overproduction

What relegates overproduction, in your view Link, to an occasional phenomenon, I guess would be the mechanism of a crisis or destruction of capital (such as war or other event). That is, a devaluation on the "supply side", whereas for Luxemburg it would seem the "demand side" has to expand. Perhaps it just depends from what standpoint you prefer to look at it, and both mechanisms somehow are at play (not to adopt a New-Agy mindset, particle-wave duality).

d-man
What relegates overproduction

dp

Link
Its a genuine question dman,

Its a genuine question dman, becuase i dont think i ever thought to ask myself let alone others.  Its was raised for my by MH so if you have a opinion on overproduction as a permanent or an occasional phenomenon please say.  As supply side or demand side theories, well id be quite happy to incorporate both and in fact Luxemburg says something about ROP and markets being just the other side of the same coin.  In fact cant we see a demand side problem today with the impact of the coronavirus whereas technological change would be considered a supply side issue.   But as you can see ive not be happy with Luxemburgs theory as a standalone theory.   Ive set time aside today to look at Marx and accumulation in accordance with MH so if you have something to contribute on that id be grateful

d-man
Allow me another small kick

Allow me another small kick against the shins dear Link: suppose the point is correct, that capitalist themselves can realise surplus from each other, would it not follow, that non-capitalist markets can't buy any capitalists goods, because there are no capitalist goods left for sale (since all capitalist goods are already realised by the workers and capitalists themselves)?

As to the so-called "move" of Western industries to non-capitalist areas, does it mean an actual "displacement" (from one place to another, of the same factory) or are additional factories build? If it's the latter, the explanation often given is the attraction by a higher profit rate. However, at least Grossman did not hold this view; he saw the reason for capital export in its overaccumulation/overproduction domestically (see also his later essay on Playfair, reprinted in Henryk Grossman Works, Volume 1: Essays and Letters on Economic Theory).

Link
Thank you for your

Thank you for your affectionate tap on the shins dman.

Regarding your first question, I dont see such a distinction between capitalist and pre capitalist markets, its not an either/or situation. They both exist and capitalist producers sell to whomever they can and this is likely to depend on the nature of their products and the potential profits. Non-capitalist markets were likely to consist of feudal aristocracy and traders/colonists from the developed world. The former bought stuff and eventual absorbed capitalist production values, the latter took capital assets with them or bought them to enable their exploitation of local assets. This is not process of using an excess of capital that cant be used in the developed world nor is it something that absorbs all surplus value from the developed world. Id suggest this was a method of making greater profits than at home or a greater opportunity at a greater risk. I dont think Luxemburg was wrong to point out the value of extra capitalist markets but just that she says accumulation can only happen because of them. Its not a logical inference.

I suppose my answer to yr second question is similar, its not an either/or situation. I remember reading that the Chinese firm that bought Rover eventually moved the production equipment to China for example. Whereas there are multitudes of new factories that have been built by western firms in the east asian markets let alone the factories owned by Korean, Malaysian, Taiwanese, Singaporean, Indonesian and Chinese entrepreneurs that sell products back to the west. When the shops reopen just look at the amount of asian household consumer goods that are sold here now. There clearly has been a major shift of production eastwards and whilst I dont at all rule out overproduction as a cause I think you have to see cheaper labour, materials and production costs are a key factor too.

Now I would like to return yr affectionate jab, sweetness. Ive tried to answer yr questions, how about having a go at mine?

d-man
Your question, if I

Your question, if I understand it, was about overproduction being either "a permanent or an occasional phenomenon". It's permanent, but kept in check by factors, and when those lessen or dry up, there are at first occasional manifestions of the underlying permanent overproduction, and as the factors fail to check overproduction more often or to a lesser extent, those occasions acquire a worse character. Was that your queston? As to your reply to mine:

Quote:
This is not process of using an excess of capital that cant be used in the developed world nor is it something that absorbs all surplus value from the developed world. Id suggest this was a method of making greater profits than at home or a greater opportunity at a greater risk

As to "greater profits" abroad, unless you elaborate, this phrase seems to be a variation on a higher rate of profit abroad (again, an explanation which Grossman rejects). You assert all the surplus capital could be used in the developed world, however, given that it wasn't, my first point was, that the buyers in the developing world consumed less than they could have, ie some capitalists looking to buy means of production faced the fact that these were sold/transferred abroad (to colonies, non-capitalist markets), and an implication here would be eg, that the domestic accumulation/investment was slowed-down.

Quote:
I remember reading that the Chinese firm that bought Rover eventually moved the production equipment to China for example 

In case of bankrupcty, the physical capital may be sold off but it's not an investment decision by Rover to relocate itself to China. If of any interest, perhaps the question would be whether the bankruptcy was due to lack of sales or due to the "too high" British wages.

Quote:
there are multitudes of new factories that have been built by western firms in the east asian markets

To the extent that this is a significant phenomenon, I wondered whether you assume the opening of these new factories goes together with the closure of the old ones in the West (recall the above-mentioned implication of slowing-down of domestic production), or whether the assumption is, one which would be more relevant to the controversy, these new factories represent only the available surplus, and thus the old factories in the West continue to exist.

Quote:
let alone the factories owned by Korean, Malaysian, Taiwanese, Singaporean, Indonesian and Chinese entrepreneurs that sell products back to the west. When the shops reopen just look at the amount of asian household consumer goods that are sold here now. There clearly has been a major shift of production eastwards and whilst I dont at all rule out overproduction as a cause I think you have to see cheaper labour, materials and production costs are a key factor too.

Of course factories owned by Chinese entrepreneurs don't need to shift eastwards to China for the sake of cheaper labour or materials, since they're already there. If your point here is that Chinese enterpreneurs are a proof that they have enough capital to establish their own factories, this elides our dispute about reasons of a "move" of Western capital. If your point is that the West is the one consuming/realising Chinese capitalist surplus, I'd respond that the form of those commodities matters: raw materials, food, consumer goods, or (advanced) means of production. Probably it's about the latter, and then I'd say your real point would be about the "shift" of Chinese capital Westwards. Do you think Chinese move investment to Europe? And do you think it is because wages are lower in Europe, or cheap raw materials? And if they move to Africa, is it because African cheap wages, or do they not bring with them Chinese workers (that would otherwise remain unemployed in China)?

zimmerwald1915
d-man wrote: Your question,

d-man wrote:
Your question, if I understand it, was about overproduction being either "a permanent or an occasional phenomenon". It's permanent, but kept in check by factors, and when those lessen or dry up, there are at first occasional manifestions of the underlying permanent overproduction, and as the factors fail to check overproduction more often or to a lesser extent, those occasions acquire a worse character.

You seem to be describing overproduction as a permanent tendency that manifests as an imanent phenomenon only occasionally and when the interplay of certain material "factors" permits. That is, you seem to be describing overproduction as a phenomenon signifying open, acute capitalist economic crisis. It would seem, therefore, that for any mechanism, whether the assimilation of extra-capitalist markets or measures to prop up the rate of profit, to act as an engine of accumulation, it must operate on a more or less continual basis and in response to and in conjunction with the tendency, and not its mere phenomenal manifestations.
d-man
It's over 9,000!!!

Speaking of periodisation (and this perhaps also relates to definitions of the "permanent" and the "occasional"), the figures Link gave in the OP are not for equal periods. If extrapolated, between 1950 and 1970 world GDP is higher than between 1970 and 2010. The argument is that China bucks that trend, so let's look at the statistics of China: https://en.wikipedia.org/wiki/Historical_GDP_of_China

During 1952-1970 there were 7 individual years with real growth above 15%. After 1970, there is only one year above 15%, namely 1984, but despite only a single year above 15% real growth, from 1979 until 2010, "based on the current price", the country's average annual GDP growth in these 32 years was 15.8%... "reaching an historical high of 36.41% in 1994" (real growth was 13%). What figures to take...

Between 1952 and 1970 Chinese GDP (in dollars) more than tripled; stretching 1952 to 1984 it was 10-fold (ie within a 32 year period). The next period of similar length (a bit shorter: 30 years), GDP increased 30x (from 1984 to 2014). Could anyone predict this (apparent acceleration), if they were writing in 1984, on the basis of the growth they saw? Btw, starting from 1952 it took 45 years, by 1997, to reach a 30-fold GDP dollar figure, so one can say that in the period 1984-2014 Chinese GDP grew by as much (namely x30) as it did in 1952-1997. Writing in 1984 someone would, assuming the same trend, say that, to see the same 10-fold increase, it would take about 32 years, that is until 2016. In reality this was reached sooner, by 2006-7. So the prediction would be off by 9-10 years. Do not economists often make such errors about the future? Let's relativise the matter.

Taking per capita GDP (dollars) there is a 6-fold increase between 1952 and 1980 (a 28 year period), and over the next period 1980-2005 (of similar length; 25 years) it's atually the same (6x), so there is no difference in growth for approximately the quarter century pre and post 1980. Between 2004-2018 (14 year period) there is a 6-fold increase, as much the increase between 1980-2005 (25 years). If someone was in 2004-5, they would on the basis of previous trend of per capita GDP, predict per capita GDP would be 6-fold at the earliest in 2030, whereas in reality it was already in 2018: so an error of 12 years. And yet such a "huge" error would still be made with data available from 1980-2005, unlike the ICC when it was writing in 1989 (or our hypothethical forecasters living in 1984) which has no such data.

MH
Implications of overproduction

Link, just to recap, I’m trying to respond here to one of your original questions:

Link wrote:
Ok, its correct that the element of surplus value destined to increase production shouldn’t by purchased by workers or capitalists for their own personal subsistence, but why on earth cannot the growth element of surplus value be purchased by productive industry and services or even the state. Why can it only be sold/realised in extra-capitalist markets?

Hopefully I’m also providing a fuller explanation of Alf’s response to you, emphasising the continuity of Luxemburg’s theory with Marx.

So I’m going to stick doggedly to my attempt to clarify Marx’s view of overproduction and I should stress I am doing this as much for my own benefit, to understand Marx’s basic position better.

So…

Marx is saying that over-production is inherent in capitalism due to the limits of the very nature of the wage labour relation which restricts the consumption of both capitalists and workers.

Over-production arises precisely from the fact that the mass of the people can never consume more than the average quantity of necessaries, that their consumption therefore does not grow correspondingly with the productivity of labour.” (Theories of SV, Ch 16 on Ricardo’s explanation for the FRP) 

This problem is exacerbated by the inbuilt drive of capital to expand itself and produce an ever-expanding mass of surplus-value under the compulsion of the tendency of the rate of profit to fall.

In summary:

Over-production is specifically conditioned by the general law of the production of capital: to produce to the limit set by the productive forces, that is to say, to exploit the maximum amount of labour with the given amount of capital, without any consideration for the actual limits of the market or the needs backed by the ability to pay…” (TSV, Ch 17)  

The implication of this for Marx is that: “The market must, therefore, be continually extended ... But the more productiveness develops, the more it finds itself at variance with the narrow basis on which the conditions of consumption rest”. (CapitalVol 3 Ch 15, my emphasis)

And:

"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. (Capital Vol 3, Ch 15)

So does it seem reasonable to conclude from this that for Marx a world consisting of only capitalists and workers cannot by definition provide a sufficient market for the realisation of the ever-expanding mass of commodities produced? 

baboon
I agree with the direction of

I agree with the direction of MH's above post in what clearly is a very complex question.

 Marx addressing this problem in "The Chapter on Capital" in Grundrisse, insists that production without realisation (overproduction) is not turned into value. A capitalism whose production and realisation is in harmony is the "unity" that capitalism can only dream of. Marx denounces "This nonsense about the impossibility of overproduction "(in other words, the assertion of the immediate identity of capital's process of realisation)"... Capitalism is driven to produce as though there is no limit to its capacities - again this is the dream of capitalism - but runs up against these limits even in the theoretical world of just workers and capitalists. These limitations and contradictions appear to be more obvious when applied to markets outside of capitalism but the fundamentals are similar.

Marx quotes Malthus approvingly here that the very existence of profit on any commodity pre-supposes "a demand exterior to that of the labourer that has produced it" and therefore "the demand of the labourer itself can never be an adequate demand". To counter this problem Proudhon ( who "hears bells ringing but never knows where") proposed creating artificial money in order to mop up the overproduction but that of course does nothing to alter the fundamental drive of capitalism to produce without limits and does nothing to overcome the contradiction involved here in production and realisation: "March, march" as Marx says of its driving force. Proudhon's scheme just kicks the can briefly down the road and the bourgeoisie has heavily resorted to the creation of "artificial money" in the massive debt it is racking up today.

Proudhon himself agrees "that the worker cannot buy back his product" but Marx argues further that this is not the origin of overproduction because this view (Proudhon's) sees interest and profits already added to the price of the product  or a top-up "overcharge" which alters everything and in which price and value are mixed up in a confused fashion.

Link
implications of capital growth

I too want to discuss these issues further for my own benefit too so dont worry about the uncertainties cos I will also be stretching what I really know of issues

I do not disagree with the idea that capitalism overproduces on an ongoing basis and ive clarified my own question that its not an occasional event, in fact, I read somewhere Marx talking of a tendency to overproduce which makes sense to me. So your quotes makes sense to me. The last one I can see you in particular relying upon to support Luxemburg’s theories. However this quote talks of consumption rather than accumulation in general and I think he is here arguing against capitalism not depending on growth and against not overproducing ie as baboon mentioned ‘the nonsense of the impossibility of overproduction’. For me it is suggesting that personal consumption by capitalist and workers is insufficient to enable growth, which we can agree on as completely correct. It doesn’t actually suggest that accumulation or growth is dependant on extra cap markets.

So I dont agree that you have proved that Marx was supporting the idea of realisation being solely dependant on extra cap markets.

Can I be clear, that I am not arguing that extra cap markets do not have an influence on capitalism itself. They clearly do and clearly must allow for the release of some of that overproduction. I think they allow, at some point in the process, for additional if not super profits for investments, new resources and new sales opportunities for capitalist products.  This would also have been more significant to capitalism during the ascendant period.

It this idea that capital growth is solely dependant on extra cap markets that I would have wanted to see supported in your material from Marx.

However I think we can agree with what causes overproduction in that you mention the FROP driving the search for profits and hence growth. This growth outstrips the capacity to realise the capital and commodities produced.

My concern or query about this is just how does that accumulation/growth take place and im not sure that Marx tackles this in a single focussed way. He talks about overproduction and foreign markets but also about internal growth as per this:

Now, this growth of the means of production includes the growth of the working population, the creation of a working population, which corresponds to the surplus-capital, or even exceeds its general requirements, thus leading to an over-population of workers. A momentary excess of surplus-capital over the working population it has commandeered, would have a two-fold effect. It could, on the one hand, by raising wages, mitigate the adverse conditions which decimate the offspring of the labourers and would make marriages easier among them, so as gradually to increase the population. On the other hand, by applying methods which yield relative surplus-value (introduction and improvement of machinery) it would produce a far more rapid, artificial, relative over-population, which in its turn, would be a breeding-ground for a really swift propagation of the population, since under capitalist production misery produces population. It therefore follows of itself from the nature of the capitalist process of accumulation, which is but one facet of the capitalist production process, that the increased mass of means of production that is to be converted into capital always finds a correspondingly increased, even excessive, exploitable worker population. As the process of production and accumulation advances therefore, the mass of available and appropriated surplus-labour, and hence the absolute mass of profit appropriated by the social capital, must grow. Capital 3 Chap 13

 

This doesnt at all contradict the idea that workers and capitalists cannot consume all surplus value generated and cannot be responsible for all capital realised but it does suggest the capacity for ‘internal’ growth.

The real barrier of capitalist production is capital itself. It is that capital and its self-expansion appear as the starting and the closing point, the motive and the purpose of production; that production is only production for capital and not vice versa, the means of production are not mere means for a constant expansion of the living process of the society of producers. The limits within which the preservation and self-expansion of the value of capital resting on the expropriation and pauperisation of the great mass of producers can alone move — these limits come continually into conflict with the methods of production employed by capital for its purposes, which drive towards unlimited extension of production, towards production as an end in itself, towards unconditional development of the social productivity of labour. The means — unconditional development of the productive forces of society — comes continually into conflict with the limited purpose, the self-expansion of the existing capital. The capitalist mode of production is, for this reason, a historical means of developing the material forces of production and creating an appropriate world-market and is, at the same time, a continual conflict between this its historical task and its own corresponding relations of social production.….. Capital 3 Chap 15

If capital is sent abroad, this is not done because it absolutely could not be applied at home, but because it can be employed at a higher rate of profit in a foreign country. But such capital is absolute excess capital for the employed labouring population and for the home country in general. It exists as such alongside the relative over-population, and this is an illustration of how both of them exist side by side, and mutually influence one another. Capital 3 Chap 15

 

He also discusses colonisation and pre cap markets without any reference to them supporting accumulation other than in a generalised way that capitalism can grow. In fact in one section he describes the fact that colonists, in some circumstances, do not generate surplus value at all because they do everything for themselves ie they become self dependant.

The colonies secured a market for the budding manufactures, and, through the monopoly of the market, an increased accumulation. The treasures captured outside Europe by undisguised looting, enslavement, and murder, floated back to the mother-country and were there turned into capital. Holland, which first fully developed the colonial system, in 1648 stood already in the acme of its commercial greatness chapter 31 capital 1

The English East India Company, as is well known, obtained, besides the political rule in India, the exclusive monopoly of the tea-trade, as well as of the Chinese trade in general, and of the transport of goods to and from Europe. But the coasting trade of India and between the islands, as well as the internal trade of India, were the monopoly of the higher employés of the company. The monopolies of salt, opium, betel and other commodities, were inexhaustible mines of wealth

chapter 31 capital 1

Do you agree, that in none of these quotes will you find anything that suggests the absolute necessity of colonial markets for any realisation of capital?  In fact these last quotes about colonies would support my view that there is more than one method of accumulation.

MH
I've started...

Link I can see you have already raised some questions about Luxemburg's interpretation of Marx in what we have covered so far. If it's ok I'd just like to finish off my attempt to summarise the basic problem of overproduction that I think  she is trying to address, then I (and hopefully others) can come back to these.

I know this will be familiar to you but anyway...

So Luxemburg’s starting point in The Accumulation of Capital is Marx’s abstract model of capitalist reproduction in Capital Volume Two, which appears to show that in a world consisting solely of capitalists and workers, the entire mass of commodities produced can be consumed (Chapter 25).

But if there is no apparent restriction on the power of society to consume, this appears to contradict Marx’s own analysis of capitalism’s inherent contradictions in Volume Three of Capital, which as we have seen leads him to conclude that over-production is inherent in capitalism due to the limits of the very nature of the wage labour relation that restricts the consumption of both capitalists and workers.

Criticisms of Luxemburg’s theory often focus on her objections to the abstract models of capitalist reproduction in Volume Two and whether she has misunderstood them, given them too much prominence, etc. But this is at best secondary given that the whole point of her theory is to prove the correctness of Marx’s analysis of capital’s internal contradictions in Volume Three, ie. to defend his identification of “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” (Ch25).

Luxemburg of course concludes that the realisation of the ever-expanding mass of surplus value produced by capital requires above all the existence of buyers outside of capitalist society, but her basic thesis that “the realisation of the surplus value for the purposes of accumulation is an impossible task for a society which consists solely of workers and capitalists” is anticipated by Marx, as I think we agree?. 

I don't think in fact that this is necessarily incompatible with your argument that Marx was not talking about realisation being solely dependent on extra-capitalist markets, but that's for discussion....

Link
MH, in the previous post i

MH, in the previous post i was just trying to point out that Marx talked about accumulation taking place not dependant on extra cap markets.   So yes i agree that overproduction exists as an ongoing problem and as a driving force for capitalism but your last 2 paragraphs contradict each other so i dont think that it is compatible to say 'its impossible for for a society of solely workers and capitalists to accumulate capital'.  I think this is not an interpretaion you can get from the quotes i put up from Marx.  So while I dont agree its impossible for a society of solely workers and capitalists to accumulate, but i agree that accumulation must take place in the right type of commerce (excuse that quible, im just thinking of Marx talking about colonists reverting to production for self) with extra cap markets but how significant that is perhap remains to be discussed.

I think we are probably agreeing here so im just trying to make certain.

 

 

Link
I found this quote whilst

I found this quote whilst looking over accumulation and over production  sections. Its is Capital 2 Chapter 2 Section 3

We dont really discuss circulation issues nowadays altho marx goes into it a lot and the issue of money hoards is the main focus of chapter 2.  Do you think this is because these topics were more relevant in Marx’s time and today this role of the hoard as a step in preparation for capital investment and even the whole question of money source and circulation problems has been simplified by easy access to credit?

The form of a hoard is simply the form of money not in circulation, of money whose circulation has been interrupted and which is therefore fixed in its money-form. As for the process of hoarding, it is common to all commodity production and figures as an end in itself only in the undeveloped, pre-capitalist forms of this production. In the present case, however, the hoard appears as a form of money-capital and the formation of a hoard as a process which temporarily accompanies the accumulation of capital because and so far as the money here figures as latent money-capital; because the formation of a hoard, the state of being a hoard, in which the surplus-value existing in money-form finds itself, is a functionally determined preparatory stage gone through outside of the circuit described by the capital and required for the transformation of the surplus-value into really functioning capital.

d-man
Link, the appendix to the

Link, the appendix to the book Discovering Imperialism (eds. Richard Day, Daniel Gaido) is a critique of Luxemburg. There the point is made that prior to the full recovery of the investment, necessary to repair/maintain the capital, a "hoard" forms, or what I'd guess is called the depreciation fund, which however is lend out, so this money is used (by other capitalists to buy stuff). It seems that's the point you're thinking of.

Just btw, I'd say technically it's not a "hoard" (as in gold withdrawn from circulation), and second, commercial credit (bills of exchange), rather than gold, was predominant "in Marx's time". 

Link
Dman. I checked and Marx was

Dman. I checked and Marx was using the term hoard to mean money capital put away for future capital investment not about gold. I know nowadays in english that the word hoard relates more to something stowed away and lost like pirate treasure but I suspect the term has been poorly translated from german

Link
Marx and overproduction

MH, I think you will be pleased with me today taking my 3 volumes of Capital outside to read up on overproduction in the sun. I realised as I did that I had been hunting and reading chapters more about accumulation so it occurred to me to look up overproduction in the indexes. I was very surprised with what I found though. There is just so very little about overproduction! Nothing in Vol 1, One mention in Vol 2 and, in Volume 3,  a couple of brief references, one of which is how credit helps overcome the restrictions of overproduction and one section of 6 pages which is where i have already quoted from and which doesnt relate the issue to pre cap markets.

I understand the clarity of the quotes you have produced and dont intend as I said before to question the issue of overproduction but these quotes  do not seem to be the products of a significant investigation and analysis. In fact so little mention in Capital suggests to me that he didnt see the issue as that significant on its own.

I end up thinking that there is little here to say that Luxemburgs theory is based on Marx’s theories.  So not only was I actually expecting more justification for the link between them on the issue, but i now doubt there is more that could be used to support the argument

MH
Impressive but...

Link, I’m impressed, naturally.

Of course I also seem to remember one Fabio Damen of the PCInt pointing out that the word ‘decadence’ doesn’t appear in the 3 volumes of Capital. It’s true, but then the word ‘capitalism’ doesn’t appear much either. From this of course I conclude that Marx didn’t consider these concepts very important …

I suggest the next time the sun is shining, pull down your volumes of the ‘Theories of Surplus Value’ and check out the chapter on Marx's critique of Ricardo’s theory of profit. I think you’ll find the title of section 14 particularly illuminating…

“The Contradiction Between the Impetuous Development of the Productive Powers and the Limitations of Consumption Leads to Overproduction.  The Theory of the Impossibility of General Over-production Is Essentially Apologetic in Tendency”

;-)

MH
dp

dp

Link
Capitalism

Hi MH.  Maybe the sun got to me but i think you are definitely wrong about the term Capitalism not appearing very much and to be fair on poor old Marx he lived during ascendancy so couldnt really discuss decadence.  Being fair to me too, i wasnt questioning the quotes you produced.  I will of course head to the link on Theories of Surplus Value as my next port of call but can i say at this point, I am still hoping for more  to defend your hypothesis that Luxemburgs ideas were founded in Marx?

Alf
On method

The discussion on this thread about Luxemburg’s theory of accumulation has made some progress, in that Link now seems convinced that the problem of overproduction arises directly from the wage labour relationship. Regarding his hesitations about whether markets outside this relationship are necessary for accumulation, I want to make a couple of methodological points.

1. Luxemburg’s Accumulation of Capital begins by posing the problem of accumulation from the standpoint of the total social capital, not from the standpoint of the individual capitalist, who can certainly accumulate without the existence of non-capitalist markets. The essay by Lukacs, “The Marxism of Rosa Luxemburg” (1922) insists that Luxemburg’s critics, most of whom have argued that Luxemburg’s entire book was based on a non-problem, have forgotten that

"It is not the primacy of economic motives in historical explanation that constitutes the decisive difference between Marxism and bourgeois thought, but the point of view of totality. The category of totality, the all-pervasive supremacy of the whole over the parts is the essence of the method which Marx took over from Hegel and brilliantly transformed into the foundations of a wholly new science. The capitalist separation of the producer from the total process of production, the division of the process of labour into parts at the cost of the individual humanity of the worker, the atomisation of society into individuals who simply go on producing without rhyme or reason, must all have a profound influence on the thought, the science and the philosophy of capitalism. Proletarian science is revolutionary not just by virtue of its revolutionary ideas which it opposes to bourgeois society, but above all because of its method. The primacy of the category of totality is the bearer of the principle of revolution in science".

Our article “Rosa Luxemburg and the limits to capitalist expansion” (https://en.internationalism.org/ir/142/luxemburg), part of a longer series in defence of the notion of capitalist decadence, develops further on Lukacs’ response to Luxemburg’s critics.

2. Secondly, Luxemburg, again following Marx, approaches this problem not as a mathematical abstraction, but in its historical dynamic. The Marx quote I used previously ends like this “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".

I want to emphasise the term “move” here. Elsewhere Marx talks about capital as “the moving contradiction” I think that the critics of Rosa Luxemburg frequently fall into a reified vision of capitalism as a machine, a static system in which every seller (or producer) has a buyer - a notion which Marx explicitly rejected in his critique of the bourgeois economists who dismissed the problem of overproduction:

"The conception...adopted by Ricardo from the tedious Say...that overprod¬uction is not possible or at least that no general glut of the market is poss¬ible, is based on the proposition that products are exchanged against products, or as Mill puts it, on the ‘meta¬physical equilibrium of sellers and buyers', and this led to the conclusion that demand is determined only by prod¬uction, or also that demand and supply are identical." (Theories of Surplus Value, Volume II, p.493)

But we know that capitalism can only be an organism in constant expansion, and it is Luxemburg’s merit to have deepened one of the key insights of the Communist Manifesto: that capitalism must penetrate every corner of the earth, must create a world in its own image, continually extend the market, as well as engage in a ceaseless hunt for cheaper raw materials and cheaper labour power. Thus it does not and cannot establish a new static equilibrium in which it trades peacefully with non-capitalist zones and thus relieves itself of the constipation of overproduction in the “home market” (ie, capital taken as a whole).It has to integrate them into its own circuit of production and realisation, which ultimately means destroying them as non-capitalist markets. But in doing so, as Engels already insisted, it enters into an even greater spiral of contradictions:

“Capitalist production being a transitory economical phase, is full of internal contradictions which develop and become evident in proportion as it develops. This tendency to destroy its own market at the same time it creates it, is one of them. Another one is the insoluble situation to which it leads, and which is developed sooner in a country without a foreign market, like Russia, than in countries which are more or less capable of competing on the open world market. This situation without an apparent issue finds its issue, for the latter countries, in commercial revulsions, in the forcible opening of new markets. But even then the cul-de-sac stares one in the face. Look at England. The last new market which could bring on a temporary revival of prosperity by its being thrown open to English commerce is China. Therefore English capital insists upon constructing Chinese railways. But Chinese railways mean the destruction of the whole basis of Chinese small agriculture and domestic industry, and as there will not even be the counterpoise of a Chinese grande industrie, hundreds of millions of people will be placed in the impossibility of living. The consequence will be a wholesale emigration such as the world has not yet seen, a flooding of America, Asia and Europe by the hated Chinaman, a competition for work with the American, Australian and European workman on the basis of the Chinese standard of life, the lowest of all--and if the system of production has not been changed in Europe before that time, it will have to be changed then. Capitalistic production works its own ruin, and you may be sure it will do so in Russia too...” (Letter to Nikolai Danielson, Sept 22 1892).

This process led to what Luxemburg described as the “age of catastrophe” (ie decadence) long before the purely economic expansion of capitalism had reached its limits. In fact, we can still see the process at work today, as the article on the Silk Road argues, mainly in relation to China, which was by no means fully capitalised by the beginning of the 20th century. We can also see Rosa’s description of the different stages of capitalist world expansion summed up in the Amazon today; first, deport or exterminate the primitive communist tribes who are a pure obstacle to “development” if they can’t be enslaved; use petty bourgeois strata like independent goldminers or loggers as foot-soldiers in the next phase of the conquest; then pave the way for roads, timber factories, agri-business, in sum the growing capitalisation of the rainforest. In Bolsonaro’s dreams, this will make Brazil into a major player on the world market. In reality, it will intensify the problem of global overproduction. And in the process, it unearths a new source of catastrophe that Luxemburg could not yet fully grasp: the destruction not only of primitive and pre-capitalist economies, but of what Marx called “man’s extended body”, the natural environment without which no human society is possible. That’s another story, but one that is certainly not divorced from the basic problem of accumulation.

d-man
I stumbled on 2 soviet pieces

I stumbled on 2 soviet pieces related to Luxemburg (they're in Russian, but if you're an enthusiast, you can copy-paste the texts into google-translate). One from 1933 by a certain B. Kazanskij is a critique of Bukharin's critique of Luxemburg ('N. Bukharin as a critic of Luxemburg'). Another from 1932 by a certain L. Ziman is titled 'On the question of the fate of the "third person" under capitalism', which argues, perhaps ironically, that Luxemburg failed to understand that imperialism was a decaying capitalism and does not automatically/progressively convert everything into the capitalist production, but rather preserves the "third person" (which involves varies relations, feudalism, petty production, etc.). Ziman talks about peasantry in all capitalist countries (England, but especially France and Japan), and about the colonies (against Rosa's notion of decolonisation/industrialisation). Ziman (p. 131ff.) also comes to speak of Central-Asia (Turkestan) in particular (also a footnote on China), so it's a bit connected to the ICC discussion about New Silk Road. Ziman finally goes to some length to criticize Trotsky on the Chinese revolution.

Link
Theories of Overproduction?

Why do I feel that it is assumed that because I dont agree with Luxemburg’s hypothesis about pre cap markets, then I must also disagree with the idea of overproduction?. As I said previously the one thing does not automatically mean the other. What I do now perceive with this discussion is that there is actually a range of different interpretations as to what overproduction means.

I will quickly summarise what I think these ‘theories of overproduction’ are:

1 That overproduction means that pre cap markets must be the source of capital accumulation, that capital expands solely because of pre cap markets. That overproduction is basically measured in relation to the size of the internal market

2 That pre capitalist markets are the prime source for the accumulation of capital

3 That in order to satisfy the drive to expand and compensate for overproduction, , capitalism creates additional pre cap markets to enable this expansion

4 That the FROP leads to overproduction and drives capitalism to make full use of markets, both internal and external, and that both have a role to play in expanding the production of capital

5 That overproduction is a question of production expansion driven by the FROP and capitalism creates its own markets to try to keep up with that expansion.

6 That overproduction is already so strong that markets are saturated and have limited growth available

These are brief paraphrases obviously so please don’t take them as precise, thought out definitions. Some may well overlap but I do think they show enough to confirm variations in the meaning of the term overproduction.

MH and Alf provide a range of quotes from Marx such as:

Over-production is specifically conditioned by the general law of the production of capital: to produce to the limit set by the productive forces, that is to say, to exploit the maximum amount of labour with the given amount of capital, without any consideration for the actual limits of the market or the needs backed by the ability to payTSV 17-14

 

This is important I absolutely agree, it lays the basis for the recognition of overproduction as a major problem for capitalism and Marx says this is particularly an issue in crises that emerge including when the FROP has drive profit down to crisis levels. It lays the basis for overproduction being a continual issue for capital at all times in its life

Again:

‘... the bourgeois mode of production contains within itself a barrier to the free development of the productive forces, a barrier which comes to the surface in crises and, in particular, in over-production—the basic phenomenon in crises. TSV 17-14’

 

All I want to point out is that there surely remains a discussion to clarify what we all mean by overproduction. Marx made significant points about overproduction that may well have influenced Luxemburg to investigate BUT I don’t see that he can be basis for Theory 1 above which links overproduction to the idea that extra cap markets are the sole source of accumulation. There are just too many steps in between. In fact I think it more reasonable to follow Luxemburg’s view that her starting point was what she saw as an error in Marx.

Alf mentioned the article in IR on Luxemburg and the Limits to Capital Expansion and this is interesting as it situates the work of Kautsky and Boudin as far closer predecessors to her theory

Marx laid the groundwork for an understanding of overproduction but he also suggested that the hoarding of money capital was one way in which capital enabled accumulation, that credit also could play a role here and that capital by itself laid the basis for further accumulation and the growth of population and both internal and external markets. As can be seen below that this still would never be able to compensate for overproduction ultimately:

However, the mere admission that the market must expand with production, is, on the other hand, again an admission of the possibility of over-production, for the market is limited externally in the geographical sense, the internal market is limited as compared with a market that is both internal and external, the latter in turn is limited as compared with the world market, which however is, in turn, limited at each moment of time, [though] in itself capable of expansion’.TSV17-13

This latter quote indeed comes from that Chapter of Theories of Surplus Value from which MH quotes the section title of TSV 17-14 and suggests it is significant:

“The Contradiction Between the Impetuous Development of the Productive Powers and the Limitations of Consumption Leads to Overproduction.  The Theory of the Impossibility of General Over-production Is Essentially Apologetic in Tendency”.

However if you if you read the section it is, in fact, a criticism of various bourgeois concepts, particularly from Ricardo, that reject overproduction as a general feature of total social capital but the section does not aim to explain or define what overproduction actually is and does not at all link accumulation to pre cap markets. It seems to me that short quotes keep being taken out of context to justify a link to Luxemburg, a very superficial link.

So the sole point I am trying to make here is that whilst Luxemburg’s interpretation of Marx’s statement:

“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”

leads her directly to the conclusion that the realisation of the ever-expanding mass of surplus value produced by capital requires above all the existence of buyers outside of capitalist society and her basic thesis that “the realisation of the surplus value for the purposes of accumulation is an impossible task for a society which consists solely of workers and capitalists’

I cannot see the one in any way proves the other, despite MH assertions that they do.

I take Marx’s view to mean that he saw overproduction as an automatic process within capitalism and as Alf says that the problem of overproduction arises directly from the wage labour relationship.

He (Ricardo) cannot therefore admit that the bourgeois mode of production contains within itself a barrier to the free development of the productive forces, a barrier which comes to the surface in crises and, in particular, in over-production—the basic phenomenon in crises.’ TSV 17-14

Over-production is specifically conditioned by the general law of the production of capital: to produce to the limit set by the productive forces, that is to say, to exploit the maximum amount of labour with the given amount of capital, without any consideration for the actual limits of the market or the needs backed by the ability to pay; and this is carried out through continuous expansion of reproduction and accumulation, and therefore constant reconversion of revenue into capital, while ||726| on the other hand, the mass of the producers remain tied to the average level of needs, and must remain tied to it according to the nature of capitalist production.TSV 17-14

I take Marx’s explanation here to be focussed on how capitalism itself expands and accumulates and grows its markets, all as part of the core processes of production and circulation.

For it is then possible—since market and production are two independent factors—that the expansion of one does not correspond with the expansion of the other; that the limits of the market are not extended rapidly enough for production, or that new markets— new extensions of the market—may be rapidly outpaced by production, so that the expanded market becomes just as much a barrier as the narrower market was formerly.’ TSV chap 17 -13

His identification of overproduction was linked to crises and the contradictions faced by capitalism growing.. It seems to me that on this issue of overproduction, 2 things can be taken from Marx for certain, firstly that he saw overproduction as important and secondly that he did not suggest that accumulation can only come from pre cap markets. The rest is open to interpretation.

I quite readily admit that this of course does not mean the latter theory is incorrect., so in my next contribution on this thread I aim to discuss more about Alf’s most recent contribution and Luxemburg’s hypothesis

Link
Re Alf's Post 24

I would like to take up points made by Alf about accumulation in Post 29 in that I was surprised by the idea that accumulation can take place at an individual level but not for the capitalism as a whole. I would understand that Total social capital is certainly the starting point for any analysis of the way capitalism works and I can see that the generalisations taking place at a global level will strip off complications at the level of the individual capitalist. But accumulation?? I need a lot more explanation of that because I cant see how individual enterprises can realise surplus value, invest in new machinery and thereby accumulate new capital without this counting towards global accumulation of capital. I can see in a small firm this figure might be negligible but not how this can be the case for the totality of firms!

Alf
Perhaps we are

Perhaps we are misunderstanding each other Link, but your response calls to mind another quote from Marx (Grundrisse, the Chapter on Capital, Notebook 4), which we also used in our article “Rosa Luxemburg and the limits to capitalist expansion” (https://en.internationalism.org/ir/142/luxemburg) to illustrate the point that Lukacs  made in his defence of Luxemburg’s analysis (see our post number #29)

 

"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."

 

In your last post you pose the question: “I can’t see how individual enterprises can realise surplus value, invest in new machinery and thereby accumulate new capital without this counting towards global accumulation of capital. I can see in a small firm this figure might be negligible but not how this can be the case for the totality of firms!”

But isn’t this the point: it’s not that the individual capitalist’s accumulation doesn’t count towards global accumulation, it’s precisely when you do begin to pose the problem from the standpoint of total social capital that the problem arises, since then you are inevitably faced with the relationship between this mode of production and its surrounding milieu . It seems to me that you are still looking at things from the somewhat “illusory” standpoint of the individual capitalist, or, more precisely, from a standpoint which sees total social capital as no more than the sum of its parts.