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