I have been trying to get to grips with economic theories of Luxembourg and of the Falling Rate of Profit just lately which led me to read Accumulation of Capital and I have a few comments and queries about the basic foundations of Luxembourg’s theory
The interpretation of c+v+s seems to be a key issue. It is an wonderful abstraction which works because it provides a valid model of capitalism whether in the form of simple or enlarged reproduction, for a individual capitalist, total capital and state capitalism, capitalism in 1850 and today. Whilst it is a very simple model of capitalism, it is perhaps not simple to relate it to actual financial and economic development. It does not of itself aim to model, competition, money supply, market processes, financial markets, production planning, demand management, international trade and so forth. Is it not correct to state that it is a model, which along with wage labour and commodity production, defines a mode of production and hence how capitalism creates value and the class relationships hidden in c and v and s. Is this not achievement enough? Of course there is a need to explain the way markets actually operate, but of itself , can c+v+s be interpreted to explain how the market brings about sufficient amounts of the correct types of c or v for that matter?
In terms of capital accumulation, Luxembourg says that simple reproduction is ok as far as it goes but is not reality because it only allows for replacement of existing constant capital. Enlarged reproduction as a model works out OK again but for total capital it does not apply to reality because it the model does not identify where the demand specifically for capital replacement (ie the growth over and above simple reproduction) comes from – as far as I can see because it is a complex demand requiring predetermined range of products and services which make the machinery to meet the right demand for products. It is because she suggests that capitalism cannot meet its own demand in this way she looks elsewhere for that demand, so this is a key point therefore.
My 2nd question is therefore why this demand cannot be met by some element of capitalism? She tries to apply enlarged reproduction to reality but in a rather narrow or selective way. Surely when considering total capital, all elements of c+v+s require a demand to enable that enlargement to be made and all come about in a complex process in the anarchy of the market. I cannot see that one element of that overall demand can be separated and said to be incapable of being satisfied within capitalism while the rest is ok.
The focus of Luxembourg’s theory is that ALL accumulation and growth in the total capital is dependant on trade with pre-capitalist markets. Without pre-capitalist markets Luxembourg says there can be NO accumulation. Her argument appears to be reducable to the idea that in each ‘cycle’ of production growth is taking place. Capital accumulates - becomes larger than it was at the start of the cycle, hence there must have been and always is overproduction in the market relative to the amount of capital in circulation originally. The size of total capital grows in that cycle, so as capitalism cannot magic this demand and growth into being, Luxembourg questions where the demand for the additional capital comes from. This growth is what enables the recapitalisation of existing capital and cannot come from within capitalism,. Her theory, because it is based on limits placed on enlarged reproduction and, is absolute and clear cut in rejecting all means at capitalism disposal to enable accumulation. This certainly appears to be the logic of her argument.
My 3rd question is therefore is really then whether this is a correct interpretation of Luxembourg’s theory? Capitalism grows and continues to accumulate during decadence so her theory seems to imply that there must be large amounts of pre-capitalist markets still available and also that a total collapse of capitalism (maybe stagnation is a better term here) will occur when all pre-capitalist markets are incorporated into capitalism.
I am concerned that some of these issues I have raised could be translation related, so please could someone clarify if there are other interpretations of these core points in Luxembourg’s theory. To be honest, I am quite worried because whilst intending to be critical, I expected to find an explanation of others' arguments and did not expect to raise so many questions