Correspondence on Crisis Theories and Decadence, Part 2: Our reply

IR106, 3rd Quarter 2001

The so-called empiricism of Rosa Luxemburg

Bukharin, Raya Dunayeskavya and other critics of Rosa Luxemburg cited by the comrade, say that she was wrong to look for external reasons for the crisis of capitalism. [1] However, the world market and the pre-capitalist economies are not external to the system: they are the environment for its development and confrontations. To claim that capitalism can realise its accumulation within its own limits, is to say that it is a system without historical limits and that it develops through the simple exchange of commodities alone. In the first volume of Capital and also in The Results of British Rule of India Marx demonstrated exactly the opposite: the genesis of capital, its progressive accumulation, took place by means of the battle to separate the producers from their means of livelihood, transforming them into the principle productive commodity – labour power – and, around this axis, through immeasurable suffering, constructing “peaceful” and “regular” commodity exchange. Using the same method, Rosa Luxemburg asks whether what was true of primitive accumulation is not also true in the later phases of capitalist development. Her critics believe that primitive accumulation is one thing, but that capitalist development is quite another, where there is no longer any role for the  “external market” and the “struggle against the natural economy”. However, this is utterly refuted by capitalism’s evolution in the 19th century especially, in its imperialist phase.

“At the time of primitive accumulation, i.e. at the end of the Middle Ages, when the history of capitalism in Europe began, and right into the 19th century, dispossessing the peasants in England and on the Continent was the most striking weapon in the large-scale transformation of means of production and labour power into capital. Yet capital in power performs the same task even today, and on an even more important scale – by modern colonial policy (…) Any hope to restrict the accumulation of capital exclusively to ‘peaceful competition’, i.e. to regular commodity exchange such as takes place between capitalist producer-countries, rests on the pious belief that capital can accumulate without mediation of the productive forces and without the demand of more primitive organisations, and that it can rely upon the slow internal process of a disintegrating natural economy (…) The method of violence, then, is the immediate consequence of the clash between capitalism and the organisations of a natural economy which would restrict accumulation. Their means of production and their labour power no less than their demand for surplus products is necessary for capitalism” (The Accumulation of Capital, pages 369-71, Modern Reader Paperbacks, 1968).

Those within the revolutionary movement who want to explain the historic crisis of capitalism exclusively by the tendency of the rate of profit to fall only see one part - exchange within the already constructed capitalist market - but miss the other, the most dynamic historically and whose progressive limitation from the end of the 19th century has caused the growing chaos and convulsions that humanity has suffered since 1914.

This puts them in a very uncomfortable position faced with that central dogma of capitalist economic ideology – the idea that “production creates its own market”, that all supply eventually encounters a demand – which was criticised so severely by Marx who denounced: “The conception (…) adopted by Ricardo from the tedious Say (…) that over-production is not possible or at least that no general glut of the market is possible, based on the proposition that products are exchanged against products, or as Mill put it, on the ‘metaphysical equilibrium  of sellers and buyers’, and this led to [the conclusion] that demand is determined only by production” (Theories of Surplus Value, Vol. 2, page 493).

In the same way he combated the conceptions that limited the disturbances of capitalism to mere disproportions between sectors of production.

If they exclude the pre-capitalist territories from the field of capitalist accumulation, if they think that capitalism can develop from its own social relations, how can the thesis that production creates its own market be avoided? The tendency for the rate of profit to fall is not a sufficient explanation since it operates within such an accumulation of counter-acting factors and over such a long period that it cannot explain the historical events that have unfolded since the last third of the 19th century and accumulated during the 20th: imperialism, world wars, the great depression, state capitalism, the reappearance of the open crisis from the end of the 1960s and the increasingly serious collapse of large parts of the world economy over the last 30 years.

But precisely because the tendential fall operates “in the long term”, is it not necessary to avoid ‘empiricism’ and ‘impatience’ and avoid being ‘misled’ by all these immediate catastrophes? This appears to be the method that the comrade proposes when he stresses the “apparent” coincidence of the “division of the world” with the “world crisis” or when he points out that the great depression appeared to confirm the theses of Grossman and Luxemburg but that these have since been disproved by the large scale growth after World War II or the growth in the 1990s.

We will return to this aspect later. What we want to highlight now is that behind the accusations of “empiricism” levelled at Rosa Luxemburg there is an important question of “method” which we think has escaped the comrade. The Revisionists in the Social Democratic movement began a crusade against Marx’s “underconsumptionism”. Bernstein was the first to put Marx’s analysis of the crisis on the same level as the pathetic Rodbertus. Tugan-Baranowsky calmly returned to Say’s theses about “production creating its own markets”, explaining with “Marxist” reasoning that the crisis arises from disproportions between the two departments of production. The Revisionist critiques of Rosa Luxemburg – Bauer, Eckstein, Hilferding etc – said with all the authority of “Marxist orthodoxy” - that the tables of expanded reproduction explained perfectly that there was not a problem of realisation. Bukharin – in the service of the Stalinisation of the Communist Parties – attacked Luxemburg’s work in order to “demonstrate” that capitalism does not have an “external” problem.

Why did the opportunists have this aversion to Rosa Luxemburg’s analysis? Simply because she put her finger on a tender spot, by showing the global and historical root of capitalism’s entry into its decadence. Fifty years previously the method of analysing the contradiction between the advance of the productivity and the necessity to maximise profit had proved very fruitful. However, now it was the question of the struggle of capitalism against the preceding social order in order to form the world market and the contradictions that arose from this (the growing poverty of the pre-capitalist territories) that provided a clearer and more systematic framework that integrated into a higher synthesis both the original contradiction, and the phenomena of imperialism, world war and the progressive decomposition of the capitalist economy.

Later on, following in the footsteps of the Revisionists but on a frankly bourgeois terrain, a whole gaggle of university “Marxologists” dedicated themselves to developing the idea of the “abstract” Marx. Cleverly separating his reflections on expanded reproduction, the rate of profit, etc., from those on the question of the market and the realisation of surplus value. By means of this fragmentation – in reality an adulteration - of Marx’s thought they conjured up the ghost of his “abstract method”, turning it into a explanatory “model” of the contractual functioning of capitalist economy: the regular exchange of commodities which Rosa Luxemburg talks of. Any attempt to confront this “model” with the realities of capitalism is seen as “empiricism” and expresses a lack of understanding of the fact that it is a question of an “abstract model”, etc. etc.

This enterprise, which turned Marx into an “inoffensive icon” – as Lenin would have said – aimed to eliminate the revolutionary thread of his work and to make it say what he never meant. The most shameless bourgeois economists who don’t adopt a “Marxist” façade also have this “long-term vision”. Are they not forever telling us not to be empiricists or immediatists: that we should look beyond the unemployment, the stock market cataclysms and instead understand the “general tendency” based upon “good fundamentals”. The Marxologists conveniently select and take out of context parts of Capital in order to achieve the same ends.

The comrade holds clearly revolutionary positions and in no way, shape or form shares in this business of confusion. However, in drawing on many of Bukharin’s “arguments”, and on those of various academics, instead of undertaking an examination of Rosa Luxemburg’s positions, [2] he closes his eyes to those aspects of the question we have tried to draw out here.

The limits of capitalist accumulation

The comrade says that Rosa Luxemburg poses an “absolute limit” to the development of capitalism. First of all we will look at exactly what she said: “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” (op. cit chapter XXXII, page 466-467).

If the comrade is referring to “this natural economic impasse of capital’s own creating”, it is clear that if interpreted literally it does give the impression of an absolute limit. Nevertheless, the same conclusion could be drawn from Marx’s assertion that: “In the way that the development of labour productivity involves a law, in the form of the falling rate of profit, that at a certain point confronts this development itself” (Capital Vol. 3, page 367). This formulation contrasts with others – which we have quoted above - where it is emphasised that this law is only a tendency.

Clearly we have to be careful not to use formulations that can lead to ambiguity or to take isolated phrases out of context. What is important to see is an analysis, dynamic and global orientation. At this level Luxemburg – like Marx – is very clear: what is most important is her assertion that the accumulation of capital “becomes a string of political and social disasters and convulsions”. This does not express an absolute limit but a general tendency that is going to get worse with the rotting of the situation.

In The Eighteenth Brumaire of Louis Bonaparte, Marx says that “Men make their own history, but not of their own free will; not under circumstances they themselves have chosen but under the given and inherited circumstances with which they are directly confronted” (Surveys From Exile, The Pelican Marx Library, page 146, 1977). The method that revolutionaries use consists, in accord with this argument, in understanding and putting forward the fundamental tendencies that mark “the circumstances with which [men] are directly confronted”. In the years before the explosion of war in 1914 Rosa Luxemburg correctly declared that there was a historical tendency that was going to mark - and how! - “men’s actions”

The conclusion to the first edition of The Accumulation of Capital clears up, in our opinion, any doubts about whether she was formulating an “absolute” tendency: “Capitalism is the first mode of economy with the weapon of propaganda, a mode which tends to engulf the entire globe and to stamp out all other economies, tolerating no rival at its side. Yet at the same time it is also the first mode of economy that is unable to live by itself, which needs other economic systems as a medium and soil. Although it strives to become universal, and indeed, on account of this its tendency, it must break down - because it is immanently incapable of becoming a universal form of production. In its living history it is a contradiction in itself, and its movement of accumulation provides a solution to the conflict and aggravates it at the same time. At a certain stage of development there will be no other way out than the application of socialist principles. The aim of socialism is not accumulation but the satisfaction of toiling humanity’s wants by developing the productive forces of the entire globe”.

What is our conception of the decadence of capitalism?  Have we ever mentioned a complete blockage in the development of the productive forces, or an absolute limit to capitalist production, a kind of definitive and mortal crisis?

The comrade recognises that we reject the idea formulated by Trotsky concerning an absolute blockage of the productive forces. In the same way, our conception is alien to certain conceptions which arose in the 20’s within tendencies of the KAPD which talked about the “mortal crisis of capitalism”, which they understood to mean an absolute stoppage of production and capitalist growth.

Our pamphlet on decadence responds to Trotsky’s position: “All social changes are the result of the deepening and prolonged collision of the relations of production with the development of the productive forces. If we defended the hypothesis of the definitive and permanent halt in this development, the deepening of this contradiction could only be demonstrated if the other bounds of the existing property relations were ‘absolutely’ receding. However, it happens that the characteristic movement of the different periods of decadence in history (including the capitalist system) tends rather in the direction of expanding these frontiers up to their final limits than towards their restriction.

Under the aegis of the state and under the pressure of economic and social necessities, the system’s carcass swells while casting off everything that proves superfluous to the relations of production, everything not strictly necessary to the system’s survival. The system is reinforced but at its last limits” (page 19-20 in the English edition).

Understanding how capitalism can “manage the crisis” through a policy of survival aimed at reducing its effects on the central countries falls entirely within the Marxist analysis of the decadence of modes of production. Did the Roman Empire not do the same when it withdrew to Byzantium and abandoned vast areas to the pressure of the invading barbarians? Was not the enlightened despotism of the ancien régime monarchies a response to the advancing capitalist relations of production?

“The freeing of the slaves under the Late Roman Empire; the freeing of the serfs at the end of the Middle Ages; the partial liberties which the declining monarchy had to grant to the new bourgeois cities; the reinforcing of the central power of the crown, and the elimination of the ‘nobility of the robe’ completely dominated by the King; and likewise, in the capitalist framework, the attempts at economic planning; the efforts to try to relieve the burden of national, economic frontiers; the tendency to replace bourgeois parasites with efficient  salaried ‘managers’ of capital; policies such as the New Deal and the continued manipulation of certain mechanisms of the law of value – all are evidence of this tendency to expand the juridical framework by laying bare the relations of production. There is no halt in the dialectical movement after a society has reached its apogee. This movement is qualitatively transformed but it does not end. The intensification of the contradictions inherent in the old society necessarily continues and for this reason the development of the imprisoned productive forces must continue even if it is at the slowest rate” (idem).

In the period of capitalism’s decadence we have seen an aggravation of its contradictions at all levels. There has been development of the productive forces, there have also been phases of economic growth, but this has taken place within a global framework that has become increasingly contradictory, convulsed and destructive. The tendency towards barbarism has not appeared in a linear procession of catastrophes and unending collapse, but rather disguised by phases of growth, by the increase in the productivity of labour, by greater or smaller periods of growth. State capitalism – especially in the central countries – has all the means at hand in order to control a potentially explosive situation, to attenuate and smooth over the most serious contradictions and, above all else, to maintain the appearance of “healthy functioning” and even “progress”. The system “is being stretched to its very limits”.

Between the 1st and 3rd century AD, the system of slavery was characterised by increasingly serious contradictions. Rome and Byzantium were being filled with the finest monuments in the history of Empire, the most advanced technologies of the time flourished in this period to the point that the principle of electrical energy was discovered during the 2nd century. But these dazzling developments took place within an increasingly degraded framework, the exacerbation of social struggles, the abandoning of territories to barbarian pressure, the massive deterioration of the transport infrastructure. [3]

Are we not witnessing the same evolution today but of even greater magnitude due to the specific characteristics of decadent capitalism? [4]

The comrade says that our theory is refuted by the growth after World War II and the growth that took place in the 1990s. We cannot develop a detailed argument [5] here: however, in relation to the growth between 1945 and 1967, it is necessary to understand, over and above its statistical volume:

-    the powerful impact of armaments and the war economy, as the comrade recognises.

-    the importance of the Marshall Plan, the most gigantic expansion of debt ever known up to then. 

-    the consequences that this has had (and the comrade also appears to recognise this): a substantial part of this growth has evaporated in a dramatic process of dismantling – which in the central countries has particularly affected heavy industry – or of implosion as in the case of the Russian bloc.

As for the growth of the 90s: a minuscule level of growth, [6] based on historically unprecedented levels of debt and speculation, was limited to the United States – and a few other countries – within the context of unprecedented setbacks for numerous countries in Africa, Asia and Latin America. [7] Moreover, the present collapse of the “New Economy” and the turbulence on the stock markets is revealing the reality of this growth.

When talking about the “growth figures” the comrade should reflect about their nature and composition. [8] Growth that expresses the expansion of the system is not the same thing as growth that reflects a policy of survival and crisis management. Generally, for a Marxist, it is not possible to identify the growth of production with the development of capitalist production. They are two distinct ideas. The practice in Stalinist Russia of using recording breaking statistics for steel, cotton and cement to hide defective or non-existent production, was only the most extreme and grotesque illustration of a general tendency of decadent capitalism, stimulated by state capitalism, to increase the production figures of a system whose bases of reproduction are being slowly and progressively eroded. Rosa Luxemburg reminds us that: “the accumulation of capital is not about piling up increasingly large heaps of commodities, but of turning increasingly large volumes of products into money-capital. Between the accumulation of surplus-value in the form of commodities and the application of surplus-value for the development of production there is a decisive and difficult step, what Marx called the perilous leap of commodity production from the production of commodities to their sale for money. Perhaps this problem only exists for individual capitalists and does not affect the class or society as a whole? Nothing of the kind: ‘In speaking of the social point of view’, Marx said, ‘it is necessary to avoid falling into the habits of bourgeois economists, as imitated by Proudhon, i.e. to avoid looking at things as if a society based on the capitalist mode of production lost its specific historical and economic character when considered en bloc, as a totality. This is not the case at all. What we have to deal with is the collective capitalist’” (Rosa Luxemburg, Anti-critique, the quote from Marx is from Vol. 2 of Capital).

The nature of the growth in production during capitalism’s decadence – and above all during the last 50 years – has been marked by the tendency for it to be mediated through debt and state intervention. An intervention which at times has amassed enormous stores of commodities, only to destroy them years later since the problem is that they are not the products of a real development of the capitalist relations of production, an authentic expansion of the mass of wage earners and markets.

But, in any case, beyond their nature and particular composition the phases of relative and drugged growth have hidden a historical slowdown in the growth of production. This is the primary characteristic of the decadence of capitalism. Thus, there is no question of an absolute stoppage of growth, but this observation cannot obscure the fundamental tendency.

The same goes for other aspects of economic and social life. The fantastic discoveries in fields such as the human genome, telecommunications or transport, hide a profound deterioration in living conditions, health and the infrastructure of production. The restoration of facades in the great cities of Europe or America, the frantic building of useless glass monuments, illuminated skyscrapers, gives the illusory sensation that “all is well” obscuring an enormous, systematic and irreversible degradation of workers’ and the whole of humanity’s living conditions. It is the same with the functioning and maintaining of these dazzling cities: behind the bright shining lights we see the repeated power cuts in prosperous California and the proliferation of food, transport and ecological catastrophes etc.

It is essential to take the point of view of the totality, as the comrade himself emphasises. We cannot look at robotics and the genome, nor the phases of more or less sustained growth in themselves: it is necessary to see the contradictory and destructive framework within which they occur. The gravity of the system’s crisis is not measured by the volume of rises and falls in production but from a historical and global standpoint, by the worsening of its contradictions, the progressive reduction in its room for manoeuvre and above all by the deterioration in the living conditions of the working class.

In China at the same time as they constructed a dazzling artificial island of skyscrapers adjoining Shanghai, they forced school children to work in order to keep them open. Whilst a totally robotized factory was being opened in Sao Paulo, Brazil, the number of street children continued to grow, and more than 50% of the population still lives below the vital minimum. In Great Britain at the same time as Pharaonic works are being carried out in London’s old docklands, livestock in their hundreds of thousands are being sacrificed. Which of these two sets of facts reflect capitalism’s real situation? We don’t have any doubts about the answer. We hope that we have contributed to dissipating any doubts that the comrade, or our readers in general, may feel on the matter. 

Adalen 2.4.2001

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[1] See International Review, numbers 29 and 30 for a critique of these accusations by Bukharin and Duyaneskaya against Rosa Luxemburg.

[2] He rarely quotes Rosa Luxemburg directly, the criticisms that he mentions are taken word for word from the Bukharin of  “Bolshevisation” (Stalinisation in reality) and from a whole series of “academics” who may occasionally have something interesting to say, but who generally hold positions alien to Marxism. The quotes from Mattick and Pannekoek are a different matter. We do not agree with them, but they demand a more detailed answer.

[3] For an analysis of the decadence of modes of production before capitalism, see the article in the series “Understanding the Decadence of Capitalism” in International Review n°55.

[4] See the “Decomposition of Capitalism” in International Review n°62.

[5] We refer the reader to the pamphlet on The decadence of capitalism, to the articles in International Review numbers 54 and 56, part of the series “Understanding the Decadence of Capitalism” and to the polemics with the IBRP in the International Review numbers 79 and 83.

[6] The level of growth in the decade of the 90’s has been less than that in the previous 5 decades.

[7] See the series “30 years of capitalist crisis” in International Review numbers 96 to 98.

[8] See the “Presentation of the VIIIth Congress”, International Review n°59, for some reflections about this.