Decadence of capitalism (vii): Rosa Luxemburg and the limits to capitalist expansion

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As we saw in the last article in this series, the central target of the revisionist attack on the revolutionary core of marxism was the latter's theory of the inevitable decline of capitalism, resulting from the irresolvable contradictions built into its relations of production. Eduard Bernstein's brand of revisionism, which Rosa Luxemburg refuted so lucidly in Social Reform or Revolution, was to a large extent based on a series of empirical observations derived from the unprecedented period of expansion and prosperity the most powerful capitalist nations lived through in the last decades of the 19th century. There was little pretence of founding the critique of Marx's "catastrophic" view on any profound theoretical investigation of Marx's economic theories. In many ways Bernstein's arguments were similar to those favoured by many bourgeois experts during the phase of economic boom that followed the Second World War, and even during the even more precarious "growth" in the first years of the 21st century: capitalism is delivering the goods, ergo it will always be able to deliver the goods.

Other economists, however, not yet completely divorced from the workers' movement, sought to base their reformist strategies on a "marxist" approach. One such case was the Russian Tugan Baronowski, who in 1901 published a book entitled Studies in the Theory and History of Commercial Crises in England. Following the work of Struve and Bulgakov a few years before, Tugan Baranowski's study was part of the "legalist Marxist" response to the Russian populists, who tried to argue that capitalism would face insuperable difficulties in establishing itself in Russia; one of these was the problem of finding sufficient markets for its production. Like Bulgakov, Tugan tried to take Marx's schemes for expanded reproduction in Volume 2 of Capital as proof that there was no fundamental problem of realisation of surplus value in the capitalist system, that it was possible for it to accumulate indefinitely in a harmonious manner as a "closed system". As Rosa Luxemburg summed it up:

"There can be no doubt that the ‘legalist' Russian Marxists achieved a victory over their opponents, the ‘populists', but that victory was rather too thorough. In the heat of battle, all three - Struve, Bulgakov and Tugan Baranovski - overstated their case. The question was whether capitalism in general, and Russian capitalism in particular, is capable of development; these Marxists, however, proved this capacity to the extent of even offering theoretical proof that capitalism can go on forever."[1]

Tugan's thesis brought a swift response from those who still adhered to the marxist theory of crisis, in particular the spokesman of "marxist orthodoxy", Karl Kautsky, who insisted in particular that because neither capitalists nor workers could consume the whole of the surplus value produced by the system, it was constantly driven to conquer new markets outside itself: 

"Although capitalists increase their wealth and the number of exploited workers grows, they cannot themselves form a sufficient market for capitalist-produced commodities, as accumulation of capital and productivity grow even faster. They must find a market in those strata and nations which are still non-capitalist. They find this market, and expand it, but still not fast enough, since this additional market hardly has the flexibility and ability to expand the capitalist process of production. Once capitalist production has developed large-scale industry, as was already the case in England in the nineteenth century, it has the possibility of expanding by such leaps and bounds that it soon overtakes any expansion of the market. Thus, any prosperity which results from a substantial expansion in the market is doomed from the beginning to a short life, and will necessarily end in a crisis.

This, in short, is the theory of crises which, as far as we can see, is generally accepted by ‘orthodox' Marxists and which was set up by Marx".[2]

At more or less the same time, a member of the left wing of the American Socialist Party, Louis Boudin, weighed into the debate with a similar, though actually more developed analysis, in The Theoretical System of Karl Marx.[3]

Whereas Kautsky, as Luxemburg pointed out in The Accumulation of Capital, an Anticritique (1915), had posed the problem of the crisis in terms of "underconsumption" and in the somewhat imprecise framework of the relative speeds of accumulation and expansion of the market,[4] Boudin situated it more exactly in the unique character of the capitalist mode of production and the contradictions which led to the phenomenon of overproduction:

"Under the old slave and feudal systems there never was such a problem as overproduction, for the reason that production being for home consumption the only question that ever presented itself was: how much of the product produced shall be given to the slave or serf and how much of it should go to the slave-holder or feudal baron. When, however, the respective shares of the two classes were determined upon, each proceeded to consume its share without encountering any further trouble. In other words, the question always was, how the products should be divided, and there never was any question of overproduction, for the reason that the product was not to be sold in the market but was to be consumed by the persons immediately concerned in its production, either as master or slave....Not so, however, with our modern capitalistic industry. It is true that all of the product with the exception of that portion which goes to the workingman goes, now as before, to the master, now the capitalist. This, however, does not settle the matter finally, the reason is that the capitalist does not produce for himself but for the market. He does not want the things that the workingman produced, but he wants to sell them, and unless he is able to sell them, they are absolutely of no value to him. Saleable goods in the hands of the capitalist are his fortune, his capital, but when these goods become unsalable they are worthless, and his whole fortune contained in the stores of goods which he keeps melts away the moment the goods cease to be marketable.

"Who then, will buy the goods from our capitalists who introduced new machinery into their production, thereby largely increasing their output? Of course, there are other capitalists who may want these things, but when the production of society as whole is considered, what is the capitalist class going to do with the increased output which cannot be taken up by the working man? The capitalists themselves cannot use them, either by each keeping his own manufacture or by buying them from each other. And for a very simple reason, the capitalist class cannot itself use all the surplus products which its workingmen produce and which they take to themselves as their profits of production. This is already excluded by the very premise of capitalistic production on a large scale, and the accumulation of capital. Capitalistic production on a large scale implies the existence of large amounts of crystallised labour in the shape of great railroads, steamships, factories, machinery and other such manufactured products which have not been consumed by the capitalists, to whom they have fallen as their share or profit in the production of former years. As was already stated before, all the great fortunes of our modern capitalist kings, princes, barons, and other dignitaries of industry, titled or untitled, consist of tools and machinery in one form or another, that is to say, in an unconsumeable form. It is that share of the capitalist profits which the capitalists have ‘saved' and therefore left unconsumed. If the capitalists would consume all their profits there would be no capitalists in the modern sense of the word, there would be no accumulation of capital. In order that capital should accumulate the capitalist must not, under any circumstances, consume all his profits. The capitalist who does, ceases to be a capitalist and succumbs in the competition with is fellow capitalists. In other words, modern capitalism presupposes the saving habit of capitalists, that is to say, that part of profits of the individual capitalists must not be consumed but saved in order to increase the already existing capital... He cannot, therefore, consume all of his share in the manufactured product, It is evident, therefore, that neither the workingman nor the capitalist can consume of the whole of the increased product of manufacture? Who, then, will buy it up?"[5] 

Boudin then attempts to answer how capitalism deals with this problem, in a passage which Luxemburg quotes at length in a footnote to The Accumulation of Capital and which she presents as a "brilliant review" of Tugan's book:[6]

"With a single exception to be considered below, the existence of surplus product in capitalist countries does not put a spoke in the wheel of production, not because production will be distributed more efficiently among the various spheres, or because the manufacture of machinery will replace that of cotton goods. The reason is rather that, capitalist development having begun sooner in some countries than in others, and because even to-day there are still some countries that have no developed capitalism, the capitalist countries in truth have at their disposal an outside market in which they can get rid of their products which they cannot consume themselves, no matter whether these are cotton or iron goods. We would by no means deny that it is significant if iron goods replace cotton goods as the main products of the principal capitalist countries. On the contrary, this change is of paramount importance, but its implications are rather different from those ascribed to it by Tugan Baranovski. It indicates the beginning of the end of capitalism. So long as the capitalist countries exported commodities for the purpose of consumption, there was still a hope for capitalism in these countries, and the question did not arise how much and how long the non-capitalist outside world would be able to absorb capitalist commodities. The growing share of machinery at the cost of consumer goods in what is exported from the main capitalist countries shows that areas which were formerly free of capitalism, and therefore served as a dumping-ground for its surplus products, are now drawn into the whirlpool of capitalism. It shows that, since they are developing a capitalism of their own, they can by themselves produce the consumer goods they need. At present they still require machinery produced by capitalist methods since they are only in the initial stages of capitalist development. But all too soon they will need them no longer. Just as they now make their own cotton and other consumer goods they will in future produce their own iron ware. Then they will not only cease to absorb the surplus produce of the essentially capitalist countries, but they will themselves produce surplus products which they can place only with difficulty."[7]

Boudin thus goes further than Kautsky in insisting that the approaching completion of capitalism's conquest of the globe also signifies the "beginning of the end of capitalism".

Luxemburg examines the accumulation problem

At the same time as these responses were being written, Luxemburg was teaching at the party school in Berlin. In outlining the historical evolution of capitalism as a world system, she was led to return in greater depth to the writings of Marx, both because of her integrity as a teacher and a militant (she had a horror of simply churning out received wisdom in new packages and considered the task of every marxist was to develop and enrich marxist theory) and because of the increasingly urgent need to understand the perspectives facing world capitalism. In re-examining Marx, she would have found much to support her view that the problem of overproduction in relation to the market was a key to understanding the transient nature of the capitalist mode of production (see "The mortal contradictions of bourgeois society" in IR n° 139). Nevertheless, it seemed to her that Marx's schemes of expanded reproduction in Volume Two, however much they were intended by Marx to operate as a purely abstract, theoretical model for approaching the problem, implied that capitalism, which for the sake of argument Marx reduced to a society composed entirely of capitalists and workers, could accumulate in an essentially harmonious way as a closed system, disposing entirely of the surplus value it produced through the mutual interaction of the two main branches of production (the producer goods and consumer goods sectors). To her this seemed to be in contradiction with other passages in Marx (for example in Volume Three) which insist on the necessity for a constant expansion of the market and which at the same time posit an inherent limit to this expansion. If capitalism could operate as a self-regulating system, there may be temporary imbalances between the branches of production but there would be no inexorable tendency to produce an indigestible mass of commodities, no irresolvable crisis of overproduction; if simply the capitalist drive to accumulate in itself generated the constantly expanding demand needed to realise the whole of the surplus value, then how could marxists argue against the revisionists that capitalism was indeed fated to enter a phase of catastrophic crisis that would provide the objective foundations of the socialist revolution?

Luxemburg's answer was that it was necessary to move away from abstract schemes and situate capitalism's ascent in its real historical context. The whole history of capitalist accumulation could only be grasped as a constant process of inter-action with the non-capitalist economies that surrounded it. The most primitive communities which lived by hunting and gathering and had not yet generated a marketable social surplus were useless to capitalism and had to be swept aside through policies of direct destruction and genocide (even the human resources in these communities tended to be unsuitable for slave labour). But the economies which had developed a marketable surplus and in particular where commodity production was already internally developed (such as the great civilisations of India and China) provided not only raw materials but enormous markets for the production of the capitalist metropolises, enabling capitalism in the heartlands to overcome its periodic glut of commodities (this process is eloquently described in the Communist Manifesto). But as the Manifesto also insisted, even when the established capitalist powers tried to restrict the capitalist development of their colonies, these regions of the world inevitably became part of the bourgeois world, ruining pre-capitalist economies and converting them to the delights of wage labour - and thus displacing the problem of the additional demand required for accumulation onto another level. Thus, as Marx himself had put it, the more capitalism tended to become a universal system, the more it was fated to break down: "The universality towards which it irresistibly strives encounters barriers in its own nature, which will, at a certain stage of its development, allow it to be recognized as being itself the greatest barrier to this tendency, and hence will drive towards its own suspension."[8]

This approach enabled Luxemburg to understand the problem of imperialism. Capital had only begun to deal with the question of imperialism and its economic foundations, which in the period the book was written had not yet become such a central focus of concern for marxists. Now they were confronted with imperialism as a drive not only towards the conquest of the non-capitalist world, but also towards sharpening inter-imperialist rivalries between the major capitalist nations for the domination of the world market. Was imperialism an option, a convenience for world capital, as many of its liberal and reformist critics contended, or was it an inherent necessity of capitalist accumulation at a certain stage of its maturity? Here again the implications were far-reaching, since if imperialism was no more than an optional extra for capital, then it might be feasible to argue in favour of more reasonable and pacific policies. Luxemburg however concluded that imperialism was a necessity for capital - a means of prolonging its reign, which was equally pulling it inexorably towards its ruin.

"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 capitalise their surplus value, and the rapid change-over to capitalism of the pre-capitalist civilisations. On the international stage, then, capital must take appropriate measures. With the high development of the capitalist countries and their increasingly severe competition in acquiring non-capitalist areas, imperialism grows in lawlessness and violence, both in aggression against the non-capitalist world and in ever more serious conflicts among the competing capitalist countries. But the more violently, ruthlessly and thoroughly imperialism brings about the decline of non-capitalist civilisations, the more rapidly it cuts the very ground from under the feet of capitalist accumulation. Though imperialism is the historical method for prolonging the career of capitalism, it is also a sure means of bringing it to a swift conclusion. This is not to say that capitalist development must be actually driven to this extreme: the mere tendency towards imperialism of itself takes forms which make the final phase of capitalism a period of catastrophe."

The essential conclusion of The Accumulation of Capital was, therefore, that capitalism was entering a "period of catastrophe". It is important to note that she did not, as has often been falsely claimed, consider that capitalism was about to come to dead halt. She makes it quite clear that the non-capitalist milieu remains "the largest part of the world in terms of geography" and that non-capitalist economies still existed not only in the colonies but also in large parts of Europe itself.[9] Certainly the scale of these economic zones in value terms was diminishing relative to the growing capacity of capital to generate new value. But the world was still a long way off from becoming a system of pure capitalism as envisioned in Marx's schemas of reproduction:

"Marx's model of accumulation - when properly understood - is precisely in its insolubility the exact prognosis of the economically unavoidable downfall of capitalism as a result of the imperialist process of expansion whose specific task it is to realize Marx's assumption: the general and undivided rule of capital. Can this ever really happen? That is, of course, theoretical fiction, precisely because capital accumulation is not just an economic but also a political process."[10]

For Luxemburg, a world of just capitalists and workers was a theoretical fiction, but the more this point was reached, the more difficult and disastrous the process of accumulation would become, unleashing calamities that were not "merely" economic, but also military and political. The world war, which broke out not long after Accumulation was published, was a stunning confirmation of this prognosis. For Luxemburg, there is no purely economic collapse of capitalism, and still less an automatic, guaranteed link between capitalist breakdown and socialist revolution. What she announced in her theoretical work was precisely what was to be confirmed by the catastrophic history of the ensuing century: the growing manifestation of capitalism's decline as a mode of production, posing humanity with the alternative between socialism and barbarism, and calling on the working class specifically to develop the organisation and consciousness needed for the overthrow of the system and its replacement by a higher social order. 

A storm of criticism

Luxemburg considered that her thesis was not particularly controversial, precisely because she had based it firmly on the writings of Marx and subsequent followers of his method. And yet it was greeted with a huge storm of criticism - not only from revisionists and reformists, but also from revolutionaries like Pannekoek and Lenin, who in this debate found himself on the same side not only as the legal Marxists in Russia but also the Austro-marxists who were part of the semi-reformist camp within social democracy.

"I have read Rosa's new book Die Akkumulation  des Kapital. She has got into a shocking muddle. She has distorted Marx. I am very glad that Pannekoek and Eckstein and O. Bauer have all with one accord condemned her, and said against her what I said in 1899 against the Narodniks".[11]

The consensus was that Luxemburg had simply misread Marx and invented a problem where none existed: the schemas of expanded reproduction show that capitalism can indeed accumulate without any inherent limit in a world consisting purely of workers and capitalists. Marx's sums add up after all, so it must be true. Bauer was a little more nuanced: he did recognise that accumulation could only proceed if it was fuelled by a growing effective demand, but he came up with a simple answer: the population grows and therefore there are more workers, and therefore an expanding demand, a solution which takes the problem back to point zero because these new workers can still only consume the variable capital transferred to them from the capitalists. The essential view - maintained by nearly all of Luxemburg's critics to this day - is that the reproduction schemes do indeed show that there is no insoluble problem of realisation for capitalism.

Luxemburg was well aware that arguments put forward by Kautsky (or Boudin, although he was obviously a much less known figure in the movement) in defence of essentially the same thesis had not provoked such outrage:

"So far one thing is certain: in 1902, when attacking Tugan-Baranovsky, Kautsky refuted the same assertions which the ‘experts' use to oppose my Accumulation, and the ‘experts' attack as a horrible deviation from the true faith the same assertions, only this time dealing with the problem of accumulation in an exact manner, which Kautsky used in opposition to the revisionist Tugan-Baranovsky as the theory of crises ‘generally accepted' by orthodox Marxists."[12]

Why this outrage? It is easy to understand coming from the reformists and revisionists, because they are concerned above all to reject any possibility of a breakdown of the capitalist system. From the revolutionaries it is harder to grasp. We can certainly point to the fact - and this is very significant as regards the hysterical response - that Kautsky did not seek to relate his argument to the schema of reproduction[13] and thus did not appear as a "critic" of Marx. Perhaps this conservative spirit lies at the heart of many of Luxemburg's critics: a view that Capital is a kind of bible that supplies all the answers to our understanding of the rise and fall of the capitalist mode of production - a closed system in fact! Luxemburg, by contrast, argued forcefully that marxists had to recognise Capital for what it was - a work of genius, but still an unfinished work, particularly in its second and third volumes; and one which in any case could not have encompassed all subsequent developments in the evolution of the capitalist system.  

However, amidst all the scandalised responses, there was at least one very clear defence of Luxemburg's theory written during that period of war and revolutionary upheaval: "The marxism of Rosa Luxemburg" by the Hungarian George Lukacs, who at that point was a representative of the left wing of the communist movement.

Lukacs' essay, published in the collection History and Class Consciousness (1922) begins by outlining the principal methodological consideration in the debate about Luxemburg's theory. He argues that what fundamentally distinguishes the proletarian from the bourgeois world-outlook is that while the bourgeoisie is condemned by its social position to regard society from the point of view of an atomised, competing unit, the proletariat alone can develop a vision of reality as a totality:

"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".

He then goes on to show that their lack of such a proletarian method prevented Luxemburg's critics from grasping the problem she had posed in The Accumulation of Capital:

"The debate as conducted by Bauer, Eckstein and Co. did not turn on the truth or falsity of the solution Rosa Luxemburg proposed to the problem of the accumulation of capital. On the contrary, discussion centred on whether there was a real problem at all and in the event its existence was denied flatly and with the utmost vehemence. Seen from the standpoint of vulgar economics this is quite understandable, and even inevitable. For if it is treated as an isolated problem in economics and from the point of view of the individual capitalist it is easy to argue that no real problem exists.

"Logically enough the critics who dismissed the whole problem also ignored the decisive chapter of her book (‘The historical determinants of Accumulation'). This can be seen from the way they formulated their key question. The question they posed was this: Marx's formulae were arrived at on the basis of a hypothetical society (posited for reasons of method) which consisted only of capitalists and workers. Were these formulae correct? How were they to be interpreted? The critics completely overlooked the fact that Marx posited this society for the sake of argument, i.e. to see the problem more clearly, before pressing forward to the larger question of the place of this problem within society as a whole. They overlooked the fact that Marx himself took this step with reference to so-called primitive accumulation, in Volume I of Capital. Consciously or unconsciously they suppressed the fact that on this issue Capital is an incomplete fragment which stops short at the point where this problem should be opened up. In this sense what Rosa Luxemburg has done is precisely to take up the thread where Marx left off and to solve the problem in his spirit.

"By ignoring these factors the opportunists acted quite consistently. The problem is indeed superfluous from the standpoint of the individual capitalist and vulgar economics. As far as the former is concerned, economic reality has the appearance of a world governed by the eternal laws of nature, laws to which he has to adjust his activities. For him the production of surplus value very often (though not always, it is true) takes the form of an exchange with other individual capitalists. And the whole problem of accumulation resolves itself into a question of the manifold permutations of the formulae M-C-M and C-M-C in the course of production and circulation, etc. It thus becomes an isolated question for the vulgar economists, a question unconnected with the ultimate fate of capitalism as a whole. The solution to the problem is officially guaranteed by the Marxist ‘formulae' which are correct in themselves and need only to be ‘brought up to date' - a task performed e.g. by Otto Bauer. However, we must insist that economic reality can never be understood solely on the basis of these formulae because they are based on an abstraction (viz. the working hypothesis that society consists only of capitalists and workers). Hence they can serve only for clarification and as a springboard for an assault on the real problem. Bauer and his confreres misunderstood this just as surely as the disciples of Ricardo misunderstood the problematics of Marx in their day".

A passage in the Grundrisse, which Lukacs would not yet have had access to, confirms this approach: the idea that the working class is a sufficient market for the capitalists is an illusion typical of the limited vision of the bourgeoisie:

"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."[14]

In questioning the letter of Marx, Luxemburg more than any other had been faithful to his spirit; but there are many more words by Marx which could be cited to support the central importance of the problem she posed.

In the next articles in this series, we will look at how the revolutionary movement tried to understand the process of capitalism's decline as it unfolded in front of their eyes in the tumultuous decades between 1914 and 1945.



[1]. The Accumulation of Capital, Chapter 24.

[2]. Neue Zeit, 1902, n°.5 (31), p.140.

[3]. First published in book form by Charles Kerr (Chicago) in 1915, this study was based on a series of articles in the International Socialist Review between May 1905 and October 1906.

[4]. "Let us forget that Kautsky calls this theory by the dubious name of an explanation of crises caused ‘by under-consumption'. Marx ridicules this in the second volume of Capital (p.414).Let us forget that Kautsky sees only the problem of crises, without noticing that capitalist production poses a problem apart from ups and downs in the state of business. Finally, let us forget that Kautsky's explanation - that the consumption of capitalists and workers does not grow ‘fast enough' for accumulation, which therefore needs an ‘additional market' - is rather vague and makes no attempt to understand the problem of accumulation in its exact terms". (Anticritique, chapter 2) Interesting that so many of Luxemburg's critics - not least the "marxist" ones - accuse her of being an underconsumptionist when she so explicitly rejects this idea! It is of course perfectly true that Marx argued on several occasions that the "the last cause of all real crises always remains the poverty and restricted consumption of the masses" (Capital, vol. III, chap XXX, p 484), but Marx is careful to explain that he is not referring to "the absolute consuming power", but to "the consuming power based on antagonistic conditions of distribution, which reduces the consumption of the great mass of the population to a variable minimum within more or less narrow limits. The consuming power is furthermore restricted by the tendency to accumulate, the greed for an expansion of capital and a production of surplus-value on an enlarged scale" (ibid, chap XV, p 244). In other words: crises are not the result of society's reluctance to consume as much as is physically possible, nor - more to the point, given the numerous mystifications about this, especially those emanating from the left wing of capital - are they caused by wages being "too low". If this were the case, then crises would be eliminated simply by raising wages, and this is precisely what Marx ridicules in Capital Volume II. The problem rather lies in the existence of the "antagonistic relations of distribution", that is, in the wage labour relationship itself, which must always give rise to a "surplus" value above what the capitalist pays to his workers.

[5]. Boudin, p 167-9.

[6]. Accumulation, chapter 23, footnote. Luxemburg's main criticism of Boudin was his apparently prescient idea that arms expenditure was a form of waste or "reckless expenditure", which seemed to go against her notion of "militarism as a province of accumulation" elaborated in the chapter with the same name in The Accumulation of Capital. But militarism could only be a province of accumulation in an epoch in which there was a real possibility that war - colonial conquests to be exact - could open up substantive new markets for capitalist expansion. With the shrinking of such outlets, militarism does indeed become a pure waste for global capitalism: even if the war economy appears to provide a "solution" to the crisis of overproduction by getting the economic machine in motion (most evidently in Hitler's Germany and during the Second World War for example).  In reality it expresses an immense destruction of value.

[7]. Quoted here directly from the English translation of The Accumulation, chapter 23, whose reference to Boudin is Die Neue Zeit, vol. xxv, part 1, "Mathematische Formeln gegen Karl Marx", p.604. A slightly different rendition of this passage in Boudin appears on p243-4 of the book.

[8]. Grundrisse, Notebook IV, "Circulation Process of Capital", p 410 in the Penguin and version.

[9]. "In reality, there are in all capitalist countries, even in those with the most developed large-scale industry, numerous artisan and peasant enterprises which are engaged in simple commodity production. In reality, alongside the old capitalist countries there are still those even in Europe where peasant and artisan production is still strongly predominant, like Russia, the Balkans, Scandinavia and Spain. And finally, there are huge continents besides capitalist Europe and North America, where capitalist production has only scattered roots, and apart from that the people of these continents have all sorts of economic systems, from the primitive Communist to the feudal, peasantry and artisan" (Anticritique, chapter 1). See the article "Overproduction, an unavoidable fetter on capitalist accumulation" for a contribution to understanding the role played by extra-capitalist markets during the period of capitalist decadence (ICC online)

[10]. Anticritique, chapter 6.

[11]. In The Making of Marx's Capital (Pluto Press, 1977) Roman Rosdolsky makes an excellent critique of Lenin's error in siding with Russian legalists and Austro-reformists against Luxemburg (see p. 472f). Although he also has his criticisms of Luxemburg, he recognises the profound value of her work and insists that marxism is of necessity a "break down" theory, pointing in particular to the tendency towards overproduction, as identified by Marx, as a key to understanding this. In fact, some of his criticisms of Luxemburg are actually quite hard to decipher. He insists that her main error was in not understanding that the reproduction schema were merely a "heuristic device", and yet Luxemburg's entire argument against her critics is that the schema can only be taken as a heuristic device and not as a real picture of the historical evolution of capital, not as a mathematical proof of the possibility of unlimited accumulation. (see p. 490 of Rosdolsky's book).

[12]. Anticritique, chapter 2.

[13]. In fact later on Kautsky himself lined up with the Austro-marxists: "In his magnum opus he strongly criticises Rosa Luxemburg's ‘hypothesis' that capitalism must break down for economic reasons; he asserts that Luxemburg ‘finds herself in opposition to Marx, who proved the opposite in the second volume of Capital, i.e. in the schemes of reproduction'" (Rosdolsky, op cit, p 451, citing Kautsky, Die Materialistische Geschichtsauffassung, vol. II, pp 546-47).

[14]. Grundrisse, the Chapter on Capital, Notebook 4. Marx also explains elsewhere that the idea that the capitalists themselves can constitute the market for expanded reproduction is based on a failure to understand the nature of capitalism:  "Since the aim of capital is not to minister to certain wants, but to produce profit, and since it accomplishes this purpose by methods which adapt the mass of production to the scale of production, not vice versa, a rift must continually ensue between the limited dimensions of consumption under capitalism and a production which forever tends to exceed this immanent barrier. Furthermore, capital consists of commodities, and therefore over-production of capital implies over-production of commodities. Hence the peculiar phenomenon of economists who deny over-production of commodities, admitting over-production of capital. To say that there is no general over-production, but rather a disproportion within the various branches of production, is no more than to say that under capitalist production the proportionality of the individual branches of production springs as a continual process from disproportionality, because the cohesion of the aggregate production imposes itself as a blind law upon the agents of production, and not as a law which, being understood and hence controlled by their common mind, brings the productive process under their joint control. It amounts furthermore to demanding that countries in which capitalist production is not developed, should consume and produce at a rate which suits the countries with capitalist production. If it is said that over-production is only relative, this is quite correct; but the entire capitalist mode of production is only a relative one, whose barriers are not absolute. They are absolute only for this mode, i.e., on its basis. How could there otherwise be a shortage of demand for the very commodities which the mass of the people lack, and how would it be possible for this demand to be sought abroad, in foreign markets, to pay the labourers at home the average amount of necessities of life? This is possible only because in this specific capitalist interrelation the surplus-product assumes a form in which its owner cannot offer it for consumption, unless it first reconverts itself into capital for him. If it is finally said that the capitalists have only to exchange and consume their commodities among themselves, then the entire nature of the capitalist mode of production is lost sight of; and also forgotten is the fact that it is a matter of expanding the value of the capital, not consuming it. In short, all these objections to the obvious phenomena of over-production (phenomena which pay no heed to these objections) amount to the contention that the barriers of capitalist production are not barriers of production generally, and therefore not barriers of this specific, capitalist mode of production. The contradiction of the capitalist mode of production, however, lies precisely in its tendency towards an absolute development of the productive forces, which continually come into conflict with the specific conditions of production in which capital moves, and alone can move" Capital, Vol. 3, chapter 15, part III, our emphasis.


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