Imperialism and the Accumulation of Capital, Bukharin 1925

1


Expanded Reproduction in an Abstract Capitalist Society

As is well known, Marx outlined in general terms the course of the total social reproduction, proceeding from a whole series of premises to simplify the situation: for instance, the assumption of a capitalism with only two classes, no external markets, value equal to price, etc. How is a mobile equilibrium possible in the growing capitalist system? – this is how Marx formulated his question. By and large, the most abstract (supremely theoretical) solution is as follows :

The total social capital is c + v, the surplus value is s.

The value of the total product (assuming that the constant capital is completely consumed in the course of one turnover or, which amounts to the same thing, that c represents only the used part of the constant capital) is then c + v + s.

This product (and correspondingly the total process of social production) is divided up into two large divisions: means of production and means of consumption. If we take the corresponding symbols into account, we arrive at:

 I (production of means of production) ... c1 + v1 + s1
II (production of means of consumption) ... c2 + v2 + s2

If we were dealing here with a simple reproduction, i.e. if the capitalists were to squander the entire surplus value amounting to s1 + s2, the condition for the regular course of reproduction would be given by the following relations:

1. Since the entire product of Dept I consists exclusively of means of production (machines, raw materials, etc:), which cannot go into individual consumption (they can be neither eaten nor used for clothing, nor even presented to the 'fair sex'), these must all be used to replace the constant capital c = (c1c2). Thus:
c1 + v1 + s1 = c1 + c2.

2. Since the entire product of Dept II consists exclusively of means of consumption, not even the smallest part of it can be used as raw materials or machines. It must therefore be completely ‘consumed' by the workers and capitalists of the two departments. Therefore:
c2 + v2 + s2 = v1 + v2 + s1 + s2.

3. Since the first department reproduces its constant capital (c1) itself and must replace the material form (v1 + s1) with a ‘consumable' form, and on the other hand the second department reproduces both the elements of its variable capital and the surplus value of the capitalists of Dept II itself in natural form and must replace the material form c2, it is essential for reproduction to run smoothly that those parts which are to be exchanged are equal. It therefore follows that c2 must equal v1s1.

It is clearly obvious that our three equations can basically be reduced to one single equation. If in the first equation we subtract c1 from both sides, and v2 + s2 from both sides in the second, we arrive at the above third equation, namely c2 = v1s1.

Now, it is precisely in this that the conditions of the smooth running of simple reproduction are expressed: the sum of the revenues of the first department must equal the constant capital of the second department. If this condition pertains, we receive for Dept I: a constant capital produced in natura which remains within the same department; and a variable capital reproduced in an unsuitable form, which appears in new clothing and can carry on functioning in a propitious union with the constant capital; finally a surplus value, which, after changing its clothes for the reproduction of the living personal officers and commanders of its department, disappears without a trace.

Dept II: a surplus value produced in a suitable form which, without going outside the bounds of its department, satisfies its master and disappears into its stomach; further, a variable capital in a form which likewise enables it to convert itself into labour-power without overstepping the bounds of its department; and lastly a constant capital, which joins the variable capital after a metamorphosis of its material, soft consumption-skin into a hard machine-armour. Thus, in this case too, production can proceed, to complete the same, closed circle once again..

The situation is much more complicated with expanded reproduction, in which a part of the surplus value is turned into capital and begins to function as capital, in other words, where reproduction proceeds 'not in a circle, but a spiral' (Marx){*}.

If we let α1 indicate the part of the surplus value which serves for the personal consumption of the capitalists, and β1 that part which is turned into capital, thus, if we make s1 = α1 + β1 and correspondingly s2 = α2 + β2; if we further let β1c indicate that part of the surplus value which is to be accumulated as a part of the constant capital, and β1v that part of the surplus value which is to be accumulated as part of the variable capital, and thus posit β1 = β1c + β1v and correspondingly β2 = β2c + β2v thus the general formula for the product of both departments takes on the following form:

formula

As is clearly obvious, the problem of simple reproduction is enclosed in those amounts which we have put together in a common frame, and the solution has already been given above. (After what has been said it would be necessary for c2 = (v1 + α1).) The difficulties only begin thanks to the appearance of new amounts lying outside the above rectangle.

Now, what do these represent?

β1 represents, according to its value, that part of the surplus value which is destined for accumulation; according to its material form, i.e. its use value, a profusion of the most diverse means of production, such as machines, raw materials, resource materials, etc.

However, this part does not, as a rule, attach itself to capital in one form, namely in the form of constant or variable capital alone; rather, it falls into two parts, according to a certain proportion, in relation to the organic composition of capital.

β1c, i.e. that part which is turned into constant capital, is produced in a corresponding natural form, and thus remains within Dept I, without ever leaving it. On the other hand, conversely, β1v cannot function as an element of the variable capital, since it is hidden in the armour of means of production, as a result of which it must be exchanged against corresponding products from the second department. Thus, β1v has to flee from its birth-place.

The production of β2v proceeds in such a form that it can constitute an element of the additional variable capital of the second department and thus remains in natura in its home, i.e. in the same department. β2c on the other hand, has a material form which technically excludes the functioning of this part of the surplus value in the role of additional constant capital. Thus, β2c must be exchanged and put on the clothes of β1v. Therefore, in respect to the value β2c must equal β1v.

Thus, in so far as we have before us an expanded reproduction, the absorption into the first and second department of the surplus value which is destined for accumulation, leaving aside the conditions of equilibrium necessary from the point of view of simple reproduction, must take place in such a relation that the additional variable capital of the first department must equal the additional constant capital of the second department.

Altogether then we arrive at three models for the formulae of expanded reproduction, which can be reduced to a single one and which are analogous to the three models of simple reproduction.

1. The total product of Dept I (means of production) cannot in any way be employed directly as revenue. It must therefore be equal to the sum of the constant capitals of both departments (including the additional constant capitals). In order to facilitate the possibility of comparison we shall put the one amount under the other,. as follows:

formula p 157[1]

It is immediately apparent that this model presupposes an equality within the framed amount in which the left frame portrays the condition of simple reproduction, the right the additional condition of expanded reproduction. Both can be reduced to the equation:

v1 + α1 + β1v  = c2 + β2c

2. The total product of Dept II cannot in any way be employed directly, i.e. in its natural form, as constant capital. It must therefore be equal to the sum of all revenues (including the additional variable capital, which is converted into the income of the additional workers).[2]

formula top p 158

One can see immediately that this model can be led back to the model already deduced above: c2 + β2c = v1 + α1 + β1v.

3. This equation could also be reached directly. Let us remind ourselves once again of the model:

Formula bottom p 158

In the upper row, (c1 + β1c), thanks to its natural form, which corresponds to a necessary economic function, can remain as it is:
((v1 + α1) + β1v), on the other hand, must be exchanged. Exchanged against what ? Against that part which cannot function in the second department as a result of its inherent material form. This is (c2 + β2c). This results in the following equation:

(c2 + β2c) = (v1 + α1 + β1v)

or, to formulate it better:

(v1 + α1 + β1v) = (c2 + β2c)

In other words: the entire new variable capital of the first department and the part of the surplus value of the same department which falls to unproductive consumption must be equal to the new constant capital of the second department.

With this the situation in Dept I has taken on the following form:

The new additional amount β1c has joined the constant capital c1 directly, i.e. without leaving the bounds of Dept I. As a result, the constant capital has grown. It was previously c1, now it is (c1 + β1c). The variable capital came into existence through reproduction of the old variable capital v1, which can only function after first stripping off its material husk, which it does together with the 'consumable' surplus value, while (v1 + α1) and c2 change places.

Moreover, additional variable capital appeared through exchange with Dept II. In this way the variable capital rose from v1 to (v1 + β1v). The part of the surplus value which is destined for ‘consumption', after assuming a corresponding form, i.e. after it has wandered through the fields and meadows of the second department, is excluded from the reproduction process: all it has done is reproduce the capitalists of the first department [i.e. maintains capitalist consumption at the previous level, Ed.]. Thus, the new circulation begins in Dept I with an enlarged constant and enlarged variable capital.

The same process is carried out in the second department. The constant capital here has indeed reproduced itself according to its value, but must still change its form. Apart from this, the additional value β2c, joined up with it, similarly after completing the change of its material husk. In this way, the constant capital grew from c2 to (c2 + β2c), and the variable capital from v2 to (v2 + β2v), in which process neither part of the new variable capital had any need of a masquerade.[3] The surplus value was finally removed from the reproduction process in that part which went to 'consumption', without undertaking a change in its form, by limiting itself to the reproduction of the officers of capital in the second department. In this way the new circulation begins here too with a raised constant and a raised variable capital.

In the following cycle the capital of the starting stage is reproduced again, the unproductively consumed part of the surplus value grows – for the first time[4] – the part of the latter which is to be accumulated will grow even more and so on.

In other words, the following grow: the constant capital of society, the consumption of the workers, the consumption of the capitalists (everything taken in values). In this connexion we will not make any further analysis of the relation in which this growth of the various above-listed values proceeds. This question needs to be treated separately. Here we must mention, even if only briefly, the following circumstances: along with the growth of production, the market of this production grows too, the market of means of production expands, and the consumer demand grows also (since, taken in absolute terms, the capitalists' consumption grows as well as that of the workers). In other words, here the possibility is given of, on the one hand, an equilibrium between the various parts of the total social production and, on the other, an equilibrium between production and consumption. In this process the equilibrium between production and consumption is for its part conditioned by the production equilibrium, i.e. the equilibrium between the various parts of the functioning capital and its various branches.

In the above analysis we neglect at first a series of highly important, specifically capitalist moments, e.g. money-circulation. That would be absolutely inadmissible if we were to continue to stay on this most abstract level of analysis. The error of Ricardo's school, and of Say's too, consisted precisely in the fact that they raised to a dogma the thesis that product was exchanged against product, while money played the role of a 'medium' in this transaction, and only of a 'medium', but not 'an essential and necessary form of existence of the commodity which must manifest itself as exchange value, as general social labour'.[5]

This resulted in a series of the most serious'rnistakes, it resulted further in the denial of the existence of contradictions within capitalism, finally a direct apology for the capitalist system, an apology which attempts – to use a Marxist word – to ‘reason away' the crises, the over-production, the mass misery and so on. ‘It must never be forgotten, that in capitalist production what matters is not the immediate use value but the exchange value, and in particular, the expansion of the surplus value.'[6] But since the movement of capital also shows up a phase of this movement in which capital appears as money capital, it must, of course, never be neglected. However, that does not in the least mean that it is inadmissible to leave out the money question provisionally, as we have done in our previous exposition, analysing the reproduction process from the viewpoint of the replacement and increase of value as well as that of the replacement and change of the material form of the elements of capital. If this analysis had proved that a reproduction or an expanded reproduction was completely impossible, it would only have been properly impossible after the introduction of the money moment. If, on the other hand, this analysis showed, as happened in the course of our expositions, in which way an expanded reproduction can take place, then a further analysis is required which must represent a more concrete level of theoretical abstraction. We shall also avail ourselves of this method because Comrade Rosa Luxemburg brings now one 'critical' argument to the fore, now the other in her critique of the Marxist theory of accumulation, her 'critique' being presented at one time in connexion with the money moment, at another without it – and from time to time with both in an amazing ‘organic tangle'.

Let us first turn to Rosa Luxemburg's most abstract method of argument. This appears all the more justified to us when we read the following, which she herself wrote.

The flaw in Marx's analysis is, in our opinion, the misguided formulation of the problem as a mere question of ‘the sources of money', whereas the real issue is the effective demand, the use made of goods, not the source of the money which is paid for them. As to money as a means of circulation: when considering the reproductive process as a whole, we must assume that capitalist society must always dispose of money, or a substitute, in just that quantity that is needed for its process of circulation. What has to be explained is the great social transaction of exchange caused by real economic needs. While it is important to remember that capitalist surplus value must invariably pass through the money stage before it can be accumulated, we must nevertheless try to track down the economic demand for the surplus product, quite apart from the puzzle where the money comes from. As Marx himself says in another passage:

‘The money on one side in that case calls forth expanded reproduction on the other, because the possibility for it exists without the money. For money in itself is not an element of actual reproduction.'[7]

Thus, with the critic's' approval, we shall provisionally leave the money question to one side.

To the extent that Comrade Luxemburg operates within this framework in her critique, her argument takes the following lines: models are purely paper operations. They neglect the most important question, namely, to whose advantage accumulation takes place, who is the consumer for the surplus value which is to be accumulated, where the excess can be deposited. She herself is of the opinion that such consumers do not and cannot exist within the framework of the capitalist system. This leads her to the conclusion that capitalism is unworkable without a non-capitalist environment'. The ‘third person' of our populists, Sismondi, Malthus and Co., has to aid abstract capitalism', in the difficult task of the realization of the surplus value, which for capitalism in concrete form means imperialistic policies. The main root of imperialism resides in this.

But we shall not anticipate anything, rather, we shall take a careful look at Comrade Luxemburg's critical analysis.

Here we shall reproduce the following passage in Accumulation of Capital unabridged, which represents one of those central passages of the work which unite the basic critical thought of the author to a certain degree in a focal point. (The object of Rosa Luxemburg's investigation here is the models of the second volume of Capital.[8]) Let us listen to the author of Accumulation:

According to Marx's assumption in the first volume of Capital, the capitalized part of the surplus value comes from the very beginning in the form of additional means of production and means of subsistence of the workers (β1c + β1v and β2c + β2v in our formulae, N. B.). Both serve continually to increase production in Depts I and II. Going by Marx's,premises for the model it is impossible to discover (! N. B.) for whom (my emphasis, N. B.) this progressive rise in production takes place. Of course (this 'of course' is really quite funny! N. B.) society's consumption rises parallel with its production; the capitalists' consumption rises ..., the workers' consumption rises too... . Yet — apart from anything else (? N. B.) – at any rate, growing consumption of the capitalist class cannot be seen as the aim of accumulation; on the contrary, to the extent that this consumption takes place and grows, no accumulation can take place; the personal consumption of the capitalists falls under the categories of simple reproduction. The question is rather: for whom do the capitalists produce, if and to the extent that they themselves do not consume, but abstain', i.e. accumulate? Still less can the maintenance of an ever larger army of workers be the aim of uninterrupted capital accumulation. The workers' consumption in capitalist society is a result of accumulation, never its aim and premise, otherwise the fundamental principles of capitalist production would have to be stood on their bead. And in any case, the workers can always consume only that part of the product which corresponds to their variable capital, not an iota more. So who keeps on realizing the growing surplus value? The model answers: the capitalists and they alone. But what do they do with their growing surplus. value? The model answers: they use it for still further expansion of their production. Thus, the capitalists are fanatics of expansion of production for the sake of expansion of production. They have machines built so that they can have more new machines built. But the result of this process is not capital accumulation, but growing production of means of production with no aim at all, and it belongs to the boldness and pleasure in paradoxes of Tugan-Baranovsky to assume that this tireless carousel in empty air could be a faithful theoretical representation of capitalist reality and a real consequence of Marx's teaching.[9]

This passage contains and 'accumulates' such an abundance of errors and contradictions (no less so for being dialectical) that it is a matter of urgent necessity to analyse it.

Point I. To start with, is there any justification for posing the question from the point of view of subjective aim (even if it is the subjective aim of a class)? What is such teleology doing in social science? It is clear that even the formulation of the question is methodologically incorrect, in as much as we are dealing with a formulation that is to be taken seriously and not with a sort of metaphorical cliché. In fact, let us take a look at one law, for instance the economic law of the falling rate of profit, which is also recognized by Comrade Rosa Luxemburg. ' Whom ', i.e. whose interests, does this fall serve? The question is obviously absurd. It should not even be posed, since the concept of aim excludes it from the very first. The individual capitalist does indeed try to make a differential profit (and gets it from time to time), others receive it, and the result is that we have before us a social fact: the fall in the rate of profit. By abandoning the conceptual exactitude of Marx's analysis, Comrade Luxemburg leaves the rails of Marxist methodology.

Point II. After Comrade Rosa Luxemburg has asked the question 'for whom ?' and answered it negatively (‘for no one'), she immediately remarks, and only by the way, as if it were of no importance : Of course, in this process the capitalists' consumption expands as well as that of the workers. It escapes Rosa Luxemburg that this statement in fact contains the answer to the question of who benefits from the expansion of production; for her question, subjectively formulated and therefore a pointless question, from the standpoint of an analysis of the objective connexions of capitalist production, only becomes meaningful when formulated objectively. But if it is posed like this, it becomes: Every growing social system, in whatever historico-economic wrapping it may appear, whatever contradictions it may develop, and in whatever way its leaders may be motivated in their economic activity, presupposes a completely objective (even if also indirect) connexion between consumption and production, where the appearance of the growth of consumption as a result of the growth of production, as the other side of this growth of production, forms the fundamental pre-condition for the growth of the social system as a whole. Rosa Luxemburg unconsciously affirms the question formulated by her precisely by indicating the growth of the social consumption.

Point III. But that does not in the least deter her, at the end of the quoted excerpt, from convicting Marx's models of TuganBaranovskyism, whose real essence consists of the separation of production from consumption and the complete isolation of the former (‘an aimlessly expanding production of means of production', etc.).

Point IV. After Comrade Luxemburg has admitted the appearance of the growth of the consumption of the total-capitalist' as a result of accumulation, she immediately attempts to diminish the theoretical value of this fact. She writes : 'In so far as consumption takes place and grows, no accumulation takes place', etc. Such sophistry is in fact vastly removed from any dialectic, for it is immediately apparent to everyone that the growth of consumption cannot take place as a continuous, uninterrupted phenomenon without corresponding accumulation. Comrade Luxemburg's mistake is quite elementary. It stems from the confusion of a statistical amount with a process. In fact, let us assume that we had a certain surplus value of the amount S: s1 corresponds to the consumed part of S, s2 to the accumulated, so that S = s1 + s2. It follows that, in as much as we are dealing with a given constant S, s2 must be smaller the larger s1 becomes, and vice versa. S will be the limit of the growth of s1, and O the corresponding limit of the fall of s2 In this, for the moment (i.e. for the given and constant amount S) ‘favourable', case we return to simple reproduction, and have thus not moved an inch. (Since this point can never be reached in the competition struggle, what we actually arrive at is a regressive movement, and so a decline.) If, on the other hand, the rate of accumulation grows and capital rises progressively, the total amount of the newly produced surplus value increases with each turnover, which only creates the possibility of a steady and uninterrupted rise of the consumption part under the assumption of proportional increase in that part of the surplus value, in other words, the consumption part of the surplus value is a function of accumulation. It is meaningless to divide these two things from each other, doubly so in respect of the process of reproduction.

The problem, however, can be illumined from another side. For if we are dealing, not with the objective results of accumulation, but with what motivates the capitalists (which, as we have seen, by no means always means the same thing), then we have before us the other side of accumulation: the capitalists accumulate, so that they can continually accumulate more and more. For the specific point of the capitalists' 'motivating reasons' lies precisely in the fact that accumulation is an end in itself for the capitalists. Looked at from this point of view, the question about the aim of accumulation (‘at any rate, the consumption of the capitalists cannot be seen as the aim of accumulation') is simply superfluous.

Point V. Rosa Luxemburg's statements about the rising consumption of the workers are equally unsuccessful. 'Still less can the maintenance of an ever larger army of workers be the aim of uninterrupted capital accumulation.' What a splendid truth! Now (from the point of view of capitalist motivations) the 'maintenance of an ever larger army of workers' can indeed be the aim of accumulation, and indeed often is. That is by no means hard to understand. Capitalism accumulates in order to accumulate further. To this end it must convert a part of the capital accumulated in one turnover into variable capital in the next turnover, into additional functioning living labour-power. The result is an even larger surplus value for it. 'The worker's consumption in capitalist society is a result of accumulation, never ... its premise,' otherwise the fundamental principles of capitalism would , be stood on their head. This is the terrifying prospect raised by Comrade Luxemburg. And yet it is 'never' true. The consumption of the workers is - and that has been settled since the appearance of the first volume of Capital - nothing other than the production of labour-power. The production of labour-power constitutes without a doubt the premise for the production of material values, of surplus value, of capital, and the production of additional labour-power is the pre-condition for the growth of accumulation. Thus, here too, we are dealing with a complete misunderstanding'.

'In any case,' exclaims Comrade Luxemburg, now with an undertone of despair, 'the workers can consume only that part of the product which corresponds to their variable capital (what does this "their capital" mean? It should read: "their income", which is equal to the variable capital, N. B.), not an iota more.' In this, Rosa Luxemburg is clearly thinking of the original labour force, of the original value of labour-power, and therefore of the original amount of the variable capital. But to accept such an assumption means to exclude expanded reproduction from the very beginning. If, however, one has excluded expanded reproduction from the start in one's logical proof, it naturally becomes easy to let it disappear at the end of it, for here one is dealing with the simple reproduction of a simple logical error. And yet in the last analysis the matter is extremely simple. The employment of additional workers produces an additional demand, which realizes precisely that part of the surplus value which is to be accumulated, to be exact, that part which must of necessity convert itself into functioning, additional variable capital. That is why Comrade Rosa Luxemburg's critique fails in this case too, while Marx is completely and unconditionally correct.

Point VI. But - horribile dictu! - in such a case the capitalists would be 'fanatics of expansion of production for the sake of expansion of production', and the entire carousel' would be 'not capital accumulation, but growing production of means of production with no aim at all'. (My emphasis, N. B.)

Let us now examine both these arguments, although superficial consideration has already revealed their rhetorical character sufficiently clearly.

In connexion with the last ‘critical' attacks of Rosa Luxemburg, let us here remind ourselves of a passage from Marx's Theories of Surplus Value:

The industrial capitalist ... as personified capital produces for the sake of production, he wants to accumulate wealth for the sake of the accumulation of wealth. (My emphasis, N. B.) In so far as he is a mere functionary of capital, that is, an agent of capitalist production, what matters to him is exchange value and the increase of exchange value, not use value and its increase. What he is concerned with is the increase of abstract wealth, the rising appropriation of the labour of others. He is dominated by the same absolute drive to enrich himself as the miser, except that he does not satisfy it in the illusory form of building up a treasure of gold and silver, but in the creation of capital, which is real production. (My emphasis, N. B.) If the labourer's over-production is production for others, the production of the normal capitalist, of the industrial capitalist as he ought to be, is production for the sake of production... . In spite of all his prodigality he remains, like the miser, essentially avaricious ... the industrial capitalist becomes more or less unable to fulfil his function as soon as he personifies the enjoyment of wealth, as soon as he wants the accumulation of pleasures instead of the pleasure of accumulation. He is therefore also a producer of overproduction, production for others.[10]

And if Comrade Rosa Luxemburg, intimidated by the 'fanatics of production' and frightening others with them, is then all eyes and exclaims: 'And that is supposed to be a real consequence of Marx's teaching!', we answer that that is by no means a 'consequence', but that it in fact represents an integral part of that teaching, a detail of it, which the practised hand of the great master himself has already sketched in. In general terms, there are three possibilities for the analysis of the motivating grounds of the capitalists, namely, that the capitalist either sets himself the goal of consumption, or that of enrichment in the 'illusory form' of money, or lastly that he is motivated by the passionate urge for enrichment in the form of 'capital accumulation, which is real production'. Since Rosa Luxemburg excludes the first and the third possibility, the only possibility at her disposal is that of the ‘illusory form'. But with this Rosa Luxemburg changes the normal capitalist ' into amedieval money changer and usurer, into a Pushkinite 'covetous knight', at the very best into a money capitalist.

There is as little doubt that this results quite logically from Rosa Luxemburg's arguments as there is in the fact that these arguments which she uses do not in any way correspond to objective reality.

‘The result of this process is not capital accumulation, but growing production of means of production with no aim at all,' says Rosa Luxemburg. Now, firstly, there is here a certain misrepresentation of the subject matter, since suddenly and inexplicably the entire production of means of consumption has disappeared, the consumption on which, in the last analysis, the production of means of production is also dependent; in other words, Comrade Rosa Luxemburg has first tidied Marx up, trimmed his beard and put on him the glasses of the Professor and Minister Tugan-Baranovsky, so that she can then brand Marx's sentences with Tugan-Baranovskyism that much more easily. If, from the very beginning, one secretly discards the difference between Marx and Tugan and then explains emphatically that there is no difference at all between the two, one may indeed succeed in taking certain people in with it. And secondly, what justification does Rosa Luxemburg have for counterposing accumulation to expanding reproduction? It seems that such mysticism can only be comprehended by the author of Accumulation.

The subjective meaning of expanded reproduction, its meaning from the standpoint of the captains of capitalist production, consists in the productive form of enrichment; but that does not in the least entail a denial of the objective consequences of these subjective tendencies, which consist in the satisfaction of the growing needs of the social totality, irrespective of the antagonistic character of the latter. For that is, as has been mentioned above, the fundamental condition of social development, independent of the concrete, historical exterior in which the given society manifests itself. Marx writes:

Besides, as we have seen (Book II, Part III), continuous circulation takes place between constant capital and constant capital (even regardless of accelerated accumulation). It is at first independent of individual consumption because it never enters the latter. But this consumption definitely limits it nevertheless, since constant capital is never produced for: its own sake, but solely because more of it is needed in spheres of production whose products go into individual consumption.[11]

This passage leads Comrade Rosa Luxemburg to explain triumphantly: 'This passage shows that the Tugan-Baranovskyan idea of production for the sake of production was entirely foreign to Marx: Our analysis has shown that il y a fagot et fagot. All that is left for Rosa Luxemburg to do is to construct a new ‘contradiction' in Marx, a contradiction between the third volume and the Theories of Surplus Value, as she has already discovered a contradiction between the second and third volume, and bourgeois science long before her a 'more significant contradiction' between the first and the third volume. We would then have an accumulation of contradictions which would in fact overcome podr Marx with horror. But fortunately for him this accumulation' has an even more 'illusory form' than the accumulation of capital as envisaged by Luxemburg. We hope we have thoroughly exhausted the fundamental arguments of Comrade Rosa Luxemburg as far as they are developed in the Accumulation of Capital.

In her Anti-Critique Comrade Rosa Luxemburg touches on the same problem at the same or, better, at almost the same level of theoretical abstraction. We shall also review her proof here. Let us listen to our 'critic':

Let us imagine that all goods produced in capitalist society were stacked up in a big pile at some place, to be used by society as a whole. We will then see how this mass of goods is naturally divided into several big portions of different kinds and destinations.[12]

Immediately afterwards, Comrade Luxemburg divides her ‘heap' into the following two parts: first, 'means of subsistence in the broadest sense of the word', secondly, ' new means of production to replace those used up'. (Incidentally, any source for ‘additional constant capital' disappears if we are dealing only with 'replacement of used' means of production. But that is only by the way.)

On the basis of this Rosa Luxemburg can now distinguish three further parts in the above-mentioned commodity heap, specifically;

(a) one part to replace the constant capital;

(b) one part which, on one hand, replaces the variable capital and, on the other, contains that rate of surplus value which is. consumed unproductively; and lastly,

(c) that part of the surplus value which is subject to accumulation. (Incidentally, it is immediately apparent that this division of the latter is quite inadequate and can only be applied to the ‘great heap' idealiter, i.e. by the process of abstraction.)

Further, Rosa Luxemburg poses the question as to who the purchasers are for each of these three parts. As regards the first and second part of her 'great heap', Rosa Luxemburg solves the question very simply, and immediately turns to the question of the third part, i.e. to the rate of surplus value which is to be capitalized. Here we are obliged to reproduce her incomparable argumentation, keeping to the text as far as is possible:

In our assumed total stock of commodities of capitalist society we must accordingly find a third portion, which is neither destined for the renewal of used (my emphasis, N. B.) means of production, nor for the maintenance of workers (?!! N. B.) and capitalists... . It will be a portion of commodities, which ... (contains) the profit destined for capitalization and accumulation. What sort of commodities are they and who in society needs them (my emphasis, N. B.)?

And:

Here we have come to the nucleus of the problem of accumulation and we must investigate all attempts at solution. Could it really be the workers who take this latter portion of the social stock of commodities? But the workers have no means beyond the wages which they receive from their employers... .[13]

Could the capitalists themselves perhaps be the customers for that latter portion of goods by extending their own private consumption? . But if the capitalists were to spend the total surplus value like water, nothing would come of accumulation ...[14]

And the conclusion:

‘Who could then be the buyer and consumer of that portion of commodities, whose sale is only the beginning of accumulation? So far we have seen, it can be neither the workers nor the capitalists.'[15]

So the other possibility:

'But are there not all sorts of strata in society, like civil servants, military, clerks, academics and artists which can neither be counted among the workers nor the employers ?'[16]

But these strata ‘do not have any independent sources of purchasing power, but are included as parasites in the consumption of the two major classes, workers and capitalists'.[17]

After enumerating all these possibilities, the author of Accumulation is suddenly struck by the sobering thought, which, however, she pushes away again as fast as possible:

In the end the solution of the problem is quite simple. Perhaps we are acting like the rider who is desperately looking for the nag he is sitting on. The capitalists are perhaps mutual customers for the remainders of the commodities, not to spend them carelessly but to use them for the expansion of production, for accumulation. Then what else is accumulation but the extension of capitalists' production? Only (what is this only' needed for? N. B.) those goods, to fulfil this purpose, must not consist in luxury articles for the private consumption of the capitalist, but in various means of production (new constant capital) and provisions for the workers.

All right, but such solution only pushes the problem from this moment to the next. After we have assumed that accumulation has started and that the increased production throws an even bigger amount of commodities on to the market the following year, the same question arises again: where do we then (emphasis by the author) find the consumers for this even greater amount of commodities? Will we answer: well, this growing amount of goods will again be exchanged among the capitalists to extend production again, and so forth year after year? Then we have the roundabout that revolves around itself in empty air. That is not capitalist accumulation, i.e. amassing money capital, but its contrary (!!! N. B.) : producing commodities for the sake of it; from the standpoint of capital an utter absurdity. If the capitalists as a class are the only customers for the total amount of commodities, apart from the share they have to part with to maintain the workers - if they must always buy the commodities with their own money (oh dear! N. B.) then for the capitalist class amassing profit, accumulation, cannot possibly take place.[18]

All this now leads to a climactic, decisive conclusion, which already announces the transition to a new theme:

[So] they must find many other buyers who receive their means of purchase from an independent source, and do not get it out of the pocket of the capitalist... They have to be consumers, who receive their means of purchase on the basis of commodity exchange, i.e. also production of goods, but taking place outside the capitalist commodity production.[19]

Let us now also examine, stone for stone, this logical construction of Comrade Luxemburg:

1. The Characteristic of the Third Part of the 'Commodity Heap'

Here we must seriously examine the following, at first sight, insignificant fact: in her definition of the notorious 'third part' Rosa Luxemburg maintains that it is 'intended neither for the renewal of used means of production nor for the maintenance of the workers', etc. Why are used, and only used, means of production mentioned here, but not means of production as a whole? Since, in as much as the surplus value which is to be capitalized consists of means of production, these means of production are additional means of production. They are not 'new' because they take the place of the old ones (the first part of the commodity heap fillfils this function), but because they play the role of a new additional capital, which is added to its original quantity. But what is the situation with the workers ? Is it true, as Rosa Luxemburg claims, that none of the ‘third part' is used for the maintenance of the workers? It is not true. It is correct that not even an atom of value replaces ‘used' variable capital. But is there no, can there be no, 'new', i.e. additional, variable capital, in the same way as there was an additional constant capital? It is a priori clear that, in as much as one admits an additional constant capital, one must also admit a growth (however small it may be) in the variable capital. But the elements of this additional variable capital have, secretly and from the outset, disappeared from the commodity heap. Comrade Luxemburg exploits this situation to make quick capital without regard to her denial of accumulation.

2. The Workers as Possible Consumers

Comrade Luxemburg is making this capital precisely with the analysis of the question of the workers as possible consumers. According to Rosa Luxemburg, there is no question of the workers being consumers of the ' surplus ', because, as is well known, they live in poverty and their purchasing power is limited by their wage. Paraphrasing a well-known anecdote, the reply to this is: I understand that the workers live in bad conditions, I also understand that their purchasing power is limited by their wage, but only Comrade Luxemburg's disciples can understand that the workers are not even consumers for a single atom of those things which contain the part of the surplus value which is to be capitalized. In fact, what sort of workers are we talking about? 'Above all', what does the word 'worker' mean? If we are dealing with old workers with old labour-power, etc., and an old wage for their labour, then such premises contain a priori a negative answer. The constancy of the variable capital presupposes a constancy of demand on the side of the workers, the lack of additional workers, in one word the maintenance of all previous conditions regarding living labour-power. Normally, however - i.e. unless the whole of that part of the surplus value which is to be capitalized is turned into constant capital - that also presupposes the lack of accumulation. Thus this point, where Comrade Luxemburg's error is in complete harmony with the error of the previous point, turns out to be basically a tautology. In reality, things are such that the capitalists employ additional workers, who then produce the additional demand.

3. The Capitalists as Possible Consumers

At this point Comrade Rosa Luxemburg's proof must evoke complete astonishment. She herself has completely brought out of equilibrium the analysis of the conditions of social equilibrium. How does she formulate the problem?

She asks (we allow ourselves the liberty of introducing the relevant passages once again):

‘Could the capitalists themselves perhaps be the customers by extending their own private consumption?'

And she answers

'If the capitalists were to spend the total surplus value like water, nothing would come of accumulation.'

In other words, she asks: 

If the capitalists consume everything individually and accumulate nothing, then how is accumulation possible?

And answers: 

Accumulation is impossible, for one must accumulate if one is to accumulate.

Naturally, Comrade Luxemburg is not unaware that in our case the capitalists' demand must be a productive demand. She is content, however, with the most tasteless and crude tautology, bordering on naïveté, for the sole purpose of avoiding a correct formulation of the question. Here, too, from the very beginning she confuses the real problem with inadmissible premises. No wonder that the answer too is inadmissible. In reality, the capitalists' demand is an additional one, precisely because they do accumulate. It should never be forgotten that, including the value-elements of the additional capital, the material elements partly belong to the capitalists from the beginning. Ergo, we are dealing with a demand of the capitalists for that which they already possess, thus we are dealing with an exchange within the class of capitalists. One can only understand what it means to be ‘one's own purchaser' when one has understood this. As regards the class of capitalists, buying means only mutual trading within this class.

But we have by no means completely dealt with the matter. The value-elements of the additional capitals (of the constant as well as the variable) are in the hands of the capitalists from the start. And the material elements ? Yes and no. The process of production resulted in the appearance of means of production on the one hand, and means of consumption on the other, in the hands of the capitalists. Means of production may figure in natura in the next production-cycle (as in any process of production one may take), but the same cannot be said of means of consumption. The process of production consists of a dynamic relationship between means of production and living labour-power, but not between means of production and means of consumption: The production of labour-power, on the other hand, is a consumption-process of the working class, a process which has the peculiarity of taking place outside the factories, outside the capitalist sphere of command, and of consisting in the mere transferral of already available values (means of consumption values).

All this finds its expression in the simple, fundamental and elementary fact that the exchange acts which are essential for reproduction include not only exchange between the capitalists of both departments, as soon as the capitalists appear as direct buyers and sellers, but also transactions between capitalists and workers.

If we take, for example, the problem of realizing the surplus value which is destined for accumulation, we have:

I  ... β1c + β1v

II ... β2c + β2v

How does the matter proceed concretely? The main condition, as we have seen, is given by the equation β2c = β1v, in which certain parts of this equation must change their places. We would then have the sum of the means of production and means of consumption in the first department, with the latter sum being equal, according to its value, to the necessary additional variable capital. We would have the same in the second department too. However, one should not confuse the social product and its material form with the social productive capital and its material form. The product consists of means of production and means of consumption. The capital consists, in its productive form, of means of production and living labour-power.

This capital, so far as its value is concerned, is equal to the value of the social labour-power . ..; in other words, it is equal to the sum of the wages paid for this labour-power. So far as its substance is concerned, it consists of the labour-power in action, i.e. of the living labour set in motion by this capital value.[20] (My emphasis, N. B.)

As a result, there must be acts of exchange in which the means of production (owned by the capitalists) change into living labour-power. On the other hand (and here we are forced to anticipate our argument a little), as a result of the social structure, the capitalists cannot dispose of the means of production directly, in natura. This results in additional acts of exchange between the workers and the capitalists.

Thus we receive:

Capitalists I, who advance the sum of money β1v to the additional workers I (employ additional workers).

Additional workers I use this sum, the whole sum, to buy means of subsistence from capitalists II. Since β1v = β2c the entire part amounting to β2c disappears to capitalists II. But there appears an amount of money equalling this in value.[21]

With this money, capitalists II buy means of production from capitalists I. Thus capitalists II possess an additional constant capital in the appropriate form of means of production, while with capitalists I, on the other hand, β1v disappears in the means of production, but then the sum of money advanced by them at the beginning of the process of production returns.

Let us give capitalists I the label of KI, and workers I the label of PI; the corresponding labels in Dept II are KII and PII. The chain of all acts of buying and selling, looked at from the viewpoint of the contracting parties concerned, but not from the viewpoint of the values, takes on the following schematic form:

KI-PI-KII-KI (the links of the chain are: KI-PI, PI-KII, KII-KI).

In this way, all material elements find their places, while the money returns to its owners after it has played the role of a means of circulation and has mediated the correct division of the material elements of capital.

We assumed that the money is advanced by capitalists I. But we can also assume that it comes from the pockets of capitalists II. In this case, we arrive at the following series: KII buy means of production from KI, advancing the sum of  β2c = β1v for them; KI employ additional workers PI; the additional workers PI buy means of consumption from KII ; the money returns to its original place; the material elements of capital are taken in a corresponding relationship.

The chain of the acts of buying and selling will then be: KII-KI-PI-KII (the links of the chain are : KII-KI, KI-PI, PI-KII).

Let us now return to our question. It is clear that the capitalists can - and also do - manifest an additional demand, partly directly (for means of production), partly taken figuratively, by way of the workers (demand for use articles) by advancing money to them.

The result is now obvious. The capitalists themselves buy the additional means of production, the additional workers, who receive money from the capitalists who buy the labour-power of these additional workers, buy the additional means of consumption. Comrade Rosa Luxemburg, however, demonstrating her pitiable tautology, concludes: 'So far we have seen: it can be neither the workers nor the capitalists'.[22]

4. But now comes the best. After Rosa Luxemburg has examined, amongst other things, a series of peripheral possibilities and triumphantly 'refuted' them, she comes quite close to a correct formulation of the question. She poses the question (right at the end!) as to whether there could be a demand on the part of the capitalists, and indeed not an individual one, but a productive demand. As we have seen, in this question she proceeds from the quite correct premise that the object of the demand must consist of means of production and the workers' means of consumption. But what happens now? After she has come very close to the solution of the problem, she suddenly breaks out into the exclamation already cited by us: 'this is all very well, but such a solution pushes the difficulties from this factor to the next'. Excuse me, Comrade Luxemburg, if this is ‘all very well' (this ‘all very well' is a forced admission, since she cannot bring forward one single argument against the fact that it is 'all very well'), i.e. buyers have been found, we ask: Wherein lies the 'difficulty ' which must be 'pushed to the next factor' ?

Perhaps in the fact that in the next moment selling presupposes buyers, and buyers will again be found ? The difficulty consisted in the very fact that the buyers had suddenly disappeared from the scene. But after they had been fortunately found again and the difficulty had shown itself to be a fictitious, 'ideal' difficulty, i.e. a difficulty of Rosa's in the analysis of reproduction, but not a difficulty of the process of reproduction itself, one is forced to ask : What more does one want? Rosa Luxemburg tries to withdraw herself from this tricky business by nimbly climbing on to a carousel. This vehicle of rotation is supposed to lend style to her flight.

The carousel argument clearly relies on two moments: (1) the repetition of the 'difficulty': and (2) on the fact that 'from the standpoint of capital [it] makes complete nonsense'.

As far as the repetition of the 'difficulty' is concerned, we have already answered it. But there can be no objection, either from a capitalist or any other point of view, that the process manifests a cyclical character. The word 'carousel' and similar comparisons with a fair on their own have absolutely no possibility of proving anything.

Let us re-examine, however, the argument of the 'pointlessness', since it is presented here in a far more crass and somewhat evasive form.

A 'carousel'. Bon. 'That is then', writes Rosa Luxemburg, as we have already seen, 'not capitalist accumulation, i.e. amassing money capital, but its contrary: producing commodities for the sake of it, from the standpoint of capital an utter absurdity.'

Once again, we have before us a real bouquet of mistakes and contradictions.

Firstly. As is well known, money is opposed to commodity, and its commodity form is opposed to money capital. As a result, as far as Rosa is concerned we are simply dealing with the simple reproduction of a Jewish anecdote. 'Have you hurt yourself?' ‘Oh no, quite the opposite.' Industrial capital, on the other hand, which 'incorporates a real reproduction', unites in its circulation all three phases of this circulation. (‘The actual circuit of industrial capital in its continuity is ... not alone the unity of the processes of circulation and production, but also the unity of all its three circuits.')[23]

Secondly. By admitting that this is 'all very well', i.e. that buyers have been found and production can begin once again, Rosa Luxemburg herself; however she may qualify this process of factual, expanded (and clearly not socialist) reproduction, has admitted that it has passed through its money phase. (We have already demonstrated concretely how this happens above.)

Thirdly. Comrade Luxemburg, however, is by no means satisfied with this. She is not content, because she has an absolutely atrocious conception of capitalist accumulation. For she identifies the accumulation of the total social capital with the accumulation of money capital! If one could only suspect that from her first work, The Accumulation of Capital, and on the basis of it – as we have done above – reach such a conclusion, she now draws this conclusion herself in the Anti-Critique, and indeed expressis verbis. She is of the opinion that the aim of the capitalists is incorporated in money as an end in itself. If money constitutes merely a phase in the movement of 'real production', there can be no talk at all of a capitalist accumulation.

Marx portrays this process more exactly:

‘Commodities are thus sold not for the purpose of buying others, but in order to replace their commodity-form by their money-form. From being the mere means of effecting the circulation,of commodities, this change of form becomes the end and aim... . The money becomes petrified into a hoard, and the seller becomes-a hoarder of money.'[24]

And at a different place:

‘Whenever these hoards are strikingly above their average level, it is, with some exception, an indication of stagnation in the circulation of commodities, of an interruption in the even flow of their metamorphoses.[25] Are these processes valid as a sort of model of expanded capitalist reproduction?

Finally, we shall quote from one more passage, which completely destroys Rosa Luxemburg's arguments:

In the face of the habitual mode of life of the old feudal nobility, which as Hegel rightly says, ‘consists in, consuming what is in hand', and more especially displays itself in the luxury of personal retainers, it was extremely important for bourgeois economy to promulgate the doctrine that accumulation of capital is the first duty of every citizen, and to preach without ceasing that a man cannot accumulate if he eats up all his revenue, instead of spending a good part of it in the acquisition of additional productive labourers, who bring in more than they cost. On the other hand the economists had to contend against the popular prejudice (hear, hear, you Luxemburgian comrades, N. B.) that confuses capitalist production with hoarding... . Exclusion of money from circulation would also exclude absolutely its self-expansion as capital, while accumulation of a hoard in the shape of commodities would be sheer tomfoolery.[26]

And: 'Accumulation for accumulation's sake, production for production's sake: by this formula classical economy expressed the historical mission of the bourgeoisie[27]

It is easy - Comrade Rosa Luxemburg's supporters will answer - the author of Accumulation is in no way confusing the accumulation of sums of money with the accumulation of capital. Now, one of the two: either we are of the opinion that in the process of accumulation the addition of additional capital to the earlier capital is only possible in money-form, so that this form can be immediately replaced by the form of productive capital, or we deny this, despite all common sense.

If we admit this, the following will also be immediately, clear. In each given moment, the total surplus value destined for accumulation appears in various forms: in the form of commodity, money, functioning means of production and labour-power. Therefore, surplus value in money-form should never be identified with the total surplus value. The entire capitalist class, taken as a whole, can realize its total profit under the conditions laid down by us. But this process is one which takes place by stages. Thus, the surplus value of any capitalist, and that of the capitalist of any branch of production, and also as a result that of the entire capitalist class, passes through, the money-phase in its development. According to Rosa Luxemburg, on the other hand, it must be deduced that the profit destined for accumulation is no longer valid as accumulated profit if it is shorn of its money-clothing. And then the supporters of Comrade Rosa Luxemburg try to explain the methods and ways of the parthenogenesis of this part of capital!

But the funniest thing in the whole of this talmudic sophistry comes with the following piquante situation. Let us assume that the entire profit destined for accumulation consisted of gold, in accordance with the partly obscure, partly extremely ambiguous wishes of Comrade Rosa Luxemburg. Each individual capitalist, like the capitalists as a whole, would have their respective product (i.e. means of production and means of consumption) realized simultaneously. This happens thanks to the exclusive possibility, which makes Rosa Luxemburg so happy, of a market abroad. Very good! But what next? Unless we want to insist on making our capitalists hoarders and misers, etc., we must let them convert the gold into productive capital. Now they want to buy additional means of production. But where do they get them (since they themselves have sold them)? So they buy them back from abroad. Further, they try to employ workers. They succeed. But there are no provisions for the workers. Now, they procure means of consumption for themselves from abroad. And so the story starts all over again: first the capitalists sell their commodities abroad, then they buy the same commodities back.[28] Thus, each time the question of ‘accumulation' is solved in the same way.

If that isn't a roundabout and a farce, what is?

We should by now have dealt with the question of accumulation in its most abstract formulation. We saw that Rosa Luxemburg began with the exclusion of the money question, and then, in retreat; found herself obliged to support herself solely and exclusively on the very moment which she had at first rejected. In this point, too, we have revealed the essence of the error of the author of Accumulation. In the interests of the completeness of the proof, however, and for the sake of the satisfaction which we hope to give the Luxemburgians, we shall devote a special chapter to the question of the role of money in the process of reproduction.


Notes

{*} Capital Vol I, (International Publishers, 1977), pp 581, 627 [missing from Collected Works edition, which contains significant differences from Engels edition]. See also Theories of Surplus Value, Collected Works, 32, p153. Sismondi's original discussion of the circle changing into a spiral is in New Principles of Political Economy, Second Book, Chapter 6, esp p104 (New Brunswick, 1991).


[[1] Sweezy criticizes Bukharin for his formulation of the equation in this manner. He argues that there should be an increment of surplus value consumed by the capitalist class. However, Bukharin specifically states that in the following cycle ‘the unproductively consumed part of the surplus value grows – for the first time ...'. Therefore Bukharin was quite well aware of the problem. This whole question is dealt with in Appendix II.]

[2] Or into the additional wages for the old workers, who in this case have to sustain a bigger amount of simple work by means of increasing the intensity of work, extending the hours of work or raising the standard of qualifications of workers and work.

[3] Basically a masquerade takes place, but it happens within the framework of acts of exchange within the second department.

[[4] What Bukharin is saying here is Δβ1c > Δα1 and Δβ1v > Δα1.]

[5] Marx, Theories of Surplus Value, Vol. II. p. 501.

[6] ibid., p. 495.

[7] Luxemburg, The Accumulation of Capital, p. 155; Capital, Vol. II,p. 494.

[8] We have replaced the arithmetical examples with algebraic ones, since arithmetic has an arithmetical logic which from time to time leads to complications which in no way stem from the essence of the subject and which can only obscure the basic questions.

[[9] My translation, R. W. See also Luxemburg, op. cit., pp. 334-5.]

[10] Marx, Theories of Surplus Value, Vol. I, Chapter IV (Productive and Unproductive Labour), pp. 273-4.

[11] Capital, Vol. III, pp. 299-300.

[12] Luxemburg, Anti-Critique, p. 51.

[13] ibid., p. 55. (Emphasized here and farther along by us, N. B.)

[14] ibid., p. 55.

[15] ibid., p. 56.

[16] loc. cit.

[17] loc. cit.

[18] loc. cit., pp. 56-7.

[19] ibid., p. 57.

[20] Capital, Vol. II; XX; II, pp. 399-400.

[21] To be precise, a much smaller amount of money is needed here, since the same sum of money initiates a whole number of purchases. In the given logical context this is of no importance. In a different logical context this circumstance is of extreme importance. More about that later on.

[22] Anti-Critique, p. 56.

[23] Capital, Vol. II, IV, p. 106.

[24] ibid., Vol. I (III, 3a), p. 130.

[25] ibid., p. 145.

[26] Capital, pp. 588-9.

[27] ibid., p. 595.

[28] We note in passing that in the second case the abroad would have to be a different abroad.