Get Red Pepper's email newsletter. Enter your email address to receive our latest articles, updates and news.

×

Capital ideas

Ingo Scmidt discusses the relevance of Rosa Luxemburg's Accumulation of Capital

May 7, 2011
5 min read

Accumulation of Capital

Rosa Luxemburg

First published 1913

Rosa Luxemburg’s Accumulation of Capital was timely when it was published in 1913 and reads like a contemporary book today. Concluding her analysis of capitalist accumulation and imperialism, she forecast ‘a string of political and social disasters … punctuated by periodical economic catastrophes’. This diagnosis was more accurate than Karl Kautsky’s elaborations about great power cooperation (published, ironically, in September 1914, a month into the first world war) and had more predictive power than Lenin’s 1917 pamphlet on imperialism.

Today’s readers will find striking parallels between Luxemburg’s analyses of early 20th-century industrial development in Russia and modern China. Her discussions of capital’s ‘Struggle against the Peasant Economy’, the role of ‘International Loans’, and ‘Militarism as a Province of Accumulation’ (chapters 29, 30 and 32) read as if she is writing about present-day multinationals, international financial institutions and military-industrial complexes.

In the first part of Accumulation of Capital, Luxemburg developed an abstract model of reproduction that, in her view, showed that neither investment nor consumer demand suffice to buy all commodities produced in any period and thus realise the surplus value needed to keep the accumulation process going. Additional demand, she concluded, must come from non-capitalist social strata – peasants and craft producers who, so far, lived outside the circuits of capital accumulation, but become part of them once they start purchasing commodities from capitalist producers.

Once all non-capitalist strata are absorbed into the process of capitalist production and reproduction, the external source of demand and capitalist accumulation dries up; the capitalist economy ends up in stagnation. Intensified class struggle, competition among firms and imperialist rivalries are the result of this economic process, because each capitalist has to accumulate to stay in business and, by doing so, outcompete other capitalists. This, in a nutshell, is Luxemburg’s model of accumulation. But it is nothing more than a model; the crucial question is how it applies to reality.

This is why the neglected second part of Accumulation of Capital is worth revisiting. Here, Luxemburg discussed historical debates between economists who denied that capitalist accumulation would ever suffer from a lack of effective demand and theoreticians of insufficient demand. The former painted the prospects of capitalist accumulation in bright colours and considered political intervention as an impediment to economic development. The latter saw capitalist economies plagued by insufficient demand and suggested all kinds of interventions to fix this problem.

Luxemburg didn’t make an argument about a linear descent from capitalist accumulation to stagnation, let alone the breakdown of capitalism. Instead, she showed how political conflicts recurrently opened up new spaces for accumulation, and how these phases of capitalist expansion mitigated class conflict – until the respective spaces for expansion were exhausted, capitalism got stuck in crisis and class struggle intensified again.

This ‘non-deterministic’ interpretation allows us to understand the long post-war boom and its supersession by a long decline, ending with today’s crises that bear so much resemblance to early 20th-century capitalism. Two world wars, revolutions, depression and the expansion of Soviet communism led to a fundamental reorientation of capital accumulation. The industrialisation of western countries and concomitant colonisation of the global South were replaced by, however incomplete, industrialisation projects in the post-colonial South and the colonisation of working-class households in the west.

Southern developmental states and western welfare states invaded so many non-capitalist territories and social strata that even investment in the already industrialised centres of the capitalist world-system reached unprecedented levels. Naturally, the combined investment booms in the centres and peripheries created an overabundance of production capacities.

In the 1970s, the question of finding sufficient demand was high on the business agenda. At that time, dreams of mass consumption weren’t fulfilled in all corners of the world – in fact, not even for everyone in the capitalist centres. So creating additional consumer demand would have been an economic possibility. Recurrent crises in the 1970s didn’t mark capitalism’s final frontier, at least not if one leaves ecological limits to accumulation out of the equation. Yet the subjugation of new social strata under the imperatives of capital accumulation had also produced new, potentially anti-systemic, movements of women, immigrant workers and ethnic minorities in the west and an upsurge of anti-imperialist struggles in the South.

Under these circumstances increasing numbers of capitalists found it preferable to slow down their investments, even if this meant lower profits, and use the combined forces of unemployment, fiscal and foreign debt crises to roll back workers, welfare and developmental states.

The irony of this capital offensive was that welfare and developmental states had created considerable public spheres during the boom that were partially disconnected from the accumulation process and could now be penetrated by capital. Thus, the privatisation of these public spheres opened new space for capitalist expansion. The collapse of Soviet communism and China’s world-market turn helped even further in this regard. Austerity policies in the aftermath of the recession are the latest effort to restart accumulation by dispossession.

Yet anti-austerity protests and strikes in the west and food riots or outright revolutions in the South indicate that ‘revolt against the rule of capital’ has become a necessity again, just as it was when Luxemburg wrote Accumulation of Capital.

Red Pepper is an independent, non-profit magazine that puts left politics and culture at the heart of its stories. We think publications should embrace the values of a movement that is unafraid to take a stand, radical yet not dogmatic, and focus on amplifying the voices of the people and activists that make up our movement. If you think so too, please support Red Pepper in continuing our work by becoming a subscriber today.
Why not try our new pay as you feel subscription? You decide how much to pay.
Share this article  
  share on facebook     share on twitter  

Labour Party laws are being used to quash dissent
Richard Kuper writes that Labour's authorities are more concerned with suppressing pro-Palestine activism than with actually tackling antisemitism

Catalan independence is not just ‘nationalism’ – it’s a rebellion against nationalism
Ignasi Bernat and David Whyte argue that Catalonia's independence movement is driven by solidarity – and resistance to far-right Spanish nationalists

Tabloids do not represent the working class
The tabloid press claims to be an authentic voice of the working class - but it's run by and for the elites, writes Matt Thompson

As London City Airport turns 30, let’s imagine a world without it
London City Airport has faced resistance for its entire lifetime, writes Ali Tamlit – and some day soon we will win

The first world war sowed the seeds of the Russian revolution
An excerpt from 'October', China Mieville's book revisiting the story of the Russian Revolution

Academies run ‘on the basis of fear’
Wakefield City Academies Trust (WCAT) was described in a damning report as an organisation run 'on the basis of fear'. Jon Trickett MP examines an education system in crisis.

‘There is no turning back to a time when there wasn’t migration to Britain’
David Renton reviews the Migration Museum's latest exhibition

#MeToo is necessary – but I’m sick of having to prove my humanity
Women are expected to reveal personal trauma to be taken seriously, writes Eleanor Penny

Meet the digital feminists
We're building new online tools to create a new feminist community and tackle sexism wherever we find it, writes Franziska Grobke

The Marikana women’s fight for justice, five years on
Marienna Pope-Weidemann meets Sikhala Sonke, a grassroots social justice group led by the women of Marikana

Forget ‘Columbus Day’ – this is the Day of Indigenous Resistance
By Leyli Horna, Marcela Terán and Sebastián Ordonez for Wretched of the Earth

Uber and the corporate capture of e-petitions
Steve Andrews looks at a profit-making petition platform's questionable relationship with the cab company

You might be a centrist if…
What does 'centrist' mean? Tom Walker identifies the key markers to help you spot centrism in the wild

Black Journalism Fund Open Editorial Meeting in Leeds
Friday 13th October, 5pm to 7pm, meeting inside the Laidlaw Library, Leeds University

This leadership contest can transform Scottish Labour
Martyn Cook argues that with a new left-wing leader the Scottish Labour Party can make a comeback

Review: No Is Not Enough
Samir Dathi reviews No Is Not Enough: Defeating the New Shock Politics, by Naomi Klein

Building Corbyn’s Labour from the ground up: How ‘the left’ won in Hackney South
Heather Mendick has gone from phone-banker at Corbyn for Leader to Hackney Momentum organiser to secretary of her local party. Here, she shares her top tips on transforming Labour from the bottom up

Five things to know about the independence movement in Catalonia
James O'Nions looks at the underlying dynamics of the Catalan independence movement

‘This building will be a library!’ From referendum to general strike in Catalonia
Ignasi Bernat and David Whyte report from the Catalan general strike, as the movements prepare to build a new republic

Chlorine chickens are just the start: Liam Fox’s Brexit trade free-for-all
A hard-right free marketer is now in charge of our trade policy. We urgently need to develop an alternative vision, writes Nick Dearden

There is no ‘cult of Corbyn’ – this is a movement preparing for power
The pundits still don’t understand that Labour’s new energy is about ‘we’ not ‘me’, writes Hilary Wainwright