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Accumulation of Capital
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.