Fictitious Capital For Beginners: Imperialism, 'Anti-Imperialism', and the Continuing Relevance of Rosa Luxemburg

Submitted by sphinx on August 27, 2007

Fictitious Capital For Beginners: Imperialism, 'Anti-Imperialism', and the Continuing Relevance of Rosa Luxemburg Editorial content | Articles

By Loren Goldner

The liquidity crisis currently wiping billions off global stock markets is just the tip of a very big iceberg. Beneath the credit crunch and incipient insolvency crisis lie the economic and political crisis of the USA’s global reign, claims Loren Goldner. But will this mean global depression, wars and intensified authoritarianism, or a renewed opportunity for communism? Goldner returns to the theories of Marx and Luxemburg to examine today's financial and military imperialism, and its left wing ‘anti-imperialist’ mirror

In February of this year the Chinese stock market, which had long been suspected of being in a runaway bubble phase, took a plunge. In the following days that tremor was felt in stock markets around the world. China in recent months has reached the ‘shoe shine boy’ phase of popular stock speculation (a major American investor famously decided to get out of the stock market just before the 1929 crash when a shoeshine boy gave him advice on stocks), and after the (not so welcome) correction, the Chinese market resumed its upward rush to new highs, followed with relief by investors everywhere.

With the slightest historical perspective, we can see that the world shock set off by such a hiccup in a still relatively small market (in terms of what savvy people call ‘total market capitalisation’) is something quite new, unthinkable only a few years ago. China’s stock market can have such an impact because people are aware that any pause, not to say downturn in the country’s economic boom (averaging over 10 percent GDP growth for years on end, whereas Britain in its 19th century heyday was considered quite impressive at 3 or 4 percent) could bring the contemporary worldwide financial euphoria to an end. Increasingly insiders and pundits talk openly of the ‘when, not if’ of a global downturn, or even (for some) cataclysm.

http://www.metamute.org/en/Fictitious-Capital-For-Beginners

Haven't finished reading this just yet but it seems to be at least as good as the interview Goldner did with KPFK awhile back.

Mike Harman

16 years 7 months ago

In reply to by libcom.org

Submitted by Mike Harman on August 27, 2007

Pretty good. I'm not totally sure about the fictitious capital stuff (it makes sense here, less so in Fictitious Capital and the Transition to Communism), but Goldner's emphasis on trying to analyse the concrete processes going on marks him out quite significantly from a lot of others. You got a link to the KPFK interview?

si

16 years 7 months ago

In reply to by libcom.org

Submitted by si on August 27, 2007

I already read this a few days ago. It's really solid, and convincing to this layperson - it makes me realise (once again) how important it is for me to study, at some point, (critique of) political economy... got to get this fucking degree out the way first though.

Hieronymous

16 years 7 months ago

In reply to by libcom.org

Submitted by Hieronymous on August 27, 2007

Loren Goldner on Bonnie Faulkner's KPFA (broadcast in Berkeley; interview by phone with Loren in Seoul, South Korea) show called "Guns and Butter" on Wednesday, April 4, 2007:

http://kpfa.org/archives/index.php?arch=19534

Alf

16 years 7 months ago

In reply to by libcom.org

Submitted by Alf on August 27, 2007

Interesting. I've just been looking at Goldner's original articles on fictitious capital and they contain much that is relevant to today's debt-fuelled economy. His willingness to take Rosa Luxemburg seriously can only be welcomed. I will come back to this when I have time to look at the new text.

Alf

16 years 7 months ago

In reply to by libcom.org

Submitted by Alf on August 28, 2007

A stimulating article. Takes the discussion about the economic crisis back to where it should be located after all the distortions of Marx served up by the various forms of 'autonomism', for whom any analysis of the inner contradictions of the system is a form of 'objectivism'. Marx spent all the energy he did on examining these contradictions because he wanted to show that capitalism, like previous modes of production, had objective limits, that it was not an eternal system.

Luxemburg continued this approach and her work has been shamefully sidelined for a very long time. Thus I welcome Loren's attempt to investigate how her analysis helps us to understand the crisis of the system today. When Luxemburg wrote The Accumulation of Capital, she recognised that although capitalism had still a long way to go before it had eliminated all the non-capitalist forms of economy on which its expansion paradoxically depended, in terms of value these markets had shrunk to the point where the capitalist world economy was entering into a period of catastrophe (a diagnosis fully confirmed by the events of the 20th century).

It is still important, as Loren tries to do, to look at how non-capitalist markets and sources of wealth contined to function for capitalism in this period, particularly in the phase after 1945. But it is even more decisive to understand the role played by various means of keeping the system going through 'artificial' means - above all state manipulation of the economy and the massive recourse to debt, to fictitious capital. So here again Loren's posing of the question of fictitious capital - already recognised by the Communist International in its analysis of the war economy which imperialism had engendered during the first world war - is central to understanding why the system has not already collapsed.

However, as I understand it, Loren has shifted emphasis away from the central preoccupation of Luxemburg's work - the problem of realisation, the inability of capital to find a market for all the value it produces within the spheres of capital and labour - towards the other main contradiction of the system, the tendency for the rate of profit to fall. This seem to be the reason why he stresses the role of 'loot' in capital's relationship with the non-capitalist world. Looting certainly played a key role in its earliest phases (the period which I think is more accurately defined as that of primitive accumulation), and looting does help to compensate for declining profits, but it doesn't resolve the problem of realisation, which requires not just capital's ability to steal labour power and natural resources, but to locate new sources of effective demand, buyers outside the confines of the capital-labour relationship. Of course the very process of extending the market in this way tends to integrate these 'third buyers' into the capital-labour relationship, which ultimately restricts capital's ability to expand and intensifies the spiral of catastrophe.

I largely agree with the political conclusions Loren draws from his analysis - the crisis accelerates the tendency towars barbarism and war, and 'anti-imperialism' is part of the problem, not part of the solution, since it leads to the defence of the USA's imperialist rivals.

mikus

16 years 7 months ago

In reply to by libcom.org

Submitted by mikus on August 28, 2007

I'm going to have to go against the grain and say I don't think this article makes much sense.

Firstly, Goldner's concept of primitive accumulation is all-inclusive and includes a lot of different concepts in one term, which easily leads to confusion. He basically admits this in footnote 2, but he seems to think that you could invent a new term and that would solve the problem. But the problem would be reproduced, since he would still be including many different concepts in one term.

In any case, the definition itself is so vague as to be useless. Goldner defines "primitive accumulation" as "accumulation that violates the capitalist 'law of value', i.e. non-exchange of equivalents" (pg. 4). This is so broad that it would have to include (nearly) all exchange in capitalism, since exchange generally does not take place at values but at market prices which deviate from the relative values of commodities. The utility of such a vague and all-inclusive category is entirely unclear.

Goldner seems not to realize that this concept would necessarily include all exchange, and he speaks of typical examples of primitive accumulation as the draining of labor-power from the third world to the first world, the looting of the natural environment, the non-replacement of plant and infrastructure, and the payment of non-reproductive wages for workers. What is strange is that he chooses as examples some of the very few things which do not fall under his definition of "primitive accumulation".

The draining of labor-power from the third world to the first world does not at all "violate the capitalist 'law of value'" so long as the capitalists in the first world pay enough to reproduce the labor-power of the third world worker at the socially defined rate in the country in question. Whether or not this occurs probably varies according to industry, nation, and chance, but the issue of whether or not this exchange violates the law of value has no direct relation to where the labor-power comes from.

I am not saying that the transfer of labor-power from the third world to the first world is inconsequential, but to try to call this "primitive accumulation" with its connotations of cheating, etc., is a bad way to describe this phenomenon. It seems to me much simpler. In general a large portion of well-educated third world labor-power will not be able to find work in its home-country, or when it does wages will be relatively low because the socially defined standard of living in its home country is relatively low compared to the first world nations. Hence the value of labor-power is lower in the third world than in the first world. Laborers thus move, when they can, to a better market for their commodity (labor-power). No talk of "primitive accumulation" is necessary, only the theory of wages and the differences between wage levels in advanced and underdeveloped nations.

Goldner's next example, "the looting of the natural environment", cannot be a violation of the law of value since no exchange is even conceivable. Nature is not a commodity-owner that capitalists steal from. It is simply there, and one can take from it free of charge. Whether or not capital's treatment of the environment is agreeable or not has nothing whatsoever to do with a violation of the law of value, since the law of value of necessity cannot apply to things that are not commodities.

As for "non-replacement of plant and infrastructure", this again is not an issue of the law of value. If a capitalist has enough profit to accumulate, and foresees the ability to make at least the average rate of profit in his/her industry in the future, s/he will reinvest and thus replace plant and infrastructure. If s/he doesn't, s/he won't. This has nothing to do with exchange per se, let alone the non-exchange of equivalents. It's no violation of the capitalist law of value that plant and infrastructure are frequently not replaced, it is a part of its normal operation.

The last example of worker's being paid non-reproductive wages does seem to be an issue of non-exchange of equivalents. But reducing it to non-exchange of equivalents seems to me to greatly limit our understanding of what is going on when wages are driven down below the customary cost of reproduction. The value of labor-power is not a fixed magnitude but is determined by historical circumstances, particularly class struggle. It is the cost of reproducing the worker as a particular sort of human being -- and what is considered the normal human being changes over time. What has been occurring for the last 30 or so years is a (successful) attempt to lower the socially defined standard of living and thus the wage that is considered acceptable. So it's not that worker's are being paid a less-than-fair wage, it's that the fair, average wage itself is being redefined at a lower level due to continuous working class defeats.

I'll post more in a little bit. These points don't address the main thrust of Loren's article, which I will get to later.

Alf

16 years 7 months ago

In reply to by libcom.org

Submitted by Alf on August 29, 2007

I tend to agree with a lot of these criticisms of Loren's use of the concept of primitive accumulation. It's not my understanding that Rosa used this term to describe the expansion of capital over the planet during the imperialist phase (ie from the last third of the 19th century on).
It's true as Loren points out that Preobrazhinsky talked about primitive socialist accumulation in the USSR in the 20s. Loren seems to interpret this as a code for the primitive accumulation of capital. But while there is no doubt that the industrialisation of the USSR under Stalin made copious use of peasant labour power and even to some extent of peasant markets, this process had the characteristics of accumulation in capitalism's decadent stage: state manipulation of the law of value and the frenzied development of a war economy. I would argue along similar lines about the development of China today: despite some apparent similarities to the early phase of capitalist industrialisation, this is a classic expression of what Marx in the Grundrisse calls "growth as decay".

baboon

16 years 7 months ago

In reply to by libcom.org

Submitted by baboon on August 31, 2007

I must read more about primitive accumulation but I tend to agree with the criticisms of Loren's description of it as a permanent feature of decadent capitalism and a cover all for every aspect of imperialist barbarism, of capitalism in decline. I don't know how primitive accumulation fits in with the development of state capitalism and extended credit which seem to be the main weapons of the bourgeoisie in staying the collapse of capitalism, in fact I don't think it is helpful to call it this.
I agree with Loren's support for Rosa against Lenin over the question of imperialism and Loren defends the analysis well in this very welcome text. The turn of last century showed that the major problem for capitalism was the restricted market and the first world war was the expression of this . That has remained the fundamental problem of capitalism and one that debt and credit can only temporarily "solve".

MJ

16 years 7 months ago

In reply to by libcom.org

Submitted by MJ on August 31, 2007

Michael Perelman's "The Invention of Capitalism" is focused on making the case that primitive accumulation is a permanent feature of capitalism.

Tojiah

16 years 7 months ago

In reply to by libcom.org

Submitted by Tojiah on August 31, 2007

si

I already read this a few days ago. It's really solid, and convincing to this layperson - it makes me realise (once again) how important it is for me to study, at some point, (critique of) political economy... got to get this fucking degree out the way first though.

Easier just to drop out. All the cool kids are doing it. Leaves you time to learn what actually interests you, rather than what's pushed down your throat, as long as you don't take too heady a job.

RedHughs

16 years 7 months ago

In reply to by libcom.org

Submitted by RedHughs on August 31, 2007

Hmm,

It is still important, as Loren tries to do, to look at how non-capitalist markets and sources of wealth contined to function for capitalism in this period, particularly in the phase after 1945.

It seems to me that China has only functioned to prop up present capitalism once its labor markets were made available to the capitalists. China did not have "loot" ready to be taken by capitalists. Rather, it had cheap labor which allowed the whole of capitalist production to expand. This has a somewhat similar result, since either way opening China provided capital with more time and profitability but the dynamics seem different.

As for markets, the United States seems to be the primary locus of demand for surplus goods. This nation finances its demand on credit and this seems to explain the willingness of the rest of world's central banks to continue financing its various bubbles.

Red

Mike Harman

16 years 7 months ago

In reply to by libcom.org

Submitted by Mike Harman on August 31, 2007

baboon

I must read more about primitive accumulation but I tend to agree with the criticisms of Loren's description of it as a permanent feature of decadent capitalism and a cover all for every aspect of imperialist barbarism, of capitalism in decline.

This is a complete obfuscation. If primitive accumulation was essential to the birth of capitalism, and it's early development, and has continued to be a permanent feature up to now, then we can say it's simply a permanent feature of capitalism. Whether it's "ascendant" or "descendant" or not is beside the point. To indicate any link at all, you'd have to show that there was a signficant quantitative and qualitative change primitive accumulation which could be described as a feature of "decadence" or "ascendance".

If anything, this article, or at least redhughs reading of it (i.e. that the over valuation of assets isn't new), suggests more that nothing has changed - that capital has simply continued to respond to the same contradictions and crises that have been present since it's inception.

mikus

16 years 7 months ago

In reply to by libcom.org

Submitted by mikus on August 31, 2007

MJ

Michael Perelman's "The Invention of Capitalism" is focused on making the case that primitive accumulation is a permanent feature of capitalism.

Michael Perelman's case for primitive accumulation as a "permanent feature of capitalism" is basically that state violence continues to exist past capitalism's birth.

This is no evidence for his point, since it's based on a complete misunderstanding of what "primitive accumulation" means in Marx's work. (re)Read the opening page to the part of Capital Vol. 1 on primitive accumulation. The whole question of primitive accumulation arises because Marx has already explained how surplus-value (the basis of profit) is produced once constant and variable capital are advanced. He also explains how this surplus-value which is produced is accumulated as more capital, which then produces more surplus-value, which is then accumulated, and so forth.

The question naturally arises as to how this process got started, since surplus-value seems to presuppose capital and capital seems to presuppose surplus-value. The answer is that original capital investments cannot have arisen out of the capitalist mode of production itself (because it did not yet exist), and through historical investigation Marx says that they were generated through various types of theft and conquest. Furthermore, in order for variable capital to purchase labor-power, labor-power had to be made free labor-power.

So that's it. "Primitive accumulation" is not synonymous with violence nor even state violence (although it of course was a violent process), nor even with dispossession since capital itself produces dispossession through the process of accumulation (one of the most fundamental points of Capital). To try to prove the existence of primitive accumulation by pointing to violence or imperialism is wrongheaded from the getgo.

This is not to deny that primitive accumulation could conceivably take place in certain areas of the world today. But it does seem unlikely to me for the most part. First of all, investment that takes place within certain areas that have not previously seen capital accumulation does not arise from those areas themselves, but rather from capitalist nations who invest in new nations. So the invested capital is accumulated surplus-value/profit rather than the initial wealth needed to create surplus-value/profit. It arose from capitalism itself rather than from non-capitalist modes of production. And secondly, even when labor is dispossessed this is frequently the result of capital's cheap products dispossessing independent manufacturers (probably agricultural laborers most often), who are then forced to enter into waged-laborer. Sometimes land is simply stolen by the state, and I suppose you can say this is something like "primitive accumulation", but it is nevertheless distinct, as the land is stolen not by a capitalism that is being birthed out of an earlier mode of production, but by an expanding capitalist state.

Mike

Demogorgon303

16 years 7 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on August 31, 2007

I agree with mikus here. Conflating primitive accumulation with the gigantic state-controlled programmes of Stalinism or today's China is not only ignoring the question of quantity vs quality, but also simply examining the surface appearance of the phenomenon. I think this strikes at the root of some forms of anarchism that tend to see things in universal, abstract terms rather than examining capitalism as a distinct mode of production.

MJ

16 years 7 months ago

In reply to by libcom.org

Submitted by MJ on August 31, 2007

Demogorgon303

I think this strikes at the root of some forms of anarchism that tend to see things in universal, abstract terms rather than examining capitalism as a distinct mode of production.

Are you saying Perelman is an anarchist, or are you just using "anarchist" as a general pejorative?

Mike Harman

16 years 7 months ago

In reply to by libcom.org

Submitted by Mike Harman on August 31, 2007

And secondly, even when labor is dispossessed this is frequently the result of capital's cheap products dispossessing independent manufacturers (probably agricultural laborers most often), who are then forced to enter into waged-laborer. Sometimes land is simply stolen by the state, and I suppose you can say this is something like "primitive accumulation", but it is nevertheless distinct, as the land is stolen not by a capitalism that is being birthed out of an earlier mode of production, but by an expanding capitalist state.

Well the massive scale forced evictions from famrs in China (mainly for construction I think) is creating a whole new lot of (homeless) wage labourers whilst simultaneously grabbing land. I really don't see a big difference between this and the enclosures based on that, although the information from China about the details of what's happening is quite slim.

Alf

16 years 7 months ago

In reply to by libcom.org

Submitted by Alf on August 31, 2007

The primitive accumulation that Marx described, as Mikus explained, took place in an epoch when feudal social relations were still dominant in Europe, albeit in a profound state of decay. China prior to the current 'boom' was not a pre-capitalist economy, but one dominated by capital. It's a huge difference. It seems to me Catch that you are arguing yourself into a completely static view of social reality.

MJ

16 years 7 months ago

In reply to by libcom.org

Submitted by MJ on August 31, 2007

And a cigar pre-1914 is incomparable to a cigar post-1914, capital being the sole ordering force of reality in a capitalist world.

mikus

16 years 7 months ago

In reply to by libcom.org

Submitted by mikus on August 31, 2007

MJ

And a cigar pre-1914 is incomparable to a cigar post-1914, capital being the sole ordering force of reality in a capitalist world.

I'm not sure what you're insinuating here, but comparing the concept of primitive accumulation to a cigar seems like a weak argument.

Furthermore, you haven't really defended yourself here but are just taking potshots. This is not very helpful.

More on Goldner and Luxemburg in a little bit.

MJ

16 years 7 months ago

In reply to by libcom.org

Submitted by MJ on August 31, 2007

Why do I need to "defend [my]self"?

MJ

16 years 7 months ago

In reply to by libcom.org

Submitted by MJ on August 31, 2007

BTW the ultimate meaning of something that happens shouldn't be defined in terms of something that happens after it.

mikus

16 years 7 months ago

In reply to by libcom.org

Submitted by mikus on September 1, 2007

You're right, you don't need to defend yourself. I mistakenly remembered you making some sort of argument about primitive accumulation. (Perhaps that's how I read your mention of Michael Perelman. Perhaps you brough his book up at random.) Then I have to ask: what are you trying to say in your posts?

"BTW the ultimate meaning of something that happens shouldn't be defined in terms of something that happens after it."

I don't know what you're insinuating here either. No one has claimed (as far as I know) that the "ultimate meaning" of the events referred to as "primitive accumulation" (dispossession of the peasantry, colonialism, the looting of gold and silver, etc.) have their "ultimate meaning" in something that occurred later (capitalism). There is no need for making a metaphysical claim of that sort. ("Ultimate meaning"? I am not a philosopher.) Certainly one of the functions of those activities was the (primitive) accumulation of capital. Maybe those historical events had other meanings too. In fact I'm sure they did. Namely the destruction of other cultures, the birth of new ethnicities, racism, etc. I don't see what any of this has to do with the claim about "primitive accumulation." The claim that these historical events served as a mechanism for the (primitive) accumulation of capital says absolutely nothing about any other potential meanings or functions of those events. One would have to make an additional proposition in that direction, which far as I know, no one did. (I know I didn't, and I know I wouldn't, since I don't believe anything of the sort.)

Think of it like this. You work a lot this month. You save a little extra money. A family member out of the country dies. You fly out of the country to the funeral.

You wouldn't have been able to go to the funeral if you had not saved the extra money. You later say: "The extra money I saved allowed me to fly out of the country."

No claim about "ultimate meaning" is made, nor is such a claim implied.

The same is the case with "primitive accumulation." Such activities did not necessarily end up in capitalism. (Just like no saving of extra money necessarily ended up in you flying out of the country.) They were necessary preconditions of it, however. (Just as you wouldn't have been able to fly out of the country if you had not saved up extra money.)

(By the way, Marx makes this distinction in a letter on Mikhailovsky, I believe, where he mentions that there have been other historical situations that were similar to the ones in Europe in the 16th-17th centuries, yet did not end up in the development in capitalism.)

Mike

mikus

16 years 7 months ago

In reply to by libcom.org

Submitted by mikus on September 1, 2007

Okay, more on Goldner's article.

I think there is a certain lack of seriousness with how he deals with both Luxemburg and Marx. The problems with his take on "primitive accumulation" were already discussed (although there are other problems in his treatment of Marx), so I'll move on to the problems with how he treats Luxemburg.

Loren makes a number of claims like the following:

1. "In her Accumulation of Capital (1913), a work much more grounded in Marx's problematic than Lenin's pamphlet, Luxemburg argued that imperialism expressed the continuing presence of what Marx had called 'primitive accumulation', a certain increment of 'loot' which capitalism required to compensate for a disequilibrium internally generated by its dynamic." (pg. 2)

2. "I have minor differences with Luxemburg..." (pg. 3)

3. "Whatever [Luxemburg's] minor flaws... she was absolutely right about the permanence of primitive acccumulation... in capitalism." (pg. 4)

4. "Thus I would 'correct' Luxemburg to the extent that the external relations of the 'pure system' are not so much about the sale of a surplus product on the model of the sale of industrial goods to independent farmers or peasants... as the more important circulation of an ever increasing fictitious bubble (fictitious capital) through international loans in exchange for whatever loot can be acquired from petty producers' labour power or from nature." (pg. 9)

5. "In her survey of the rise and fall of classical political economy from the Physiocrats to the Ricardian school, she points out that only a socialist (i.e. Marx) could solve the problem of the source of profit and of expanded reproduction." (pg. 7)

Throughout these passages Goldner acts as if his understanding of the main difficulty of accumulation (summarized in the 4th passage quoted) were merely a "minor difference" with Luxemburg. I think this is an extreme understatement. The vast majority of Luxemburg's book is devoted to an analysis of the sources of effective demand required for the expanded accumulation of capital. Her argument is that capitalism cannot itself generate this effective demand, but it comes through the transformation of non-commodity-producing countries into commodity-producing ones, and the transformation of commodity-producing countries into capitalist ones, so that the effective demand for the commodities produced by the capitalist world comes from outside of capitalism itself. The central problem discussed throughought the whole book is effective demand.

Goldner, on the other hand, focuses on the declining rate of profit and the difficulties of supplying all the claims on surplus-value. (What Goldner calls "fictitious capital.")

These are entirely different theories. There is no relation whatsoever between them, except for a certain attention to international loans. But international loans aren't even discussed by Luxemburg until around the 400th page of her book, appropriatedly entitled "International Loans". (The book, is about 450 pages long, mind you.) International loans are hardly the subject-matter of Luxemburg's book. The main subject-matter is the root cause of capital's tendency towards crisis, war and imperialism. Her explanation of this root cause is entirely different from Goldner's. To glance over the first 400 pages of Luxemburg's book and to treat the last 50 pages as the real subject-matter is absurd.

Furthermore, Luxemburg never claims that "primitive accumulation" is a permanent feature of capitalism. She is fairly clear that "primitive accumulation" is confined to the birth of capitalism out of the feudal mode of production. It is a bizarre and enduring myth that Luxemburg was one of those people who used the term "primitive accumulation" as a synonym for all forms of violence in capitalism. I'm not sure how this myth came about but there is no doubt that there is no basis for it in Luxemburg's own work. It is annoying to see this myth perpetuated in supposedly Luxemburgian text such as Goldner's.

And lastly, regarding the 5th quote above. Goldner completely misses Luxemburg's point here. Luxemburg does not claim that "only a socialist (i.e. Marx) could solve the problem of the source of profit and of expanded reproduction." In fact, Luxemburg's entire work is a criticism of what she takes to be the limits of Marx's analysis of expanded reproduction at the end of Vol. 2 of Capital. She admits that Marx posed the question correctly (although I don't think she claimed that he was the first to do so, since she was also fairly fond of Sismondi and several other political economists who discussed the issue of effective demand -- but I may be wrong here), but her solution of the problem is not Marx's and she is completely honest about this. Goldner has reversed Luxemburg's whole point -- for Luxemburg, Marx did not "solve the problem of the source of profit and of expanded reproduction".

Mike

MJ

16 years 7 months ago

In reply to by libcom.org

Submitted by MJ on September 1, 2007

Yeah I'm not completely sold on Perelman's argument, I was responding directly to baboon saying "I must read more about primitive accumulation".

I do think there are interesting comparisons to make between the "primitive accumulation" that enabled the bourgeoisie to exploit the proletariat, the ongoing "accumulation that violates the capitalist ‘law of value’, i.e. non-exchange of equivalents" (Goldner's formulation) that exists alongside regular capitalist accumulation in the form of "housework" etc even during the supposed golden age of capitalism (by anyone's chronology), and some important processes that are happening now. If there are points of comparison should these all be termed "primitive accumulation"? I don't really care. But

"Primitive accumulation" is not synonymous with violence nor even state violence (although it of course was a violent process),

This isn't what Perelman (etc) are saying, at least not how I read it. It isn't about the presence of "violence". I think they would say that most labor in a capitalist society performed in exchange for something other than a wage would be "primitive accumulation" whether or not "violence" is present.

nor even with dispossession since capital itself produces dispossession through the process of accumulation (one of the most fundamental points of Capital).

I don't think anyone is saying it's simply about "dispossession".

If this thread continues I'd like to participate in it much more thoroughly, and while not half drunk and sorting my laundry. But I'm leaving in the morning for a weeklong job, where I probably won't have internet access. Bad timing -- don't think I'm withdrawing from the conversation.

mikus

16 years 7 months ago

In reply to by libcom.org

Submitted by mikus on September 1, 2007

MJ

mikus

"Primitive accumulation" is not synonymous with violence nor even state violence (although it of course was a violent process),

This isn't what Perelman (etc) are saying, at least not how I read it. It isn't about the presence of "violence". I think they would say that most labor in a capitalist society performed in exchange for something other than a wage would be "primitive accumulation" whether or not "violence" is present.

You are right, what I said was wrong. It's been a long time since I read Perelman's book. I don't think it changes my main point however. The existence of unfree labor during capitalism is irrelevant, given the definition of primitive accumulation I have advanced. (The concept was not invented by Marx, by the way. The phrase is specific to Marx but the concept was taken from Adam Smith and it was addressed by other classical political economists as well. Marx discusses Wakefield's take on primitive accumulation in the last chapter of Capital, for example. So I do think it is unnecessarily confusing to speak of primitive accumulation in a different sense than in which it was always meant.)

nor even with dispossession since capital itself produces dispossession through the process of accumulation (one of the most fundamental points of Capital).

I don't think anyone is saying it's simply about "dispossession".

Interesting. My impression is that this is how many people take it. I'll have to think about this a little more before I cite some specific examples. But the whole academic obsession with the so-called "enclosures" and its general association with "primitive accumulation" seems to be a good example of the conflation of primitive accumulation with dispossession. Werner Bonefeld, for example, seems to equate dispossession with primitive accumulation in some of his articles. Or at least he seems to think that dispossession is the main characteristic of primitive accumulation, even if he doesn't define primitive accumulation as dispossession.

Joseph Kay

16 years 7 months ago

In reply to by libcom.org

Submitted by Joseph Kay on September 1, 2007

mikus

Interesting. My impression is that this is how many people take it. I'll have to think about this a little more before I cite some specific examples. But the whole academic obsession with the so-called "enclosures" and its general association with "primitive accumulation" seems to be a good example of the conflation of primitive accumulation with dispossession. Werner Bonefeld, for example, seems to equate dispossession with primitive accumulation in some of his articles. Or at least he seems to think that dispossession is the main characteristic of primitive accumulation, even if he doesn't define primitive accumulation as dispossession.

the 'permanance of primitive accumulation' thesis seems to parallel the 'commonism' of nick dyer-witheford, massimo de angelis et al who pose struggle as the defence of commons against capital's permanent enclosures (iirc they see privatisation as enclosure, as if the state is outside of capital). i don't think that crowd references luxemburg at all though, they're more arguing out of the practice of the 'movement of movements' (disclaimer, i've only read a few of the essays on the commoner site, not de angelis' book).

MJ

16 years 7 months ago

In reply to by libcom.org

Submitted by MJ on September 1, 2007

(iirc they see privatisation as enclosure, as if the state is outside of capital)

I don't think you recall this correctly at all -- most Commoner contributors definitely think the state is part of capital (their ideological roots are with Midnight Notes and with Bonefeld's side of the state derivation debate), and capable of enclosure. What a bizarre recollection.

They do complain about "privatization," but at this point in history, "privatization" is a transition that is often imposed by capital in order to create an opportunity for further commodification (and, in the case of privatizing industries, reconfigurations of the labor process in anticipation of speedup). Would you favor allowing such attacks on the basis that the state happens also to be part of capital?

baboon

16 years 7 months ago

In reply to by libcom.org

Submitted by baboon on September 1, 2007

I don't think "primitive accumulation" helps the point that Goldner wants to make. I don't think that as an explanation it describes capitalism's "looting". Self-cannibilsation, the feature of decadent capitalism, doesn't equate to primitive accumulation. The Third Reich's slogan of 'Export or Die' could only be at the expense of rivals and ultimately of capitalism overall, demonstrating the increasing irrationality of imperialism.
I am not sure also, but it's not impossible, that a new pole of accumulation could be posed around an Asian "bloc".Goldner's equasion of a possible Asian bloc taking over from the US, with the US takeover from Britain during the 1900s, is stretching possibilities too far. US imperialist domination over Britain was predicated on two world wars and the important fact that US soil was never invaded or attacked (except for Pearl Harbour - and there the attackers were invited in by the US administration). But I do agree with Goldner that the perspective for the US economy is that that befell Russian imperialism in the 80s and for exactly the same fundamental reasons - given, of course, the specificities of both regimes. Russia didn't collapse by dint of primitive accumulation, but because of its inability to compete on a saturated world market and it held its position as a military bloc only by means of its military domination and reach. And it was these factors that contributed to its downfall.
Goldner's text though is a breath of fresh air against both the supporters of "anti-imperialism", which he correctly describes as imperialist, and against those who see fictitious capital as a means of eternalising capitalism. It's a common theme on these threads that capitalism can go on for ever. He is correct to see in today's "financial turmoil" the seeds for further, deeper economic disasters.

MJ

16 years 7 months ago

In reply to by libcom.org

Submitted by MJ on September 1, 2007

I am not sure also, but it's not impossible, that a new pole of accumulation could be posed around an Asian "bloc".Goldner's equasion of a possible Asian bloc taking over from the US, with the US takeover from Britain during the 1900s, is stretching possibilities too far.

IIRC this is one of the possible capitalist fixes pointed to in Arrighi and Silver's "Chaos and Governance in the Modern World System", and one of the more plausible ones. What Goldner is right about, though, is that many US capitalists operate on the assumption that capitalism will go on forever and therefore have adopted a long-term strategic orientation against the development of a new center in Asia.

Joseph Kay

16 years 7 months ago

In reply to by libcom.org

Submitted by Joseph Kay on September 1, 2007

MJ

I don't think you recall this correctly at all -- most Commoner contributors definitely think the state is part of capital (their ideological roots are with Midnight Notes and with Bonefeld's side of the state derivation debate), and capable of enclosure. What a bizarre recollection.

They do complain about "privatization," but at this point in history, "privatization" is a transition that is often imposed by capital in order to create an opportunity for further commodification (and, in the case of privatizing industries, reconfigurations of the labor process in anticipation of speedup). Would you favor allowing such attacks on the basis that the state happens also to be part of capital?

well my recollection is that (de angelis i think) described privatisation as enclosure of the common, making an analogy with the enclosures, the implication being what's being privatised is a 'common' i.e. outside capital somehow. may be misremembering though, or confusing it with something else.

obviously i don't support privatisation (or nationalisation for that matter) simply because it's a shift in the managment of capital, and how would that possibly follow anyway?:confused:

Spikymike

16 years 7 months ago

In reply to by libcom.org

Submitted by Spikymike on September 1, 2007

I have to agree with most of what Mikus says so far, particularly in relation to Luxemburg and her contradiction of Marx in 'The Accumulation of Capital'. The ICC's dependency on her theories on this point has been a continuing weakness in their analysis.

Whilst I have much to disagree with the CWO/IBRP on, in this particular ongoing debate they clearly have the edge.

See 'Revolutionary Perspectives 43' and other material on : http://www.ibrp.org

mikus

16 years 7 months ago

In reply to by libcom.org

Submitted by mikus on September 1, 2007

MJ

(iirc they see privatisation as enclosure, as if the state is outside of capital)

I don't think you recall this correctly at all -- most Commoner contributors definitely think the state is part of capital (their ideological roots are with Midnight Notes and with Bonefeld's side of the state derivation debate), and capable of enclosure. What a bizarre recollection.

They do complain about "privatization," but at this point in history, "privatization" is a transition that is often imposed by capital in order to create an opportunity for further commodification (and, in the case of privatizing industries, reconfigurations of the labor process in anticipation of speedup). Would you favor allowing such attacks on the basis that the state happens also to be part of capital?

I never followed The Commoner too closely but my impression is that you are correct that they view the state as a part of capital, BUT the fact that they talk about "enclosures" and "primitive accumulation" when referring to privatization plays on a linguistic vagueness, making it seem as if there were a sense in which state enterprises were outside of capital. Otherwise, why not call privatization privatization, why use names that invoke the beginnings of capital accumulation and the dispossession of laborers? I think it is strongly implied that workers in the midst of privatization there is something deeper than cutting the social wage going on, namely dispossession.

I of course support workers who struggle against privatization. I don't see why you bring that up. But calling the absolutely normal operations of capital (speedup, etc.) "primitive accumulation" or "enclosure" is just plain bizarre.

marxfan69

16 years 7 months ago

In reply to by libcom.org

Submitted by marxfan69 on September 4, 2007

I think that David Harvey makes the connection between Luxemburg and Primitive Accumulation in the New Imperialism. Perhaps now Harvey's theory is just the excepted doctrine so no one needs to point out the connections anymore = Luxemburg is talking (throughout her entire "masterpeice") about primitive accumulation. It is just watered down Harvey?

Also, in terms of the commoners, (oddly) I have this sort of Marxist family tree thing that de Angelis sent me along with some lecture notes which has the origins of the use of primitive accumulation-- there is a direct link (according to him) between Rosa and Harvey, but he locates himself and other open marxists as stemming directly from Marx's use of primitive accumulation, or in other words not Rosa's. (However, he can't get enough of quoting her in his notes). This means that although he is not using Rosa's version of primitive accumulation, he seems to except that there is a link between the two-- one which does not seem to actually exist prior to Harvey.

Here are the Harvey Lux/Primitive Accumulation bits, from the chapter "Accumulation by Dispossession. I think you can see where the whole, everything is primitive accumulation comes from, (including no accumulation at all, as Goldner throws in the proverbial kitchen sink "when capital runs capital plant and infrastructure into the ground...that's primitive accumulation") Anyways I think the geneology begins here:

"After due consideration of various ways in which the supposed gap between supply and effective demand might be bridged, she [Rosa Luxemburg] concludes that trade with non-captialist social formations provides the only systematic way to stabilize the system. If those social formations or territories are reluctant to trade then they must be compelled to do so by force of arms...One possible corollary of this argument (though Luxemburg does not state it directly) is that, if the system is to last any length of time, the non capitalist territories must be kept (forcibly if necessary) in a non-capitalist state....the implication is that non-capitalist territories should be forced open not only to trade (which could be helpful) but also to permit capital to invest in profitable ventures using cheaper labor power, raw-materials, low-cost land, and the like. The general thrust of any capitalsitic logic of power is not that territories should be held back from capitalist development, but that they should be continuously opened up...Put in the language of contemporary postmodern political theory, we might say that capitalism necessarily and always creates its own 'other'... But capitalism can either make use of some pre-existing outside (non-capitalist social formations or some sector within capitalism-- such as education-- that has not yet been proletarianized) or it can actively manufacture it...The brilliance of Marx's dialectical method, as Luxemburg for one clearly recognizes...[neo-liberalism is inevitable]...The disadvantage of these assumptions is that they regulate accumulation based upon predation, fraud, and violence to an 'original stage' that is considered no longer relevant or, as with Luxemburg, as being somehow 'outside of' the capitalism as a closed system. A general reevaluation of the continuous role and persistence of the predatory practices of 'primitive' or 'original' accumulation within the long historical geography of capital accumulation is, therefore, very necessary...since it seems peculiar to call an ongoing process 'primitive' or 'original' I shall substitute these terms by the concept of 'accumulation by dispossession'...A closer look at Marx's description of primitive accumulation reveals a wide range of processes. These include the commodificaiton and privatization of land and the forceful expulsion of peasant populations; the conversion of various property rights (common, collective, state, etc.) into exclusive private property rights; the suppression of rights to the commons; the commodification of labor power and the suppression of alternative (indiginous) forms of production and consumption; colonial, neo-colonial, and imperial processes of appropriation of assets (including natural resources); the monetization of exchange and taxation, particularly of land; the slave trade; and usury, the national debt, and ultimately the credit system as radical means of primitice accumulation... All the features of primitive accumulation that Marx mentions have remained powerfully present within capitalism's historical geography up until now. Displacement of peasant populations and the formation of a landless proletariat has accelerated in countries such as Mexico and India in the last three decades, many formerly common property resources, such as water, have been privatized (often at WB insistence) and brought within the capitalist logic of accumulation, alternative (indigenous and even, in the case of the US, petty commodity) forms of production and consumption have been privatized. Family farming has been taken over by agribusiness. And slavery has not disappeared (particularly in the sex trade)...Primitive accumulation, in short, entails appropriation and co-optation of pre-existing cultural and social achievements as well as confrontation and supersession..."

baboon

16 years 7 months ago

In reply to by libcom.org

Submitted by baboon on September 4, 2007

Though I don't see it as a contest, I'd like to know from Spikey where the IBRP has "the edge" over the ICC.
Could it have been in their analysis of the great microprocessor revolution of capitalism around the late 90s. An analysis elaborated and defended throughout its press and meetings... just before the whole bubble collapsed. They should have paid more attention to Rosa's analysis of credit and debt.
Or maybe it's in their change of analysis from seeing only Russia and American as imperialist countries and thus lining up on many occasions with leftism in its "anti-imperialism" (see Goldner's text above). They changed from this potentially leftist position to a marxist analysis on global imperialism, but this didn't give "the edge" over the ICC, because, quite correctly, it was the ICC that pressurised them to change it. The IBRP took up the ICC's analysis (although with persisting weaknesses) not least from the latter's coherence based on Rosa's explanation of imperialism.
Or perhaps they had "the edge" when, along with all of leftism, they discovered that capitalism had become a global economic system in the 1990s (around the same time as the great dotcom revolution). But of course, anyone with a modicom of marxist understanding, and that would have certainly included Rosa, knew that capitalism became a global system approximately one hundred years earlier.
Where precisely, Spikey, does the IBRP have "the edge" as you put it?

Alf

16 years 7 months ago

In reply to by libcom.org

Submitted by Alf on September 4, 2007

Spikey wrote:

"I have to agree with most of what Mikus says so far, particularly in relation to Luxemburg and her contradiction of Marx in 'The Accumulation of Capital'".

Mikus has indeed pointed out that Luxemburg's analysis is critical of certain aspects of Marx's, and that Luxemburg is open about this, but none of his posts so far have criticised Luxemburg, so I am not sure what Spikey is agreeing with here. This is not to imply that Mikus agrees with Luxemburg either, but for the moment he has been more concerned to point out that Goldner's presentation of Luxemburg's views is not that accurate.

shug

16 years 7 months ago

In reply to by libcom.org

Submitted by shug on September 4, 2007

Baboon writes about the IBRP as:
"seeing only Russia and American as imperialist countries and thus lining up on many occasions with leftism in its "anti-imperialism"
and
"along with all of leftism, they discovered that capitalism had become a global economic system in the 1990s"

Let's give him the benefit of the doubt, and assume that he's been overdoing the wakky bakky. I'll leave it to the IBRP to defend themselves against these ravings.
On the original post, the CWO have written an article in the latest Revolutionary Perspectives -'The Dynamic of Capitalism and its Crisis (a reply to the ICC)' that deals with their criticism of Luxemburg's ideas.

mikus

16 years 7 months ago

In reply to by libcom.org

Submitted by mikus on September 4, 2007

Alf

Spikey wrote:

"I have to agree with most of what Mikus says so far, particularly in relation to Luxemburg and her contradiction of Marx in 'The Accumulation of Capital'".

Mikus has indeed pointed out that Luxemburg's analysis is critical of certain aspects of Marx's, and that Luxemburg is open about this, but none of his posts so far have criticised Luxemburg, so I am not sure what Spikey is agreeing with here. This is not to imply that Mikus agrees with Luxemburg either, but for the moment he has been more concerned to point out that Goldner's presentation of Luxemburg's views is not that accurate.

To be fair to Spikymike, he never claimed that I disagreed with Luxemburg. He only said that I pointed out that Luxemburg disagreed with Marx on accumulation. Which I did point out. He agreed that that is in fact the case.

For the record, I completely disagree with Luxemburg. But I don't feel that this would be the thread to discuss it in, since as I mentioned earlier I don't think Goldner's article is Luxemburgian in any significant sense.

Mike

mikus

16 years 7 months ago

In reply to by libcom.org

Submitted by mikus on September 4, 2007

The Harvey quote Marxfan posted is funny. Even in the work of the well-respected academics there is a lot of misinformation.

To break it down piece by piece:

After due consideration of various ways in which the supposed gap between supply and effective demand might be bridged, she [Rosa Luxemburg] concludes that trade with non-captialist social formations provides the only systematic way to stabilize the system. If those social formations or territories are reluctant to trade then they must be compelled to do so by force of arms...One possible corollary of this argument (though Luxemburg does not state it directly) is that, if the system is to last any length of time, the non capitalist territories must be kept (forcibly if necessary) in a non-capitalist state....the implication is that non-capitalist territories should be forced open not only to trade (which could be helpful) but also to permit capital to invest in profitable ventures using cheaper labor power, raw-materials, low-cost land, and the like. The general thrust of any capitalsitic logic of power is not that territories should be held back from capitalist development, but that they should be continuously opened up...

The first couple of sentences on the necessity of trade with non-capitalist social formations are undoubtedly correct as a summary of Luxemburg, but the argument goes horribly wrong firstly when Harvey imagines that it is a mere "corollary of this argument" (one which "Luxemburg does not state... directly"[!]) that "if the system is to last any length of time, the non capitalist territories must be kept (forcibly if necessary) in a non-capitalist state..."

This is not only a "corollary" of her argument, but is indeed something that she argues explicitly in chapters 27 and 28 of her book, respectively entitled "The Struggle Against Natural Economy" and "The Introduction of Commodity Economy". Her argument is that because the capitalist mode of production requires trade with non-capitalist nations, it must transform "natural economies" (by which she means economies not based on commodity exchange) into commodity exchanging (but nevertheless non-capitalist) economies, so that they have money with which to buy the commodities of the capitalist nations with represent produced surplus-value. The commodity exchanging (but non-capitalist) nations are continually transformed into capitalist nations, thus reproducing the problem of the realization of surplus-value on a larger scale, and the "natural economies" are transformed into petty commodity producing economies, and so forth.

So this aspect of her argument is entirely present and explicit in her book, and it did not take any special deductive powers of a David Harvey to draw these conclusions from Luxemburg's book.

Then, surprisingly, Harvey goes on to argue the exact opposite point:

"the implication is that non-capitalist territories should be forced open not only to trade (which could be helpful) but also to permit capital to invest in profitable ventures using cheaper labor power, raw-materials, low-cost land, and the like. The general thrust of any capitalsitic logic of power is not that territories should be held back from capitalist development, but that they should be continuously opened up..."

WTF? Harvey has just summarized Luxemburg's point that the capitalist mode of production needs non-capitalist modes of production in order to realize its surplus-value. (Remember he just said: "the non capitalist territories must be kept (forcibly if necessary) in a non-capitalist state.") So how in the world can transforming non-capitalist modes of production into capitalist modes of production help the capitalist mode of production? As I remember Luxemburg's argument, the non-capitalist modes of production do indeed eventually turn into capitalist modes of production, but this is hardly a prop for the capitalist system but rather a cause of its eventual demise and the increasingly intense period of warfare and imperialism.

Then there is also the common piece of nonsense among the Harvey proponents, which Luxemburg correctly fought against:

"But capitalism can either make use of some pre-existing outside (non-capitalist social formations or some sector within capitalism-- such as education-- that has not yet been proletarianized) or it can actively manufacture it..."

Luxemburg argues, especially in her chapter on Malthus (if I remember correctly), that this is NOT the case, that sectors within capitalism cannot serve as an outlet for effective demand since the income of these sectors is entirely derived from surplus-value of the capitalist mode of production herself. (In this critique of Malthus, whose idea of the unproductive sectors of the capitalist mode of production serving as an outlet for the realization of surplus-value is rather close to Harvey's, Luxemburg follows Marx who criticized Malthus similarly.) If surplus-value cannot be realized within the capitalist system, the unproductive sectors of the capitalist system cannot serve as a deus ex machina for the realization of this surplus-value.

As usual, even the Luxemburgians don't seem to read Luxemburg too closely.

Mike

marxfan69

16 years 7 months ago

In reply to by libcom.org

Submitted by marxfan69 on September 5, 2007

Sorry Mike I didn't mention this part of Harvey's arguement:

"Few would now except Luxemburg's theory of underconsumption as the explaination of crisis. By contrast the theory of overaccumulation identifies the lack of opportunities for profitable investment as the fundamental problem..."(138-139). I think I misrepresented Harvey here because I was tired and didn't feel like typing the whole thing. So yeah, he does contradict her, on purpose. He points out that, "reinvestment...generates its own demand for capital goods and other imputs"(139). I'm sorry I didn't make that clear before. My point was that Harvey draws the connection between Lux and primitive accumulation that you don't find in her work explicitly. He just riffs off of her thing about an "outside" to talk about geographical expansion and his theory that capital produces outsides (state owned/public spaces) which it then privatizes. His outsides are only pseudo-outsides. This is what is seen as like some new sort of primitive accumulation of the state, or as Retort has it, the "next round of globalization" (In Afflicted Powers they explicitly use the term 'primitive accumulation' and cite Marx to bulster an arguement that the category is tantamount today to privatization. This sounds again like Harvey to me).

-maya

mikus

16 years 7 months ago

In reply to by libcom.org

Submitted by mikus on September 5, 2007

Oh I see. The contradiction is between him and Luxemburg, not within his reading of Luxemburg.

Well, even though he's consistent, he is wrong, since the "outside" that is produced by capital do anything to help capital accumulation. Luxemburg was correct on this point, at least.

Harvey's view of how the "outside" (by which he seems to mean mostly unproductive state sectors) can help capital accumulation though privatization is akin to imagining that one accumulates wealth by burying treasure and then digging it up every so often.

Alf

16 years 7 months ago

In reply to by libcom.org

Submitted by Alf on September 5, 2007

Baboon: "Or maybe it's in their change of analysis from seeing only Russia and American as imperialist countries and thus lining up on many occasions with leftism in its "anti-imperialism" (see Goldner's text above). They changed from this potentially leftist position to a marxist analysis on global imperialism"

Shug: "Let's give him the benefit of the doubt, and assume that he's been overdoing the wakky bakky. I'll leave it to the IBRP to defend themselves against these ravings"

I can't vouch for Baboon's short-term memory, but his long term memory is still functioning: in the 70s, the CWO did indeed have the view that only the US and the USSR were imperialist states. I think on the other hand that this was indeed more 'potentially' leftist than actually leading to lining up with leftism as Baboon's phrasing implies. There have been occasions when the ICC has critiicsed the CWO/IBRP for being unclear about leftism and making concessions on the natiional question, for example their relations with the 'CP of Iran' in the 80s, but this wasn't directly the result of seeing only the USA and USSR as imperialist and is a wider issue.

In any case, I don't think this thread should become an ICC-IBRP debate unless it relates directly to the main point - whetther or not Rosa Luxemburg's views have a "continuing relevance" or not.

dave c

16 years 7 months ago

In reply to by libcom.org

Submitted by dave c on September 5, 2007

Another confused aspect of Goldner's article is his use of the idea of the "pure system" of capitalism. It seems like he is saying that the abstract "pure system" interacts with the concrete historical world. For example, he claims that the rate of profit (the "pure system") would mechanically decline if it were not for LOOT (from the real world outside). (page 8) However, since abstractions can't loot very well, a particular group (say, the Italian pirates of the 11th century on page 7) must act as a stand-in for the "pure system." It is also curious that in sketching out the characteristics of his pure system in which the rate of profit declines, he imagines that "everything exchanges at its value." (page 8) I have no idea why this would be necessary if he were not implying that exchanges of unequal values were an "outside" source of sustenance for capitalism, which is a complete confusion of different levels of abstraction.

marxfan69

16 years 6 months ago

In reply to by libcom.org

Submitted by marxfan69 on September 6, 2007

Yeah, it seems like he is juxtaposing a normal capitalism with a worse, or new one or something-- normal capitalism has things exchanging at values (which is never the reality), and then you have the different one where capitalists are looters and trying to snatch up "extra" booty, or surplus value, or whatever. It is as if what he claims Marx is talking about in Vol. I and most of II, i.e some "pure system" or "closed system" with only workers and capitalists, is a possible capitalism, and that everything that happens once you get to volume three is like some revelation Goldner is having. Yet, he still gets it wrong. He says that in the falling rate of profit theory, there are commodities trading at values, and that profit will decline unless it is supplemented by LOOT; however, you don't need anything exchanging at values to have productivity rising -- as it does-- in fact you couldn't have it rising in that case because rising productivity would imply competition, which would create an average rate of profit, and industries with a higher organic comp would get the same rate as ones with lower ones, blah blah blah, things aren't trading at values. Where is he getting the rising productivity in his "pure system" from and not prices diverging from values?? One gets the feeling sometimes that he hasn't really read Capital(s), or at least not very closely.

Or is it that he is just trying to get people to believe his loony loot theory by creating bullshit models that will slip past the people who haven't read as closely.

sphinx

16 years 6 months ago

In reply to by libcom.org

Submitted by sphinx on September 7, 2007

MJ

IIRC this is one of the possible capitalist fixes pointed to in Arrighi and Silver's "Chaos and Governance in the Modern World System", and one of the more plausible ones. What Goldner is right about, though, is that many US capitalists operate on the assumption that capitalism will go on forever and therefore have adopted a long-term strategic orientation against the development of a new center in Asia.

I'm not prepared to judge the likelihood of an expanded ASEAN taking over the central role of world capital accumulation, but going by Prime Minister Abe's recent trip to India with 200 capitalists in tow, it seems that Japan is trying to build bilateral ties there and potentially shift away some investment from China. Japan has also been showing a lot more enthusiasm for ASEAN recently which could presage that kind of bloc emerging.

I've just got around to reading the rest of the thread, and also the CWO/IBRP's critique of Luxembourg that SpikyMike posted. I think that despite Goldner's loot theory, the article's empirical observations are quite well-argued, and I would like to use what can be used. Still, having read Mikus' posts and the IBRP's article I want to go back and read Goldner's with a different eye.

One of the things that the IBRP points out (as far as I caught) is that Luxemburg mistakenly associated the tendency of the rate of profit to fall due to the rising organic composition of capital with an actual scarcity of currency (the physical quantity of gold), which to her meant that effective demand falls and the state has to resort to imperialism at some point to establish new markets, or in Goldner's words, to 'loot'. However the IBRP argue that her assumption that the money supply must equal the mass of surplus value in circulation doesn't hold because money is an interlocutor, and does not function as a static representation of value that increases with each commodity produced.

... to follow Luxemburg’s logic to the end, she finally reveals to us who the “real” buyers are. She tells us that both a realisation of the surplus value and accumulation are impossible in a purely capitalist society and that we must look outside the capitalist relation to pre-capitalist societies or pre-capitalist enclaves (like the peasantry).

Thus, if effective demand has fallen, then according to Luxemburg, capital can only realize surplus value via new consumers abroad. But given that her starting premise appears to be false, this conclusion would also be incorrect unless it is empirically observable (and the IBRP article has figures that indicate otherwise). I am not sure however if Goldner shares Luxemburg's error. He talks about a 'disequilibrium' of reproduction in the article but doesn't go into details.

Let's try an example. Since it relates to Goldner's article, what would be a good way to explain the financial expansion of the United States after WWII without using the concept of loot? I've been looking into this history a little since there's some parallels with Japan.

Roosevelt starts with the Emergency Banking Act where the government ensures all banks that it finds trustworthy, so the state basically becomes a collective insurer for capitalists. There was a huge monetary expansion which accumulated private gold and disbursed more money in circulation. At the same time the government was heavily deficit spending and investing in public works. While the first two measures were addressing the pressing contradictions that appeared in 1929, the new public works had their own contradictions. Namely that, since profit in public sector-financed initiatives is based on capital supplied by state funds which comes from taxation (on private capital), public works cannot yield a net increase in surplus value (this is Mattick's argument in Economic Crisis and Crisis Theory). Knowing that the profit rate would eventually fall since increased taxation subtracts from it, isn't the rise in public works, and state capitalism generally, at least one source of the 'runaway capital' that can be seen in the Bretton Woods system, where American (and other) capital travels the globe looking for a better return on investment? Similarly, deficit spending would be, much like Goldner says, a continual running away from crisis, that is only permitted because it allows American capital to avoid confronting what it took to restore the rate of profit in the 30s.

How about military expenditures by the US or for that matter American hegemony? When reading the piece I thought the idea of American capitalists collectively investing in military might for the sake of loot sounded convincing, but considering it again, I think that American imperialism has little to do with 'looting' per se, and much more to do with maintaining confidence in the dollar system and international investments. Even in Iraq, you can't say that the US is making some sort of net profit by its adventure there. The opposite is true, deficit spending to fund the war is collosal. But at the same time the interest of American capitalists in Iraq is, besides collectively influencing the price of oil and holding influence in the region, the immediate profits from 'reconstruction', 'security', defense contacts etc. which are funded by the state but whose profits are realised by private capitalists. Blackwater etc. these are huge companies that are basically private armies by now.

Even assuming that the US in Iraq could effectively attack wages in order to increase the surplus value cake, this increase could not be outside of capitalism unless we are to assume that every externality that a state can impose on another via force or diplomacy exists outside capitalist production. I think Goldner is looking for one word express the fact that imperialism is used by the capitalist class to repress its own contradictions, but it seems that 'loot' and perhaps 'fictitious capital' also will just lead to more obfuscation.

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 7, 2007

sphinx

One of the things that the IBRP points out (as far as I caught) is that Luxemburg mistakenly associated the tendency of the rate of profit to fall due to the rising organic composition of capital with an actual scarcity of currency (the physical quantity of gold), which to her meant that effective demand falls and the state has to resort to imperialism at some point to establish new markets, or in Goldner's words, to 'loot'. However the IBRP argue that her assumption that the money supply must equal the mass of surplus value in circulation doesn't hold because money is an interlocutor, and does not function as a static representation of value that increases with each commodity produced.

I'm not familiar with IBRP's critique of Luxemburg, but I do think one of Luxemburg's main problems is her lack of understanding of money capital. Her main criticism of Marx's reproduction schema is that he treats the exchange of commodities between departments as barter, such that commodities are directly exchanged for commodities. She claims that Marx is thus able to ignore the issue of effective demand, since in reality it is money that purchases commodities and realizes surplus-value. So if there is not enough money to purchase commodities, it doesn't matter if other capitalists have produced commodities in the proportions necessary for expanded reproduction, since there is a lack of effective demand necessary to buy the commodities.

Her criticism seems to presume that the amount of gold in circulation must be equal in value to the amount of surplus-value that needs to be realized. It is as if money were used to purchase only one commodity and then not reused to purchase another. (In reality, it is obvious that you use your $5 to purchase a commodity, and the person who receives this bill will use it, followed by the next person, and so forth. A single dollar will serve to realize many more dollars. In other words, empirically the velocity of money is greater than 1.)

Luxemburg's criticism could perhaps be made slightly more realistic by saying that one can take any velocity of money as a given, say 3 (or anything higher) so that each dollar of money is used 3 times and thus realizes $3 of value over such-and-such a period of time. If this velocity of money is taken as a constant, the same problem pointed to by Luxemburg will reappear as capital accumulation takes place, since the amount of value that needs to be realized is continually growing, and once the amount of value to be realized was, say, 3 times greater than the value of the money in circulation, there would be a shortage of effective demand.

Even in this modified version, however, there is an error based on misunderstanding the role of credit in capitalism. Marx is emphatic on this point and I think it is a very strong one. The continuous concentration of money capital into banks and the expansion of the credit system allows a great number of transactions to take place without the mediation of any money. This is due to what Marx calls the mutual settlement of accounts. If there is a series of exchanges based on credit such that Capitalist A owes $500 to Capitalist B, and Capitalist B owes $600 to Capitalist A, the only amount of money necessary to realize the $1100 of commodities is a $100 -- the $500 owed to each ($1000 in total) are simply canceled on the books and no money is necessary to intervene in the realization of this portion of the value of the commodity capital.

This should be empirically verifiable. The amount of actual money intervening in giant purchases is surely very small. The bulk of purchases take place against credit, where the mutual settlement of accounts is always possible.

With this one of Luxemburg's main points falls down. (She does have other points as well, however.) There is no reason that effective demand should lag what is produced, or at least she has not given any legitmate reason.

Thus, if effective demand has fallen then according to Luxemburg, capital can only realize surplus value via new consumers abroad. But given that her starting premise appears to be false, this conclusion would also be incorrect unless it is empirically observable (and the IBRP article has figures that indicate otherwise). I am not sure however if Goldner shares Luxemburg's error. He talks about a 'disequilibrium' of reproduction in the article but doesn't go into details.

I don't think you can empirically observe Luxemburg's theory, because Luxemburg's theory is not simply that foreign consumers realize the surplus-value produced by the capitalist world, but that this exchange is necessary for the existence of capitalist accumulation. So even if such exchange were empirically verified, all this would do would be to not falsify Luxemburg's theory, it wouldn't prove that her theory were correct, since it would remain the case that Luxemburg's explanation of this exchange could be wrong.

Nevertheless, I have never seen any empirical evidence that surplus-value is realized by non-capitalist nations. Given that such nations don't seem to exist, and haven't existed for quite some time, it is not at all clear why the capitalist system has not collapsed (assuming Luxemburg is correct). So this does serve to falsify Luxemburg's theory.

And then there is Otto Bauer's criticism of Luxemburg. Otto Bauer did what Luxemburg thought was impossible, namely to show that accumulation could indeed take place with the full realization of surplus-value even with a rising organic composition of capital, assuming that the proportions between the departments of production were correct. (Luxemburg had claimed that there would always be an overproduction of commodities by either Department I or II, I can't remember which, if the organic composition of capital were rising.)

It is important to realize what Otto Bauer did by drawing up these schemas. He didn't prove that accumulation actually takes place in those proportions. He didn't even provide any evidence for it. And he didn't prove that surplus-value was in fact not realized by non-capitalist nations. But he did show that such a thing was not necessary, since it was in principle possible for a capitalist mode of production to realize its own surplus-value. Even Joan Robinson admits this in her introduction to Luxemburg's Accumulation of Capital, when she discusses how Luxemburg's scenario is not necessary, but only one plausible scenario. In my opinion the scenario is not even too plausible given some of the above criticisms, but that is a somewhat different issue. There is no question that Bauer's criticism took a bit of the force out of Luxemburg's theory by showing that she was wrong as far as the necessity of this exchange was concerned.

This doesn't have a lot to do with Goldner, however. He doesn't even talk about problems of realization. His theory has other problems, many of which I've pointed out earlier on the thread, and many which remain to be discussed.

I'll have a thing or two to say about recent imperialist adventures by the US later on.

Mike

Alf

16 years 6 months ago

In reply to by libcom.org

Submitted by Alf on September 7, 2007

mikus, I think you are overemphasising the role of money in Luxemburg's theory. Contrary to the accusation made by many of her critics, Luxemburg poses the problem entirely at the level of value. Luxemburg is picking up on a central aspect of Marx's theory of crisis - his notion that because the workers are producers of surplus value, they must by definition be "overproducers"; in short that the tendency towards the crisis of overproduction is inherent in the capital/ wage labour relationship, and that this is a key element in the drive of capital to constantly extend the market, to "create a world in its image" as the Manifesto puts it. At the same time she argues that this aspect of Marx's crisis theory is at odds with a literal interpretation of the reproduction schema in Vol 2. Throughout his work Marx polemicises against the bourgeois economists who argue that there can't be a general crisis of overproduction because every commodity can find a buyer; in the Grundrisse he makes it clear that neither the wages of the workers nor the demand of the capitalists are sufficient for realising the totality of the surplus value created; and yet taking the schema literally seems to imply exactly that.

Money as such is part of Luxemburg's theory only in so far as she insists on the basic point that the surplus value extracted from the working class has to realised on the market to become money capital that can feed into the spiral of expanded reproduction.

Regarding the reality of extra-capitalist markets, they clearly were a major element in the expansion of the system in the period prior to 1913 when Luxemburg wrote Accumulation: she points to the huge markets represented by precapitalist economies such as India and China, the 'simple reproduction' economies established in the American west, etc. The sharpening imperialist conflicts of the early 20th century signified for Luxemburg not that these extra-capitalist markets had disappeared - in 1914 only about 30% of global production was created by capitalist wage labour - but (a) that they had been divided up by the great imperialist powers and would become the focus of increasingly deadly military rivalries and (b) that in comparison to the growing productive capacitiies of capital, these markets were becoming less and less capable of absorbing the necessary fraction of surplus value required for expanded reproduction. She thus predicted not a period in which capitalism would simply cease to function, but one in which its functioning would encounter increasingly insuperable obstacles, plunging through a growing spiral of catastrophe. At this level Luxemburg's perspective for the new century was entirely vindictated.

Of course Luxemburg did not expect capitalism to go staggering on for another hundred or so years - she thought that the proletariat would get rid of it long before it had completed its ultimate slide into barbarism. And it is of course necessary for those who think that Luxemburg's vision was basically correct to explain how in this epoch the system has not only continued but has appeared in certain phases to prosper. Essentially, we would argue that this has been made possible by the system's increasing need to flout its own laws; in particular, the state's manipulation of debt, of fictional capital, to maintain war production during the 1914-18 war was already noted by Trotsky in the early years of the Communist International and it has been a model of capitalist 'development' ever since. Especially after 1929 when the bourgeoisie really gave up any illusion in allowing the unrestricted play of the market: The great depression of the 30s basically convinced it that it could not go back to the epoch of 'free enterprise', that the old 'business cycle' was a thing of the past. It had learned (eg in the work of Keynes) that something had changed in the global conditions of accumulation which meant that the system, once entered into crisis, would no longer spontaneously revive and return stronger than ever. The world order that was set up after world war two was to some extent consciously moulded on this understanding.

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 7, 2007

Alf,

I disagree with pretty much every proposition made in your post. So I'd like to stick to one thing at a time so that we can get to the bottom of this. Otherwise, we will speak past each other.

First I'd like to address this claim you made:

mikus, I think you are overemphasizing the role of money in Luxemburg's theory. Contrary to the accusation made by many of her critics, Luxemburg poses the problem entirely at the level of value.

Under what conditions will you acknowledge that the claim that "Luxemburg poses the problem entirely at the level of value" is false? In other words, under what conditions will you say: "It is not the case that Luxemburg poses the problem [of realization] entirely at the level of value" ?

Also, please explain a little more clearly what you mean when you say that she "poses the problem entirely at the level of value". I assume you mean here that the issue for her is not that of the existence of a sufficient quantity of money for the realization of surplus-value. Am I correct in my interpretation of what you wrote?

I'm sorry to be so tedious here, but I've debated this issue a million times and I'm tired of having the meaning of propositions changed on me half way through debates. So clarity at the beginning would be nice.

Mike

Alf

16 years 6 months ago

In reply to by libcom.org

Submitted by Alf on September 7, 2007

I'm not sure ththat I entirely follow your questions. What I mean is that Luxemburg's problematic is located in the social relations of capital, and not outside them. She is looking at the totality of value created in this social relatiionship - the c+v+s embodied in the total social capital, and as Lukacs points out, it is only when we look at the problem from the standpoint of totality that the realisation problem can be grasped - from the standpoint of the individual capitalist it is indeed a non-problem. The problem is only a money problem in so far as money is the 'congealed' form of value in this society. According to Luxemburg, the fraction of the total capital that requires to be re-invested for accumulation needs to be exchanged outside the capital/wage labour relationship; my understanding is that this immediate exchange of values can take various forms, not always the monetary one, but that to re-enter into the capitalist accumulation cycle it evidently does need to mutate into the monetary form. I am afraid that's all I can manage for now - it's getting late over here! But do come back and we will try again to talk to each other and not past each other as you put it.

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 7, 2007

Okay,

I don't think your last post has anything to do with the specific issue I tried to single out -- except for the second part of this sentence:

According to Luxemburg, the fraction of the total capital that requires to be re-invested for accumulation needs to be exchanged outside the capital/wage labour relationship; my understanding is that this immediate exchange of values can take various forms, not always the monetary one, but that to re-enter into the capitalist accumulation cycle it evidently does need to mutate into the monetary form.

But this seems to make the same claim which I attempted to refute in the earlier post where you said I misunderstood Luxemburg on the role of money. So which is it? Do you agree with what you say here ("that to re-enter into the capitalist accumulation cycle [surplus-value] evidently does need to mutate into the monetary form"), or do you not agree?

If the former, then I refer you back to my earlier post, which I believe shows that accumulated surplus-value does not need to take the form of money, if by money you mean actual means of circulation (and I think this is indeed what Luxemburg was referring to when she referred to a shortage of effective demand for commodities); if the latter, I ask why you just claimed it if you do not agree with it.

Mike

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 7, 2007

To try and make this still a little clearer.

In an earlier post I explained why I think that Luxemburg misunderstood how money functions in capitalism. You didn't really respond to my argument about money, but said this:

mikus, I think you are overemphasising the role of money in Luxemburg's theory. Contrary to the accusation made by many of her critics, Luxemburg poses the problem entirely at the level of value.

Which implies that while my criticism may have been correct, it was a straw-man criticism and thus doesn't function as a criticism of Luxemburg. In the above quote you counterpoise the posing of the problem as one based on the role of money to a posing of the problem "entirely at the level of value", and you say that Luxemburg's posing of the problem is the latter (rather than the former).

But then in your latest post you say:

to re-enter into the capitalist accumulation cycle it [surplus-value] evidently does need to mutate into the monetary form.

But it is precisely that aspect of Luxemburg's theory (the notion that surplus-value needs "to mutate into the monetary form," where by "monetary form" is meant money as a means of circulation), that I criticized in my earlier post.

So your latest post seems to imply that my critique of Luxemburg was not a straw-man, and that Luxemburg did not pose the problem "entirely at the level of value" (the assumption seems to be that posing the problem at the level of value and at the level of money are mutual exclusive, which is an assumption I'm not sure I share).

So again, which is it: Was my first criticism a straw-man, or not? If it was a straw-man, then why did you make the statement about money in your latest post (I'm speaking of the post I quoted)? If it wasn't a straw-man, then why didn't you respond directly to that criticism?

It seems to me that you might be trying to say that the necessity of converting surplus-value into money is a claim made by Luxemburg, but it's not an important or central one. I'd like to put this off for now, because when I said that Luxemburg's misunderstanding of money capital was one of her "main problems", I meant "main problem" in the sense that if her understanding of money capital is wrong, the bulk (or perhaps all) of her theory falls down with it. I certainly didn't mean to imply that it was a subjectively important aspect of her theory, nor even one that she objectively spent the most pages on, or anything like that. I think she passes over it far too quickly and probably accorded it a subjectively very small place in her overall theory. (Indeed, she seems to have taken it entirely for granted.) What I'm saying is that her theory falls apart without it.

So perhaps first we should see whether her specific claims are correct or not. If we agree that her specific claims are correct, and that I am wrong in my criticisms of those claims, then (this aspect of) my criticism is stopped dead in its tracks and it is not relevant how her theory would fare without those claims, since they would be correct. On the other hand, if we come to agreement that my criticism is correct, then we can take the next step and see how much of her theory survives. If large portions of her theory have to go, then my claim that it is a "main problem" would be justified; if her theory can be reformulated without any major surgery, then my claim that it is a "main problem" would not be justified, and it would be just a small point of criticism that doesn't cause problems for her overall theory.

Does this sound reasonable?

Mike

Alf

16 years 6 months ago

In reply to by libcom.org

Submitted by Alf on September 8, 2007

So your latest post seems to imply that my critique of Luxemburg was not a straw-man, and that Luxemburg did not pose the problem "entirely at the level of value" (the assumption seems to be that posing the problem at the level of value and at the level of money are mutual exclusive, which is an assumption I'm not sure I share)”.

I don’t think that the two are mutually exclusive: rather the latter is the (often distorted) expression of the former. I stressed the dimension of value because the charge that Luxemburg confuses value with money is a very frequent one. The IBRP for example always claim that Luxemburg doesn’t use value theory at all, which makes no sense to me.

I am still not clear whether you are saying that capitalism can accumulate on a global scale without converting surplus value into money. It can certainly do so within certain limits, at least formally – large part of the USSR’s economy functioned in this way, with ‘free distribution’ or even barter between ‘Soviet’ enterprises, but at the overall level the economy was not able to function without converting the surplus value extracted from the workers into the form of money capital

I have a feeling that I am not really getting to the heart of your question – probably to answer it adequately I would have to go through the Accumulation again, and although that is always worthwhile, I just don’t have the resources at the moment.

I have a question however. Luxemburg’s fundamental motive in writing the Accumulation was to argue, against the revisionists, and in fundamental continuity with Marx (even if one rejects her specific theory of crisis), that capitalism was a finite system and that the working out of its contradictions posed the socialist revolution as an objective as well as a subjective necessity. To what extent would you agree with Luxemburg at this level?

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 10, 2007

Alf

I stressed the dimension of value because the charge that Luxemburg confuses value with money is a very frequent one. The IBRP for example always claim that Luxemburg doesn’t use value theory at all, which makes no sense to me.

I'm not the IBRP, and I don't even know what their critique is. I do know that your response has nothing to do with what I originally said. I never said that she confused value with money, nor that she doesn't use value theory at all.

I am still not clear whether you are saying that capitalism can accumulate on a global scale without converting surplus value into money. It can certainly do so within certain limits, at least formally – large part of the USSR’s economy functioned in this way, with ‘free distribution’ or even barter between ‘Soviet’ enterprises, but at the overall level the economy was not able to function without converting the surplus value extracted from the workers into the form of money capital

I'm not saying that "capitalism can accumulate on a global scale without converting surplus value into money." Please go back to the original criticism I made of Luxemburg. My point was only that the amount of money does not necessarily need to grow as accumulation proceeds, and certainly doesn't need to grow to the same extent as the commodity capital has grown. This certainly refutes one of Luxemburg's arguments, which uses the implicit assumption that there must be an amount of gold equal in value to the amount of commodity capital that must be realized. This is how she deduces a lack of effective demand necessary to purchase all commodities, unless there is extra gold production, which she rejects as an explanation. (Remember she criticizes Marx extensively for allowing gold production to exist in the schemas.) But the problem is solved once one realizes that there is no necessity for extra gold at all.

This doesn't mean that NO money is needed for the accumulation of capital. It means that a given amount of money can serve to realize growing amounts of commodity capital through the speeding up of the velocity of money and by the expansion of the credit system and the mutual settlement of debts. In the example I gave earlier, $100 is needed to realize $1100 of commodity capital. As you can see, not even in my example was there a complete disposal of money, so I don't know why you have the idea that I may have been thinking that it was unnecessary to convert any surplus-value into money.

I have a question however. Luxemburg’s fundamental motive in writing the Accumulation was to argue, against the revisionists, and in fundamental continuity with Marx (even if one rejects her specific theory of crisis), that capitalism was a finite system and that the working out of its contradictions posed the socialist revolution as an objective as well as a subjective necessity. To what extent would you agree with Luxemburg at this level?

I don't even know what you are attempting to ask. I think the sun will burn out in a few billion years. I don't think capitalism will survive that. If the global warming people are even close to correct, neither capitalist mode of production nor the humans who produce capital will survive the next 500 years. And I don't believe in infinity as anything more than a weird mathematical concept.

If you are asking something more specific than merely whether or not capitalism will go on forever, which I don't think anyone believes, please explain exactly what you mean. I assume you want something more than this but I don't know what it is you want. I also don't know what this means: "the working out of [capitalism's] contradictions pose[s] the socialist revolution as an objective as well as a subjective necessity," so I can't say whether or not I agree with it. Perhaps give me some examples of objective necessities, and some subjective necessities, and if you can some example of some things that are both objective and necessities, and then I'll know whether or not I think capitalism is similar.

Mike

lem

16 years 6 months ago

In reply to by libcom.org

Submitted by lem on September 10, 2007

i think it would be more useful for communists to engage militantly [if you will] with equalitarian movements rather than disappear up their own backsides trying to achieve the impossible - a "true" theory of capital. it's just me tho :(

Alf

16 years 6 months ago

In reply to by libcom.org

Submitted by Alf on September 11, 2007

Mike: as I understand it, you are saying that Luxemburg deduces the lack of effective under capitalism from the amount of money in circulation, and not from the actual social relations of capital. This is why I keep coming back to this point, because I think it, and not the problem of gold or money, is the central aspect of Luxemburg's theory. But as I said I don't feel able to answer your questions in any depth at the moment, Hopefully i will come back to this later. What is certain though is that, however capitalism functioned in Marx's day and even in Luxemburg's day, it no longer is the case today: When Marx wrote about credit he was writing about 'promises' that could be kept because there was a prospect of a constantly expanding world market. This is not true today: given the objedive limits to its expansion capitalism has increasingly operated on the basis of a mountain of credit which bears less and less relation to real values. It no longer even tries to balance the books in the short or long term. The abandonment of the gold standard was a symbolic marker of this, but the astronomical development of debt (ie fictitious capital) in the last few decades is its more concrete expression.

You kind of answered my question about the objective limits of capitalism. if you think that capitalism can keep going till the sun goes out, or even for the next 500 years (which would make it an equally or more long lasting mode of production than far less dynamic systems such as slavery or feudalism), then I would say that you don't really agree with Luxemburg's basic approach, which was to show why capitalism was about to enter a period of unprecedented catastrophe that would made the socialist revolution a necessity for the preservation of human culture. I think she was right and that we have been living in such an epoch for a long time - far longer than Luxemburg would have thought, no doubt, but one in which the potential catastrophe facing mankind is postponed only by increasing its danger.

baboon

16 years 6 months ago

In reply to by libcom.org

Submitted by baboon on September 11, 2007

I've got lost in this 'discussion' but I think the last point of the last post brings it around to where it could be most productive. Capitalism was already finished to all intents and purposes when Rosa wrote her Accumulation. Whatever form accumulation took in the 20th C it could only be done in the framework of imperialism and state capitalism - growing, or rather festering as the century wore on. Rosa's merit (among other things) to me, was to clearly explain the centrality of the market question in taking the works of Marx forward and laying out the perspective of revolution or barbarism. I can see the evidence before my eyes of the lack of markets resulting in two world wars, the second worse than the first and the slide of the system into barbarism, chaos and decomposition since. All that still within the framework laid out by Rosa.

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 11, 2007

Alf

Mike: as I understand it, you are saying that Luxemburg deduces the lack of effective under capitalism from the amount of money in circulation, and not from the actual social relations of capital.

Okay, now we are back at the beginning. So under what conditions will you admit that what you say is false? Under what conditions will you admit that Luxemburg DOES in fact "deduce the lack of effective demand under capitalism from the amount of money in circulation"? I ask this because I don't feel like presenting the evidence and then having you dismiss it with a wave of the hand. Will clear quotations of Luxemburg speaking of a lack of effective demand due to a lack of money in circulation suffice?

Furthermore, you are phrasing this issue in the IBRP's terminology and not mine when you counterpose the money in circulation to the "actual social relations of capital". I think this is allowing you to get carried away in your responses and avoid what I'm saying. If you want to refute my criticism, you're going to have to stick the specific issue I've brought up and not get into a worldview of capitalism which I haven't advocated nor criticized. Hell, I haven't even gone into Luxemburg's overall theory. I've only criticized one specific aspect of her theory. First we need to decide whether or not my criticism is legitimate before we get into an appraisal of Luxemburg in general.

And you still haven't clearly answered my question about whether or not you think my criticism of the argument about gold circulation above was a straw man, or just wrong. Please do.

Alf

This is why I keep coming back to this point, because I think it, and not the problem of gold or money, is the central aspect of Luxemburg's theory.

You are saying the problem of gold and money is not a CENTRAL aspect of Luxemburg's theory. Okay. Given a certain definition of "central aspect", I might be able to agree with you. I really don't care to argue the point, or at least not now.

So let's just assume you're right for the sake of argument, so we can move onto a different issue. Maybe we can return to this later. But even if you are right on this, this does not change the fact that it is possible that gold and money are AN aspect of Luxemburg's theory. And this is indeed the case. So I'm criticizing one thing she said. I'd like you to try to show why my criticism is wrong, but you are consistently avoiding it. Now you seem to be saying that it's a straw-man, but I will show that it's not a straw-man as soon as you answer the question above about the conditions necessary for you to admit your earlier claim was false.

Your defense of Luxemburg seems to be something like the following: Imagine Luxemburg wrioe 6 paragraphs on the relation of the earth to the sun, discussing the orbit of the earth, the time it takes for light to reach the earth, the rotation of the earth, the exact length of the day, etc. All of this information is correct. Then say there is a sentence thrown in saying that the sun is a mere 10,000,000 miles from the earth.

If I criticize that one false sentence, it is not a defense of the sentence to say that it was not the "main point" of the argument. It was a point, and to criticize it is a valid thing to do.

In the above scenario, it may not do much to the overall point of such a description of the sun and the earth. In the case of Luxemburg's theory of accumulation, I feel that this single point changes quite a bit. I may be wrong, but before deciding whether or not I'm wrong about that, we have to decide whether or not her few statements on the relation of effective demand and gold circulation are wrong. (Or indeed whether or not they exist.)

But as I said I don't feel able to answer your questions in any depth at the moment, Hopefully i will come back to this later.

But Alf, my main question to you has been to ask under what conditions you will admit what you have said about Luxemburg's argument is false. You don't have to go read Luxemburg again to answer this question. This is a matter of principle. Under what conditions will you admit that your claims are falsified. No reference to actual evidence is necessary to answer this question. Reference to evidence is only necessary to decide whether or not those conditions are satisfied. And you don't need to provide the evidence, because I will. There is 0 work required for you here.

What is certain though is that, however capitalism functioned in Marx's day and even in Luxemburg's day, it no longer is the case today: When Marx wrote about credit he was writing about 'promises' that could be kept because there was a prospect of a constantly expanding world market. This is not true today: given the objedive limits to its expansion capitalism has increasingly operated on the basis of a mountain of credit which bears less and less relation to real values. It no longer even tries to balance the books in the short or long term. The abandonment of the gold standard was a symbolic marker of this, but the astronomical development of debt (ie fictitious capital) in the last few decades is its more concrete expression.

You're just begging the question here. You're saying that capitalism can't expand because of its objective limits, and that is what makes it so that credit cannot be expanded. Okay, I see you're assuming that capitalism has objective limits, but I already made an argument against about your specific understanding of its objective limits. (This does not mean that I don't subscribe to any theory of "objective limits" in some sense -- I just don't agree with yours.) So to go on asserting this without answering my criticism is just dogmatism. And this paragraph doesn't count as a reply because it presupposes that you're correct about precisely what we're arguing.

In any case, my criticism requires only the mutual settlement of debts, in other words debts which are matched on both sides of a transaction. (I.e. I owe you $100, you owe me $100, so no money is exchanged.) Are you saying that this does not occur today? Talk of the mountains of debt doesn't have any direct relation to what I'm saying. Again, you seem to be on a tangent.

You kind of answered my question about the objective limits of capitalism. if you think that capitalism can keep going till the sun goes out, or even for the next 500 years (which would make it an equally or more long lasting mode of production than far less dynamic systems such as slavery or feudalism), then I would say that you don't really agree with Luxemburg's basic approach, which was to show why capitalism was about to enter a period of unprecedented catastrophe that would made the socialist revolution a necessity for the preservation of human culture. I think she was right and that we have been living in such an epoch for a long time - far longer than Luxemburg would have thought, no doubt, but one in which the potential catastrophe facing mankind is postponed only by increasing its danger.

This is pure dogmatism. I've made a criticism of Luxemburg, you haven't even come close to ATTEMPTING to respond, yet you declare that Luxemburg was right. I would like to think Luxemburgians can do better than this, but I still haven't run into one who can.

Furthermore, I didn't say that capitalism "can keep going till the sun goes out" nor "even for the next 500 years). I just said that those are objective limits to how long it can go on. There may be other limits I have not forseen which make it impossible for capitalism to go on for another 200 years, or 50 years, or 10 years. I don't know. It's just that if you want to talk of "objective limits", the examples I gave are the most scientifically verifiable and "law-like" (so to speak) ones. Your talk of objective limits rests on Luxemburg, and we have seen that you haven't even tried to defend her, so there's no way I'm going to take your talk of "objective limits" seriously. Your claims are not scientific, but dogmatic ones. If someone had a serious economic theory showing "objective limits" I would give the idea some weight. I'm open to such a theory.

And again you keep trying to make it an issue of one's "approach." I really couldn't care less about one's "approach" (or at least I don't think it makes any difference in relation to this argument). I know Luxemburg "approached" the issue trying to prove that capitalism couldn't go on past the point when the outside markets were exhausted. This has nothing to do with what I'm saying. I haven't criticized her approach, I've criticized what she said, and all you've been able to mount in defense is a rather stale discussion of "objective/subjective necessity" (neither of which have you given me an example of!) and so forth, which is to say, you've mounted no defense at all.

Mike

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 11, 2007

baboon

I've got lost in this 'discussion' but I think the last point of the last post brings it around to where it could be most productive. Capitalism was already finished to all intents and purposes when Rosa wrote her Accumulation. Whatever form accumulation took in the 20th C it could only be done in the framework of imperialism and state capitalism - growing, or rather festering as the century wore on. Rosa's merit (among other things) to me, was to clearly explain the centrality of the market question in taking the works of Marx forward and laying out the perspective of revolution or barbarism. I can see the evidence before my eyes of the lack of markets resulting in two world wars, the second worse than the first and the slide of the system into barbarism, chaos and decomposition since. All that still within the framework laid out by Rosa.

The ICC's take on "decadence" is based (more or less) on the theories of Rosa Luxemburg. Saying that a discussion of decadence will be MORE productive than a discussion of Rosa Luxemburg is absurd if the validity of Luxemburg's theory is being questioned, since if her theory is wrong then so is your theory of decadence (or at least there is no evidence to suggest that it is correct, and becomes a dogmatic belief).

You say that you can "see the evidence before [your] eyes". This is no defense of Luxemburg. I see the evidence that she was wrong before my eyes -- in her book, and in the false arguments contained in it. Now lets get down to business and look at the validity of that evidence before our very eyes, and see what it does and does not prove.

Mike

baboon

16 years 6 months ago

In reply to by libcom.org

Submitted by baboon on September 12, 2007

The first world war was a fact. What caused it?

Alf

16 years 6 months ago

In reply to by libcom.org

Submitted by Alf on September 12, 2007

"Will clear quotations of Luxemburg speaking of a lack of effective demand due to a lack of money in circulation suffice?"

It would help.

"And you still haven't clearly answered my question about whether or not you think my criticism of the argument about gold circulation above was a straw man, or just wrong. Please do".

I never said it was a straw man. I said that the question of gold/money doesn't get to the heart of Luxemburg's analysis of the objective limits of capital.

For example when you write: "This certainly refutes one of Luxemburg's arguments, which uses the implicit assumption that there must be an amount of gold equal in value to the amount of commodity capital that must be realized. This is how she deduces a lack of effective demand necessary to purchase all commodities, unless there is extra gold production, which she rejects as an explanation".

I don't think Luxemburg 'deduces' a lack of effective demand in any mathematical sense, if that's what you're saying. In The Anti-Critique she is particularly sharp about the critics who try to bring the whole subject down to a question of mathematical formulae, whereas for her it was matter of a real historical process and the concrete unfolding of the contradictions implicit in capitalist social relations.

I am not against having this discussion about gold and money, although it doesn't seem to me as simple as you seem to assume and could take rather a lot of work and time, even if you do supply the quotes. But it does seem to be getting in the way of the essential question, which is whether capitalism can create sufficient markets within itself to realise all the surplus value it creates.

I don't really understand what you're saying about 'approach'. What I am asking you is what is the angle from which you look at works like Capital and 'political economy' in general, because while it's evident that you have a very thorough knowledge, I have no idea what conclusions you draw from it, whether at the level of the historical perspective for the capitalist mode of production, or the political positions that might derive from such a perspective.

The reason why I welcomed Loren’s text and its attempt to take Luxemburg seriously is not so much because I agree with its interpretation of Luxemburg (in fact I have agreed with a number of your criticisms of this) but because a discussion on Luxemburg can take us back to what I think is key to Marx’s ‘approach’ to political economy and thus provide an alternative to the various forms of autonomism which have such a weight on these threads – by ‘autonomism’ I mean analyses which tend to see any attempt to grasp the economic contradictions of capitalism, to understand that “the barrier to capital is capital itself”, as Marx put it, as a kind of mechanistic objectivism, and thus as a denial of the role of proletarian subjectivity.

Demogorgon303

16 years 6 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on September 12, 2007

A couple of points spring to mind reading this:

1) Decadence is not a concept unique to Luxemburg. However it has been expressed, Marxism has always had the view that class societies have a period of rise and fall. Marx practically eulogises about the advances of capitalist society in the Manifesto - only, in the next breath to explain why it now has to be destroyed.

Similarly, the necessity to explain the apparent changes in capitalism in the early 20th century is clear from the writings that were produced try to tackle it. Lenin, Bukharin, Luxemburg, etc. all sought to explain this albeit in different ways. Whatever the differences, the whole Third International agreed on this: "Ours is the epoch of the breakdown of capital, its internal disintegration, the epoch of the Communist revolution of the proletariat.".

2) Luxemburg offers one explanation for the mechanism that causes decadence within capitalism. This may or may not be correct, but this doesn't mean the concept of decadence itself is therefore wrong. Decadence (like, for example, economic crises) is either a fact within the world or it isn't but this is independent of the validity of explanations.

Loren Goldner

16 years 6 months ago

In reply to by libcom.org

Submitted by Loren Goldner on September 12, 2007

As you know, quite a debate took place on the libcom.org list about my article "Imperialism, 'Anti-Imperialism"...". The link to the list:

http://libcom.org/forums/thought/fictitious-capital-beginners-imperialism-anti-imperialism-continuing-relevance-rosa-luxemburg-27082007

This is my reply. Comments helpful.

Loren

Reply to Critics: Bringing Social Reproduction Back In

First, thanks to all comrades who have participated in the debate so far.

I must first say, reading and re-reading it, that I was initially somewhat surprised at all the things I said that were (IMHO) controversial that were barely mentioned or not mentioned at all. No one defended Lenin’s theory of imperialism or the labor aristocracy theory; no one questioned the idea that the U.S. is “managing empire through bankruptcy”, or the critique of Chavez or of Third Worldism, or my assertion of a vast population of unproductive consumers in advanced capitalism, or the concrete analysis of contemporary accumulation centered (for now) on the “indebted U.S. consumer”. Of course on this particular libertarian communist list affirmations that might elsewhere be controversial are, I presume, like charging through an open door.

I’m glad we all agree on the preceding.

It is unfortunate that the article was basically finished in May and that its mention of the biggest credit bubble in the history of capitalism was not made front and center, a bubble whose contraction over the summer finally exploded into the biggest liquidity crisis since 1998 and (since it’s not over) perhaps well before that. It’s certainly a strange context for some people to be doubting that there’s an enormous amount of fictitious capital sloshing around.

Boiled down to its simplest, my article says that capital accumulation, in the course of a cycle, necessarily generates titles to wealth (stocks, bonds, property deeds and leases, and more recently securitized mortgages, etc.), capitalized anticipations of income in excess of available surplus value, and that it makes up that gap with “loot”, i.e. goods, labor power, raw materials not paid for at their reproductive value, by running down (not reproducing) C (means of production and infrastructure) or V labor power past their point of depletion. When available surplus value and loot no longer suffice to support those paper claims, capitalism undergoes a deflationary crisis that wipes out claims (and ultimately real capital, and labor power) until those claims and are once again in some equilibrium with available surplus value. That’s exactly what we are seeing today.

In a nutshell, in the era of the proliferation of fictitious capital, capitalist paper expands, while the material reproduction of society goes backwards.

That said, the biggest polemical target I had in mind was the broader left milieu, led by the Trotskyists and the altermondialists. No defenders here, apparently. But, in more advanced circles, make a positive mention of Rosa Luxemburg’s economic theory and you’ve got a debate on your hands.

To get certain questions out of the way (namely about the “heuristic”, “pure model” of capitalism in vol. I and most of vol. II of Capital) I refer comrades to the article on my web site “Production or Reproduction”, which grew out of the 2002 exchange with Aufheben (http://home.earthlink.net/~lrgoldner/prodorreprod.html). It shows clearly, with the requisite quotations from Capital, that Marx intended much of the discussion prior to the introduction of expanded reproduction and the total social capital at the end of vol. II to be what he called “a purely formal mode of presentation”, mainly focused on the single firm. With Engels’ preface to vol. II clearly stating that Marx was very dissatisfied with the last part of vol. II, I don’t see how anyone can think that Luxemburg was seeing problems where there were none, whatever the limits of her solution.

Most of the texts I have written on the critique of political economy have attempted to rehabilitate the (in my opinion) neglected concept of social reproduction. I think that most of the criticisms raised in the discussion of the “Imperialism, ‘Anti-Imperialism”…” demonstrate yet again that most comrades, similar to the people Luxemburg was polemicizing against 95 years ago, are preoccupied with the reproduction of capital only in a formal sense of their reproduction schema, and, when that occurs, see the material reproduction of society to be almost a given, taken for granted. They don’t believe that a capitalist can make a profit from contracted social reproduction. They seem to pay no attention to Marx’s remark in vol. I (pp. 726-727): “Accumulation requires the transformation of a portion of the surplus product into capital. But we cannot, except by a miracle, transform into capital anything but such articles as can be employed in the labour process (i.e. means of production), and such further articles as are suitable for the sustenance of the worker (i.e. means of subsistence)…In a word, surplus-value can be transformed into capital only because the surplus product, whose value it is, already comprises the material components of a new quantity of capital.” No one in the discussion so much as commented on my affirmation that there exists today a huge unproductive consumption by the state, the military and (e.g.) the FIRE population which is precisely not materially transformed back into capital. To acknowledge this means to admit that there is “fictitious profit”, i.e. profit from the sale of commodities (tanks, Ferraris) that “drop out” of the capital circuit. Yet that ficititious profit is pocketed by some capitalist and continues, for a while, to undergo the M-C-M’ circuit just like profit from food and clothing.

So let’s cut to the quick. Mikus is right that I lump too many things under the category of primitive accumulation and I say in a footnote that if that is so then a better term is necessary. But in all the specific instances I cite and he criticizes, he’s wrong.

What was historically progressive about capitalism was that it expanded the material reproduction of society, both in means of production and labor power. It laid the material foundation for the supersession of socially necessary labor time of reproduction (the law of value) as the numeraire of economic activity. Having reached that point, it began a massive retrogression, attempting (like all previous crises) to re-equilibrate an adequate rate of profit, even if billions of people have to go onto the scrapheap and entire continents have to be depleted to achieve it. The capitalist spiral (the expanded reproduction extension of Marx’s circuit, the latter used in reference to simple reproduction in vols. I and II) goes backward just as it previously went forward.

Capitalism is not merely about production (“the sphere of immediate production” of vol. I) but about reproduction: in Marx’s model and in its progressive phase, it reproduced C (means of production and infrastructure) and it reproduced V (the labor power of wage workers). Thus it is wrong-headed to say that “all exchange” violates the law of value because market price fluctuates around value; “inside” the heuristic model of vols. I and II commodities are presumed to interact, in general, at their value precisely to eliminate vulgar economic explanations of profit, etc. from “rip-off”.

I was also inexact in quoting Luxemburg to the effect that only a socialist could identify the source of profit. What she actually said is that

“only a socialist can really solve the problem of the reproduction of capital. Between the Tableau Economique and the diagram of reproduction in the second volume of Capital there lies the prosperity and decline of bourgeois economics, both in time and in substance” (Accumulation of Capital, p. 106).

But the substance of what I meant is still there: only someone seeing capitalism as a transitory phase between feudalism and socialism/communism can grasp and act on a true practical universal at work in the system: the working class as a “class for itself”, posing a higher mode of production. But the implication of that transition is that the violence of the early emergence from feudalism is still with us, and will be until that transition is complete.

Luxemburg didn’t say that primitive accumulation was a permanent feature of capitalism? If she didn’t say it in so many words, she did say that

“Although (capitalism) strives to become universal…it is immanently incapable of becoming a universal form of production.” (Accumulation of Capital, p. 467).

Since she sees capitalism as handling that impossibility by its “war on natural economy”, i.e. the absorption of labor power, goods and raw materials from non-capitalist economies, that is tantamount to saying that primitive accumulation (or a more general violation of the law of value, pending a new name) is permanent.

Mikus says that the historical sections on the looting of non-capitalist economies make up only 50 pages of a 400-page book. Without wanting to quibble, in my (1923 German) edition, they are 90 pages of 380, and further constitute the illustration of the dynamic she has identified in the preceding middle section, a review of various bourgeois and non-Marxist socialist attempts to solve the problem. Unlike people who think everything can be resolved (and has been) in abstract models, Luxemburg insists on concrete history.

Several people questioned whether the contemporary pulling of labor power out of parts of the Third World can be considered primitive accumulation. I don’t think Indian doctors working in the UK is an adequate example. Once again, if the term “primitive accumulation” is limited to the initial separation of petty producers from their means of production (e.g. England in the 16th and 17th centuries) let’s think of a better term. What that initial phase has in common with today, as I said, is a “violation of the capitalist law of value”, the exchange of equivalents. The reproduction costs of petty producers recently expelled from the dissolution of the Chinese rural communes, from the Mexican ejido (especially since NAFTA) or tiny plots in the Indian countryside are not paid for by capital until they are directly enlisted in the wage labor system, any more than were the American farmers wiped out by debt described in Luxemburg’s book. Petty producers sell to capital, but can’t reproduce themselves in the exchange, just as Preobrazhenzy imagined (wrongly) the possibility of a ”planned” gradual elimination of Russian rural petty producers in the 1920’s.

Others questioned my mention of the running down of capital plant and infrastructure under the category of primitive accumulation. Again, I am referring to non-reproduction. It seems to me that many people in this discussion are still laboring under vol. I ideas of production and not end of vol. II ideas of reproduction. If capital continues to make a profit from ancient plant (the most dramatic example today follows in a moment) and does not adequately renew infrastructure, that is non-reproduction of “C”. After Katrina, the New York City (80-year old) pipeline explosion this summer, and the estimate (following the Minnesota bridge collapse this summer) that 7,000 bridges in the U.S. are in as bad shape or worse, who can doubt that U.S. capitalism, showing unusually high paper profits over most of the past three decades, is not materially reproducing society?

Reproduction is also missing from comments on what I said about the looting of nature. It is certainly true that raw materials are not capital investment and that their cost is a combination of the cost of extracting them plus an increment of ground rent. If it is true that capital does not produce nature it must in fact reproduce (i.e. replace) the nature it uses. “Humanity reproduces all of nature” as Marx wrote in 1844. When capital makes a “profit” from strip mining but leaves the total cost to society (depleted countryside, polluted water), capital is expanding but nature is not being reproduced. When capital ruins the earth’s atmosphere with CFCs, nature is not being reproduced. When air and water become unusable from pollution, nature is not being reproduced. Where, as with labor power being paid below the cost of its reproduction, there is profit without paying the cost of reproducing nature, there is a “free input” to the system comparable for the S/C+V ratio to the recruitment of petty producers to the wage-labor proletariat, call it what you will.

Another element missing from most formulations in the discussion is the recognition that capital for capitalists is not what we read about in vols. I and II or the first section of vol. III of Capital but is rather a CAPITALIZATION of the cash flow generated by those underlying realities. However, for long periods of time, understandable only if we ask the concrete question of whether C and V are being materially reproduced, those capitalizations (as today) can be seriously out of whack with reality, if compensated by the material inputs of non-reproduction mentioned previously.

Paper values (and abstract conceptions of reproduction) expand, and society goes backward.

Let’s look at Exhibit A for the prosecution, the self-cannibalization of the system where S/C+V in material terms goes negative while profit, interest and ground rent grow. . The Nazi economy from 1933-1945 is the extreme illustration (to date) of this process at work in an advanced capitalist economy in crisis. Hitler’s finance minister Hjalmar Schacht reflated the Germany economy with a huge credit pyramid, conjured from almost nothing and financing rearmament (unproductive consumption) while suppressing working-class consumption and keeping workers’ wages at about 50% of their pre-1929 levels (non-reproduction of V) , even choking off most investment in Dept. I (non-reproduction of C). As this first experiment in Keynesianism (recognized as such at the time by Keynes) achieved full employment and reached the “overheating” stage ca. 1937-38, inflation took off. Like the U.S. dollar-denominated economy today (which can, however, still tap the world’s wealth, whereas Germany was shorn of all its colonies in 1918), ever-increasing amounts of fictitious capital demanded profit and the completion of the M-C-M’ circuit. The solution was expansionist war, and the outright seizing of assets throughout Nazi-occupied Europe (confiscatory accumulation if you will) to complete that circuit. Within the German war economy itself, millions of people were worked to death in concentration camps and in slave labor in the factories of the big German corporations (non-reproduction of V) both in Germany and in occupied Europe. One of the reasons Germany lost the war was because of the running down of the capital plant from 1929 and especially 1933 onward. This is the concrete illustration of the self-cannibalization immanent in the final stage of the system: capital paper values expand, social reproduction contracts. This was the extreme conclusion of the tendencies already discussed by Rosa Luxemburg in her 1912 portrait of arms production financed by taxing the working class below its reproductive level and other early manifestations of barbarism. Anyone who doubts the permanence of the violence of the earliest primitive accumulation (or whatever improved and expanded term one wants) pointing to this end result can ponder these realities of the Nazi economy.

Those are my basic points. I look forward to rejoinders.

I am currently (in part inspired by this debate) completing a companion piece to my Mute article entitled “Expanded Social Reproduction for Beginners: Bringing the Material World Back In”. Stay tuned.

Loren

dave c

16 years 6 months ago

In reply to by libcom.org

Submitted by dave c on September 12, 2007

Demogorgon303:

Luxemburg offers one explanation for the mechanism that causes decadence within capitalism. This may or may not be correct, but this doesn't mean the concept of decadence itself is therefore wrong.

Mike said that if Luxemburg is wrong, then the ICC's theory of decadence is wrong. Read what he wrote. Obviously if Luxemburg is wrong, this does not mean that any possible concept of decadence is invalidated. The abstraction, "the concept of decadence itself," is unscathed.

Demogorgon303:

Decadence (like, for example, economic crises) is either a fact within the world or it isn't but this is independent of the validity of explanations.

First of all, economic crises are only an example of Decadence for someone who is convinced of the existence of said Decadence. And this particular theory (i.e. Luxemburgian decadence theory) is not either "a fact within the world," or not, it is a theory for understanding that world. If you believe it is valid "independently of the validity of explanations," this is dogmatism. Baboon can see decadence with his own eyes, for Demogorgon303 it is simply a fact within the world. Do you understand why you are accused of dogmatism?

What has happened (aside from Loren's post) is that Alf, Demogorgan303, and baboon are extremely eager to repeat their take on decadence when that was not what was being discussed. This "approach" to discussion only makes sense if you want theory to be a retrospective justification for political positions.

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 12, 2007

baboon

The first world war was a fact. What caused it?

If this is a defense of your theory, it is absurd. Aside from the fact that looking for a single "cause" without defining "cause" is not likely to get you anywhere, it is well known that ignorance is not a reason, e.g. the fact that you don't know a DIFFERENT reason for WWI does not mean that your reason is correct.

If it is not a defense, I don't care to answer, since we're in the middle of a different debate. Your crew has their work cut out for them, please don't divert.

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 12, 2007

Demogorgon303

1) Decadence is not a concept unique to Luxemburg. However it has been expressed, Marxism has always had the view that class societies have a period of rise and fall. Marx practically eulogises about the advances of capitalist society in the Manifesto - only, in the next breath to explain why it now has to be destroyed.

Look at what you wrote. This is a perfect example of decadence theorists smuggling strange ideas into the debates, to act as if their not-so-obvious positions were in fact self-evident.

Your second sentence says that "Marxism has always had the view that class societies have a period of rise and fall." If THIS is what you mean by "decadence" then you will be hardpressed to find anyone who disagrees with it. All class societies (except for capitalism -- so far) HAVE risen and fallen, so no problems there. And that capitalism eventually HAD a period of rise will not be news to any radical, nor will the idea that it WILL fall (whether through nuclear warfare, the sun burning out, global warming, or communist revolution).

Is this ALL that the theory of decadence is, then I agree. But I'm sure it isn't. Alf said earlier that I don't agree with the decadence theory, and I find his accusation to be more typical of decadence theorists than your rather casual claim that class societies do indeed rise and fall. (I should add, it is likely that if a future communist society ever has a period of rise, as we all would like it to, it is a fact more certain than any of our economic theories that it will eventually fall. It should be rather strange, however, to apply a theory of "decadence" to a communist society.)

You are using normal, everyday language about how class societies have hitherto risen and fallen, and then elevate this to a new conception: "decadence", which is an essential position of communists. If you keep the everyday connotations, then not only communists but the vast majority of anyone how put any thought into the issue would agree. If you try to erase the everyday connotations, as I believe you do, you end up at a theory of decadence, full of holes, but with a handful of true believers nonetheless.

Similarly, the necessity to explain the apparent changes in capitalism in the early 20th century is clear from the writings that were produced try to tackle it. Lenin, Bukharin, Luxemburg, etc. all sought to explain this albeit in different ways. Whatever the differences, the whole Third International agreed on this: "Ours is the epoch of the breakdown of capital, its internal disintegration, the epoch of the Communist revolution of the proletariat.".

Okay, great, a whole bunch of people I'm not big fans of liked a theory of decadence. Still not convinced. Even if I loved every one of them this would not be a convincing argument.

2) Luxemburg offers one explanation for the mechanism that causes decadence within capitalism. This may or may not be correct, but this doesn't mean the concept of decadence itself is therefore wrong.

As dave c pointed out, I didn't say anything about the theory of decadence in general. I disagree with YOUR theory of decadence. And as I said earlier, ignorance is not a reason, so the fact that I am not aware of any reason to believe in a decadence theory does not change the fact that perhaps one could be created that would be correct. But it does mean that I have no more reason to believe in decadence theory than in the Boogie Man. The Yeti would actually rank higher on my list of things-to-believe.

Decadence (like, for example, economic crises) is either a fact within the world or it isn't but this is independent of the validity of explanations.

This is news to me. Define decadence empirically. If this is actually what is generally meant by "decadence", then it should be rather easy to prove that capitalism is decadent by simply specifying the conditions under which capitalism is to be called "decadent." The problem you'll find is that unless you specify the conditions very broadly, capitalism may well pass into and out of decadence, which of course doesn't make a periodization based on decadence too appealing. And if you go with the vague route, then your notion of decadence doesn't do much of anything.

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 12, 2007

Alf

"Will clear quotations of Luxemburg speaking of a lack of effective demand due to a lack of money in circulation suffice?"

It would help.

At first I was happy about this response -- upon second glance, I'm baffled.

Why would clear quotations of this sort not convince you that Luxemburg in fact mode those claims? Why would it only "help"? Are you a philosophical skeptic, and having gone through the Cartesian process of abandoning everything uncertain you landed on your particular interpretation of Luxemburg rather than the thinking self?

But seriously, what is going on here? Dogmatism seems to be a good explanation, unless you have a better one.

"And you still haven't clearly answered my question about whether or not you think my criticism of the argument about gold circulation above was a straw man, or just wrong. Please do".

I never said it was a straw man. I said that the question of gold/money doesn't get to the heart of Luxemburg's analysis of the objective limits of capital.

And I've said many times I'm not interested in whether or not it was her main point, so I'm not sure why you would keep on about this (hence my assumption that you were implying my criticism was a straw man). The only way to decide how much her analysis depends on this issue is to FIRST decide whether it was an issue at all, which you've been avoiding discussing for a good 5 days now, and then to decide, how much of an issue it was.

For example when you write: "This certainly refutes one of Luxemburg's arguments, which uses the implicit assumption that there must be an amount of gold equal in value to the amount of commodity capital that must be realized. This is how she deduces a lack of effective demand necessary to purchase all commodities, unless there is extra gold production, which she rejects as an explanation".

I don't think Luxemburg 'deduces' a lack of effective demand in any mathematical sense, if that's what you're saying. In The Anti-Critique she is particularly sharp about the critics who try to bring the whole subject down to a question of mathematical formulae, whereas for her it was matter of a real historical process and the concrete unfolding of the contradictions implicit in capitalist social relations.

Well no, she doesn't perform a formal deduction, no, but I don't know how else she arrived at her conclusions. Did she not use some form of reasoning? That's all I meant by "deduced".

Against my better judgement, since I'm aware this will likely cause further diversion on your part, I will note that Luxemburg DOES try to mathematically prove the impossibility of accumulation while the organic composition of capital is rising , giving exact figures on pg. 317 of the Routledge edition (pg. 337 of the Modern Reader edition), with the argument beginning a few pages earlier and ending a few pages later.

Luxemburgians always seem to forget this portion of the book when they claim that she was against mathematical formulae. (In this they are only following in the footsteps of the master, who herself seems to have forgot her attempt to prove her point mathematically when Otto Bauer inconveniently showed that the attempt was an utter failure.) I mentioned this point in a debate on a mailing list almost a year ago only to be asked by a prominent Luxemburgian where she said this. I should think that those who defend Luxemburg so ardently should be aware of this, as it has been addressed by many critics (Grossman, Mattick, and Joan Robinson (in the intro to Luxemburg's book, for god's sake!) among them).

I am not against having this discussion about gold and money, although it doesn't seem to me as simple as you seem to assume and could take rather a lot of work and time, even if you do supply the quotes. But it does seem to be getting in the way of the essential question, which is whether capitalism can create sufficient markets within itself to realise all the surplus value it creates.

As I said, if I am correct, then this IS a discussion of the issue of whether or not capitalism can create sufficient markets, since one reason Luxemburg produces for this impossibility is a lack of money. There may be other reasons for believing that the creation of markets is impossible (within a closed system), but since we can't address them all at once we may as well start off with this one.

I don't really understand what you're saying about 'approach'. What I am asking you is what is the angle from which you look at works like Capital and 'political economy' in general, because while it's evident that you have a very thorough knowledge, I have no idea what conclusions you draw from it, whether at the level of the historical perspective for the capitalist mode of production, or the political positions that might derive from such a perspective.

If you want to divert, please start another thread for it where we can all talk about our approaches to Capital and political economy, how it informs our political practice, how it makes us fee and so forth, and I may respond. None of this is at all relevant to my criticism of Luxemburg (hell, I could be a Born Again Christian and it would make no difference to my criticism), so I don't feel the need to indulge you here.

The reason why I welcomed Loren’s text and its attempt to take Luxemburg seriously is not so much because I agree with its interpretation of Luxemburg (in fact I have agreed with a number of your criticisms of this) but because a discussion on Luxemburg can take us back to what I think is key to Marx’s ‘approach’ to political economy and thus provide an alternative to the various forms of autonomism which have such a weight on these threads – by ‘autonomism’ I mean analyses which tend to see any attempt to grasp the economic contradictions of capitalism, to understand that “the barrier to capital is capital itself”, as Marx put it, as a kind of mechanistic objectivism, and thus as a denial of the role of proletarian subjectivity.

If you don't like autonomism, great for you. That autonomists are wrong doesn't make Luxemburg any more correct, let alone give you reason to not address my criticism.

I'll provide the quotes tomorrow, hopefully. I only provided the page number above because I have an old e-mail where I cite those pages. I'll have to look through some notes today to find the quotes I've been speaking of.

Mike

Demogorgon303

16 years 6 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on September 12, 2007

Mikus has already confirmed that he "not aware of any reason to believe in a decadence theory", so it's clear this is not simply a discussion about simply the ICC's theory of decadence. Mikus is not convinced by any decadence theory. He may leave open the possibility he may one day encounter one, but I say the same thing when I talk to Christians about God. For Mikus, he'd rather join Ghostbusters and hunt Boogie Men and Yeti. Comrades, let's call a spade a spade and accept Mikus rejects the concept of decadence altogether. In my view, however, this is nothing less than a rejection of Marxism itself.

The concept of decadence is not simply that societies rise and fall. As mikus said, this is a trivial observation. The position of Marxism is that these societies rise and fall because of their internal contradictions and limitations. This conception underwrites the whole of Marx's writing. The very fact that he talks about capitalism producing its own gravedigger in the form of the proletariat demonstrates this. The first part of the Communist Manifesto described exactly why this is so. He charts several phases of capitalism's development:

1) Capitalism had a progressive role to play - "The bourgeoisie, historically, has played a most revolutionary part."

2) The very development of capitalism has now become a danger to the system itself - "The productive forces at the disposal of society no longer tend to further the development of the conditions of bourgeois property; on the contrary, they have become too powerful for these conditions, by which they are fettered, and so soon as they overcome these fetters, they bring disorder into the whole of bourgeois society, endanger the existence of bourgeois property.."

3) The proletariat will revolt against this condition which threatens the whole of society, by destroying capitalism - "But not only has the bourgeoisie forged the weapons that bring death to itself; it has also called into existence the men who are to wield those weapons — the modern working class — the proletarians."

You don't need to be a Marxist scholar (which I am certainly not) to see this, the Manifesto spells it out all quite clearly. You cannot reject decadence without rejecting the Manifesto. So assuming we're not rejecting Marx, we're back to to my original point: the dispute is not about the rejection of decadence but that of a particular explanation or understanding of it.

Perhaps mikus will confirm whether or not he agrees with the description the Manifesto gives, i.e. of the collapse of capitalism brought about by its own internal pressures?

First of all, economic crises are only an example of Decadence for someone who is convinced of the existence of said Decadence. And this particular theory (i.e. Luxemburgian decadence theory) is not either "a fact within the world," or not, it is a theory for understanding that world. If you believe it is valid "independently of the validity of explanations," this is dogmatism.

I never claimed economic crises were an example of decadence, they have existed in all stages of capitalism's development. It is the nature of crisis that has changed, not the existence of crisis itself - but that's a whole other debate. (Although, as a side point, in the Manifesto, Marx points to crises as an expression of the contradictions that will one day destroy society). My intention was to point to something that all Marxists acknowledge exist but there are disagreements about the exact mechanisms behind it. If we happened to encounter someone that denied the existence of crisis, surely we'd be trying to convince them of the existence of crisis before discussing the mechanisms! However, the two topics are closely related so I can see where the confusion arose and I accept the example was poorly chosen.

This point about dogmatism is particularly interesting because I actually agree with it. It repeats back precisely the point I was making as if I disagree with it. I agree that Luxemburgist decadence theory is a "theory for understanding the world" and not "a fact within the world". I made (or tried to) a careful distinction between the decadence as a fact and the theory for understanding decadence. I made no claim that Luxemburgist decadence was a "fact within the world". I said decadence was a fact, but this is not the same thing at all. But Dave C fails to make this distinction (or perhaps he thinks I have) - instead he conflates "decadence" (fact) with "Luxemburgist decadence" (explanation of fact) and thinks I am incapable of accepting the existence of a fact without this specific explanation of this fact. I can only guess that this is because Dave C also doesn't believe there is any conception of decadence outside of Luxemburg?

Allow me to clarify with an analogy. It is perfectly possible for a phenomenon to exist (and to be acknowledged to exist) without there being agreement about the mechanisms that govern it. I'm going to state, rather dogmatically, that the universe exists. There's something of a debate about how the universe came into existence (or even if we can talk of it "coming into existence" at all, but that's another story!). Yet the universe exists and this is a fact, regardless of whether we give credence to big bang theory, m-theory, or the story of Genesis.

So I hope that makes what I was trying to say a bit clearer.

Lazy Riser

16 years 6 months ago

In reply to by libcom.org

Submitted by Lazy Riser on September 12, 2007

The position of Marxism is that these societies rise and fall because of their internal contradictions and limitations. This conception underwrites the whole of Marx's writing.

How very Victorian. Luckily, Wittgenstein’s logic demonstrates such contradictions do not mean eventual collapse. And, well, it correlates with reality. Whilst increasingly marginalised and mystic communists rub their chins and deliberate on crisis in self-enforced poverty and oppression, the non-Marxists continue to accumulate and consume.

lem

16 years 6 months ago

In reply to by libcom.org

Submitted by lem on September 12, 2007

i don't remember Wittgenstein tackling contradictions in tractatus [sp].

imo true theories of capital are only pragmatically true, because commodity fetishism can't be seen through, only physically done away with.

Lazy Riser

16 years 6 months ago

In reply to by libcom.org

Submitted by Lazy Riser on September 12, 2007

i don't remember Wittgenstein tackling contradictions in tractatus

He didn't. He did lectures with Turing challenging the meaning of mathematical truth, showing that a contradiction in-itself doesn’t invalidate a system.

dave c

16 years 6 months ago

In reply to by libcom.org

Submitted by dave c on September 13, 2007

Demogorgon303, rather than share my thoughts on decadence theory and Marxism, I feel I must ask a simple question:
Is decadence a theory, a

conception [that] underwrites the whole of Marx's writing

or is it a fact, as you say (

I said decadence was a fact

)? Simply put, it cannot be both. You claim that it is both. This is nonsense.

To be perfectly clear, I understand a "decadence theory" to be one that demarcates a phase of decline for capitalism, making it neither a conception that underwrites the whole of Marx's writing, nor an empirical fact. This is the impression that I get both from numerous past discussions on this forum and from a book the ICC published, The Dutch and German Communist Left, in which Bourrinet disagrees with Pannekoek and the GIC for not adopting a conception of decadence. He does not claim that they thereby abandoned Marx's perspective in the Manifesto, as this would be absurd, dogmatic, nonsensical. I am also perfectly aware of the references to capitalist decline in Paul Mattick's writings, which you (and I) would no doubt see as an example of some conception of decadence that is not Luxemburgian.

By trying to define decadence as a theory of the current period of capitalism, a theory at the heart of Marx's writings, and as an empirical fact you are . . . not fooling anyone.

Demogorgon303

16 years 6 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on September 13, 2007

Hi Dave C

There's a distinction between decadence as a fact and the theory of decadence. They are two different things. As you ignored the analogy in my previous post, I'll try another. Evolution exists as a fact within the world. The theory of evolution is both a description of that fact and - more importantly - an explanation of the mechanisms that underlie it. You might, for sake of argument, accept Lamarkism as an explanation for the observered fact that species change. Or you might accept Darwin's theory of natural selection. Larmark, Darwin, or both, may be proved wrong - the observed fact that species change remains and demands explanation. To borrow a phrase from TalkOrigins ... decadence is both a fact and a theory.

I'm not sure what you mean by your point about Pannekoek. The GIC were mistaken on this - this doesn't automatically place them outside the working class or that they've consciously abandoned Marxism. However, it certainly constituted a weakening of their understanding. It's been a while since I've read about the GIC, so I can't respond in any depth here.

To be perfectly clear, I understand a "decadence theory" to be one that demarcates a phase of decline for capitalism, making it neither a conception that underwrites the whole of Marx's writing, nor an empirical fact.

This seems like a non-sequitur to me. Why does demarcating a phase of decline mean its not a conception in Marx or an empirical fact? There are two aspects for discussion here: the appearance of the concept in Marx's writings and empirical validation of the concept. As far as the first is concerned, I gave a couple of quotes from the Manifesto in my previous response which show Marx had a clear vision of the rise, apogee and decline of capitalism driven by its internal contradictions. Do you think they say something different and, if so, what?

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 13, 2007

I'm not going to answer your questions about decadence because I'm stilll waiting for you Luxemburgians to even attempt to answer my criticism of her fairly ridiculous theory. It's starting to look like you have no answer. Even if you succeed in banishing me from Marxism for placing your mystical theory on the same level as a theory of the Boogie Man (and a step lower than a theory of the Yeti), this does nothing to my criticism.

In fact, I'll banish myself first so we can get on with the real issues. I'm a right-wing social democratic who, if I was German and elected to the Reichstag at the turn of the century, would have voted for war credits. I think the theory of decadence is nonsense, I don't like dialectics, the theory of value is a relic of a time gone by, and I just love Edward Bernstein. The only way I can get hard is by seeing thousands of workers die for their own country.

Okay, now answer my criticism of Luxemburg.

Mike

Alf

16 years 6 months ago

In reply to by libcom.org

Submitted by Alf on September 13, 2007

I don't think that the tone of the last post helps much. Let's try to keep this discussion a bit more serene. if you send me the quotes from Luxemburg you mentioned I will try to respond, but this is not an easy discussion and needs time for reflection.

I am very pleased to see that Loren has joined this discussion. There is much in his post that i agree with, but again I need time to think about the whole thing. This isn't a debate that can be settled ina few quick posts. It's already gone on in the workers' movement for nearly a century, after all.

dave c

16 years 6 months ago

In reply to by libcom.org

Submitted by dave c on September 13, 2007

Hi Demogorgon303:

Let me spell out once more why your approach (I will ignore the others) to this discussion is dogmatic (or completely incoherent).
My point is that you use the concept of decadence in different ways as if you were talking about one and the same concept. It is true that two different concepts can go under the same word, but this is not the problem.

Here are some propositions that are at work in this discussion:
1) Decadence is a theory that claims that capitalism has entered an epoch of decline.
2) Decadence is an empirical fact that is described by decadence theory.
3) Decadence is Marx's theory that capitalism produces its gravediggers in the proletariat.

Now, Mike clearly was using proposition 1 when he stated

The ICC's take on "decadence" is based (more or less) on the theories of Rosa Luxemburg. Saying that a discussion of decadence will be MORE productive than a discussion of Rosa Luxemburg is absurd if the validity of Luxemburg's theory is being questioned, since if her theory is wrong then so is your theory of decadence (or at least there is no evidence to suggest that it is correct, and becomes a dogmatic belief).

Neither Mike nor I have used propositions 2 or 3. Now onto your arguments. You defend decadence theory, which Mike questions using proposition 1, using proposition 2:

Decadence (like, for example, economic crises) is either a fact within the world or it isn't but this is independent of the validity of explanations.

You also defend decadence theory, which Mike questions using proposition 1, using proposition 3:

Decadence is not a concept unique to Luxemburg. However it has been expressed, Marxism has always had the view that class societies have a period of rise and fall. Marx practically eulogises about the advances of capitalist society in the Manifesto - only, in the next breath to explain why it now has to be destroyed.

and when presenting your reasons for claiming that Mike rejects Marxism:

The position of Marxism is that these societies rise and fall because of their internal contradictions and limitations. This conception underwrites the whole of Marx's writing. The very fact that he talks about capitalism producing its own gravedigger in the form of the proletariat demonstrates this.

Once again you are using proposition 3, and thus you make a non-argument, given that proposition 1 is what is being discussed, what Luxemburg's theory is claimed to explain, this thread being about Luxemburg, etc.

Claiming that capitalism has entered an epoch of decline is a theoretical proposition. Whether this claim is made as part of a Luxemburgian theory or not is beside the point. When you write,

Why does demarcating a phase of decline mean its not a conception in Marx or an empirical fact?

you must clearly not be understanding what I am putting very clearly. "Demarcating a phase of decline," saying that capitalism is in its epoch of decline, is a theoretical proposition. Therefore this act of making this theoretical proposition is not the same thing as observing an empirical fact, whether or not you happen to conveniently call this empirical fact "decadence." Once again, propositions 1, 2, and 3 are distinct even if you choose to use the same word to describe all of them, even if, when discussing one of them, you decide to use these other concepts that you conveniently define as "decadence." The prerequisite for any discussion about decadence is obviously that you use the same definitions as the person you are discussing with. Go ahead and claim that you had no idea Mike and I were using proposition 1. I simply don't believe you. I guess this brings us back to the beginning, i.e. the theoretical basis for proposition 1, which wasn't even being discussed until it was asserted to be true . . . repeatedly. Perhaps Alf has already realized that this inquisition or detour went nowhere.

My point about Pannekoek and the GIC was that Bourrinet was using proposition 1, and did not conflate this with proposition 3. But thanks for letting me know that the GIC were wrong :wall:

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 14, 2007

Alf

I don't think that the tone of the last post helps much. Let's try to keep this discussion a bit more serene. if you send me the quotes from Luxemburg you mentioned I will try to respond, but this is not an easy discussion and needs time for reflection.

If you need time to reflect, just say so, and don't go off on some tangent about approaches to Marx and decadence. That is diversionary. And I would be a bit more friendly if I didn't get constant diversions here in a desperate attempt to avoid the fact that your group hasn't answered these questions (indeed, no Luxemburgian has).

This isn't a debate that can be settled ina few quick posts. It's already gone on in the workers' movement for nearly a century, after all.

The fact that the debate has gone on for a century is not at all a sign that it is a worthwhile or even difficult debate. Theological debates have gone on for the better part of the last two millenia, yet they are still worthless. The fact that the worker's movement could never rid itself of underconsumptionism just goes to show how weak much of the theory of the worker's movement really was (and remains).

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 14, 2007

Okay, for the citations of Luxemburg which I kept mentioning. The issue is taken up primarily in Chapter 8, "Marx's Attempt to Resolve the Difficulty" (the difficulty is noted in the previous chapter). Luxemburg claims that there is insufficient money to realize the growing surplus-value within the confines of Marx's schema, that Marx has to bring in gold producers as a deus ex machina to realize the value of commodities, etc. She never explores the possibility that money is not needed to intervene as a medium of circulation, i.e. that debts can be settled on paper and without the use of physical money to realize commodities' value.

In the next chapter she moves on to the issue of effective demand (which she considers to be distinct from that of a simple source of money). Nevertheless, this is a different issue, and her critique in Ch. 8 is based on a supposed lack of money within Marx's schema. She goes on to (sort of) drop the issue, but she starts off with it.

So first please address my criticism of this argument and then we can move on to the issue of effective demand as distinct from the source of money if you feel that is more important or central to her criticism. I think the force of her later argument is taken away if her earlier criticism fails.

Mike

Alf

16 years 6 months ago

In reply to by libcom.org

Submitted by Alf on September 14, 2007

The reason why a discussion about 'approaches to Marx and decadence' isn't diversionary as far as this thread is concerned is that it was posed by the original subject of debate, Loren's text. This emerges even more clearly in his recent post, when he contrasts the period in which capitalism was a 'historically progressive' system to its period of 'retrogession' and 'self-cannibalisation', so I can't see how it was a diversion to ask mikus where he stood on such issues, still less an 'inquisition' as Dave C calls it, unless polite questioning is one of the Inquisition's feared new methods along with the comfy chair.

Thanks for the references to Accumulation, athough I have already been looking at these chapters and the issues are indeed complex, not least because they involve a lot of maths and this has always been my nemesis.

Joseph Kay

16 years 6 months ago

In reply to by libcom.org

Submitted by Joseph Kay on September 14, 2007

Alf

unless polite questioning is one of the Inquisition's feared new methods along with the comfy chair

well no one would expect that

Demogorgon303

16 years 6 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on September 14, 2007

Hi Dave C

I don't dispute your breakdown of the propositions 1 and 2, I agree with them. I think proposition 3 is too simplistic, taking one aspect of the "internal contradictions and limitations" that drive capitalism's decline. But despite that caveat, okay so far, I think.

The reason I made the points I did is that it was obvious that decadence as whole (i.e. prop 1, 2 and 3) was being rejected. Firstly, mikus talked about the ICC's take on "decadence" - the inverted commas clearly indicating the whole concept was under question, even if only implicitly. Later comments made implicit rejection explicit. Mikus comparied all decadence theories to Yeti, confirming my suspicion that behind the critique of Luxemburg (P1) there was a rejection of P2 and presumably P3 too.

I was simply saying that:

- rejecting Luxemburgism doesn't alter the reality of decadence if it does, indeed, exist. In a broader sense, facts exist (or not) independently of what human beings happen to think about those facts (i.e. in theory). I gave two analogies, the existence of the universe and evolution (lets call this P4).
- that Luxemburg's theory wasn't the only possible theory of decadence
- and that decadence in a broad sense (not specifically Luxemburgist decadence) was fundamental to Marxism (prop 3).

I made no effort whatsoever to defend Luxemburgism (i.e. your proposition 1). I am not qualified to do so and make no pretensions of being so. Nor did I make any effort to claim decadence was a fact within the world - I simply said that it's status as fact (be it true or false) is independent of theory. (But, to be perfectly clear, I do believe it exists but I do not intend to try and defend that position on this thread).

So for you to say I'm trying to counter P1 with P2 and P3 is incorrect. If P1 can be disproved while leaving P2 and P3 undamaged, it is also true that P2 and P3 can be demonstrated to be true without necessarily proving P1. Now if you want to accuse me of changing the subject, or even derailing the thread, you're well within your rights to do so. In retrospect, considering the awful abortion of a discussion that this has become, I'm becoming inclined to agree with you. But I haven't conflated these different propositions. Edit: Alf raises a good point concerning Loren's original post. Perhaps I wasn't so off the wall after all.

To start with, you actually acknowledged what I said, saying: "Obviously if Luxemburg is wrong, this does not mean that any possible concept of decadence is invalidated. The abstraction, "the concept of decadence itself," is unscathed." This was one of the points I was making! So we agree there, don't we?

But then you claimed I was being dogmatic. You have clearly misread what I said right at the beginning. I said "Decadence (like, for example, economic crises) is either a [empirical] fact within the world or it isn't but this is independent of the validity of explanations [i.e. theories of decadence]." You then interpreted this as "for Demogorgon303 it is simply a fact within the world", when this is clearly not what I said at all. Therefore your claim that I used P2 as a defence against P1 is incorrect because I never actually used P2 at all but rather P4 (see above).

Several posts later, with me attempting time and again to distinguish between decadence as fact and theories of decadence, we've finally got to the state where you're explaining to me the distinction between empirical facts (P2) and theories of decadence (P1, P3)! Can't you see that we're essentially saying the same thing on this point?

To sum up, I'm going to make a list of where I think we agree:

1) Facts exist independently of theories to explain those facts
2) Proving Luxemburg wrong doesn't invalidate the fact of decadence (if decadence actually exists as an empirical fact, which has yet to be demonstrated on this thread)
3) Proving Luxemburg wrong doesn't invalidate the concept of decadence

baboon

16 years 6 months ago

In reply to by libcom.org

Submitted by baboon on September 14, 2007

Mikus, I asked your opinion on what caused the first world war. You don't have to answer the question and are perfectly entitled to avoid it, but to me this is the central question of the debate and not a "diversion" as you see it. At any rate this is not a discussion revolving around Mikus but around the text of Goldner. I welcome the latter's intervention on this post, again as a breath of fresh air. I have disagreements with Golder over his description of loot but generally agree with his analysis of imperialism. No capitalist accumulation (extent or depth) can take place in the epoch of imperialism as defined by Rosa, compared to the progessive, expansive phase of capitalism. It took the bourgeoisie itself some decades to realise this (around the early to mid 30s) and reorganise capital on the basis of state capitalism and the war economy. The "gold standard", promissary notes, literally bits of paper, all represent the development of fictitious capital (as well as the strength of American imperialism). The main component of today's "accumulation" of capital, is debt, credit and speculation. And the main component of imperialism, which is in no way divorced from the economic aspects of capitalism, is destruction.

RedHughs

16 years 6 months ago

In reply to by libcom.org

Submitted by RedHughs on September 14, 2007

I don't agree with the general position that capital's crisis is the result of a lack of effective demand. Rather, I would see it coming out of the declining rate of profit directly.

However, it is worth considering that a declining rate of profit can appear to individual capitalists as a lack of demand. When the rate of profit declines, the market tends adjust demand for example capitalist's products in accordance with this decline. So there tend to no longer be enough consumers who are willing and able buy to a given capitalist's commodities at the prices which produced the capitalist's previous rate of profit. The given capitalist may lower his or her prices and accept this lump or they may engage in extra-market efforts to prop up their profits - the extra-market efforts may include all of the factors that Loren might mention as "primitive accumulation" (Thus I would agree that "primitive accumulation" is a poor word for a normal occurrence in capitalist society).

Mike's mono-maniacal focus on finding a single intention in the classic authors (Marx, Hegal, Luxemburg) can be illuminating at times and infuriating at other times. It might be good for the ICC say whether their decadence position depends on Luxemburg or not. They have said it is possible to believe in decadence without embracing Luxemburg. Do they treat decadence as something they observe and Luxemburg's theory as just one possible explanation?

Red

Mike Harman

16 years 6 months ago

In reply to by libcom.org

Submitted by Mike Harman on September 14, 2007

[Loren Goldner

I must first say, reading and re-reading it, that I was initially somewhat surprised at all the things I said that were (IMHO) controversial that were barely mentioned or not mentioned at all. No one defended Lenin’s theory of imperialism or the labor aristocracy theory; no one questioned the idea that the U.S. is “managing empire through bankruptcy”, or the critique of Chavez or of Third Worldism, or my assertion of a vast population of unproductive consumers in advanced capitalism, or the concrete analysis of contemporary accumulation centered (for now) on the “indebted U.S. consumer”. Of course on this particular libertarian communist list affirmations that might elsewhere be controversial are, I presume, like charging through an open door.

I don't think many people on here have big disagreements on any of these points. From your list, recently there's been discussions on imperalism/national liberation and I don't think there's a massive consensus on what is and isn't productive labour (in itself, for capital etc. )

Loren Goldner

Boiled down to its simplest, my article says that capital accumulation, in the course of a cycle, necessarily generates titles to wealth (stocks, bonds, property deeds and leases, and more recently securitized mortgages, etc.), capitalized anticipations of income in excess of available surplus value, and that it makes up that gap with “loot”, i.e. goods, labor power, raw materials not paid for at their reproductive value, by running down (not reproducing) C (means of production and infrastructure) or V labor power past their point of depletion. When available surplus value and loot no longer suffice to support those paper claims, capitalism undergoes a deflationary crisis that wipes out claims (and ultimately real capital, and labor power) until those claims and are once again in some equilibrium with available surplus value. That’s exactly what we are seeing today.

I think I largely agree with this, I don't think it's anything new though, and I'm not certain whether you do or not. For example the "running down (not producing) C" is clearly evident in the IIR region's textile production during the First Five Year Plan, and I'm sure countless examples beforehand once you had significant fixed capital in place at all (i.e. actual capital stuff to depreciate). Similarly with reproduction of labour power.

In a nutshell, in the era of the proliferation of fictitious capital, capitalist paper expands, while the material reproduction of society goes backwards.

Although clearly credit has expanded massively, do you consider this a qualitative or quantitative change. I think most of the causes and results of this process are an enduring feature of capital rather than a sign of any particular 'decadent' phase.

Most of the texts I have written on the critique of political economy have attempted to rehabilitate the (in my opinion) neglected concept of social reproduction. I think that most of the criticisms raised in the discussion of the “Imperialism, ‘Anti-Imperialism”…” demonstrate yet again that most comrades, similar to the people Luxemburg was polemicizing against 95 years ago, are preoccupied with the reproduction of capital only in a formal sense of their reproduction schema, and, when that occurs, see the material reproduction of society to be almost a given, taken for granted. They don’t believe that a capitalist can make a profit from contracted social reproduction. They seem to pay no attention to Marx’s remark in vol. I (pp. 726-727): “Accumulation requires the transformation of a portion of the surplus product into capital. But we cannot, except by a miracle, transform into capital anything but such articles as can be employed in the labour process (i.e. means of production), and such further articles as are suitable for the sustenance of the worker (i.e. means of subsistence)…In a word, surplus-value can be transformed into capital only because the surplus product, whose value it is, already comprises the material components of a new quantity of capital.” No one in the discussion so much as commented on my affirmation that there exists today a huge unproductive consumption by the state, the military and (e.g.) the FIRE population which is precisely not materially transformed back into capital. To acknowledge this means to admit that there is “fictitious profit”, i.e. profit from the sale of commodities (tanks, Ferraris) that “drop out” of the capital circuit. Yet that ficititious profit is pocketed by some capitalist and continues, for a while, to undergo the M-C-M’ circuit just like profit from food and clothing.

OK well capital expenditure (military etc.) is clearly higher than it used to be, consumption by capitalists also pretty high. In terms of unproductive sectors, we had a bit of discussion about that on the wages for housework thread. Both myself and Joseph K. argued that (for example), the commodification of childcare through commercial nurseries and creches is bringing unpaid labour directly into the cycle of reproduction of capital (wage labour, capital accumulation - producing surplus value in addition to reproducing labour value, and essentially creating the opportunity for two jobs (medium-high waged unproductive (usually) work by one ex-housewife who consumes the service of childcar,e low-wage productive work by the provider of child care). Would be interested to hear your views on that process, don't have a link to the thread to hand at the moment but will try to post later.

What was historically progressive about capitalism was that it expanded the material reproduction of society, both in means of production and labor power. It laid the material foundation for the supersession of socially necessary labor time of reproduction (the law of value) as the numeraire of economic activity. Having reached that point, it began a massive retrogression, attempting (like all previous crises) to re-equilibrate an adequate rate of profit, even if billions of people have to go onto the scrapheap and entire continents have to be depleted to achieve it. The capitalist spiral (the expanded reproduction extension of Marx’s circuit, the latter used in reference to simple reproduction in vols. I and II) goes backward just as it previously went forward.

Again I'm not sure this "progressive stage" "regressive stage" holds so much - depletion of natural resources was well under way 150 years ago, the productive forces are still being developed, especially in communications technology. Renewable energy technology, digital reproduction of information - these I think continue to bring us closer to a "post scarcity" society, whilst irrational expansion promises to make more fundamental resources quite scarce - I agree that process is happening but I don't think it ever wasn't happening.

Several people questioned whether the contemporary pulling of labor power out of parts of the Third World can be considered primitive accumulation. I don’t think Indian doctors working in the UK is an adequate example. Once again, if the term “primitive accumulation” is limited to the initial separation of petty producers from their means of production (e.g. England in the 16th and 17th centuries) let’s think of a better term. What that initial phase has in common with today, as I said, is a “violation of the capitalist law of value”, the exchange of equivalents. The reproduction costs of petty producers recently expelled from the dissolution of the Chinese rural communes, from the Mexican ejido (especially since NAFTA) or tiny plots in the Indian countryside are not paid for by capital until they are directly enlisted in the wage labor system, any more than were the American farmers wiped out by debt described in Luxemburg’s book. Petty producers sell to capital, but can’t reproduce themselves in the exchange, just as Preobrazhenzy imagined (wrongly) the possibility of a ”planned” gradual elimination of Russian rural petty producers in the 1920’s.

Agree with all that.

Had more to say, but not in this post it seems.

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 14, 2007

RedHughs

Mike's mono-maniacal focus on finding a single intention in the classic authors (Marx, Hegal, Luxemburg) can be illuminating at times and infuriating at other times.

Your inability to read what others write and propensity to make things up is infuriating. When have I ever tried to find a "single intention" in the above authors? Seriously, what the fuck are you on about? In this debate specifically, I've been quite clear that I'm open to Luxemburg having a number of reasons for believing in the impossibility of expanded reproduction (within a closed system of capitalist production), but that I wanted the ICC to answer my objection to one of her reasons first, since we can't tackle every problem at once. (In fact, in my last post, I explicitly say that there are two arguments that Luxemburg uses. (Indeed, there is a third more major argument, perhaps more, but a consideration of that will have to wait still more.)

In the future, please read more closely before spewing forth nonsense. Or, alternatively, stop lying.

Mike

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 14, 2007

baboon

Mikus, I asked your opinion on what caused the first world war. You don't have to answer the question and are perfectly entitled to avoid it, but to me this is the central question of the debate and not a "diversion" as you see it.

Given that you were the first person to bring up the cause of WWI on here, I do not think it is a "central question of the debate". In fact, the "debate" really only started once we started talking about Luxemburg. (I wrote a number of criticisms of Goldner's text but those went unanswered until Goldner's recent intervention.) So I do think bringing up WWI in the context of the debate on Luxemburg is a diversion.

Perhaps we should split this whole thing into 3 threads for clarity and so we can all talk about whatever we want without skipping each other's points. I'm fine with discussing decadence theory, but not in the middle of a debate on Luxemburg. We can leave this thread for a discussion of Goldner's text. A new one for the discussion of Luxemburg, and a third one for a general discussion of decadence theory.

Alf

16 years 6 months ago

In reply to by libcom.org

Submitted by Alf on September 14, 2007

Red: Marx's view of history as summarised in the Preface to the Citique of Political Economy (1857) centres round the notion that hitherto, the rise and fall of all societies (although Marx only explicitly deals with societies of exploitation in this text) is the result of a dynamic between the social relations of production and the productive forces. An epoch of social revolution or decadence is inaugurated at a point where the former have moved from being forms of development to becoming fetters on development. The marxist notion of ascendancy and decadence therefore precedes Luxemburg's theory and cannot in all logic be dependent on it.

The marxist movement has generally considered that capitalist society is no exception to the general tendency and must therefore enter into a phase of decline. It has analysed the specific contradictions which most centrally express the conflict at the heart of this mode of production - the manner in which, at a certain point, and after an initial period in which they permitted an unprecedented development of the material forces of production, capitalist social relations become a barrier to the further development of mankind's productive capacities. The contradictions that result in the fall in the rate of profit on the one hand, and to the crisis of overproduction on the other, are both integral to a mode of production founded on surplus value. There is clearly a basic link between these two contradictions but I think that Marx's writings on Capital, being an unfinished project, cannot provide us with a definitive answer as to which contradiction is the most decisive element in the historic demise of capital.

The ICC has always had the view that Rosa's analysis offers the most coherent continuation of Marx's theory of crisis, but we have always said that adherence to this analysis is not a precondition for membership and that this is a debate which has to continune both within the organisation and within the wider proletarian movement.

Spikymike

16 years 6 months ago

In reply to by libcom.org

Submitted by Spikymike on September 16, 2007

Followers/participants on this thread may be interested in the texts 'The Roots of Capitalist Crisis' just published in English on:

http://internationalist-perspective.org/IP/ip-archive

Looks relevant but I have only dipped into it so far. I will take it on my holday for a more relaxed read.

admin edit, try this one instead: http://internationalist-perspective.org/IP/ip-archive/ip_30-31_cap-crisis_intro.html

Spikymike

16 years 6 months ago

In reply to by libcom.org

Submitted by Spikymike on September 16, 2007

Sorry -on that last link I posted go to Home - whats new.

Alf

16 years 6 months ago

In reply to by libcom.org

Submitted by Alf on September 16, 2007

Looks very serious - requiring more time for reflection I think!

troglodyte

16 years 6 months ago

In reply to by libcom.org

Submitted by troglodyte on September 17, 2007

I've been enjoying following this as lurker...

But I'm unclear - is anyone here actually willing to defend Luxemburg's theory?

Trog

jaycee

16 years 6 months ago

In reply to by libcom.org

Submitted by jaycee on September 17, 2007

i admit i haven't read this whole debate but i thought i would add my two sense anyway.

If the working class is an exploited class (which i think we all agree it is) then surely it is necessarily true that they cannot buy back all that they produce. If this is true then it seems that overproduction is a neccessary result of the wage labour relationship.

While its true that this isn't the only relationship tht exists in capitalsim and the world generally, there surely is an innate drive in capitalism to generalise this relationship. This would reach a point where its room for growth was particulaly small (hence decadence).

While this doesn't neccessarily mean that this is the main contradiction in capitalism, or even a contradiction which cannot be (temporarily) overcome, or rather avoided, it still exists as a contradiction within the capitalist social organisation.

It seems logical to me that the advent of a developed world market in which capitalism have become strong in all areas of the globe would be a period in which this contradiction becomes increasingly apparent and important.

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 17, 2007

troglodyte

I've been enjoying following this as lurker...

But I'm unclear - is anyone here actually willing to defend Luxemburg's theory?

It appears not.

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 17, 2007

jaycee

If the working class is an exploited class (which i think we all agree it is) then surely it is necessarily true that they cannot buy back all that they produce. If this is true then it seems that overproduction is a neccessary result of the wage labour relationship.

This is false. The working class doesn't need to buy back everything it produces. It has been proved a number of times (Marx, Tugan-Baranovsky, Bauer, I'm sure more) that accumulation can continue even though the working class doesn't buy back everything. You have to remember that at any given point of time not all goods on the market are final consumer goods purchased by the working class (there also exist means of production and goods consumed by the capitalist class), and that the capitalist class consumes both for their personal consumption, and the productive consumption of means of production. Thus the rest of the total social product can possibly be purchased by the capitalists. This doesn't prove that it is purchased by the capitalists, but it makes the argument that the working class must buy back all they produce wrong, and it makes the underconsumptionist scenario rather implausible (especially considering that it is a fact that capitalist consumption and accumulation takes place at least to some extent).

A riddle for you: how could the capitalist class possibly make money by having the working class buy back all it produces? If I give you $10, the best I could possibly make off with is to have you give me all $10 back. In which case I break even. (And obviously, if you give me back, say, $8, I'm $2 short.) If I am to make money, I can't rely on what I give you. So how can the capitalist class profit by receiving the money it advanced to workers as wages?

If you can show how this is possible, I have $10 I'd like to loan you at no interest.

Alf

16 years 6 months ago

In reply to by libcom.org

Submitted by Alf on September 18, 2007

"The same occurs when there is an over-production of commodities, when markets are overstocked. 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".
Marx, Capital Vol III, 15, 3.

Marx, it seems to me, was an 'overproductionist', not an underconsumptionist, a term which Luxemburg also rejects in The Anticritique. He also appears in this passage to specifically reject Mike's notion that the capitalists could buy back the rest of the social product not bought by the workers.

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 18, 2007

Alf

"The same occurs when there is an over-production of commodities, when markets are overstocked. 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".
Marx, Capital Vol III, 15, 3.

Marx, it seems to me, was an 'overproductionist', not an underconsumptionist, a term which Luxemburg also rejects in The Anticritique. He also appears in this passage to specifically reject Mike's notion that the capitalists could buy back the rest of the social product not bought by the workers.

Marx is fairly clearly talking about a crisis caused by disproportionality between spheres of production, which is certainly not what Luxemburg was talking about. I fully accept the reality of disproportions between spheres of production, and even crises caused by such disproportions.

But leaving aside Marx's intent in the above passage for a moment, what are you trying to prove here? If you accept Luxemburg's argument, then your own argument that Marx was simply an "overproductionist" (or whatever you want to call it) cannot stand, since Luxemburg herself claims that he was contradictory on this point (hence her whole criticism of the reproduction schemas). According to Luxemburg there are two Marx's: the Marx of the reproduction schemas and the Marx of Vol. 3 (what you have called "overproductionist"). (I don't agree with Luxemburg's interpretation of Marx as contradictory, nor do I agree with her interpretation of what Marx was doing in either Vol. 2 or Vol. 3, but let's just assume she's correct here for a moment.) Quoting the Marx of Vol. 3 doesn't prove the Marx of Vol. 2 wrong, since I could do the exact same thing in reverse (use the schemas to criticize Vol. 3). You need a new argument here, or otherwise we can go back and forth all day.

The Marx of Vol. 2 provides a schema in which the capitalists do buy whatever the working class does not buy. Rosa Luxemburg criticized those schemas. I have criticized her criticism. You haven't responded to my criticism, but instead have decided to quote Marx in Vol. 3. But even if your interpretation of the quote were correct it would not answer my point, since my point was not about what Marx did or did not say.

I would be happy to discuss the quote with you further once you answer my criticisms and show why there is not enough gold to realize all commodity capital in Marx's schemas. (Which is Luxemburg's claim.)

Mike

Alf

16 years 6 months ago

In reply to by libcom.org

Submitted by Alf on September 18, 2007

"Okay, for the citations of Luxemburg which I kept mentioning. The issue is taken up primarily in Chapter 8, "Marx's Attempt to Resolve the Difficulty" (the difficulty is noted in the previous chapter). Luxemburg claims that there is insufficient money to realize the growing surplus-value within the confines of Marx's schema, that Marx has to bring in gold producers as a deus ex machina to realize the value of commodities, etc. She never explores the possibility that money is not needed to intervene as a medium of circulation, i.e. that debts can be settled on paper and without the use of physical money to realize commodities' value.
In the next chapter she moves on to the issue of effective demand (which she considers to be distinct from that of a simple source of money). Nevertheless, this is a different issue, and her critique in Ch. 8 is based on a supposed lack of money within Marx's schema. She goes on to (sort of) drop the issue, but she starts off with it.
So first please address my criticism of this argument and then we can move on to the issue of effective demand as distinct from the source of money if you feel that is more important or central to her criticism. I think the force of her later argument is taken away if her earlier criticism fails".
Mike

This is how Luxemburg begins chapter IX:
The flaw in Marx’s analysis is, in our opinion, the misguided formulation of the problem as a mere question of the ‘source 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”. .

Having gone through these chapters again, and in the light of this quote, I still cannot see how this is a “different issue”, a question apart from the problem of realisation of surplus value. Luxemburg is saying that in the process of formulating the reproduction schemas (the context of which Luxemburg discusses later on in chapter IX, in particular the polemic with Adam Smith) puts forward a solution which avoids the basic problem of effective demand (which in turn takes us back to the antagonistic nature of capitalist social relations).

Neither can I understand your apparent solution in the realm of credit. Obviously in discussing the schemas both Marx and Luxemburg were working at an abstract level where the use of credit was temporarily put aside, but later on in Accumulation when she comes to deal with the concrete historical process of accumulation, there is a whole chapter (XXX) where Luxemburg deals with the question of international loans and notes that “these inherent conflicts of the international loan system are a classic example of spatio-temporal divergences between the conditions for the realisation of surplus value and the capitalisation thereof”.

Luxemburg also examined the role of credit in Social Reform or Revolution where she concludes that “credit, instead of being an instrument for the suppression or the attenuation of crises, is on the contrary a particularly mighty instrument for the formation of crises. It cannot be anything else. Credit eliminates the remaining rigidity of capitalist relationships. It introduces everywhere the greatest elasticity possible. It renders all capitalist forces extensible, relative and mutually sensitive to the highest degree. Doing this, it facilitates and aggravates crises, which are nothing more or less than the periodic collisions of the contradictory forces of capitalist economy”. In other words, credit can put off the contradictions inherent in the accumulation process, but they will only rebound at a more devastating level later on If this was true in the latter part of the 19th century, it is incomparably more true in the present epoch where capitalism has become as dependent on credit as a smackhead on smack, and where the drug is increasingly threatening to kill the patient.

Regarding the quote from Capital III, again I cannot see how you can reduce this to a problem of disproportionality. Marx’s whole polemic with the bourgeois economists is that they could accept crises of overproduction based on disproportionality because they posed no fundamental threat to the existence of the capitalist mode of production, but that they denied the possibility of a general crisis of overproduction. The passage I have quoted, and there are many more, locate the crisis of overproduction in capitalist social relations and that is precisely why he concludes “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”.

Demogorgon303

16 years 6 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on September 18, 2007

I'm finding it difficult to follow this. It seems clear to me that Marx is saying that there are immanent limits to consumption inherent within capitalist social relations, i.e. that capitalism overproduces. If capital doesn't overproduce, if we're simply talking about disproportionality, are we not back to Say? "a glut can take place only when there are too many means of production applied to one kind of product and not enough to another"

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 18, 2007

Alf,

Go back to chapter 8, which is the chapter I mentioned, not the chapter 9 which you responded with. Chapter 8 is indeed about a lack of money in Marx's schemas to realize the social product. In chapter 9, Rosa Luxemburg goes in a different (not wholly unrelated) direction. But first we should discuss chapter 8 given that chapter 8 prepares the basis for chapter 9.

Chapter 8 tries to show what Marx's problem is. Chapter 9 tries to show the source of the problem.

If the problem she locates in Marx's schema is not a problem, then this will change how we view chapter 9.

And I do appreciate your attempt to answer my point about credit, but unfortunately what you said isn't any more relevant to my criticism than all the earlier talk about decadence and "approach", etc. I did not say that credit makes crises impossible, less severe, or anything of that sort. (I actually agree with what you said about credit's intensification of crises.)

I only said that credit allows a given quantity of money to realize more value than would be possible without it by allowing payments to be settled on paper without the intervention of any circulating medium, and that this disproves Luxemburg's claim in chapter 8 of her book that there is insufficient money to realize all value in Marx's reproduction schemas.

You still haven't disproved that point. I don't think you can. I don't see any way around my criticism of Luxemburg's argument. Appealing to credit crises does not counter my point in any way.

Mike

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 18, 2007

Demogorgon303

I'm finding it difficult to follow this. It seems clear to me that Marx is saying that there are immanent limits to consumption inherent within capitalist social relations, i.e. that capitalism overproduces. If capital doesn't overproduce, if we're simply talking about disproportionality, are we not back to Say? "a glut can take place only when there are too many means of production applied to one kind of product and not enough to another"

You're missing a few other possibilities and acting as if Luxemburg's theory is the only one consistent with the possibility of overproduction and Marx's criticism of Say's law. There are a number of other theories compatible with both things.

Keep in mind also that "disproportionality" meant something quite different in classical political economy than in later Marxist theories focusing on disproportionalities. I am sympathetic to the latter, while not fully agreeing with them, though I am not at all sympathetic to the former.

But as usual, I'd be happy to discuss this with you after Alf (or anyone else) disproves my point about Luxemburg's critique of Marx in chapter 8 or admits that she was wrong in that chapter.

Admitting this of course doesn't mean that she was wrong in her whole book. I'm not overly ambitious here. I will lead you to see why her whole book was wrong slowly, but first either show I'm wrong about chapter 8 or admit that she was wrong in chapter 8.

Mike

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 18, 2007

And I should add that I'm not denying the existence of overproduction during crises. That would be absurd. Almost no one today would deny that such a thing occurs. I'm denying that Luxemburg's theory can explain the cause/s of that overproduction.

Mike

Alf

16 years 6 months ago

In reply to by libcom.org

Submitted by Alf on September 19, 2007

I understand that chapter 8 is about a lack of money in Marx's schemas to realise the social product. But I quoted the passage at the beginning of chapter 9 because it sums up her conclusions in chapter 8: that the problem cannot be reduced to one of money supply; and this is surely because she understands that behind money stands value and behind value stands a social relation.

But perhaps I am simply not getting the point here, and perhaps you have demolished me utterly. Would that then allow us to go on to what you see as the fundamental flaws in Luxemburg's book, since you yourself seem to think that the money question is not the main one? In any case, I think that would be of more interest to others participating in or following this thread.

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on September 19, 2007

Alf

I understand that chapter 8 is about a lack of money in Marx's schemas to realise the social product. But I quoted the passage at the beginning of chapter 9 because it sums up her conclusions in chapter 8: that the problem cannot be reduced to one of money supply; and this is surely because she understands that behind money stands value and behind value stands a social relation.

It is typical of Luxemburg to spend time making a certain point and then immediately go back on it, acting as if it isn't important anyway. As I said in an earlier post, she also criticizes the use of mathematical schemas to prove points about real reproduction yet she attempts to draw up schemas that prove the impossibility of realizing surplus-value when the organic composition of capital grows. Of course, when Otto Bauer showed that her attempt failed (by drawing up one such schema, making her impossibility claim obviously incorrect), she responded by denying the relevance of schema.

Alf

But perhaps I am simply not getting the point here, and perhaps you have demolished me utterly. Would that then allow us to go on to what you see as the fundamental flaws in Luxemburg's book, since you yourself seem to think that the money question is not the main one? In any case, I think that would be of more interest to others participating in or following this thread.

You aren't getting the point. My point was to examine specific claims made in chapter 8, which you have still not attempted to defend. Saying that in your eyes, the argument isn't as important as a different one is no defense of it.

Now you want to skip this and act as if I were correct for the sake of argument so we can move on to chapter 9. Okay, but now there are two implications of me being correct about chapter 8:

1. There is a schema (namely, Marx's) in which expanded reproduction takes place unproblematically. (This of course does not refute Luxemburg, since she simultaneously affirms and denies the importance of schemas, but then again, nothing can refute a contradictory theory in this way.) This takes a bit of the force out of Luxemburg's argument since the impetus for coming up with a new theory of accumulation comes (at least partly) from her belief that Marx's schemas simply don't work.

2. We can examine this schema to see what is happening that allows all surplus-value to be realized. We can then discuss whether or not what is happening occurs in real capitalism.

This will make Luxemburg's argument in chapter 9 harder to defend.

I will go over chapter 9 in more detail over the next day or two and post something summarizing her main points (with quotes).

Mike

Spikymike

16 years 6 months ago

In reply to by libcom.org

Submitted by Spikymike on September 27, 2007

Well, back from my short holiday and just about managed to read the text: 'The Roots of Capitalist Crisis' which I suggested people might have a look at over a week ago on:

http://internationalist-perspective.org/IP/ip-archive/ip_30-31_cap-crisis_intro.html

Although written a few years back it contains some good basic criticism of both Rosa Luxemburg's and Mattick's theories in relation to the tendential decline of the rate of profit and it's relation to market realisation. It also has some useful ideas on the dual function of money as a means of circulation and a store of value and some early predictions on the credit crisis within modern capitalism.

Read in conjunction with 'How Capitalism Changed' in IP 42, it has caused me to start rethinking some of my own critical support for a particular version of Mattick's theories as at:

http://geocities.com/cordobakaf/rothbart.html

though I still consider that the active factor of militant class struggle is not given the importance as a motor of capitalist 'development' that it deserves alongside competition between different capitals.

I did struggle a bit with some of the later sections and will need to give it another read sometime.

In the meantime I would be interested in any explanatory/critical views from others who have read these texts.

ICC and other posters who support a marxist decadence theory but on a different basis to IP must presumably have some criticism to make of these texts from their particular viewpoint?

Other Libertarian Communists might be critical from a similar angle to myself on the issue of the influence of the class struggle on the Law of Value?

Alf

16 years 6 months ago

In reply to by libcom.org

Submitted by Alf on September 30, 2007

"ICC and other posters who support a marxist decadence theory but on a different basis to IP must presumably have some criticism to make of these texts from their particular viewpoint?"

Yes. I was not aware of this text until you pointed it out. I have begun to read it, but have had to put it aside because of other work. But it contains a great deal worth discussing. And although it rejects Luxemburg's theory in the end, the text shows a much greater degree of respect for her, including for her 'economic' theories, than is evident in the writings of others who should know better. From a bried glance at the later sections, it also reclaims a version of decadence.

I want to return to this thread in due course. There is at the moment a sudden, world wide blossoming of discussion about Rosa's theories, even if the majority of opinions expressed are more or less opposed to her.

The CWO have republished their text 'The accumulation of contradictions' from 1976, which also needs to be re-examined.

lem

16 years 6 months ago

In reply to by libcom.org

Submitted by lem on September 30, 2007

is decadence theory = theory of collapse?

i've got real work to be doing :(

:)

eta i ask wrt this article by chris wright [riff-raff member?] http://www.riff-raff.se/wiki/en/chris_wright/crisis_constitution_and_capital

might make clearer to someone. i like riff raff more than aufheben...

Alf

16 years 6 months ago

In reply to by libcom.org

Submitted by Alf on September 30, 2007

'Decadence theory' - yes it is the theory of the unavoidable collapse of capitalism, it's inability to finally and totally dominate the world.

lem

16 years 6 months ago

In reply to by libcom.org

Submitted by lem on September 30, 2007

aha - so the icc think we ARE collapsing AS WE SPEAK! yeah?

ernie

16 years 6 months ago

In reply to by libcom.org

Submitted by ernie on October 1, 2007

Yes we think that the capitalist system has been undergoing a process of collapse since 1914. Two world wars, countless other wars, including the decent of Iraq into chaos, the ripping apart of even the most basic structures of minimal social existence in many parts of Afirca, the poverty of billions, social decay throughout the most advanced capitalist countries, 40 years of developing economic crisis since 1968, the fact that tens of millions of children day each day from the lack of clean water, the collapse of many states (somalia, Congo, etc).. Lem if you see this as a sign of the social system that is healthy and developing the productive and social resources of humanity, it would be interesting to how you think this is happening? Don't mix up the 'bright lights' of the present economic development with the advancement of human society. I do not think we would be having a discussion about collapsing capitalist society (or any society for that fact) with a poor peasant in Darfur, or those living in the Congo who have seen over 4.000.000 slaughtered in the last few years. Yes in the West, China and India we see nice shiny things, big swanky buildings, and there are lot of cheap goods, but under the surface is a social system that is like an exhausted drug addict that is totally dependent upon state capitalism and debt in order to be just about able to lift its head of the pillow each morning.
This does not mean that there has not been economic growth, the development of the means of production, or that countries have not been industrialised over the last 100 years they have, but such growth has mainly confined to the 50's and 60's and in the context of the division of the world into two imperialist blocs. In the post WW1 period there was widespread stagnation, the horrors of Stalinism and fascism, the depression and then WW2. And even the period of the golden age of capitalism, millions were still slaughtered in endless imperialist wars.
When we talk about collapse we do not mean that one day there will be a mega 1929 and capitalism will go down the pan and the class will rise up. What we mean is that capitalism is goring through a long drawn out process of decay. As the Communist International said in 1919 capitalism has entered a period wars, civil wars and decay. The bloody century in the history of humanity (the 20th) demonstrated that and the first 7 of the 21st have continued with this horror. Never has the slogan socialism or barbarism been so important or relevant.
It is this wider view of the totality of capitalist society that has been missing from a lot of this discussion: a totality that Luxemburg's analysis sort to illuminate. You may agree or disagree with the specifics of the analysis but its aim to show that capitalism is a transitory historical system and what this means for humanity is the very bedrock of the Marxist method, unless we are going to rip the revolutionary guts out of Marxism.

lem

16 years 6 months ago

In reply to by libcom.org

Submitted by lem on October 1, 2007

maybe the problem that most have is that a crisis coupled with development sounds impossible. if i as an individual or member of a group was experiencing socio-economic development i could not be in socio-economic crisis.

but then again maybe we are not a member-part of capital. or maybe it's the case that decay does not always entail crisis?

point scoring

:D been meaning to think about that...

ernie

16 years 6 months ago

In reply to by libcom.org

Submitted by ernie on October 1, 2007

What group is experiencing socio-economic development?
You are right to say that decay does not away involve crisis if by crisis you mean the open economic crisis, clearly for example the period of the 50's and 60's in the most developed areas of capitalism were not marked by open crisis. However, at the level of the totality of society tens of millions if not hundreds were living through terrible imperialist wars. As said above it depends on whether your method involves only looking at the economic surface or the social whole. Even at the economic level, the necessity for the state to dominate the economy and the whole of society surely cannot be seen as a sign of progress and development?

lem

16 years 6 months ago

In reply to by libcom.org

Submitted by lem on October 1, 2007

i assumed that was what you were saying :o
eta2: ------------
eta1: i might nick that 'point scoring' turn for a masters reasearch proposal...

i sort of want to post it up for advice but tbh - dunno.

ernie

16 years 6 months ago

In reply to by libcom.org

Submitted by ernie on October 1, 2007

Didn't mean to put you on the spot but there has been a tendency in the discussion to down play the totality of the question and I may have been a bit defensive, I apologise. Anyway, lem, Do you agree with what we are saying and the wider point we are trying to make about Luxemburg's method and aim?
Feel free to use the 'point scoring' but I have removed it from the post because it did not really express what I was trying to get at, though a lot of academic stuff is simply that though.
Well I must climb the wooden hill and embrace the sandman, Good night one and all.

lem

16 years 6 months ago

In reply to by libcom.org

Submitted by lem on October 1, 2007

iirc i have read the thread, but i don't know the answer to your question tbh..

ernie

16 years 6 months ago

In reply to by libcom.org

Submitted by ernie on October 2, 2007

Fair enough. The aim of the forums is to allow clarification, let me pose another question: where do you see capitalism going?

lem

16 years 6 months ago

In reply to by libcom.org

Submitted by lem on October 2, 2007

i find it difficult to assess because of the ecological crisis. of course if we factor in that i think it likely that we are in decay.

capricorn

16 years 6 months ago

In reply to by libcom.org

Submitted by capricorn on October 3, 2007

What I'd like to know is, if Rosa Luxemburg was right, why is capitalism still going? Surely external markets dried up a long time ago (and arms spending and so-called "fictitious capital" are internal)?

Demogorgon303

16 years 6 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 3, 2007

The development of state capitalism is one answer. Over the decades they've developed increasingly sophisticated methods of printing money to satisfy the lack of effective demand. Obviously these phenomena are internal to capitalism, but they represent a conscious attempt by the bourgeoisie to circumvent the logic of the system. Nonetheless, they can't overcome the underlying problem - as the last century, wracked by crisis, demonstrates - but it prevents a complete breakdown of the economy and allows the bourgeoisie, to some degree, to influence the course of the crisis.

Whether this demonstrates the accuracy of Rosa's theories is another question. This policy can probably be interpreted as an effort by the bourgeoisie to deal with the empirical reality of overproduction which has not actually been disputed on this thread. Overproduction can be explained either through Rosa's idea of the saturation of external markets or the tendency of the rate of profit to fall (which can also express itself through a lack of demand).

On the other hand, the rate of profit for European and American capital has actually risen ever since the 80s. And yet, all the other signs of a gangrened economy continue: financial shocks, wild speculation, etc. Consumer debt has ballooned beyond the wildest imaginings of economists in the 80s, let alone poor old Rosa! For example, the UK's consumer and mortgage debt alone is now larger than annual GDP for the first time in history - that doesn't even include the state debt which could raise the figure to as much as 160 - 250% of GDP depending on how it's calculated. If the rate of profit was able to provide effective demand within the economy, why is there so much need for this credit?

capricorn

16 years 6 months ago

In reply to by libcom.org

Submitted by capricorn on October 3, 2007

The development of state capitalism is one answer. Over the decades they've developed increasingly sophisticated methods of printing money to satisfy the lack of effective demand.

I can't see that this can be the answer. That would only effect prices and lead to inflation (and has) while leaving the real economy and its relationships unchanged. And I can't see that Luxemburg herself would have accepted it as it would have made her into a common or garden monetary "underconsumptionist". Whereas, as a Marxist, surely she must have been concerned with something more fundamental than a mere lack of tokens expressing "purchasing power" . I thought she argued that the fundamental economic flaw in capitalism was that there was nobody within the system with products embodying value to exchange with that part of surplus value destined for capital accumulation. Which, surely, won't be effected by mere monetary measures, however sophisticated.

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on October 3, 2007

Demogorgon303

The development of state capitalism is one answer. Over the decades they've developed increasingly sophisticated methods of printing money to satisfy the lack of effective demand. Obviously these phenomena are internal to capitalism, but they represent a conscious attempt by the bourgeoisie to circumvent the logic of the system. Nonetheless, they can't overcome the underlying problem - as the last century, wracked by crisis, demonstrates - but it prevents a complete breakdown of the economy and allows the bourgeoisie, to some degree, to influence the course of the crisis.

I'm not sure this offers Luxemburg's theory an escape from the problem of how capitalism could still exist if her theory were correct. It may. But then it isn't clear why these methods couldn't be used indefinitely as a solution to Luxemburg's problem. (I admit, this also causes problems for those who think that the falling rate of profit is the primary cause of economic crises, since it is conceivable that prices could be propped up by state intervention enough to eliminate the problem. Andrew Kliman has dealt with this problem somewhat but I think more work is still needed.)

Whether this demonstrates the accuracy of Rosa's theories is another question. This policy can probably be interpreted as an effort by the bourgeoisie to deal with the empirical reality of overproduction which has not actually been disputed on this thread. Overproduction can be explained either through Rosa's idea of the saturation of external markets or the tendency of the rate of profit to fall (which can also express itself through a lack of demand).

I'm very glad that you have recognized this. I have had a hard time trying to explain this to Luxemburgians. The accusation that those who reject Luxemburg's theory must accept Say's law is extremely common, and entirely untrue.

On the other hand, the rate of profit for European and American capital has actually risen ever since the 80s. And yet, all the other signs of a gangrened economy continue: financial shocks, wild speculation, etc. Consumer debt has ballooned beyond the wildest imaginings of economists in the 80s, let alone poor old Rosa! For example, the UK's consumer and mortgage debt alone is now larger than annual GDP for the first time in history - that doesn't even include the state debt which could raise the figure to as much as 160 - 250% of GDP depending on how it's calculated. If the rate of profit was able to provide effective demand within the economy, why is there so much need for this credit?

I don't think this condemns the falling rate of profit theory. Even in Luxemburg's theory (indeed, in any theory of crisis) a lack of effective demand takes effect through reducing the amount of surplus-value realized, which is also a fall in the rate of profit. If the falling rate of profit theory can't make sense of these modern phenomena, neither can Luxemburg's.

Mike

Demogorgon303

16 years 6 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 3, 2007

mikus

I'm very glad that you have recognized this. I have had a hard time trying to explain this to Luxemburgians. The accusation that those who reject Luxemburg's theory must accept Say's law is extremely common, and entirely untrue.

You seem to be under the impression that I'm a "Luxemburgist" and act surprised at my apparent concession. I'm haven't decided where I stand on that issue yet, as I've said repeatedly. In fact, I was very glad you had recognised the presence of overproduction ;) which seems to me to be an essential element of Marx's contribution. Often anti-Luxemburgists seem to deny the reality of overproduction completely, so touche. But, joking aside, it's important to see where we agree. What's really important in my view is to understand the evolution of the crisis in reality and if a theory helps us understand this better, then it's useful. What I understand of Luxemburg's theory seems to make sense in the light of this.

I don't think this condemns the falling rate of profit theory. Even in Luxemburg's theory (indeed, in any theory of crisis) a lack of effective demand takes effect through reducing the amount of surplus-value realized, which is also a fall in the rate of profit. If the falling rate of profit theory can't make sense of these modern phenomena, neither can Luxemburg's.

The use of credit instruments allows the bourgeoisie to cheat - it allows the realisation of surplus value in the short term, at the price of accumulating a debt that can never be paid back. Again, this seems to conform with the empirical reality being laid bare in the current crisis. Once it becomes obvious to everyone the debts can't be repaid there's carnage in the economy and only an ever more massive injection of credit can overcome it. Again, whether this proves Luxemburg (or anyone else) correct, I couldn't say but it seems to make sense.

capricorn

I can't see that this can be the answer. That would only effect prices and lead to inflation (and has) while leaving the real economy and its relationships unchanged. And I can't see that Luxemburg herself would have accepted it as it would have made her into a common or garden monetary "underconsumptionist". Whereas, as a Marxist, surely she must have been concerned with something more fundamental than a mere lack of tokens expressing "purchasing power" . I thought she argued that the fundamental economic flaw in capitalism was that there was nobody within the system with products embodying value to exchange with that part of surplus value destined for capital accumulation. Which, surely, won't be effected by mere monetary measures, however sophisticated.

I didn't say that the strategy of the bourgeoisie has changed the underlying relationships, that's precisely the problem. They're attempting to overcome the contradictions produced by those relationships without changing them. Thus, the phenonemon of consumer credit which raises purchasing power without actually raising purchasing power (because it has to be paid back). The problem remains that the working class - despite the determination of the bourgeoisie - cannot become a consuming class because in doing so it would no longer be an exploited class.

The bourgeoisie's measures don't overcome this fundamental contradiction. They can merely ameliorate it temporarily. The progression of the crisis since the end of the 60s shows both the enormous achievement of their efforts (they've avoided total economic meltdown) as well as its limits (the virtual economic collapse of Africa following the debt crises in the 70s, followed by periodic catastrophes that have hit the Far East (especially Japan, in permanent stagnation since the 90s), Russia, Latin America, etc. They've controlled inflation in the last two decades by pushing wages below the cost of their reproduction (concretely, pushing production into places like China where they literally work people to death) but it now looks like this strategy is on the verge of coming to an end as inflationary pressures begin to build.

There's loads more to say here, but it's only matchsticks keeping my eyes open, so I'm going to have to leave it there.

Alf

16 years 6 months ago

In reply to by libcom.org

Submitted by Alf on October 3, 2007

"The development of state capitalism is one answer. Over the decades they've developed increasingly sophisticated methods of printing money to satisfy the lack of effective demand. Obviously these phenomena are internal to capitalism, but they represent a conscious attempt by the bourgeoisie to circumvent the logic of the system. Nonetheless, they can't overcome the underlying problem - as the last century, wracked by crisis, demonstrates - but it prevents a complete breakdown of the economy and allows the bourgeoisie, to some degree, to influence the course of the crisis".

I think this is well put. The history of capitalism since the first world war, and above all since the great depression, is the history of the bourgeoisie's efforts to use the state power to 'deny' the economic contradictions - to circumvent the 'free' market, to cheat the law of value. Despite all the guff about neo-liberalism today, no serious faction of the ruling class contemplates a return to the illusions of the 1920s. Hence the unlimited use of debt, fictitious capital, artificial markets, hence the whole attempt to command the economy and carry on expanding production as if the laws of the market can be ignored (a practice most evident during times of imperialist war, but in any case typical of a permanent war economy).

At the end of the second world war, a glimpse of these tendencies led Bordiga to argue that capitalism was actually becoming 'fascist'. It would have been more accurate to say that capitalism was everywhere becoming Stalinist. But the limits of Stalinist levels of 'command' were also revealed very clearly in 1989. So the bourgeoisie needs to 'go back to the free market', and that's equally impossible.This is actually why the bourgeoisie is in an even deeper hole today than it was in 1929.

But a discussion about the relevance of Rosa's theory to these problems has to include the recognition that in 1913, when Accumulation of Capital was published, Luxemburg did not consider that capitalism had exhausted all the non-capitalist markets and in fact wrote that a purely capitalist world could only be a theoretical construct. Certainly the non-capitalist markets have progressively shrunk since then, but they did not all vanish a year later, in 1914! To understand how capitalism has survived since that point, we have to consider the role played by its relationship with the non-capitalist 'milieu' even during the epoch of decline.

capricorn

16 years 6 months ago

In reply to by libcom.org

Submitted by capricorn on October 4, 2007

But a discussion about the relevance of Rosa's theory to these problems has to include the recognition that in 1913, when Accumulation of Capital was published, Luxemburg did not consider that capitalism had exhausted all the non-capitalist markets and in fact wrote that a purely capitalist world could only be a theoretical construct. Certainly the non-capitalist markets have progressively shrunk since then, but they did not all vanish a year later, in 1914! To understand how capitalism has survived since that point, we have to consider the role played by its relationship with the non-capitalist 'milieu' even during the epoch of decline.

I don't think this is the answer either. As a matter of historical fact the development of capitalism did depend on non-capitalist areas and, as you say, not all of these had been exhausted by the time Luxemburg was writing. But her argument, I thought, was that capitalism could not have existed without these areas, not simply that it did not. That it needed them to convert into money that part of surplus value that was destined to be accumulated as further capital.

You concede that non-capitalist markets have progressively shrunk since 1913, but, to have kept capitalism going, they would have had to have expanded at the same rate as the capitalised part of surplus value (which has expanded enormously since then).

Anyway, nearly a hundred years later what and where are the remaining non-capitalist areas and their markets?

Nor is the so-called "permanent arms economy" you mention an explanation. Luxemburg herself argued that State spending was no answer (because its income was derived from taxing capitalists and/or workers, so merely transferring purchasing power from them to it) unless it obtained its income from taxing or stealing from non-capitalist areas (and only to that extent). But, once again, where are these non-capitalist areas today?

Alf

16 years 6 months ago

In reply to by libcom.org

Submitted by Alf on October 4, 2007

Very briefly: when we look at the last 100 years we can't see it as a homogeneous block. With the exception of America in the 1920s, the period from 1914-1945 was of virtual stagnation of the world economy in which the proportion of capitalist to non-capitalist relations of production was not dramatically altered. So we are really looking at the basis for the 'outward' expansion of world capital during the 'glorious' post second world war period. Since the onset of the open crisis at the end of the 60s we are very clearly looking at a system which sustains itself on the basis of astronomical debt.

You are right to say that the war economy is not a solution but it gives the appearance of one: during the 30s, the 'natural' functioning of the economy resulted in massive underutilisation of plant and massive unemployment. During the war the factories were running full pelt and there was no unemployment. Individual capitalists made huge profits out of this. But as far as global capital was concerned, this was not the accumulation of value but the destruction of value on a vast scale.

I think part of the problem in this discussion is that people are looking for proof that capitalism in its decadent epoch can function 'normally' when it can only keep going by increasingly flouting its own laws.

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on October 4, 2007

capricorn

The development of state capitalism is one answer. Over the decades they've developed increasingly sophisticated methods of printing money to satisfy the lack of effective demand.

I can't see that this can be the answer. That would only effect prices and lead to inflation (and has) while leaving the real economy and its relationships unchanged. And I can't see that Luxemburg herself would have accepted it as it would have made her into a common or garden monetary "underconsumptionist". Whereas, as a Marxist, surely she must have been concerned with something more fundamental than a mere lack of tokens expressing "purchasing power" .

Insofar as her claim was that it didn't make sense for capitalists to continue accumulating capital if markets were not already given (i.e. she thought it didn't make sense that markets would be created as capital accumulated), state intervention does solve the problem by consciously creating a reason for this accumulation. But then her whole problem disappears altogether and it doesn't make sense to say that the underlying problems of capital accumulation remain in spite of state intervention.

I thought she argued that the fundamental economic flaw in capitalism was that there was nobody within the system with products embodying value to exchange with that part of surplus value destined for capital accumulation. Which, surely, won't be effected by mere monetary measures, however sophisticated.

This is only one argument she made, and she really only makes it very clearly in the situation where the organic composition of capital is rising. (I posted citations in an earlier post on this thread somewhere.) This argument was decisively refuted by Otto Bauer, so in my opinion it isn't even worth discussing unless someone finds a hitherto unknown mathematical error in Bauer's schema. (They won't.)

Mike

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on October 4, 2007

Demogorgon303

mikus

I'm very glad that you have recognized this. I have had a hard time trying to explain this to Luxemburgians. The accusation that those who reject Luxemburg's theory must accept Say's law is extremely common, and entirely untrue.

You seem to be under the impression that I'm a "Luxemburgist" and act surprised at my apparent concession. I'm haven't decided where I stand on that issue yet, as I've said repeatedly. In fact, I was very glad you had recognised the presence of overproduction ;) which seems to me to be an essential element of Marx's contribution. Often anti-Luxemburgists seem to deny the reality of overproduction completely, so touche. But, joking aside, it's important to see where we agree. What's really important in my view is to understand the evolution of the crisis in reality and if a theory helps us understand this better, then it's useful. What I understand of Luxemburg's theory seems to make sense in the light of this.

I assume you were a Luxemburgian because you are a member of the ICC. (Or at least, I think you are.) I know the ICC doesn't require that one agree with Luxemburg to be a member, but I hadn't come across a member who wasn't a Luxemburgian.

And where did you say that you hadn't taken a stand on Luxemburg? If it was on this thread, I am sorry for missing it. If it wasn't on this thread, I probably never saw it as I only read topics which are of interest to me.

As for overproduction: I don't think it is in any way "Marx's contribution" to recognize its existence. Sismondi and Malthus both recognized its possibility, even arguing for its necessity. Every practical businessman certainly knew of it as well. The only people who denied it were the classical political economists (and as Marx showed, even they admitted its existence at times while trying to act as if it didn't exist). Marx never really made an argument for the existence of overproduction. No argument was necessary: it was a visible fact during crises.

You also talk about Luxemburg's theory making light of reality. This is, of course, necessary, but if a theory doesn't even make sense then it cannot explain reality. In addition, she makes claims of impossibility, which are refuted by showing how it is possible for capital to accumulate without the non-capitalist nations. Which I think has been done over and over again in the history of the debate. As Joan Robinson recognized, this does leave open the possibility that something similar to Luxemburg is a correct empirical description under certain conditions, but it does show that her claim that it is impossible for capitalism to solve the problem/s she noted incorrect.

I don't think this condemns the falling rate of profit theory. Even in Luxemburg's theory (indeed, in any theory of crisis) a lack of effective demand takes effect through reducing the amount of surplus-value realized, which is also a fall in the rate of profit. If the falling rate of profit theory can't make sense of these modern phenomena, neither can Luxemburg's.

The use of credit instruments allows the bourgeoisie to cheat - it allows the realisation of surplus value in the short term, at the price of accumulating a debt that can never be paid back. Again, this seems to conform with the empirical reality being laid bare in the current crisis. Once it becomes obvious to everyone the debts can't be repaid there's carnage in the economy and only an ever more massive injection of credit can overcome it. Again, whether this proves Luxemburg (or anyone else) correct, I couldn't say but it seems to make sense.

Perhaps. I'll think about this a little more. But if you are correct about this, Luxemburg's theory does no more than provide the same prediction as the falling rate of profit theory. So it is no more an argument in favor of her theory than the falling rate of profit theory.

But Luxemburg's theory still can't answer why the simple printing of money to inject demand into the economy can't be sustained forever.

Mike

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on October 4, 2007

Alf

But a discussion about the relevance of Rosa's theory to these problems has to include the recognition that in 1913, when Accumulation of Capital was published, Luxemburg did not consider that capitalism had exhausted all the non-capitalist markets and in fact wrote that a purely capitalist world could only be a theoretical construct. Certainly the non-capitalist markets have progressively shrunk since then, but they did not all vanish a year later, in 1914! To understand how capitalism has survived since that point, we have to consider the role played by its relationship with the non-capitalist 'milieu' even during the epoch of decline.

I thought the you (meaning the ICC) also agreed with the basic points of Lenin's Imperialism. And one of his main claims is that the whole world had been carved up by the imperialist powers by the time of the first world war.

Am I wrong about the ICC's position with regard to Lenin's pamphlet?

Mike

mikus

16 years 6 months ago

In reply to by libcom.org

Submitted by mikus on October 4, 2007

capricorn

But a discussion about the relevance of Rosa's theory to these problems has to include the recognition that in 1913, when Accumulation of Capital was published, Luxemburg did not consider that capitalism had exhausted all the non-capitalist markets and in fact wrote that a purely capitalist world could only be a theoretical construct. Certainly the non-capitalist markets have progressively shrunk since then, but they did not all vanish a year later, in 1914! To understand how capitalism has survived since that point, we have to consider the role played by its relationship with the non-capitalist 'milieu' even during the epoch of decline.

I don't think this is the answer either. As a matter of historical fact the development of capitalism did depend on non-capitalist areas and, as you say, not all of these had been exhausted by the time Luxemburg was writing. But her argument, I thought, was that capitalism could not have existed without these areas, not simply that it did not. That it needed them to convert into money that part of surplus value that was destined to be accumulated as further capital.

You concede that non-capitalist markets have progressively shrunk since 1913, but, to have kept capitalism going, they would have had to have expanded at the same rate as the capitalised part of surplus value (which has expanded enormously since then).

Anyway, nearly a hundred years later what and where are the remaining non-capitalist areas and their markets?

Nor is the so-called "permanent arms economy" you mention an explanation. Luxemburg herself argued that State spending was no answer (because its income was derived from taxing capitalists and/or workers, so merely transferring purchasing power from them to it) unless it obtained its income from taxing or stealing from non-capitalist areas (and only to that extent). But, once again, where are these non-capitalist areas today?

I agree with what your write in this post, particularly about Luxemburg's claim of the necessity of non-capitalist areas for capitalist accumulation. Which means, no amount of empirical evidence could substantiate Luxemburg's claim, since the necessity of something can't be empirically observed. If Luxemburg had showed that the math couldn't work out in the reproduction schemas, she would have had a case for the necessity of outside markets. But she didn't, so the necessity thesis has to go.

Mike

Demogorgon303

16 years 6 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 5, 2007

Mikus

No, I'm not a member of the ICC although I am a sympathiser. I agree largely with their analysis of decadence which, in my opinion, doesn't depend on Luxemburg's validity to maintain the substance of its core arguments. I don't understand enough of the core theory to take a firm position either for or against Luxemburg.

As far as the ICC's position on the question, Alf already said on this thread that:

The ICC has always had the view that Rosa's analysis offers the most coherent continuation of Marx's theory of crisis, but we have always said that adherence to this analysis is not a precondition for membership and that this is a debate which has to continune both within the organisation and within the wider proletarian movement.

mikus

Perhaps. I'll think about this a little more. But if you are correct about this, Luxemburg's theory does no more than provide the same prediction as the falling rate of profit theory. So it is no more an argument in favor of her theory than the falling rate of profit theory.

Perhaps and perhaps not. But shouldn't a rising rate of profit, generate demand in its own right as the bourgeoisie invest more and recapitalise? If there is no external factor, I would have thought this would minimise the need for credit to plug the gaps in demand. And yet, the period since the 80s has seen the veritable explosion of credit. Why does the bourgeoisie find shifting capital into loans for consumption rather more profitable than actual production? Surely this is because there is no sufficient demand for the vast amount of products that would be created if all capital was pushed into industry? Luxemburg (or variant thereof, I don't think anyone agrees with everything she wrote) seems able to explain this phenomenon.

But Luxemburg's theory still can't answer why the simple printing of money to inject demand into the economy can't be sustained forever.

Because it doesn't actually create real demand in the long term, it simply simulates it. The increase of currency
doesn't actually change the fundamental economic relationships (i.e. the distribution of purchasing power between the bourgeois and proletariat, the cleavage between production and market, etc.). Once the new currency is absorbed into the system, the contradictions return with even more violence. Without an increase in real demand it ultimately creates inflation - which is, of course, what we see in the real world, especially in the 70s when this policy reached its extremes. So the question of why it can't go on forever has been largely answered by reality and the bourgeoisie have learnt from this experience, hence the develop of ever more sophisticated credit instruments. Of course, the same question could be asked as far as debt is concerned - why can't it go on forever? Theory answers: because at the end of the day, it has to be paid back or the capitalists have given production away for free. And the current credit crunch is reality's answer to that question, just as stagflation buried Keynes in the 70s.

Alf

16 years 6 months ago

In reply to by libcom.org

Submitted by Alf on October 5, 2007

Mike:
I thought the you (meaning the ICC) also agreed with the basic points of Lenin's Imperialism. And one of his main claims is that the whole world had been carved up by the imperialist powers by the time of the first world war.

Am I wrong about the ICC's position with regard to Lenin's pamphlet

I think perhaps you have mistaken 'carved up' for used up'. The fact that the major powers had politically divided up most of the globe by the beginning of the 20th century didn't mean that they had developed all the possible economic outlets in these areas, far from it. Luxemburg defined imperialism as the struggle for the last remaining non-capitalist areas - the imperialist war of 1914-18 was largely fought to redivide colonial regions because there were no unconquered areas left, but if anything it delayed the economic development of these areas for decades. In other words, the war intervened for miltary/political reasons well before the full impact of the 'saturation of markets' was felt. The first full-blown economic crisis of decadence was not until 1929.

I agree with Demogorgon's response to your question about printing money. I was a bit surprised that you argued this, to say the least.

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 5, 2007

Alf

Mike:
I thought the you (meaning the ICC) also agreed with the basic points of Lenin's Imperialism. And one of his main claims is that the whole world had been carved up by the imperialist powers by the time of the first world war.

Am I wrong about the ICC's position with regard to Lenin's pamphlet

I think perhaps you have mistaken 'carved up' for used up'. The fact that the major powers had politically divided up most of the globe by the beginning of the 20th century didn't mean that they had developed all the possible economic outlets in these areas, far from it. Luxemburg defined imperialism as the struggle for the last remaining non-capitalist areas - the imperialist war of 1914-18 was largely fought to redivide colonial regions because there were no unconquered areas left, but if anything it delayed the economic development of these areas for decades. In other words, the war intervened for miltary/political reasons well before the full impact of the 'saturation of markets' was felt. The first full-blown economic crisis of decadence was not until 1929.

This doesn't really address my point. In Lenin's theory, the whole world is carved up and capital is exported to undeveloped areas. (By "capital" Lenin seems to mean "productive capital".) The implication of this is that capitalist production is undertaken in those areas. Hence they could not have served as outlets for the capitalist mode of production, since they already were the capitalist mode of production.

What you said only makes sense if you don't subscribe to Lenin's theory of imperialism.

Alf

I agree with Demogorgon's response to your question about printing money. I was a bit surprised that you argued this, to say the least.

I will respond to Demogorgon in a moment.

ernie

16 years 5 months ago

In reply to by libcom.org

Submitted by ernie on October 5, 2007

Just caught up with the discussion, there seems to be a real clarification taking place. This process would be further deepened if Nikus could explain what he/she sees as the theory of the crisis. It is clear that Nikus does not agree with Luxemburg and has questions about the Falling Rate of Profit as a sole explanation. So Nickus what explanation do you see as being Marx's explanation?

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 5, 2007

Demogorgon303

Mikus

No, I'm not a member of the ICC although I am a sympathiser. I agree largely with their analysis of decadence which, in my opinion, doesn't depend on Luxemburg's validity to maintain the substance of its core arguments. I don't understand enough of the core theory to take a firm position either for or against Luxemburg.

Okay. But since you are defending Luxemburg's theory on this thread (whatever your personal opinions) I am arguing with you as I would with a genuine Luxemburgian.

As far as the ICC's position on the question, Alf already said on this thread that:

The ICC has always had the view that Rosa's analysis offers the most coherent continuation of Marx's theory of crisis, but we have always said that adherence to this analysis is not a precondition for membership and that this is a debate which has to continune both within the organisation and within the wider proletarian movement.

I am aware of this. Since you are not an ICC member, it turns out that I still haven't come across an ICC member who isn't a Luxemburgian. Which is okay, and I'm not trying to say that the ICC is lying or that it has adherence to Luxemburg's theory of crisis as a secret membership clause, but I don't feel terribly out of line in assuming that any member I come across in the future is a Luxemburgian.

Demogorgon

mikus

Perhaps. I'll think about this a little more. But if you are correct about this, Luxemburg's theory does no more than provide the same prediction as the falling rate of profit theory. So it is no more an argument in favor of her theory than the falling rate of profit theory.

Perhaps and perhaps not. But shouldn't a rising rate of profit, generate demand in its own right as the bourgeoisie invest more and recapitalise? If there is no external factor, I would have thought this would minimise the need for credit to plug the gaps in demand. And yet, the period since the 80s has seen the veritable explosion of credit. Why does the bourgeoisie find shifting capital into loans for consumption rather more profitable than actual production? Surely this is because there is no sufficient demand for the vast amount of products that would be created if all capital was pushed into industry? Luxemburg (or variant thereof, I don't think anyone agrees with everything she wrote) seems able to explain this phenomenon.

Firstly, even if what you said were correct (and I don't think it is) it would only mean that there was a lack of demand. That is not all Luxemburg's theory is. Luxemburg's theory is a theory of the impossibility of sufficient demand without outside markets. Hence even if you could prove that a crisis was caused by a lack of effective demand with no antecedent fall in the rate of profit, it would not prove Luxemburg's theory correct. It would prove no more than that a single crisis was caused by a lack of effective demand.

In any case, I don't think what you're saying is true. I'm no expert on the development of capitalism over the last 30-40 years, but people with more credentials than the ICC have been saying for a while that the general rate of profit is not high. (I particularly have in mind Paolo Giussanni. I almost mentioned Robert Brenner but he doesn't have any more credentials in this field than the ICC.) I know there is some disagreement here even among professional economists (Shaikh seems to think that the rate of profit is rising) but the picture you have painted isn't the generally accepted one. (I don't mean to imply that the idea that the rate of profit is falling is generally accepted, either. I don't think there is a generally accepted view on this at the moment, so far as I know.)

And even if what you were saying were true, it seems to be based on a view of credit expansion as something that occurs in order to increase effective demand. I don't at all agree with this. Credit expansion does increase effective demand (although as the ICC never tires of pointing out, it has to be paid back), but to make that into its purpose would require an explanation of how that happens. (For the record, I don't think the Fed has as great of control of interest rates as it is frequently made out to have.)

Demogorgon

But Luxemburg's theory still can't answer why the simple printing of money to inject demand into the economy can't be sustained forever.

Because it doesn't actually create real demand in the long term, it simply simulates it. The increase of currency doesn't actually change the fundamental economic relationships (i.e. the distribution of purchasing power between the bourgeois and proletariat, the cleavage between production and market, etc.). Once the new currency is absorbed into the system, the contradictions return with even more violence. Without an increase in real demand it ultimately creates inflation - which is, of course, what we see in the real world, especially in the 70s when this policy reached its extremes. So the question of why it can't go on forever has been largely answered by reality and the bourgeoisie have learnt from this experience, hence the develop of ever more sophisticated credit instruments. Of course, the same question could be asked as far as debt is concerned - why can't it go on forever? Theory answers: because at the end of the day, it has to be paid back or the capitalists have given production away for free. And the current credit crunch is reality's answer to that question, just as stagflation buried Keynes in the 70s.

Again, I don't see what this explains. You said that state printing of money "doesn't actually create real demand in the long term, it simply simulates it." (I presume you meant "stimulates it"?) Thus you distinguish between "real demand" and something else (state demand?) without explaining the distinction or why it matters. As far as I can tell, it doesn't -- a dollar is a dollar no matter where it comes from, and it makes no difference to an enterprise whether or not the dollar derives from an increase in the paper money supply or from an old stock of paper money.

Assuming that something "stimulating" demand cannot serve as a long-term source of demand is akin to the following reasoning:

Eating cannot serve as a long-term cure for hunger. Eating only temporarily serves to alleviate hunger by stimulating the body. It whets the pallet but the hunger returns again and again. (The absurdity of this reasoning should be self-evident.)

You also say: "The increase of currency doesn't actually change the fundamental economic relationships (i.e. the distribution of purchasing power between the bourgeois and proletariat, the cleavage between production and market, etc.)."

You are wrong here, since a change in the distribution of purchasing power between bourgeois and proletariat is precisely what the printing of money does -- it puts more money into the hands of the bourgeoisie, hence allowing them to purchase products at higher prices than would be the case without as extensive a printing of money (hence raising the rate of profit and alleviating shortages in effective demand).

Then you say: "Once the new currency is absorbed into the system, the contradictions return with even more violence. Without an increase in real demand it ultimately creates inflation - which is, of course, what we see in the real world, especially in the 70s when this policy reached its extremes. "

How do you know that the contradictions return with even more violence? How do you know that a crisis that later occurs isn't derived from other factors? For example, the bailouts of the 1980s. How do you know that those bailouts are what are creating increasing problems right now? How do you know that the bailouts weren't successful but that we are now in an unstable period for other reasons?

As for inflation, I don't see any evidence for what you are saying. You say that "without an increase in real demand, [the printing of money] ultimately creates inflation", which of course doesn't make sense if there is no distinction between real demand and state demand (as I claimed above). Secondly, your statement implies that with an increase in so-called "real demand" inflation won't be created. This simply isn't true, whatever definition of "real demand" you use. Any increase in demand relative to supply will cause prices to rise. This happens during every economic boom.

And lastly, you make another strange claim when you say that " the same question could be asked as far as debt is concerned - why can't it go on forever? Theory answers: because at the end of the day, it has to be paid back or the capitalists have given production away for free. And the current credit crunch is reality's answer to that question, just as stagflation buried Keynes in the 70s."

In fact, your answer cannot be given as to why the printing of money cannot be sustained forever, since it is characteristic of debt, but not of the simple printing of money, that it must be paid back.

So it is still not clear why the printing of money by the state can't alleviate the problems you point to.

And to clarify, I'm not saying that the printing of money by the state does alleviate all problems. I'm only saying that within the confines of Luxemburgs theory I see no reason why it shouldn't.

Mike

capricorn

16 years 5 months ago

In reply to by libcom.org

Submitted by capricorn on October 6, 2007

Here's why I think that Luxemburg's economic theories are mistaken and therefore irrelevant and quite worthless as a contribution towards an understanding of how capitalism works.

Luxemburg shared the common view amongst the Social Democrats of her day that capitalism would sooner or later collapse because of its inability to sell an ever-increasing surplus-product over and above what the workers could buy back. Her book on the Accumulaton of Capital was an elaborate attempt to prove this, but its basic argument is fallacious.

The level of effective demand under capitalism, she argued, is determined by consumption (what the workers and capitalists consume). If a part of the capitalists' profits are re-invested rather than consumed, then consumption and hence demand is reduced. The result is that there is nobody to buy the products in which the re-invested profits are embodied (new machinery, raw materials and consumer goods for the extra workers).

This argument makes accumulation impossible under 'pure' capitalism (where there are only workers and capitalists and their hangers-on). Luxemburg does not shrink from this conclusion. In fact it is the basic argument of her book: for capital accumulation to take place there must be non-capitalist areas to buy the surplus-product. It follows that capitalism would collapse at the point when there were no more non-capitalist areas left in the world.

She made the silly mistake of assuming that the level of demand was determined exclusively by consumption whereas in fact it is determined by consumption plus investment (capitalist spending on new means of production as opposed to consumer goods for themselves).

Whatever may have been her other merits, Luxemburg was no economic theorist. Those here who support her conclusions have not dared to defend her so obviously mistaken argument that effective demand under capitalism is made up only of the consumption of workers and capitalists. All that Goldner, the ICC and the others do is advance reasons as to how effective demand is supposedly increased under capitalism, without trying to defend the basic assumption of Luxemburgist economics that this needs to be done because there is a built-in lack of purchasing power in capitalism in the first place.

There's plenty wrong with capitalism, but that it suffers from not generating enough income to purchase all of the newly produced wealth is not one of them.

Alf

16 years 5 months ago

In reply to by libcom.org

Submitted by Alf on October 6, 2007

Capricorn, I don't think that Luxemburg made the "silly mistake" of seeing only workers as consumers of commodities. Obviously capitalists sell to other capitalists, mainly capital goods. But once again, the problem emerges when you consider the total social capital and not the individual capitalists. Surely Marx was thinking about this problem when we wrote in Capital Vol 3 that "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". A fuller version of this quote is included on page 4 of this thread - it deals precisely with the basic problem of overproduction in capitalism. Perhaps you should comment on that because for us it shows a clear continuity between Marx and Luxemburg.

Demogorgon303

16 years 5 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 6, 2007

Hi Mikus

On the rate of profit, I don't see that you've answered my questions at all. I don't say this to be combatitive, but nothing that you've said has shown me where I've gone wrong. Maybe you misunderstood what I was saying, so I'll try and be more direct. If capitalism is a self-contained system and able to create its own demand, then a rising rate of profit should generate this demand, should it not? We should be seeing healthy expansion, capital being shifted into production, debts being repaid and a good time had by all. And yet we see the opposite to this: growth has been slowing since the 60s, capital is shifted into credit and speculation, debts are growing beyond control. So the empirical reality can only be explained by (a) a falling rate of profit, (b) a lack of effective demand, (c) some combination of the two. Am I right so far?

Now, if the rate of profit is empirically rising (you may doubt this, but accept it for sake of argument for the moment), there must be a lack of effective demand. This means that the demand created by the rising rate of profit (which does create demand) must be insufficient by itself to create sufficient demand. This could mean two things, that (a) these rates of profit are insufficient or (b) there is some external factor which was previously present is now missing. Ironically, both of these conditions end up in the same place. If the rate of profit is insufficient (now for decades), it means the only way capitalism can expand in this epoch is through external markets - which it clearly is not doing or the economy would be healthy. This is something of a reversal of Luxemburg's theory, saying capitalism didn't need external markets before when the rate of profit was high, but now does, but its consequences for us living today are the same -capitalism's inability to accumulate "naturally". The second alternative, is Luxemburg's classic theory that capitalism has always needed external markets and they've now dried up.

You are wrong here, since a change in the distribution of purchasing power between bourgeois and proletariat is precisely what the printing of money does -- it puts more money into the hands of the bourgeoisie, hence allowing them to purchase products at higher prices than would be the case without as extensive a printing of money (hence raising the rate of profit and alleviating shortages in effective demand).

I think there is a misunderstanding here. You're claiming this proves me wrong when I say printing money doesn't change "the fundamental economic relationships (i.e. the distribution of purchasing power between the bourgeois and proletariat, the cleavage between production and market, etc.).". Frankly, it does nothing of the kind. All you have done is elaborate on my claim that it simulates/stimulates (and both words are valid, I think) demand - you haven't actually disagreed with it. If printing money changed the distribution of purchasing power, the working class would be either no longer exploited or less exploited than before. Clearly, this is not the case.

As you say, the printing of money allows the bourgeoisie (and the proletariat for that matter) to purchase goods at a higher price. This doesn't change the fundamental value embodied within those commodities. It may also temporarily allow the purchase of goods that may otherwise not have been purchased, which realises the surplus value for those particular capitalists. But the money that has been created in this fashion is not real money - gold (or paper money backed by gold), represents a definite amount of labour (what was required to extract and process that gold). Merely printed money only contains the labour required to produce paper while claiming to represent the labour represented by gold. When it first appears, the bourgeoisie can pretend this claim is true - but as the money enters the system, the law of value exerts its power and the money, over time, returns to its true value. There may now be £3 in circulation instead of £2, but they are the same when measured in commodities. Which leaves the bourgeoisie right back where they have started - except perhaps that they are able to increase the exploitation of the working class, by raising wages below the rate of inflation. This means that ultimately the workers must consume less which shrinks demand further. That is what I mean when I say the contradictions return even more violently.

The stagflation of the 70s was widely acknowledged to be the result of decades of abusing state printing presses in one way or another. This is why Volcker closed the taps on monetary emission - and triggered the early 80s recession. This was overcome with a new strategy of war economy (star wars, etc.) and debt (issuing bonds, etc.) - in other words an unprecedented mobilisation of surplus capital, led by the state, to finance the consumption of the war machine and consumer credit.

Examining the changing strategy of the bourgeoisie goes some way to answering your question "How do you know that a crisis that later occurs isn't derived from other factors?". These conjunctural crises, stagflation in the 70s, stock market crash in the 80s, all have different immediate causes but they are related to the fundamental underlying historic crisis. The bourgeoisie counters overproduction in the 70s with inflationary methods but this ultimate produces stagflation - to counter stagflation, they demolish industry and expand finance and credit, but this creates a debt that can't be repaid. The immediate cause of the current credit crunch is thus not, strictly speaking, overproduction per se but the non-payment of the debts that allowed the bourgeoisie to overcome overproduction.

In fact, your answer cannot be given as to why the printing of money cannot be sustained forever, since it is characteristic of debt, but not of the simple printing of money, that it must be paid back.

I didn't mean this at all. I was merely pointing out that both printing money and expanding credit both have limits, not that these limits spring from the same immediate reasons. Sorry if that wasn't clear.

capricorn

16 years 5 months ago

In reply to by libcom.org

Submitted by capricorn on October 6, 2007

I don't think that Luxemburg made the "silly mistake" of seeing only workers as consumers of commodities. Obviously capitalists sell to other capitalists, mainly capital goods.

I didn't say that Luxemburg only saw workers as consumers, but that her "silly mistake" was to think "that the level of demand was determined exclusively by consumption",ie. by what the workers consumed and by what the capitalists consumed for their personal use, and that she therefore ignored what the capitalists spent on buying new equipment, etc (re-invested). We are of course only talking here about new wealth produced over and above the replacement of the wealth (raw materials, machinery, etc) used up to produce it. Obviously, as you say, capitalists buy this from each other. For Luxemburg the "problem" was who was to buy that part of newly produced wealth destined for accumulation as new capital. (The answer is in fact capitalists buying and selling to each other, but I don't think that was the point you were trying to make!).
Her are some of Luxemburg's statement of what she sees as the problem:

"The difficulty had been that for the purpose of accumulation, part of the surplus value is not consumed by the capitalists but added to capital in order to expand production, giving rise to the question of buyers for this additional product. The capitalists do not want to consume it and the workers are not able to do so, their entire consumption being covered in every case by the available variable capital. Whence the demand for the accumulated surplus value? or, as Marx would have it: Whence the money to pay for the accumulated surplus value?" (chapter VIII)

"It is not the source of money that constitutes the problem of accumulation, but the source of the demand for the additional goods produced by the capitalised social value; not a technical hitch in the circulation of money but an economic problem pertaining to the reproduction of the total social capital"(chapter VIII)

" . . . it is the lack of consumers other than workers and capitalists which accounts for the difficulty in capitalist accumulation . . ." (chapter XI)

"The real problem . . . had been the question: who are the buyers and consumers of the surplus product that comes into being if the capitalists produce more goods than are needed for their own and their workers' consumption; if, that is to say, they capitalise part of their surplus value and use it to expand production, to increase their capital?" (chapter XII)

Later, she quotes, a now obscure Russian writer V. Vorontsov for giving

"the following very clear formulation of the specific relations between the capitalist mode of production and the problem of markets":

"The products of capitalist industry come on the market for another purpose; the question whether all the needs of the country are satisfied is irrelevant to them, and the entrepreneur does not necessarily receive in their stead another material product which may be consumed. Their main purpose is to realise the surplus value they contain. What, then, is this surplus value that it should interest the capitalist for its own sake? From our point of view, it is the surplus of production over consumption inside the country. Every worker produces more than he himself can consume, and all these surplus items accumulate in a few hands; their owners themselves consume them, exchanging them for the purpose against the most variegated kinds of necessities and luxuries. Yet eat, drink and dance as much as they like—they will not be able to squander the whole of the surplus value: a considerable remnant will be left over, of which they have to dispose somehow even though they cannot exchange it for other products. They must convert it into money, since it would otherwise just go bad. Since there is no one inside the country on whom the capitalists could foist this remnant, it must be exported abroad, and that is why foreign markets are indispensable to countries embarking on the capitalist venture." (chapter XIX)

Luxemburg describes the author of this crude underconsumptionist analysis as

"this brilliant Russian theorist with whom one can spend moments of sheer delight".

You yourself make the same mistake when, after giving the expanded version of the passage from Marx to which you refer me, you write:

Marx . . . appears in this passage to specifically reject Mike's notion that the capitalists could buy back the rest of the social product not bought by the workers.

Not to me and, I suspect, most readers he doesn't. Read the passage again to see why:

"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".

The obvious reading of this passage is that Marx is saying that production under capitalism is not essentially to satisfy the consumption of the capitalists, but to accumulate capital. Your conclusion that, when Marx is saying that the capitalists do not consume all the surplus product in riotous living, this means the capitalists can't "buy back the rest of the social product not bought by the workers" can only be drawn if you make the mistake of assuming that the capitalists have no money to spend on buying the materials and labour power to accumulate capital and expand production. Of course the capitalists can, or could, "buy back" the entire social product not bought by the workers (that they don't always choose to is another matter).

Perhaps you should comment on that because for us it shows a clear continuity between Marx and Luxemburg.

Willingly, even though it's not strictly relevant since Marx could be wrong too. But it so happens that Luxemburg herself never claimed such continuity. She freely admitted (chapter XXV) that Marx assumed that capital accumulation was possible within a "pure" or "closed" capitalist system (as one made up only of workers and capitalists and their hangers-on) and went on to criticise this as "flawed", "contradictory", "deficient" and "turning in circles".

ernie

16 years 5 months ago

In reply to by libcom.org

Submitted by ernie on October 7, 2007

Mikus, how about an answer to the question I posed? At the moment we are having to discuss with you with one arm tied behind our back i.e., we have no idea of what explanation of the crisis is, or even if you think there is a crisis. You can kick about Luxemburg's theory as much as you want but if you have nothing to put in its place this is just an academic exercise.
Why is that these other authoritative people should be listen to more than the ICC? We are not fully trained economists (nor was Marx), but then Marx never said you needed to be one in order to apply his method. The role of the economist under decadent capitalism is to try and work out what the hell is going in the economy for the bourgeoisie but without adopting the Marxist method even the most critical is left only being able to see a disaster without being able to give an answer. Yes bourgeois economists can be worth reading, because they are all not consciously seeking to hid the truth and their statistics are of real use (providing one remembers that they are the statistics of the ruling class). But in the end revolutionaries interest in all this "economic shit" as Marxist put it, is in order to show that capitalism is a historically transitory social system that will drag the working class and humanity down with it, unless the proletariat carry out it historical mission.

ernie

16 years 5 months ago

In reply to by libcom.org

Submitted by ernie on October 7, 2007

capricorn
Here's why I think that Luxemburg's economic theories are mistaken and therefore irrelevant and quite worthless as a contribution towards an understanding of how capitalism works.

Luxemburg shared the common view amongst the Social Democrats of her day that capitalism would sooner or later collapse because of its inability to sell an ever-increasing surplus-product over and above what the workers could buy back. Her book on the Accumulaton of Capital was an elaborate attempt to prove this, but its basic argument is fallacious"

There are two important points that you raise here.
1. Are Luxemburg's theories irrelevant and quote useless as a contribution towards an understanding of how capitalism works? Firstly, if you are with them or not it is historically very clear that her contribution (and she saw her work as a contribution to the development of the marxist method, as posing of the problems that she thought she saw in Vol 2, but she was open having it explained to her where she was going wrong. Unfortunately, she was not able to contribute more to the discussion because the ruling class killed her) has generate a constant discussion amongst Marxists since. Also disagreeing with her analysis does not mean dising her contribution. Grossman makes very clear that despite completely disagreeing with her answer that he believed she had the honor posing vitally important questions. Preobrazhensky in his very interesting book The decline of capitalism (1931)

Rosa luxemburg raised the question of the difference between reproduction in conditions of pure capitalism and reproduction in conditions where capitalism has a broad periphery of small-scale production. However, her entire book, excellent as it is in parts, was given more to expressing the presentiment of a problem then to giving a proper formulation of the question itself. The answer she gave to the question was entirely incorrect

Lenin held back from criticizing her book in public because of the overriding importance of the need to develop the movement against the war and then the needs of the revolution.
Luxemburg seeks to apply the historical materialist framework to the question and that is why revolutionaries never disparaged her contribution. Pannekeok in his criticism of her work did say irrelevant or worthless.

2. Yes Rosa was seeking to show that the economic root of imperialism and the collapse of capitalism: you are right there. But you are very wrong in saying that amongst Social Democrats at the time it was the accepted view that capitalism would collapse sooner or later. The whole point of Rosa's book is to attack revisionists and opportunists denial or downplaying of the collapse of capitalism. She was seeking to defend the revolutionary essence of Marxism against the penetration of bourgeois ideology into the ranks of the party. A struggle that the whole of the Marxist Left was carrying out at the time and which became a real life battle on the streets during the revolution. Lenin and all other revolutionaries may have disagreed with the analysis in Accumulation but they were 100% with Rosa in her struggle against those who sort to deny the historically limited nature of capitalism. Those who seek to deny the decadence of capitalism today should take a long and hard look at the history of the workers movement: been in the same bed a Bernstien should worry any revolutionary.
As for the collapse of capitalism being fallacious capricorn: permanent war, social decay, ecological disaster, billions living in poverty are all expressions of a healthy system then?

Capricorn, as with Mikus it would help the discussion if you could explain your analysis of the crisis, or if you even believe there one.

capricorn

16 years 5 months ago

In reply to by libcom.org

Submitted by capricorn on October 7, 2007

But you are very wrong in saying that amongst Social Democrats at the time it was the accepted view that capitalism would collapse sooner or later.

No, Ernie, it's you who is wrong. Let me call to the box Jack London whose book The Iron Heel which appeared in 1908 and will have been read by many thousands more than Luxemburg's Accumulation of Capital. London was a member of the Socialist Party of America. Even though he was a good writer rather than a theoretician, he still has his hero, Ernest Everard, express views which were common amongst American Social Democrats.
Chapter IX is entitled "The Mathematics of A Dream". In it Everard tells a group of small businessmen:

I shall develop the inevitability of the breakdown of the capitalist system, and I shall demonstrate mathematically why it must break down.

A few pages later Everard summarises his argument:

''Let me briefly go over the ground with you again,'' Ernest said. " We began with a particular industrial process, the shoe factory. We found that the division of the joint-product that took place there was similar to the division that took place in the sum total of all industrial processes. We found that labour could buy back with its wages only so much of the product, and that capital did not consume all of the remainder of the product. We found that when labour had consumed to the full extent of its wages, and when capital had consumed all it wanted, that there was still left an unconsumed surplus. We agreed that this surplus could only be disposed of abroad. We agreed, also, that the effect of unloading this surplus on another country would be to develop the resources of that country, and that in a short time that country would have an unconsumed surplus. We extended this process to all the countries on the planet, till every country was producing every year, and every day, an unconsumed surplus, which it could dispose of to no other country. And now I ask you again, What are we going to do with those surpluses ? "
Still no one answered.
" Mr. Calvin ? " Ernest queried.
" It beats me," Mr. Calvin confessed.
" I never dreamed of such a thing," Mr. Asmunsen said. " And yet it does seem clear as print."
It was the first time I had ever heard Karl Marx's doctrine of surplus value elaborated, and Ernest had done it so simply that I, too, sat puzzled and dumbfounded.

Everard then says:

" I have demonstrated to you mathematically the inevitable breakdown of the capitalist system. When every country stands with an unconsumed and unsaleable surplus on its hands, the capitalist system will break down under the terrific structure of profits that it has itself reared"

This was the sort of crude and, I repeat, fairly widespread underconsumptionist view that Luxemburg was trying to give some semblance of theoretical justification to. As a matter of fact Luxemburg actually quotes favourably the American Social Democrat, Louis Boudin, who expressed London's argument in a more sophisticated form (footnote, Chapter XXIII).
But do you (does anyone?) still believe that to convert into money the part of surplus value destined to be accumulated as capital an amount of equal worth had to be exported to some non-capitalist part of the world? Because that was what Luxemburg was trying to argue. It's nonsense and I notice that you have not attempted to defend it. All you have tried to defend is Luxemburg's political motivation.
I agree capitalism is in a mess (it always has been) but not for the economic reasons advanced by Jack London and Rosa Luxemburg.

Alf

16 years 5 months ago

In reply to by libcom.org

Submitted by Alf on October 7, 2007

I agree with Ernie that a real problem with this discussion is the frankly disrespectful tone that so many comrades adopt towards Rosa's marxism. It makes it very hard for the debate to be a fraternal one when one side insists with such passion that the other has followed her in 'breaking with Marx', as the CWO put it recently. Or, to put it another way, it feels as if many of Rosa's critics do not really feel her to be a comrade. It may of course be that the tone of the comrades towards Rosa and her defenders has sometimes not been aided, or may have been provoked, by the tone of the ICC's defence. But the answer to such baggage from the past is to pose the question from a new angle.

I would suggest that one way to continue this discussion would be to discuss George Lukacs 1921 essay, 'The marxism of Rosa Luxemburg'. Is it online anywhere?

In any case I will come back and try to summarise the relevant points of the essay.

capricorn

16 years 5 months ago

In reply to by libcom.org

Submitted by capricorn on October 7, 2007

I would suggest that one way to continue this discussion would be to discuss George Lukacs 1921 essay, 'The marxism of Rosa Luxemburg'. Is it online anywhere?

In any case I will come back and try to summarise the relevant points of the essay.

Yes, it is, at http://www.marxists.org/archive/lukacs/works/history/ch02.htm
Please do explain it. Hopefully you've got a Ph D. in Hegelian Philosophy. Oops, sorry for being disrepectful to Lukacs.

ernie

16 years 5 months ago

In reply to by libcom.org

Submitted by ernie on October 7, 2007

Caprcorn, It is good to hear that you think capitalism is in a mess, but it would be even better to know why you think this is the case. then we can have a real discussion rather than the one side point scoring against Rosa that has been taking place.
As for the point about London, well yes he has a character who defends the collapse of capitalism: how on earth does that contradict the historical fact of the struggle between the Marxiist Left (with Luxemburg at point) of the 2nd International against revisionism/opportunism/centrism which centred around the question of the historical transitory nature of capitalism?
What on earth is wrong with quoting Boudin's excellent work The theoretical system of Marx? You may disagree with his analysis of the crisis, but hell it is one hell of an attack on all those seeking to attack Marxism at the time. His theoretical effort to try and understand the nature of impeialism and what this means for the working class is extremely interesting and well worth reading. To be frank it is worth far more than much of the academic Marxism one comes across today. Yes he did go on to making a sophisticated defense of participation in WW1, but that is marked by a break with his previous method and analysis of imperialism.

ernie

16 years 5 months ago

In reply to by libcom.org

Submitted by ernie on October 7, 2007

Capricorn, you know full well that you do not need a phd to understand Lukacs's essay. It is very clear and one of the first things I read when coming to Marxism. His essay on reification yes a good understanding of philosophy, but then there is nothing wrong with being challenged to learn more.

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 7, 2007

ernie

Mikus, how about an answer to the question I posed? At the moment we are having to discuss with you with one arm tied behind our back i.e., we have no idea of what explanation of the crisis is, or even if you think there is a crisis. You can kick about Luxemburg's theory as much as you want but if you have nothing to put in its place this is just an academic exercise.

I already posted my political positions earlier. Now I will add that I like Jevons' sunspot theory of crisis.

Why must one put a new theory in Luxemburg's place in order to make one's criticism of Luxemburg valid? My criticism stands no matter what my own feelings are.

Why is that these other authoritative people should be listen to more than the ICC?

Because they are trained in the collection of statistics, whereas ICC'ers can't even defend the simple arguments of their theoretical hero.

Mike

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 7, 2007

ernie

What on earth is wrong with quoting Boudin's excellent work The theoretical system of Marx? You may disagree with his analysis of the crisis, but hell it is one hell of an attack on all those seeking to attack Marxism at the time. His theoretical effort to try and understand the nature of impeialism and what this means for the working class is extremely interesting and well worth reading. To be frank it is worth far more than much of the academic Marxism one comes across today. Yes he did go on to making a sophisticated defense of participation in WW1, but that is marked by a break with his previous method and analysis of imperialism.

Ernie, what on earth are you going on about? Capicorn only mentioned that Luxemburg quoted Boudin in order to show that some social democrats did indeed have a theory very close to Luxemburg's. You have posted a bunch of new information in an attempt to diver the discussion, but have not acknowledged that Capicorn is correct at the very least as far as this specific point is concerned!

Mike

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 7, 2007

I will answer Demogorgon soon. I am done discussing the issue with Alf and Ernie. Neither have even attempted to defend any of Luxemburg's theories against the arguments put forward by myself or anyone else. Instead, they'd rather go on and on about Marx's and Luxemburg's method, and now Ernie even wants to discuss Lukács' take on Luxemburg's method (and then we can discuss our own takes on Lukács' take on Luxemburg's take on Marx's method, and so forth). I don't care about any of this. It doesn't have any bearing on whether or not Luxemburg's theories are correct, which is the only issue I have been discussing.

No wonder the ICC is largely considered a dogmatic sect!

Mike

Mike Harman

16 years 5 months ago

In reply to by libcom.org

Submitted by Mike Harman on October 7, 2007

Alf

I agree with Ernie that a real problem with this discussion is the frankly disrespectful tone that so many comrades adopt towards Rosa's marxism. It makes it very hard for the debate to be a fraternal one when one side insists with such passion that the other has followed her in 'breaking with Marx', as the CWO put it recently. It may be that the tone of the comrades towards Rosa and her defenders has sometimes not been aided, or may have been provoked, by the tone of the ICC's defence. But the answer to such baggage from the past is to pose the question from a new angle.

I would suggest that one way to continue this discussion would be to discuss George Lukacs 1921 essay, 'The marxism of Rosa Luxemburg'. Is it online anywhere?

I think the real problem is that none of the ICC's members of sympathisers have staked out their position on underconsumptionism and the need for external markets, despite the question being posed numerous times.

But do you (does anyone?) still believe that to convert into money the part of surplus value destined to be accumulated as capital an amount of equal worth had to be exported to some non-capitalist part of the world? Because that was what Luxemburg was trying to argue. It's nonsense and I notice that you have not attempted to defend it. All you have tried to defend is Luxemburg's political motivation.

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 8, 2007

Demogorgon303

On the rate of profit, I don't see that you've answered my questions at all. I don't say this to be combatitive, but nothing that you've said has shown me where I've gone wrong. Maybe you misunderstood what I was saying, so I'll try and be more direct. If capitalism is a self-contained system and able to create its own demand, then a rising rate of profit should generate this demand, should it not?

No. If I can walk, it does not follow at any given moment that I am walking. The way you are reasoning here, it is as if observing me sitting would be evidence that I wasn't able to walk at all.

I never claimed that capitalism does generates sufficient demand to realize all surplus-value so long as the rate of profit is high. I claimed that there is no necessity for outside markets. There is no necessary reason that surplus-value cannot be realized if the rate of profit is high. There is no necessity here.

The necessity of outside markets is one of Luxemburg's primary claims.

Demogorgon303

We should be seeing healthy expansion, capital being shifted into production, debts being repaid and a good time had by all. And yet we see the opposite to this: growth has been slowing since the 60s, capital is shifted into credit and speculation, debts are growing beyond control. So the empirical reality can only be explained by (a) a falling rate of profit, (b) a lack of effective demand, (c) some combination of the two. Am I right so far?

No, you are not right. See my response to the quote previous to this one. It is entirely conceivable that existing demand wouldn't satisfy the needs for successful accumulation even if the rate of profit were high. Whether or not this is the case at any given moment, I don't know.

Demogorgon303

Now, if the rate of profit is empirically rising (you may doubt this, but accept it for sake of argument for the moment), there must be a lack of effective demand. This means that the demand created by the rising rate of profit (which does create demand) must be insufficient by itself to create sufficient demand.

I never denied that a high rate of profit may be insufficient to create sufficient effective demand for accumulation to continue. Unfortunately this does not make Luxemburg's theory any truer.

Demogorgon303

This could mean two things, that (a) these rates of profit are insufficient or (b) there is some external factor which was previously present is now missing. Ironically, both of these conditions end up in the same place. If the rate of profit is insufficient (now for decades), it means the only way capitalism can expand in this epoch is through external markets - which it clearly is not doing or the economy would be healthy. This is something of a reversal of Luxemburg's theory, saying capitalism didn't need external markets before when the rate of profit was high, but now does, but its consequences for us living today are the same -capitalism's inability to accumulate "naturally". The second alternative, is Luxemburg's classic theory that capitalism has always needed external markets and they've now dried up.

Neither point is viable.

If point A is correct, then Luxemburg is wrong, as you acknowledge, so I won't bother with it. (Which of course is not an endorsement of A.)

Point B rests on the false assumptions pointed out above, namely the notion that if sufficient effective demand in one situation is not produced within the capitalist mode of production itself then it follows that sufficient demand cannot be effectively generated within the capitalist mode of production. Again, this reasoning is false. That I'm not walking does not imply that I cannot walk.

Demogorgon303

mikus

]You are wrong here, since a change in the distribution of purchasing power between bourgeois and proletariat is precisely what the printing of money does -- it puts more money into the hands of the bourgeoisie, hence allowing them to purchase products at higher prices than would be the case without as extensive a printing of money (hence raising the rate of profit and alleviating shortages in effective demand).

I think there is a misunderstanding here. You're claiming this proves me wrong when I say printing money doesn't change "the fundamental economic relationships (i.e. the distribution of purchasing power between the bourgeois and proletariat, the cleavage between production and market, etc.).". Frankly, it does nothing of the kind. All you have done is elaborate on my claim that it simulates/stimulates (and both words are valid, I think) demand - you haven't actually disagreed with it. If printing money changed the distribution of purchasing power, the working class would be either no longer exploited or less exploited than before. Clearly, this is not the case.

Yes, there is a misunderstanding. When you talked about the distribution of purchasing power between the bourgeoisie and the proletariat I assumed you meant the ratio of purchasing power between the two classes. You apparently meant only that there is a distinction between the purchasing power of the proletariat and the bourgeoisie. Okay. But the fact that there is a difference between the proletariat and bourgeoisie's purchasing power proves nothing. In fact there would remain a distinction between the purchasing power of the two classes even if all new printed money immediately went into the hands of the working class.

What you seem to be suggesting, but haven't said, is that the bourgeoisie has more money than the proletariat and hence more purchasing power, and that this isn't changed by the printing of money, since the printing of money only increases the amount of money in the hands of the bourgeoisie. In this case, I agree. And you are correct that I haven't disagreed with you. What you are wrong about is your implication that my position requires that the proletariat gain money.

Demogorgon303

As you say, the printing of money allows the bourgeoisie (and the proletariat for that matter) to purchase goods at a higher price. This doesn't change the fundamental value embodied within those commodities. It may also temporarily allow the purchase of goods that may otherwise not have been purchased, which realises the surplus value for those particular capitalists. But the money that has been created in this fashion is not real money - gold (or paper money backed by gold), represents a definite amount of labour (what was required to extract and process that gold). Merely printed money only contains the labour required to produce paper while claiming to represent the labour represented by gold. When it first appears, the bourgeoisie can pretend this claim is true - but as the money enters the system, the law of value exerts its power and the money, over time, returns to its true value. There may now be £3 in circulation instead of £2, but they are the same when measured in commodities. Which leaves the bourgeoisie right back where they have started - except perhaps that they are able to increase the exploitation of the working class, by raising wages below the rate of inflation. This means that ultimately the workers must consume less which shrinks demand further. That is what I mean when I say the contradictions return even more violently.

None of this is relevant to our discussion. Your emphasis that purchasing goods at a higher price doesn't change the fundamental value embodied within those commodities is irrelevant since I never claimed otherwise and it frankly has nothing to do with Luxemburg's theory. Luxemburg says that there will be a surplus of unsold goods, i.e. there must be a certain amount of unrealized surplus-value. This has nothing to do with the production of surplus-value, so I don't know why you are talking about the amount of value in commodities as if it were relevant. What is relevant is that if the state prints more money it can purchase all or part of Luxemburg's mass of unsold goods (i.e. it can realize the previously unrealized surplus-value).

(And again for clarification, in the last paragraph I am pointing to what would be implied if Luxemburg were correct. I don't think the real causes of state spending are related to Luxemburg's theory.)

As for your claims about fiat paper money, the mere fact that all fiat paper money is not worthless contradicts what you are saying. (I should also mention that I think (but cannot be certain) that you are basing this idea on a very mistaken reading of Marx's argument about money, which is by no means an easy argument to follow. But Marx's claim is that in the case of paper money backed by gold the value of the total quantity of paper money will function in circulation as a quantity equal to the amount of gold that would be necessary to realize the mass of commodities if gold were circulating. You are saying something quite different. But I don't want to pursue this here as it is not directly related to the validity of Luxemburg's theory.)

Demogorgon303

The stagflation of the 70s was widely acknowledged to be the result of decades of abusing state printing presses in one way or another. This is why Volcker closed the taps on monetary emission - and triggered the early 80s recession. This was overcome with a new strategy of war economy (star wars, etc.) and debt (issuing bonds, etc.) - in other words an unprecedented mobilisation of surplus capital, led by the state, to finance the consumption of the war machine and consumer credit.

Even stagflation did not drive the value of the dollar down anywhere near its "true" value, which would be close to zero. Again, your notion of money is contradicted by reality.

Demogorgon303

Examining the changing strategy of the bourgeoisie goes some way to answering your question "How do you know that a crisis that later occurs isn't derived from other factors?". These conjunctural crises, stagflation in the 70s, stock market crash in the 80s, all have different immediate causes but they are related to the fundamental underlying historic crisis. The bourgeoisie counters overproduction in the 70s with inflationary methods but this ultimate produces stagflation - to counter stagflation, they demolish industry and expand finance and credit, but this creates a debt that can't be repaid. The immediate cause of the current credit crunch is thus not, strictly speaking, overproduction per se but the non-payment of the debts that allowed the bourgeoisie to overcome overproduction.

My question to you was "How do you know?", not, "Can you tell me a story?" I could tell a different story. Whether or not either of them are true is a different matter. Evidence is required to decide the truth of a story.

Take care,

Mike

Demogorgon303

16 years 5 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 8, 2007

Mikus

I am becoming more and more confused by your responses. You dispute my summary of the mechanisms that may allow capitalism to realise its surplus value by saying "I never claimed that capitalism does generates sufficient demand to realize all surplus-value so long as the rate of profit is high". If a high rate of profit doesn't realise surplus value and external markets aren't needed either, then where the devil does the demand come from in a healthy capitalist system? Conversely, if these two mechanisms aren't responsible for a healthy system, it seems to me that they can't be crucial in understanding its crisis either. What then does?

You also seem to be saying that just because the rate of profit (or any other mechanism for that matter) is insufficient at any given moment, doesn't mean that it can't be so in the future. This is like a negative version of Hume's analogy about the Sun. Just because we've seen it rise in the East, doesn't mean it will always rise in the East. This is perfectly correct as far it goes, but it doesn't seem useful to help us understand the situation.

To follow your analogy about walking, what do you think if you see a man who is wheelchair bound. He is given a pill and suddenly is able to walk. Every now and again, he falls down and immediately he does so he reaches for the medicine bag. It's reasonable to conclude there may be a relationship between his drug consumption and his walking, don't you think?

The point about money and value is that commodity exchange is ultimately about an exchange of equivalents of human labour (except, of course, when purchasing the labour of the working class). If the money used doesn't represent the labour it says it does, then no real exchange of equivalents has been achieved. Production has effectively been given away, but this doesn't become obvious until further along the chain.

Finally, you seem to dislike my "story" but you don't say exactly what you dispute about it. Are you asking how I know what caused each crisis? Or how I know the crises are historically connected?

capricorn

16 years 5 months ago

In reply to by libcom.org

Submitted by capricorn on October 8, 2007

I don't see how the political position Luxemburg took up -- revolutionary or reformist, pro-WWI or anti-WWI -- is relevant to her theory that capital accumulation is impossible without extra-capitalist markets. The line up for and against her on this shows this. According to the discussion so far, for her are: Louis Boudin, Jack London and some Russian Narodnik. Against her are: Lenin, Preobrazhensky, Otto Bauer, Pannekoek and Bernstein. Both Boudin and Jack London supported WWI. Bernstein, I believe, opposed it as did Lenin and Pannekoek. Lukacs has been mentioned, but I don't know what position he took on whether or not capital accumulation is possible without non-capitalist markets. I'll try and plough through his article at the dentist's this afternoon and report back.

Demogorgon303

16 years 5 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 8, 2007

Combining Lukacs and the dentist seems like a case of serious masochism!

Mike Harman

16 years 5 months ago

In reply to by libcom.org

Submitted by Mike Harman on October 8, 2007

The point about money and value is that commodity exchange is ultimately about an exchange of equivalents of human labour (except, of course, when purchasing the labour of the working class).

It's a little while since I read Capital, but I seem to remember Marx making precisely the point that human labour power is bought at more or less it's value - that there's a 'fair' exchange of wages for labour. However it's the particular property of labour power as a commodity which can itself create value which leads to surplus value and exploitation. Marx's whole conception of surplus value rests on labour receiving the cost of its reproduction - an exchange of equivalents, not being paid at less than it's value as you appear to be suggesting.

Demogorgon303

16 years 5 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 8, 2007

He identifies the contradictory aspect of labour in this respect. The quote you're referring to is this:

Moneybags, must be so lucky as to find, within the sphere of circulation, in the market, a commodity, whose use-value possesses the peculiar property of being a source of value, whose actual consumption, therefore, is itself an embodiment of labour, and, consequently, a creation of value. The possessor of money does find on the market such a special commodity in capacity for labour or labour-power.

Workers are - all things being equal - paid the full value for the reproduction of their labour. This is the case, regardless of whether the worker works 1 hour or 18 hours as long as the worker remains alive and capable of the work, is able to have children to replace him when he dies, etc.

But workers are not paid the full value of the productof their labour, otherwise they would not be exploited.

In the empirical world, at many points workers are actually paid less than the value of the reproduction of labour. The various Factory Acts were brought in in the 19th Century precisely because of this widespread abuse of labour, which reached such extremes that the proletariat was literally being devoured by capital. The more intelligent capitalists were able to see this was destroying one of the "national resources" upon which their own wealth rested.

I think it's also an open question whether today workers are being paid the full value of their labour in the sense you mean either. Considering that many workers today can't possibly own enough to afford the property and education costs, necessary to replace their own labour would suggest they're not.

Mike Harman

16 years 5 months ago

In reply to by libcom.org

Submitted by Mike Harman on October 8, 2007

Demogorgon303

He identifies the contradictory aspect of labour in this respect. The quote you're referring to is this:

Moneybags, must be so lucky as to find, within the sphere of circulation, in the market, a commodity, whose use-value possesses the peculiar property of being a source of value, whose actual consumption, therefore, is itself an embodiment of labour, and, consequently, a creation of value. The possessor of money does find on the market such a special commodity in capacity for labour or labour-power.

Workers are - all things being equal - paid the full value for the reproduction of their labour. This is the case, regardless of whether the worker works 1 hour or 18 hours as long as the worker remains alive and capable of the work, is able to have children to replace him when he dies, etc.

But workers are not paid the full value of the product of their nature, otherwise they would not be exploited.

I didn't say they were. Marx assumes the price of labour power as the cost of it's reproduction though - which puts it in line with other commodities. It's obviously a special kind of commodity, but his point is that the exploitation happens within the sphere of production, it's not a hoodwinking/rip-off a the contractual level as many people put it (though obviously that does happen in reality as well, it's just not essential for capital to function).

Demogorgon303

16 years 5 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 8, 2007

No, I realise what you're saying catch, but the discussion about overproduction rests on the supposed problem that the working class can't consume all it produces. In this specific sense, the working class is not (and cannot be) given the full value of [product of] their labour and that's why I posed it in the way I did.

So the question becomes who does consume all this value the workers produce? Capitalists obviously consume more than they produce and absorb some proportion of this value, contributing to their luxurious lifestyle. Now if a capitalist simply consumes all this value (either directly or by exchange of equivalents - and therefore provides it a market - then he's not actually a capitalist but more akin to a feudal lord. The question is accumulation - the enlargement of plant, labour, etc. This is achieved because either the capitalist can't consume all the surplus value (how many DVD players does one bourgeois need?) or won't because of his ethical frugality and committment to accumulation. Okay, regardless of the reason, he spends the spare cash on new machines. But if he's not consuming the final product (or its equivalent) the sale of which gives him that cash - and remember all other capitalists are doing the same - who is?

This is (I think - I don't claim to be any authority on this whatsoever!) the core of the problem Luxemburg believed she had identified. She then attempted to solve it by saying that the final products were consumed by people outside the capitalist - worker relationship, the "third buyers".

ernie

16 years 5 months ago

In reply to by libcom.org

Submitted by ernie on October 8, 2007

Mikus, I am not sure you have understood the point I am trying to make to capricorn, which is that Luxemburg's contribution has to be understood in its historical context i.e., the struggle against the revisionists/opportunists/centrists who either denied or played down the historically transitory nature of capitalism. His quote from London or mention of Boudin was no reply to this central point. To make it as clear as possible: whether you agree or not with his analysis her fundamental objective was to defend marxism against the attacks of revision etc, which is what Lenin, Grossman and other revolutionaries understood very well.
As for Lukacs it was alf who suggested discussing his essay on Luxemburg in order to try and place her contribution in context.

ernie

16 years 5 months ago

In reply to by libcom.org

Submitted by ernie on October 8, 2007

Capricorn you are avoiding the central issue: what was the objective of Rosa's work? Rosa wrote the Accumulation in order to struggle against the revisionists/opportunists/centrists efforts to disembowel Marxism through denying or playing down the historically transitory nature of capitalism and also to counter their arguments about imperialism being a choice rather than an integral part of capitalism. Is that clear enough?
As for Boudin and London being for Luxemburg, who can day I do not know what they thought of her analysis. Those you say opposed Rosa it is true that they all disagreed with her analysis (though Lenin never publicly polemised with it). However that all they have in common. Lenin was the bitter enemy of Bernstein, not only for his revision but his social pacifism during the war and his opposition to the revolution. Fundamentally, Lenin, Preobrazhensky and Pannekoek saw Luxemburg as their comrade in the revolutionary struggle. They would have never have lined themselves up with revisionists and opportunists simply because they disagreed with Rosa's analysis,

Mike Harman

16 years 5 months ago

In reply to by libcom.org

Submitted by Mike Harman on October 8, 2007

Demogorgon303

No, I realise what you're saying catch, but the discussion about overproduction rests on the supposed problem that the working class can't consume all it produces. In this specific sense, the working class is not (and cannot be) given the full value of [product of] their labour and that's why I posed it in the way I did.

Well it's already been put quite clearly on this thread that capitalist investment in production (over and above that required to reproduce existing capital) consumes additional surplus product. This would seem to me to be quite fundamental to the idea of the expansion of capital. And although I've not read the Luxemburg text under discussion, from reading what's been put so far that appears to be missing from her analysis.

Even if we're simply looking for extra consumers who are neither capitalists nor workers receiving wages, there's plenty to find within capitalism itself. Population increase itself accounts for some, as does the reserve labour force, 'unproductive' ex-workers - pensioners due to increased life-expectancy, even students (starting work at 24, rather than 10) - all of this has massively expanded alongside (and within) capital without requiring external markets.

And if we're simply asking the question "where does all the value go?" - then we have capital expenditure to account for a very large amount of it, along with the periodic destruction of value (pathfinder housing scheme in the North for example); to add to the examples previously cited.

More than that, and returning to the original article under discussion, we also have the fact that vast amounts of labour (and capital) is engaged in activities which don't reproduce either fixed or variable capital - i.e. workers who consume value without reproducing it.

ernie

16 years 5 months ago

In reply to by libcom.org

Submitted by ernie on October 8, 2007

Mikus, in relation to the reply to capricorn, the initial stimulus to this part of the discussion was his saying that Luxemburg's analysis was irrelevant and most worthless. Do you agree with this sweeping dismissal.
To completely avoid any confusion on the question of capricorn and his point on Social Democracy here is what he said

Quote:

But you are very wrong in saying that amongst Social Democrats at the time it was the accepted view that capitalism would collapse sooner or later.

No, Ernie, it's you who is wrong. Let me call to the box Jack London whose book The Iron Heel which appeared in 1908 and will have been read by many thousands more than Luxemburg's Accumulation of Capital. London was a member of the Socialist Party of America. Even though he was a good writer rather than a theoretician, he still has his hero, Ernest Everard, express views which were common amongst American Social Democrats.

Thus it is capricorn who is saying that I was wrong for saying that the collapse of capitalism was not generally accepted in Social Democracy? Mikus do you also think I was wrong to say there was a revisionists/opportunist wing in Social Democracy which denied or down played the collapse of capitalism?
Yes this is not answer to your specific points about Rosa, but it does have to do with her overall aim and the question of what should the Marxist approach be to Luxemburg's work:: total dismissal or an acceptance that she was trying to deal with real questions. What you think?

ernie

16 years 5 months ago

In reply to by libcom.org

Submitted by ernie on October 8, 2007

Catch the ICC defends Marx's analysis of overproduction, i/e., that the drive to unrestricted production leads to overproduction. As Marx summed it up (I apologise for the long quote but it is worth it, you will find a more developed expostion of our analysis in a recent series of articles in our International Review, beginning with this introduction http://en.internationalism.org/ir/127/war-introduction), but back to the Marx quote

Given the necessary means of production, i.e. , a sufficient accumulation of capital, the creation of surplus-value is only limited by the labouring population if the rate of surplus-value, i.e. , the intensity of exploitation, is given; and no other limit but the intensity of exploitation if the labouring population is given. And the capitalist process of production consists essentially of the production of surplus-value, represented in the surplus-product or that aliquot portion of the produced commodities materialising unpaid labour. It must never be forgotten that the production of this surplus-value — and the reconversion of a portion of it into capital, or the accumulation, forms an integrate part of this production of surplus-value — is the immediate purpose and compelling motive of capitalist production. It will never do, therefore, to represent capitalist production as something which it is not, namely as production whose immediate purpose is enjoyment or the manufacture of the means of enjoyment for the capitalist. This would be overlooking its specific character, which is revealed in all its inner essence.

The creation of this surplus-value makes up the direct process of production, which, as we have said, has no other limits but those mentioned above. As soon as all the surplus-labour it was possible to squeeze out has been embodied in commodities, surplus-value has been produced. But this production of surplus-value completes but the first act of the capitalist process of production — the direct production process. Capital has absorbed so and so much unpaid labour. With the development of the process, which expresses itself in a drop in the rate of profit, the mass of surplus-value thus produced swells to immense dimensions. Now comes the second act of the process. The entire mass of commodities, i.e. , the total product, including the portion which replaces the constant and variable capital, and that representing surplus-value, must be sold. If this is not done, or done only in part, or only at prices below the prices of production, the labourer has been indeed exploited, but his exploitation is not realised as such for the capitalist, and this can be bound up with a total or partial failure to realise the surplus-value pressed out of him, indeed even with the partial or total loss of the capital. The conditions of direct exploitation, and those of realising it, are not identical. They diverge not only in place and time, but also logically. The first are only limited by the productive power of society, the latter by the proportional relation of the various branches of production and the consumer power of society. But this last-named is not determined either by the absolute productive power, or by the absolute consumer power, but by the consumer power based on antagonistic conditions of distribution, which reduce the consumption of the bulk of society to a minimum varying within more or less narrow limits. It is furthermore restricted by the tendency to accumulate, the drive to expand capital and produce surplus-value on an extended scale. This is law for capitalist production, imposed by incessant revolutions in the methods of production themselves, by the depreciation of existing capital always bound up with them, by the general competitive struggle and the need to improve production and expand its scale merely as a means of self-preservation and under penalty of ruin. The market must, therefore, be continually extended, so that its interrelations and the conditions regulating them assume more and more the form of a natural law working independently of the producer, and become ever more uncontrollable. This internal contradiction seeks to resolve itself through expansion of the outlying field of production. But the more productiveness develops, the more it finds itself at variance with the narrow basis on which the conditions of consumption rest. It is no contradiction at all on this self-contradictory basis that there should be an excess of capital simultaneously with a growing surplus of population. For while a combination of these two would, indeed, increase the mass of produced surplus-value, it would at the same time intensify the contradiction between the conditions under which this surplus-value is produced and those under which it is realised

I hope that helps, or at least gives more material to reflect upon

Mike Harman

16 years 5 months ago

In reply to by libcom.org

Submitted by Mike Harman on October 8, 2007

Ernie, I'd prefer it if you answered my posts (and the others posed on this thread), rather than quoting Marx back at me.

ernie

16 years 5 months ago

In reply to by libcom.org

Submitted by ernie on October 8, 2007

Mikus, a knowledge of your analysis of the reasons for overproduction certainly will not make a lot of differences to you analysis of Rosa and our position, but on the other hand it will help us to understand where you are coming from and what you think the cause of the crisis. I know you think we are avoiding answering you, but then please humour us poor deluded sectarians,

Demogorgon303

16 years 5 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 8, 2007

Mike Harman

Well it's already been put quite clearly on this thread that capitalist investment in production (over and above that required to reproduce existing capital) consumes additional surplus product.

This isn't in dispute. But before the capitalist can spend this additional value, it must be realised, i.e. someone must buy the end product. If the capitalists are not buying all the end product they are producing in the first place, and the workers aren't, then who is? Now, if this additional product is realised (he manages to sell all his DVD players), the capitalist can buy more plant (the product of another capitalist), which builds demand further and a virtuous circle is created. But for this to happen, the additional product must be realised first.

Even if we're simply looking for extra consumers who are neither capitalists nor workers receiving wages, there's plenty to find within capitalism itself. Population increase itself accounts for some, as does the reserve labour force, 'unproductive' ex-workers - pensioners due to increased life-expectancy, even students (starting work at 24, rather than 10) - all of this has massively expanded alongside (and within) capital without requiring external markets.

I agree that bourgeois society contains "third buyers" - this includes the petit-bourgeoisie, etc. This is exactly why Luxemburg is right when she says "pure" capitalism is a complete abstraction. However, I think you're mistaken to include pensioners and students - they don't create value at all, they simply consume it. A self-employed plumber creates value with his labour on old ladies toilets, and exchanges this for capitalist-produced goods. The consumption of students and pensioners is financed either by loans (students) or the appropriation of value from others (taxes or annuity returns in the case of pensioners) - in effect, this production is paid for by others who are producing value.

The question is whether these "third-buyers" that are indigenous to bourgeois society constitute enough of a market to absorb this production. If it is, why is the economy not healthier?

And if we're simply asking the question "where does all the value go?" - then we have capital expenditure to account for a very large amount of it, along with the periodic destruction of value (pathfinder housing scheme in the North for example); to add to the examples previously cited.

Not sure what you mean by this as I don't know what Pathfinder is or how you think it destroys value. But, as the destruction of value has come up, it seems obvious that the most effective way for the bourgeoisie to do this is through war. The annihilation of Europe in WW2, for example, removed the problem of overproduction and created an enormous market as the countries involved rebuilt their industrial base - this reconstruction is what led to the post-war boom. Once the reconstructing countries - especially Germany and Japan - became competitive again, the problem resurfaced and thus began the drawn out crisis we've suffered for nearly 40 years.

Mike Harman

16 years 5 months ago

In reply to by libcom.org

Submitted by Mike Harman on October 8, 2007

Demogorgon303

Mike Harman

Well it's already been put quite clearly on this thread that capitalist investment in production (over and above that required to reproduce existing capital) consumes additional surplus product.

This isn't in dispute. But before the capitalist can spend this additional value, it must be realised, i.e. someone must buy the end product. If the capitalists are not buying all the end product they are producing in the first place, and the workers aren't, then who is? Now, if this additional product is realised (he manages to sell all his DVD players), the capitalist can buy more plant (the product of another capitalist), which builds demand further and a virtuous circle is created. But for this to happen, the additional product must be realised first.

Yeah and I just showed a whole bunch of potential avenues for that product to be realised outside of the consumption of employed workers and capitalists, and of the reproduction of capital itself, without requiring external markets. If you want to look at capital at the level of the individual enterprise, then you'll not find an answer, but production isn't limited to DVD players and DVD components/machine tools in an ever increasing circle.

Back to Marx again:

The repetition or renewal of the act of selling in order to buy, is kept within bounds by the very object it aims at, namely, consumption or the satisfaction of definite wants, an aim that lies altogether outside the sphere of circulation. But when we buy in order to sell, we, on the contrary, begin and end with the same thing, money, exchange-value; and thereby the movement becomes interminable.
[...]

Therefore, the final result of every separate circuit, in which a purchase and consequent sale are completed, forms of itself the starting-point of a new circuit. The simple circulation of commodities - selling in order to buy - is a means of carrying out a purpose unconnected with circulation, namely, the appropriation of use-values, the satisfaction of wants. The circulation of money as capital is, on the contrary, an end in itself, for the expansion of value takes place only within this constantly renewed movement. The circulation of capital has therefore no limits.

http://www.marxists.org/archive/marx/works/1867-c1/ch04.htm

I agree that bourgeois society contains "third buyers" - this includes the petit-bourgeoisie, etc. This is exactly why Luxemburg is right when she says "pure" capitalism is a complete abstraction. However, I think you're mistaken to include pensioners and students - they don't create value at all, they simply consume it. A self-employed plumber creates value with his labour on old ladies toilets, and exchanges this for capitalist-produced goods. The consumption of students and pensioners is financed either by loans (students) or the appropriation of value from others (taxes or annuity returns in the case of pensioners) - in effect, this production is paid for by others who are producing value.

That's what I said, except I think you meant 'consumption' rather than 'production' at the end of your paragraph; and pensions tend to get a lot of their funds from surplus-value via investments and employer contributions, not just wages - that they get any of their funds from this method proves my point well enough that it's not a case of "but who will buy all the DVD players without external markets?".

The question is whether these "third-buyers" that are indigenous to bourgeois society constitute enough of a market to absorb this production. If it is, why is the economy not healthier?

No the question was whether capital requires external markets in order to expand - Luxemburg's original proposition, which has been shown not to be the case. This doesn't mean that external markets have no effect on capital circulation and reproduction, but they have been shown not to be essential. We can look at other reasons why the economy isn't healthy, but as Mikus has been at pains to point out, it's worth deciding whether we can eliminate one possible reason or not first.

Mike Harman

And if we're simply asking the question "where does all the value go?" - then we have capital expenditure to account for a very large amount of it, along with the periodic destruction of value (pathfinder housing scheme in the North for example); to add to the examples previously cited.

Not sure what you mean by this as I don't know what Pathfinder is or how you think it destroys value.

Pathfinder is the housing scheme in the north of England which will replace tens of thousands of perfectly good terraced housing (possibly in need of some refurbishment) with new-build apartments at great capital expense, overseen by John Prescott (or whoever's John Prescott in cabinet now). Hence destruction of value on a mass scale allowing for increased production. Again, this is quite possible within the logic of capitalism and doesn't require external markets.

Mike Harman

16 years 5 months ago

In reply to by libcom.org

Submitted by Mike Harman on October 8, 2007

ernie

I hope that helps, or at least gives more material to reflect upon

Ernie, that whole section rests on this:

But this last-named is not determined either by the absolute productive power, or by the absolute consumer power, but by the consumer power based on antagonistic conditions of distribution, which reduce the consumption of the bulk of society to a minimum varying within more or less narrow limits.

What constitutes a minimum level of consumption has massively changed with the development of capital - it's socially determined in the same way that socially necessary labour time is. Marx himself points out there is antagonism, but in this passage doesn't include the capacity of workers to win increased wages etc. It also ignores capital expenditure entirely - i.e. there is a whole realm of production and services which never make it into either consumption of use-values or the reproduction of capital. Not to mention an "ever expanding market" doesn't depend on external markets either.

Alf

16 years 5 months ago

In reply to by libcom.org

Submitted by Alf on October 8, 2007

I’ve hesitated to continue on the Lukacs essay because I am already being further accused of evading the issue of Luxemburg’s theory, to the point where Mikus apparently refuses to continue the discussion. But the reason that I raised Lukacs essay was precisely that he poses very forcefully the key issues of the debate around Rosa’s Accumulation. He argues:

(a) that while Rosa’s theory is in fundamental continuity with Marx’s approach in Capital, it is the ‘orthodox’ experts like Bauer who express a non-proletarian standpoint, with its attempt to prove the eternal stability of the capitalist system;

(b) that Rosa’ proletarian approach is demonstrated by the fact she starts not from the standpoint of the individual capitalist, for whom there is no insoluble problem of realisation, but from the view of total social capital, for which there is: “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”.

Furthermore he insists that it is this capacity to examine reality from the standpoint of the totality which is specific to the proletarian “approach” (an issue which seems to exasperate Mikus no end). The essay begins by asserting that “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”.

(c) that Marx’s schemes of reproduction(in which a purely hypothetical world of only workers and capitalists is posited) were offered as an abstraction to prove a particular point and were never intended to be used as proof that capitalism can accumulate perpetually without encountering any fundamental internal contradictions. This would have been entirely at odds the fundamental aim of Capital, which was to demonstrate not just the existence of exploitation and surplus value but to show why capital was condemned to become a barrier to itself. Furthermore, Lukacs argues, alongside Luxemburg, that the misinterpretation of the reproduction schema derives from a failure to understand the implications of the fact that Marx’s Capital was an unfinished work Thus the whole attempt to prove mathematically that there is no irresolvable problem of realisation (Mikus in particular seems to entirely accept Bauer’s “approach” here) is fundamentally flawed:

“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”.

This question of Marx’s exact purpose in elaborating the reproduction schema, and its relationship to the rest of Marx’s work, is by definition one of historical interpretation. It is evidently crucial for determining whether or not Luxemburg has simply misunderstood the whole problem of accumulation, but it is a problem to debate, not an established fact.

But one thing is clear. Despite the accusations of making a fundamental break from Marx, Luxemburg’s whole approach is to treat Capital as an irreplaceable starting point but not a fixed and final dogma. This is evident in chapter 25 of Accumulation, where she cites precisely Marx’s explanation for the necessity for the market to extend from Vol 3, the one Ernie quotes above, and argues:

“If we compare this description with the diagram of enlarged reproduction, the two are by no means in conformity. According to the diagram, there is no inherent contradiction between the production of the surplus value and its realisation, rather, the two are identical. The surplus value here from the very beginning comes into being in a natural form exclusively designed for the requirements of accumulation. In fact it leaves the place of production in the very form of additional capital, that is to say it is capable of realisation in the capitalist process of accumulation. The capitalists, as a class, see to it in advance that the surplus value they appropriate is produced entirely in that material form which will permit and ensure its employment for purposes of further accumulation. Realisation and accumulation of the surplus value here are both aspects of the same process, they are logically identical. Therefore according to the presentation of the reproductive process in the diagram, society’s capacity to consume does not put a limit to production. Here production automatically expands year by year, although the capacity of society for consumption has not gone beyond its ‘antagonistic conditions of distribution’. This automatic continuation of expansion, of accumulation, truly is the ‘law of capitalist production . . . on penalty of failure’. Yet according to the analysis in volume iii, ‘the market must, therefore, be continually extended’, ‘the market’ obviously transcending the consumption of capitalists and workers. And if Tugan Baranovski interprets the following passage ‘this eternal contradiction seeks to balance itself by an expansion of the outlying fields of production’ as if Marx had meant production itself by ‘outlying fields of production’, he violates not only the spirit of the language but also Marx’s clear train of thought. The ‘outlying fields of production’ are clearly and unequivocally not production itself but consumption which ‘must be continually extended’. The following passage in Theorien über den Mehrwert, amongst others, sufficiently shows that Marx had this in mind and nothing else: ‘Ricardo therefore consistently denies the necessity for an expansion of the market to accompany the expansion of production and the growth of capital. The entire capital existing within a country can also be profitably used in that country. He therefore argues against Adam Smith who had set up his (Ricardo’s) opinion on the one hand but also contradicted it with his usual sure instinct.’

In yet another passage, Marx clearly shows that Tugan Baranovski’s notion of production for production’s sake is wholly alien to him: ‘Besides, we have seen in volume ii part iii that a continuous circulation takes place between constant capital and constant capital (even without considering any accelerated accumulation), which is in so far independent of individual consumption, as it never enters into such consumption, but which is nevertheless definitely limited by it because the production of constant capital never takes place for its own sake, but solely because more of this capital is needed in those spheres of production whose products pass into individual consumption.’

Admittedly, in the diagram in volume ii, Tugan Baranovski’s sole support, market and production coincide—they are one and the same. Expansion of the market here means extended production, since production is said to be its own exclusive market—the consumption of the workers being an element of production, i.e. the reproduction of variable capital. Therefore the limit for both the expansion of production and the extension of the market is one and the same: it is given by the volume of the social capital, or the stage of accumulation already attained. The greater the quantity of surplus value that has been extracted in the natural form of capital, the more can be accumulated; and the greater the volume of accumulation, the more surplus value can be invested in its material form of capital, i.e. the more can be realised. Thus the diagram does not admit the contradiction outlined in the analysis of volume iii. In the process described by the diagram there is no need for a continual extension of the market beyond the consumption of capitalists and workers, nor is the limited social capacity for consumption an obstacle to the smooth course of production and its unlimited capacity for expansion. The diagram does indeed permit of crises but only because of a lack of proportion within production, because of a defective social control over the productive process. It precludes, however, the deep and fundamental antagonism between the capacity to consume and the capacity to produce in a capitalist society, a conflict resulting from the very accumulation of capital which periodically bursts out in crises and spurs capital on to a continual extension of the market”.

Apologies for more long quotes but I think they are useful in establishing the issue under debate – whether or not Rosa ‘breaks’ from Marx or critically continues his work.

Demogorgon303

16 years 5 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 8, 2007

Catch

Some quick responses. Firstly, there seems to be a confusion by what I mean by external markets. You say you showed "A whole bunch of potential avenues for that product to be realised outside of the consumption of employed workers and capitalists, and of the reproduction of capital itself, without requiring external markets."

The two highlighted parts of your statement contradict each other. You claim you show avenues outside the capitalist-worker relationship - and then claim they're not an external market. They are an external market precisely because they are not workers or capitalists.

When I critique your examples of such markets (and posit an alternative of my own), you don't actually explain how the transference of value from one section of the population to another represents an expansion of the market. All you are describing is the redistribution of surplus value that has already been produced and already realised. If it hadn't been realised there would be no profits or wages to tax, and no stock market returns, and thus no pension. From the point of view of the total market, there is no difference if workers didn't pay tax and supported Granny at home. The working class as a whole (which includes pensioners, of course) still doesn't received the full value of [the product of] their labour and thus doesn't resolve our problem.

Nonetheless, despite our quibbles about who exactly they are, I think there is some level of agreement here: capitalist society, even today, does produce "third buyers" outside the immediate capitalist-worker relationship. This is not the issue as neither Marx, Luxemburg, the ICC, me or anyone else has claimed a "pure" capitalism ever has or ever will exist.

Moving on, you also claim (in your post to ernie) that capital expenditure is ignored in this model. This is not the case, capital expenditure in terms of simple reproduction is not at issue. It is enlarged reproduction where the problem occurs. The problem is that no matter how complex the production process, no matter how many separate steps (and the transactions that represent them), the final destination for a good proportion, if not all, production is individual consumption. Marx himself states this quite clearly in Volume 3 (emphases mine): "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."

Thus the claim that buying ever more vast productive mechanisms from each other can provide sufficient demand is only true if at the end of a long chain of production there is a consumer, be they capitalist, worker, peasant, or whatever with need and money, that can underwrite the effective demand on which the whole system depends.

As I pointed out above, I cannot see how either the working class (because it is exploited) or the capitalists (because they refrain from directly consuming all the surplus value they extract from the working class) can meet all of this requirement for effective demand.

Mike Harman

16 years 5 months ago

In reply to by libcom.org

Submitted by Mike Harman on October 8, 2007

Demogorgon303

Catch

Some quick responses. Firstly, there seems to be a confusion by what I mean by external markets. You say you showed "A whole bunch of potential avenues for that product to be realised outside of the consumption of employed workers and capitalists, and of the reproduction of capital itself, without requiring external markets."

The two highlighted parts of your statement contradict each other. You claim you show avenues outside the capitalist-worker relationship - and then claim they're not an external market. They are an external market precisely because they are not workers or capitalists.

Not at all. The ICC (and Luxemburg) is arguing here that when capital becomes an international system this presents an insurmountable barrier to its expansion because it always needs consumers who are neither workers nor capitalists, I'm simply saying that they exist within capital (in fact are in highest concentration in the most developed countries). Now, I'm not stating here that capital needs these "third buyers" in order to expand, simply that they don't have to be found in uncolonised countries.

When I critique your examples of such markets (and posit an alternative of my own), you don't actually explain how the transference of value from one section of the population to another represents an expansion of the market. All you are describing is the redistribution of surplus value that has already been produced and already realised. If it hadn't been realised there would be no profits or wages to tax, and no stock market returns, and thus no pension. From the point of view of the total market, there is no difference if workers didn't pay tax and supported Granny at home.

It's not something I've given a load of thought to, but off the top of my head I'd say the current pension system, as a massive collective capitalist investor, means at least a part of the income of pensioners is taken from 'surplus value' rather than wages - i.e. it's not only deferred wages since pension funds are extremely powerful capitalists. Hence some value produced by workers finds it way back to the working class, and not via wages (or taxes). This could be counterposed to the income of directors and CEOs being 'wages' as opposed to profit in capitalist accounting. Might be best to start a new thread on this since it's only muddying the waters at this point and certainly isn't central to the still unanswered questions of Mikus.

Moving on, you also claim (in your post to ernie) that capital expenditure is ignored in this model. This is not the case, capital expenditure in terms of simple reproduction is not at issue. It is enlarged reproduction where the problem occurs. The problem is that no matter how complex the production process, no matter how many separate steps (and the transactions that represent them), the final destination for a good proportion, if not all, production is individual consumption.

Actual production yes, but only a small number of workers are employed in production. See my comments about workers whose work does not reproduce either capital or labour. As a side note, 10% of Japan's labour force is employed in construction, a large proportion of which is re-foresting forests and cementing under rivers for absolutely no appreciable purpose whatsoever except to divert public spending into the shell accounts of bureaucrats.

capricorn

16 years 5 months ago

In reply to by libcom.org

Submitted by capricorn on October 8, 2007

I've now read Lukacs's article and it confirms my fears. Hegeliam mumbo-jumbo:

The totality of an object can only be posited if the positing subject is itself a totality; and if the subject wishes to understand itself, it must conceive of the object as a totality.

and, worse, Party-worship:

The form taken by the class consciousness of the proletariat is the Party.

and (his italics).

. . . the Party is assigned the sublime role of bearer of the class consciousness of the proletariat and the conscience of its historical vocation.

I'd heard that Lukacs spouted such dangerous, anti-working-class views; which was why I never bothered to read him. Reading this has confirmed for me that he is an über-Leninist.
But I don't want to follow Alf and Ernie's red herring to draw us away from the point at issue: Luxemburg's argument that capital accumulation is impossible with external, non-capitalist markets.
Lukacs doesn't seem to be interested in (and probably didn't understand) the economics of the argument, though he does write:

. . . what Rosa Luxemburg has done is precisely to take up the thread where Marx left off and to solve the problem in his spirit.

So, I suppose he can be counted, alongside Louis Boudin, Jack London and the Russian Narodnik as a supporter of Luxemburg's position.
Lukacs seems mainly concerned to back up Luxemburg's view that capitalism cannot continue for ever. I'm sure capitalism can't continue for ever for all sorts of social reasons, but Luxemburg wanted, like Jack London's Ernest Everard, to demonstrate mathematically that capitalism must break-down at some point. A pretty pointless exercise. In any event, she got it wrong. Lukacs says that those who refuted her mathematics, Otto Bauer in particular, were in effect demonstrating that capitalism could continue for ever. I've not read Bauer (who has?) but I doubt if this really was his intention. Just because it can't be demonstrated mathematically that capitalism will breakdown at some point doesn't mean that capitalism will therefore last for ever.
Lukacs also makes the point - already accepted by both sides in this discussion - that a 'pure' capitalist society (as one composed exclusively of workers and capitalists and their hangers one) has never existed, but that this was an assumption made by Marx to develop his argument more clearly. Historically-existing capitalism had always existed alongside and to a certain extent off non-capitalist areas, but this does not mean that it could not, or could not have existed, without them, as Luxemburg, Boudin, Jack London, the Russian Narodniks and Lukacs argued. Mike has already made this point well.
So, we are still where we started: does or does not capitalism require external, non-capitalist areas and markets for capital accumulation to take place? Come on, Alf and Ernie, yes or no?

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 8, 2007

Demogorgon303

I am becoming more and more confused by your responses. You dispute my summary of the mechanisms that may allow capitalism to realise its surplus value by saying "I never claimed that capitalism does generates sufficient demand to realize all surplus-value so long as the rate of profit is high". If a high rate of profit doesn't realise surplus value and external markets aren't needed either, then where the devil does the demand come from in a healthy capitalist system? Conversely, if these two mechanisms aren't responsible for a healthy system, it seems to me that they can't be crucial in understanding its crisis either. What then does?

I never said that a high rate of profit cannot be the cause of the realization of surplus-value. I said that it may not. Your confusion comes from imagining that there has to be a necessary single cause of accumulation (or crisis) somewhere, and that if I admit that effective demand may be insufficient at a given time in spite of a high rate of profit, then I have to say that effective demand is always insufficient unless there is an outside market. It simply doesn't follow. Things are a lot more contingent than you are allowing for.

Demogorgon303

You also seem to be saying that just because the rate of profit (or any other mechanism for that matter) is insufficient at any given moment, doesn't mean that it can't be so in the future. This is like a negative version of Hume's analogy about the Sun. Just because we've seen it rise in the East, doesn't mean it will always rise in the East. This is perfectly correct as far it goes, but it doesn't seem useful to help us understand the situation.

Luckily for the theory that the sun will rise tomorrow, we have something like a trillion days of evidence that the sun has risen before. (Making it statistically a very tiny chance that the sun will not rise tomorrow.) There is nothing even close to this for your underconsumptionist theory. If you could even point to one clearcut example of the scenario pointed to in Luxemburg's book being the case, it would be a huge achievement for your theory. But you can't, and even if you did it would not even come close to justifying the claim of necessity.

To follow your analogy about walking, what do you think if you see a man who is wheelchair bound. He is given a pill and suddenly is able to walk. Every now and again, he falls down and immediately he does so he reaches for the medicine bag. It's reasonable to conclude there may be a relationship between his drug consumption and his walking, don't you think?

The only problem with this analogy is that there is no correspondence between the analogy and Luxemburg's theory. If you could point to the outside markets which function as the medicine bag for capitalism, which is able to accumulate whenever the outside market buys its products, then you would have a case for at least the consideration of Luxemburg's theory. But there is nothing like this, so your analogy is useless.

Demogorgon303

The point about money and value is that commodity exchange is ultimately about an exchange of equivalents of human labour (except, of course, when purchasing the labour of the working class). If the money used doesn't represent the labour it says it does, then no real exchange of equivalents has been achieved. Production has effectively been given away, but this doesn't become obvious until further along the chain.

I have no idea what you're on about here. You still have not provided a shred of evidence for anything you have said.

Finally, you seem to dislike my "story" but you don't say exactly what you dispute about it. Are you asking how I know what caused each crisis? Or how I know the crises are historically connected?

The fact that you are confused by my question of how you know that what you say is correct is mindboggling. I am asking you for evidence to back up the little paragraph you posted earlier. Quoted again:

Demogorgon303

These conjunctural crises, stagflation in the 70s, stock market crash in the 80s, all have different immediate causes but they are related to the fundamental underlying historic crisis. The bourgeoisie counters overproduction in the 70s with inflationary methods but this ultimate produces stagflation - to counter stagflation, they demolish industry and expand finance and credit, but this creates a debt that can't be repaid. The immediate cause of the current credit crunch is thus not, strictly speaking, overproduction per se but the non-payment of the debts that allowed the bourgeoisie to overcome overproduction.

Mike

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 8, 2007

Demogorgon303

No, I realise what you're saying catch, but the discussion about overproduction rests on the supposed problem that the working class can't consume all it produces. In this specific sense, the working class is not (and cannot be) given the full value of [product of] their labour and that's why I posed it in the way I did.

So the question becomes who does consume all this value the workers produce? Capitalists obviously consume more than they produce and absorb some proportion of this value, contributing to their luxurious lifestyle. Now if a capitalist simply consumes all this value (either directly or by exchange of equivalents - and therefore provides it a market - then he's not actually a capitalist but more akin to a feudal lord. The question is accumulation - the enlargement of plant, labour, etc. This is achieved because either the capitalist can't consume all the surplus value (how many DVD players does one bourgeois need?) or won't because of his ethical frugality and committment to accumulation. Okay, regardless of the reason, he spends the spare cash on new machines. But if he's not consuming the final product (or its equivalent) the sale of which gives him that cash - and remember all other capitalists are doing the same - who is?

This is (I think - I don't claim to be any authority on this whatsoever!) the core of the problem Luxemburg believed she had identified. She then attempted to solve it by saying that the final products were consumed by people outside the capitalist - worker relationship, the "third buyers".

Did you even bother to read Vol. 2 of Capital before hopping on Luxemburg's bandwagon (or more accurately, hopping on the bandwagon of those who are on Luxemburg's bandwagon)?

All of the questions you asked are answered in Part 3 of Vol. 2, on the simple and expanded reproduction of the total social capital. The answers are there, in numbers, which show just who can consume the surplus-value. (And here's a hint at who does it: the capitalists, while they are accumulating.)

The schemas of course do not prove that things are consumed in exactly the way described (such a task would be impossible since the rate of profit, organic composition of capital, rate of accumulation, etc, are constantly changing) but they do prove that it is possible for all surplus-value to be realized even without external markets.

And since Rosa Luxemburg claims that it is not possible for all surplus-value to be realized even without external markets, she is wrong.

p → ~ [~p]

If p, then not not-p.

Mike

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 8, 2007

ernie

Mikus, I am not sure you have understood the point I am trying to make to capricorn, which is that Luxemburg's contribution has to be understood in its historical context i.e., the struggle against the revisionists/opportunists/centrists who either denied or played down the historically transitory nature of capitalism. His quote from London or mention of Boudin was no reply to this central point. To make it as clear as possible: whether you agree or not with his analysis her fundamental objective was to defend marxism against the attacks of revision etc, which is what Lenin, Grossman and other revolutionaries understood very well.

The historical context of Luxemburg's proposition has nothing to do with whether or not her proposition is true. All I care about is whether or not her proposition is true. After you people accept that it isn't true, then we can have a discussion of why/how she went so horribly wrong in her wretched book.

ernie

As for Lukacs it was alf who suggested discussing his essay on Luxemburg in order to try and place her contribution in context.

Sorry about this, you are correct. It was Alf who wanted to discuss Lukács' take on Luxemburg's take on Marx's method.

Mike

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 8, 2007

ernie

Capricorn you are avoiding the central issue: what was the objective of Rosa's work?

Central issue for who? Everyone except the ICC has been criticizing her arguments, not her objectives. I don't care what her objectives were. Her objective could have been to create love and friendship across the world for all I care. Her arguments are still garbage.

As for Boudin and London being for Luxemburg, who can day I do not know what they thought of her analysis.

From the quote of London given by capricorn, it seems very clear that the character in London's book had ideas very similar to Luxemburg's, and from the discussion of Boudin in Luxemburg's book it seems clear that the "problem" discussed by Boudin was very similar to Luxemburg's. (Wasn't Varga's theory of crisis (Stalin's main economist theoretician) basically the same as Luxemburg's as well??)

Those you say opposed Rosa it is true that they all disagreed with her analysis (though Lenin never publicly polemised with it).

Lenin openly disagreed with Luxemburg in the bibliography of Marxism in his biography of Marx, and openly agreed with Bauer's criticism of her at the same time.

Lenin

On the question of the Marxist theory of the accumulation of capital there is a new work by Rosa Luxemburg, Die Accumulation des Kapitals (Berlin, 1913),[29] and an analysis of her incorrect interpretation of Marx’s theory by Otto Bauer, Die A/c/cumulation des Kapitais (Die Neue Zeit, XXXI, 1, 1913, S.831 und 862).[30] See also Eckstein in Vorwiirtsand Pannekoek in Bremer Biirger-Zeitung for 1913.

Not an in depth polemic by any means, but nevertheless an open disagreement.

Here someone quotes a book by Peter J. Nettl which discusses Lenin's reaction to Luxemburg:

Nettl

"Fue Lenin, que habia leido el libro [The Accumulation of Capital] en un
momento en que sus relaciones politicas con Rosa Luxemburg era muy malas,
quien arrojo la primera piedra. Sus notas criticas anotadas en los margenes
del libro indican que encontro equivocado cuando le fue posible; ellas
abundan en exclamaciones como "sin sentido" o "ridiculo". La critica
principal de Lenin era dirigida a los fundamentos: considero como un "error
basico" la tesis que sostenia que la reproduccion capitalista ampliada era
imposible en una economia cerrada, y que el capitalismo para poder
funcionar, debia fagocitar las economias precapitalistas..." in, Luxemburg
and Bujarin, "El imperialismo y la acumulacion de capital", Pasado y
Presente, Mexico, 1980, p. xxiii.

I would translate this roughly as:

Nettle

It was Lenin, who had read the book [The Accumulation of Capital] at a moment in which his political relations with Rosa Luxembug were very bad, who threw the first stone. His critical notes annotated to the margins of the book indicate that he found it mistaken when this was possible; they abound in exclamations such as "nonsense" or "ridiculous". The main critique of Lenin was directed at the foundation: he considered the thesis which maintained that the expanded reproduction of capital was impossible in a closed economy and that in order to function capitalism had to absorb precapitalist economies, to be a "basic error"...

ernie

However that all they have in common. Lenin was the bitter enemy of Bernstein, not only for his revision but his social pacifism during the war and his opposition to the revolution. Fundamentally, Lenin, Preobrazhensky and Pannekoek saw Luxemburg as their comrade in the revolutionary struggle. They would have never have lined themselves up with revisionists and opportunists simply because they disagreed with Rosa's analysis,

If you are implying that Capricorn or myself have lined up with revisionists and/or opportunists because of our disagreements with Rosa's analysis, I have to say that you are a bit nuts.

In any case, all of this is irrelevant and brings you not one step closer to defending Luxemburg's theory. On with it. I'm starting to doubt you people have even read her book.

Mike

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 8, 2007

capricorn

I've not read Bauer (who has?) but I doubt if this really was his intention. Just because it can't be demonstrated mathematically that capitalism will breakdown at some point doesn't mean that capitalism will therefore last for ever.

I have read Bauer. He had two intentions: firstly, to show that Luxemburg's theory was wrong, (and in this he undoubtedly succeeded), and secondly to give his own theory of economic crisis based primarily around population growth. His own theory is certainly ridiculous, and I largely agree with Luxemburg's criticism of it. The problem is that Luxemburg acted as if her criticism of Bauer's own theory of crisis somehow got her off the hook. It didn't and still doesn't. The ICC people seem to have fallen into this trap as well.

Mike

Alf

16 years 5 months ago

In reply to by libcom.org

Submitted by Alf on October 9, 2007

Capricorn asked: "So, we are still where we started: does or does not capitalism require external, non-capitalist areas and markets for capital accumulation to take place? Come on, Alf and Ernie, yes or no?"

I find this a strange question, since I have obviously been defending Luxemburg's thesis.

The answer is yes, but recall the point about total capital in my previous post.

The question also has to posed historically and not statically - these markets were evidently a vital part of capital's global expansion in its ascendant phase, but the basic issue we are faced with is how capitalism responds to the shrinking of these outlets towards the end of the 19th century and during the 20th.

Joseph Kay

16 years 5 months ago

In reply to by libcom.org

Submitted by Joseph Kay on October 9, 2007

Alf

these markets were evidently a vital part of capital's global expansion in its ascendant phase

so what you're saying is, your conclusions are included in your premisses? this seems horribly circular...

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 9, 2007

I can only imagine the ICC members attempting to answer those standardized highschool tests.

Test: If John is traveling 5 miles per hour, and he has traveled for 1 hour, how far has he traveled?

ICC response: Not enough information given. Was capitalism in its ascendant or decadent phase while John was traveling? Did he at least agree with Marx's basic approach? Was he comradely to Luxemburg, or rude? What did he think about Lukács' take on the totality? What was John's own theory of travel?

I think they missed that class where it is explained that extra information doesn't change the answer to a question.

Mike

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 9, 2007

I said I was done responding to Alf, but he said something so patently stupid that I can't help but reply.

Alf

Apologies for more long quotes but I think they are useful in establishing the issue under debate – whether or not Rosa ‘breaks’ from Marx or critically continues his work.

Excuse me Alf, but could you please explain WHY you are under the impression that "the issue under debate" has been "whether or not Rosa 'breaks' from Marx or critically continues his work." Certainly I have never even mentioned this issue. I'm pretty sure Capricorn and Catch haven't, either. The only people who have brought this issue up on this thread, as far as I am aware, have been the ICC'ers, trying to distract from whether or not Rosa Luxemburg was correct.

Arguing with you guys is convincing me that machine intelligence and human intelligence is not so very different. Not because I have seen evidence that machines can do what I previously thought only humans could, but because it seems that there is a group of humans (namely the ICC and its hanger-ons) who seem to operate like low-quality machines. I think you people are still programmed to argue with the CWO or whoever your rivals are, and if others don't take the same positions as them, it is no matter for the ICC, since you will simply continue act as if they did.

Carry on with your computing operations.

Mike

Alf

16 years 5 months ago

In reply to by libcom.org

Submitted by Alf on October 9, 2007

Willingly, even though it's not strictly relevant since Marx could be wrong too. But it so happens that Luxemburg herself never claimed such continuity. She freely admitted (chapter XXV) that Marx assumed that capital accumulation was possible within a "pure" or "closed" capitalist system (as one made up only of workers and capitalists and their hangers-on) and went on to criticise this as "flawed", "contradictory", "deficient" and "turning in circles".

Sorry, I stupidly assumed this statement by Capricorn was something to do with the continuity (or not) between Marx and Luxemburg, which is why I tried to respond by showing that for Luxemburg some of Marx's statements in one part of Capital were "contradictory" insofar as they didn't square with key statements in others.

Or put it another way. We think Luxemburg's analysis was in continuity with Marx, or at the very least that she took up a real problem posed by Marx (the origins of the overproduction crisis) and tried to use his method to examine the problem further, in the light of historical experience. You on the other hand think her theory was "garbage". So forgive us for thinking that this is a debate about whether or not Luxemburg's theory is in the marxist tradition or not.

Mike Harman

16 years 5 months ago

In reply to by libcom.org

Submitted by Mike Harman on October 9, 2007

We think Luxemburg's analysis was in continuity with Marx, or at the very least that she took up a real problem posed by Marx (the origins of the overproduction crisis) and tried to use his method to examine the problem further, in the light of historical experience. You on the other hand think her theory was "garbage". So forgive us for thinking that this is a debate about whether or not Luxemburg's theory is in the marxist tradition or not.

A theory can be in the marxist tradition, and also be garbage, they aren't mutually exclusive. However in the context of the usefulness and/or provability of any theory, whether it's in the 'marxist tradition' (however defined) is irrelevant, and a red herring, and one you seem determined to continue bringing up to the exclusion of the rest of the issue contained in the thread. I'll also leave you to it until we get some real critical engagement.

Alf

16 years 5 months ago

In reply to by libcom.org

Submitted by Alf on October 9, 2007

No it's not irrelevant. It's the key question, just as it was when Rosa wrote Accumulation and she was accused of raising a non-problem because all the answers were there in Capital. But to be honest I have been accused so many times of not answering the question that I no longer know what the question is or what you or others would 'accept' as an answer and not an evasion. I seem to recall that mikus was going to take me very slowly, as befits a stupid person, through Luxemburg's fundamental errors, which would have made it possible to 'engage' with the charges being levelled at her work, but he has now declared the discussion with us to be over before doing this. But rather than 'leaving me to it', perhaps you could stand in for him and state very clearly what questions you expect me to answer.

capricorn

16 years 5 months ago

In reply to by libcom.org

Submitted by capricorn on October 9, 2007

Capricorn asked: "So, we are still where we started: does or does not capitalism require external, non-capitalist areas and markets for capital accumulation to take place? Come on, Alf and Ernie, yes or no?"
The answer is yes, but recall the point about total capital in my previous post.

Thanks, Alfie. That's now clear. You are saying that not enough purchasing power is generated within 'pure' capitalism to buy back the whole of the wealth (value) newly produced over the same period; that only enough is generated to buy back the equivalent of what the workers and what the capitalists (and their hangers-on) use for their personal consumption; and that the rest (that part of surplus value destined for accumulation as more capital) can only be converted into money by an equivalent amount of value being sold to non-capitalist areas of the world and the money so obtained used to purchase new raw materials, machinery, build new factories, hire new workers, etc. In other words, that 'pure' capitalism suffers from a chronic deficiency of purchasing power.
I say this is an elementary mistake (which puts you in the same league as Major Douglas's Social Credit and its species A + B theorem). It assumes that purchasing power/effective demand is made up only of what workers and capitalists spend on consumer and luxury goods, whereas in fact capitalism generates enough purchasing power to buy the whole amount of newly produced wealth. Capitalists can chose to spend their purchasing power either on consumer goods or on producer goods (well, actually they have not got that much of a free choice since competition obliges them to accumulate as much as possible as new capital). What you have to explain is why capitalists have money to spend on their luxury yatchs and mansions and the caviar and champagne, etc to go with them but not on purchasing new raw materials, new machines, building a new factory or hiring new workers? Why does the money to buy these have to come ultimately only from purchasers in non-capitalist parts of the world?

The question also has to posed historically and not statically - these markets were evidently a vital part of capital's global expansion in its ascendant phase, but the basic issue we are faced with is how capitalism responds to the shrinking of these outlets towards the end of the 19th century and during the 20th.

It has already been agreed that, as a matter of historical fact, capitalist development did depend on external markets, But this is not the same thing as saying that it had to or has to. If this was the case, as you maintain, then if these markets did dry up or shrink capitalism would be in serious trouble. In fact, it would tend to breakdown as an economic system as capital accumulation would become less and less possible. That this has not in fact happened is in itself evidence that your view is wrong. Capital has continued to accumulate since Luxemburg's day and is still accumulating today. Goldner and others have advanced various reasons as to why, but most of these are invalid as they are internal to the capitalist system (merely transferring purchasing power amongst the various economic actors and consumers already within the system). The only explanation, on your theory, has to be that non-capitalist areas have expanded at the same rate. Yet you yourself have admitted that they have shrunk.
How is this contradiction to be overcome? By abandoning your theory as mistaken.

Joseph Kay

16 years 5 months ago

In reply to by libcom.org

Submitted by Joseph Kay on October 9, 2007

or by insisiting that capitalism is in fact breaking down, which is the ICC's prefered option. they know this because of rosa's theory, and rosa's theory is confirmed by it. theological tautology you say?

Demogorgon303

16 years 5 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 9, 2007

The tone of this discussion has really begun to degenerate, which is unfortunate because it has been quite stimulating in many respects. I think the accusations about "avoiding questions" work both ways. No-one has yet explained to me - at least in a way I can understand - exactly how recapitalisation, or the rate of profit, or anything else can fulfill the requirements for demand within a closed capitalist system if we are to dismiss Luxemburg's proposal. Personally, I've found aspects of this thread quite stimulating but it's unfortunate that I feel no closer to understanding why I should reject Luxemburg than when I started.

Like Alf, I am also waiting for Mikus' idiots guide to Luxemburg. I'm quite happy to take instruction here, I freely admit to not understanding many aspects of Marxist economics. But what I do understand - or at least think I do - does not sit well with many of the things that have been said on this thread.

Much has been said about Marx's schemas in Volume 2, as if this is proof that Luxemburg is talking nonsense. And yet the relevancy of these schemas to the discussion are the very thing which is under dispute. My understanding is that Marx is analysing capital in an abstract sense, demonstrating that capital circulates between different parts of the productive apparatus, not to demonstrate the interaction between the product and the market. This is no different to Newtonian physics which assumes that objects are points without mass - an impossibility in nature. In other words, the abstraction works only to demonstrate the particular point under discussion. All the plethora of schemas that have been written - Marx, Luxemburg, Bauer, Grossman, etc. - have only ever demonstrated what the authors thought in the first place and work fine as long you accept the assumptions built into them.

Later in Volume 3, Marx makes remarks that appear to contradict the idea that capitalism is an entirely closed system. Unless we accept that Marx contradicts himself - which throws his entire system into doubt in my opinion - there is a higher synthesis of these two aspects that this discussion is refusing to engage with. It seems both the Luxemburgists and anti-Luxemburgists are only hearing one half of Marx and that's the bit they agree with.

For the moment, I have nothing further to contribute on this thread. I will re-read and reflect upon what has been said so far and see if I can pick up what it seems I'm missing.

Joseph Kay

16 years 5 months ago

In reply to by libcom.org

Submitted by Joseph Kay on October 9, 2007

Demogorgon303

The tone of this discussion has really begun to degenerate

appropriate, no? sorry, offices are very boring places :(

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 9, 2007

Demogorgon303

Like Alf, I am also waiting for Mikus' idiots guide to Luxemburg. I'm quite happy to take instruction here, I freely admit to not understanding many aspects of Marxist economics. But what I do understand - or at least think I do - does not sit well with many of the things that have been said on this thread.

The ICC has failed the idiots' course on Luxemburg.

Demogorgon303

Much has been said about Marx's schemas in Volume 2, as if this is proof that Luxemburg is talking nonsense. And yet the relevancy of these schemas to the discussion are the very thing which is under dispute. My understanding is that Marx is analysing capital in an abstract sense, demonstrating that capital circulates between different parts of the productive apparatus, not to demonstrate the interaction between the product and the market. This is no different to Newtonian physics which assumes that objects are points without mass - an impossibility in nature. In other words, the abstraction works only to demonstrate the particular point under discussion. All the plethora of schemas that have been written - Marx, Luxemburg, Bauer, Grossman, etc. - have only ever demonstrated what the authors thought in the first place and work fine as long you accept the assumptions built into them.

This whole argument is seen to be incorrect if you consider for the moment the point I have been making over and over again, that a schema can't prove that something does happen, but it can prove that something is possible. Marx's schema proves the possibility of expanded reproduction without outside markets. Bauer's proves the same thing but with an increasing organic composition of capital.

How does it prove this? Well, it would help if you at least read his schemas before trying to enter into a debate in which they are criticized. But to put it very simply, in the schemas it is shown that capital can realize all value in the following way:

1 portion of the total value produced is consumed by the working class. The magnitude of this value is equal to the value of the capital advanced as variable capital. (I.e. the workers buy an amount of the social product equal to their wages.)

1 portion of the total value is used to replace raw materials, used up fixed capital, etc. This portion of value is equal to the constant capital advanced.

1 portion of the total value is used for capitalist's personal consumption. This is a portion of the surplus-value (and if it were the whole surplus-value, we would have simple rather than expanded reproduction).

1 portion of the total value is used to accumulate. This portion of the surplus-value is used to purchase additional constant capital and to advance to workers as variable capital. The surplus-value (which exists in the capitalist's hands as money) earmarked for accumulation is used to purchase a part of the social product, and thus functions as effective demand. And this can be done during every period of accumulation. (I am not, of course, saying that accumulation can go on forever, which is a strawman argument used by Luxemburg and by many Luxemburgians. It is quite possible that accumulation will stop for whatever reason. It's just that the impossibility of realizing the value of the whole social product will not be one of those reasons.) To say that this only "reproduces the problem", as Luxemburg did, and as an earlier poster on here did (I believe it was Demogorgon303 but I could be wrong), supposes that there is a problem to begin with, i.e. is circular logic. And it makes about as much sense as saying that eating cannot be the solution to hunger because it merely puts off the problem until a little later.

Now go read Marx's schemas with this in mind and the ICC dummy course on Luxemburg should be complete. Next semester I may include a section on method.

And also go look at Bauer's schemas as reproduced in Grossman's book, table 2.1: http://marxists.org/archive/grossman/1929/breakdown/ch02.htm

As you can see, there is proportional growth with a rising organic composition of capital. Which refutes Luxemburg's attempted schematic proof that such a schema was impossible. (If you know anything about proofs, you will know that one counterexample serves as a refutation. One counterexample is exactly what Bauer has given. Hence Luxemburg's argument has been refuted.)

You ICC people still haven't acknowledged that Luxemburg tried to schematically prove that not all surplus-value could be realized within the capitalist mode of production itself (I gave citations earlier on the thread as well), and that she was schematically demonstrated false by Bauer. For you people, if Luxemburg uses math her argument is okay, even if it is bad math. When a social-democrat uses math his argument is inherently wrong and reactionary, even if it is correct math.

Later in Volume 3, Marx makes remarks that appear to contradict the idea that capitalism is an entirely closed system. Unless we accept that Marx contradicts himself - which throws his entire system into doubt in my opinion - there is a higher synthesis of these two aspects that this discussion is refusing to engage with. It seems both the Luxemburgists and anti-Luxemburgists are only hearing one half of Marx and that's the bit they agree with.

This is irrelevant to whether or not Luxemburg is correct.

Mike

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 9, 2007

Alf

Willingly, even though it's not strictly relevant since Marx could be wrong too. But it so happens that Luxemburg herself never claimed such continuity. She freely admitted (chapter XXV) that Marx assumed that capital accumulation was possible within a "pure" or "closed" capitalist system (as one made up only of workers and capitalists and their hangers-on) and went on to criticise this as "flawed", "contradictory", "deficient" and "turning in circles".

Sorry, I stupidly assumed this statement by Capricorn was something to do with the continuity (or not) between Marx and Luxemburg, which is why I tried to respond by showing that for Luxemburg some of Marx's statements in one part of Capital were "contradictory" insofar as they didn't square with key statements in others.

Yes, this is a stupid assumption, since in that quote Capricorn is responding to something you brought up, and even in the quote he says that it's not strictly relevant. I.e. he indulged your obsession for a moment. The Capricorn quote is therefore not evidence that the main issue under discussion has been whether or not Luxemburg broke with Marx.

And this is exactly why at the beginning I wanted to discuss no more than one very simple issue at a time. The second one indulges an ICC member on a side-issue the ICC imagines that the side-issue has become the main issue and sees no need to counter the points being discussed. Instead, you receive a plethora of out-of-context Marx quotes in a desperate attempt to prove a point that no one except the ICC really cared about.

I've never met a Luxemburgian who could do better.

Mike

lem

16 years 5 months ago

In reply to by libcom.org

Submitted by lem on October 9, 2007

It is quite possible that accumulation will stop for whatever reason. It's just that the impossibility of realizing the value of the whole social product will not be one of those reasons.)

are the icc and their comrades saying that failure to realize value is a tendency that can or cannot be activated, or that it is constant in the same way as the beating of someone's heart?

i think you're confused [using the terms "possibility" and "schema" seems quite unclear] but you're confusing me so i don't know.

admin edit, two posts become one
if mikus' argument is just that it's rational rather than empirical - i think he should shut up [in the kindest possible way] :p

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 9, 2007

lem

It is quite possible that accumulation will stop for whatever reason. It's just that the impossibility of realizing the value of the whole social product will not be one of those reasons.)

are the icc and their comrades saying that failure to realize value is a tendency that can or cannot be activated, or that it is constant in the same way as the beating of someone's heart?

In Luxemburg's theory, it is impossible to realize surplus-value and accumulate capital without an outside market. This is a constant. Whether or not surplus-value is actually realized would depend on whether or not outside markets were serving as markets for the capitalist nations.

i think you're confused [using the terms "possibility" and "schema" seems quite unclear] but you're confusing me so i don't know.

I don't know what you're talking about.

admin edit, two posts become one
if mikus' argument is just that it's rational rather than empirical - i think he should shut up [in the kindest possible way] :p

Again, I don't know what you are talking about. And no, you shut up. :p

Mike

lem

16 years 5 months ago

In reply to by libcom.org

Submitted by lem on October 9, 2007

sorry. without reading from the beginning - are you arguing that luxemburg is wrong because marx says she is, or?

oh it doesn't matter i have work to do.

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 9, 2007

lem

sorry. without reading from the beginning - are you arguing that luxemburg is wrong because marx says she is, or?

It's not my job to summarize a 7-page-long thread for you. You can read it if you are interested.

But no.

Mike

lem

16 years 5 months ago

In reply to by libcom.org

Submitted by lem on October 9, 2007

i am interested but i think you've confused things by using terms like schema and possibility. i don't want to read it and still be unsure what ou thnk.

you're saying that luxemburg said that by definition capitalism will not be able to expand beyond a certain point? and that it has?

i can't find a book and my notes, so sorry to interrupt..

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 9, 2007

lem

i am interested but i think you've confused things by using terms like schema and possibility.

http://www.m-w.com

capricorn

16 years 5 months ago

In reply to by libcom.org

Submitted by capricorn on October 9, 2007

you're saying that luxemburg said that by definition capitalism will not be able to expand beyond a certain point? and that it has?

That's one way of putting it. But what comes next?

lem

16 years 5 months ago

In reply to by libcom.org

Submitted by lem on October 9, 2007

i think that's up to the icc.

conficus says there are several moves :groucho:

Alf

16 years 5 months ago

In reply to by libcom.org

Submitted by Alf on October 10, 2007

So Mikus has spoken, and we are back to the beginning: accumulation solves the problem of accumulation. You invest in new plant and that is accumulation. Which is why Luxemburg questions this by quoting Marx:

In yet another passage, Marx clearly shows that Tugan Baranovski’s notion of production for production’s sake is wholly alien to him: ‘Besides, we have seen in volume ii part iii that a continuous circulation takes place between constant capital and constant capital (even without considering any accelerated accumulation), which is in so far independent of individual consumption, as it never enters into such consumption, but which is nevertheless definitely limited by it because the production of constant capital never takes place for its own sake, but solely because more of this capital is needed in those spheres of production whose products pass into individual consumption.’

In other words, investing in new plant doesn’t solve the problem because it creates more commodities (whether capital or consumer goods is not the issue, by the way, Capricorn), which is why “The market must, therefore, be continually extended” , to quote Marx again (see Ernie’s post).

And once again, for Mikus, the reproduction schemas, based on a hypothetical world of only capitalists and workers, are taken as reality, not a theoretical abstraction. I am reminded of what Engels said in his preface to Capital vol 2: “What they (the political economists) regarded as a solution, he (Marx) considered but a problem”. And caveats about taking the schema literally have been raised not only by Luxemburg, or Lukacs, or the ICC, but also by other marxists who did not agree with Luxemburg, such as Preobrazhinsky.

This is why Luxemburg did not restrict her analysis of the schemas to the schematic level, but proceeded to examine the historical reality of the process of capitalist accumulation in a world still very far from being one composed only of capitalists and workers. No doubt this was the original evasion of the question on her part.

Mikus also accuses the ICC of being, among other things, computers who are programmed to respond to the IBRP at all times. But the IBRP are far closer to the revolutionary spirit of Marx’s Capital than Mikus. They don’t agree with Luxemburg, but, following Mattick and Grossman, they do try to look at the fundamental contradictions which must lead capital to “suspend itself”, thus posing the objective basis for the communist revolution. They focus on the falling rate of profit, which is certainly a basic contradiction inscribed in the capital/labour relationship. Mikus leaves us with something rather less specific: “It is quite possible that accumulation will stop for whatever reason”, and resents any question being posed to him about what he actually thinks are the fundamental contradictions of the system, or whether these contradictions must become a historic barrier to the development of the capitalist mode of production.

Joseph Kay

16 years 5 months ago

In reply to by libcom.org

Submitted by Joseph Kay on October 10, 2007

Alf

In other words, investing in new plant doesn’t solve the problem because it creates more commodities

hence the analogy about eating not solving hunger; you may have a mechanism for explaining capital's need to grow or die, but i don't see how this necessarily requires outside markets

jaycee

16 years 5 months ago

In reply to by libcom.org

Submitted by jaycee on October 10, 2007

i think Lems question about whether it is a constant problem is important. I would argue that it is not constant because as has been said, there are no societies made purely of workers and capitalists, also capitalsim can and must find ways around the contradiction (eg state capitalism)

However while capitalism is not only made up of workers and capitalists, this remains the most fundamental relation in capitalism. Therefore while other social strata may at times be able to consume what cannot be consumed by either worker or capitalist, the contradiction remains at the heart of capitalist production, (namely the worker capitalist relation). It seems to me that it is therefore likely that this contradiction is still an important factor in capitalsim and will tend to express itself as at certain times.

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 10, 2007

Alf

So Mikus has spoken, and we are back to the beginning: accumulation solves the problem of accumulation. You invest in new plant and that is accumulation. Which is why Luxemburg questions this by quoting Marx:

In yet another passage, Marx clearly shows that Tugan Baranovski’s notion of production for production’s sake is wholly alien to him: ‘Besides, we have seen in volume ii part iii that a continuous circulation takes place between constant capital and constant capital (even without considering any accelerated accumulation), which is in so far independent of individual consumption, as it never enters into such consumption, but which is nevertheless definitely limited by it because the production of constant capital never takes place for its own sake, but solely because more of this capital is needed in those spheres of production whose products pass into individual consumption.’

Even accepting the validity of this statement from Marx, Rosa Luxemburg's problem does not follow. (By the way, you have done nothing to substantiate the truth of this statement of Marx's. I don't accept the statement.) It is entirely possible, given the Marx quote, that accumulation continues, just at a rate limited by final consumers. In Marx's own schemas, for example, the portion of constant capital produced by department I (C1) does not grow as a proportion of the social capital. (In Bauer's schema with the organic composition of capital rising, however, it does. Thus Bauer's schema does contradict this statement by Marx. How this makes Bauer's schema less valid, however, I do not know.)

In other words, investing in new plant doesn’t solve the problem because it creates more commodities (whether capital or consumer goods is not the issue, by the way, Capricorn), which is why “The market must, therefore, be continually extended” , to quote Marx again (see Ernie’s post).

You are quite good at repeating yourself, and thus may eventually move high up the ICC's ladder (if you aren't already high up), but not terribly good at countering peoples points. I pointed out that this is circular logic because you are assuming from the beginning that there is a "problem" to be solved. And no wonder that you discover what you have been trying to prove all along -- that there is a problem!

If p, then p.

In any case, all you have said in the quote above is that if commodities intended for accumulation are produced, then they must be accumulated. And order for capital to accumulate, it must accumulate. (Joseph K already pointed this out.) Well, I agree.

And I'm fine with the idea that the market must be continually extended. Indeed it must. But there is no necessity for outside markets in order to do this.

Alf

And once again, for Mikus, the reproduction schemas, based on a hypothetical world of only capitalists and workers, are taken as reality, not a theoretical abstraction. I am reminded of what Engels said in his preface to Capital vol 2: “What they (the political economists) regarded as a solution, he (Marx) considered but a problem”.

Since the "mikus' Luxemburg for Dummies" class is soon coming to a close, I highly recommend that you consider joining "mikus' Reading for Dummies" follow-up course.

Notice I said earlier: "consider for the moment the point I have been making over and over again, that a schema can't prove that something does happen, but it can prove that something is possible."

Please don't use your own inability to read as a means of throwing mud.

Alf

And caveats about taking the schema literally have been raised not only by Luxemburg, or Lukacs, or the ICC, but also by other marxists who did not agree with Luxemburg, such as Preobrazhinsky.

Another gem from Alf! Great Marxists have had problems with the schemas! And in some bizarre way, this counters all of my points and makes Luxemburg's theory correct! Come on, Alf, we all know this doesn't matter...

Alf

Mikus also accuses the ICC of being, among other things, computers who are programmed to respond to the IBRP at all times. But the IBRP are far closer to the revolutionary spirit of Marx’s Capital than Mikus. They don’t agree with Luxemburg, but, following Mattick and Grossman, they do try to look at the fundamental contradictions which must lead capital to “suspend itself”, thus posing the objective basis for the communist revolution. They focus on the falling rate of profit, which is certainly a basic contradiction inscribed in the capital/labour relationship. Mikus leaves us with something rather less specific: “It is quite possible that accumulation will stop for whatever reason”, and resents any question being posed to him about what he actually thinks are the fundamental contradictions of the system, or whether these contradictions must become a historic barrier to the development of the capitalist mode of production.

What the fuck are you rambling on about? Has the ICC machine malfunctioned?

A. Your reply is nothing more than yet another straw-man. You start off by bringing up my accusation that you criticize straw-men, and then you ramble on about how you like the IBRP better than me. Well, okay. But your rambling on about the IBRP is not a response to my claim that you criticize straw-men!

B. You are grasping for straws. When I said "it is quite possible that accumulation will stop for whatever reason" I didn't mean that I had no reasons in mind as to why it would/could stop, I was rather saying that it was irrelevant to this discussion what reasons accumulation stops for. In any case, I wish you would spend as much time actually answering my points as you would claiming that I'm not a good Marxist (or perhaps not a Marxist at all). I won't even counter the accusations. I'll let them stick. It doesn't make Luxemburg's economic theory any less garbage.

Mike

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 10, 2007

jaycee

However while capitalism is not only made up of workers and capitalists, this remains the most fundamental relation in capitalism. Therefore while other social strata may at times be able to consume what cannot be consumed by either worker or capitalist, the contradiction remains at the heart of capitalist production, (namely the worker capitalist relation). It seems to me that it is therefore likely that this contradiction is still an important factor in capitalsim and will tend to express itself as at certain times.

The problem you see is a pseudo-problem invented in the mind several bourgeois economists, elaborated by a genuine socialist who simply hadn't thought the issue through very well (and apparently didn't even reread her book before publishing it!), and parroted by a groups true believers who are better at reciting supposed truths than at making any actual arguments in favor of them.

I already answered your earlier post and you did not say what the problem with my response was. And the same issue has been discussed in more detail for the last few pages.

lem

16 years 5 months ago

In reply to by libcom.org

Submitted by lem on October 10, 2007

i think Lems question about whether it is a constant problem is important. I would argue that it is not constant because as has been said, there are no societies made purely of workers and capitalists, also capitalsim can and must find ways around the contradiction (eg state capitalism)

nrrt, but what other objections do you have mikus :)

capricorn

16 years 5 months ago

In reply to by libcom.org

Submitted by capricorn on October 11, 2007

Here beginneth the requested simple lesson as to why Luxemburg's economics is wrong.
According to her account of him (I've not read him). she started from the view put forward by an early 19th century economist called Sismondi who argued that capital accumulation was impossible because, if people saved a part rather than spent all of their income, that would reduce market demand and there'd be no money to buy the resources set aside to expand production (to accumulate capital).
His simple mistake was to confuse "saving" with "hoarding". If people did simply hoard a part of their income then, yes, this would reduce demand. But if they put it in a bank, that bank could lend it to capitalists to purchase what they needed to expand production.
Luxemburg accepted this simple mistake and went on to argue, on the basis of it, that the "missing" purchasing power could only be found outside the capitalist system. Hence imperialism and, hence also, that at some point (when all non-capitalist markets are exhausted) capitalism must breakdown as an economic system.
But, as there is no built-in shortage of purchasing power under capitalism, this theory of imperialism is wrong. So is the theory that capitalism has been in economic decline since her day due to a shrinking of the non-capitalist markets.
I must add straightaway that just because what is produced and the purchasing power to buy it can balance, this doesn't mean that they always do. In fact, they don't because from time to time capitalists and capitalist firms do in effect "hoard" their money if the expected rate of profit is not high enough. Then you do have a crisis. But, sooner or later, this is rectified and capital accumulation resumes. This is the way capitalism has worked both before and after 1914 and still works today. Fortunately or unfortunately, it is not breaking down and is not going to break down economically.

Alf

16 years 5 months ago

In reply to by libcom.org

Submitted by Alf on October 11, 2007

Capricorn: that's not Rosa's theory. The limits to effective demand don't result from the fact that people don't spend all their income. It derives from the nature of wage labour, so whatever income the proletarians earn and however much they save, they will always be overproducers. As Marx put it:

“.. the more capitalist production develops the more it is forced to produce on a scale which has nothing to do with immediate demand but depends on a constant expansion of the world market” (...) The mere relationship of wage-labourer and capitalist implies;

1. that the majority of the producers (the workers) are non-consumers (non-buyers) of a very large part of their product, namely, of the means of production and the raw material. 2. that the majority of the producers, the workers, can consume an equivalent for their product only so long as they produce more than this equivalent, that is, so long as they produce surplus-value or surplus product. They must always be overproducers, produce over and above their needs, in order to be able to be consumers or buyers within the limits of their needs (...)

Over-production is specifically conditioned by the general law of the production of capital: to produce to the limit set by the productive forces, that is to say, to exploit the maximum amount of labour with the given amount of capital, without any consideration for the actual limits of the market or the needs backed by the ability to pay” (Marx, Theories of Surplus Value, Vol 2, Lawrence & Wishart, 1969, pages 468, 520, 534)

Luxemburg's theory is entirely in line with Marx's view on this essential point.

I also think you should be arguing with Marx, not just Luxemburg, when you say that there is no economic tendency towards break-down in capitalism.

Joseph Kay

16 years 5 months ago

In reply to by libcom.org

Submitted by Joseph Kay on October 11, 2007

1. that the majority of the producers (the workers) are non-consumers (non-buyers) of a very large part of their product, namely, of the means of production and the raw material. 2. that the majority of the producers, the workers, can consume an equivalent for their product only so long as they produce more than this equivalent, that is, so long as they produce surplus-value or surplus product. They must always be overproducers, produce over and above their needs, in order to be able to be consumers or buyers within the limits of their needs

nothing in that implies capital is dependent on external markets.

sure, workers necessarily can't consume all that they produce "namely, of the means of production and the raw material" - which may nonetheless still consumed by the bourgeoisie. sure this consumption creates expanded production, and the whole thing goes round again, but this is why capitalism must grow or die, not a dependency on an outside market. Marx clearly says that overproduction in this paragraph referes to workers producing "over and above their needs" - not over and above the effective demand, of which the bourgeoisie are a part.

i mean i don't have a strong opinion on this and haven't given it much prior thought, but you're not really making your case imho.

Demogorgon303

16 years 5 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 11, 2007

I haven't finished my review of this thread yet, but reading the latest posts a number of comments spring to mind.

Firstly Mikus:

1 portion of the total value produced is consumed by the working class. The magnitude of this value is equal to the value of the capital advanced as variable capital. (I.e. the workers buy an amount of the social product equal to their wages.)

1 portion of the total value is used to replace raw materials, used up fixed capital, etc. This portion of value is equal to the constant capital advanced.

1 portion of the total value is used for capitalist's personal consumption. This is a portion of the surplus-value (and if it were the whole surplus-value, we would have simple rather than expanded reproduction).

1 portion of the total value is used to accumulate. This portion of the surplus-value is used to purchase additional constant capital and to advance to workers as variable capital. The surplus-value (which exists in the capitalist's hands as money) earmarked for accumulation is used to purchase a part of the social product, and thus functions as effective demand.

I don't dispute any of this but all of this seem to rest on the assumption that any particular capitalist can realise his product. It's all very well saying that surplus value can be used to accumulate, but the surplus value only exists in useable form once it has been realised. The problem of demand does not appear after the capitalist spends his money to replace plant and expand production, it takes place before it. As presented here, this formulation appears to assume what it is attempting to prove.

And Mikus, you also appear to reject Marx's statement that says that, ultimately, all production is aimed at individual consumption. What is it that you object to exactly? The consumption part, or the individual part? Obviously there are products which can only be consumed collectively: large buildings, roads, general infrastructure. But I'm not sure what difference this really makes. And if you're saying some production is not ultimately destined for any type of consumption, perhaps you can explain what these products might be?

Joseph Kay

16 years 5 months ago

In reply to by libcom.org

Submitted by Joseph Kay on October 11, 2007

Demogorgon303

The problem of demand does not appear after the capitalist spends his money to replace plant and expand production, it takes place before it.

but that seems to say the problem of demand is only present before the bourgeoisie satisfy it... do they have to wait until all the ipods have been sold before they by invest in new means of production or raw materials? :confused: it seems you've provided the answer to your 'problem' - expanded production, endless growth.

Demogorgon303

16 years 5 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 11, 2007

but that seems to say the problem of demand is only present before the bourgeoisie satisfy it... do they have to wait until all the ipods have been sold before they by invest in new means of production or raw materials

It seems obvious that each cycle of production requires its products to be sold. That's the whole point of the inner mechanic Marx identified: M -> C ->M. If the transfomation of C back to M fails, then no new cycle can begin.

Again, simple reproduction is no problem. The capitalist has handed money into the market to buy his fixed and variable capital. The sellers of these commodities therefore have money waiting to buy his products when he sells them. But if the capitalist is selling products surplus to the value already put into the market, who buys the extra? It's all very well to say, "oh well, other capitalist are accumulating" and so create the extra demand but this simply shifts the problem to the other capitalists. They also have to find markets larger than they themselves have created. If this is the reality that faces every individual capitalist then it would seem to face the capitalist class as a whole: hence generalised overproduction.

Mikus and the others that share his view, seem to be arguing that there is a fallacy of composition here: that the characteristics of the parts (e.g. individual capitalists needing markets larger than they can create) are not relevent to the whole (the entire capitalist class). But I honestly just can't see it.

Joseph Kay

16 years 5 months ago

In reply to by libcom.org

Submitted by Joseph Kay on October 11, 2007

why does only workers' income count as effective demand?

Demogorgon303

16 years 5 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 11, 2007

I didn't say it did. Both capitalists and workers count as demand. Look at what I said above "the capitalist has handed money into the market to buy his fixed and variable capital. The sellers of these commodities therefore have money waiting to buy his products when he sells them." Fixed capital is only sold by capitalists, variable capital only by workers. Both can buy back production, but only (at maximum) in the amounts they have already been paid.

Joseph Kay

16 years 5 months ago

In reply to by libcom.org

Submitted by Joseph Kay on October 11, 2007

so you're saying there's not enough money to realise the extra value created by labour? can't remember my economics very well but isn't this where all that velocity of money stuff comes in? i mean i'm pretty agnostic on this, but the marx quote above didn't seem to say what alf said it did

Alf

16 years 5 months ago

In reply to by libcom.org

Submitted by Alf on October 11, 2007

Marx: 1. that the majority of the producers (the workers) are non-consumers (non-buyers) of a very large part of their product, namely, of the means of production and the raw material. 2. that the majority of the producers, the workers, can consume an equivalent for their product only so long as they produce more than this equivalent, that is, so long as they produce surplus-value or surplus product. They must always be overproducers, produce over and above their needs, in order to be able to be consumers or buyers within the limits of their needs

Joseph K: nothing in that implies capital is dependent on external markets.

But when Marx, in the other key passage quoted on this thread, says that the market must be continually extended, he can only mean extended beyond the confines of the capital/labour relationship, because he is not talking about geography, but about social relations (even though geographical extension was part of the process). The problem for capitalism is that the very process of finding these new markets results in their being incorporated into the capitalist social relationship and thus posing the whole problem again on a higher level.

Mike Harman

16 years 5 months ago

In reply to by libcom.org

Submitted by Mike Harman on October 11, 2007

1. that the majority of the producers (the workers) are non-consumers (non-buyers) of a very large part of their product, namely, of the means of production and the raw material. 2. that the majority of the producers, the workers, can consume an equivalent for their product only so long as they produce more than this equivalent, that is, so long as they produce surplus-value or surplus product. They must always be overproducers, produce over and above their needs, in order to be able to be consumers or buyers within the limits of their needs (...)

And within capitalism, as JK says, there are other consumers - employers for a start. Also, a very, very large proportion of the working class isn't involved in direct production, I've said this a few times, I think that's one of the main unanswered points iirc. This proportion has increased dramatically in the past century or so. Again we see no dependence on external markets.

Mike Harman

16 years 5 months ago

In reply to by libcom.org

Submitted by Mike Harman on October 11, 2007

Demogorgon303

And Mikus, you also appear to reject Marx's statement that says that, ultimately, all production is aimed at individual consumption. What is it that you object to exactly? The consumption part, or the individual part? Obviously there are products which can only be consumed collectively: large buildings, roads, general infrastructure. But I'm not sure what difference this really makes. And if you're saying some production is not ultimately destined for any type of consumption, perhaps you can explain what these products might be?

Defense for just one of many examples.

Mike Harman

16 years 5 months ago

In reply to by libcom.org

Submitted by Mike Harman on October 11, 2007

Demogorgon303

I didn't say it did. Both capitalists and workers count as demand. Look at what I said above "the capitalist has handed money into the market to buy his fixed and variable capital. The sellers of these commodities therefore have money waiting to buy his products when he sells them." Fixed capital is only sold by capitalists, variable capital only by workers. Both can buy back production, but only (at maximum) in the amounts they have already been paid.

Isn't this just going back to the "but there's not enough money!!11!!" argument again?

edit: like JK said - velocity of money answers this perfectly well - another unanswered point since you asked for them.

Demogorgon303

16 years 5 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 11, 2007

It doesn't matter if the workers are employed in the production of physical goods. The same problem occurs no matter what product is produced. The capitalists (in a closed system) can only sell their products (cars, Mars bars, insurance, whatever) to a market that has been created by the money they themselves have already put in (buying constant and variable capital).

Demogorgon303

16 years 5 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 11, 2007

Defense for just one of many examples.

This should be interesting. Mikus, do you defend the idea that weapons are a province for accumulation??

Joseph Kay

16 years 5 months ago

In reply to by libcom.org

Submitted by Joseph Kay on October 11, 2007

Alf

says that the market must be continually extended, he can only mean extended beyond the confines of the capital/labour relationship

i don't think that's the only thing he could mean, i haven't read the passage that quote's from, but surely 'extending the market' could just mean commodifying more stuff, which is pretty much a constant feature of capitalism? again you may think this would run up against limits, but new shit's constantly being invented, and there are plenty of 'immaterial' commodities around too (itunes, ring tones, software etc) which are basically unlimited by ecological finitude.

Demogorgon303

16 years 5 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 11, 2007

How does the velocity of money answer this? The velocity of money is determined by the speed it changes hands. Each change is a transaction which, by definition, assumes there is demand there. It relies on demand, it doesn't create demand.

Joseph Kay

16 years 5 months ago

In reply to by libcom.org

Submitted by Joseph Kay on October 11, 2007

Demogorgon303

How does the velocity of money answer this? The velocity of money is determined by the speed it changes hands. Each change is a transaction which, by definition, assumes there is demand there. It relies on demand, it doesn't create demand.

so the argument is a lack of money? wasn't this gone over several pages ago, with examples of how it's not a problem (i.e. if firm a buys from firm b while firm b buys from firm a, only the net amount is needed as ready cash)

edit:

wikipedia

The velocity of money is the average frequency with which a unit of money is spent...

If, for example, in a very small economy, a farmer and a mechanic, with just $50 in money between them, buy goods and services from each other in just three transactions over the course of a year.

* Mechanic buys $40 of corn and $10 on barn cats from a farmer.
* Farmer spends $50 on tractor repair.

Together they spend $100 even though there is only $50 of money in this little economy.

Mike Harman

16 years 5 months ago

In reply to by libcom.org

Submitted by Mike Harman on October 11, 2007

It doesn't matter if the workers are employed in the production of physical goods.

O RLY?
I'd say the presence of a whole bunch of workers employed in unproductive labour that neither produces commodities nor services for consumption, but which obviously has to consume services and commodities themselves matters quite a lot if you're talking about 'overproduction'. Mainly this is state and private bureaucracies, but not only. The rise of 'middle classes' in India and China in the past few years would confirm that this is one method of increasing demand for goods within the boundaries of the nation state.

Demogorgon303

16 years 5 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 11, 2007

I dont think the argument (my argument at least) is about lack of money per se. It's the lack of demand that expresses itself in lack of money.

Demogorgon303

16 years 5 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 11, 2007

I'd say the presence of a whole bunch of workers employed in unproductive labour that neither produces commodities nor services for consumption

Errm, I don't think unproductive labour means the services they provide are not consumed. And think about what you're saying here. These workers will be removing value from the system but not giving anything back. If they have money, then it must come from another source because they can't be producing any themselves.

The state is, of course, the biggest province of unproductive labour and these functions are provided for by taxes on the profitable sections of the economy.

Mattick demolishes this idea in Economic Crisis and Crisis Theory:

"The fact that state-induced production has been expanded by means of credit already indicates that the private expansion of it has not been able to sustain prosperity . Since state-induced production in competition with private capital would increasingly aggravate the economic difficulties of the latter without changing the low profitability, the state produces not goods for the market, where their value could be realized and accumulated, but goods for “public consumption.” This “public consumption” is at all times paid for by taxation of the workers and the surplus-value-producing capital in order to satisfy the general needs of capitalist society. The extension of “public consumption” through deficit financing also implies a deduction from surplus value and a decrease in private consumption, although with a delay, since this financing is accomplished not through additional taxation but through the mobilization of private money; capital for a long period i.e., through the public debt.

The whole matter finally comes down to the simple fact that what is consumed cannot be accumulated, so that the growth of “public consumption” cannot be a means to transform a stagnating or declining rate of accumulation into a rising one. If the rate of accumulation is improved, it is due not to public expenditures but to a restored profitability of capital, accomplished by the crisis, sufficiently vigorous to launch a new expansion despite the increase in public expenditures. This also is not altered by the fact that the economic stimulation due to state expenditures can be an impetus to further expansion, since the expansion itself can only be achieved through the actual increase of private surplus value. Without this, state-induced production can lead only to a further collapse of the rate of accumulation."

Incidentally, this also answers your point about defence, as this is financed in exactly the same way as state works.

The short version of this is that these unproductive workers are buying products with money they've already taken from the capitalist. The capitalist is essentially buying his own products.

Joseph Kay

16 years 5 months ago

In reply to by libcom.org

Submitted by Joseph Kay on October 11, 2007

Demogorgon303

The whole matter finally comes down to the simple fact that what is consumed cannot be accumulated

is not accumulation productive consumption? i'm sure marx says as much...

Demogorgon303

16 years 5 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 11, 2007

Productive consumption and unproductive consumption, which is what catch advocates, are rather different don't you think?

Joseph Kay

16 years 5 months ago

In reply to by libcom.org

Submitted by Joseph Kay on October 11, 2007

catch isn't claiming unproductive workers accumulate though is he? his point is that if there's a problem of overproduction, a rising proportion of unproductive consumers would counter that tendency. that doesn't mean capital can't be accumulated as capital still shifts its goods...

Demogorgon303

16 years 5 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 11, 2007

Joseph, both yourself and catch are basically defending a fundamentally Keynesian approach: raise consumption through unproductive expenditure. You're not disproving the existence of the problem at all, just advocating classical bourgeois economic strategies to overcome it. In fact, ironically you're countering one theory accused of being "underconsumptionist" with another one.

Your approach is completely different to Mikus who is at least attacking the problem from a Marxist perspective (one which incidentally is very similar to Mattick's), even if I'm not completely convinced about his position yet.

Again Mattick makes the point for me (emphases mine):

"This is not to deny all efficacy to Keynesian methods. Just as the expansion of private credit can stimulate economic activity beyond the level to which it would otherwise be limited, the expansion of public spending realised through credit can also at first have a stimulating effect on the economy as a whole. But both methods find their limits in the actual production of profit."

And further:

"Since the concentrated capitals totally disregard social needs, even as capitalistically defined, these needs must be supplied by political means, for example, by state subsidisation of profit-poor but necessary branches of production. In short, the viability of society requires state intervention in the distribution of the total social profit. This redistribution of the social profit in the form of state-induced production in no way changes the quantity of this profit.

Since the additional production yields no profit of its own, it is of no service to the accumulation of capital. Since the crisis results from insufficient accumulation, it is not eliminated by state-induced production ..."

I should point out that Mattick is a severe critic of Luxemburg, so there's something of an irony in my quoting him here. But his position on this particular question is absolutely correct.

Joseph Kay

16 years 5 months ago

In reply to by libcom.org

Submitted by Joseph Kay on October 11, 2007

i'm not advocating anything, let alone a means of managing capital. in fact all i've done is clarify catch's point that this happens, and unproductive workers exist withing capitalism. it's all a bit of a tangent from whether there's necessary overproduction that requires external markets (mattick above seems to assume the crisis that is under discussion), not sure how it switched to productive/unproductive, on which there's another thread.

Demogorgon303

16 years 5 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 11, 2007

Well, it was catch's comments about unproductive workers providing a market, without explaining how these workers came to exist in the first place. I think other thread is about what constitutes unproductive labour, but I haven't had the time to really follow that one at all.

And I'm not suggesting that you want to manage capital. I was suggesting that what catch (if not you) was supporting was a variation on the theory that Keynes put forward. It's perfectly possible to believe a theory which allows capitalism to completely overcome its economic crisis, but still want to get rid of capitalism.

Mattick doesn't think capitalism needs extra markets at all but his assault on Keynes is clearly relevant to what catch is suggesting, IMHO.

capricorn

16 years 5 months ago

In reply to by libcom.org

Submitted by capricorn on October 11, 2007

Alf, you write:

Capricorn: that's not Rosa's theory. The limits to effective demand don't result from the fact that people don't spend all their income. It derives from the nature of wage labour, so whatever income the proletarians earn and however much they save, they will always be overproducers. As Marx put it:

“.. the more capitalist production develops the more it is forced to produce on a scale which has nothing to do with immediate demand but depends on a constant expansion of the world market” (...) The mere relationship of wage-labourer and capitalist implies;

1. that the majority of the producers (the workers) are non-consumers (non-buyers) of a very large part of their product, namely, of the means of production and the raw material. 2. that the majority of the producers, the workers, can consume an equivalent for their product only so long as they produce more than this equivalent, that is, so long as they produce surplus-value or surplus product. They must always be overproducers, produce over and above their needs, in order to be able to be consumers or buyers within the limits of their needs (...)

Over-production is specifically conditioned by the general law of the production of capital: to produce to the limit set by the productive forces, that is to say, to exploit the maximum amount of labour with the given amount of capital, without any consideration for the actual limits of the market or the needs backed by the ability to pay” (Marx, Theories of Surplus Value, Vol 2, Lawrence & Wishart, 1969, pages 468, 520, 534)

Luxemburg's theory is entirely in line with Marx's view on this essential point.

I also think you should be arguing with Marx, not just Luxemburg, when you say that there is no economic tendency towards break-down in capitalism.

I don't think anybody here is denying what the passages you quote say:
(1) that workers are "over-producers" in the sense that they produce more than they consume. Of course they do, otherwise there'd be no profit. It can't mean what you seem to be implying: that overproduction results because the workers can't buy back what they produce.
(2) that, in times of boom when the market is expanding, some capitalists get over-optimistic and end up producing more than the market for their particular product can absorb, thereby starting off a chain reaction leading to a general crisis of overproduction.
Luxemburg may well have accepted this, but this is not why she is being criticised here. It is for saying that workers and capitalists combined can't buy back the whole net social product. The fact is that they could, but that from time to time the capitalists choose not to spend all that they could (not to buy new raw materials, machines, factories, workers to expand production, because the rate of profit is not high enough), so provoking a crisis of overproduction and a consequent slump which appears to result from underconsumption. But this is never permanent, ie there is no such thing as a permanent crisis of overproduction or permanent underconsumption. Sooner or later (thanks actually to the fall in wages and capital values that occurs in a crisis) the rate of profit rises, and accumulation (capitalist spending on producer goods) resumes again (till the next crisis). The history of capitalism has been a series of cycles of such periods of apparent overproduction followed by periods of apparent underconsumption.

Mike Harman

16 years 5 months ago

In reply to by libcom.org

Submitted by Mike Harman on October 11, 2007

Joseph, both yourself and catch are basically defending a fundamentally Keynesian approach: raise consumption through unproductive expenditure. You're not disproving the existence of the problem at all, just advocating classical bourgeois economic strategies to overcome it. In fact, ironically you're countering one theory accused of being "underconsumptionist" with another one.

We're not 'advocating' this in any way whatsoever. We're just simply showing that there exists demand within capitalism for goods that 'actually productive' workers can't buy themselves.

Again Mattick makes the point for me (emphases mine):

"This is not to deny all efficacy to Keynesian methods. Just as the expansion of private credit can stimulate economic activity beyond the level to which it would otherwise be limited, the expansion of public spending realised through credit can also at first have a stimulating effect on the economy as a whole. But both methods find their limits in the actual production of profit."

And further:

"Since the concentrated capitals totally disregard social needs, even as capitalistically defined, these needs must be supplied by political means, for example, by state subsidisation of profit-poor but necessary branches of production. In short, the viability of society requires state intervention in the distribution of the total social profit. This redistribution of the social profit in the form of state-induced production in no way changes the quantity of this profit.

Since the additional production yields no profit of its own, it is of no service to the accumulation of capital. Since the crisis results from insufficient accumulation, it is not eliminated by state-induced production ..."

Mattick here is talking about the falling rate of profit, not that capital requires external markets. If you want to talk about the falling rate of profit, that's fine, but please don't use Mattick's writings on that as a defence of your underconsumptionist schtick - although on the other hand, feel free, because it shows you've got no real defence of it at all.

I'm quite prepared to say that a massive number of unproductive workers leads to a smaller proportion of 'real value' being produced in relation to the totality of capitalist circulation- bringing it back to Goldner again, that much activity is involved in securing 'titles to surplus value' rather than surplus value itself - in other words a falling rate of overall profit. However, the falling rate of profit hasn't been the subject of this discussion so far so you're not helping yourself at all here. I'm not at all convinced that there's any objective terminalism in a falling rate of profit though - given absolute profit is massively expanded anyway. Generally I'm much more interested in the subjective reasons for capitalist crisis, which as usual have been largely ignored in this discussion (currently three times longer than the public sector pay dispute thread)

Well, it was catch's comments about unproductive workers providing a market, without explaining how these workers came to exist in the first place.

Generally I'd say as a result of working class militancy - in some cases as concessions, in some cases as a means of managing it.

And I'm not suggesting that you want to manage capital. I was suggesting that what catch (if not you) was supporting was a variation on the theory that Keynes put forward. It's perfectly possible to believe a theory which allows capitalism to completely overcome its economic crisis, but still want to get rid of capitalism.

I'm merely stating the historical and contemporary record that such workers exist. I largely agree with Mattick on this specific point I think (although I've not read him on this except where others have quoted).

capricorn

16 years 5 months ago

In reply to by libcom.org

Submitted by capricorn on October 11, 2007

Demigorgon, you write:

Again, simple reproduction is no problem. The capitalist has handed money into the market to buy his fixed and variable capital. The sellers of these commodities therefore have money waiting to buy his products when he sells them. But if the capitalist is selling products surplus to the value already put into the market, who buys the extra? It's all very well to say, "oh well, other capitalist are accumulating" and so create the extra demand but this simply shifts the problem to the other capitalists.

But why not, that is precisely the answer! All the accumulating capitalists may not initially have the money to buy from each other what they all want to accumulate but they do have the products -- and products can always serve as collateral to raise money. Which of course is (very crudely) what happens. Other capitalists do provide the market for accumulation to take place.
In any event, you have "proved" too much: that even so-called "simple reproduction" (where all the surplus value extracted from the working class is spent by the capitalists and their hangers-on on consumer goods and luxuries, and none accumulated as new capital). You say there's no problem with "simple reproduction" but, according to your argument, there is. The capitalists are still trying to make a profit over and above what they pay their workers and what they pay to other capitalists for the raw materials, machinery, etc. But where is the money to come from to buy the goods in which the profit is embodied? (Answer: other capitalists of course, as with accumulation).
There is no difference in principle between "simple reproduction" and "extended reproduction" (where some of the capitalists accumulate some of their profits). The only difference is how the capitalists use their purchasing power: all on consumer goods or some on producer goods. The money is there in both cases, only it is spent differently.

Demogorgon303

16 years 5 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 11, 2007

We're not 'advocating' this in any way whatsoever. We're just simply showing that there exists demand within capitalism for goods that 'actually productive' workers can't buy themselves.

See my response to Joseph K. I expressed myself badly here. And I don't see why you're pursuing this point considering you quote my correction later in your post. Nonetheless, you are saying that this would work if the capitalists did it.

And I haven't used Mattick to defend my "underconsumptionist schtick" in any way whatsoever. I've used him to point out that the demand from the workers you point to is not real demand. They don't bring any new money to the equation:

Capitalist wealth: £1000 - £200 tax = £800
Worker Wealth: £1000 - £200 tax = £800

= state expenditure= £400

£800 + £800 + £400 = £2000. The total purchasing power in the market is still exactly the same as it was. Either this is adequate or it is not, but the fact it is spent by productive of unproductive workers is completely irrelevant to the question under discussion: whether this total market is adequate.

Even worse, this scenario assumes that value has already been realised which it must have been in order for the state to tax it. You cannot tax profits that don't exist. But it is the capacity to realise the value in the first place that is in dispute here. You cannot therefore say, that already realised value can overcome it without demonstrating where that value has come from. So far nobody has, as far as I can see.

Now Mikus may yet prove me wrong by answering the question I posed to him earlier. And there may also be something in the question of money that Joseph K raised. I need to think about that a bit more. But unproductive workers as either a market or a source of profit is completely wrong, IMO.

Edit: I had to redo the construction of the tax figures up there, because they got horribly mangled when I posted.

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 11, 2007

Demogorgon303

I haven't finished my review of this thread yet, but reading the latest posts a number of comments spring to mind.

Firstly Mikus:

1 portion of the total value produced is consumed by the working class. The magnitude of this value is equal to the value of the capital advanced as variable capital. (I.e. the workers buy an amount of the social product equal to their wages.)

1 portion of the total value is used to replace raw materials, used up fixed capital, etc. This portion of value is equal to the constant capital advanced.

1 portion of the total value is used for capitalist's personal consumption. This is a portion of the surplus-value (and if it were the whole surplus-value, we would have simple rather than expanded reproduction).

1 portion of the total value is used to accumulate. This portion of the surplus-value is used to purchase additional constant capital and to advance to workers as variable capital. The surplus-value (which exists in the capitalist's hands as money) earmarked for accumulation is used to purchase a part of the social product, and thus functions as effective demand.

I don't dispute any of this but all of this seem to rest on the assumption that any particular capitalist can realise his product. It's all very well saying that surplus value can be used to accumulate, but the surplus value only exists in useable form once it has been realised. The problem of demand does not appear after the capitalist spends his money to replace plant and expand production, it takes place before it. As presented here, this formulation appears to assume what it is attempting to prove.

Okay, I see what you're doing now, but your point was already answered earlier. My response does show that Alf was wrong, however, when he kept saying that accumulation would just mean that more commodities were produced (to which I kept responding that this is synonymous with accumulation itself).

You are actually back to the lack of money argument I already refuted earlier in the thread, but I don't think you have tried to arrive back there.

You say:

Demogorgon303

Again, simple reproduction is no problem. The capitalist has handed money into the market to buy his fixed and variable capital. The sellers of these commodities therefore have money waiting to buy his products when he sells them. But if the capitalist is selling products surplus to the value already put into the market, who buys the extra? It's all very well to say, "oh well, other capitalist are accumulating" and so create the extra demand but this simply shifts the problem to the other capitalists. They also have to find markets larger than they themselves have created. If this is the reality that faces every individual capitalist then it would seem to face the capitalist class as a whole: hence generalised overproduction.

To summarize what you say here: simple reproduction is unproblematic because an equal amount of money is put into the market (by the initial expenditure of constant and variable capital) as is realized by the capitalists. In expanded reproduction this is not the case, and this is where the problem lies (namely, that the capitalist must take more money out of the market to realize his/her surplus-value than was spent at the beginning as constant and variable capital).

Capricorn has already showed why you are wrong here.

Capricorn

You [Demogorgon303] say there's no problem with "simple reproduction" but, according to your argument, there is. The capitalists are still trying to make a profit over and above what they pay their workers and what they pay to other capitalists for the raw materials, machinery, etc. But where is the money to come from to buy the goods in which the profit is embodied? (Answer: other capitalists of course, as with accumulation).

The problem which you point to with expanded reproduction would also be a problem in simple reproduction. Think about it for a moment. In the aggregate, capitalists lay out money as constant capital and as variable capital (c+v). But the aggregate product to be realized includes not only the value equal to the constant and variable capital, but also a surplus-value. (Total product's value = c+v+s.) There is a portion of the social product (namely, the surplus-value, s) which needs to be realized although there is no quantity of money matching it in value. The total social product must be realized by an amount of money which represents less value than the social product as a whole. So the problem of effective demand that you think you have identified is in fact a problem of a (supposed) lack of money. If we can show that there is no lack of money, then the reasons that you see for a lack of effective demand will also disappear. (This does not mean that someone else can't come along and see some other cause of a lack of effective demand, but it does mean that if we show that there is in fact no shortage of money then we also show that the problem that you claim to have noticed is not a problem.)

This leads you back to the issue I identified early in the thread -- how can $1 of money realize more value than $1? I pointed to a number of ways this can happen, particularly an increase in the velocity of money and the mutual settlement of debts. In Marx's schemas this occurs by buying small portions of the social product at a time. This is one possible way that $1 of money can realize more value than $1. (I.e. I have $100 worth of commodities representing surplus-value, you have $100 worth of commodities representing surplus-value, so I buy $1 of commodities from you, then you buy $1 of commodities from me with the same dollar, and so forth. Obviously the amount of minimum money to be used varies with the type of commodity and with the industry doing the purchasing but the point remains the same.)

Gold production is another possibility (nowadays we could refer to the printing of money), which Luxemburg notoriously objected to. I don't think her objections were valid, but even if they were it isn't necessary to use gold production as a way of increasing the mass of money since the velocity of money and the mutual settlement of debts are constantly expanding.

I don't generally think Bukharin's response to Luxemburg is very good but this is one point that he made extremely well. Rosa acted (as you do) as if the capitalist class must realize all the surplus-value in one mass, as if all capitalists simultaneously had to have all the surplus-value in money form at one moment in time. Obviously this is not the case.

If you do think that is the case, then you have to show that the portion of money in the economy is exactly equal to the value of the total social product at any given time (or at least that this equality obtained before so-called decadence). But it is well known that the value of total commodity capital is way larger than the total value of money at any given moment.

And Mikus, you also appear to reject Marx's statement that says that, ultimately, all production is aimed at individual consumption. What is it that you object to exactly? The consumption part, or the individual part? Obviously there are products which can only be consumed collectively: large buildings, roads, general infrastructure. But I'm not sure what difference this really makes. And if you're saying some production is not ultimately destined for any type of consumption, perhaps you can explain what these products might be?

I don't really want to get into this debate, but I object to the idea that all production is aimed at individual consumption. (By individual consumption I mean unproductive consumption.) There is always a portion of social product which never enters into individual consumption, namely the portion of constant capital consumed by Department I (producers of means of production). And under circumstances in which the organic composition of capital grows, or the rate of accumulation rises, or the rate of surplus-value rises, this portion of the social product will grow as a proportion of the total social product. I.e. there will be a greater and greater portion of the social product which never enters into individual consumption.

That is all I'll say on that topic for now. First we have to address Luxemburg.

Mike

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 11, 2007

Demogorgon303

Defense for just one of many examples.

This should be interesting. Mikus, do you defend the idea that weapons are a province for accumulation??

I don't know what you mean by "weapons [as] a province for accumulation". I think you're getting at the issue of unproductive consumers within the capitalist mode of production and whether or not I think they can solve Luxemburg's problem.

I don't think there is a problem.

Mike

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 11, 2007

I should also add to Demogorgon303, that the problem he thinks exists (which reduces to a lack of money) is exactly the (non-)problem I criticized at the beginning of the thread before Alf kept saying that it wasn't the real problem located by Luxemburg. In fact it is one of Luxemburg's (non-)problems, although it's true that Alf's (non-)problem was also pointed to by Luxemburg.

I think at this point it should be clear why it is correct to refer to the supposed problems as non-problems.

The only argument left in Luxemburg's arsenal (that I'm aware of) is the claim about the numbers not working out while the organic composition of capital is rising, but I'm afraid it fairs even more poorly than the lack of money one (Demogorgon303) and the excess of commodities one (Alf).

lem

16 years 5 months ago

In reply to by libcom.org

Submitted by lem on October 11, 2007

Demorgon - can't more money just be printed? Tho i think that must sidestep the real issue.. i can't see why this isn't settled by now, or why it's become too complicated for the idle to simply pick up at a random point :-?

Demogorgon303

16 years 5 months ago

In reply to by libcom.org

Submitted by Demogorgon303 on October 12, 2007

Mikus

I think I'm getting closer to understanding what you're saying. I'm not yet entirely convinced, but with a little more work on you part perhaps I will be.

You and Capricorn do seem to be right about simple reproduction also being problematic in the scenario I've posed. Still, there are two ways of interpreting this: (1) The problem is indeed a non-problem in the manner you suggest or (2) capitalism is even more dependent on external markets that even I thought. I have no doubt that even mentioning the number 2 option will make you bang your head against the table but it is a possibility that needs to be explored. I have to say I'm not convinced of the validity of this myself, at this time. But it would be dishonest of me not to mention it seeing as it has crossed my mind.

I need to think more about the question of the velocity of money. It would seem to presume an advanced state of commodity production and many interlocking cycles of M-C-M. This appears to be what Marx assumes in Volume 2, III. I can dimly see how this may overcome the problem although I still think the problem I've posed points to an inherent tendency to crisis in the M-C-M cycle if this is taken in isolation. But, as I say, I need to think about this some more.

As far as the "final destination of consumption" goes, I still don't agree with you here but as you don't want to get into the argument I see little point in pursuing this at the moment.

capricorn

16 years 5 months ago

In reply to by libcom.org

Submitted by capricorn on October 12, 2007

I think I understand why Luxemburg took such an extreme position, i.e. denying that a ‘pure’ capitalism was possible because built-in to capitalism was a chronic shortage of purchasing power. She must have felt that had she accepted that there was no such chronic shortage, this would not only make socialism not inevitable but would also make social reformism possible and plausible.
Another famous “underconsumptionist” theorist of Imperialism was JA Hobson, whose book of this title appeared in 1902 and which is said to have influenced Lenin’s work on this subject. Luxemburg had heard of him, but doesn't seem to have read him as the only mention of him in her book assumes that he is someone like her "who is convinced that accumulation is impossible" (chapter XXIII). But this was far from being the case.
Hobson’s argument was not that capitalism suffered from a chronic shortage of purchasing power but that the capitalism of his day suffered from a mal-distribution of purchasing power (or "consuming power" as he called it).

“The assumption, sometimes made, that home demand is a fixed amount, and that any commodities made in excess of this amount must find a foreign market, or remain unsold, is quite unwarranted. There is no necessary limit to the quantity of capital and labour that can be employed in supplying home markets, provided the effective demand for the goods that are produced is so distributed that every increase in production stimulates a corresponding increase in consumption” (Chapter II).

So, how come there is imperialism?

“With everything that is produced a consuming power is born. If then there are goods which cannot get consumed, or which cannot even get placed because it is evident they cannot get consumed, and if there is a quantity of capital and labour which cannot be consumed, the only possible explanation of this paradox is the refusal of owners of consuming power to apply their power in effective demand for commodities” (Chapter VI).

He went on to identify these “owners of consuming power” as the super-rich who controlled trusts whose income was so high that they saved too much of it, so reducing home demand:

“The fallacy of the supposed inevitability of imperial expansion as a necessary outlet for progressive industry is now manifest. It is not industrial progress that demands the opening up of new markets and areas of investment, but mal-distribution of consuming power which prevents the absorption of commodities and capital within the country. The over-saving which is the economic root of Imperialism is found by analysis to consist of rents, monopoly profits, and other unearned or excessive elements of income, which, not bring earned by labour of head or hand, have no legitimate raison d’être” (Chapter VI).

Hence, his proposed solution was to

“divert from these owners their excess of income and make it flow, either to the workers on higher wages, or to the community in taxes, so that it will be spent instead of being saved, serving in either of these ways to swell the tide of consumption” (Chapter VI).

And his conclusion (which would have made Luxemburg’s hair stand on end):

“Imperialism is the fruit of this false economy; ‘social reform’ is its remedy”.

Hobson’s argument does not suffer from the same elementary mistake as Luxemburg’s. But that doesn't make it right. The answer to him is to emphasise that the aim of production under capitalism is not to satisfy consumption but to make a profit to be accumulated as further capital; that imperialism occured during "the age of imperialism" because bigger profits were to be made out of investing overseas than at home; and that increasing wages and State services for workers (“social reform”) had severe limits because it went against the whole logic of capitalism as this could only happen at the expense of profits and so of further investment in cost-cutting methods that are necessary if a country’s industry is to remain competitive.
Luxemburg could have used these arguments (after all, she was still in the Marxist tradition, even if she did not continue the work of Marx on this point). Instead, her book sought to prove an even more radical proposition: that imperialism arose because the surplus value destined for accumulation as further capital could only be converted into money by being sold to non-capitalist areas. Which was just plain wrong.

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 12, 2007

Demogorgon303

I need to think more about the question of the velocity of money. It would seem to presume an advanced state of commodity production and many interlocking cycles of M-C-M. This appears to be what Marx assumes in Volume 2, III. I can dimly see how this may overcome the problem although I still think the problem I've posed points to an inherent tendency to crisis in the M-C-M cycle if this is taken in isolation. But, as I say, I need to think about this some more.

Yes, it does presume an advanced state of commodity production but this has existed for quite some time. Already in Marx's time the credit system was fairly well developed. Paper money had already been used for a long time before Marx wrote Capital as well. In Vol 3 Marx always talks about how much the Scottish hate gold. (I.e. they preferred to use paper money.) And commodity production in general was well developed even before these things.

I do think that large stocks of gold, and hence the looting of other countries, were necessary for the primitive accumulation of capital. But that says nothing about the capitalist mode of production's continued development.

I don't really feel like debating what you call the "final destination of consumption" issue, as I am pretty tired of the whole thing and have spent far too much time on Libcom over the past couple of weeks, but I may post something outlining and providing evidence for what I'm saying so that I'm at least clear about this. I do think that if I'm correct about this, it provides yet another argument against Luxemburg, but I don't think it's necessary since there are already sufficient reasons to reject her theory.

Mike

ernie

16 years 5 months ago

In reply to by libcom.org

Submitted by ernie on October 12, 2007

Capricorn, thanks for the above post it certainly clarifies one of the points we have been trying to clarify -though may be not in the clearest way at times-: where do you think Rosa stand in relation to the marxist tradition? It is extremely pleasing to see that you see her as being in the tradition, even if you do not think that she continued Marx on this question. Also that you see the Accumulation as an attempt to make an even more radical proposition about the nature of imperialism (though wrong). This places the whole discussion on a much more clearly defined foundations. It was the fear that revisionism/opportunism could use the schema to seek to undermine Marxism that as you say was the core of her concern.
It would be interesting to hear what you (and also Mikus) think the role of the Schema were and why the revisionists/opportunists could not use them for their ends.

ernie

16 years 5 months ago

In reply to by libcom.org

Submitted by ernie on October 12, 2007

Mikus

Sorry for the delay in replying to your explanation of how Lenin did criticize Luxemburg's analysis ( I have had a hard week), it is necessary to accept that I was wrong. Where are Lenin's marginal comments on Luxemburg, are they in the vol of the Collected works on Imperialism?

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 13, 2007

ernie

Mikus

Sorry for the delay in replying to your explanation of how Lenin did criticize Luxemburg's analysis ( I have had a hard week), it is necessary to accept that I was wrong. Where are Lenin's marginal comments on Luxemburg, are they in the vol of the Collected works on Imperialism?

Sorry, I have no idea. All the info I have was taken from the post that I linked to on that webpage.

Mike

capricorn

16 years 5 months ago

In reply to by libcom.org

Submitted by capricorn on October 13, 2007

It would be interesting to hear what you (and also Mikus) think the role of the Schema were and why the revisionists/opportunists could not use them for their ends.

I think that they were rough calculations by Marx which have been blown up out of all proportion (to the extent of many books and articles being written on them), but at least they show that Marx, for one, did not make the elementary mistake Luxemburg did -- otherwise he'd have been a laughing stock -- of thinking that capitalism suffers from a chronic shortage of purchasing power. They have long since been replaced by "national accounts" which demonstrate more clearly that this is not the case.
You and Alf seem to think, Ernie, that Luxemburg wrote her book to refute those you call "the revisionists/opportunists". But in fact, Bernstein isn't mentioned once while Kautsky is treated with respect. Her main contemporary opponents were the "Russian Marxists" who she lists (end of Chapter XVIII) as "Professor Kablukov, Professor Manuilov, Professor Issayev, Professor Skvortsov, Vladimir Ilyin, Peter v. Struve, Bulgakov, and Professor Tugan Baranovski".
Lenin (the "Vladimir Ilyin" above) may or may not have criticised Luxemburg's theory of capitalism in public, but she criticised him. For example:

"Yet, if later critics of Sismondi, e.g. the Russian Marxist Ilyin, think that pointing out this fundamental error in the analysis of the aggregate product can justify a cavalier dismissal of Sismondi's entire theory of accumulation as inadequate, as 'nonsense', they merely demonstrate their own obtuseness in respect of Sismondi's real concern, his ultimate problem".(chapter X)

Luxemburg was intervening in a dispute between "the Russian Marxists" and the Russian Narodniks. The Narodniks argued that capitalist development could not take place in Russia because of the problem of finding external markets. Lenin and the Professors argued that it could because it didn't necessarily need them. Luxemburg's contribution was to say that the Narodniks had a point.
Who were "the revisionists/opportunists": the Narodniks or the "Russian Legal Marxists"? The Professors turned out to be using "Marxism" to justify further developing capitalism in Russia. But, then, so once he got into power did Lenin.
Uncomfortable as I am to be in the same camp as Lenin, I have to admit that, in this argument, he was right and she was wrong.

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 13, 2007

I think the main point of Marx's schemas was to refute the idea, beginning with Adam Smith, that in the aggregate all capital was variable capital and that constant capital did not exist. I think he succeeded in this task.

ernie

16 years 5 months ago

In reply to by libcom.org

Submitted by ernie on October 14, 2007

Capricorn thanks for the reply. I see what you mean: the aim of the book was not a confrontation with the opportunists as such, but wiithin the wider context of the struggle with these tendencies the book does play a role. But they certainly took great exception to the Accumulation and it was mainly with them that she had to polemise in the Anti-Critique.

Capricorn and Mikus, you appear to downplay the importance of the schema. As Rosa points out they mark a leap forwards by economics understanding of social reproduction. Engel's in a letter to Viktor Adler 16th March 1895 (who had written to him to ask for advise on reading vols 2 and 3 whilst he was in prison) says of Vol 2 Sction 3:

This is a quite excellent presentation of the entire circulation of commodities and money in capitalist society (the first since the days of the Physiocrats) -excellent in content, but fearfully heavy in form because 1. it is patched together from two treatments of the problems by two different methods, and 2. because treatment No2 was completed forcibly during a period of illness in which the brain was suffering from chronic insomnia. This section I would keep until the very end, adter the first reading of Volume 3

(taken from Letters on 'Capital')

mikus

16 years 5 months ago

In reply to by libcom.org

Submitted by mikus on October 14, 2007

ernie

Capricorn and Mikus, you appear to downplay the importance of the schema.

I only appear to downplay the importance of the schema if you downplay the importance of destroying Smith's dogma about constant capital.

I think destroying that dogma was a huge advance in political economy.

Mike

ernie

16 years 5 months ago

In reply to by libcom.org

Submitted by ernie on October 15, 2007

Point taken. Could you explain more about this?

capricorn

16 years 5 months ago

In reply to by libcom.org

Submitted by capricorn on October 16, 2007

This bloke would seem to have come up with a better way than Marx or the Physiocrats to show whether or not there's a built-in chronic shortage of purchasing power under capitalism:
http://en.wikipedia.org/wiki/Phillips_machine

Cardinal Tourettes

16 years 5 months ago

In reply to by libcom.org

Submitted by Cardinal Tourettes on October 18, 2007

Have started a thread on constant capital prompted by some of the stuff on this thread.

Spikymike

7 years 7 months ago

In reply to by libcom.org

Submitted by Spikymike on August 5, 2016

So as Luxemburg and Goldner's article got a mention elsewhere just recently I thought this discussion thread might still be of interest to some with the stamina to pursue it and also with the addition of this useful related criticism:
http://internationalist-perspective.org/IP/ip-archive/ip_48_bubble.html