SOURCE: "Appendix I: Rosa Luxemburg as an Economist," in Rosa Luxemburg, Vol. I, Oxford University Press, London, 1966, pp. 828-41.

[Nettl was a German-born English political scientist and novelist. In the following essay, he surveys the main ideas of Luxemburg's The Accumulation of Capital.]

Rosa Luxemburg always said that, in so far as her talent lay in the field of the social sciences, it was in economics—and in mathematical economics at that. Mathematics may have been her violon d'Ingres—the thing at which she would rather have excelled than those in which she was in fact outstanding. It is quite a common nostalgia. The only evidence for her mathematical claim or wish are the recalculations of Marx's not very complicated compound reproduction formulae in Volume II of Capital. And here her calculations are capable both of fairly obvious refinement as well as fairly obvious contradiction. But what is probably true is that the thin end of the wedge of her interest in the problem of accumulation, which gave rise to her remarkable book The Accumulation of Capital, was the mathematical difficulty Marx experienced in the 'proof of accumulation, and which he left unresolved at his death.

Rosa Luxemburg's main talent as a writer and, above all, teacher of economics—the latter was the more important and enduring function—was her capacity to enliven the subject with vivid, unusual, and convincing illustrations. Her textbook on economics—political economy, to use the Marxist phrase for the specific economics of capitalism—was essentially a conducted tour through the historical stages of economic relations, from primitive Communism via the slave economy to feudalism and capitalism. As her friend and editor pointed out, these were lectures, written for oral delivery. They were incomplete; Rosa worked on the manuscript from 1907 to 1912, and again in prison from 1916 to 1918. They were intentionally simple; the fact that most of the theoretical problems (value, surplus value, reproduction) are missing may have been due to her inability to complete the manuscript, but more probably to her reluctance to complicate her lectures with material partially dealt with in The Accumulation of Capital. Whatever her preference for mathematical analysis, therefore, she was essentially an economic historian—naturally in a Marxist sense; her facts were chosen to illustrate a fundamental thesis. The fact that she, and in her time she alone, succeeded in enlivening this potentially grey subject is eloquently attested by her students at the party school, and by the many extramural lectures for which friends and party organizations were forever pestering her before the war. Nor was clarity and strong colouring merely a mastered technique. One of the strongest points in her indictment of orthodox academic economics was its dryness, its obscurantism, its persistence in making an important and thrilling subject well-nigh incomprehensible—except to other professors.

It is thus not surprising that Rosa Luxemburg's only piece of original academic research—in the formal sense of the term—was also a piece of economic history. Her doctoral dissertation for the University of Zurüch not only gained her the required award of a degree but also achieved the much less usual distinction of instant commercial publication. It was widely reviewed in Germany, as well as in the Polish and Russian émigré press. Its originality lay in two distinct factors. Its thesis—a new one at the time—was Poland's economic integration into the Russian empire since the beginning of the century, resulting in the dependence of the Polish economy on the Russian market, and consequently the logical necessity of this continued integration. Though rigorously dependent on economic evidence, this thesis provided a secure base for the political contest against Polish national independence in the future. Those Socialists who argued for self-determination—no Socialist could play down the primacy of economic evidence—were thus left with arguments that might proliferate frothily on the surface of reality but had no roots in its economics laws. Try as they might, none of her critics was able to demolish her case. And history, too, proved her right, as the situation of the Polish economy between the wars showed all too clearly; chronic under-consumption and an oversized, unbalanced industry that tottered at the slightest whiff of crisis—with a laissezmourir, not even a laissez-faire, government in charge.

The other original aspect of her work was her sources. In the West no one had previously bothered with these (and Polish emigres were far too politically minded for economics). At home it was not a subject that was encouraged at Russian universities. In the Bibliotheque Nationale and the Czartoryski Library in Paris Rosa dug up hitherto unknown material, and the use to which she put it opened up new lines of investigation into Polish and Russian economic history. Historians can and still do use her work with profit today. In addition, her early researches in 1893 and 1894 unearthed enough material not only for her own thesis, but for Julian Marchlewski's as well; his dissertation on the Polish Physiocrats and subsequent work on the Polish economy were largely due to Rosa's suggestion and indication of sources.

But all Marxists have to know a lot of economics; had it not been for Accumulation, Rosa Luxemburg's work would have remained merely a better and brighter-than-most dab at economic history. The Accumulation of Capital is a compound work of incidental genius—incidental because it achieved fame and importance in quite a different way from that which the author intended. It was intended to 'clarify' imperialism—but it did not; no more than the theory of relativity 'explains' light (which Einstein did not of course intend it to). It was intended to solve compound reproduction mathematically, but did not succeed—though Rosa Luxemburg admitted that this was not perhaps as vital as she had at first supposed. Finally, it was meant to provide a rational (as well as logical) explanation of capitalist expansion in spite of the severely limiting parameters of Marxist economics, and at the same time identify the theoretical point of inevitable collapse—and though she did provide this, her analysis failed to find favour among contemporary or later economists, whether bourgeois or Communist. Instead it raised and partially answered a question about investment that was entirely new then and is still vital today. Instead of a tenable theory of imperialism Rosa Luxemburg offered a theory of growth which at least some economists today hold to be vital and valid. Her political heirs have relegated the work to the museum of primitive curiosities and have misused her economics to condemn her politically. It is her ancient enemies, on the other hand—the professional bourgeois economists, dressed up with much sophistication and technique since the days of Roscher, Schmoller, and Sombart—who have rediscovered the prophetic quality in her line of economic inquiry.

The mathematics are of secondary importance, and need not be discussed here. Nor do we have to pass judgement on how 'Marxist' a work Rosa Luxemburg's Accumulation really is. I would not presume to judge this in vacuo; an analysis by way of reference to later authorities is so politically loaded as to subsume the economic arguments completely. We are therefore left, first, with a confrontation of Rosa Luxemburg's intention against her achievement, and secondly with the incidental illuminations. I shall postulate neutrality between Marxist and non-Marxist methods of economic analysis, except to emphasize that Rosa's problems with Marx's own works were not merely technical, but fundamental.

ACCUMULATION

In Marxist analysis of the capitalist economy, production is the primary function, and predominates over consumption and its derivative, demand. Distribution problems are of a technical nature only, and the proper functioning of distribution is assumed (concepts and assumptions which incidentally have been taken over into Soviet economies which in turn are actually rationalized capitalism but without capitalist criteria). Apart from the temporary dislocation caused by crises of boom and slump—from which Rosa Luxemburg deliberately abstracts—all production starts by being 'consumed', either literally by consumers, or as replacement of fixed capital by producers, or by the reinvestment of profits. As long as total production—annual national income, say—is 'consumed' in this way, and the stock of capital remains constant (investment just equals replacement), the economy remains in equilibrium. This is Marx's simple reproduction.

It is only a conceptual basis, however. Production dominates, not consumption; the point of capitalist enterprise is the maximization of profit—for reinvestment and further maximization. The stock of capital grows. The central point of Marxist economic analysis is that consumer incomes do not rise proportionately (the iron law of wages); it is the producer who has to absorb the bulk of the increased output as replacement of or addition to his fixed capital. The Marxist model in fact divides the economy into two departments, that of producer's goods and that of consumer goods. The one thus grows faster than the other. Since they are related (consumer goods produced for workers in producer's goods industries, producer's goods produced for the capitalists in consumer goods industries), disequilibrium results. Worse, it is progressive, not circular; it gets worse as accumulation proceeds. Accumulation proportionate to investment is consequently impossible, yet it happens—demonstrably. Accumulation is the capitalist's raison d'etre, but why does he invest in the first place?

This then was Rosa Luxemburg's problem, as it had been Marx's—one of them. Before his death he had indicated various possible approaches, but no definite or central solution. Initially the mathematics come in here. But neither for Marx nor Rosa Luxemburg was this a question of mere mathematical elegance. What was needed was a function of demand which would furnish, not the need, but the effective means of 'consuming' the cause of the imbalance, the additional output generated by the compulsive quest for profit.

To start with, Rosa Luxemburg examined the various possibilities adumbrated by Marx himself. The most probable one, however, is referred to only in passing, as part of the problem itself and not of its solution. This is the thesis that the investment criterion is not the starting point of economic causality, but is a derived function of production—derived by that anarchic competition that enforces perpetual technical change, improvement, and expansion (to reduce unit cost). Without it a capitalist is forced quickly out of business—and joins the haggard army of the proletariat. Thus profits are still the object of capitalist activity, not by any act of will but from sheer necessity. It is either profits or economic death. Orthodox Marxist economists, both Soviet and anti-Soviet, have accepted this causality, and have developed it into a sophisticated rationality that serves to explain the entire process of capitalist growth.

Why did Rosa Luxemburg bypass this solution, which became and has remained the mainstream of Marxist orthodoxy? For her, it never rises above the level of being a minor constituent part of the problem, an also-ran in the cause of competition and anarchy. Nor is it peculiar to the capitalist system, but has existed in all forms of productive relations from first to last. But if this is so, then it cannot begin to provide a solution to the specific problem of capitalist accumulation. Technological change and economies of scale were merely additional complications imposed by real life.

Having searched in Marx, Rosa Luxemburg then looked at the Marxists—or rather at all the important economists from Sismondi and Ricardo to the Russian 'legal' Marxists who were concerned with this problem. In the process of extracting what was relevant they were unceremoniously buffeted about, called to account and then contemptuously dismissed—for none of them provided the answer. It is clear that Rosa never expected that they would. She was much less than fair to many of their ideas. For she thought she had the answer even before she started on them.

The balancing factor is the existence of pre-capitalist economies—and the pre-capitalist enclaves within capitalist economies, mainly agricultural. It is the 'capitalization' of these areas which provides the justified growth drive of capitalists, the expectation of growing profits and continuous investment. The process, and with it the entire capitalist system, can continue just as long as such areas exist. When they have been gobbled up, capitalism will have to rely on its internal resources, accumulation will become self-defeating, capitalism will collapse. Voluntary abstention is impossible by definition; those writers like von Kirchmann who appeared to suggest it are berated most severely by Rosa Luxemburg.

Rosa Luxemburg asserts this solution and describes it—convincingly; she does not prove it in the way she disproves the theories of her opponents. This does not of course invalidate it. Capitalist consumption goods go out to pay for 'cheap' raw materials from colonies. Capital is also exported to exploit 'cheap' labour. The process was then and is now familiar enough—the classic indictment of imperialism, before and since political independence (old political as opposed to new economic imperialism). The question is whether this is a feature of capitalism or the mainspring of its continued existence. And this problem remains open. But curiously enough it remains open only in the non-Communist world, among politicians as well as academic economists. At least it is an arguable case. Among orthodox Marxists, however, the thesis is a manifestation not the cause, and the reasons for this demotion are in the last resort more political than economic.

IMPERIALISM

The only explicit political analysis in The Accumulation of Capital is the last chapter, which purports to prove the economic necessity of militarism—but fails to do so. By this time, the internal logic and beauty of Rosa's analysis made her overreach herself; it began to run wild. But of course imperialism is the necessary consequence of Rosa's whole concept of capitalist accumulation. If one capitalist economy must capture and cannibalize pre-capitalist society in order to survive, then the other capitalist economies must be kept out of 'captured' areas. The whole apparatus of militarism, the sharpened social tensions that were so typical of it, thus had two causes: the need to wrest colonies from their indigenous rulers, and then to keep and if possible extend them at the expense of other people's colonies. As a matter of logical causality, imperialism follows from the moment the problem of accumulation is identified and 'solved' by Rosa Luxemburg.

As already emphasized, the whole political and historical development of imperialism as a specific internal condition of society is absent from the analysis in The Accumulation of Capital—implied but not described. In Rosa Luxemburg's political writings of the period it is the effects of imperialism on class relations that are stressed—again not described; the essence of imperialism, das Ding an sich, is absent—the missing step already referred to. This leaves an apparent vacuum for followers and critics to fill in as seems best to them. Lenin, at the time unaware of her political writings on this subject, assumed that for psychological reasons Rosa wanted to exorcise the problem of imperialism from home and export it to the colonies, thus belittling its importance among the manifold preoccupations of Social Democracy. This notion is nonsence—though a hostile and isolated reading of The Accumulation of Capital makes it conceivable. If anything the opposite is true. Though the location of capitalism's centre of gravity moves to pre-capitalist societies or areas, at least from the theoretical moment of internal repletion of imperialist societies, these are never anything but passive objects. They can neither arrest nor alter the process of their own transformation. The stimulus comes wholly from the colonizers, the imperialists. And though Rosa Luxemburg shared with Lenin the recognition of a need for political action to hasten the end of capitalism through revolution, she was much closer to the Mensheviks and Kautsky in her belief that the economic laws of capitalism should not be short-circuited, much less held up. Hence her emphasis on the inevitability of capitalist agrarian relations after the 1905 revolution (which she considered progressive, while Lenin feared they would make revolution in Russia well-nigh impossible). The same reasoning applied to her consistent opposition to tariffs and duties in Germany; these would impede, not assist, full capitalist development.

As with the Russian peasants, Rosa Luxemburg had no vision of eventual colonial independence in a capitalist world. Though she recognized the tendency for industrial investment in colonies, she saw this merely as an extension of 'home' capitalism looking for cheap labour and the procurement of raw materials—without any local response other than misery and suffering. Thus she did not look for any revolutionary potential in the exploitation of colonial peoples—however vividly she described that exploitation. She came very close to laying down the axiom that any colony fighting for independence did so because it had inherent imperialist ambitions of its own—an indictment similar to recent Chinese characterizations of Nehru's 'imperialist' India. The honour of the incorporation of the nationalist-colonial struggle into revolutionary Marxism—and the acquisitive peasant struggle—fell to Lenin. But again it must be said: The Accumulation of Capital was intended as an economic theorem, not an analytical text of political revolution. This makes a confrontation between The Accumulation of Capital and Lenin's work on imperialism three years later—after the outbreak of the war—not so much impossible as pointless.

And if one wants to extrapolate Rosa's arguments into a political context, as her later critics have done, a more meaningful result than theirs can be achieved. First, an objective case can certainly be made for the pre-eminent importance of colonial 'spheres of influence' for thriving capitalist economies. The classical trade pattern of exports of cheap manufactures to colonial dependencies in return for imports of artificially cheap raw materials is accurate, though not of course complete. Physical domination is not necessary; post-independence control is today called 'economic imperialism'.

Secondly, the classic economic theory that the rationalization of foreign trade which follows this pattern (expanded production of desirable staple exports with all the resultant internal economies of scale) enriches the exporting country is now seriously questioned. In spite of such trade and much aid, the poor countries get poorer and the rich richer, at least comparatively—and this divergence is linked, not discrete. This development (which incidentally is endemic in capitalism, and has only recently been 'discovered') follows from Rosa Luxemburg's Accumulation far more naturally than some of the technical criticisms and assumptions made by orthodox Marxist-Leninists like Oelssner, drowning in the minutiae of formal and politically loaded concepts.

Thirdly, once the notion of colonial exploitation becomes central and is brought up to date, the basic confrontation between rich and poor societies—which is today's real dialectic—subsumes the 'old' form of class conflict within society. In this context we are witnessing a curious resurgence of nationalism in ex-colonies; to coin a suitable Leninist formula: 'Neutralism is nationalism in the age of imperialism.' Instead of conflicts within colonial societies against imperialist domination, linked to class conflict at home, there is a line-up of poor countries against rich, with the former assuming the role of the international proletariat. This alignment, moreover, cuts across the 'Leninist-Stalinist' division into capitalist and socialist camps; what matters is wealth or poverty and the relative growth of wealth or poverty. This then is an 'international' or 'class' line-up that cuts across national boundaries or rather makes these boundaries into mere markers of autonomy rather than absolute isolation—as Rosa Luxemburg actually advocated. This too follows from her emphasis on colonizers and colonies as basic protagonists in a developing capitalist world. Accumulation may be an abstract but is by no means a barren work.

Though no reference is made to Rosa Luxemburg's work, modern Soviet writing on imperialism has perforce had to adjust in part to this redefinition of relevance. Imperialism is no longer the highest stage of capitalism, but a specific condition of distortion which cuts across the 'normal' articulation of class relationships. 'Inasmuch as imperialism impeded the development of factory manufacturing, very few of the ruined peasants and artisans became modern workers connected with big, mechanized production … they were forced to linger on through the intermediate stages of proletarization and to become not so much capitalist workers as semi-proletarians-semi-paupers … an army of hired labour… [with] a specific colonial character.' Or 'the European bourgeoisie by no means went into overseas countries in order to implant there the prevailing capitalist production relationships.' 'Normal' capitalism is represented by the domestic 'national bourgeoisie' which thus finds itself in conflict with foreign imperialism. 'The economic interests of the national bourgeoisie are inimical to the interests of imperialism.… Everywhere the bourgeoisie tries to attain independent capitalist development, just what imperialism hampers. This is an apparent paradox … but imperialism cannot function without colonial or semi-colonial exploitation … and will try to keep the exploited countries in a state of rural backwardness; i.e. to preserve that very state of underdevelopment which all nationalist forces, including the bourgeoisie, are trying to remedy. Hence the struggle between them will be sharpened.…'

This is no longer either Lenin or Luxemburg. It is Leninist in so far as it relates to current strategy of focusing on American economic imperialism as the main enemy, and thus accepts the very un-Luxemburg notion of (temporarily) better and worse capitalisms. But it is Luxemburgist in so far as it retransfers attention to the 'third world' of underdeveloped or colonial countries, and locates the final struggle of Socialism and capitalism in that arena, thus once more connecting the future of capitalism with the colonial rather than the domestic scene. Soviet writers are making this concession painfully and slowly—under the pressure of Chinese competition.

INVESTMENT AND CAPITALIST EXPANSION

The confinement of Marxist economics has already burst apart in the previous section; we shall now leave it behind altogether in an attempt to identify the mechanism of Rosa Luxemburg's model. If production and profits rather than consumption and income are the prime motives of economic action—this is central to Marxism—then the difficulties of compound reproduction necessarily lead to the question: 'Why do capitalists continue to do something which is incapable of successful achievement?' We have already seen what they do (exploit colonies and other pre-capitalist segments of the economy); the problem now is why. More specifically, whence do they anticipate a demand which leads them to increase production—in short, to invest?

It is here that orthodox Marxist economics fails us—as it failed Rosa Luxemburg, otherwise she would not have written her book. Marx himself was aware of the problem, though he (and subsequently all orthodox Marxists) dealt with it by assuming that investment was a function of, and limited by, the needs of technology and size which would enable a producer to remain viable, to stay in the game. This minimal viability is not growth. But historically growth has taken place in capitalist economies over the last sixty years—growth, not merely concentration. And, though Rosa Luxemburg nowhere suggests even for a moment that genuine growth of capitalist economies (in our sense of that word) is possible or important to analyse, her analysis is in fact close to some modem growth models. It is only necessary to abstract from her two limitations—the lack of an adequate banking system to channel one man's savings to another man's physical investment, and the rather more fundamental assumption that effective demand cannot come from a rise in workers' real wages. Once this is done, the capitalists' search for investment and the whole analysis of cumulative growth of investible savings (surplus) in conditions of technical progress and of a rising rate of capital exploitation, provide the right basis for a modem growth model. Rosa Luxemburg asks—unintentionally—the right question (we can easily alter 'why does he invest' to 'how can he be induced to invest'). She also provides some elements of an answer, by looking for a new and additional source of demand and defining its theoretical quantity. It is better than merely postulating investment, however illogical, and then measuring it empirically without explaining it. Instead of starting this problem at the end, Rosa Luxemburg begins at the beginning.

Beyond all doubt, The Accumulation of Capital is a work of uneven, flickering genius, ill-confined within the strict limits of the author's self-imposed task. Its explicit quality is considerable, but the real impact comes from the incidentals. Given freer rein than in the immediate political polemics which occupied most of her attention, Rosa Luxemburg's mind plumbed hitherto dark or barely explored depths. The questions asked are more interesting than the solutions offered. But in economics, as in all social sciences, this is the bigger hurdle.

One aspect that is frequently overlooked in discussing Marxist economics—and confronting it with the various economic techniques evolved since classical equilibrium theory began to be demolished—is the very fundamental difference in the ground covered. All too often we assume that we are merely dealing with a different set of techniques, that we shall get answers to what are essentially similar problems. This is not so. For the last 150 years economics has narrowed, like a pyramid, towards increasing specialization—a concentration in depth. Marxist economics was syphoned out of the scientific mainstream of economics at a time when specialization had not passed beyond emphasis—a focus of interest on a particular aspect of the social sciences, but not an abstraction from them as irrelevant or 'different'. It retained this quality of emphasis within totality; all Marxist analysis does. Marxism means scientific totality. The Marxist word for over-intensive specializing is 'vulgarization', and bourgeois economics are vulgar economics. Interlocked as they are, the techniques of Marxism have not plumbed any new depths in their particular spheres for many years—however much they may push forward the validity of the whole system.

Rosa Luxemburg subscribed whole-heartedly to the interlocking totality of Marxism; all or nothing. Indeed, she went further in this than most contemporaries. She emphasized that the science of Political Economy—the name itself is a concession to totality—would become extinct when capitalism, its subject of study, disappeared. Probably the same fate would befall all the other tools of Marxist social analysis, originating from and confined as they were to the historical class dialectic they claimed to illuminate. Socialist revolution would wipe away the tools for studying reality when it destroyed that reality itself.

It is this context of the function of science that lights up The Accumulation of Capital with a luridly nonconformist fire. Intentional or not, the work achieves and (more important still) demands a validity for its analysis that has nothing to do with the author's usual acceptance of severe limitations of purpose. In spite of the handicap of loaded and often ill-defined concepts—blunt tools for a precision job—Rosa Luxemburg surrenders herself freely to the search for basic, objective causalities. For the moment revolution and politics hardly matter. Not that this was deliberate. The point is that, given stimulus and the right circumstances, she was capable of thinking in this extended, scientific manner. Marx certainly was. Lenin, for instance, was not. That is why Marx and Rosa Luxemburg (though not of course to the same extent) have provided scientific techniques quite separate from and valid outside their political doctrines, while Lenin and Kautsky and Plekhanov have not. It has nothing to do with ability, but with the depth of mind and analysis.

And this may be ultimately why The Accumulation of Capital has been Rosa Luxemburg's livre maudit. It is unique among her own writings, in scope even more than in quality. Marxists have dealt with it either by making it subsume all her other writings ('the fount of all her errors') or by treating it as a fascinating deviation—into a blind alley. Among non-Marxists it takes its place in the procession of contributions to scientific analysis. To enable it to do so they have stripped it of its relevance to totality, emphasizing depth rather than breadth. In both cases, however, the book's unquiet spirit continues to haunt a world still inhabited by the obstinate problems with which it deals. That alone is the best measure of its importance.