SOURCE: "Rosa Luxemburg's The Accumulation of Capital, "in Science and Society, Vol. XXXI, No. 4, Fall, 1967, pp. 474-85.

[Sweezy is an American Marxist economist. In the following essay, he describes how Luxemburg's idea of the accumulation of capital grew from her study of Karl Marx's theories.]

[The Accumulation of Capital] was an outgrowth of Rosa Luxemburg's teaching activity at the school of the German Social Democratic Party in the years after 1906. Her main course was a broad survey of political economy, and in connection with it she undertook to write an Introduction to Political Economy. The work proceeded slowly, owing to the pressure of other tasks and duties, and there were long periods during which she was obliged to put it aside altogether. In January, 1912, however, she took it up in earnest, hoping to be able to complete at least a first draft of the whole book. It was then that she ran into what she describes in the Foreword to The Accumulation of Capital as "an unexpected difficulty."

She was not successful, she tells us, in presenting the overall process of capitalist production "with sufficient clarity." On closer examination, however, she came to the conclusion that the trouble was not one of presentation but rather had to do with "the content of Volume II of Marx's Capital, and at the same time with the practice of presentday imperialism and its economic roots." To one of Rosa Luxemburg's temperament and interests, this was a challenge that could not be refused. She liked logically complete and tidy intellectual constructions, and the discovery of what she thought were loose ends in the Marxist system was in itself enough to spur her into action. But perhaps even more important was the belief that she was on the trail of theoretical results that would have great practical importance in the struggle against revisionism on the one hand and imperialism on the other. She immediately broke off work on the Introduction and threw herself into this new task that she had set herself. The book was completed and published in 1913. Writing to her friend Diefenbach from prison several years later, she described the composition of the book as follows:

The period when I was writing the Accumulation was one of the happiest of my life. I lived as though in a state of intoxication, saw and heard night and day nothing but this problem which was so beautifully unfolding itself before me, and I hardly know which gave me greater pleasure: the thought processes involved in wrestling with complicated problems as I walked slowly back and forth across the room, or the putting of results to paper in literary form. Do you know that I wrote the whole thing out in one stretch of four months—an unheard of thing—and sent it direct to the printer without even once reading the draft through?

What was the nature of the gap or weakness which Rosa Luxemburg thought she had discovered in Volume II of Capital?

It will be recalled that this volume deals with the circulation of capital, and that it is here that the famous "reproduction schemes," which are in effect Marx's version of the tableau economique in numerical form, are presented. According to Marx, the value of every commodity, and hence also the total value of all commodities, is made up of constant capital (raw and auxiliary materials, depreciation of machinery, etc.) plus variable capital (wages) plus surplus value (profit, interest, and rent). At the same time, since all commodities can be classified as either means of production or consumer goods, it follows that production can be divided into two departments, Department I producing means of production and Department II producing consumer goods. Now it is obvious that if the system is to function without hitches, not only must total demand equal total supply but also the demand for the products of each department must equal the output of that department. In the case of what Marx called Simple Reproduction—that is to say, a state of affairs in which everything remains unchanged from one year to the next—these conditions are evidently met if the constant capital used up in both departments equals the output of Department I, and the income of workers and capitalists of both departments (which must be wholly consumed for conditions to remain unchanged) equal the output of Department II. If we designate the components of value by the letters c, v, and s, and use subscripts to designate departments, we can write the output of the two departments in value terms as follows:
c1+v1+s1
c2+v2+s2
The equilibrium conditions then become
c1+c2=c1+v1+s1
v1+v2+s1+s2=c2+v2+s2
And both of these reduce to the simpler form
c2=v1+s1
When we proceed from the case of Simple Reproduction to what Marx called Expanded Reproduction, matters are somewhat more complicated, but the principles involved are essentially the same. The difference between Simple and Expanded Reproduction is that in the latter capitalists do not consume their entire income but instead save a part and invest in additional variable and constant capital. The output of Department I is now greater than the amount of constant capital used up in the two departments, and the new workers employed by the additional variable capital generate a growing need for consumer goods. As surplus value increases, capitalists will also be able to consume more without encroaching on the sources of accumulation. In Expanded Reproduction, therefore, all the magnitudes will increase simultaneously, and there need be no hitches provided only that the proper proportions are maintained. These proper proportions can be expressed in equilibrium conditions analogous to, though of course not identical with, those given above for the case of Simple Reproduction.

Marx's numerical schemes expressed all this clumsily and imperfectly, but the essential logic of the process came through clearly enough and was correctly grasped by Rosa Luxemburg. She did not argue that there was anything wrong with the scheme of Expanded Reproduction as such, and she recognized in a number of passages that in a planned socialist society the course of development would follow more or less closely the pattern depicted in the scheme. But she emphatically denied that the scheme was a faithful reflection of capitalist reality.

This was the heart of Rosa Luxemburg's criticism of the Marxian system, and it is important to understand the nature and grounds of her argument.

According to Rosa Luxemburg, accumulation can take place only after capitalists have sold the commodities in which their surplus value is embodied. Just as in the case of the individual capitalist, so for the capitalist class as a whole—she argued—surplus value must be "realized," that is, turned into money, before it can be used to buy additional labor power and constant capital. But where are the purchasers? In part, the answer is that the capitalists, in order to satisfy their own consumption requirements, realize each other's surplus value. But if we say that the entire surplus value is realized in this way, we are back in Simple Reproduction. Who, Rosa asks, is to buy the products which comprise "the other, capitalized portion of surplus value"? According to the reproduction scheme, she notes, the answer is "partly the capitalists themselves, to the extent that they invest in new means of production for the purpose of expanding output, and partly the new workers who are needed to put the new means of production into operation." This might seem to be a logical solution to the problem, but Rosa holds that it does not apply to capitalism. "In order to combine new workers with new means of production," she continues, "one must have—capitalistically speaking—a prior purpose for the expansion of production, a new demand for the products which are to be turned out."

The problem, therefore, boils down to this: Where, within the framework of the capitalist system, is this new demand to come from? And Rosa Luxemburg finds that there is no answer. The idea that increasing consumption by the capitalists themselves will provide the necessary new demand she regards as too absurd to require refutation. A more plausible answer would be that the new demand comes from the natural increase in population, and Rosa concedes that in a socialist society this would indeed be the starting point for expanded reproduction. Under capitalism, however, babies are not born with money in their pockets and the only kind of demand capitalists care about is a paying demand. This therefore provides no way out. Another possibility is that so-called third persons (doctors, lawyers, civil servants, soldiers, etc.) should provide the demand. But, she argues, their incomes are merely subtractions from wages and surplus value; they add nothing to total demand, nor can they raise it over time. In this fashion she comes to the following conclusion:

Surplus value must … unconditionally pass through the money form; it must shed the form of surplus product before assuming it again for the purposes of accumulation. But who and where are the buyers of the surplus product of Departments I and II? Merely to realize the surplus product of I and II, there must exist, according to the arguments presented above, a market outside I and II. If the realized surplus product is to serve the purpose of expanded reproduction, of accumulation, there must be a prospect of still larger markets in the future which must also lie outside I and II… Accumulation can take place only to the extent that markets outside I and II grow.

Rosa Luxemburg goes over this ground many times and at length, and her line of argument is not always as clear as we have attempted to make it here. But we believe the above accurately presents the gist of her thinking. The difficulty with the Marxian system, she believed, was that Marx never solved the contradiction of the incompatibility of Expanded Reproduction and pure capitalism. He struggled with the problem; at times he saw it more or less clearly; if he had lived to complete Capital he doubtless would have discovered the solution. But in fact he did not; the contradiction remains, and it is the responsibility of Marx's followers to solve it. This is the way Rosa Luxemburg saw the problem, and this is the task she set herself.

Seen against this background, the plan of The Accumuladon of Capital is logical, indeed one might almost say inevitable. Section I, consisting of nine chapters, is entitled "The Problem of Reproduction." An initial chapter dealing with preliminaries is followed by two analyzing Quesnay's tableau economique and Adam Smith's theory that the value of all commodities is ultimately reducible to rent, profit, and wages. The remaining six chapters are devoted to the Marxian reproduction schemes, culminating in a lengthy discussion of the "difficulty" that Rosa Luxemburg thought she had uncovered and that has been sketched above. Section II, "Historical Presentation of the Problem," includes fifteen chapters divided into three "Passages at Arms," which are in effect three famous debates over the interrelation of consumption and accumulation in the capitalist economy. In these debates, Rosa Luxemburg saw earlier attempts to grapple with the same problem that she thought had stymied Marx, and she shows why, in her view, none of the protagonists was successful in solving it. The chief authors dealt with are Sismondi, Malthus, Say, Ricardo, and MacCulloch among the classics; Rodbertus and von Kirchman among the pre-Marxian Germans; and Voronzov, Struve, Bulgakov, Tugan-Baranowsky, and Nikolai-on (Danielson) among Rosa's Russian contemporaries. Finally Section III (eight chapters) presents Rosa Luxemburg's own solution of the difficulty under the title "The Historical Conditions of Accumulation."

The title of this last section points to what Rosa Luxemburg regarded as the source of Marx's difficulty. Following in the footsteps of the classical economists before him, he had based his whole theoretical structure on the assumption of what may be called a "pure" capitalist system, that is to say, one consisting exclusively of capitalists and workers. This, according to Rosa, was fully justified in the analysis of individual capitals and also in the analysis of Simple Reproduction. It was natural enough to base the analysis of Expanded Reproduction on the same assumption, and Marx, as well as all the other authors treated by Rosa, did so. But closer examination showed that this was an illegitimate step which led into an impasse. Expanded Reproduction was impossible with only capitalists and workers as buyers, and all attempts to find a way out while retaining the assumption of pure capitalism led nowhere. On the basis of this reasoning, the conclusion seemed unavoidable to Rosa that the assumption would have to be dropped and the problem of accumulation would have to be analyzed within a framework defined by the actual historical conditions surrounding the rise and development of capitalism.

Among these historical conditions two seemed to Rosa to be of outstanding importance: First, the existence of noncapitalist countries alongside the capitalist ones; and second, the presence inside even the predominantly capitalist countries of noncapitalist population strata (peasants, handicrafts, etc.). These two conditions defined what she called the noncapitalist milieu or environment of the capitalist system, and it was this environment which provided the needed buyers who, as we have seen, she thought were missing from a pure capitalist system.

This, then, was Rosa Luxemburg's solution to the "difficulty," and she devoted most of Section III to explaining its modus operandi and its consequences. Capitalism as a whole, she argued, both lives off its noncapitalist environment and in the process destroys it, that is to say, sucks it into the orbit of capitalism. And each capitalist country fights tooth and nail for the largest possible share of the noncapitalist market. Everywhere she looked, Rosa Luxemburg found confirmation of her theory. The rise of protectionism, for example, which was such a striking feature of the late nineteenth and early twentieth centuries, seemed to reflect the concern of each capitalist country to exclude others from its own internal noncapitalist market. And of course imperialism, with all its grim accompaniments of militarism and war, was the expression of the determination of the leading capitalist powers each to bring under its own control the largest possible share of the noncapitalist world. The chapters in which Rosa Luxemburg describes these phenomena—the aggressions of the strong against the weak and the deadly struggles among the strong for the lion's share of the spoils—constitute the heart of the book. Writing with brilliance and passion, she here leaves far behind the somewhat dry scholasticism of the earlier sections and raises the whole work to the level of a revolutionary classic.

It was not, however, only to an explanation of imperialism that her theory led her. In addition, it pointed to certain definite and extremely important conclusions regarding the future of capitalism and hence also the problems and tasks facing the international socialist movement. If it be true that capitalism depends for its very existence on its noncapitalist environment, but that in the process of living off this environment it also destroys it, then it follows with inexorable logic that the days of capitalism are numbered. When the last of the non-capitalist environment has been used up, the system will break down and its further continuance will be quite literally impossible. In Rosa's view, however, it was unthinkable that the system could live to see the hour of its final and irrevocable doom. As that time approached, the course of capitalist development was found to become increasingly violent and catastrophic and hence to "make necessary the rebellion of the international working class against the domination of capital even before the latter smashes itself against its own self-created economic barriers."

Developed to its logical conclusion, Rosa Luxemburg's theory thus provided an implicit refutation of the revisionist argument that the contradictions of capitalism were becoming milder and the system would continue to expand indefinitely. At the same time, it provided powerful support for the revolutionary view that capitalism must be overthrown, rather than gradually reformed as the revisionists advocated.

There is no doubt that Rosa Luxemburg attached the greatest importance to these political implications of her theory, but she did not spell them out in the book, nor did she attack any of her contemporaries in the German socialist movement. She may have felt that the scholarly form of the book would have been impaired by introducing material of this nature, or perhaps she thought that the book would have wider circulation and greater influence if she did not stress its partisan thesis. In any case she was careful not to give it the appearance of a contribution to the debate between reformists and revolutionaries, and she no doubt expected that the work would be received in the spirit in which it was offered, as a scientific contribution to the clarification and development of Marxian theory.

In this she was doomed to disappointment. Her political opponents were quick to see the political meaning of the book and their reactions were shaped accordingly. Most of the reviews in the German Social Democratic press were hostile, and the few left-wingers who praised it were made to feel the displeasure of the party leadership. The chorus of disapproval included both revisionists and orthodox Marxists: In the latter connection it is significant that Otto Bauer's review in Die Neue Zeit, edited by Kautsky, was sharply critical. The truth is that except for a relatively small left wing, of which Rosa Luxemburg herself was the outstanding figure, the entire German movement had by this time adopted a reformist position. It was still acceptable to talk about the revolution as an event which the proletariat would carry through when its moral and political preparation had been perfected. But this was still a long way off, and in the meantime, what was needed was not proof that capitalism must break down but rather proof that capitalism could last until the workers were ready to overthrow it. Very few in the German movement could accept the perspective Rosa Luxemburg offered them, of a crisis-ridden future in which the proletariat would be forced to act in self-defense whether it was ready or not.

Though she had not sought a political battle, Rosa Luxemburg was not one to remain silent in the face of an attack by her opponents. The year 1913 and the first half of 1914 were fully occupied with practical agitation against militarism and the growing war threat, but in the enforced idleness of prison after the war actually broke out, Rosa returned again to the problems of The Accumulation of Capital and the bitter controversies it had provoked. It was under these circumstances that she wrote her second book on accumulation. Entitled The Accumulation of Capital, Or What the Epigones Have Made of Marxian Theory: A Countercriticism, it was first published in Germany in 1921 and is often referred to in the literature as the Antikritik.

There is no necessity to dwell on the contents of the Antikritik in this paper. Only two points need to be made for the guidance of the reader. First, the Antikritik provides the political element which is lacking from the original volume and in this sense may be regarded as a completion of the earlier work. Second, the Antikritik contains a restatement of Rosa Luxemburg's theory of the impossibility of accumulation in a pure capitalist system that is simpler and clearer than any comparable statement of the theory in the original work. It is advisable that the reader who is approaching Rosa Luxemburg's work for the first time begin by reading the first two dozen pages of the Antikritik before proceeding to Chapter 1 of The Accumulation.

A detailed evaluation of Rosa Luxemburg's theory is, of course, beyond the scope of this paper. A number of critics have subjected it to careful scrutiny and have demonstrated that her contention that accumulation is impossible under pure capitalism is based on a fallacy. Here it will be sufficient to call attention to the nature of her error.

Fundamentally, Rosa's trouble lay in a purely formal confusion. In passing from Simple to Expanded Reproduction she unconsciously retained some of the assumptions of the former. This is the only way to explain her repeated assertion that consumption cannot expand within the framework of the reproduction scheme. Given this assumption, there is no doubt that the rest of her theory follows quite logically. If consumption remains unchanged from one year to the next, there can be no incentive for capitalists to invest their surplus value in additional means of production. Or, to put the matter in Rosa Luxemburg's terms, the idea of capitalists' realizing their surplus value by buying means of production from one another in order to produce more means of production the next year and so on indefinitely without there ever being an increase in the final flow of consumer goods, is an economic fantasy. Accumulation and consumption are linked in such a way that a positive rate of accumulation depends on a rise of consumption; on this point Rosa was absolutely right. Where she was wrong was in assuming that the logic of the reproduction scheme excludes a rise of consumption by either workers or capitalists or both. Actually, Expanded Reproduction typically involves rising incomes for both workers and capitalists, and there is no reason whatever to suppose that both classes will not spend at least some of the increment on consumption. If they do, then at least some accumulation will be justified, and Rosa's impossibility theorem is disproved.

Why did Rosa Luxemburg resist this conclusion with the single-minded determination of which one will find so much evidence throughout this volume? Was it simply and solely intellectual confusion? Or was there something deeper involved? I strongly suspect that the latter was the case. Rosa was afraid that if she admitted the possibility of accumulation in a pure capitalist system, she would be forced to admit that the system can expand without limits. If she said A, she would have no choice but to say B—and it was B that she not only refused to say but felt in her bones to be untrue.

The reasons for this fear are not hard to understand. She knew from the history of economic thought that arguments designed to prove the possibility of accumulation were usually followed by arguments designed to prove the impossibility of too much accumulation. This was after all the message of Say's Law, which, as Keynes was later to point out, exercised such tyranny over the minds of economists for more than a century. But much more important was the fact that essentially the same idea in a Marxian (and much more sophisticated) form had only recently gained currency in the German socialist movement. The Russian economist Tugan-Baranowsky was the first to use the Marxian reproduction schemes in this context. He purported to prove that accumulation can proceed indefinitely provided only that the proper proportions are maintained among the various industries and branches of production. Two things seemed to follow from this: (1) that crises are caused by "disproportionality"; and (2) that crises can be ameliorated and perhaps eventually overcome altogether, by better foresight and planning, even within the framework of capitalism. From this it was but a short step to the conclusion that the trustification of capitalism plus the increasing intervention of the state in economic affairs were ushering in a period of ever smoother capitalist development. This was a conclusion that Bernstein had already reached without benefit of reproduction schemes, but Tugan-Baranowsky's theory seemed to lend it impressive scientific support. Further, the authority of the theory was enormously enhanced when it was taken over in scarcely modified form by Hilferding in Das Finanzkapital, which was published in 1910 and was quite the most influential treatise by a Marxian economist since Das Kapital itself. By the time Rosa Luxemburg wrote The Accumulation of Capita, the disproportionality theory of crises, with all its reformist implications, had for practical purposes become official Social Democratic doctrine.

Rosa Luxemburg was fighting against all this, and she was grimly determined not to concede anything to her opponents. This explains, I believe, why she clung so tenaciously to the theory of the impossibility of accumulation in a pure capitalism and how it happened that she could fail to see that the theory was based on a relatively simple error of reasoning.

Actually, of course, Rosa did a disservice to the position she was trying to uphold by insisting so rigidly on the impossibility thesis. Her critics in the German party tended simply to dismiss her theory as not worth serious examination: After all, didn't the reproduction schemes prove that accumulation could proceed smoothly if only the right proportions were maintained? Why waste time on a theory that flies in the face of well-established principles?

The critics, as not infrequently happens, were throwing out the baby with the bathwater. There certainly is a problem of accumulation under capitalism: On this point Rosa Luxemburg's instinct was thoroughly sound. But it is not a question of possibility versus impossibility, nor is it a mere matter of guarding against disproportionalities among the various branches of production. It has to do with the deep-seated, indeed inherent and ineradicable, tendency of capitalism to accumulate too rapidly, that is to say, to add more to the means of production than the rate of increase of consumption can justify or sustain. In a sense, to be sure, this too is a matter of "disproportionality," but it is not a disproportionality that arises from the planlessness of capitalism and can be remedied by this or that reform; it is a disproportionality which is of the very essence of the system. "The real barrier of capitalist production is capital itself," Marx wrote, and he went on to explain:

It is the fact that capital and its self-expansion appear as the starting and closing point, as the motive and aim of production; that production is merely production of capital, and not vice versa, the means of production mere means for an ever expanding system for the life process for the benefit of the society of producers. The barriers within which the preservation and self-expansion of the value of capital resting on the expropriation and pauperization of the great mass of producers can alone move, these barriers come continually in collision with the methods of production which capital must employ for its purposes and which steer straight toward an unrestricted expansion of production, toward production for its own sake, toward an unconditional development of the productive forces of society. The means, this unconditional development of the productive forces of society, comes continually into conflict with the limited end, the self-expansion of the existing capital. Thus, while the capitalist mode of production is one of the historical means by which the material forces of production are developed and the world market required for them created, it is at the same time in continual conflict with this historical task and the conditions of social production corresponding to it.

There is perhaps no passage in all of Marx's writings which is so successful in distilling the essence of his teaching about the nature of the capitalist system. There was one Marxist contemporary of Rosa Luxemburg who had thoroughly mastered this message and made it his own, and that was Lenin. In his polemics against the Narodniki in Russia during the 1890s, Lenin firmly rejected the impossibility thesis—which is precisely what the Narodnik writers upheld—and at the same time just as firmly rejected its opposite, the thesis of the indefinite expansibility of capitalism. The conflict between accumulation and consumption, he held, is one of the major contradictions of capitalism, but it does not prove the impossibility of capitalism as the Narodniki thought. On the contrary, capitalism can neither exist nor develop without contradictions. What these contradictions prove is not its impossibility but rather its historical-transitional character.

Rosa Luxemburg was familiar with these writings of Lenin, and she referred to or quoted him on several occasions, sometimes critically and sometimes with approval. But she never really came to terms with him, and it is a great pity that she didn't. For Lenin was living proof that it was possible to reject the impossibility thesis without falling into the morass of reformism and revisionism. If Rosa had understood this, The Accumulation of Capital might have been both a different and a better book. It would also have been a more influential book.

Nonetheless, despite its faults and weaknesses—which, as we have shown, are not of a minor character—The Accumulation of Capital is an important work of a great revolutionary. Much can be learned from it even today—from its excursions into the history of economic thought, from its passionate exposure of the nature and methods of imperialism, from its indomitable Marxist spirit—yes, and even from its mistakes.