Commercial and banking capital, then, reproduce themselves both by continuing their former practices (i.e. appropriation of part of the social product originating outside the realm of capitalist relations of production, and transformation of it into surplus-value and money capital) and by appropriating part of the surplus-value created within the capitalist process of production proper. The interpenetration of pre-capitalist, semi-capitalist and capitalist relations of production, imposed upon colonies and semi-colonies by the power of capital on the world market and the violence of foreign political and military domination, has been an extremely important factor in the historical development of these twin sources of money capital accumulation. Through the operations of merchant, commercial, usury and banking capital, they have continued till this very day to play a key role in world-wide capitalist expansion, especially within the so-called third-world countries. Thus primitive accumulation of capital and ‘productive’ accumulation of capital (through the creation of surplus-value in commodity production) are not only successive historical stages, but also simultaneous and combined phenomena. Nor does primitive accumulation automatically lead to a commensurate spread of ‘productive’ capital and industrialization; it may instead simply condense into a ‘one-sided’ expansion of the above-mentioned forms of ‘unproductive’ capital. This circumstance, together with the impact of foreign imperialist domination, clarifies one of the mysteries of underdevelopment under capitalism.

10. LUXEMBURG’S CRITIQUE OF MARX’S REPRODUCTION SCHEMAS

In the history of Marxist thought and the international labour movement, the most important controversy to have arisen in connection with Volume 2 was sparked off by Luxemburg’s critique of Marx’s reproduction schemas in her The Accumulation of Capital. Involved in the debate have been truly formidable questions: Marx’s theory of crisis; the historical limits of the capitalist mode of production (the so-called ‘breakdown theory’ or Zusammenbruchstheorie); and the origins and functions of imperialism, colonialism, militarism and wars in the imperialist epoch.76 We shall confine ourselves, in this introduction, to that part of Luxemburg’s contribution which is directly related to the subject-matter of Capital Volume 2 – the circulation, turnover and reproduction of the total social capital.

Luxemburg’s critique is essentially centred on a single theme: how can that part of the value of commodities which corresponds to the accumulated portion of surplus-value be realized? What purchasing power is available for its realization? Why do capitalists expand production, if not because they are assured of, or expect to have, additional customers? Who are these new customers? She first rejects the idea that they could be workers, since the purchasing power of the latter originates with capital, and expansion of production merely to satisfy the new needs of an enlarged work-force would be inconceivable for the capitalist class in its totality. (Of course, this is not true of capitalists taken individually, for whom all workers except their own are potential customers; but, as Luxemburg flatly states, for the capitalist class as a whole, all workers are ‘their own workers’, and it makes no sense to treat them as a source of increased sales.77) She also dismisses the notion that these additional customers could be other capitalists. For how could the capitalist class in its totality enrich itself if the money to buy the surplus product came out of its own pocket?78 Nor could they be so-called third persons, who are essentially the cronies, hangers-on and servants of the capitalist class (or of landowners appropriating ground-rent). For, in the last analysis, the revenue of all these social layers is derived from surplus-value. If surplus-value were the only source of purchasing power available for buying up the increased mass and value of commodities, it would mean that capitalists become richer by spending their own money.

For Luxemburg, then, the conclusion is inescapable. The additional purchasing power which has to be sucked into the process of capitalist circulation can only come from outside capitalist relations of production properly called, through forcing non-capitalist social classes (essentially peasants and pre-capitalist landowners) ruinously to spend their revenue on capitalist commodities. Only in this way can expanded production and reproduction, capital accumulation and capitalist economic growth in general take place. The end result of the argument is equally obvious. By destroying the non-capitalist milieu on which its expansion is based, capitalism undermines the conditions of its own growth. The disappearance of this non-capitalist (pre-capitalist) environment thus marks the absolute limit of capitalist development.79

While the main thrust of Luxemburg’s argument is clear and simple, much of the controversy surrounding The Accumulation of Capital has been diverted away from her central thesis, largely because she herself combined it with a series of further criticisms of Marx’s reproduction schemas which are much easier to answer. Thus, when she asserts that Marx confuses the function of money as means of circulation with the role of income (purchasing power) as necessary prerequisite of the realization of commodity-value, she is quite evidently mistaken.80 And when she implies that the reproduction schemas do not correspond to the reality of the capitalist mode of production, she mixes up levels of abstraction which are clearly differentiated in Marx’s method. She is no less misguided when she surmises that, because Marx’s figures do not incorporate the ‘laws of motion’ of capital (they allow for no increase in the organic composition of capital), they could not incorporate these laws. Similarly, it does not follow at all from the evident truth that department I is the primum movens of the accumulation process, that department II is somehow ‘sacrificed to’ or ‘dependent upon’ department I, in contradiction to the laws of private property and competition.81 And so on and so forth. On all these secondary issues, controversy has been raging fiercely, generally at Luxemburg’s expense. But although it still erupts from time to time, it has little relevance to the principal question that she raised.

Luxemburg’s main argument has to be answered at three successive levels of abstraction. First, and most abstractly, she committed a methodological error by situating within the framework of ‘capital in its totality’ a problem that can only be considered in relation to the ‘competition of many capitals’.82 It is impossible to conduct an analysis simultaneously at these two distinct levels, since capital in its totality abstracts by definition from many capitals, from competition. Thus the argument that the capitalist class cannot enrich itself by purchasing its own surplus product overlooks the fact that, under a system of private property, the surplus product can never be owned by ‘a single total capital’. Capitalist competition implies that capitalists can indeed grow richer by buying one another’s ‘surplus product’. Marx himself explicitly states that ‘the surplus-value created at one point requires the creation of surplus-value at another point, for which it may be exchanged’.83 He also indicates that, in the absence of competition, growth would actually disappear.84

In short, for Marx, growth is possible in a ‘purely’ capitalist milieu (i.e. where no part of the social surplus product can find ‘non-capitalist’ customers) provided that the interests and growth rates of all capitalists are assumed to be not identical, but on the contrary rooted in competition. The realization question does not, and cannot, arise within the realm of ‘capital in general’; it appears, together with the theory of crises and the trade cycle, only within the sphere of ‘many capitals’. This Marx repeatedly stated himself.85

It follows that reproduction schemas which imply competition should assume as a rule the existence of different, rather than equal rates of accumulation in the two departments, only occasionally leading to equalization of the rate of profit.