Rosa Luxemburg and the Critique of Political Economy, edited by Riccardo Bellofijiore, London: Routledge, 2009
AbstractThis review-essay discusses the contributions to Ricardo Bellofijiore’s book Rosa Luxemburg and the Critique of Political Economy in their respective historical and theoretical contexts. A key goal of the book is to establish Luxemburg’s work as a ‘macro-monetary class approach’, which means linking an economic outlook on efffective demand and fijinance with a political focus on class-struggles in the domestic and international arenas. This approach marks a signifijicant, and positive, departure from widespread interpretations that separate Luxemburg’s political theory from her economic theory. Given the apparent limits of neoliberal globalisation it is also a very timely approach that can help us to understand the current conjuncture of economic and political crises. Bellofijiore’s book offfers a useful framework for such analysis but focuses much more on economic theory than on politics and the historical developments of global capitalism. To fully exploit the potential of Luxemburg’s political economy, complementary work on these latter two aspects has to be done.
Rosa Luxemburg’s The Accumulation of Capital seems like a spectre haunting Marxian political economy. After its fijirst publication, the book received devastating critiques from right-wing social democrats in Germany1 and Russian Bolsheviks2 alike. Kautsky, who had been an ally of Luxemburg against Bernstein and his revisionist friends, kept silent. After her assassination, her life and work became taboo among social democrats. Soviet communists presented her as a heroine, as Hannah Arendt critically remarked,3 but banned her ideas as adventurist deviations from the party-line.4 For that reason, the anti-critique that Luxemburg had written to answer her critics and which was published posthumously in 19215 fell on deaf ears, just as the fragment ‘Introduction to Political Economy’, written in 1916 and published in 1925, did.6 The New Left, searching for alternatives to social democracy and communism, which were considered equally outdated, drew some inspiration from Luxemburg’s political works but, for the most part, shared the Old Left’s silence on her economic ideas.7 Later publications maintained the focus on Luxemburg’s political work8 or reiterated the original verdict on her theory of accumulation as logically wrong.9
The rejection Luxemburg’s economic theory received from social democrats and communists in the early-twentieth century is easy to comprehend. Social democrats were
1. Eckstein 1913.2. Bukharin 1972.3. Arendt 1966.4. See Oelßner 1951.5. Luxemburg 1972.6. Luxemburg 1975; partial English translation in Luxemburg 2004b.7. See Basso 1975; Geras 1976.8. See Bronner 1981; Le Blanc (ed.) 1999.9. See Müller 2009.
striving for some kind of ‘organised capitalism’,10 in which political moderation would propel economic growth and thus allow the overcoming of class-divisions. Soviet communism began to propagate the building of socialism in one country in the mid-1920s11 and subsequently lost interest in social stirrings in the capitalist world. Luxemburg’s dire prediction that the limits to capital-accumulation would invariably lead to intensifijied class-struggles did not fijit either of these two strategies. No wonder that social-democratic and Soviet theoreticians were equally keen on fijinding an excuse to dismiss Luxemburg’s theory. They found it in a few arithmetical errors in her analyses of the process of reproduction and accumulation. While the Old Left rejected Luxemburg’s theory of accumulation on political grounds, masked as scientifijic critique, the New Left simply neglected it. In the 1950s and 1960s, the social-democratic dream of ‘organised capitalism’ had apparently come true, at least in the West. Not surprisingly, interest in economic developments, whether analysed through Luxemburgian or any other lenses, was fairly limited within the New Left. Yet, the prosperity did not last long. Beginning in the 1980s, the neoliberal project began to remake capitalism in a way that resembles in many respects the late-nineteenth and early-twentieth century capitalism that Luxemburg had analysed in The Accumulation of Capital.12 Neoliberalism also changed the political landscape by destroying, superseding or destroying the Old and the New Left. In this respect, today’s world is fundamentally diffferent from Luxemburg’s. She saw herself, and rightly so, as part of an international socialist movement that, after a century of working-class formation and organising in Europe and, with some delay, North America,13 was ready to overcome capitalism through revolution or, as her revisionist opponents suggested, social reform.14 After the defeats of the Old and New Lefts in the twentieth century, today’s Left is neither sure whether it could, let alone should, be socialist, nor whether the working class will be the agent of any progressive change. Attempts at reinventing socialism, let alone communism, have barely begun.15 Similar to the utopian socialists of the early-nineteenth century, these debates revolve more around philosophy than political economy. Considering the obvious similarities between today’s capitalism and that of Luxemburg’s times, and also that her political ideas did not gain much ground at the time – some think they were premature16 – a fresh look at her economic and political works might contribute to Left-analyses of capitalism and imperialism and also to the remaking of an international socialist movement. After all, Luxemburg’s accumulation-theory recognises the rôle of political intervention by the ruling classes at all stages of capitalist development and, at the same time, explores working-class capacities to act as an anticapitalist force.
The links between class-struggle, state-intervention and economic development were present in Luxemburg’s work right from the start. In ‘Social Reform or Revolution’, her fijirst major theoretical work (1899),17 Luxemburg rebuts the argument of Bernstein and other
10. See Winkler (ed.) 1974.11. See Carr 1973.12. See Schmidt 2011.13. See Katznelson and Zolberg (eds.) 1986.14. See Steenson 1991.15. See Douzinas and Žižek (eds.) 2010; Lebowitz 2010.16. Trincado 2010.17. Luxemburg 2007.
revisionists that large-scale credit and conscious control of the economy through cartels would prevent severe economic crisis in the future and that the continued existence of the middle-class requires cross-class alliances instead of working-class politics proper. In her critique, Luxemburg argues that political intervention, such as colonial conquest, might open up new markets and spur capital-accumulation temporarily so that one might be left with the impression that economic crises, class-polarisation and class-struggle were a thing of the past. Yet, this kind of stimulus would not last and the tendency towards crisis and stagnation would face the labour-movement with the choice to either abandon its socialist aspirations or turn the struggle for social reform into a revolutionary struggle against capitalism. The Accumulation of Capital and the Anti-Critique focused entirely on the question of the limits to capitalist development. In these two books, Luxemburg argues that the realisation of surplus-value, and thus capital-accumulation, depends on demand from non-capitalist social strata, i.e. producers and consumers whose economic activity is not yet subjugated to the imperative of capital-accumulation. Yet, the integration of such strata into the process of commodity-exchange eventually turns them – most as workers, some as capitalists – into agents of capital. The full integration of non-capitalist strata into the orbit of the capitalist process of reproduction, Luxemburg concludes, deprives capital of the demand-stimulus without which accumulation comes to a halt. In turn, economic stagnation intensifijies class-struggles and poses the alternative, socialism or barbarism.
It has already been noted that critics picked up a couple of arithmetical errors in her model of accumulation in order to reject the whole argument.18 By computing alternate sets of numbers they demonstrated that limits to accumulation do not exist, at least not on paper. This was Bauer’s argument.19 Grossman20 did some further calculations based on Bauer’s numerical example and came to the conclusion that capitalist accumulation would eventually face the problem of insufffijicient surplus to keep it going. As diffferent as Bauer’s and Grossman’s conclusions are, they both reject Luxemburg’s argument that a lack of aggregate demand would constrain the realisation of already-produced surplus-value. They also shared the methodological approach of building their critique of Luxemburg almost entirely on the arithmetic of her schemes of reproduction. In doing so, they neglected two points that are of particular interest for the analysis of today’s capitalism and imperialism.
First, Luxemburg focuses on the rôle of efffective demand for capital-accumulation. This distinguishes her from Hilferding21 and Lenin.22 The chief theoreticians of social democracy and communism, respectively, stressed structural, i.e. supply-side, changes in capitalist economies, namely the rise of monopoly-capitalism, in their analyses of capitalism. Contrary to such a supply-side approach, Luxemburg’s analysis accentuates the demand-side arguments in Marx, which sit uneasily with supply-side arguments inherited from Ricardo,23 and anticipates Keynes’s General Theory of 1936,24 arguably the most important guide to twentieth-century economic policies. Like Keynes, Luxemburg recognised the possibility of government-spending as a way to overcome a lack of aggregate demand, particularly in her
18. See Zarembka 2002.19. Bauer 1913.20. Grossman 1929.21. Hilferding 2006.22. Lenin 1996.23. See Heinrich 2005.24. Keynes 2007.
chapter on militarism and arms-spending.25 Yet, she was also aware of the fact that such spending is just another means of capitalist penetration of non-capitalist social strata, which, after a while, would pose the problem of insufffijicient demand again. Capitalist rulers tried to solve this problem after the turn from Keynesianism to neoliberalism through unleashing debt- and speculation-driven demand and integrating the former Soviet Union and China into the capitalist world-market. Not surprisingly, if seen through Luxemburgian lenses, this phase of capitalist expansion ended in another great crisis of capitalism.26 In short, Luxemburg’s political economy, if used in an undogmatic way, allows us to understand why Keynesian demand-stimulus could overcome the tendency towards stagnation but also what the limits of Keynesianism and the succeeding phase of neoliberal expansion were.
The second point that is absent in Bauer’s and Grossman’s critique, and which, like the previous point, distinguishes Luxemburg from Hilferding and Lenin again, is that she did not see the world-market as an arena for imperialist competition that private capital enters after the exhaustion of their domestic markets, but rather as part and parcel of capitalist development from its earliest days. Instead of theorising the penetration of a succession of national economies by the world-market, a method that also dominates current research on varieties of capitalism27 and globalisation,28 she analyses the relations between the capitalist world-market, however fractured by state-intervention it may be, and non-capitalist social strata. This approach was not only useful in understanding the colonisation of the global South but can also guide research on the capitalist penetration of private households under the reign of consumer capitalism and the contemporary colonisation of the biosphere.
Bringing the potential of Luxemburg’s political economy to full fruition requires some refijinement of her conceptual framework. In the fijirst part of The Accumulation of Capital, Chapters 1–9, Luxemburg develops a theoretical model that shows the need for capitalist expansion into non-capitalist social strata as a means to create aggregate demand and thus keep accumulation going; in the second part, Chapters 10–24, she looks at the debates that economists had at diffferent times about the rôle for state-intervention in opening up new markets, and in the fijinal part of the book, Chapters 25–32, she describes the means by which imperialism had fostered capitalist penetration historically. What she has not done is develop the conceptual link between the theoretically demonstrated need for capitalist expansion and its realisation, or the limits thereof, in historical praxis. This is where Bellofijiore’s edited volume Rosa Luxemburg and the Critique of Political Economy comes into play.
Bellofijiore shares with Luxemburg, and her political followers from the New Left, the historical-materialist outlook that is so crucial to avoid the mechanical materialism that so restrained theoretical and strategic thinking within the Second and the Third International.29 As co-editor of the Critical Edition of Marx’s works he is well-equipped to extend a historical-materialist approach to the work of Luxemburg.30 In this latter respect, the most innovative point that Bellofijiore makes is what he calls in the Introduction to the book a ‘macro-monetary class approach’ (p. 8). This approach links the labour-theory of value and money
25. See Luxemburg 2003, Chapter 32.26. See Schmidt 2010a.27. See Hanké 2009.28. See Held and McGrew (eds.) 2000.29. See Colletti 1972; Negt 1974.30. See Bellofijiore and Fineschi (eds.) 2009.
as the expression of abstract labour to the use of credit as a means of capitalist expansion. Moreover, it recognises class-struggle as a decisive factor that impacts upon such expansion and capitalist development more generally. Capitalism, then, is characterised by the conflicting logics of class-struggle and socialisation of atomistic producers through money. In one respect, though, Bellofijiore departs from Luxemburg signifijicantly. He downplays the rôle of non-capitalist social strata, whose capitalist penetration played such a prominent rôle in Luxemburg’s own account. Bellofijiore, on the other hand, argues that capitalist expansion, and the competition that comes with it, leads to disproportions between diffferent sectors of the capitalist economy. The forward and backward linkages that exist between these sectors eventually turn such sectoral disproportions into a general lack of aggregate demand. This departure from Luxemburg’s original argument shifts the focus from the relations between capitalist and non-capitalist economies to tendencies of crisis created by an economic system in which socialisation only occurs through competition and monetary exchange. This approach to Luxemburg was discussed at a conference which the University of Bergamo, Bellofijiore’s alma mater, hosted in 2004 under the title ‘Like a Candle Burning at Both Ends – Rosa Luxemburg and the Critique of Political Economy’. Most, but not all, of the proceedings from that conference were eventually published in the book that is under review here. The fijirst part of the conference-title, referring to a favourite saying of Luxemburg that aptly characterises her restless life in the international socialist movement, was lost during the editing and publishing process. This is worth mentioning because contributions to two roundtable-discussions at the conference, one on Luxemburg the woman and revolutionary and one on the rôle of Luxemburg’s ideas for twenty-fijirst century labour and social movements, also got lost. From these roundtables only Edoarda Masi’s intervention was published, while all others, most prominently the one by Fausto Bertinotti, leader of Rifondazione Communista at the time, were not published. As a result, the book has a much more theoretical focus than the conference had. Most of the chapters deal, as the book-title suggests, with various aspects of Luxemburg’s political economy; one, by Andrea Panaccione, discusses trade-union and political-party strategies, and another, Luxemburg as woman and revolutionary. The order of the chapters and their respective topics seems rather arbitrary but it is possible to group them by the diffferent epistemologies they, implicitly, apply to their arguments.
The fijirst and largest group discusses Luxemburg’s original theories in such a way as to allow their use for contemporary analysis. Bellofijiore’s and Andrew Trigg’s macroeconomic considerations belong to this group as much as Jan Toporowski’s chapter on imperialism and fijinance and Michael Krätke’s comparison of Marx’s and Luxemburg’s theories of wages. Tadeusz Kowalski and Paul Zarembka discuss the place of Luxemburg and her critics in the history of Marxian political economy. With their chapters they help to refijine the theoretical tools and directions for future research based on Luxemburg’s ideas. The second group is much more critical. Though none of the authors in this group openly denies the actual or potential relevance of Luxemburg’s political economy, their respective lines of argument make it quite clear that they consider her work as either outdated or flawed from the outset. In this manner, Paul Mattick Jr. restates the position that his father had taken vis-à-vis Luxemburg: a respectable fijighter but a weak economist.31 Joseph Halevi’s chapter on imperialism today and He Ping’s on the relations between the capitalist West and China
argue that Luxemburg’s ideas were highly relevant in her time but can not be adequately used for any analyses of today’s world. Roberto Venziani offfers a radically diffferent approach in his two chapters, one co-authored with Meghnad Desai. They use mathematical models to analyse Luxemburg’s critique of Marx’s schemes of reproduction and her analysis of imperialism, but draw neither clear conclusions nor offfer much direction for future work. They simply do not ask whether formal models offfer an adequate methodological framework for political economy in the Marxian and Luxemburgian tradition. It should be remembered that Luxemburg engaged in ‘fool-proof mathematical exercises in addition and subtraction’ to come to terms with Marx’s schemes of reproduction, and then set herself the task to ‘further inquire whether it is not merely because mathematical equations are easily put on paper that accumulation will continue ad infijinitum without any friction.’32 This methodological scepticism is completely absent from Veneziani’s and Desai’s chapters. They represent one extreme of interpreting Luxemburg’s own theory. Drawing on her formal discussion of ‘The Problem of Reproduction’,33 they develop purely logical models devoid of the path-dependencies and ‘moments of decision’34 that characterise actual history. The other extreme is the complete historicisation of the last section of The Accumulation of Capital, the ‘Historical Conditions of Accumulation’,35 that is implied by Halevi and Ping. They suggest that history develops through stages and that an adequate understanding of each of these stages requires specifijic theories, but cannot explain the transition from one stage to another. What is missing in either case is the mediation between logical reasoning and historical developments as exemplifijied in Section 2 of The Accumulation of Capital, ‘Historical Exposition of the Problem (of Reproduction, IS)’.36 Bellofijiore, Trigg, and the other authors identifijied as the fijirst group of contributors to the book under review, each in their own way, contribute to such a mediated, or historical-materialist, understanding of capitalist accumulation and imperialism. Among the authors of the book at hand, Zarembka is the only one who addresses such epistemological questions explicitly and concludes: ‘We cannot discuss penetration of non-capitalist society by capital without examining what it is that is being penetrated. We cannot examine what is being penetrated without the context, a context which must be historical.’ (p. 78.)
The question of capitalist development in non-capitalist societies and their theoretical reflection also provides the context for the following discussion of the individual chapters of the book. The starting-point of this discussion, though, falls outside the questions of whether (and if so, how) history and logic can be articulated with each other. The title of Masi’s chapter – ‘Rosa Luxemburg: The Woman, the Revolutionary’ – could have been amended by ‘the Analyst’, because it allows reflections on the perspective that Luxemburg, as woman, revolutionary and political economist, had on her subject-matter, the capitalist world-economy and imperialism. Masi does not write about this question explicitly; as a matter of fact, she does not write very much at all. Her chapter is just fijive pages long and consists almost entirely of quotes from Luxemburg’s letters. Surprisingly enough, these assorted quotes sufffijice to reveal, as Masi writes, ‘a strong feeling of self, the responsibility of the
32. Luxemburg 2003, p. 91.33. Luxemburg 2003, pp. 1–143.34. See Bronner 1991.35. Luxemburg 2003, pp. 307–447.36. Luxemburg 2003, pp. 145–306.
leader who answers not only to herself, but to history’ (p. 189). Historical materialism with practical intent would be another way of saying this. How much of that do we fijind in Bellofijiore’s book?
As already mentioned, Bellofijiore interprets Luxemburg’s theory as a ‘macro-monetary class approach’ (p. 8), in which the successful validation of values, and thus capitalists’ ability to recover their capital-outlays at a profijit, depends on efffective demand. Whether labour performed in the production-process is socially necessary or not is proven by the sale of the products of this labour in the market-place. That does not mean, Bellofijiore argues against many of Luxemburg’s critics,37 that she had advanced a theory of underconsumption that would seek the reasons for lacking demand in the circulation-process. Instead, he suggests, drawing on her ‘Introduction to Political Economy’, that competition forces capitalists to introduce labour-saving technologies so that the rate of surplus-value rises and, conversely, the share of wages in total income decreases. He also presents Luxemburg’s argument that trade-union struggles for higher real wages counter this trend towards lower relative wages but, by doing so, come into conflict with capitalists who will scale-up their effforts to replace living labour-power by machines and so reinforce the lack of demand. This discussion convincingly shows that the political fijix that adherents to underconsumption-theory suggest – increase workers’ purchasing power through higher wages – may work for a short while but does not offfer an escape from capitalism’s tendency to general overproduction.
In a second chapter, Bellofijiore further develops his interpretation of Luxemburg’s theory as a monetary theory, in which fijinancing demand becomes the crucial bottleneck for accumulation. The punchline of this interpretation is that the solution Luxemburg suggested to overcome demand-constraints – ‘external outlets in non-capitalist areas’ (p. 63) – becomes one among two other ways of creating demand: government-spending, which Bellofijiore ironically calls ‘internal exports’, and a ‘banking system fijinancing not only production (of both consumer and producer goods) but also fijirms’ (net) investment demand.’ (ibid.) In this last case, capitalism is no longer plagued, as Luxemburg had argued, by the exhaustion of non-capitalist areas whose integration into capitalism could keep accumulation going, but by fijinancial instability. A similar argument is developed by Trigg who concludes his chapter on the sources of money and demand with the following proposition: ‘Credit has a double role, in which it breaks through the limits of the market, but also exaggerates the extent of crisis.’ (p. 50.) The links between Luxemburg and modern theories of fijinancial capitalism are also the theme of Toporowski’s contribution to the book. He draws attention to Chapter 30, ‘International Loans, of the Accumulation of Capital’38 to show that Luxemburg was well-aware of the rôle of credit in opening up new markets but also that the expansion of international fijinance creates new potentials for crises. Luxemburg’s analysis of international fijinance, though not central to her argument on the limits of capitalist accumulation, can be understood, Toporowski argues, as a forerunner to more modern theories of fijinancial capitalism such as Hyman Minsky’s.39
Luxemburg’s solution to the problem of insufffijicient demand through the penetration of non-capitalist areas is discussed, in rather diffferent ways, by Veneziani and Zarembka.
37. See, for example, Sweezy 1970, Chapter XI.8.38. Luxemburg 2003, pp. 399–425.39. Minsky 1975 and 1986.
Veneziani claims that violence and non-competitive practices can establish international relations of imperialist dominance. At the same time, he claims that the latter can develop when all economic agents are subjected to competition. What cannot be shown with his formal model is why and under which conditions competitive agents are the main drivers of imperialism and when non-competitive practices get the upper hand in this respect. As already mentioned, Zarembka is much more aware of the fallacies of purely formalistic arguments and the need to consider historical contexts in order to properly understand the combined development of capitalism and imperialism. The focus in his chapter is on the history of Marxian thought and the place of Luxemburg within it. Referring to Marx’s ‘Results of the Immediate Process of Production’ and his Grundrisse,40 he shows that Marx had at least given sporadic hints at the rôle of non-capitalist areas as sources for capital-accumulation even after capitalism had passed its initial phase of primitive accumulation. These hints are presented as corroborating Luxemburg’s thesis that accumulation would be impossible without such areas.
Halevi shifts the focus of the analysis of imperialism from the history of economic ideas to actual history and presents an original synthesis of the transformations of imperialism and the rise of international fijinance. He argues that some kind of super-imperialism developed after World-War II, in which imperialist competition was replaced by US hegemony and the search for external markets gave way to fijinancial accumulation as a means to create additional demand and to allow the realisation of profijits. The new imperialism, Halevi claims, is better understood in terms of the ‘Baran-Sweezy-Magdofff-approach’ (p. 127). Luxemburg’s theory can only be applied to ‘countries interested in the external markets as a sphere of realization . . . [b]ut they are impotent . . . and must adjust to what comes from the USA.’ (p. 127.) In this respect, Halevi mentions Japan and the European Union as export-oriented countries and certainly characterises their subordination to the US properly. However, the theoretical underpinnings of his argument are inconsistent with the Minskyan interpretation of Luxemburg’s economic theory that Bellofijiore and Toporowski suggest. One might argue that Halevi simply does not agree with this interpretation. Yet, in a recent publication, co-authored with Bellofijiore,41 Halevi explicitly made the link between the Baran-Sweezy-Magdofff approach and Minsky’s theory of fijinance-capitalism. This, then, raises the question of whether he considers the historicisation of Luxemburg, which he suggests in the book under review, as obsolete or whether he seeks to refute the link between Luxemburg and Minsky that Bellofijiore and Toporoswki stress in their chapters. Minsky42 focused on the impact that fijinancing has on investment. The limits of investment fijinanced out of retained profijits, he argued, could be overcome through credit and the sale of stock. By doing so, companies would create additional demand and thus keep accumulation going. The downside is an increasing dependence on the conditions of fijinancial markets such that rising interest-rates or falling stock-prices could throw companies into fijinancial disarray and force them to cut back on their planned investment to maintain their cash-flows. If one believes that fijinancial expansion is one of the ways in which to integrate non-capitalist social strata into the circuits of capital accumulation and that these latter consist of the intertwined circuits of money-capital and productive capital
40. Marx 1976 and 1973.41. Bellofijiore and Halevi 2010.42. Minsky 1975 and 1986.
it makes perfect sense to integrate Minsky’s arguments into a Luxemburgian political economy as Bellofijiore and Toporowski suggest.
Another aspect of historicisation is presented in Ping’s chapter on imperialist centres in the West and Eastern peripheries. Like Halevi, she attributes great value to Luxemburg’s ideas for the understanding of her, Luxemburg’s, time but does not see much use for them regarding later developments: ‘She could not see that once Eastern countries obtain national independence, they will play a dynamic role in changing the relationship between East and West and making progress in world history.’ (p. 150.) Following this proposition, Ping argues that national independence and subsequent modernisation in the East is more crucial for historical progress than proletarian revolutions in the West. Her case in point is China, which she presents as a continuous success-story from the revolution to today’s ‘socialism with Chinese characteristics’ (p. 157). China’s development, including the question of whether there is anything socialist about it, is a hot topic among political economists of all stripes. With regard to Luxemburg’s theory, Ping misses the chance to compare the discussion of Russian development in The Accumulation of Capital43 with China today. After all, the capitalist penetration of Russia then and China now bear so many similarities that a Luxemburgian interpretation would have cast a more critical light on the latter than Ping’s line of thought does.
The chapters discussed so far looked at imperialism and fijinance as two, often closely entwined, ways to create additional demand. Kowalik brings the state and a Kaleckian perspective into the equation. In the 1930s,44 Kalecki developed the argument that the continued concentration of capital allows big corporations to raise their sales-prices way above production-costs. As a result, the profijit-share of national income would increase at the expense of the wage-share. This redistribution could be avoided, though, if the import of cheap resources from poor countries would lead to a lowering of production-costs that would compensate for the increasing mark-ups on prices. Without such imports, redistribution from wages to profijits leads to a lack of aggregate demand and unemployment. Defijicit-spending by the government and welfare-state expansion more generally could, according to Kalecki, create full employment provided political opposition from the business-community can be overcome.45 In a similar fashion, state-led development in poor countries can only be successful if it can resist pressures from comprador-bourgeoisies and foreign capital.46 This is the point Kowalik picks up in his discussion of Luxemburg’s and Kalecki’s theories of capitalist dynamics. With a good sense of historical context, he argues that Luxemburg’s most important contribution to political economy was not her interpretation of Marx’s schemes of reproduction but ‘putting the problem of underdeveloped countries in the centre of her analysis.’ (p. 106.) Regarding the problem of efffective demand he draws a line from Marx via Luxemburg and Tugan-Baranowski to Kalecki. His main interest is in the changing conditions under which Luxemburg and Kalecki developed their respective ideas. Luxemburg, according to Kowalik, was writing about a capitalism that was endangered by the ‘impossibility to solve a deepening clash between the capitalist developed north and the mostly non-capitalist backward south.’ (p. 112.) Kalecki, however, saw how a
43. Luxemburg 2003, Chapters 18–24.44. Kalecki 1938.45. See Kalecki 1943.46. See Kalecki and Kowalik 1991.
‘crucial reform’ saved capitalism from the dangers of economic stagnation or even collapse. Crucial to this reform, which, with a slightly diffferent focus, Gramsci called ‘passive revolution’, was state-intervention that created new outlets for capital-accumulation. Unfortunately, Kowalik confijines himself to restating Kalecki’s 1971 argument that was developed, at times in collaboration with Kowalik, over three decades from the 1940s to the 1960s.47 Only at the very end of his chapter does he hint at changes in the composition of the working classes and the collapse of the Soviet empire as reasons for the unmaking of the crucial reform and the subsequent rise of neoliberal capitalism. Even though he does not develop this thesis, it is quite obvious, and in accordance with Kalecki’s own argument, that the crucial reform depended on political factors, which also implies that, given the right political conditions, state-intervention could keep capitalist accumulation alive indefijinitely. Such claims are as controversial, at least among Marxian and other left-political economists, as Pings’s thesis of socialist development in China. What is striking in the context of the book at hand is that Kowalik does not relate his Kaleckian interpretation of Luxemburg to the theses that Bellofijiore, Halevi and Toporowski put forward on imperialism and fijinance. Arguably, imperialist expansion, even though capitalist accumulation may be its driving force, relies on state-activity – the last chapter of The Accumulation of Capital is devoted to this issue.48 Moreover, government-expenditures, whether related to imperialist expansion or any other means, creates, on the one hand, additional demand but, on the other hand, also depends on fijinance and is thus prone to the fijinancial, or fijiscal, crises that fijigure so prominently in Bellofijiore’s and Toporowski’s interpretations of Luxemburg.
Krätke’s elaborations on Marx’s and Luxemburg’s theories of wages are related to Kowalik’s issue of crucial reform, although neither of the two authors make this connection. The reason might be that their respective approaches are very diffferent. Whereas Kowalik argues on the level of the process of circulation, Krätke brings the discussion back to the process of production and the labour-theory of value. His point of departure, after briefly touching on Marx’s critique of Ricardo, is the claim that, in Marx, the ‘labour power of wage earners is actually not produced as a commodity but appears as such on the labour market . . .’ (p. 163.) He then convincingly argues that, for any given level of subsistence, the value of labour-power can be determined by the labour that is socially necessary to produce the wage-goods that are required to maintain this level. What determines this level in the fijirst place remains unclear in Marx’s works.
Luxemburg, Krätke argues, offfers an explanation of the value of labour-power by pointing to the trade-unions’ wage-struggles. Without such struggle workers will never recover the value of their labour-power but only a, still undetermined, fraction of it. This argument is highly political because there are obviously many domestic and international factors that impact upon union-organising and bargaining successes. Among this myriad of factors, Krätke highlights only those that were relevant in the debate between Sternberg,49 who extended Luxemburg’s theory of wages to the world-scale, and Grossmann.50 In this debate, Sternberg maintained that imperialist expansion, the tapping into the world’s surplus-population, could, temporarily, shift the balance between labour and capital in the
47. Ibid.48. Luxemburg 2003, pp. 434–47.49. Sternberg 1926.50. Grossmann 1929.
imperialist centres towards the former and thus higher real wages. Grossmann refuted such ‘supply-and-demand’ arguments by looking strictly at socially necessary labour in the production-process, which, he maintained, would incessantly lower the value of labour-power because of labour-saving technical progress. This proposition, of course, misses the whole point of the debate. Any such progress decreases the working time that is socially necessary to produce a certain basket of consumer-goods, but this cannot explain how many such goods are in the basket. Yet, Krätke does not give any hints about what to do with the political determination of the value of labour-power. Nor does he say a word about the value of labour-power in the absence of unions serving as the ‘enforcer’ of the law of value. And he misses the opportunity to discuss the rôle of household-labour, which is an issue that would nicely fijit with his opening argument that labour-power is not produced as a commodity. The Luxemburgian question of whether households are non-capitalist areas that are eventually penetrated by capital, and household-labour thus subsumed to capital-rule, could enrich debates between Marxism and feminism about the relations between capitalist production and the sphere of reproduction. After all, capitalist penetration of private households might be a factor in explaining the long postwar boom and the ‘crucial reform’ that became possible during the boom.51 External markets are not necessarily markets in far-away countries; they can also be established in the non-capitalist hinterlands of imperialist centres.52
Do the contributions to this book add up to something? Without a doubt, all of them address issues that are relevant to Luxemburgian political economy, although their quality difffers signifijicantly. Some are more consistent than others and some raise bigger issues than others. The greatest difffijiculty in reading this book is that the relationship between the individual chapters is not clear and that some of the chapters present arguments that were developed in other contexts but not made explicit in the book. Anyone who is not familiar with the respective discourses will, at one point or another, wonder why a certain argument or reference is relevant for an up-to-date interpretation of Luxemburg’s economic works. Yet, there also seems to be an underlying agenda that may help to transform these works from a spectre haunting Marxian political economy into a source of inspiration. In fact, Bellofijiore did the best he could in exposing it in his Introduction, but it was pushed into the background by subsequent chapters. Its main thread is that the problem of insufffijicient demand might be solved in more than one way. Besides the ‘Luxemburg solution’, the capitalist penetration of non-capitalist areas, there is the ‘Minsky solution’ of credit-expansion and the ‘Kalecki solution’ of state-intervention. All three solutions to the problem of insufffijicient demand are addressed in this book and all three deserve further elaboration. The turn from Kalecki’s crucial reform to Minsky-style fijinancial accumulation and capitalist penetration of the territories of the former Soviet empire and, arguably, China pose as many questions to these solutions as the current crisis, which, in many ways, looks like one Luxemburg had already envisioned a century ago:
The more ruthlessly capital sets about the destruction of non-capitalist strata, at home and in the outside world, the more it lowers the standard of living for the workers as a whole, the greater also is the change in the day-to-day history of capital. It becomes a string of political and social disasters and convulsions, and under these conditions, punctuated by periodical economic catastrophes or crises, accumulation can go on no longer.
But even before this natural economic impasse of capital’s own creating is properly reached it becomes a necessity for the international working class to revolt against the rule of capital.53
Anyone who reads the The Accumulation of Capital these days will be struck by its timeliness. What she wrote about capitalism and imperialism in the early-twentieth century could be written just as well today. However, this timeliness poses an important question that is not discussed in Bellofijiore’s book. After all, Luxemburg argued that the phase of economic stagnation and intensifijied class-struggle, ultimately posing the alternative ‘socialism or barbarism’ as she put it in the Junius Pamphlet,54 was imminent at the time of writing the Accumulation. Since that time, capitalism went through two phases – or, perhaps, ‘long waves’? – of capitalist expansion, one associated with Keynesianism, the other with neoliberalism. In the introduction to this article I argued that Luxemburg’s theoretical framework could be used to explain both of these expansions and their respective limits. Doing so requires the development of concepts that can link theoretical reasoning to actual historical developments. Bellofijiore’s ‘macro-monetary class approach’ has the potential to do that but the mission is not accomplished yet. Most contributions in his book are either on the side of pure theory or historicise Luxemburg’s theories so much that it seems all but impossible to apply them to any other time than hers. Bellofijiore’s own contributions to the book develop a conceptual framework that, potentially, can bridge the gap between theoretical logic and historical praxis. Now it is time to put these concepts to work.
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