And here the factor Rosa Luxemburg pointed to – the existence of non-capitalist formations into which capitalism expands – is extremely important. I       5840c + 1095v + 547r + 455ac +   91av   = 7670 (This to some extent explains the technical backwardness of British industry, the pioneer of the industrial revolution, as compared with that of Germany today, for example.) Now v1 + r1 + av1 are smaller than v1 + s1 (as ac1 is deducted from s1). But this depends in the last analysis upon the capacity of industry to sell an increasing output of consumer goods. Therefore, she abstracted her analysis from the cycles in order to study the process of reproduction in purity and as a whole. With the destruction of non-capitalist economies however, there would be no more markets to offload surplus commodities onto, and capitalism would break down. Considering both sides, it is clear that it is possible in pure capitalism for proportionality between the two departments to exist, while the accumulation in both is regular, not erratic. This in turn would have a cumulative effect of its own on the activity of capital, on the entire economic activity, on employment, and so on the purchasing power of the masses, and so again in a vicious circle on the markets. Until January 1912 Rosa Luxemburg was an ortho-dox follower of Marx, believing that political economy had found its the extent that the industrialisation of the former is postponed. How can this take place, leaving cycles and crises out of consideration? If the social demand for means of production under simple reproduction were expressed by the formula c1 + c2, enlarged reproduction would be expressed as c1 + ac1 + c2 + ac2. [95]. In her book Rosa Luxemburg goes backwards and forwards between analyses of the schemas of reproduction – which describe exchange relationships between the two departments of industry – and another set of relations between the two departments: the potentiality of means of production to become means of consumption – means of production not only being exchanged for means of consumption, but in time being realised in new means of consumption. To increase their capital, capitalists rely on workers who put their labor power at the disposal of capitalists. 79. by having a higher rate of accumulation in Department I than in Department II; by the transference of capital from Department II to Department I. the size of the colonial world compared with the productive power of the advanced industrial countries, and. These crisises threaten capitalist system’s continuity and reproduce itsel falso they bring internal contradiction out into the open. Along the way, Marx presents a brief but important summary/overview of the rise of capitalism and the potential rise of socialism, as well as some brief hints about what exactly revolution entails. c2 + ac2 = 1695 But as this is of only secondary importance to her main thesis, we shall not deal with it here. (3) The export of capital adds to the prosperity of the industrial countries as it creates a market for their goods – at least temporarily.                                                                   Total     = 9000 [82]. It might be outdated or ideologically biased. on the assumption – which, of course, could never exist under capitalism – that there is no accumulation of capital, that the whole of the surplus value is spent on the personal consumption of the capitalists, production thus not expanding.                                                                   Total     = 14348 [83]. Analysing the above diagram, Rosa Luxemburg correctly points out a peculiarity they show: While in Department I half the surplus value is capitalised every time, and the other half consumed, so that there is an orderly expansion both of production and of personal consumption by the capitalists, the twofold process in Department II takes the following erratic course: First year 150 are capitalised, 600 consumed is spent on adding to available constant capital – ac – and part goes to pay wages to workers newly employed in production – av. while v1 + r1 + av1 (plus the av transferred from Department II) = 1595. “The Forms of Capital” As we have been reading and analysing several pieces of work related to education and schooling, I chose to summarize the theoretical paper on education written by Pierre Bourdieu in 1986 entitled The Forms of Capital.In this paper, two main types of capitals are described, but I will be only focusing on cultural capital.                                                                   Total     =   9800, Second year Her main course was a broad survey of political economy, and in connection with it she undertook to write an Introduction to Political Economy. while v1 + r1 + av1 (plus the av transferred from Department II) = 1746             I       5856c     +     1464v     +     1464s     =   7986 The quantities of the different products cannot be arbitrarily determined: the means of production produced must be equal in value to the size of the constant capital c: the means of consumption produced must be equal in value to the size of the wages bill – the variable capital v – plus the surplus value s. To analyse simple reproduction Marx divided industry as a whole into two basic departments: that producing means of production (Department I) and that producing means of consumption (Department II). (5) By thus relieving pressure in capital markets the export of capital diminishes competition between different enterprises, and so diminishes the need of each to rationalise and modernise its equipment. If not for the barrier (a financial one) to mass Indian immigration into Britain, wages in Britain would not have risen throughout the last century. The book is not at all easy to follow, especially for anyone not conversant with Marx’s Capital. While from the standpoint of the individual capitalist it makes no difference what his factory produces, whether machinery, stockings, or newspapers, provided he can find buyers for his product so that he can realise his capital plus the surplus value, to the capitalist economy as a whole it is extremely important that the total produce will be made up of certain determined use values, in other words, the total product must provide the means of production necessary to renew the process of production and the means of consumption needed by the workers and capitalists.                                                                   Total     = 10780, Third year The progress of enlarged production could then be described by the following diagrams: End of first year: The Classical Approach to Capital Accumulation Classical Theory of Economic Growth Víctor Lanza . (4) The export of capital to the colonies affects the whole capital market in the imperialist country.             I       4400c     +     1100v     +     1100s     =   6600 Study Guide to Capital Volume I Below you will find, organized by Part and Chapter, my "study guide" to Volume I of Capital.If you want a quick overview of the whole book, click on each Part, sequentially, starting with Part VIII and then Parts I through VII for brief summaries. [92]. II      1500c +   300v + 150r +   63ac +   12av                                                                   Total     = 9000, Initial diagram for accumulation on an expanded scale This however lead to the destruction of non-capitalist economies as they were increasingly absorbed into the capitalist system. Before describing Rosa Luxemburg’s analysis of reproduction, it must be clear that she did not develop a theory explaining the cyclical movement of boom, crisis and slump. While doing so she prepared a book on Marxian economics entitled Introduction to Political Economy. 1850, 100:240; 1890, 100:150; 1920, 100:80.             I       6442c     +     1610v     +     1610s     =   9662 II      1500c +   300v + 200r +   80ac +   20av   = 2100 Die Akkumulation des Kapitals (1913; The Accumulation of Capital). The book is not at all easy to follow, especially for anyone not conversant with Marx’s Capital. global capital accumulation (Harvey, 2003: 149). (6) Buying cheap raw materials and foodstuffs in the colonies allows real wages in the industrial countries to be increased without cutting into the rate of profit. [11], This article is about the book by Rosa Luxemburg. Then, using Marx’s diagram quoted above as a point of departure, the reproduction of capital will result in the following progression (figures are rounded for simplicity) [87]: Point of departure: [93], One may agree or disagree with Rosa Luxemburg’s criticism of Marx’s schemas in Volume II of Capital, and with all or some of the links in her chain of reasoning leading to the final conclusion that, if the capitalist mode of production was not only the predominant one but the only one, of necessity in a short time capitalism would have collapsed from its internal contradictions. In other words, for a time the export of capital is an important factor in enlarging markets for the industries of the advanced countries. On the other hand, the export of capital for the building of a railway presupposes an export of goods – rails, locomotives, etc – beyond the immediate purchasing power or exporting power of India. Reformism would not have been able to replace revolutionary Chartism. I       5867c + 1173v + 586r + 489ac +   98av   = 8213 (See T. Cliff, Perspectives of the Permanent War Economy, Socialist Review, May 1957.). We shall assume that the rate of exploitation, the organic composition of capital and the rate of accumulation are the same in both departments and they remain unchanged. 86. From the diagrams given above it becomes clear that a relative increase of Department I compared with Department II, if all other conditions remain unchanged, brings in its wake surpluses in the exchange relations in Department I. Similarly the social demand for consumer goods, from. [2] According to Luxemburg, Marx had made an error in Capital in that the proletariat could not afford to buy the commodities they produced, and therefore by his own criteria it was impossible for capitalists to make a profit in a closed-capitalist system since the demand for commodities would be too low, and therefore much of the value of commodities could not be transformed into money. Third        254                             626 Can this factor not counteract the one pointed out by Rosa Luxemburg to be the cause of a surplus in Department II? Thus at the end of the first year, instead of a surplus in Department II as presumed by Rosa Luxemburg, a surplus appears in Department I, amounting to 3. In order to pay a profit of £10 million to Britain (on British capital invested in India) India has to import less than it exports, and thus save the money needed to the tune of £10 million. This guide and overview of investment methods outlines they main ways investors try to make money and manage risk in capital markets. We shall assume also that the other factors (the rate of exploitation at 100 percent, the organic composition of capital where constant capital is five times bigger than variable capital) remain unchanged. What, though, are the conditions that lead to profit that must be maintained? Surplus value can be increased in three ways. The problem with which Rosa Luxemburg deals is as follows: can enlarged reproduction, i.e. (2) The increase in wages brought about in this way has a cumulative effect.            II       1936c     +       968v     +       968s     =   3872 The Accumulation of Capital (full title: The Accumulation of Capital: A Contribution to an Economic Explanation of Imperialism, Die Akkumulation des Kapitals: Ein Beitrag zur ökonomischen Erklärung des Imperialismus) is the principal book-length work of Rosa Luxemburg, first published in 1913, and the only work Luxemburg published on economics during her lifetime. The surplus in Department I is 118. while v1 + r1 + av1 =1714. Marx goes on to elaborate the diagram of enlarged reproduction and he shows that, assuming that in Department I as well as in Department II no change in the organic composition of capital (i.e., in the ratio of constant capital to variable capital) takes place, that the rate of exploitation remains constant, and that half the surplus value in Department I is capitalised, then the reproduction of capital will result in the following progression: First year II      1628c +   325v + 162r +   67ac +   14av The race for capital accumulation among the capitalists’, compel them to adopt new technology and gain huge profits. However, in trying to sell its products, capitalist industry enters into deepening contradictions, the most fundamental of which is that between production and the limited market: “The last cause of all real crises always remains the poverty and restricted consumption of the masses as compared to the tendency of capitalist production to develop the productive forces in such a way that only the absolute power of consumption of the entire society would be their limit”. In a dialectical manner, once started, the capital-labour relation develops a logic of its own. 5, No. Again, while, if we carefully followed Rosa Luxemburg’s own reasoning about the schemes of reproduction, we should say that the weight of her argument is that a portion of the surplus value in Department II could not be realised under pure capitalism, Rosa Luxemburg herself sums up the argument as if she proved that no realisation of any portion of the surplus value could take place under pure capitalism. The surplus in Department I is 219. Capital accumulation is esence of capitalist system. Now Rosa Luxemburg argues against this idea that the transfer of surplus value from one department to another can help to bring about an exchange balance between the departments, saying that the “intended transfer of part of the capitalised surplus value from Department II to Department I is ruled out, first because the material form of this surplus value is obviously useless to Department I, and secondly because of the relations of exchange between the two departments which would in turn necessitate an equivalent transfer of the products of Department I into Department II”. For the gathering of objects of value, see, CS1 maint: multiple names: authors list (, "Rosa Luxemburg: Die Akkumulation des Kapitals – Ein Beitrag zur ökonomischen Erklärung des Imperialismus", Organizational Questions of the Russian Social Democracy, The Mass Strike, the Political Party and the Trade Unions, The Accumulation of Capital: An Anti-Critique, https://en.wikipedia.org/w/index.php?title=The_Accumulation_of_Capital&oldid=983250461, Creative Commons Attribution-ShareAlike License, The Historical Conditions of Accumulation, This page was last edited on 13 October 2020, at 04:34. Capital accumulation depends upon the ability of the capitalists to raise the surplus value. Joan Robinson's magnus opus The Accumulation of Capital was first published in 1956 and sought to extend Keynes's theory to the long-run issues of growth and capital accumulation. II      1670c +   338v + 225r +   94ac +   19av   = 2346 The proportionalities expressed in Marx’s schemas are conditions without which accumulation cannot take place; but in order that accumulation should actually take place there is need for a progressively enlarged demand for commodities, and the question that arises is: where does this demand come from? It seems that in a number of places in her book Rosa Luxemburg confuses the question: where does the demand come from? [3], The Accumulation of Capital was harshly criticized by both Marxist[4][5][6][7][8][9][10] and non-Marxist economists, on the grounds that her logic was circular in proclaiming the impossibility of realizing profits in a close-capitalist system, and that her "underconsumptionist" theory was too crude. In the case of simple reproduction c2 must be equal to v1 + s1. with the question: where does the money come from? Marx assumed that it can. Thus, for instance, Rosa Luxemburg devoted a good deal of attention to purely monetary problems of capital accumulation – whether, for instance, one should include the production of money commodity (gold, silver, etc) in Department I, as Marx did, or, as she herself proposed, should add a third department. Chapter 26: The Reproduction of Capital and Its Social Setting Chapter 27: The Struggle Against Natural Economy Chapter 28: The Introduction of Commodity Economy Chapter 29. the Struggle Against Peasant Economy Chapter 30. International Loans Chapter 31: Protective Tariffs and Accumulation Chapter 32: Militarism as a Province of Accumulation [94] Joan Robinson mixes praise of Rosa Luxemburg’s analysis with a criticism that Rosa Luxemburg ignored the rise in real wages that occurred throughout the capitalist world – a factor enlarging the market – and thus presented an incomplete picture. Workers treat their labor power as a commodity and sell it to factory owners. 2 Abstract The aim of this thesis is to explain how the main liberal classical economists perceived economic growth in developing countries, such as France or Great Britain, in their time. Even if the surplus of capital looking vainly for investment were very small, its cumulative influence could be tremendous, as it would create pressure in the capital markets, and strengthen the downward trend of the rate of profit. (Of course, in changed circumstances, in which Britain has ceased to hold a virtual monopoly in the industrial world, this factor may well cause the defeat of British industry in the world market, unemployment and cuts in wages.). It is the quantitative ratios which are relevant, since they are supposed to express strictly determinate relationships. 1.2.1 Capital accumulation Physical capital accumulation was central, as codified by the Harrod–Domar dynamic equilibrium condition, which in the simplest case is that the rate of growth equals the average saving rate divided by the incremental capital output ratio (ICOR). (plus surplus value transferred to Department I: 63ac + 12av) = 2100 The latter requires accumulation: an individual capitalist aims not only to guarantee his own luxury consumption, but also aims to accumulate more and more capital, as a necessary condition for maintaining his position as a capitalist in society. The drive to accumulate capital dramatically pits capitalist against capitalist, capitalist against … Rosa Luxemburg therefore shows clearly that, if any logical rules were laid down for the relations of accumulation in Department I, these rules seem to “have been gained at the cost of any kind of principle in constructing these relations for Department II”; or otherwise, if the same logical rules were applied to the relations of accumulation in Department II as those applied in Department I, a disequilibrium in the form of overproduction in Department II would appear and grow progressively. Contrary to Lenin’s view, the high profit from capital invested abroad may well be not a concomitant of capitalist prosperity and stabilisation in the imperialist country, but a factor of mass unemployment and depression. 88. The export of surplus capital can obviate these difficulties and can thus be of great importance to the whole of capitalist prosperity, and thus to reformism. [90]. 95. In this way Rosa Luxemburg came to write her major theoretical work, The Accumulation of Capital: A Contribution to an Economic Explanation of Imperialism (Berlin, 1913). In her argument Rosa Luxemburg made a number of side errors which were discovered subsequently by N. Bukharin in his Der Imperialismus und die Akkumulation des Kapitals, although he did not disprove her central thesis (even though he thought he did). So that if equilibrium were achieved under conditions of simple reproduction, the transition to enlarged reproduction would demand not only non-accumulation in Department II but the absurd position of disaccumulation. Hence the exchange between capitalist industry and the non-capitalist sphere, even if it is small in absolute terms, may have a tremendous effect on the elasticity, and hence stability, of capitalism. Summary Marx says that capital's starting point is with the circulation of commodities. One cannot but agree with Rosa Luxemburg when she says, “Accumulation is more than an internal relationship between the branches of capitalist economy”; as a result of the relationship between the capitalist and non-capitalist environment: ... the two great departments of production sometimes perform the accumulative process on their own, independently of each other, but even then at every step the movements overlap and intersect. The Accumulation of Capital is as relevant today as when it was first published. 80. Let us assume that the rate of accumulation in Department I is higher than in Department II, say, half the surplus value in Department I compared with only a third in Department II.                                                                   Total     = 13043, Fifth year End of second year: After all, neither Marx nor Rosa Luxemburg assumed that capitalism would continue to exist until all pre-capitalist formations had been overthrown. c2 + ac2 = 1580 By the way, the “third” buyer – not worker nor capitalist consumer – need not necessarily be the non-capitalist producer, but the non-producing state; hence the permanent war economy can, at least for a time, have a similar effect on capitalist prosperity as the non-capitalist economic sphere. As Joan Robinson’s views matured, the study of expansion through the accumulation of capital moved more and more to central stage, and she increasingly sought to group other questions around it. It will now be easy to show, assuming as a point of departure for enlarged reproduction that the constant capital in Department II was not 500 smaller than in simple reproduction, that there would have been disequilibrium between Department I and Department II: the demand of Department I for means of consumption would have been 500 smaller at the beginning of the process than the supply available in Department II of the means of consumption looking for exchange: there would have been overproduction of consumer goods to the value of 500 at the start of the process of enlarged reproduction. End of third year: [3] Her conclusion that the limits of the capitalist system drive it to imperialism and war led Luxemburg to a lifetime of campaigning against militarism and colonialism. [88]. However, in time this factor turns into its opposite: capital once exported puts a brake on the export of goods from the “mother” country after the colonial countries start to pay profit or interest on it. Her conclusion that the limits of the capitalist system drive it to imperialism and war led Luxemburg to a lifetime of campaigning against militarism and colonialism. Editor’s note: in these examples Cliff ignores decimals when assigning numbers to individual portions of value, so the totals are correct even if the portions do not appear to add up. (plus surplus value transferred to Department I: 67ac + 14av) = 2278 R. Luxemburg, Accumulation, pp.340-341. The Accumulation of Capital, probably the best book produced by a Marxist and socialist thinker since Karl Marx’s opus magnum, emerged from her sudden revelation.            II       1500c     +       750v     +       750s     = 3000 (Werner Stark 1951:11) Freedom only for the supporters of the government, only for the members of one party--however numerous they may be--is no freedom at all. These equations, which are algebraic formulations of Marx’s analysis in Volume II of Capital were formulated by N Bukharin in his Der Imperialismus und die Akkumulation Des Kapitals (Berlin, 1925) and we find them very useful for summing up Marx’s many arithmetical examples. The capital invested in Department I can grow comparatively to Department II in two ways: We shall give a diagrammatic example for each of these two processes. Hence the existence of great British capital investments abroad does not at all exclude overproduction and mass unemployment in Britain. 83. At the same time, we shall assume that half the surplus value produced in Department II is being transferred to Department I. Of course this is so. [81] Rosa Luxemburg showed that a comparison of the formula for simple reproduction with that for enlarged reproduction produced a paradox. It was however praised by prominent Marxist theorist György Lukács, who sa… From the above diagrams it is clear that if we assume that the rate of exploitation and the organic composition of capital remain unchanged, while the rate of accumulation in Department I is higher than in Department II, then overproduction appears in Department I. production on an increasing scale, take place under the conditions of abstract, pure capitalism, where non-capitalist countries do not exist, or where any classes besides capitalists and workers do not exist? It is easy to prove that if the rate of exploitation rises, so that the ratio of surplus value to wage (s:v) is rising, the relative demand for consumer goods as against producer goods will decline, and hence either the rate of accumulation in Department II would be even more erratic than in Marx’s diagrams, or increasing surpluses would appear in Department II. Capitalist prosperity depends upon the increasing output and absorption of capital goods. I       6000c + 1200v + 600r + 500ac + 100av   = 8400 He must be able to sell the product of his factory, and with the money obtained buy the means of production (machines, raw materials, etc) that he needs for his particular industry; also he must get the labour power he needs from the market, as well as the means of consumption required to feed, clothe, and provide other necessities for the labourers.            II       2342c     +     1172v     +     1172s     =   4686 Between these two departments a certain proportionality must obtain for simple reproduction to take place.            II       1760c     +       880v     +       880s     =   3520 The product produced by the workers with the help of the means of production must again find a market, and so on. The Accumulation of Capital was harshly criticized by both Marxist and non-Marxist economists, on the grounds that her logic was circular in proclaiming the impossibility of realizing profits in a close-capitalist system, and that her "underconsumptionist" theory was too crude. If these were taken into account, Rosa Luxemburg’s contention, that under pure capitalism economic disequilibrium would be an absolute, unavoidable, permanent phenomenon, would be greatly strengthened. K. Marx, Capital, vol.II, pp.598-600. When about to conclude the basic draft she met with an unexpected difficulty: I could not succeed in depicting the total process of capitalist production in all its practical relations and with its objective historical limitations with sufficient clarity. Therefore, according to Luxemburg, capitalists sought to realize profits through offloading surplus commodities onto non-capitalist economies, hence the phenomenon of imperialism as capitalist states sought to dominate weaker economies. Fifth          320                             745, Needless to say, the absolute figures of the diagram are arbitrary in every equation, but that does not detract from their scientific value. 1, pp. Using much more complicated schemes of reproduction than Marx or Rosa Luxemburg, he tried to prove that “the accumulation of capital adapts itself to the increase of population ... the periodic cycle of prosperity, crisis and slump is an empirical expression of the fact that the capitalist apparatus of production automatically overcomes too large or too small accumulation by adapting anew the accumulation of capital to the increase of population” (Die Neue Zeit, 1913, p.871). As Professor Joan Robinson states in her introductory essay to the English edition of The Accumulation of Capital: “... few would deny that the extension of capitalism into new territories was the mainspring of what an academic economist has called the ‘vast secular boom’ of the last 200 years, and many academic economists account for the uneasy condition of capitalism in the 20th century largely by the ‘closing of the frontier’ all over the world”. i) by reducing the wage rates ii) … W.S. while v1 + r1 + av1 = 1583. The surplus in Department I is now 93. The Journal of Development Studies: Vol. c2 + ac2 = 1628 Now the first argument falls through owing to the fact that exchange between enterprises in the same department can serve to realise the surplus value: when an owner of a hat factory sells his hats to workers who produce biscuits, he realises the surplus value produced by his workers. 1900, 100:480; 1913, 100:270; 1925, 100:240. However, there is one important factor which cancels out all the above factors and is immanently connected with them: the rise in the relative weight of Department I as compared with Department II. The The reader should consult the source. THE ACCUMULATION OF CAPITAL PAUL M. SWEEZY I BOOK WAS an outgrowth of Rosa Luxemburg's teaching activity at the school of the German Social Democratic Party in the years after 1906. Overproduction is weakened, unemployment decreases, wages rise analysis, she abstracted her from... ) the export of capital book of Marx ’ s capital to the... The progress of capitalist economy, Socialist Review, May 1957. ) becomes a self-reinforcing tend… accumulation... S1 ) workers with the circulation of commodities is as relevant today as when it first. Tendency for overproduction is weakened, unemployment decreases, wages rise phase in the case of simple reproduction that... Cycles in order to study the process of reproduction in capitalist economy, Review... 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