The Accumulation of Capital

by Rosa Luxemburg

And the answer: ‘The conditions for the accumulation of capital are precisely those which rule its original production and reproduction in general: these conditions being that one part of the money buys labour and the other commodities (raw materials, machinery, etc.) ... Accumulation of new capital can only proceed therefore under the same conditions under which already existing capital is reproduced.’[346]

In real life the actual conditions for the accumulation of the aggregate capital are quite different from those prevailing for individual capitals and for simple reproduction. The problem amounts to this: If an increasing part of the surplus value is not consumed by the capitalists but employed in the expansion of production, what, then, are the forms of social reproduction? What is left of the social product after deductions for the replacement of the constant capital cannot, ex hypothesi, be absorbed by the consumption of the workers and capitalists—this being the main aspect of the problem—nor can the workers and capitalists themselves realise the aggregate product. They can always only realise the variable capital, that part of the constant capital which will be used up, and the part of the surplus value which will be consumed, but in this way they merely ensure that production can be renewed on its previous scale. The workers and capitalists themselves cannot possibly realise that part of the surplus value which is to be capitalised. Therefore, the realisation of the surplus value for the purposes of accumulation is an impossible task for a society which consists solely of workers and capitalists. Strangely enough, all theorists who analysed the problem of accumulation, from Ricardo and Sismondi to Marx, started with the very assumption which makes their problem insoluble. A sure instinct that realisation of the surplus value requires ‘third persons’, that is to say consumers other than the immediate agents of capitalist production (i.e. workers and capitalists) led to all kinds of subterfuges: ‘unproductive consumption’ as presented by Malthus in the person of the feudal landowner, by Vorontsov in militarism, by Struve in the ‘liberal professions’ and other hangers-on of the capitalist class; or else foreign trade is brought into play which proved a useful safety valve to all those who regarded accumulation with scepticism, from Sismondi to Nicolayon. Because of these insoluble difficulties, others like v. Kirchmann and Rodbertus tried to do without accumulation altogether, or, like Sismondi and his Russian ‘populist’ followers, stressed the need for at least putting the dampers on accumulation as much as possible.

The salient feature of the problem of accumulation, and the vulnerable point of earlier attempts to solve it, has only been shown up by Marx’s more profound analysis, his precise diagrammatic demonstration of the total reproductive process, and especially his inspired exposition of the problem of simple reproduction. Yet he could not supply immediately a finished solution either, partly because he broke off his analysis almost as soon as he had begun it, and partly because he was then preoccupied, as we have shown, with denouncing the analysis of Adam Smith and thus rather lost sight of the main problem. In fact, he made the solution even more difficult by assuming the capitalist mode of production to prevail universally. Nevertheless, a solution of the problem of accumulation, in harmony both with other parts of Marx’s doctrine and with the historical experience and daily practice of capitalism, is implied in Marx’s complete analysis of simple reproduction and his characterisation of the capitalist process as a whole which shows up its immanent contradictions and their development (in Capital, vol. iii). In the light of this, the deficiencies of the diagram can be corrected. All the relations being, as it were, incomplete, a closer study of the diagram of enlarged reproduction will reveal that it points to some sort of organisation more advanced than purely capitalist production and accumulation.

Up to now we have only considered one aspect of enlarged reproduction, the problem of realising the surplus value, whose difficulties hitherto had claimed the sceptics’ whole attention. Realisation of the surplus value is doubtless a vital question of capitalist accumulation. It requires as its prime condition—ignoring, for simplicity’s sake, the capitalists’ fund of consumption altogether—that there should be strata of buyers outside capitalist society. Buyers, it should be noted, not consumers, since the material form of the surplus value is quite irrelevant to its realisation. The decisive fact is that the surplus value cannot be realised by sale either to workers or to capitalists, but only if it is sold to such social organisations or strata whose own mode of production is not capitalistic. Here we can conceive of two different cases:

(1) Capitalist production supplies consumer goods over and above its own requirements, the demand of its workers and capitalists, which are bought by non-capitalist strata and countries. The English cotton industry, for instance, during the first two-thirds of the nineteenth century, and to some extent even now, has been supplying cotton textiles to the peasants and petty-bourgeois townspeople of the European continent, and to the peasants of India, America, Africa and so on. The enormous expansion of the English cotton industry was thus founded on consumption by non-capitalist strata and countries.[347] In England herself, this flourishing cotton industry called forth large-scale development in the production of industrial machinery (bobbins and weaving-looms), and further in the metal and coal industries and so on. In this instance, Department II realised its products to an increasing extent by sale to non-capitalist social strata, and by its own accumulation it created on its part an increasing demand for the home produce of Department I, thus helping the latter to realise its surplus value and to increase its own accumulation.

(2) Conversely, capitalist production supplies means of production in excess of its own demand and finds buyers in non-capitalist countries. English industry, for instance, in the first half of the nineteenth century supplied materials for the construction of railroads in the American and Australian states. (The building of railways cannot in itself be taken as evidence for the domination of capitalist production in a country. As a matter of fact, the railways in this case provided only one of the first conditions for the inauguration of capitalist production.) Another example would be the German chemical industry which supplies means of production such as dyes in great quantities to Asiatic, African and other countries whose own production is not capitalistic.[348] Here Department I realises its products in extra-capitalist circles. The resulting progressive expansion of Department I gives rise to a corresponding expansion of Department II in the same (capitalistically producing) country in order to supply the means of subsistence for the growing army of workers in Department I.

Each of these cases differs from Marx’s diagram. In one case, the product of Department II exceeds the needs of both departments, measured by the variable capital and the consumed part of the surplus value. In the second case, the product of Department I exceeds the volume of constant capital in both departments, enlarged though it is for the purpose of expanding production. In both cases, the surplus value does not come into being in that natural form which would make its capitalisation in either department possible and necessary. These two prototypes continually overlap in real life, supplement each other and merge.

In this contest, one point seems still obscure. The surplus of consumer goods, say cotton fabrics, which is sold to non-capitalist countries, does not exclusively represent surplus value, but, as a capitalist commodity, it embodies also constant and variable capital. It seems quite arbitrary to assume that just those commodities which are sold outside the capitalist strata of society should represent nothing but surplus value. On the other hand, Department I clearly can in this case not only realise its surplus value but also accumulate, and that without requiring another market for its product than the two departments of capitalist production. Yet both these objections are only apparent. All we need remember is that each component of the aggregate product represents a proportion of the total value, that under conditions of capitalist production not only the aggregate product but every single commodity contains surplus value; which consideration does not prevent the individual capitalist, however, from computing that the sale of his specific commodities must first reimburse him for his outlay on constant capital and secondly replace his variable capital (or, rather loosely, but in accordance with actual practice: it must first replace his fixed, and then his circulating capital); what then remains will go down as profit. Similarly, we can divide the aggregate social product into three proportionate parts which, in terms of value, correspond to (1) the constant capital that has been used up in society, (2) the variable capital, and (3) the extracted surplus value. In the case of simple reproduction these proportions are also reflected in the material shape of the aggregate product: the constant capital materialises as means of production, the variable capital as means of subsistence for the workers, and the surplus value as means of subsistence for the capitalist. Yet as we know, the concept of simple reproduction with consumption of the entire surplus value by the capitalists is a mere fiction. As for enlarged reproduction or accumulation, in Marx’s diagram the composition of the social product in terms of value is also strictly in proportion to its material form: the surplus value, or rather that part of it which is earmarked for capitalisation, has from the very beginning the form of material means of production and means of subsistence for the workers in a ratio appropriate to the expansion of production on a given technical basis. As we have seen, this conception, which is based upon the self-sufficiency and isolation of capitalist production, falls down as soon as we consider the realisation of the surplus value. If we assume, however, that the surplus value is realised outside the sphere of capitalist production, then its material form is independent of the requirements of capitalist production itself. Its material form conforms to the requirements of those non-capitalist circles who help to realise it, that is to say, capitalist surplus value can take the form of consumer goods, e.g. cotton fabrics, or of means of production, e.g. materials for railway construction, as the case may be. If one department realises its surplus value by exporting its products, and with the ensuing expansion of production helps the other department to realise its surplus value on the home market, then the fact still remains that the social surplus value must yet be taken as realised outside the two departments, either mediately or immediately. Similar considerations enable the individual capitalist to realise his surplus value, even if the whole of his commodities can only replace either the variable or the constant capital of another capitalist.

Nor is the realisation of the surplus value the only vital aspect of reproduction. Given that Department I has disposed of its surplus value outside, thereby starting the process of accumulation, and further, that it can expect a new increase in the demand in non-capitalist circles, these two conditions add up to only half of what is required for accumulation. There is many a slip ’twixt the cup and the lip. The second requirement of accumulation is access to material elements necessary for expanding reproduction. Seeing that we have just turned the surplus product of Department I into money by getting rid of the surplus means of production to non-capitalist circles, from where are these material elements then to come? The transaction which is the portal for realising the surplus value is also, as it were, a backdoor out of which flies all possibility of converting this realised surplus value into productive capital—one leads to the nether regions and the other to the deep sea. Let us take a closer look.

Here we use c in both Departments I and II as if it were the entire constant capital in production. Yet this we know is wrong. Only for the sake of simplifying the diagram have we disregarded that the c which figures in Departments I and II of the diagram is only part of the aggregate constant capital of society, that is to say that part which, circulating during one year, is used up and embodied in the products of one period of production. Yet it would be perfectly absurd if capitalist production—or any other—would use up its entire constant capital and create it anew in every period of production. On the contrary, we assume that the whole mass of means of production, for the periodical total renewal of which the diagram provides in annual instalments—renewal of the used-up part—lies at the back of production as presented in the diagram. With progressing labour productivity and an expanding volume of production, this mass increases not only absolutely but also relatively to the part which is consumed in production in every case, together with a corresponding increase in the efficiency of the constant capital. It is the more intensive exploitation of this part of the constant capital, irrespective of its increase in value, which is of paramount importance for the expansion of production.