The Accumulation of Capital

by Rosa Luxemburg

So the capitalist hoarding will not do as a way out of our difficulties. This conclusion should not come as a surprise, since the very exposition of the difficulty was misleading. It is not the source of money that constitutes the problem of accumulation, but the source of the demand for the additional goods produced by the capitalised surplus value; not a technical hitch in the circulation of money but an economic problem pertaining to the reproduction of the total social capital. Quite apart from the question which had claimed Marx’s entire attention so far, namely where B, B´, etc., (I), get the money to buy additional means of production from A, A´, etc., (I), successful accumulation will inevitably have to face a far more serious problem: to whom can B, B´, etc., now sell their increased surplus-product? Marx finally makes them sell their products to one another:

‘It may be that the different B, B´, B´´, etc., (I), whose virtual new capital enters upon its active function, are compelled to buy from one another their product (portions of their surplus-product) or to sell it to one another. In that case, the money advanced by them for the circulation of their surplus-product flows back under normal conditions to the different B’s in the same proportion in which they advanced it for the circulation of their respective commodities.’[122]

‘In that case’—the problem simply has not been solved, for after all B, B´, and B´´ have not cut down on their consumption and expanded their production just so as to buy each other’s increased product, i.e. means of production. Even that, incidentally, would only be possible to a very limited extent. Marx assumes a certain division of labour in Department I itself: the A’s turn out means of production for making producer goods and the B’s means of production for making consumer goods, which is as much as to say that, though the product of A, A´, etc., need never leave Department I, the product of B, B´, etc., is by its natural form predestined from the first for Department II. Already the accumulation of B, B´, etc., it follows, must lead us to circulation between Departments I and II. Thus Marx’s analysis itself confirms that, if Department I is to accumulate, the department for means of consumption must, in the last resort, increase its immediate or mediate demand for means of production, and so it is to Department II and its capitalists that we must look for buyers for the additional product turned out by Department I.

Sure enough, Marx’s second attack on the problem takes up from there: the demand of capitalists in Department II for additional means of production. Such a demand inevitably implies that the constant capital IIc is in process of expanding. This is where the difficulty becomes truly formidable:

‘Take it now that A(I) converts his surplus-product into gold by selling it to a capitalist B in Department II. This can be done only by the sale of means of production on the part of A(I) to B(II) without a subsequent purchase of articles of consumption, in other words, only by a one-sided sale on A’s part. Now we have seen that IIc cannot be converted into the natural form of productive constant capital unless not only Iv but also at least a portion of Is, is exchanged for a portion of IIc, which IIc exists in the form of articles of consumption. But now that A has converted his Is into gold by making this exchange impossible and withdrawing the money obtained from IIc out of circulation, instead of spending it for articles of consumption of IIc, there is indeed on the part of A(I) a formation of additional virtual money-capital, but on the other hand there is a corresponding portion of the value of the constant capital B(II) held in the form of commodity-capital, unable to transform itself into natural productive constant capital. In other words, a portion of the commodities of B(II), and at that a portion which must be sold if he wishes to reconvert his entire constant capital into its productive form, has become unsaleable. To that extent, there is an over-production which clogs reproduction, even on the same scale.’[123]

Department I’s efforts to accumulate by selling its additional product to Department II have met with an unlooked-for result: a deficit for the capitalists of Department II serious enough to prevent even simple reproduction on the old scale.

Having got to this crucial point, Marx seeks to lay bare the root of the problem by a careful and detailed exposition:

‘Let us now take a closer look at the accumulation in Department II. The first difficulty with reference to IIc, that is to say the conversion of an element of the commodity-capital of II into the natural form of constant capital of II, concerns simple reproduction. Let us take the formula previously used. (1,000v + 1,000s) I are exchanged for 2,000 IIc. Now, if one half of the surplus-product of I, or 500s, is reincorporated in Department I as constant capital, then this portion, being detained in Department I, cannot take the place of any portion of IIc. Instead of being converted into articles of consumption, it is made to serve as an additional means of production in Department I itself.... It cannot perform this function simultaneously in I and II. The capitalist cannot spend the value of his surplus-product for articles of consumption, and at the same time consume the surplus-product itself productively, by incorporating it in his productive capital. Instead of 2,000 I(v + s), only 1,500 are exchangeable for 2,000 IIc, namely 1,000v + 500s of I. But 500 Ic cannot, be reconverted from the form of commodities into productive constant capital of II.’[124]

By now, hardly anybody could fail to be convinced that the difficulty is real, but we have not taken a single step nearer a solution. This, incidentally, is where Marx has to do penance for his ill-advised continual recourse in an earlier over-simplification, to a fictitious moment of transition—in order in elucidate the problem of accumulation—from simple reproduction to enlarged reproduction, making his major premise accumulation at its very inception, in its feeble infancy instead its vigorous stride. There was something to be said, at least, for this fiction, so long as it was just a question of accumulation within Department I. The capitalists of Department I, who denied themselves part of what they had been wont to consume, at once had a new hoard of money in hand with which they could start capitalisation. But when it comes to Department II, the same fiction only piles on the difficulties. The ‘abstinence’ of the capitalists in Department I here finds expression in a painful loss of consumers for whose expected demand production had largely been calculated. Since the capitalists of Department II, on whom we tried the experiment whether they might not possibly be the long-sought buyers of the additional product of accumulation in Department I, are themselves in sore straits—not knowing as yet where to go with their own unsold product—they are even less likely to be of any help to us. There is no shutting our eyes to the fact that an attempt to make one group of capitalists accumulate at the expense of the other is bound to get involved in glaring inconsistencies.

Yet another attempt to get round the difficulty is subsequently mentioned by Marx who at once rejects it as a subterfuge. The unmarketable surplus value in Department II that is the result of accumulation in Department I might be considered a reserve of commodities the society is going to need in the course of the following year. This interpretation Marx counters with his usual thoroughness: