International Luxemburgist Forum - Foro Luxemburguista Internacional - Forum Luxemburgiste Intl

Forum for those in general agreement with the ideas of Rosa Luxemburg.
Foro para aquellos que tienen un acuerdo general con las ideas de Rosa Luxemburgo.
Forum pour ceux qui ont un accord général avec les idées de Rosa Luxembourg.

Translations

Log in

I forgot my password

Navigation

Latest topics

» Critique Sociale
Mon Sep 05, 2016 11:54 am by Atreides

» QUÉ HACER ANTE UN CUERPO SOCIAL EN DESCOMPOSICIÓN
Thu Sep 01, 2016 11:35 am by francisc

» EL BREXIT EL AUTO GOLPE Y EL YIHADISMO
Mon Aug 01, 2016 11:25 am by francisc

» ¿PUCHERAZO?
Tue Jun 28, 2016 9:45 am by francisc

» 18 de Junio: MANIFESTACIÓN EN DEFENSA DE LO PÚBLICO
Mon Jun 06, 2016 11:42 am by luxemburguista

» Contre la "loi travail", passons à la vitesse supérieure !
Wed Mar 30, 2016 6:03 am by Atreides

» Reunion Publique du CCI
Tue Jan 05, 2016 3:00 pm by rubion

» EL CONTEXTO PRESENTE Y FUTURO DE CATALUNYA DEBE DE BASARSE EN LOS CIUDADANOS Y NO EN PACTOS
Tue Jan 05, 2016 10:05 am by francisc

» LA ENCRUCIJADA SIRIA
Sat Jan 02, 2016 11:25 am by francisc

Who is online?

In total there are 3 users online :: 0 Registered, 0 Hidden and 3 Guests :: 1 Bot

None


[ View the whole list ]


Most users ever online was 368 on Sun Feb 19, 2012 3:15 am

Statistics

Our users have posted a total of 4399 messages in 1407 subjects

We have 189 registered users

The newest registered user is sebastianIII


    Brief summary of Luxemburg theory of accumulation

    Share

    EricL

    Number of posts : 53
    Registration date : 2008-04-19

    Brief summary of Luxemburg theory of accumulation

    Post  EricL on Mon Apr 21, 2008 8:22 pm

    HOW CAPITALISM WORKS
    As everyone knows, the whole point of a capitalist economy is to make a profit -- to sell things for more than their total costs of production. And profit alone is not enough. For capitalism to function, profit must become new capital, be re-invested and generate still more profit, creating still more capital. All this seems pretty simple, if we are looking at a single capitalist, or a single corporation.

    But if we look at the entire world capitalist economy, things look different. How can all capitalists, capitals as a whole, make a growing profit? The world economy is complicated, so let's first simplify it as much as possible. Imagine an island, with two capitalists, each having, say two workers. The first capitalist, call him General Mills, is an agro-businessman and employs his workers to grow wheat. The second, General Harvester, is a manufacturer and employs his workers to produce plows.

    General Mills pays $200 a year in wages and has to buy $200 worth of plows each year, so to make a profit he prices his crop at $700 with the $300 above expenses going to his own consumption plus profit. General Harvester also pays $200 in wages, doesn't need much in the way of equipment, so he sells his years' production of plows for $500, with again a $300 profit. The workers spend their whole $400 wages on wheat.

    But, at the end of the year, a crisis develops. General Harvester finds that he's only sold to General Mills $200 worth of plows -- the other three fifths of his production is unsold, and he has no profit at all -- not even enough to live on. General Mills is in the same fix. He has sold $400 of wheat, made no profit at all, and has $300 worth still on hand. He at least can eat some of it, but he can't make a profit either.

    Multiply this little picture a hundred million times over, with many capitalists and millions of workers and, in a world of only capitalists and workers, profit is simply impossible. Capitalists invest their capital in the means of production -- the factories that make goods, the railroads that carry them, in raw materials, and in the means of consumption -- the goods needed to support a work force --housing, clothing, food, and so on. These means of consumption are not bought directly but are instead paid out in the form of wages to workers, who then buy these means of consumption. In the process of production, when the workers work in the factories and in the essential services like energy and transportation that support of production, what gets produced is, first of all, those goods necessary to replace those used up in the production process. This is first, the means of consumption that have been consumed; second, the raw materials -- iron ore, coal, oil ; and third; the means of production that have become worn out and must be replaced -- worn out machinery, dilapidated plants. But, in a functioning "normal" capitalist economy, something more had been produced -- a surplus of goods, both means of production and means of consumption that can go into expanding production, building new plants, hiring more workers. Once the entire product has been sold, the cost of the product is spent on replacing the means of consumption and production that have been used up, and the difference -- the money equivalent of the surplus-- is profit. This profit, together with the old capitals is reconverted into goods to start another, expanded cycle of production.

    The problem is: how can this surplus be sold? Workers can buy the means of consumption , the capitalists themselves buy the replacement raw materials and means of production, but who buys the surplus? Workers have no income except the wages they get from capitals and how can capitalists make a profit from the money they themselves lay out? Nor can the capitalists make a profit by selling to themselves. Sure, one capitalist can gain at the expense of another's losses but there can be no overall net profit. Yet in the real world, in general there is a net profit for all capitals. Who, then, buys the surplus -- where does the profit come from?

    The solution, as the socialist economist and revolutionary Rosa Luxembourg first pointed out in 1911, elaborating on earlier ideas of Karl Marx, is that capitalism has never existed in a world of only employers and wage earners. At all times, including today, the largest portion of the world's population is neither -- they are peasants, petty agricultural producers who are not employees, but neither are they capitalists because they don't accumulate capital -- they sell crops just to support themselves and their families. It is this external market that is crucial for the very survival of capitalism.

    Taking capitalists as a whole, capital can only cover its costs by selling to itself (capitalists selling to capitalists) or to workers. Ford can sell cars at a profit to GM workers and GM can sell cars at a profit to Ford workers. But collectively, capitalists as a whole can only make a profit to the extent they sell to non-capitalist producers --farmers and peasants, in whatever country they are and other non-capitalist producers, such as state-owned factories. This is, as we'll see, the key to understand the development of capitalism and to the present crises.

    Why is selling to non-capitalist producers different? Because they can pay not just with money they receive from capitalists, when they sell their agricultural products, but they have independent sources of wealth -- they possess means of production, their land (or today, state-owned enterprises have their factories). Initially, as capital first penetrated non capitalist areas, it absorbed the previously accumulated wealth of other societies -- of feudal Europe, of India, of China, vast countries that had for centuries settled affairs in gold and money. Second, when this source is exhausted, capital can loan money to these peasants and their governments -- with the collateral being their land and the mineral wealth beneath it. Of course capitalists can lend to workers. But such loans are limited because workers possess and can use as collateral only that which they've bought with capitalist wages -- houses, cars and so on. Nothing can be produced with them, they can just be resold. With non-capitalist layers, however, the land itself is the collateral, and as peasant families, or entire nations default on such loans, capital forecloses, seizing in the process vast real wealth, vast means of producing new wealth.

    In our imaginary island example, if we had a population of ten or twenty natives originally living on the island, they first buy surplus plows and grain with their own, anciently accumulated, gold and silver, then they borrow money from General Mills and General Harvester, putting up their land as collateral. When they cannot pay back the loans, their land is lost and they go to work for the capitalists. The capitalists have realized their profit -- that is, sold their surplus -- and have, in return, the islanders' gold and silver and their land. Mills and Harvester then look for the next island.

    What is crucial to their process is not just an external, non capitalist market, but an expanding non-capitalist market. Capital only exists to the extent that it grows -- makes a profit. Thus the capitalists have appropriated for themselves, after paying out wages and other costs of production, part of the product that the workers produced --this is the essence of capitalist exploitation of labor. If that fraction of goods is, say 10% of the costs, the initially invested capital, then the rate of profit is 10%. But this means, in turn, that in the next cycle of production, capital is 10% more, production is 10% larger and profit is 10% larger.

    So, since the scale of profit realized is limited by sales to the external market, that market must grow and grow at a rate determined by the rate of profit. In rough terms an 10% annual rate of profit means a growth in capital, profit and everything else by 10% a year and thus an increase in the external market by 10% a year.

    This necessity for the rapid expansion of the external market has driven the history of capitalism. For expanding the external market means seeking ever new populations of non-capitalist producers. This is because it is not possible to increase the value sold to any given set of peasants without limit. Initial reserves of money, accumulated over long periods of time in non capitalist economies, are soon exhausted. The peasant can raise new income by selling his own surplus product -- food or other agricultural raw materials either to the capitalists, or to other non-capitalist layers -- local townspeople for example. But the peasant's money income is also strictly limited. Even if he is able, with the help of new tools and technologies, to increase productivity and thus the volume of goods he sells, a process that takes time, he will not similarly increase the money value of his product. For as peasants produce more goods, the price of the goods declines. Thus, for example, the volume of grain produced world wide increased by 2.4 times over the past 40 years. Yet the total market value of the grain crop, in constant dollars, has actually fallen by 11%.

    Under capitalism, over the long run, the prices of given types of goods are roughly proportional to the labor time (of average productivity) expended in making them. So over the long run, the total value produced by a given population of peasants is limited by the labor time available to them.

    The only way to increase this value is for the peasants to increase their productivity over the world average, which is possible for individual groups of peasants, but not for peasants as a whole, since they represent the bulk of the world population.

    Thus increasing the external market means increasing the number of peasants in the external market, and increasing it far more rapidly than the slow natural growth of population. Capitalism, in its insatiable drive for markets, forcibly opens to trade nation after nation, through war, revolutions and imperialism. The need for these new markets provides capitalism with its dynamic. And capitalism accelerates this process because it is continually eating away at these new markets. As peasants become progressively indebted, as their land is foreclosed, they are proletarianized, converted to part of the wage work force. So capitalism must be continuously replacing these peasants who are absorbed into the wage earning population, as well as finding new markets for the expansion of capital and production.

    But at the same time, this very process of ransacking the earth for new markets provides capitalism with its other needs. By generating an ever growing supply of impoverished peasants forced from the land, capitalism forms a reserve army of labor, which applies downward pressure on all wages, at the same time allowing the work force, in boom times, to grow far faster than natural reproduction. This process is still at work today, as for example, Chinese peasants are driven off the land into factories to make goods for the world market at a fraction of the wages earned in the advanced countries, but in direct competition with their products. Without such a reserve army of unemployed, desperate for work, shortages of labor would have developed as capitalism expanded, forcing wages upwards and profits down.

    Second, and equally important, the progressive incorporation of more and more of the earth into the capitalism market provides capital with the raw materials needed for production. Not only was the linen of English textile mills sold to Indian peasants, the cotton for it came from non-capitalist production: the slave plantations of the American South, and later the feudal plantations of Egypt. As more and more land is encumbered with capitalist debt, and subsequently foreclosed, the vast mineral wealth underneath falls into the hands of world capital.

    Thus the process of expansion of the external market, the progressive incorporation of non-capitalist layers into that market, is essential for capitalism. And it is at the same time, the Achilles heel that dooms capitalism. For it is impossible to continuously expand the external market. At one point, a point reached some time ago, the entire world was incorporated into the capitalist market and it could no longer expand. At that point capitalism itself could no longer expand and entered a prolonged crisis.

    ricardo fuego

    Number of posts : 44
    Registration date : 2008-05-17

    Re: Brief summary of Luxemburg theory of accumulation

    Post  ricardo fuego on Mon May 19, 2008 11:13 am

    I have a question. Is this text an extract of a RL work or is it a summary made by someone else?

    EricL

    Number of posts : 53
    Registration date : 2008-04-19

    summary by EricL

    Post  EricL on Mon May 19, 2008 7:34 pm

    This is a summary of Luxemburg's theory written by me, Eric Lerner.

    ricardo fuego

    Number of posts : 44
    Registration date : 2008-05-17

    Re: Brief summary of Luxemburg theory of accumulation

    Post  ricardo fuego on Mon May 19, 2008 9:36 pm

    Thanks for your answer. Which text(s) did you read to make that summary? Did you read The Accumulation of Capital?

    luxemburguista
    Admin

    Number of posts : 1107
    Group : Alternativa Roja y Verde - Los Alternativos
    Website : http://altermundialistas.wordpress.com/
    Registration date : 2008-04-16

    Re: Brief summary of Luxemburg theory of accumulation

    Post  luxemburguista on Wed May 28, 2008 9:27 am

    I post here the link to an interesting article of Loren Goldner about this question. The title is "Fictitious Capital for Beginners: Imperialism, “Anti-Imperialism”, and the Continuing Relevance of Rosa Luxemburg"
    The link is: http://home.earthlink.net/~lrgoldner/imperialism.html
    SALUD


    _________________
    ¡SOCIALISMO O BARBARIE!
    Alternativa Roja y Verde - Los Alternativos
    Democracia Comunista Internacional

    EricL

    Number of posts : 53
    Registration date : 2008-04-19

    Luxemburg texts

    Post  EricL on Thu May 29, 2008 9:04 pm

    The best Lux text on this is actually Accumulation of Capital: an Anti-Critique. This is shorter then the original book, Accumulation of Capital, but is not as widely available. Both are good.

    luxemburguista
    Admin

    Number of posts : 1107
    Group : Alternativa Roja y Verde - Los Alternativos
    Website : http://altermundialistas.wordpress.com/
    Registration date : 2008-04-16

    Re: Brief summary of Luxemburg theory of accumulation

    Post  luxemburguista on Fri May 30, 2008 4:46 am

    Yes, Eric. I have read these days both (one in english and one in french version, although my linguistic knowledges are limited). I am preparing a reply in spanish (but my backache prevent to me to write in the PC
    SALUD


    _________________
    ¡SOCIALISMO O BARBARIE!
    Alternativa Roja y Verde - Los Alternativos
    Democracia Comunista Internacional

    ElIndio

    Number of posts : 341
    Group : Réseau Luxemburgiste International/International Luxemburgit Network
    Website : luxemburgism.lautre.net
    Registration date : 2008-04-16

    Re: Brief summary of Luxemburg theory of accumulation

    Post  ElIndio on Sat May 31, 2008 6:07 pm

    Ricardo, Eric's book (or its draft) is available here : http://www.workersdemocracy.org/book.html. It is a very good book.

    As for RL's books on Accumulation I didn't find them in Spanish. So here are the English links : The Accumulation of capital and The Accumulation of capital : An anti-critique or What the Epigones Have Made of Marx's Theory.

    There is a discussion on Lux's economical theory in Spanish : http://luxemburgism.forumr.net/economia-f8/que-es-la-economia-t28.htm

    I do not understand completely what he means but it would be nice to get in English the discussion also

    mondialiste

    Number of posts : 120
    Registration date : 2008-06-01

    Re: Brief summary of Luxemburg theory of accumulation

    Post  mondialiste on Sun Jun 08, 2008 3:29 pm

    Imagine an island, with two capitalists, each having, say two workers. The first capitalist, call him General Mills, is an agro-businessman and employs his workers to grow wheat. The second, General Harvester, is a manufacturer and employs his workers to produce plows.

    General Mills pays $200 a year in wages and has to buy $200 worth of plows each year, so to make a profit he prices his crop at $700 with the $300 above expenses going to his own consumption plus profit. General Harvester also pays $200 in wages, doesn't need much in the way of equipment, so he sells his years' production of plows for $500, with again a $300 profit. The workers spend their whole $400 wages on wheat.

    But, at the end of the year, a crisis develops. General Harvester finds that he's only sold to General Mills $200 worth of plows -- the other three fifths of his production is unsold, and he has no profit at all -- not even enough to live on. General Mills is in the same fix. He has sold $400 of wheat, made no profit at all, and has $300 worth still on hand. He at least can eat some of it, but he can't make a profit either.
    I've been thinking about this passage for a day or so because there seems to be something odd about it. I think I've found what it is. I don't think that General Mills has a problem. With sales worth $400 he has recovered enough money to begin production again the following year ($200 to buy plows, $200 to hire workers). True, he is left with $300 worth of unsold wheat but this is not really a problem because, supposing he had sold this, what would he have spent the money on? Only buying wheat [ie consumer goods to consume himself].
    The problem is General Harvester. Why would he really be so stupid as to produce $500 worth of plows when he could have made a more accurate estimate? Certainly, his overproduction of plows would provoke an economic crisis and a hard time for himself and his workers, but not a permanent one, at least not as far as I can see. Eventually, something like this would emerge: General Harvester produces only $200 worth of plows (which he should have done at the start), spending $80 on wages and expecting a profit of $120. General Mills produces as before, but is able still able to sell $400 worth of wheat and consume the surplus of $300 himself.

    ElIndio

    Number of posts : 341
    Group : Réseau Luxemburgiste International/International Luxemburgit Network
    Website : luxemburgism.lautre.net
    Registration date : 2008-04-16

    Re: Brief summary of Luxemburg theory of accumulation

    Post  ElIndio on Sun Jun 08, 2008 5:33 pm

    Very interesting indeed. I don't want to speak on Eric's behalf, but this how I see the issue raised by Mondialiste (by the way I am glad you participate in this) :

    I don't think that General Mills has a problem. With sales worth $400 he has recovered enough money to begin production again the following year ($200 to buy plows, $200 to hire workers). True, he is left with $300 worth of unsold wheat but this is not really a problem because, supposing he had sold this, what would he have spent the money on? Only buying wheat

    The fact that General Mills did not manage to sell its entire wheat stock is an issue. Had it completely realised its production (sold all the wheat) it could have expanded (accumulation of capital) its capital and therefore his production to earn more profit. It could have bought part of the $ 300 as plow (I don't know what is meant by plow here, but I assume it is a means of production) and a the rest on wheat consumption.

    Indeed, he can continue production but it can not grow.

    The problem is General Harvester. Why would he really be so stupid as to produce $500 worth of plows when he could have made a more accurate estimate?
    I think General Harvester wants to produce $ 500 worth of plow in order to have the average profit of the island (ie $ 300) : "For capitalism to function, profit must become new capital, be re-invested and generate still more profit, creating still more capital".

    Eventually, something like this would emerge: General Harvester produces only $200 worth of plows (which he should have done at the start), spending $80 on wages and expecting a profit of $120. General Mills produces as before, but is able still able to sell $400 worth of wheat and consume the surplus of $300 himself.
    Some problems come up : first I am not sure General Harvester would be interested in earning just $ 120 whereas General Mills earns $300, but let us assume it doesn't care.

    Let's present the two situations (the one presented by Eric and the one presented by Mondialiste) using Marx's diagram (if I understood well, GH represents the manufacturer of means of production so Department I and GM is producing means of consumption the equivalent of Department II) :

    Eric's simulation:
    >>> General Mills pays $200 a year in wages and has to buy $200 worth of plows each year, so to make a profit he prices his crop at $700 with the $300 above expenses going to his own consumption plus profit
    >>> General Harvester also pays $200 in wages, doesn't need much in the way of equipment, so he sells his years' production of plows for $500, with again a $300 profit

    GM : 200 c + 200 v + 300 s = $ 700 worth of wheat
    GH : 0 c + 200 v + 300 s = $ 500 worth of plows

    Sales
    GM : Total production - Workers consumption = $ 700 - $ 400 = $ 300 (unsold wheat)
    GH : Total production - GM consumption = $ 500 - $ 200 = $ 300 (unsold plows)

    Mondialiste's simulation:
    >>> General Mills produces as before, but is able still able to sell $400 worth of wheat and consume the surplus of $300 himself
    >>> General Harvester produces only $200 worth of plows (which he should have done at the start), spending $80 on wages and expecting a profit of $120

    GM : 200 c + 200 v + 300 s = $ 700 worth of wheat
    GH : 0 c + 80 v + 120 s = $ 200 worth of plows

    Sales
    GM : Total production - Workers consumption - GM consumption = $ 700 - $ 400 - $ 300 = $ 0 (no accumulation of capital and no profit)
    GH : Total production - GM consumption = $ 200 - $ 200 = $ 0

    I think that Mondialiste's simulation, instead of contradicting Luxemburg, actually backs up what Eric said earlier : he transformed GM from a capitalist corporation (that accumulates and makes profit) into a non-capitalist company who makes no profit and who does not accumulate (since it spends its surplus value buying its own wheat). GH grows ($ 120 s) at the expense of GM. In order to avoid an under consumption crisis (or, what is the same, overproduction) GM must give its profit and increase its consumption.

    GM would exclusively do this (produce to sell to itself and to workers, in other words to provide a service without profit to the island) is if it is nationalised or if it was petty peasant (in all cases, non capitalist)...

    It should be interesting to see what happens during the next year since reproduction managed to go through :
    Code:
    GM continues "subsidising" GH while the latter accumulates $ 120 (it must find a way to use its surplus) :
    GM : 200 c + 200 v + 300 s = $ 700 worth of wheat
    GH : 120 c  + 80 v  + 120 s = $ 320 worth of plows

    [i]Sales[/i]
    GM : Total production - Workers consumption - GM consumption = $ 700 - $ 400 - $ 300 = $ 0 (again, no accumulation of capital and no profit)
    GH : Total production - GM consumption = $ 320 - $ 200 = $ 120

    The crisis is back because there is no more non-capitalist buyer in the market (GM gave everything already).

    mondialiste

    Number of posts : 120
    Registration date : 2008-06-01

    Re: Brief summary of Luxemburg theory of accumulation

    Post  mondialiste on Mon Jun 09, 2008 1:18 am

    It is years since I spent time studying the tables at the end of Volume II of Capital and know they can provide endless hours of entertainment for the mathematically-minded! But my point was that Eric's example is oversimplified and does not show what it should to illustrate Luxemburg's view. As you say, she tried to show that capital accumulation was impossible within a closed capitalist system (Eric's isolated island). Eric's example is designed to show something else: that no profit could be made within a closed capitalist system. As he puts it in the sentence immediately following his example:
    Multiply this little picture a hundred million times over, with many capitalists and millions of workers and, in a world of only capitalists and workers, profit is simply impossible.
    I was trying to show that, on his assumption, profit is possible. I don't know if there's a mathematical error in my counter-example, but the example Marx gave at the beginning of the chapter on "simple reproduction" at the end of Volume II could be applied on Eric's island, with General Harvester representing all the profit-seeking producers of means of production and General Mills representing all those producing consumer goods.

    Here, then, is Marx's example. To produce $6000 worth of plows (which is an agricultural implement, here representing all raw materials and instruments) General Harvester spends $4000 on the raw materials needed to produce them and $1000 on workers to transform these into plows; his workers produce plows worth $6000, ie there's a profit for him of $1000 if he can sell them all. General Mills spends $2000 on buying the plows and $500 on workers to use them to produce wheat (here representing all consumer goods) worth $3000, ie there's a profit for him of $500.

    Marx shows how both General Harvester and General Mills can sell all their products and make a monetary profit. General Mills's wheat is bought by General Harvester's workers ($1000), General Harvester ($1000), his own workers ($500) and "himself" ($500). General Harvester's plows are bought by General Mills ($2000) and by "himself" ($4000). ("Himself" in both these cases means the profit-seeking enterprises in the particular sector, means of production or consumer goods, which buy and sell the different products of their particular sector amongst themselves).

    I was trying to suggest that, following the crisis provoked in Eric's example by General Harvester being too optimistic or foolish or greedy, production would eventually settle down to something like in Marx's example, with both Generals selling all their products and making a profit.

    Incidentally, Marx's example is much more realistic than Eric's. Eric assumes the same rate of surplus value (ratio of surplus value to wages) but not the same rate of profit (ratio of surplus value to wages + raw materials). General Harvester's anticipated rate of profit is 150% while General Mills is only expected 75%. In Marx's example in both cases the rate of profit is 20% (a bit more unrealistic).

    Eric assumes that General Harvester has to spend nothing on the materials to make plows (no wonder you didn't know what "plows" are as, in Eric's example, they are like something that grows on trees which workers just have to pick!).

    In other words, in trying to prove that profit is impossible on an isolated island Eric was trying to prove too much. I agree that this does not invalidate Luxemburg's argument as she was not trying to show this but that the accumulation of capital out of profits would be impossible. Which is something different.

    EricL

    Number of posts : 53
    Registration date : 2008-04-19

    Re: Brief summary of Luxemburg theory of accumulation

    Post  EricL on Mon Jun 09, 2008 8:33 pm

    Surprising as it seems, it really is the case that capitalism can not even make a profit as a closed system. As RL writes: “You can twist and turn it as you wish, but so long as we retain the assumption that there are no other classes but capitalists and workers, then there is no way that the capitalists as a class can get rid of the surplus goods in order to change the surplus value into money and thus accumulate capital.” No sale of the surplus, no profit. If you treat the capitalists as a single class, which has to make a profit as a class, you can see that they can not make a profit by selling to themselves. No one, no matter how good a businessman, can make a profit by selling to themselves.

    The oversimplification is not in my islanders, but in the basic model of a society with only capitalists and workers, which has never in history existed. What Luxemburg pointed out is that the surplus must be sold to non-capitalist producers, producers who themselves do not make a profit. Not only do they not make a profit, these non-capitalist producers, once they enter into market relations with capitalist producers, dis-accumulate capital—they acquire debt. The process eventually forces the non-capitalist producers to give up their means of production to capitalist producers. So to grow, capitalism must continuously open up new non-capitalist markets to both replace the ones it is destroying and to provide for an ever-growing surplus. This is not possible in the long run.

    We see this process going on right now as hundreds of millions of peasants are forced off their land to become migrant workers. We also see it in the past decade as the whole capitalist structure has been supported by absorbing into the market the huge Chinese state sector, as well as the Chinese peasantry.

    The crisis occurs not when the last peasant is converted to a worker and profit becomes impossible, but when the non-capitalist market ceases to grow. At that point a growing profit becomes impossible and the re-investment of capital, to create a larger profit, is no longer possible.

    mondialiste

    Number of posts : 120
    Registration date : 2008-06-01

    Re: Brief summary of Luxemburg theory of accumulation

    Post  mondialiste on Tue Jun 10, 2008 2:36 pm

    Surprising as it seems, it really is the case that capitalism can not even make a profit as a closed system. As RL writes: “You can twist and turn it as you wish, but so long as we retain the assumption that there are no other classes but capitalists and workers, then there is no way that the capitalists as a class can get rid of the surplus goods in order to change the surplus value into money and thus accumulate capital.” No sale of the surplus, no profit. If you treat the capitalists as a single class, which has to make a profit as a class, you can see that they can not make a profit by selling to themselves. No one, no matter how good a businessman, can make a profit by selling to themselves.
    I think 3 different concepts are being mixed-up here:
    1. The surplus (value) produced by wage workers over and above the value of what they are paid for the sale of their labour power and which the capitalist employer realises as profit when/if the products that the workers have produced are sold.
    2. That part of surplus value that is destined to be accumulated as new capital (rather than spent on consumer and luxury goods).
    3. The increase of Gross National Product at the end of a year compared with what it was at the beginning.
    I always thought that Luxemburg saw the problem as who, in an economy composed only of capitalists and workers, would have the money to buy the equivalent of that part of surplus value to be accumulated (in her view no one within the system would). If this can't take place, as she claimed, then neither can 3. But I don't think that she denied that capitalists in such an economy could under no circumstances realise the profit embodied in the products of their workers. In fact, she conceded that they could but only as long as the capitalists spent all their monetary profit on consumption. Of course this wouldn't really be a proper capitalist economy because this would rule out the accumulation of capital which is one of the defining features of capitalism, but it still shows that capitalists could make a profit (including by buying and selling from each other).
    What she said was "impossible" was not making any profit at all, but only accumulating a part of it as new capital.

    EricL

    Number of posts : 53
    Registration date : 2008-04-19

    Re: Brief summary of Luxemburg theory of accumulation

    Post  EricL on Tue Jun 10, 2008 10:29 pm

    Capitalism is, after all, about making money. There is, for capitalists, no distinction between making a profit and accumulating capital. A capitalist is, by definition, a member of the class that accumulates capital.

    Compare the capitalist with the “petit bourgeois” –the shop keeper. The shop keeper sells the goods for a profit and then spends the profit to support himself. But this is not capitalist profit. The fact that he has no money left over means that he is not a capitalist.

    What RL emphasized is that to have capitalist profit means accumulation. If a capitalist’s capital is unchanged at the end of the year, he considers that he has made no profit. If the capital grows by 5%, he has made 5% profit. So for a capitalist, no accumulation means no profit—it is the same thing.

    mondialiste

    Number of posts : 120
    Registration date : 2008-06-01

    Re: Brief summary of Luxemburg theory of accumulation

    Post  mondialiste on Wed Jun 11, 2008 2:31 am

    If a capitalist’s capital is unchanged at the end of the year, he considers that he has made no profit. If the capital grows by 5%, he has made 5% profit. So for a capitalist, no accumulation means no profit—it is the same thing.
    We seem to be arguing at cross purposes here. If a capitalist's capital grows by 5% that means that their capital has grown by 5% not that they has made a profit of 5%. As a matter of fact, it is likely that, to do this, their profit will have been more than this. After all, they must allocate some of it not just for their own consumption and luxuries but also (via taxes) for the maintainence of capitalist government and its institutions (including the armed forces).

    But even in an imaginary isolated island where there were only capitalists and workers the capitalists would still make a profit each year even though they didn't increase their capital. If my corrected version of the parable of General Harvester and General Mills, where both make a profit, is unacceptable, here's Marx's table of "simple reproduction" (from the beginning of chapter 20 of Volume II of Capital)
    We shall base our study of simple reproduction on the following scheme, in which c stands for constant capital, v for variable capital, and s for surplus-value, assuming the rate of surplus-value s/v to be 100 per cent. The figures may indicate millions of marks, francs, or pounds sterling.

    I. Production of Means of Production:
    Capital. . . . . . . . . . . . . 4,000c + 1,000v = 5,000
    Commodity-Product . . . 4,000c + 1 ,000v, + 1,000s = 6,000,

    existing in means of production.

    II. Production of Articles of Consumption:
    Capital . . . . . . . . . . . 2,000c + 500v = 2,500
    Commodity-Product . . 2,000c + 500v + 500s = 3,000,

    existing in articles of consumption.
    It is clear that, even without accumulation, the capitalists in Dept I (General Harvester) make a profit (their costs are $5000 while their sales receipts are $6000) as do those in Dept II (General Mills). In both cases of 20% of their capital (or rather their annual costs, fixed capital being excluded).

    Their capital does not increase (by definition) and they are assumed to consume all their profit in various ways. The following year they reinvest their original capital (of $5000 and $2500 respectively) and again make a profit (of $1000 and $500).

    So, capitalists can still make a profit even if there is no accumulation -- and by selling to each other (one being a market for another).

    Sponsored content

    Re: Brief summary of Luxemburg theory of accumulation

    Post  Sponsored content Today at 7:12 pm


      Current date/time is Wed Dec 07, 2016 7:12 pm