Rosa Luxemburg
The Accumulation of Capital

Section Three
The Historical Conditions of Accumulation

Chapter 31
Protective Tariffs and Accumulation

IMPERIALISM is the political expression of the accumulation of capital in its competitive struggle for what remains still open of the non-capitalist environment. Still the largest part of the world in terms of geography, this remaining field for the expansion of capital is yet insignificant as against the high level of development already attained by the productive forces of capital; witness the immense masses of capital accumulated in the old countries which seek an outlet for their surplus product and strive to capitalise their surplus value, and the rapid change-over to capitalism of the pre-capitalist civilisations. On the international stage, then, capital must take appropriate measures. With the high development of the capitalist countries and their increasingly severe competition in acquiring non-capitalist areas, imperialism grows in lawlessness and violence, both in aggression against the non-capitalist world and in ever more serious conflicts among the competing capitalist countries. But the more violently, ruthlessly and thoroughly imperialism brings about the decline of non-capitalist civilisations, the more rapidly it cuts the very ground from under the feet of capitalist accumulation. Though imperialism is the historical method for prolonging the career of capitalism, it is also a sure means of bringing it to a swift conclusion. This is not to say that capitalist development must be actually driven to this extreme: the mere tendency towards imperialism of itself takes forms which make the final phase of capitalism a period of catastrophe.

Classical economics, in its period of storm and stress, had had high hopes of a peaceful development of the accumulation of capital and of a trade and industry which can only prosper in times of peace, evolving the orthodox Manchester ideology of the harmony of interests among the world’s commercial nations on the one hand, and between capital and labour on the other. These hopes were apparently justified in Europe by the short period of Free Trade in the sixties and seventies, which was based upon the mistaken doctrine of the English Free Traders that the only theoretical and practical condition for the accumulation of capital is commodity exchange, that the two are identical. As we have seen, Ricardo and his whole school identified accumulation and its reproductive conditions with simple commodity production and the conditions of simple commodity circulation. This was soon to become even more obvious in the practices of the common Free Trader. The special interests of the exporting Lancashire cotton manufacturers in Manchester determined the entire line of argument of the Cobden League. Their principal object was to get markets, and it became an article of faith: ‘Buy from foreign countries and thus in turn sell our industrial product, our cotton goods, on the new markets.’ Cobden and Bright demanded Free Trade and cheaper foodstuffs in particular in the interest of consumption; but the consumer was not the worker who eats the bread, but the capitalist who consumes labour power.

This teaching never expressed the interests of capitalist accumulation as a whole. In England herself it was given the lie already in the forties, when the harmony of interests of the commercial nations in the East were proclaimed to the sound of gunfire in the Opium Wars which ultimately, by the annexation of Hongkong, brought about the very opposite of such harmony, a system of ‘spheres of interest’.(1) On the European Continent, Free Trade in the sixties did not represent the interests of industrial capital, because the foremost Free Trade countries of the Continent were still predominantly agrarian with a comparatively feeble development of industry. Rather, the policy of Free Trade was implemented as a means for the political reconstruction of the Central European states. In Germany, under Bismarck and Manteuffel, it was a peculiarly Prussian lever for ousting Austria from the Bund and the Zollverein and to set up the new German Empire under Prussian leadership. Economically speaking, the mainstays of Free Trade were in this case the interests both of commercial capital, especially in the Hansa towns to whom international trade was vital, and of agrarian consumers; among industry proper, it was otherwise. The iron industry was won over only with difficulty and in exchange for the abolition of the Rhine tolls. But the cotton industry in Southern Germany remained irreconcilable and clung to protective tariffs. In France, ‘most favoured nations’ clause’ agreements, the basis of the Free Trade system all over Europe, were concluded by Napoleon III without the consent, and even against the will, of parliament, industrialists and agrarians, who constituted an absolute majority, being in favour of protective tariffs. The government of the Second Empire only took the course of commercial treaties as an emergency measure – Britain accepted it as such – in order to get round political opposition in France and to establish Free Trade behind the back of the legislature by international action. The first principal treaty between England and France simply rode rough-shod over public opinion in France.(2) Two imperial decrees abolished the old system of French protective tariffs which had been in force from 1853 to 1862. With scant observance of the formalities they were ‘ratified’ in 1863. In Italy, Free Trade was a prop of Cavour’s policy, depending as it did on French support. Under pressure of public opinion, an inquiry was made in 1870 which revealed that those most intimately concerned were hostile to the policy of Free Trade. In Russia, finally, the tendency towards Free Trade in the sixties was but the first step towards creating a broad basis for commodity economy and industry on a large scale, coming at the same time as the abolition of serfdom and the construction of a railway network. (3)

Thus the very inception of an international system of Free Trade shows it to be just a passing phase in the history of capitalist accumulation, and it shows up the fallacy of attributing the general reversion to protective tariffs after the seventies simply to a defensive reaction against English Free Trade.(4)

Such an explanation is vitiated by the fact that both in Germany and France the leaders in the reversion to protective tariffs were the agrarian interests, that the measures were directed not against British but against American competition, and that not England but Germany constituted the chief danger to the rising home industry in Russia, and France to that in Italy. Nor was Britain’s monopoly the cause for the world-wide depression which prevailed since the seventies and induced the desire for protective tariffs. We must look deeper for the reasons responsible for the change of front on the question of protective tariffs. The doctrine of Free Trade with its delusion about the harmony of interests on the world market corresponded with an outlook which conceived of everything in terms of commodity exchange. It was abandoned just as soon as big industrial capital had become sufficiently established in the principal countries of the European Continent to look to the conditions for its accumulation. As against the mutual interests of capitalist countries, these latter bring to the fore the antagonism engendered by the competitive struggle for the non-capitalist environment.

When the Free Trade era opened, Eastern Asia was only just being made accessible by the Chinese wars, and European capital had but begun to make headway in Egypt. In the eighties the policy of expansion became ever stronger, together with a policy of protective tariffs. There was an uninterrupted succession of events during the eighties: the British occupation of Egypt, Germany’s colonial conquests in Africa, the French occupation of Tunisia together with the Tonkin expedition, Italy’s advances in Assab and Massawa, the Abyssinian war and the creation of a separate Eritrea, and the English conquests in South Africa. The clash between Italy and France over the Tunisian sphere of interest was the characteristic prelude to the Franco-Italian tariff war seven years later, by which drastic epilogue an end was made to the Free Trade harmony of interests on the European Continent. To monopolise the non-capitalist areas at home and abroad became the war-cry of capital, while the free-trade policy of the ‘open door’ specifically represented the peculiar helplessness of non-capitalist countries in the face of international capital and the natural equilibrium which was aimed at by its competition in the preliminary stage of the partial or total occupation of these areas as colonies or spheres of interest. As the oldest capitalist Empire, England alone could so far remain loyal to Free Trade, primarily because she had long had immense possessions of non-capitalist areas as a basis for operations which afforded her almost unlimited opportunities for capitalist accumulation. Until recently, she had thus in fact been beyond the competition of other capitalist countries. These, in turn, universally strove to become self sufficient behind a barrier of protective tariffs; yet they buy one another’s commodities and come to depend ever more one upon another for replenishing their material conditions of reproduction. Indeed, protective tariffs have by now completely lost their use for technical development of the productive forces, all too often being the instrument for the artificial conservation of obsolete productive methods. The inherent contradictions of an international policy of protective tariffs, exactly like the dual character of the international loan system, are just a reflection of the historical antagonism which has developed between the dual interests of accumulation: expansion, the realisation and capitalisation of surplus value on the one hand, and, on the other, an outlook which conceives of everything purely in terms of commodity exchange.

This fact is evidenced particularly in that the modern system of high protective tariffs, required by colonial expansion and the increasing inner tension of the capitalist medium, was also instituted with a view to increasing armaments. The reversion to protective tariffs was carried through in Germany as well as in France, Italy, and Russia, together with, and in the interests of, an expansion of the armed services, as the basis for the European competition in armaments which was developing at that time, first on land, and then also at sea. European Free Trade, with its attendant continental system of infantry, had been superseded by protective tariffs as the foundation and supplement of an imperialist system with a strong bias towards naval power.

Thus capitalist accumulation as a whole, as an actual historical process, has two different aspects. One concerns the commodity market and the place where surplus value is produced – the factory, the mine, the agricultural estate. Regarded in this light, accumulation is a purely economic process, with its most important phase a transaction between the capitalist and wage labourer. In both its phases, however, it is confined to the exchange of equivalents and remains within the limits of commodity exchange. Here, in form at any rate, peace, property and equality prevail, and the keen dialectics of scientific analysis were required to reveal how the right of ownership changes in the course of accumulation into appropriation of other people’s property, how commodity exchange turns into exploitation and equality becomes class-rule.

The other aspect of the accumulation of capital concerns the relations between capitalism and the non-capitalist modes of production which start making their appearance on the international stage. Its predominant methods are colonial policy, an international loan system – a policy of spheres of interest – and war. Force, fraud, oppression, looting are openly displayed without any attempt at concealment, and it requires an effort to discover within this tangle of political violence and contests of power the stern laws of the economic process.

Bourgeois liberal theory takes into account only the former aspect: the realm of ‘peaceful competition’, the marvels of technology and pure commodity exchange; it separates it strictly from the other aspect: the realm of capital’s blustering violence which is regarded as more or less incidental to foreign policy and quite independent of the economic sphere of capital.

In reality, political power is nothing but a vehicle for the economic process. The conditions for the reproduction of capital provide the organic link between these two aspects of the accumulation of capital. The historical career of capitalism can only be appreciated by taking them together. ‘Sweating blood and filth with every pore from head to toe’ characterises not only the birth of capital but also its progress in the world at every step, and thus capitalism prepares its own downfall under ever more violent contortions and convulsions.

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(1) And not only in England. ‘Even in 1859, a pamphlet, ascribed to Diergardt of Viersen, a factory owner, was disseminated all over Germany, urging that country to make sure of the East-Asiatic markets in good time. It advocated the display of military force as the only means for getting commercial advantages from the Japanese and the Eastern Asiatic nations in general. A German fleet, built with the people’s small savings, had been a youthful dream, long since brought under the hammer by Hannibal Fischer. Though Prussia had a few ships, her naval power was not impressive. But in order to enter into commercial negotiations with Eastern Asia, it was decided to equip a ship. Graf zu Eulenburg, one of the ablest and most prudent Prussian statesmen, was appointed chief of this mission which also had scientific objects. Under most difficult conditions he carried out his commission with great skill, and though the plan for simultaneous negotiations with the Hawaiian islands had to be given up, the mission was otherwise successful. Though the Berlin press of that time knew better, declaring whenever a new difficulty was reported, that it was only to be expected, and denouncing all expenditure on naval demonstrations as a waste of the taxpayers’ money, the ministry of the new era remained steadfast, and the harvest of success was reaped by the ministry that followed’ (W. Lotz, Die Ideen der deutschen Handelspolitik, p.80).

(2) Following on the preliminary discussion between Michel Chevalier and. Richard Cobden on behalf of the French and English governments, ‘official negotiations were shortly entered upon and were conducted with the greatest secrecy. On January 1, 1860, Napoleon III announced his intentions in a memorandum addressed to M. Fould, the Minister of State. This declaration came like a bolt from the blue. After the events of the past year, the general belief was that no attempt would be made to modify the tariff system before 1861. Feelings ran high, but all the same the treaty was signed on January 23’ (Auguste Devers, La politique commerciale de la France Depuis 1860, Schriften des Vereins für Sozialpolitik, vol.51, p.136).

(3) Between 1857 and 1868, the revision along liberal lines of the Russian tariffs and the ultimate writing-off of the insane system of kantrin with regard to protective tariffs were a manifestation and corollary of the progressive reforms which the disastrous Crimean wars had made inevitable. But the reduction of customs duties reflected the concern of the landowning gentry who, both as consumers of foreign goods and as producers of grain for export, were interested in unrestricted commerce between Russia and Western Europe. The champion of agrarian interests, the ‘Free Economic Association’ stated:

‘During the last sixty years, between 1822 and 1882, agriculture, Russia’s largest producer, was brought to a precarious position owing to four great setbacks. These could in every case be directly attributed to excessive tariffs. On the other hand, the thirty-two years between 1845 and 1877 when tariffs were moderate went by without any such emergency, in spite of three foreign wars and one civil war [meaning the Polish insurrection of 1863 – R.L.], every one of which proved a greater or less strain on the financial resources of the state’ (Memorandum of the Imperial Free Economic Association on Revising Russian Tariffs, St. Petersburg 1890, p.148).

As late as the nineties, then, the scientific spokesman of the Free Trade Movement, the said ‘Free Economic Association’, had to agitate against protective tariffs as a ‘contrivance to transplant’ capitalist industry to Russia. In a reactionary ‘populist’ spirit, it denounced capitalism as a breeding ground for the modern proletariat, ‘those masses of shiftless people without home or property who have nothing to lose and have long been in ill repute’ (p.191). This is proof enough that until most recent times the Russian champions of Free Trade, or at least of moderate tariffs, did not to any appreciable extent represent the interests of industrial capital. Cf. also K. Lodyshenski: The History of the Russian Tariffs, St. Petersburg 1886, pp.239-58.

(4) This is also the opinion of F. Engels. In one of his letters to Nikolayon, on June 18, 1892, he writes:

‘English authors, blinded by their patriotic interests, completely fail to grasp why the whole world so stubbornly rejects England’s example of free trade and adopts in its place the principle of protective tariffs. Of course, they simply dare not admit even to themselves that the system of protective tariffs, by now almost universal, is merely a defensive measure against English free trade which was instrumental in perfecting England’s industrial monopoly. Such a defence policy may be more or less reasonable – in some cases it is downright stupid, as for instance in Germany who under the system of free trade had become a great industrial power and now imposes protective tariffs on agricultural products and raw materials, thus increasing the cost of her industrial production. In my view this universal reversion to protective tariffs is not a mere accident but the reaction against England’s intolerable industrial monopoly. The form which this reaction takes, as I said before, may be wrong, inadequate and even worse, but its historical necessity seems to me quite clear and obvious’ (Letters of Karl Marx and Frederick Engels to Nikolayon, St. Petersburg 1908, p.71).

Last updated on: 12.12.2008