Ernest Mandel

Late Capitalism

1. The Laws of Motion and the History of Capital

The relationship between the general laws of motion of capital – as discovered by Marx – and the history of the capitalist mode of production is one of the most complex problems of Marxist theory. Its difficulty can be measured by the fact that there has never yet been a satisfactory clarification of this relationship.

It has become a commonplace to repeat that Marx’s discovery of the laws of development of capitalism was the outcome of a dialectical analysis which advanced from the abstract to the concrete: ‘The economists of the seventeenth century, for example, always start out with the living whole, with population, nation, state, several states, and so on; but they always conclude by discovering through analysis a small number of determinant, abstract, general relations such as division of labour, money, value and so on. As soon as these individual moments had been more or less established and abstracted, there began the economic systems which ascended from the simple relations such as labour, division of labour, need, exchange value, to the level of the state, exchange between nations and the world market. The latter is obviously the scientifically correct method. The concrete is concrete because it is the concentration of many determinations, hence the unity of the diverse. It appears in the process of thinking, therefore, as a process of concentration, as a result, not as a point of departure, even if it is the point of departure in reality and hence also the point of departure for observation and conception. Along the first path, the full conception was evaporated to yield an abstract determination; along the second, the abstract determinations lead towards a reproduction of the concrete by way of thought. In this way Hegel fell into the illusion of conceiving the real as the product of thought concentrating itself, probing its own depths, and unfolding itself out of itself, by itself, whereas the method of rising from the abstract to the concrete is only the way in which thought appropriates the concrete, reproduces it as the concrete in mind.’ [1]

To reduce Marx’s method to a ‘progression from the abstract to the concrete’, however, is to ignore its full richness. In the first place, this misunderstanding overlooks the fact that, for Marx, the concrete was both the ‘real starting point’ and the final goal of know ledge, which he saw as an active and practical process; the’ reproduction of the concrete in the course of thought’. Secondly, it forgets that a progression from the abstract to the concrete is necessarily preceded, as Lenin put it, by a progression from the concrete to the abstract. [2] For the abstract itself is already the result of a previous work of analysis, which has sought to separate the concrete into its ‘determinant relations’. Thirdly, this error destroys the unity of the two processes of analysis and synthesis. The abstract result is only true if it succeeds in reproducing the ‘unity of the diverse elements’ present in the concrete. Only the whole is true, says Hegel, and the whole is the unity of the abstract and the concrete – a unity of opposites, not their identity. Fourthly, the successful reproduction of the concrete totality only becomes conclusive by application in practice. This means, among other things, that – as Lenin expressly emphasized – each stage of the analysis must be subject to ‘control either by facts, or by practice’. [3]

In their turn, however, the ‘simplest abstract concepts’ (categories) are not merely the products of ‘pure understanding’, but mirror the beginnings of actual historical development: ‘Thus in this respect, it may be said that the simpler category can express the dominant relations of a less developed whole, or else those subordinate relations of a more developed whole which already had a historic existence before this whole developed in the direction expressed by a more concrete category. To that extent, the path of abstract thought, rising from the simple to the combined, would correspond to the real historical process.’ [4] Marx’s dialectic, therefore, to quote Lenin once more, implies ‘a twofold analysis, deductive and inductive, logical and historical’. [5] It represents the unity of these two methods. An ‘inductive’ analysis can here be only a ‘historical induction’, for Marx regarded every relationship as determined by history, and his dialectic thus involved a unity of theory and empirical historical fact. [6]

I t is well known that Marx stated that science was necessary precisely because essence and appearance never directly coincide. [7] He did not see the task of science solely as the discovery of the essence of relations obscured by their superficial appearances, but also as the explanation of these appearances themselves, in other words as the discovery of the intermediate links, or mediations, which enable essence and appearance to be reintegrated in a unity once again. [8] Where this integration fails to occur, theory is reduced to the speculative construction of abstract ‘models’ which bear no relation to empirical reality, and the dialectic regresses from materialism to idealism: ‘A materialist analysis does not coincide with an idealistic dialectic, but with a materialist one; it deals with factors that are empirically verifiable.’ [9] Otto Morf has rightly remarked: ‘The process whereby the mediation between essence and appearance emerges in this unity of an identical and opposite duality, is necessarily a dialectical one.’ [10]

Furthermore, there is no doubt that Marx considered that the empirical appropriation of the material should precede the analytical process of cognition, just as practical empirical verification should provisionally conclude it – that is, raise it to a higher level. Thus, in his Afterword to the Second Edition of Capital, he wrote: ‘Of course the method of presentation must differ in form from that of inquiry. The latter has to appropriate the material in detail, to analyse its different forms of development, to trace out their inner connection. Only after this work is done, can the actual movement be adequately described. If this is done successfully, if the life of the subject matter is ideally reflected as in a mirror, then it may appear as if we had before us a mere a priori construction.’ [11] A few years earlier, Engels had said much the same when he wrote: ‘It is evident that mere empty talk can achieve nothing in this context and that only an abundance of critically examined historical material which has been completely mastered can make it possible to solve such a problem.’ [12] Marx himself repeated this point again in a letter to Kugelmann: ‘Lange is naive enough to say that I move with rare freedom in empirical matter. He hasn’t the least idea that this "free movement in matter" is nothing but a paraphrase for the method of dealing with matter – that is, the dialectical method.’ [13]

Karel Kosik thus rightly stresses that: ‘The progression from the abstract to the concrete is always initially an abstract movement: its dialectic consists in overcoming this abstraction. In very broad terms, therefore, it is a movement from the parts to the whole and from the whole to the parts, from the appearance to the essence and from the essence to the appearance, from the totality to the contradiction and from the contradiction to the totality, from the object to the subject and from the subject to the object.’ [14] In sum, we can suggest a six-fold articulation of Marx’s dialectical method, which can be defined approximately thus:

  1. Comprehensive appropriation of the empirical material, and mastery of this material (superficial appearances) in all its historically relevant detail.
  2. Analytical division of this material into its constituent abstract elements (progression from the concrete to the abstract). [15]
  3. Exploration of the decisive general connections between these elements, which explain the abstract laws of motion of the material, in other words its essence.
  4. Discovery of the decisive intermediate links which effect the mediation between the essence and the superficial appearances of the material (progression from the abstract to the concrete, or the reproduction of the concrete in thought as a combination of multiple determinations).
  5. Practical empirical verification of the analysis (2, 3, 4) in the developing movement of concrete history.
  6. Discovery of new and empirically relevant data, and of new connections – often even of new abstract elementary determinations – through the application of the results of knowledge, and practice based on it, in the infinite complexity of reality. [16]

We are here not dealing with strictly separate stages of the cognitive process, for some of these moments are interlinked and there is an inevitable traffic between them. We can thus see that Marx’s method is much richer than the procedures of ‘successive concretization’ or ‘approximation’ typical of academic science. ‘Since the individual and particular features are (here) only superficially eliminated and reintroduced, in other words without any dialectical mediations, the illusion can easily arise that no qualitative bridge exists between the abstract and the concrete. It thus becomes perfectly logical to believe that the theoretical model does in fact (although in a simplified form) contain all the essential elements of the concrete object under investigation – as in the case, for example, of a photograph taken from a great height, which shows all the fundamental elements of a landscape, although all that is visible are mountain ranges, large rivers, or woods.’ [17] The difference between the reductionist method of vulgar materialism, in which the concrete specificity of individual objects disappears, and the materialist dialectic proper, becomes by the same stroke evident. [18] Jindřich Zelený rightly emphasizes that the intellectual reproduction of reality, or in Althusser’s language, ‘theoretical practice’, must remain in constant contact with the actual movement of history: ‘The whole of Marx’s Capital is pervaded by an incessant oscillation between the abstract dialectical development and the material concrete reality of history. At the same time, however, it must be emphasized that Marx’s analysis repeatedly detaches itself from the superficial course of the historical reality, to give ideal expression to the necessary inner relations of this reality. Marx was able to grasp historical reality only because he produced a scientific reflection of it in the form of a somewhat idealized and typified inner organization of real capitalist relations. He did not detach himself from them in order to achieve distance from historical reality, nor was he making an idealistic escape from it. The purpose of his detachment was a close and rational appropriation of realitv.’ [19]

There is a clear contrast with the views of Althusser and his school here. The principles set out above do not transform Marxism by ‘historicizing’ it, or dispute that the specific object of Capital is the structure and laws of development of the capitalist mode of production – and in no sense ‘general laws of the economic activity of humanity’. They do, however, assert that the dialectic of the abstract and the concrete is also a dialectic between real history and the intellectual reproduction of this historical process, and that this dialectic must not be limited exclusively to the level of ‘theoretical production’. The difference between Marx’s and Althusser’s conception comes out most clearly in Marx’s Marginal Notes to Wagner, where he states explicitly: ‘At the very outset I do not start from “concepts”. Therefore I do not start from the concept of value either, and hence I do not have to “introduce” it in any way. What I start from is the simplest social form of the product of labour in present day society, and that is the “commodity”. That is what I analyse, and I analyse it initially in the form in which it appears.’ [20] Althusser, on the other hand, says: ‘This is where we are led by ignoring the basic distinction Marx was careful to draw between the “development of forms” of the concept in knowledge and the development of the real categories in concrete history: to an empiricist ideology of knowledge and to the identification of the logical and historical in Capital itself. It should hardly surprise us that so many interpreters go round in circles in the question that hangs on this definition, if it is true that all problems concerned with the relation between the logical and the historical in Capital presuppose a non-existent relation.’ [21]

Althusser thus sanctions only a relationship between economic theory and historical theory; the relationship between economic theory and concrete history is by contrast declared a ‘false problem’, ‘non-existent’ and ‘imaginary’. What he does not seem to realize is that this is not only in contradiction to Marx’s own explanation of his method, but that the attempt to escape the spectre of empiricism and its theory of knowledge – a spectre of his own making – by establishing a basic dualism between ‘objects of knowledge’ and ‘real objects’, inevitably runs the danger of idealism. [22]

The need for such a reintegration of theory and history has sometimes been disputed on the grounds that the specificity of the laws of motion of any mode of production, and of the capitalist mode of production in particular, precisely excludes any such unity with mere empirical facts. The laws of motion, it is argued, are only ‘tendencies’ in the very broad historical sense. They are therefore sup posed to exclude the possibility of any causal connections with temporal events in the short or medium term, and even in the long term are deemed not to be demonstrable in a materially identifiable, empirical way. It is further often claimed that each of these tendencies may provoke counter-tendencies which can neutralize their own effect for a considerable period. [23] Marx’s treatment of the tendency of the rate of profit to fall in Chapters 13,14 and 15 of the Third Volume of Capital has been endlessly cited as the classic example of a tendency and counter-tendency which allegedly enable nothing to be said of the final outcome.

From this, the conclusion is then drawn that it is scarcely possible to find empirical ‘confirmation’ for Marx’s laws of development. Indeed, it is maintained that attempts to track down such ‘empirical confirmations’ reveal a fundamental ‘positivist’ misunderstanding of Marx’s method and intentions, since the two different levels of abstraction, that of the ‘pure’ mode of production and that of the ‘concrete’ historical process are so far removed from one another that there is virtually nowhere that they could come into contact.

It would not be difficult to prove that Marx himself, at any rate, categorically and resolutely rejected this quasi-total rift between theoretical analysis and empirical data. For the real implication of this separation is a significant retreat from the materialist dialectic to the dialectic of idealism. From the standpoint of historical materialism, ‘tendencies’ which do not manifest themselves materially and empirically are not tendencies at all. They are products of false consciousness, or for those who dislike that phrase, of scientific errors. Moreover, they cannot lead to any scientific, materialist intervention in the historical process. As soon as (laws of development’ come to be regarded as so abstract that they can no longer explain the actual process of concrete history, then the discovery of such tendencies of development ceases to be an instrument for the revolutionary transformation of this process. All that remains is a degenerate form of speculative socio-economic philosophy, in which the ‘laws of development’ have the same shadowy existence as Hegel’s ‘world spirit’ – always, as it were, beyond the reach of one’s fingertips. In such constructed systems, the abstractions are truly ‘empty’, or in Engels’s sharper language – a mere phrase. For this reason, the rejection of a mediated unity between theory and history, or theory and empirical data, has always been connected in the history of Marxism with a revision of Marxist principles – either with a mechanical-fatalistic determinism, or a pure voluntarism. Inability to re-unite theory and history inevitably leads to inability to re-unite theory and practice.

Thus Peter Jeffries has accused us of trying to verify Marx’s categories empirically, while he claims that such categories as capital, socially necessary labour-time, and so forth, do not appear empirically in the capitalist system. But are there no mediations which permit us to connect surface phenomena (profits, prices of production, average prices of commodities over a certain period of time) with Marx’s basic categories by quantitative relationships? Marx and Engels themselves certainly thought so, at any rate. [24] Jeffries’ relapse into the idealist dialectic is due to the fact that he reduces the concrete to the appearance only [25] failing to understand that the essence, together with its mediations to the appearance, forms a unity of abstract and concrete elements, and that the object of the dialectic represents, to quote Hegel, ‘not merely an abstract universal, but a universal which embraces within itself the wealth of the particular.’ [26] He thus also fails to understand the following remark by Engels: ‘When commodity exchange began, when products gradually turned into commodities, they were exchanged approximately according to their value. It was the amount of labour expended on two objects which provided the only standard for their quantitative comparison. Thus value had a direct and real existence at that time. We know that this direct realization of value in exchange ceased and that now it no longer happens. I believe that it won’t be particularly difficult for you to trace the intermediate links, at least in general outline, tha t lead from directly real value to the value of the capitalist mode of production, which is so thoroughly hidden that our economists can calmly deny its existence. A genuinely historical exposition of these processes, which does indeed require thorough research but in return promises amply rewarding results, would be a very valuable supplement to Capital.’ [27]

The two-fold problem to be solved, therefore, can be defined more precisely as follows:

  1. How can the real history of the capitalist mode of production over the past hundred years be shown as the history of the unfolding development of the internal contradictions of this mode of production, in other words, as determined in the last resort by its’ abstract’ laws of motion? What ‘intermediate links’ operate the unity between the abstract and the concrete elements of the analysis here?
  2. How can the real history of the past hundred years be traced back to that of the capitalist mode of production, in other words, how can the combinations of expanding capital and the pre-capitalist (or semi-capitalist) spheres which it has conquered, be analysed in their appearance and explained in their essence?

The capitalist mode of production has not developed in a vacuum but within a specific socio-economic framework characterized by very important differences, for example, in Western Europe, Eastern Europe, Continental Asia, North America, Latin America and Japan. [28] The specific socio-economic formations – ‘bourgeois societies’ and capitalist economies – which arose in these different areas in the course of the 18th, 19th and 20th centuries and which in their complex unity (together with the societies of Africa and Oceania) comprise ‘concrete’ capitalism, reproduce in varying forms and proportions a combination of past and present modes of production, or more precisely, of varying past and successive stages of the present mode of production. [29] The organic unity of the capitalist world system by no means reduces this combination, which is specific in each case, to a factor of only secondary importance in face of the primacy of the capitalist features common to the whole system. On the contrary: the capitalist world system is to a significant degree precisely a function of the universal validity of the law of unequal and combined development. [30] A more thorough analysis of the phenomenon of imperialism later in the book will confirm this: we are merely anticipating here.

Without the role that non-capitalist or only semi-capitalist societies and economies have played and still are playing in the world it would hardly be possible to comprehend specific features of every successive step of the capitalist mode of production – such as the British capitalism of free competition from Waterloo to Sedan, the classic epoch of imperialism before and between the two World Wars and the late capitalism of today.

Why is it that the integration of theory and history which Marx applied with such mastery in the Grundrisse and Capital has never since been repeated successfully, to explain these successive stages of the capitalist mode of production? Why is there still no satisfactory history of capitalism as a function of the inner laws of capital – with all the qualifications suggested above – and still less a satisfactory explanation of the new stage in the history of capitalism which clearly began after the Second World War?

The manifest lag of consciousness behind reality is at least partly to be explained by the temporary paralysis of theory that resulted from the apologetic perversion of Marxism by the Stalinist bureaucracy, which for a quarter of a century reduced the area in which the Marxist method could develop freely to the barest minimum. The long-term effects of this vulgarization of Marxism have still far from disappeared even today. Beyond the immediately social pressures which have prevented any satisfactory development of Marx’s economic theory in the 20th century, however, there is also an inner logic in the development of Marxism which in our opinion at least partly explains why so many important attempts have fallen short of their goal. Two aspects of this inner logic of the history of Marxism deserve particular emphasis in this respect. One concerns the analytical tools of Marx’s economic theory, the other the analytical method of the most important Marxist scholars.

Nearly all the attempts that have been made to explain specific phases of the capitalist mode of production – or specific problems arising from these phases – from the laws of motion of this mode of production, as revealed in Capital, have taken as their starting point the reproduction schemes used by Marx in the Second Volume of Capital. In our opinion, the reproduction schemes that Marx developed are unsuited to this purpose and cannot be used in the investigation of the laws of motion of capital or the history of capitalism. Hence any attempt to deduce either the impossibility of a ‘pure’ capitalist economy or the fatal collapse of the capitalist mode of production, the inevitable development towards monopoly capitalism or the essence of late capitalism, from these schemes is doomed to failure.

Roman Rosdolsky has already provided a convincing foundation for this view in his important book Zur Entstehungsgeschichte des Marx’schen Kapital, We can therefore limit ourselves to a short summary of his argument. [31] It explains why four of the most brilliant attempts by pupils of Karl Marx to reintegrate theory and history – those of Rudolf Hilferding, Rosa Luxemburg, Henryk Grossmann and Nikolai Bukharin – did not meet with success. The same is also true of the successive efforts of Otto Bauer, who for most of his life experimented with the same problem without arriving at any satisfactory answer to it.

Marx’s reproduction schemes play a closely defined and specific role in his analysis of capitalism and they are designed to solve a single problem and no other. Their function is to explain why and how an economic system based on ‘pure’ market anarchy in which economic life seems to be determined by millions of unrelated decisions to buy and sell does not lead to continuous chaos and constant interruptions of the social and economic process of reproduction, but instead on the whole functions ‘normally’ – that is with a big crash in the form of an economic crisis breaking out (in Marx’s time) once every seven or ten years. Or to put it differently; how can a system based on exchange value, that only functions for the sake of profit and regards the specific use values of the commodities it produces as a matter of indifference to it, nonetheless assure the material elements of the reproduction process which are determined precisely by their specific use value – in other words, how can it at least for a time ‘spontaneously’ overcome the antinomy between exchange value and use value? The function of the reproduction schemes is thus to prove that it is possible for the capitalist mode of production’ to exist at all.

Marx uses a number of familiar abstractions for this purpose. He groups all the firms into two categories, those that produce means of production (Department I) and those that produce consumer goods (Department II). All the producers at society’s disposal who are forced to sell their la bour power are similarly di vided in to these two spheres. The same division is applied to the mass of means of production at the disposal of society, whether fixed (machines, buildings) or circulating (raw materials, sources of power, auxiliary elements). With these analytical tools, Marx reaches the conclusion that social production is in a state of equilibrium, i.e., that social and economic reproduction can proceed undisturbed as long and in so far as the formula for equilibrium which he has discovered is observed. In the system of simple reproduction this formula is Iv + Is = IIc. This means that economic equilibrium depends on whether the production of commodities in Department I can evoke a monetarily effective demand for commodities in Department II corresponding in value to the commodities which it must itself deliver to Department II and vice versa. A similar formula for equilibrium can easily be deduced from Marx’s schemes of expanded production; as far as we know this was first formulated by Otto Bauer. [32]

To make the structure of his argument as rigorous as possible, Marx deliberately left out of his schemes the non-capitalist sector of the economy. Nothing is said, therefore, of the simple commodity producing peasants or artisans. It is not difficult, however, to construct a scheme in which these groups appear as a separate sector, and in which, for example, they themselves buy fixed means of production from Department I while at the same time they sell to this Department raw materials and. consumer goods. In order to reconstruct Marx’s formula for equilibrium, one would then have to reduce the volume of production in Department II by the value of the consumer goods produced by the simple commodity producers.

It is obvious, however, that the overall development of the capitalist mode of production cannot be subsumed under the notion of ‘equilibrium’. It is rather a dialectical unity of periods of equilibrium and periods of disequilibrium, each of the two elements engendering its own negation. Each equilibrium inevitably leads to a disequilibrium, and after a certain period of time this in turn makes possible a new provisional equilibrium. Even more: it is one of the characteristics of the capitalist economy that not only crises but also accelerated growth of production, not only interrupted reproduction but also extended reproduction, are governed by ruptures of equilibrium. There is equally little doubt that the laws of motion of the capitalist mode of production lead to such constant disequilibria. An increase in the organic composition of capital – to give only one example – determines, among other things, a more rapid growth in Department I than Department II. One can even go further and say that ruptures of equilibrium, i.e., uneven development, pertain to the very essence of capital in so far as it is based on competition, or to use Marx’s words, on the existence of ‘many capitals’. Given the fact of competition, ‘the incessant urge for enrichment’ which is a feature of capital is really the search for surplus-profit, for profit above the average profit. This search leads to constant attempts to revolutionize technology, to achieve lower production costs than those of competitors, to obtain surplus-profits together with a greater organic composition of capital while at the same time increasing the rate of surplus value. All the characteristics of capitalism as an economic form are contained in this description and they are based on its inherent tendency towards ruptures of equilibrium. This same tendency also lies at the root of all the laws of motion of the capitalist mode of production.

It is obvious that schemes designed to prove the possibility of periodical equilibrium in the economy, despite the anarchical organization of production and the segmentation of capital into competing individual firms, will be inadequate for use as analytical tools to prove that the capitalist mode of production must, by its very essence, lead to periodic ruptures of equilibrium, and that under capitalism economic growth must always lead to disequilibrium just as it is itself always the result of it. Therefore, what is needed are other schemes which incorporate from the very start this tendency for the two Departments and all that corresponds to them to develop unevenly. These more general schemes ought to be constructed in such a way that Marx’s reproduction schemes will only constitute a special case – just as economic equilibrium is only a special case of the tendency, characteristic of the capitalist mode of production, for the various sectors, departments and elements of the system to develop unevenly.

An uneven rate of growth in the two Departments ought to correspond to an uneven rate of profit in the two Departments. Uneven growth in the two Departments ought to find expression in an uneven rate of accumulation and an uneven tempo of growth for the organic composition of capital, which is in turn periodically and partially suspended by the uneven impact of crisis on the two Departments. These could be the factors that would enable us, as it were, to ‘dynamicize’ Marx’s schemes. (His schemes remain important tools for the study of the possibilities and variants of periodical equilibrium or temporary supersession of disequilibrium.) The theoretical efforts of Rudolf Hilferding, Rosa Luxemburg, Henryk Grossmann, Nikolai Bukharin, Otto Bauer and many other were bound to fail because they attempted to investigate the problems of the laws of development of capitalism, i.e., the problems of ruptured equilibrium, with tools designed for the analysis of equilibrium.

In Finanzkapital Rudolf Hilferding claims that Marx’s reproduction schemes demonstrate ‘that in capitalist production, reproduction on both a simple and an extended scale can proceed undisturbed as long as these proportions are preserved ... It does not follow at all, therefore, that capitalist crisis must have its roots in underconsumption of the masses as an inherent feature of capitalist production ... Nor does it follow from the schemes themselves that there is a possibility of a general overproduction of commodities. On the contrary, what the schemes show is that any expansion of production is possible that is consonant with the potential of the available forces of production’. [33]

In actual fact, Marx in no way intended his reproduction schemes to justify statements about the alleged possibility of ‘undisturbed production’ under capitalism: on the contrary, he was profoundly convinced of the inherent susceptibility of capitalism to crises. He by no means ascribed this solely to the anarchy of production; he also attributed it to the discrepancy between the development of the forces of production and the development of mass consumption, that he believed to be integral to the very nature of capitalism. ‘The conditions of direct exploitation, and those of realizing it, are not identical. They diverge not only in place and time, but also logically. The first are only limited by the productive power of society, the latter by the proportional relation of the various branches of production and the consumer power of society. But this last-named is not determined either by the absolute productive power, or by the absolute consumer power, but by the consumer power based on antagonistic conditions of distribution, which reduce the consumption of the bulk of society to a minimum varying within more or less narrow limits. It is furthermore restricted by the tendency to accumulate, the drive to expand capital and produce surplus value on an extended scale.’ [34]

Marx thus says exactly the opposite of what Hilferding sought to read out of the reproduction schemes. This is all the more amazing in the light of Hilferding’s own words at the beginning of his reflections on crises and reproduction schemes: ‘In the capitalist mode of production too, there remains a general connection between production and consumption, which is a natural condition common to all social formations.’ He goes on even more clearly: ‘The narrow basis offered by the relations of consumption in capitalist production, however, is the general root of economic crisis because the impossibility of expanding consumption is a general precondition for the stagnation of sales. If consumption could be extended at will, overproduction would not be possible. But under capitalist conditions the extension of consumption means a reduction in the rate of profit. For an extension of the consumption of the broad masses is tied to a rise in wages.’ [35] Despite these correct insights, Hilferding is later misled by the reproduction schemes into a theory of crises based on ‘pure’ disproportionality.

In The Accumulation of Capital Rosa Luxemburg accuses Marx of devising his schemes in such a way that ‘it is downright impossible to achieve a faster expansion of Department I as against Department II.’ A few pages later she declares that the scheme excludes ‘the expansion of production by leaps and bounds’. [36] However, she attributes these apparent contradictions in the reproduction schemes solely to the consumer goods produced by Department II which cannot be sold, i.e., to the absence of a ‘non-capitalist market outlet’ which would be indispensable for the realization of the entire surplus value produced. In actual fact, her criticism here corresponds to the misunderstanding outlined earlier over the purpose and function of the schemes. His by no means their purpose to express the more rapid rate of growth in Department I as against Department II, which is inevitable under capitalism, or the ‘expansion of production by leaps and bounds’, which under capitalism inevitably leads to ruptures of equilibrium. On the contrary, the purpose of the schemes is to prove that despite this ‘expansion by leaps and bounds’ and despite the periodic ruptures of equilibrium, it is also possible to achieve periodic equilibria under capitalism.

This makes it clear why Marx did not make provision for ‘reproduction by leaps and bounds’. It is equally plain that if we disregard the hypothesis of equilibrium we do not by any means have to look for the solution to the ‘inner contradictions’ of the reproduction schemes in ‘non-capitalist buyers’; this is rather to be found in the transfer of surplus-value from Department II to Department I in the course of the equalization of the rate of profit made necessary by the lesser organic composition of capital in Department II. Rosa Luxemburg herself initially sees this as both the logical and the normal historical solution [37], but she immediately rejects it on the grounds of the ‘inner coherence’ of the reproduction schemes, claiming that this solution does not conform to the conditions established by Marx for the working-out of the schemes (for instance, the sale of commodities at their value). She thereby fails to notice that the whole process of the growth of capitalist production, and the increasing unevenness of its development, are not even meant to conform to these conditions.

What is true of Rosa Luxemburg is even more true of Henryk Grossmann. At first glance this author seems to understand the function of the reproduction schemes better than Rosa Luxemburg. In his book Das Akkumulations- und Zusammenbruchsgesetz des kapitalistischen Systems, he explicitly underlines the fact that the schemes are calculated on the basis of a hypothetical state of equilibrium. It immediately transpires, however, that he is referring only to the equilibrium between the supply and demand of commodities, which leads to the absence of market price-fluctuations. In actual fact, however, such fluctuations in market prices are not merely excluded from the context of the reproduction schemes in Volume Two of Capital. Throughout Marx’s analysis of capitalism they play no role whatsoever and are dealt with only in passing in Chapter 10 of Volume Three of Capital.

It is quite a different matter when we come to fluctuations in the prices of production or rates of profit. These play a central role in Marx’s system. In them, i.e., in the drive for surplus-profit, we have the basic explanation for the whole of the investing and accumulating activity of the capitalist. This in turn immediately brings us to competition. While Marx understandably ignores competition in his attempt to prove that equilibrium is possible in the capitalist mode of production and presupposes not only the equilibrium of supply and demand but also the even development of both sectors, i.e., of all capitals, Grossmann carries the same presuppositions over into his investigation of the tendencies in capitalism towards accumulation, growth and collapse. He does not understand that such presuppositions are quite absurd for the analysis of these tendencies, for they in fact negate what he intends to analyse.

Incidentally, Grossmann’s treatment of the reproduction schemes reveals, by contrast with Rosa Luxernburg’s, a fundamental misunderstanding of the central role played by competition in Marx’s system. Grossmann cites a passage from Marx about the appearance of competition out of its context – i.e., its relation to the problems of value – and concludes that it plays no important role in Marx’s explanation of the inner logic of the capitalist mode of production. He does this despite the fact that he himself quotes the following passage from Volume Three of Capital [38], which ought to have taught him better and shown him that capitalism without competition is capitalism without growth: ‘As soon as formation of capital were to fall into the hands of a few established big capitals, for which the mass of profit compensates for the falling rate of profit, the vital flame of production would be altogether extinguished. It would die out.’ [39]

In his argument Grossmann employs Otto Bauer’s scheme, which the latter constructed in 1913 as a counter to Rosa Luxemburg’s The Accumulation of Capital. Otto Bauer’s schemes appear to take the laws of development of capital into account; for in them the organic composition of capital and with it the rate of accumulation grows, while the rate of profit conversely falls. But Bauer’s schemes immediately negate their own assumptions, for together with a growing organic composition of capital they contain an identical rate of surplus-value and an identical rate of accumulation for both Departments, which is untenable logically and historically. [40] These schemes thus provide Grossmann with his ‘mathematical proof’ that accumulation must stagnate for lack of surplus-value, because otherwise not enough will accrue to the capitalist for consumption. Admittedly it will only ‘stagnate’ in the 34th cycle. If we remember that the aim of the reproduction schemes is to formulate states of equilibrium purified by periodic crises every 5, 7 or 10 years, it is obvious that Grossmann – contrary to his own intentions – has in fact proved the opposite of what he set out to demonstrate. For the upshot of this argument is that capitalism could survive for many decades, if not for several centuries, before suffering economic collapse.

Bukharin also based his critique of Luxemburg on Marx’s schemes.

In the process he tried to conceive a ‘general theory of the market and of crises’ which once again starts from the conditions of equilibrium and at most arrives at disproportionality by way of ‘contradictory tendencies in capitalism’ (efforts to increase production but bring down wages) – not the immanent tendencies of development of capital or the laws of motion of the capitalist mode of production itself. In the process Bukharin appears to become so fascinated by the ‘conditions of equilibrium’ revealed in Marx’s schemes that he argues, just like Hilferding, the thesis that there would be no more crises of reproduction if the ‘anarchy of production’ was eliminated, as in the case of ‘state capitalism’ with a planned economy. [41] In this he has the misfortune to take as the basis for his argument a passage in Marx’s Theories of Surplus Value which says exactly the opposite. Bukharin quotes the following passage: ‘Here, therefore, is presupposed 1. capitalist production, in which the production of each particular industry and its increase are not directly regulated and controlled by the wants of society, but by the productive forces at the disposal of each individual capitalist, independent of the wants of society. 2. It is assumed that nevertheless production is proportional (to the requirements) as though capital were employed in the different spheres of production directly by society in accordance with its needs. On this assumption, if capitalist production were entirely socialist production – a contradiction in terms – no overproduction could, in fact occur.’ [42]

Bukharin triumphantly adds: ‘If there were a planned economy, there could be no crisis of overproduction. Marx’s thoughts are very clear here: the conquest of anarchy, i.e., planning, is not opposed to the liquidation of the contradiction between production and consumption as a particular factor; it is portrayed as containing this liquidation’. [43] Bukharin has here overlooked that among the conditions in which capitalist production would be ‘entirely socialist production’ Marx expressly includes not merely proportionality between the individual spheres of production but also the employment of ‘capital’ directly by society, in accordance with its needs (i.e., no production of commodities or exchange-values, but rather production of use-values). Both the paragraph before the passage quoted by Bukharin and the paragraphs following it show quite clearly that for Marx proportional growth of the creation of value in the various branches of industry is not the answer to the problem of the realization of surplus-value, because this problem can only be resolved under conditions of ‘entirely socialist production’ through the adaptation of the production of use-values to the needs of society: ‘If all other capitals have accumulated at the same rate, it does not follow at all that their production has increased at the same rate. But if it has, it does not follow that they want one per cent more of cutlery, as their demand for cutlery is not at all connected, either with the increase in their own produce, or with their increased power of buying cutlery.’ Further: ‘By the way, in the various branches of industry in which the same accumulation of capital takes place (and this too is an unfortunate assumption that capital is accumulated at an equal rate in different spheres), the amount of products corresponding to the increased capital may vary greatly, since the productive forces in the different industries or the total use values produced in relation to the labour employed differ considerably. The same value is produced in both cases, but the quantity of commodities in which it is represented is very different. It is quite incomprehensible, therefore, why industry A, because the value of its output has increased by one per cent while the mass of its products has grown by twenty per cent, must find a market in B where the value has likewise increased by one per cent, but the quantity of its output by five per cent. Here, the author has failed to take into consideration the difference between use-value and exchange value.’ [44]

In other words, crises, for Marx, are not caused solely by a dis proportionality of value among the various branches of industry but also by a disproportionality between the development of exchange value and use value, i.e., by disproportionality between valorization of capital and consumption. Bukharin’s state capitalism, in which crises no longer occur) would have to eliminate this second type of ‘disproportionality’ as well, – in other words, it would no longer be capitalism at all, for it would no longer be based on the pressure for the valorization of capital. It would have overcome the antinomy of use value and exchange value.

If we now move from the inadequacy of Marx’s reproduction schemes as tools for the analysis of the laws of development of capitalism, to the inadequacy of the methods of economic analysis employed after Marx, we are struck by one fact above all else. Discussions of the problem of the long-term tendencies of development and the inevitable collapse of the capitalist mode of production have been dominated for more than half a century by every author’s attempts to reduce this problem to a single factor. [45]

For Rosa Luxemburg this factor is, of course, the difficulty of realizing surplus-value, and the consequent necessity of absorbing more and more spheres of the non-capitalist world into the capitalist circulation of commodities; the latter is seen as the only possible way to market the inevitable residue of consumer goods which cannot otherwise be sold. This basic mechanism is used to explain both the development of capitalism from free competition to imperialism and the predicted inevitability of the system’s economic collapse. [46]

In Hilferding’s Finanzkapital, competition – the anarchy of production – is the Achilles heel of capital. But Hilferding took this undoubtedly crucial feature of the capitalist mode of production out of its overall context and identified it as the sole cause of capitalist crises and disequilibria. This inevitably led him to his later concept of ‘organized capitalism’ in which a ‘general cartel’ eliminates crises, and to his rejection of the notion of the ultimate economic collapse of capitalism. [47]

In Otto Bauer there is a continuous struggle to find the ‘single’ most crucial, internal economic contradiction of the capitalist mode of production, which leads him successively to a number of different positions. He gradually develops from his original view that the periodic release of non-accumulated money capital is the most important factor in the rupture of capitalist equilibrium, to a more ingenious version of Rosa Luxernburg’s theory of under-consumption. [48] This finds expression in his last work of economic analysis Zwischen zwei Weltkriegen?, in which he puts forward the thesis that the basic contradiction in capitalism is the fact that the production of constant capital (in Department I) grows more rapidly than the need for constant capital in the production of consumer goods. This is said to be an inevitable consequence in the rise of surplus value. [49] Fritz Sternberg, Leon Sartre and Paul Sweezy have taken over Bauer’s thesis with minor alterations, or have developed the same thesis independently [50], with the result that in the end they all come to the same conclusion as Rosa Luxemburg: capitalism suffers inherently, if not from a residue of unsaleable consumer goods, then at least from unutilized capacity for the output of consumer goods (or, which amounts to the same thing, from a mass of means of production which cannot be sold because, although marketed for Department II, they cannot be bought by the latter).

In Marxist Economic Theory, I have already exposed the basic misunderstanding – an obvious petitio principii – which underlies this type of argument. All these authors work on the basic assumption that there is no change in the proportion of the value of production or productive capacity between the two Departments, while the demand for commodities from Department II, because of the rising rate of surplus-value and the growing organic composition of capital, naturally grows more slowly than the demand for commodities from Department I. Thereby crisis naturally becomes inevitable. But the constancy of this ‘technical proportion’ (Otto Bauer speaks of a ‘technical coefficient’) between the growth of production in Depart ment I, and the. productive capacity of Department II (Sweezy) or the means of production required for the production of additional consumer goods (Bauer), has by no means been proved.

The fact that accelerated development in Department I must, by raising the organic composition of capital in the economy as a whole, ultimately also raise the productive capacity of Department II, by no means proves that the productive capacity of both Departments must rise in the same proportion. If there is a change in the proportion of the two capacities to each other, however, and given a large increase in the total production of commodities, an increased demand for commodities from Department I can certainly be accompanied by an absolute, if relatively smaller, increase in the productive capacity of Department II and by the full utilization of this capacity, without this necessarily leading to over-production or over-capacity.

Henryk Grossmann sees the main weakness of the capitalist mode of production in the growing problems of valorization of capital, which must necessarily lead to ‘over-accumulation’, i.e., to a state in which all the surplus-value available no longer suffices for the profitable valorization of the available capital. His argument, which relies too heavily on the quite arbitrary figures from which he starts, wavers between two main approaches. On the one hand he states that the difficulties of valorizing capital would become an absolute barrier if they actually led to a fall in the surplus-value unproductively consumed by the capitalist. On the other hand, he argues that the inability to valorize all the accumulated capital ‘profitably’ would bring the entire process of expansion to a halt. [51] The first argument does not hold water, for it disregards the fact that the part of the surplus-value marked for consumption could be divided among a constantly decreasing number of capitalists (even more so in Grossmann’s scheme than in reality, for the difficulties of valorization which he presupposes would greatly intensify capitalist competition). A fall in consumption as a share of the surplus-value produced is quite compatible with a rise in the consumption of each capitalist family (we shall not consider here to what extent Grossmann is correct in regarding the consumer needs of the capitalist as the ‘ultimate goal’ of capitalist production). The second argument contains an obvious fallacy: for if the entire mass of the surplus-value available no longer suffices to valorize all the accumulated capital, the result would not be the collapse of the entire economy but only the devalorization (Entwertung) of the ‘superfluous’ capital through competition and crisis. All that Grossmann proves by this is that the inherent tendency towards over-accumulation, which is undoubtedly a feature of capitalism, must be neutralized by the tendency, which is similarly inherent in the system, towards the periodic devalorization of capital in order to avoid a longer stagnation of the process of valorization. This is precisely the function of crises of over-prod uction, as Marx himself emphasized. Grossmann has not proved, therefore, that this process would make the valorization of capital generally impossible in the long run. [52]

The Polish-American economist Michal Kalecki has made the most advanced attempt hitherto to combine the research methods of Marxism with those of modern econometrics – his work anticipated many of Keynes’s findings. His conclusion is a variant of Grossmann’s thesis: namely, that the rate of accumulation of newly created surplus-value, i.e., the division of this surplus-value between non-productive consumption and accumulation, is the ‘strategic variable’ in Marx’s system. But the isolation of this factor out of the overall context of the system does not answer the question why the capitalists display a lower rate of accumulation over quite long periods, followed by a higher rate (or conversely, a higher rate of unproductive consumption followed by a lower rate again). [53]

Yet another variant of the same position is advanced by the theorists of the so-called ‘permanent war economy’, represented principally by the British Marxist Michael Kidron. [54] Accumulation can continue beyond its inner limits if more and more surplus-value is moved ‘out of the system’ through unproductive consumption. We will discuss the basic contradictions of this theory in Chapter 9: the postponement of the collapse of capitalism is explained by the unproductive use, i.e., waste, of surplus-value. It remains obscure, however, how the production of weapons, i.e., the production of commodities, i.e., the production of value) can be equated with the waste of surplus value; and how the waste of surplus value can lead to accelerated economic growth.

Bukharin is the only Marxist [55] who, in his critique of Rosa Luxemburg, has pointed out, in passing as it were, that several basic contradictions of the system would have to be taken into account in order to be able to foresee its inevitable collapse. [56] At the same time Grossmann is right when he accuses Bukharin of not devoting a single line to an analysis of the dynamics of these contradictions and of not explaining how far and why these – or some of them – should possess a tendency to become intensified. [57]

We thus find that all these theories (with the exception of a comment of Bukharin, who himself precisely failed to develop a systematic theory in this direction) suffer the basic ailment of wanting to deduce the whole dynamic of the capitalist mode of production from a single variable in the system. All the other laws of development that Marx discovered act more or less automatically only as functions of this single variable. But Marx himself flatly contradicts this assumption in several places, for example: ‘The world trade crises-must be regarded as the real concentration and forcible adjustment of all the contradictions of bourgeois economy. The individual factors which are condensed in these crises must therefore emerge and must be described in each sphere of the bourgeois economy and the further we advance in our examination of the latter, the more aspects of this conflict must be traced on the one hand, and on the other hand it must be shown that its more abstract forms are recurring and are contained in the more concrete forms.’ [58]

In fact, any single-factor assumption is clearly opposed to the notion of the capitalist mode of production as a dynamic totality in which the interplay of all the basic laws of development is necessary in order to produce any particular outcome. This notion means that up to a certain point all the basic variables of this mode of production can partially and periodically perform the role of autonomous variables – naturally not to the point of complete independence, but in an interplay constantly articulated through the laws of development of the whole capitalist mode of production. These variables include the following central items: the organic composition of capital in general and in the most important departments in particular (which also includes, among other things, the volume of capital and its distribution between the departments); distribution of constant capital between fixed and circulating capital (again in general and in each of the main departments; we will henceforth omit this self-evident addition to the formula); the development of the rate of surplus-value; the development of the rate of accumulation (the relation between productive surplus-value and surplus-value which is unproductively consumed); the development of the turnover-time of capital; and the relations of exchange between the two Departments (which are mainly but not exclusively a function of the given organic composition of capital in these Departments).

A major part of the present study will be devoted to an investigation of the development and correlation of these six basic variables of the capitalist mode of production. Our thesis is that the history of capitalism, and at the same time the history of its inner regularities and unfolding contradictions, can only be explained and understood as a function of the interplay of these six variables. Fluctuations in the rate of profit are the seismograph of this history, since they express most clearly the result of this interplay in accordance with the logic of a mode of production based on profit, in other words, the valorization of capital. But they are only results which must themselves be explained by the interplay of the variables.

Here – in anticipation of our later findings – we shall give a few examples which in our opinion show that this thesis is correct. The rate of surplus-value – i.e., the rate of exploitation of the working class – is a function of the class struggle [59] and its provisional outcome in each specific period of time, among other things. To see it as a mechanical function of the rate of accumulation, say in the simplified form – higher rate of accumulation = less unemployment = stabilization or even reduction of the rate of surplus-value – is to confuse objective conditions which can lead to a particular result, or can attenuate this result, with the result itself. Whether or not the rate of surplus-value does in actual fact rise depends among other things on the degree of resistance displayed by the working class to capital’s efforts to increase it. How numerous are the variations which are possible in this respect and how diverse are their outcomes can readily be seen from the history of the working class and the labour movement over the past 150 years. An even more incorrect example of a mechanical relation can be found in Grossmann’s formula: low productivity of labour = low rate of surplus-value; high productivity of labour = high rate of profit. Marx often pointed to the situation in the United States, where wages were high from the very beginning, hot as a function of the high productivity of labour but of the chronic shortage of labour-power caused by the frontier; high productivity of labour in North America was thus not the cause but the result of high wages and was therefore accompanied for a very long time by a lower rate of profit than in Europe.

The degree of resistance of the proletariat, i.e., the unfolding of the class struggle, is not the only determinant that causes the rate of surplus-value to develop into a variable partially independent of the rate of accumulation. The original historical position of the industrial reserve army also plays a crucial role. Depending on the size of this reserve army, it is possible for a rising rate of accumulation to be accompanied by a rising, stationary or falling rate of surplus-value. When there is a massive reserve army the growing rate of accumulation has no significant influence on the relation between the demand and supply of the commodity of labour-power (except, possibly, in some highly qualified professions). This explains the rapid increase in the rate of surplus-value despite the rapid increase in the rate of accumulation in England, for example, between 1750 and 1830, or in India after the First World War. Conversely: when there is a tendency for the industrial reserve army to decrease, due – among other things – to the massive emigration of ‘superfluous’ labour power abroad, a rapid increase in the rate of accumulation can perfectly well be accompanied by a plateau or a fall in the rate of surplus value. This scheme would fit Western Europe, for instance, between 1880 and 1900, or Italy at the start of the 1960s.

Similarly, the rate of growth of the organic composition of capital cannot be regarded simply as a function of technological progress arising from competition. This technological progress does admittedly cause living capital to be replaced by dead capital in order to reduce costs, in other words it causes a more rapid rise in the outlay on fixed capital than wages. We can easily find empirical evidence for this in the history of capitalism. But as we know, constant capital is comprised of two parts: a fixed part (machines, buildings, and so on) and a circulating part (raw materials, sources of power, auxiliary elements, and so on). The rapid growth of fixed capital and the rapid increase in the social productivity of labour that results from it, still tell us nothing definite about the tendencies of development of the organic composition of capital. For if the productivity of labour in the sector that produces raw materials grows more rapidly than in the sector producing consumer goods, then circulating constant capital will become relatively cheaper than variable capital, and this will ultimately lead to a situation in which the organic composition of capital, despite accelerated technological progress and despite accelerated accumulation of surplus-value in fixed capital, will grow more slowly and not more rapidly than before.

We have anticipated these results of our later investigations here in order to illustrate the method that will be used in them. This method treats all the basic proportions of the capitalist mode of production simultaneously as partially independent variables, in order to be able to formulate long-term laws of development for this mode of production. The key task will be to analyze the effect that these partially independent variables have in concrete historical situations, in order to be able to interpret and explain the successive phases of the history of capitalism.

It will emerge that the interplay of these different variables and laws of development can be summed up in a tendency for the various spheres of production and the various component parts of the value of capital to develop unevenly. The uneven development of Department I and Department II is only the beginning of this process, which is by no means reducible to this single movement. At the same time, we will have to investigate the extent to which the inner logic of the capitalist mode of production leads not only to an uneven development in the two Departments, but also to an uneven development in the rate of accumulation and the rate of surplus-value in the two Departments and in the economy as a whole, an uneven development between fixed and circulating constant capital, an uneven development between the rate of accumulation and the industrial reserve army, and an uneven development between the unproductive waste of surplus-value and the increasing organic composition of capital.

The combination of all these uneven tendencies of development of the fundamental proportions of the capitalist mode of production – the combination of these partially independent variations of the major variables of Marx’s system – will enable us to explain the history of the capitalist mode of production and above all the third phase of this mode of production, which we shall call ‘late capitalism’, by means of the laws of motion of capital itself, without resort to exogenous factors alien to the core of Marx’s analysis of capital. In this way the ‘life of the subject matter’ should emerge in the interplay of all the laws of motion of capital: in other words, it is their totality which yields the mediation between the surface appearances and the essence of capital, and between ‘many capitals’ and ‘capital in general’.

In his recent polemic with Arghiri Emmanuel, Charles Bettelheim has questioned the validity of the notion of ‘independent variables’ in the context of Marxist analysis. Although on the whole we concur with the direction of this polemic, we cannot concede this point with out reservation. Bettelheim writes: ‘When we are dealing with Marx’s formulas and are using them in full awareness of their function, we have no right to alter the “magnitudes” given in these formulas unless such alterations are justified by variations that affect, in accordance with laws, the different elements making up the structure to which these formulas refer. Only such theoretically justified changes are capable of altering these magnitudes, not arbitrarily but in a way that conforms precisely to the actual laws of the structure.’ [60] Here Bettelheim overlooks two basic difficulties. Firstly, the fact that the reproduction schemes are not tools for the analysis of problems of growth and ruptures of equilibrium, and that it is therefore impossible for ‘laws’ of any sort to regulate the variations of their component parts. (An even growth of the two Departments or an even rate of accumulation of these two Departments are not ‘laws’ of the capitalist mode of production, but only methodological abstractions to fulfil the purpose of the schemes, which is to prove that periodic equilibrium in the economy is possible.) Secondly, the fact that although the laws of development of capitalism discovered by Marx reveal long-term end-results (the increasing organic composition of capital, the increasing rate of surplus-value, the falling rate of profit) they do not reveal any exact and regular proportions between these tendencies of development. It is therefore not only legitimate but imperative to treat the variables listed above as partially independent and partially interdependent in function. Obviously this independence is not arbitrary but exists within the framework of the inner logic of the specific mode of production and its general long-term tendencies of development. [61] But it is precisely the integration of the general long-term tendencies of development with the short and medium-term fluctuations of these variables which makes possible a mediation between abstract ‘capital in general’ and the concrete ‘many capitals’. In other words, it is this which makes it possible to reproduce the actual historical process of the development of the capitalist mode of production through its successive stages. Thus the history of this mode of production becomes the history of the developing antagonism between capital and pre-capitalist and semi-capitalist economic relations, which the capitalist world market perpetually incorporates into itself. We shall therefore start with an account of the structural changes which the spread of the capitalist mode of production wrought in the world market in the epoch from Waterloo to Sarajevo, and then of the subsequent transformations of this world market in the epoch of capitalist decline inaugurated by the First World War.


1. Karl Marx, Grundrisse, London 1973, pp. 100–1.

2. Lenin, Collected Works, Vol. 38, p. 171.

3. Lenin, Collected Works, Vol. 38, p. 320.

4. Marx, Grundrisse, p. 102.

5. Lenin, Collected Works, Vol. 38, p. 320.

6. Otto Morf, Geschichte und Dialektik in der politischen Ökonomie, Frankfurt 1970, p. 146. Karl Marx: ‘This organic system itself, as a totality, has its presuppositions, and its development to its totality consists precisely in subordinating all elements of society to itself, or in creating out of it the organs which it still lacks. This is historically how it becomes a totality. The process of becoming this totality forms a moment of its process, of its development.’ Grundrisse, p. 278. (Our italics)

7. ‘All science would be superfluous if the outward appearance and the essence of things directly coincided.’ Marx, Capital, Vol. 3, London 1972, p. 797.

8. Marx: ‘The various forms of capital, as evolved in this book, thus approach step by step the form which they assume on the surface of society, in the action of different capitals upon one another, in competition, and in the ordinary consciousness of the agents of production themselves.’ Capital, Vol. 3, p. 25.

9. Max Raphael, Zur Erkenntnistheorie der konkreten Dialektik, Frankfurt 1962, p.243.

10. Morf, op. cit., p. 111.

11. Marx, Capital, Vol. 1, London 1970, p. 19. (Our italics.

12. Friedrich Engels, Review of Karl Marx, Contribution, in Maurice Dobb (ed.), A Contribution to the Critique of Political Economy, London 1971, p. 221.

13. Marx to Kugelmann in Hanover, in Marx and Engels, Selected Correspondence (revised edition), Moscow 1965, p. 240.

14. Karel Kosik, Die Dialektik des Konkreten, Frankfurt 1967, p. 31. The Soviet author Ilyenkov has devoted an interesting book to the relationship between (and the unity of) the abstract and the concrete in Marx’s Capital. See E.I. Ilyenkov, La dialettica dell’ astratto e del concreto nel Capitale di Marx, Milan 1961.

15. Following on from the Soviet theorist Ilyenkov, Erich Hahn has emphasized that ‘the division of the real concrete subject into abstract determinations must under no circumstances be equated with the movement from empirical matter to theory. The empirical stage of cognition merely serves to prepare for this process of division.’ Historischer Materialismus und marxistische Soziologie, Berlin 1968, pp. 199–200.

16. Hahn (op. cit., pp. 185–7) refers to a seven-step scheme of scientific cognition proposed by the Soviet theorist V.A. Smirnov. At the outset Smimov separates ‘observations’ from the ‘analysis of the recorded observations’, but thus fails to take into account the crucial mediation between essence and appearance and reduces the problem to a confrontation of theory and empirical matter.

17. Roman Rosdolsky, Zur Entstehungsgeschichte des Marx’schen Kapitals, Frankfurt 1968, Vol. II, p. 533. See also Hegel: ‘In thinking about the gradualness of the coming-to-be of something, it is ordinarily assumed that what comes to be is already sensibly or actually in existence; it is not yet perceptible only because of its smallness. Similarly with the gradual disappearance of something, the non-being or the other which takes its place is likewise assumed to be really there, but not yet observable ... In this way coming-to-be and ceasing-to-be lose all meaning.’ Science of Logic, London 1969, p. 370.

18. Karel Kosik, op. cit., p. 27.

19. Jindřich Zelený, Die Wissenschaftslogik und das Kapital, Frankfurt 1969, p. 59.

20. Marx, Marginal Notes to A. Wagner’s Lehrbuch der politischen Oekonomie, Werke, Bd. 19, p. 369 (Our italics).

21. Louis Althusser, The Object of Capital, in Louis Althusser and Etienne Balibar, Reading Capital, London 1970, p. 115.

22. The spectre of ‘empiricism’ which Althusser conjures up on pp. 35–7 of Reading Capital is reduced by him to the danger of ‘splitting’ the object of knowledge, since the ‘illusion’ of the ‘theoretical appropriation of reality’ is accompanied by an unavoidable process of abstraction which can only partly grasp this reality. We have already indicated above how the active intellectual reproduction of reality can be characterized precisely as a process in which the abstract and the concrete, the universal and the particular, are increasingly reintegrated – in other words, a process in which this ‘split’ is progressively overcome. Naturally, it is impossible for thought and being to achieve any complete identity; the materialist dialectic can only try to reproduce reality with ever-increasing precision.

23. See for example, Paul Mattick, Werttheorie und Kapitalismus, in Kapitalismus und Krise, Eine Kontroverse um das Gesetz des tendenziellen Falls der Profitrate, Frankfurt 1970; Tom Kemp, Theories of Imperialism, London 1967, pp. 27–8, etc. Note also Althusser’s thesis that surplus-value is not measurable ...

24. Marx and Classical Political Economy, II, Workers Press, May 30, 1972. We shall give only one example here. In the First Volume of Capital Marx calculated the mass and rate of surplus-value for an English spinning mill, basing himself on exact data (declarations) from a Manchester manufacturer, as they had been given him by Engels: Capital, Vol. I, p. 219. In the 4th Chapter of the Third Volume of Capital, which he edited, Engels cites this example once more, and added: ‘For that matter we have here an illustration of the actual composition of capital in modern large-scale industry. The total capital is broken up into £12,182 constant and £318 variable capital, a sum of £12,500.’ Ibid., p. 76. For Engels, the problem was not that capital ‘never appears empirically’ or ‘is not measurable’, but that capitalists obstruct public access to their accounts, and so conceal the necessary and sufficient elements for measuring it. ‘Since very few capitalists ever think of making calculations of this sort with reference to their own business, statistics is almost completely silent about the relation of the constant portion of the total social capital to its variable portion. Only the American census gives what is possible under modern conditions, namely the sum of wages paid in each line of business and the profits realized. Questionable as they may be, being based on the capitalist’s own uncontrolled statements, they are nevertheless very valuable and the only records available to us on this subject.’ Capital, III, p. 76.

25. ‘Here Marx explains that the process of movement from abstract to concrete, from essence to appearance, cannot be an immediate one.’ Peter Jeffries, Marx and Classical Political Economy, III, Workers Press, May 31,1972. In the passage from Capital (Vol. 3, p. 25) to which Jeffries’s interpretation refers, Marx manifestly made no such reduction of the concrete to the ‘appearance’ (as less ‘real’ than the abstract ‘essence’). On the contrary, Marx there stated: ‘In their actual movement capitals confront each other in such concrete shape, for which the form of capital in the immediate process of production, just as its form in the process of circulation, appear only as special instances’ ‘(Our italics). Marx’s intention was precisely to explain this actual movement. For him, as for Hegel, the truth lay in the whole, that is, in the mediated unity of essence and appearance.

26. Science of Logic, London, p. 58. Lucien Goldmann, Immanuel Kant, London 1971, p. 134) has rightly pointed out that underlying Kant’s Critique of Pure Reason was the notion of the unbridgeable contradiction between empirical matter and ‘essence’ (thing in itself). Jeffries is therefore, regressing from Hegel (not to mention Marx) back to Kant when he reduces the essence to the abstract and shows his failure to understand the dialectical unit of the abstract and the concrete.

27. Engels to W. Sombart, in Marx and Engels, Selected Correspondence, p. 481.

28. ‘This does not prevent the same economic basis – the same from the standpoint of its main conditions – due to the innumerable different empirical circumstances, natural environment, racial relations, external historical influences, and so on from showing infinite variations and gradations in appearance, which can be ascertained only by analysis of the empirically given circumstances.’ (Karl Marx, Capital, Vol. 3, pp. 791–2.)

29. ‘Colonial and semi-colonial countries are backward countries by their very essence. But backward countries are part of a world dominated by imperialism. Their development, therefore, has a combined character: the most primitive economic forms are combined with the last word in capitalist technique and culture ... The relative weight of the individual democratic and transitional demands in the proletariat’s struggle, their mutual ties and their order of presentation, is determined by the peculiarities and specific conditions of each backward country and to a considerable extent – by the degree of its backwardness.’ Leon Trotsky, The Death Agony of Capitalism and the Tasks of the Fourth International, pp. 40–1, in The Founding Conference of the Fourth International, New York 1939.

30. ‘Capitalism finds various sections of mankind at different stages of development, each with its own profound internal contradictions. The extreme diversity in the levels attained and the extraordinary unevenness in the rate of development of the different sections of mankind during the various epochs, serve as the starting point of capitalism. Capitalism gains mastery only gradually over the inherited unevenness, breaking and altering it, employing therein its own means and methods ... Thereby it brings about their rapprochement and equalizes the economic and cultural levels of the most progressive and the most backward countries ... By drawing the countries economically closer to one another and levelling out their stages of development, capitalism however operates by methods of its own, this is to say by anarchistic methods which constantly undermine its own work, set one country against another, and one branch of industry against another, developing some parts of the world economy while hampering and throwing back the development of others. Only the correlation of these two fundamental tendencies – both of which arise from the nature of capitalism – explains to us the living texture of the historical process’: Trotsky, The Third International after Lenin, pp. 19–20, New York 1970. See also Rosa Luxemburg, The Accumulation of Capital, London 1971, p. 438: ‘European capital has largely swallowed up the Egyptian peasant economy. Enormous tracts of land, labour, and labour products without number, accruing to the state as taxes, have ultimately been converted into European capital and have been accumulated. Evidently ... it was just the primitive nature of Egyptian conditions which proved such fertile soil for the accumulation of capital.’

31. Rosdolsky, op. cit., pp. 534–7, 583–6.

32. Otto Bauer, Marx’ Theorie der Wirtschaftskrisen, in Die Neue Zeit, Vol. 23/1, p. 167. Bukharin put the same formula into simpler and more elegant language: Der Imperialismus und die Akkumulation des Kapitals, Vienna 1926, p. 11. For an English translation of the latter, see Rosa Luxemburg and Nikolai Bukharin, Imperialism and the Accumulation of Capital, London 1972, p. 157.

33. Rudolf Hilferding, Das Finanzkapital, Vienna 1923, p. 310.

34. Marx, Capital, Vol. 3, p. 244. (Our italics)

35. Hilferding, Finanzkapital, p. 299.

36. Rosa Luxemburg, Accumulation of Capital, pp. 340–1.

37. Luxemburg, ibid., p. 340.

38. Henryk Grossmann, Das Akkumulations- und Zusammenbruchsgesetz des kapitalistischen Systems, Frankfurt 1967, pp. 90–2.

39. Marx, Capital, Vol. 3, p. 254.

40. Otto Bauer, Die Akkumulation des Kapitals, p. 83, in Die Neue Zeit, Vol. 31/1, 1913.

41. Bukharin, Imperialism and the Accumulation of Capital, p. 226.

42. Marx, Theories of Surplus Value, Vol. 3, London 1972, p. 118.

43. Bukharin, op. cit., pp. 228–9.

44. Marx, Theories of Surplus Value, Vol. 3, pp. 118–9.

45. The most extreme – and naive – version to date of a ‘mono-causal’ explanation of capitalist development can be found in Natalie Moszkowska: ‘The same factor (1) that determines the conjunctural curve also determines the overall curve of the capitalist economy. If we disregard secondary factors and causes and only consider the main cause we can distinguish two diametrically opposed tendencies in economics. The representatives of one tendency see the cause of disruptions in the economy in excessive consumption and insufficient saving (under-accumulation), those of the other tendency conversely in insufficient consumption and excessive saving (over accumulation).’ She adds the following footnote: ‘It is true that many economists reject monocausal theories of crises because of the “complexity of ways in which crises manifest themselves” and speak of a “multiplicity of sources for these events”. But a closer examination shows that even in the theories of these researchers a single cause mostly predominates.’ N. Moszkowska, Zur Dynamik des Spätkapitalismus, Zurich 1943, p. 9.

46. The first writers to develop these ideas systematically were: Heinrich Cunow, in Die Zusammenbruchstheorie, in Die Neue Zeit, 1898, pp. 424–30; Alexander Parvus, Die Handelskrisis und die Gewerkschaften, Munich 1901; Karl Kautsky, Krisentheorien, in Die Neue Zeit, Vol. 20/2, 1902, p. 80; and the American Marxist Louis B. Boudin, The Theoretical System of Karl Marx, 1907, pp. 163–9, 243–4.

47. See Grossmann, op. cit., pp. 57–9.

48. Otto Bauer’s successive views on the subject are to be found mainly in his article entitled Marx’ Theorie der Wirtschaftskrisen, in Die Neue Zeit, 1904; in his book Die Nationalitätenfrage und die Sozialdemokratie, Vienna 1907, pp. 461–74; in his article Die Akkumulation des Kapitals, in Die Neue Zeit, 1913; and in his book Zwischen zwei Weltkriegen?, which was published in Bratislava in 1936. The crucial elements he singled out were, in chronological order, the fluctuations in the reconstitution of fixed capital (1904), the pressure of idle capital for investment abroad (1907), the discrepancy between capital accumulation and population growth (1913), and finally the discrepancy between the development of Department I and the demand for means of production in Department II (1936).

49. Otto Bauer, Zwischen zwei Weltkriegen?, pp. 351–3.

50. Paul M. Sweezy, The Theory of Capitalist Development, New York 1942. pp. 180–4, Leon Sartre, Esquisse d’une Theorie marxiste des Crises Periodiques, Paris 1937, pp. 28–40, 62–7; Fritz Sternberg, Der Imperialismus und Seine Kritiker, Berlin 1929, pp. 163f.

51. Grossmann, op. cit., pp. 118–23, 129–35, 137–41.

52. A sharp critique of Grossmann’s thesis is given by Fritz Sternberg, Eine Umwälzung der Wissenschaft, Berlin 1930.

53. Michal Kalecki, Theory of Economic Dynamics, London 1954.

54. Michael Kidron, Western Capitalism Since the War, London 1962.

55. We are not taking Lenin into consideration here, because he does not provide a systematic theory of the contradictions of capitalist development. But his brochure Imperialism, the Highest Stage of Capitalism certainly does not suffer from the disease of ‘mono-causality’.

56. Bukharin, pp. 229–30, 264–68.

57. Henryk Grossmann, op. cit., pp. 44–8. It is true that in one sentence Bukharin (op. cit., p. 264) does seek to deduce the collapse of capitalism from the destruction of the forces of production and the impossibility of reproducing labour-power, exactly following the scheme of his book Zur Oekonomie der Transformationsperiode. In the further course of this study, we shall have occasion to undertake a more thorough critical examination of these views.

58. Marx, Theories of Surplus Value, Vol. 2, p. 510; ibid., p. 534: ‘In world market crises, all the contradictions of bourgeois production erupt collectively’.

59. ‘The maximum of profit is, therefore, limited by the physical minimum of wages and the physical maximum of the working day. It is. evident that between the two limits of this maximum rate of profit an immense scale of variations is possible. The fixation of its actual degree is only settled by the continuous struggle. between capital and labour.’ Karl Marx, Wages, Price and Profit, in Marx/Engels, Selected Works, London 1968, p. 226

60. Charles Bettelheim, in A. Emmanuel, Unequal Exchange, London 1972, pp. 283–4.

61. Bettelheim himself later admits that there is a ‘relative indeterminacy’ in the particular relations that Marx discovered: Unequal Exchange, p. 288.

Last updated on 7 June 2014