David Yaffe

Review Article: Imperialism and the Accumulation of Capital[1]


Written: 1972;
Source: David Yaffe, Review Article: 'Imperialism and the Accumulation of Capital' , Bulletin of the Conference of Socialist Economists, 2,2, 1972, pp70-77.
Transcription/Markup: Steve Palmer
Copyleft: This work is licensed under a Creative Commons license permitting unrestricted copying for non-commercial use.
Notes: MIA notes appear {thus}. 

The appearance of two major essays by Rosa Luxemburg and Nikolai Bukharin in English translation, more than forty years after they were first published in German, at last gives some indication to non-German readers, of the important debate that took place within (and beyond) German Social Democracy from about 1913 to 1930. The only widely known summary in English of this discussion on the Marxian crisis theory and 'breakdown' controversy is in P. Sweezy's Theory of Capitalist Development published in 1942. Henryk Grossman's major contribution and survey of the issues in Das Akkumulations und Zusammenbruchsgesetz des kapitalistischen Systems, 1929, has still not been translated into English[*], Quite clearly, a re-examination of the major issues is called for. It is therefore important that Allen Lane (Penguin Press) has seen fit to publish two of the major contributions in book form, with an introduction and biographical notes by Ken Tarbuck.

Rosa Luxemburg's Anti-Critique, written in prison in 1915 and not published until 1921, is her answer to the heated controversy in the German. Party press and elsewhere, generated by her book The Accumulation of Capital (1913). Nikolai Bukharin's Imperialism and the Accumulation of Capital written in 1924 is a direct attack on both the ideas expressed in the Accumulation and the Anti-Critique. Despite his sharp and devastating attack on Luxemburg’s position, Bukharin nevertheless, recognised and acknowledged Luxemburg’s significant contribution to the revolutionary movement.

"She has raised the question about the necessity of imperialism and in general answered it properly, although her answer was based on theoretically wrong arguments. … It represents a daring theoretical attempt, it is the deed of a brilliant theoretical intellect."

What he refers to is her revolutionary approach to the problem. She understood clearly that this discussion was about the foundations of scientific socialism. As she had earlier pointed out,

"If the capitalist mode of production can ensure boundless progress, it is invincible indeed. The most important objective argument in support of socialist theory breaks down; socialist political action and the ideological import of the proletarian class struggle cease to reflect economic events, and socialism no longer appears an historical necessity.”[2]

To show the limitations of capitalist expansion, she developed a theory that saw non-capitalist social strata and countries as the key to that expansion.

"Thus capitalism expands because of its mutual relationship with non-capitalist social strata and countries, accumulating at their expense and at the same time pushing them aside to take their place. The more capitalist countries participate in this hunting for accumulation areas, the rarer non-capitalist places still open to the expansion of capital become and the tougher the competition; its raids turn into a chain or economic catastrophe: world crises, wars, revolution."(p60)

Since capitalist accumulation needs, according to Rosa Luxemburg, an additional market outside that provided by capitalists and workers, the necessity to expand into non-capitalist markets follows (p 80). Imperialism becomes an historical necessity and follows from the requirements and conditions of capital accumulation. Those who deny the phase of imperialism as an historical necessity, those who say that capitalism does not require imperialistic and militaristic expansion to survive, logically at least, are driven towards reformist conclusions. Tactically they call for a 'bloc of the proletariat with broad sections of the bourgeoisie in order to 'moderate' imperialism, to contain it by 'partial disarmament' and so on. The final confrontation between the proletariat and capital is converted into the 'utopia' of historical compromise to 'moderate' the imperialist contradictions between capitalist states (p 148).

This latter point is of great significance. It shows the importance of a correct theoretical understanding of imperialism. Unfortunately, Rosa Luxemburg's theory is untenable. A consequence of it, as Bukharin points out with considerable effect, is that the fight for territories that have already become capitalist or that are already 'occupied' is not imperialism according to her definition. (p253). Her theory cannot also explain why the export of capital from one capitalist land to another capitalist land takes place and, indeed, today has become one of the more important features of modern capitalism.[3] Her examination of international loans to Egypt in the Accumulation of Capital[4] points to very different conclusions than those suggested by her analysis. The historical evidence, far from showing how surplus—value produced in the capitalist lands is ''realised' (in the Luxemburgist. sense), tells us how the export of capital helps to produce additional surplus-value in nor—capitalist lands and how this is returned to the old—capitalist countries through interest payments, etc. She actually says, "the greater the debt to European capital became, the more had to be extorted from the peasants". It is precisely this kind of phenomenon that her theory cannot explain and which is in direct conflict with her point of view.

Bukharin particularly stresses the role of the export of capital in his own analysis. His explanation is very different to Rosa Luxemburg’s. The question remains: does his analysis satisfy the two criteria that he quite clearly accepts,

(i) that there is a long—term secular tendency towards 'breakdown' in the capitalist system,[5] although Rosa Luxemburg gives no adequate explanation of this.

(ii) that imperialism is an historical necessity.

Unfortunately, Bukharin has a number of explanations for both crises and. imperialism. He is never particularly clear and his points are sometimes so general that we cannot deduce a consistent theoretical framework.

Crises, we are told, stem from the disproportion of social production, and the factor of consumption forms a component part of this disproportionality. This is the view of Marx, Lenin and the orthodox Marxists (and presumably Bukharin) (p 225). If this disproportionality could be overcome, then clearly crises would disappear (a position held by Bauer and Hilferding). The difficulty, though, for capitalism lies in its anarchical structure, in which, of course, production is not controlled (p 216). In another place, while maintaining the mutual dependence of production and consumption, he states,

"Once labour-power has entered into commodity circulation … the contradiction between use-value and exchange-value appears here in the shape of the contradiction between the production of surplus-value, which strives for boundless expansion, and the limited purchasing power of the masses, who are realising the value of labour-power. This contradiction finds its solution in crises." (p 234)

This is an underconsumptionist position. And, finally, in order to cover all possibilities, he relates the expansion of capital to the movement of profit, its amount and rate (pp 254-255, and p261-262). In Imperialism and World Economy, he talks of the tendency towards lowering the rate of profit and his theory of imperialism rests on the attempt to achieve higher rates of profit. He clearly needs some such theory to explain his assertion that 'disturbances' which are 'immanent' for capitalism are 'done away with' periodically only to reappear stronger periodically (p 265) but this is not forthcoming in Imperialism and the Accumulation of Capital. All we are told is that capitalist society is a 'unity of contradictions' and the process of expanded reproduction is a process of expanded reproduction of these contradictions (p264). This is clearly true, but no explanation of precisely the tendency he ought to explain.

His explanation of imperialism is likewise, at times, eclectic, and, at others, unconvincing. Nevertheless, there is a wealth of ideas that can contribute to the discussion today. The critical point is to understand that it is the export of capital not commodities which is the distinguishing feature of modern imperialism. He quotes Marx with approval in saying,

"If capital is sent abroad, this is not done because it absolutely could not be applied at home, but because it can be employed at a higher rate of profit in a foreign country", (Capital, vol. III, p 251, Moscow edition).

So that capital is exported because it gains an additional profit (p 245). This is made more explicit in Imperialism and World Economy where it is the race for higher rates of profit that is the motive power of world capitalism, and lower rates of profits are said to drive commodities and capital further and further from their 'home'.[6]

Likewise, foreign trade can yield a surplus profit for the advanced country, due to the productivity differentials of he goods exchanged (p 245). This is the basis of the theory of Unequal Exchange.[7]

In Imperialism and World Economy another factor is mentioned: the need to avoid and take advantage of tariff walls. Insofar as capital has been imported and begins to function in the foreign country as capital, it receives as much 'protection' from the tariff as the capital of native businesses. This is said in turn to cause a tremendous increase in capital export.[8]

In all these points it should be stressed that when Bukharin speaks of capital he refers to its specific characterization as finance capital. This must not be confused with money capital for finance capital is characterised as being simultaneously banking and industrial capital. Rosa Luxemburg failed to recognise the concrete, historical form of capital in the epoch of imperialism (p. 253). There is barely any mention in her major work of the 'treatment of cartels and trusts'(p. 252). She cannot therefore understand the struggle of the big monopoly capitalist organisations and the extension of imperialist operations not only to the non-capitalist world but also to capitalist territories and the foreign territories of finance capital. 'The struggle has changed from a mere fight for the distribution of the agrarian countries into a division of the world' (p. 254).

This point is correct and yet it nevertheless shows the weakness of Bukharin's own position. Why should capital move across national boundaries to different advanced industrial nations? Is the rate of profit significantly higher on average in Europe or America, than in Japan (taking into account risk, transport costs etc.)? Capital will certainly seek areas of higher profits - but can this really be the general explanation of the movement of capital between advanced industrial countries?[9]

In his three fundamental motives for the conquest policies of modern capitalist states Bukharin is nearer the answer. They are increased competition in the sales market, in the markets for raw materials, and for spheres of capital investment.[10] But it is precisely this increased competition and the form it takes that has to be explained. To do this we need a systematic explanation of the Marxian crisis theory and this Bukharin nowhere produces. The rest of this review will examine the Marxian theory of crisis and, in particular, the role of the reproduction schema in that theory. It will then attempt to give a framework for discussing imperialism based on the theory of crisis.

Rosa Luxemburg in her discussion of the Reproduction Schema of Volume II of Capital was critical of them on two accounts:

1. The precise rules laid down for the relations of Department 2 (means of production) are gained at the cost of any kind of principle in construing these relations for Department II (means of consumption); and this calls for a revision of the immanent connections revealed by the analysis.[11]

2. The problem that is posed and left unanswered in the second volume of Capital - to show how accumulation takes place under the exclusive rule of capitalism - is insoluble. Accumulation is simply impossible under such conditions (p. 145). Therefore Marx's assumption in the 2nd volume of capital of a society of only capitalists and workers has to be criticised. Not to do this means that we cannot explain imperialism.

The first point is a technical one and Rosa Luxemburg is clearly wrong. Bukharin shows there is a strict equilibrium relation if expanded reproduction is to take place. That is

v1 +  α1 +  β1v = c2 +  β2c (p. 158)

Subscripts 1, 2 denote departments. c is constant capital consumed in the production process, v is variable capital and s is surplus value. a is capitalist consumption, b represents the part of the surplus value which is destined for accumulation. b1c, b2c and b1v, b2v, are parts of the accumulated capital turned into constant capital and variable capital respectively. It can be shown that if we follow Marx and assume equal rates of exploitation in both departments, and unchanging organic compositions and rates of accumulation in succeeding production periods for both departments then:-

β1β2  =      v2       v1    
 s1    s2      c2 + v2   c1 + v1  

That is, that the rates of accumulation in both departments are inversely proportional to the organic compositions.[12] Rosa Luxemburg was indeed wrong.

Rosa Luxemburg's second point is wrong because she does not understand the role of the reproduction schema in Marx's total conception. In these schema Marx shows the necessary relationships that must hold between the two principle departments if the process of simple and extended reproduction is to continue undisturbed. His aim is to show that the exchange-relations between the two departments must be in accordance with regard to their value as well as use-value side, if the equilibrium conditions of the reproduction of total social capital are to be maintained. Supply and demand are perfectly balanced and Says law of markets is presupposed. In this sense, as Rosdolsky has pointed out, the reproduction scheme can be regarded as a (provisional) solution to the so-called realisation problem.[13] They indicate the necessary relations for equilibrium. In other words Marx shows that if certain conditions of proportionality in the exchange between the two departments are observed, all commodities are sold at their value and no over-production of commodities would occur. That is, the general cause of the capitalist crisis does not lie in the circulation process.

The general theory of capital accumulation developed in volume I of capital shows that even if all goods sold at their value, and Say's law could operate, crises and ultimate breakdown would follow.[14] The law of the fa11ing tendency of the rate of profit is the kernel of Marx's theory of crisis.[15] He himself called it 'the most important law of modern political economy' and it forms the basis of any real understanding of imperialism.

It is interesting to note that even Bauer's schema discussed somewhat dismissively by Rosa Luxemburg (p. 90 ff) eventually break down due to a shortage of surplus value if an attempt is made to keep the departments in equilibrium. Outside Rosa Luxemburg's correct criticism that Bauer has somehow managed to assume technological progress and a constant rate of surplus-value, her other points are of little consequence (p. 98). It took Grossmann's: analysis and extension of the Bauer schema for 35 periods of production to show that Bauer's system will break down due to a lack of surplus-value.[16] The passage quoted from Capital volume III by Bukharin (p. 244-5) to show that his argument that capital invested in foreign trade can yield a higher rate of profit was accepted by Marx, is just in that section concerned with counteracting tendencies to the fall in the rate of profit. And yet Bukharin does not give the impression that it is precisely the tendency of the rate of profit to fall that forces capital to seek other outlets of surplus-value elsewhere. It is not merely a question of seeking higher rates of profit but of seeking additional surplus-value in order to capitalise investments already made. This means that capital must maintain its share of old markets and fight for a share of newly expanding markets, wherever these markets are. Bukharin comes nearest to recognising this when in Imperialism and World Economy[17] he discusses the absolute over-production of capital.

'The export of capital from a country presupposes an overproduction of capital in that country. The over-production would be absolute were the increment of capital to yield nothing from the capitalist point of view, namely, if capital, c, having increased to c + Δc, were to yield as much profit as it would without the increment Δc. For the export of capital, however, it is not necessary that over-production should have reached that limit'.

But, as Marx points out, the same laws produce for social capital an increase in the absolute mass of profit and a falling rate of profit. So long as c + Δc yields a greater profit than c, then accumulation is possible. It is not merely that monopoly organisations can overcome the tendency of the rate of profit to fall by receiving monopoly superprofits at the expense of the non-trustified industries. Marx puts it more generally.

'A fall in the rate of profit connected with accumulation necessarily calls forth a competitive struggle. Compensation of a fall in the rate of profit by a rise in the mass of profit applies only to the total social capital and to the big, firmly placed capitalists. The new additional capital operating independently does not enjoy any such compensating conditions. It must still win them, and so it is that a fall in the rate of profit calls forth a competitive struggle among capitalists, not vice versa.'[18]

Capital has to expand in order to 'realise' investments already made. This accentuates the tendency of the rate of profit to fall and therefore increases the competition for the mass of profits produced. Large capitals are in a stronger position to hold their own in this struggle but as capitalism develops this competition intensifies. It is only on the basis of such a theoretical framework that we can understand why the struggle for advanced country markets has become a central feature of imperialism today.

A feature of this tendency and the increasing concentration and centralisation of capital is the necessity of large firms to attempt to plan their production, markets, inputs etc. in spite of the anarchy of capitalist production. Nationally, this involves the increasing role of the state in the production process, both as buyer of the products and with subsidies to help firms exporting: With any downturn of production in the world economy this increases the world over-capacity of the industry in question. The shipbuilding industry is an acute example of this situation. Likewise raw material resources have to be planned and organised against risks of exhaustion, nationalisation, and other factors. Similarly markets have to be maintained and often the state will come to the defence of the national industry to, secure these markets for domestic capital. Countering this process there is an increasing tendency towards the internationalisation of capital, as capital attempts to break out of the narrow limits of the nation state in search for additional profits and markets elsewhere. All these features and contradictory tendencies belong to -modern imperialism. But to understand them we need to locate these developments within the framework of Marx's general theory of capital accumulation. The appearance of Imperialism and the Accumulation of Capital is a major contribution to the clarification that is necessary. The review has been a critical one but it recognises 'the daring theoretical attempt' of both authors to understand and lead the fight against imperialism.

Institute of Development Studies,

University of Sussex, October, 1972.


[1]. Rosa Luxemburg and Nikolai Bukharin. Imperialism and the Accumulation of Capital. Edited with an Introduction by Kenneth 3. Tarbuck. Translated by Rudolf Wichmann. Allen Lane, The Penguin Press, 1972.

{[*] This was written in 1972. Jairus Banaji’s English language translation of Grossman’s The Accumulation and Breakdown of the Capitalist System was not published until 1992 by Pluto Press.}

[2]. The Accumulation of Capital. Routledge Kegan Paul 1963, p. 325. See also Anti-Critique, p. 76.

[3]. For an interesting analysis of this tendency see Bob Rowthorn, 'Imperialism: Unity or Rivalry', New Left Review 69, September/October, 1971.

[4]. op. cit. pp. 429 ff. This point is very clearly discussed in Grossmann, p. 528-9. Henryk Grossmann, Das Akkumulations und Zusammenbruchs des kapitalistischen Systems, Archiv sozialistischer Literatur 8, Verlag Neue Kritik Frankfurt.

[5]. This is in no sense 'deterministic' or 'fatalistic'. Historical necessity can only find: its expression through the actions of people, the struggle of classes etc. Bukharin makes this point admirably clear in his Imperialism and the World Economy (Merlin Press edition 1972) p. 130-1. We use 'breakdown' in the sense of the increasing difficulties and contradictions with the system. No crisis can be said to be definitely the' last 'crisis for capitalism and while the crisis indicates the disease, it is also the cure, the means to renew cycle of expansion.

[6]. op. cit. p. 84.

[7]. See in last Bulletin Vol 2,1, the article by Christian Palloix.

[8]. op. cit., p. 98.

[9]. Arghiri Emmanuel produces evidence to show that, taken as a whole overseas investment does not give a bigger return than is obtained by capital inside the home country. See A. Emmanuel, Unequal Exchange: A Study of the Imperialism of Trade, New Left Books, 1972.

[10]. Imperialism and World Economy op. cit. p.104.

[11]. Accumulation of Capital op. cit. p.122. This is repeated in the Anti-Critique. p. 83.

[12]. R. Rosdolsky quotes this formula in his Zur Enstehungsgeschichte des Marxschen 'Kapital' Band II p. 528. Europaische Verlagsanstalt Frankfurt, 1968. Roy Tearse has given me a proof of this relationship and we hope to produce it with other material as part of a Note on the Reproduction Schema in a later volume of the Bulletin. Marx failed to work out the first year of the schema correctly (according to the formula) and it is only after the second year that the pattern emerges. This accounts for Bukharin's error in making both

(1) v1 +  α1 = c2


(2)  β1v =  β2c

Simple reproduction is not a sub-set of expanded reproduction as Bukharin's analysis suggests.

[13]. Rosdolsky op. cit. p. 539.

[14]. For an excellent discussion on Karl Marx and Says Law see Bernice Shoul’s article in J. J. Spengler & W. R. Allen Essays in Economic Thought (Rand McNally, Chicago, 1960), pp. 454-469.

[15]. See my forthcoming article in the next issue of position of this theory.

[16]. Grossman op. cit. p. 99 ff.

[17]. op. cit. p. 96-7.

[18]. Capital volume III p. 251 (Moscow Ed).