Posted by: exiwp | August 9, 1980

Capitalism’s” Final Crisis (1980)

“Capitalism’s” Final Crisis” was written by Lou Hinman (with an introduction by Newman). The paper outlines the IWP’s economic theories of the early and mid-70s. I find it interesting to see how the cult’s use of language has changed from hard-core communist rhetoric to the current mass-marketed sales pitch. From what I know of their history, the cult’s early “analyses” on the “evils of capitalism” actually dovetailed with their failure to secure continued federal funding from the government-sponsored CETA program (from which their front groups had benefited greatly). The language “evolved” yet again with the creation of the Unemployed and Welfare Council (a mid-70s front group designed to capitalize on the welfare right movement originated by other progressive community activists), and again with the creation of the New Alliance Party and the Rainbow Lobby in the mid-80s. In any case, I find it curious how Newman continues to display a Marxist posture considering the All Stars’ “support” for workfare-like programs (aka “internships” and “volunteer” assignments). Finally, will Newman ever address the fact that the majority of the people who toil long hours within his various operations are UNPAID and that even paid employees have few benefits (when I was in the cult, health insurance, vacations and other “worker” benefits were out of the question). Unions be damned, indeed!



What the Politicians Won’t
Tell You About the U.S. Economy

by Lou Hinman
Editor in Chief

All rights reserved,
September, 1980

United Struggle Press
216 West 102nd Street
Second floor
New York, New York 10025
(212) 864-3126 

By Fred Newman

Capitalism–A System Without a Chance

From its earliest days, the capitalist class has suffered from a kind of social schizophrenia which is but the psychological (ideological) expression of the ever-changing, yet never fully coherent, relationship between the accumulation of capital (the driving force of both the capitalist as an individual and the capitalist class) and the development of the productive forces (the objectively necessary condition for continued capitalist–or, for that matter, any other system’s–survival).

Within intra-capitalist competition, greed and rapaciousness of a kind rarely encountered in human history has dominated.  Yet concurrent with such “individualized motives” has existed a class consciousness by which the capitalists identified themselves as the vanguard class in the struggle to progressively advance human society.  Such class consciousness–vulgar and pervasively hypocritical as it might be–is not simply to be written off as either Madison Avenue public relations or self-serving rationalization for capitalism’s crimes against humanity.  It is in fact the case that during capitalism’s “middle period” productive forces and, accompanying them the quality of human existence, grew at a rate never before approached in the history of the specie.  There are few who would deny that this growth was most directly a function of the capitalist mode of production and distribution.

During this “middle period,” the capitalist drive to accumulate (to “make money”) and the development of the productive forces were sufficiently compatible so that many–including, ironically, historically significant Marxists–came to equate the two.  Doing so effectively denied the historical contradictions (as opposed to the Hegelian contradictions which make plain capitalism’s historical limits as a productive and distributive system.  Why the capitalists would wish to deny the necessity of their own demise seems easy enough to understand.  The mistakes of Marxists on these matters (indeed, not simply “dissident” Marxists but the “orthodoxy”) require more careful consideration.

The capitalist class’ consciousness as the vanguard of progress is critical in understanding not only capitalism as a social system but, as well, capitalism as an economic system.  Indeed, the separation of capitalism as a social system and capitalism as an economic system serves only to make capitalism’s current terminal stage (not to mention its entire history) totally incomprehensible.  For capitalism’s economic movement cannot be understood by reducing it to purely mechanical quantitative mathematical formulae. Bourgeois economics, perhaps the world’s most expensive intellectual failure, has exposed itself as a pseudo-science in its attempt to do just that.  These are the contemporary vulgar materialists who know nothing of the subjectivity of history.  On the other hand, (following Marx’s observation in the Theses on Fuerbach) subjectivity as treated by the idealists–whose contemporary form is the bourgeois psychologist–reveals little or no understanding of history as the real movement of social forces.

Thus, when we speak of the consciousness of the capitalist class (or, for that matter, of any class) it is necessary to reject the bourgeois psychological paradigm which considers mental states to be properties of individuals.  To be sure, this model is totally invalid even as it applies to an individual’s emotions, beliefs, attitudes, etc.  However, the reductionistic attempt to comprehend mass or class consciousness by explicitly or implicitly employing the individualistic model of contemporary psychology reduces the sciences of the many (history) to the banal level of bourgeois individualized psychology.  Capitalist class consciousness is properly understood in its historical setting as the objectively identifiable historical subjectivity necessary to produce the effective demand for capitalist expanded reproduction.  And to understand this subjectivity demands an understanding of the ,economic,, condition–viz. the existence of pre-capitalist modes of production–which is a required condition for capitalist realization, and therefore development.

These two: capitalist class consciousness (unconscious or conscious historical awareness of the social and economic superiority of capitalism) and the existence of pre-capitalist economies are synthesized aspects of modern human history.  One is not merely the ‘reflection” of the other.  Rather, the recognition of capitalist superiority and the existence of pre-capitalist modes of production are intricately tied together normative features of social reality.  Values are not simply “subjective’ opinions, akin, as the early logical positivists use to say, to screams of pain when one is stuck with a pin or smiles when one is stroked.  Values are real, neither Platonic forms nor Judeo-Christian ethical imperatives, but historical components of social development.  Charles Sanders Pierce, the early American pragmatist spoke of “values in a universe of chance.”  Pragmatism, the dominant mode of U.S. ideology, has played out the scenario suggested by that formulation.  The point, however, is not that values exist in a universe of chance but that chance (better known as bourgeois science) exists in a universe of values.  And it is Marx more than anyone who has shown us the method for correctly understanding our valued history.

These ideological dualisms–the separation of fact and value, objective and subjective, quantitative and qualitative, etc.–are the very methodological basis of contemporary bourgeois science, and they demand an understanding of capitalist development and motion free of “subjective” considerations.  Such is not possible.  Moreover, the attempt to do so obscures the very critical fact that capitalism is in its final crisis.  For the former vanguard of progress–the capitalist class–has become the conservative preserver of zero-growth status-quoism.  And capitalism (the capitalists) cannot carry on with this class consciousness. Shall they simply change it by finding a good therapist?  They cannot.  For capitalism is no longer progressive.  And economically speaking, there can be no capitalism without progress.

Mr. Hinman’s paper explains why as clearly as I have seen anyone do.


The Terminal Crisi of Capitalism

“Freeman and slave, patrician and plebeian, lord and serf, guild-master and journeyman, in a word, oppressor and oppressed, stood in constant opposition to one another, carried on an uninterrupted, now hidden, now open fight, a fight that each time ended, either in a revolutionary reconstitution of society at large, or in the common ruin of the contending classes.”  (our italics)

Marx and Engels, The Communist Manifesto

The last twenty years have seen some truly astounding changes in the problems confronting capitalism.  The 1960s began with a record-breaking period of economic expansion in the United States, a period that lasted for some 105 months.  So unprecedented was such a period of uninterrupted expansion in a capitalist economy that it led Walter Heller, Chairman of President Johnson’s Council of Economic Advisors, to announce euphorically in the mid-sixties that the new Keynesian techniques for stimulating consumption had been perfected, thus opening up the prospect of limitless crisis-free expansion of capitalist production and continually growing prosperity.1  Economists were so willing to accept this unhistorical view that many colleges and universities actually eliminated courses on the “business cycle” from their curricula.

A decade later, by the mid-seventies, both the new theory and practice of continuous capitalist growth lay in ruins. Keynesians were astounded to find unemployment increasing steadily over the long term, and reaching new post-war cyclical highs, at the same time that inflation accelerated.  The Phillips Curve, one of the key tools in the application of Keynesian techniques (in making policy decisions about trade-offs between unemployment and inflation) was shown to be useless.  It began to appear that practically no amount of unemployment could stop the acceleration of inflation, on the one hand, and that on the other hand, almost no amount of fiscal and monetary stimulus could bring about increased production.

Some (the extreme economic conservatives) counseled that sufficiently stringent application of fiscal and monetary restraint could still bring inflation under control.  Others (the economic liberals and the social-democratic labor leaders) counseled that increased stimulation of demand by government spending–more Keynesian medicine–could still increase production and employment.

But the remarkable fact is that neither of these counsels has prevailed, and neither seems likely to, since it becomes clearer every day that either one would spell disaster for capitalist control of production and distribution.  Deficit spending by the federal government remains high.  Indeed, much of this spending by government has become so crucial to economic stability in the United States that it cannot be eliminated without precipitating a collapse of the economy.  Carter’s talk about balancing the budget has come to little and Reagan’s, despite more conservative rhetoric, is likely to come to little more given the present conditions internationally.  The political consequences of permitting the economy to go through a full scale depression and “bottom out” are truly unthinkable for the capitalist class, which is clearly doing everything possible to avoid precipitating such a depression.  Like it or not, the government must continue to provide subsidies and bail-outs to failing corporations, welfare to those whom the economy cannot employ productively, funding for maintenance of essential social services (albeit at inadequate levels), and massive military spending to defend capitalist interests internationally.

At the same time, even this high level of deficit spending is completely ineffective in bringing about an increase in the production of real goods and services.  The more money is pumped into the economy, the more credit is extended, the higher prices rise.  Thus, for the U.S. economy as a whole we are witnessing stagnation, decline, and the complete failure of Keynesian “under-consumptionist” solutions to do anything about it.

At the level of local government (whose credit rating is lower than the national government’s to begin with) deficit spending has already exceeded its limits in many cases.  New York City is still in the throes of the “debt crisis” that began in 1974. Debt crises in Detroit, Cleveland, Washington D.C., Chicago and other municipalities are imminent or have already begun.  These cities have been driven to the verge of bankruptcy by their attempts to meet operating expenses through continual refinancing of short term bank loans.

In New York City, the banks have essentially “foreclosed” on these loans and taken direct political control of the city (witness the Emergency Financial Control Board), demanding the elimination of significant portions of the city’s infrastructure-schools, hospitals, fire protection–and laying off tens of thousands of city workers.  The profitability of the banks’ capital–the loans–is thus being secured by the destruction of the city’s “human capital.”  The city is promised the restoration of its credit rating if it will submit to the planned deterioration of its housing, education, health care, transportation systems and much else.

It goes without saying that the burden of these adverse changes has fallen disproportionately on the poor.  Moreover, the poor have increased by many millions of people during the 1970s, even by the conservative criteria of the Bureau of Labor Statistics.  The War on Poverty, the last gasp of deficit finance and a major propaganda thrust of the Johnson administration, has come to an end.  In place of this War on Poverty, which was to have eliminated the purely “accidental” causes of poverty and cleared the way for the integration of welfare recipients into the productive labor force, we have today as the 1980s begin a cancerously growing and thoroughly bureaucratized welfare-state system.

Today, “the poor” no longer identifies merely the chronically unemployed.  In addition to millions of welfare recipients, it includes tens of thousands of poverty workers who are themselves little better off than the welfare recipients they service.  It includes millions of undocumented workers.  It includes millions of workers who have only part-time, occasional or seasonal work.  Finally, it includes tens of millions of workers who are fully employed at, slightly above, or even below minimum wage.  The U.S. welfare-state system subsumes not only welfare benefits per se, but also institutions such as food stamps, unemployment insurance, government subsidies for housing (not to mention subsidies for “poor” corporations such as Chrysler and Lockheed) and Medicaid.

Though thoroughly inadequate to the scope and depth of poverty in the United States, the welfare-state system is nevertheless crucial, since it helps to maintain purchasing power in an economy in which declining numbers o£ people are able to obtain the means of purchase through productive employment.

While these profound changes have been taking place in the heartland of industrial capitalism, other changes have been taking place internationally.  Indeed, the changes that have taken place in the U.S. economy can only be understood in the context of these international developments.

In the last twenty years, we have seen the rise of the multinational corporation as the dominant organizational form within the world capitalist system.  In these corporations, we have seen not only the continued concentration and centralization of capita12 under the control of fewer and fewer individuals and “conglomerates,” but concentration and centralization in a form which to a great extent is outside the even nominal legal control of any national jurisdiction.

At the same time that de-industrialization, chronic unemployment and intractable inflation have become facts of life in the United States, the multinational corporations have been exporting some of the most advanced capitalist industry to selected areas in the “third world.”  Multinational corporations have transferred the manufacture of TV sets, automobiles, electrical equipment, electronic components, textiles, shoes (to name a few commodities) out of the United States and other advanced capitalist countries and into such countries as Brazil, Singapore, Malaysia Sri Lanka, Taiwan and Hong Kong.

The industrialization of selected parts of the underdeveloped world is proceeding apace with the stagnation and decline of U.S. industry.  The dilemma which now confronts the advocates of capitalist “development” is that the productive forces of the United States, which for decades relied on the imperialist control of the third world for its economic growth, is now being sacrificed to this “internationalization of capital.”

This internationalization of capital cannot be identified as “development,” since it entails the decline of advanced productive forces where they already exist.  Moreover, in view of the statistics on the growth of poverty internationally, this internationalization of capital cannot even be characterized as the long overdue development of the former victims of imperialism.

The “export of capital” in the nineteenth century was characterized by loans to backward economies and by the development of such one-crop agricultural economies and extractive industries as produced commodities that could be used directly (capitalized) by capitalism.  In the past twenty years, the development of the “export-platform” by multinational capital has continued this one-sided development in a new form.3

The new form is now, more than ever, demonstrably neither an all-round development of the productive forces, nor a more equitable redistribution of the world’s wealth in favor of the more backward and deprived sectors of the capitalist world.  This move by capital is purely and simply a method of increasing profits (and hence, accumulation of capital) by reducing wage costs.  The extreme conditions under which newly proletarianized people work in these export-platforms, and the poverty that confronts them and the millions for whom the export-platforms offer no jobs, recall the “primitive accumulation” phase of early capitalist development.  Yet there are neither historical nor economic reasons for believing that these beginnings will evolve into a new heyday for capitalism in these or any other countries.

These export platforms have all been built in areas where special tax concessions are available and where the protection of labor organizations is curtailed or prevented completely by repressive governments.  In Hong Kong, Singapore and Taiwan labor unions are illegal, as are strikes.  In all of South America except Argentina (and recently, Nicaragua) there are no effective labor organizations of any kind.  Under these circumstances, it is not surprising that wages in Singapore, for example, are thirty cents an hour; that sixty percent of the adults in Hong Kong work a seven-day week while some 34,000 children under the age of fourteen work ten hours a day or longer; and that neo-fascist military governments in Chile and Brazil sustain a ravenously inflationary accumulation of capital out of the hides of the working class.

The foregoing statistics suggest the kind of “development” the advent of the multinational corporation and the export-platform represent for the areas directly affected.  But looking at the capitalist world as a whole, the gross statistics on the accelerated growth of poverty in general give us incontrovertible proof of what current capitalist “development” is really about.  In Central America, where a revolutionary upheaval begun by the Sandinista victory in Nicaragua is now in progress, the economic growth of the last twenty years has widened the gap between the rich and the poor.  In El Salvador, the poorest 20 percent of the population received 5.5 percent of the national income in 1961. By 1969, their share had dropped to 3.7 percent.4  In India, after centuries of commerce with British imperialism, 200,000,000 people live today on incomes of $40 a year.  During the United Nations “Decade of Development” (the 1960s), GNP figures for some of the world’s poorest countries showed modest growth, but the statistics also showed that the poorest 60 percent of the world’s population lived in worse material conditions at the end of the 1960s than they did at the beginning.  The development of capitalism in the 1960s brought absolute and relative increases in income for the top 5 percent of people, but an absolute decrease for the poorest 60 percent.

Furthermore, there is now ample evidence that the “internationalization” o£ capital by the multinational corporations and the implantation of export-platforms has not, in fact, even been carried out primarily through the export of capital, but rather through the capitalization of the existing resources in backward countries. Between 1957 and 1965, some 83 percent of the investment in Latin America by U.S.-based multinational corporations was financed out of local capital. From 1960 to 1970, some 78 percent of operations in Latin America by U.S.-based, non-financial multinational corporations was financed out of local capital.

At the same time that multinationals have been absorbing and capitalizing local resources, they have been repatriating the profits generated by these investments. From 1960 through 1969, U.S.-based multinationals repatriated 79 percent of their net profits from Latin American operations.  Other statistics reveal that while capital inflows to South America increased from 1960-71 by 340 percent, the outflow of capital increased 982 percent.  One suspects that the “internationalization of capital” is not what it might appear to be.

Finally, there is clear historical proof that the imperialisms of the nineteenth and twentieth centuries-both the old “national” imperialism and the new multinational imperialism–have not internationalized capitalism as a mode of production.  Despite “economic miracles” such as Brazil, the percentage of the Latin American workforce employed in manufacturing has actually decreased from 1925 to 1970.  In 1960, unemployment in the third world stood at 27 percent. By 1970, it had risen to 30 percent.5

There can be little doubt that these are hard times for capitalism.  Yet why do we regard the present crisis as terminal?  Capitalism has been known since its inception as a mode of production to be prone to periodic crises.  The cause of these crises is the tendency of capitalist production to overproduce, resulting in the production of commodities that cannot be realized (sold).

To understand this general pattern of crisis it is necessary to take note of some special features of capitalist production.  The first is that capitalist production depends on a subjective motive, namely, the search for private profits by individual capitalists and firms for the purpose of expanding their individual capitals.  The second is that capitalist production is anarchistic.  There is no comprehensive plan that integrates the production and distribution of goods, and all distribution takes place through the market.  Finally, the profits to be appropriated privately are embodied in the products of capitalist production, and the appropriation of these profits depends on the products first being sold in the market.

Consequently, the objective requirements that any mode of production must meet–the satisfaction of the survival needs of the productive classes–have been met under capitalist conditions only through the alternation of scarcity and glut.  Crisis is not simply a problem of capitalist production; historically it has been the very mechanism that regulates capitalist production.

How then is it possible for a capitalist crisis to be terminal, and why do we believe that the present crisis is terminal?  The periodic over-production of capitalist commodities results in a crisis of realization.  The purpose of production, from the point of view of the capitalists who control it, is obtaining value in an independent form, i.e., realized value.  This independent form may be money, but it may be some other form.  In particular, it may be in the form of capital.6

The issue of terminal crisis comes to this: Is the constantly recurring crisis of realization of capitalism’s over-production indefinitely resolvable?  To answer this question, it is necessary to look at ways in which it has been resolved in the past, and see if these ways of resolving it (or any new ways) are now available to capitalism.

In the early development of capitalist production, periodic crises of over-production and realization were overcome primarily through the extension of the market domestically.  Once competing (pre-capitalist) modes of production began to disappear in the homeland of capitalism, the crises of realization became more and more severe.

In the latter half of the nineteenth century, modern imperialism developed.  In our view, the essence of this imperialism was not the “export of capital” but the extension of the capitalist market beyond the capitalist mode of production itself, by one means or another, as the new solution to the crisis of realization.  But note well, this means of solving the crisis of realization is nothing but the continued accumulation of capital.  Like the “primitive accumulation” against feudalism and petty commodity production at the beginning of capitalism, imperialism is the means by which value which has been over-produced by capitalist industry is realized (converted into money or capital) for the continued expansion of capitalist production.

An exercise in “free-market competition” called World War I marked the end of the capacity of imperialism to progressively resolve the realization crisis of capitalism.  The war occurred when the world had been completely divided up by the imperialist powers, so that the only way capitalist nations could continue the realization of their own over-production was at the expense of competing capitalist nations.  The war succeeded in restoring the profitability of certain capitals (namely, those of the victorious nations) by depriving the losers of theirs and putting them at a permanent disadvantage.  (For the losers of World War I, the solution to this disadvantage was fascism.  We will have more to say later about the economic meaning of fascism).  Not incidentally, the war also destroyed large quantities of productive forces, including millions of members of the working class on both sides.

Capitalism’s new solution lasted roughly ten years, until the stock market crash of 1929 plunged the entire capitalist world into the Great Depression. Out of the Great Depression, the new Keynesian gospel of “under-consumptionist” solutions was born.  In theory, deficit spending was merely to “prime the pump,” the assumption being that capitalist production was really self-equilibrating and that by stimulating consumption that was lagging for no good reason, the economy could be pushed back into full employment and full production.

In practice, all deficit spending did was to exacerbate the realization crisis by creating within the economy massive debt which was itself in need of realization.  To understand this, it is only necessary to see that credit is itself a “product” for capitalist exchange.  The extension of credit might appear to solve the problem of realization, but in reality it only introduces a new commodity to be realized.  Credit is the sale of indebtedness by the debtor to the creditor for money.  When this transaction is complete, the original commodity (bought with credit) has been realized, but now a new commodity has been “produced” which is still unrealized, namely the debt.  When debts themselves are sold and re-sold, as they are in a capitalist economy, the problem of realization obviously displays an infinite regress which offers no solution to the crisis of realization.  Moreover, the capitalization of debt (since capitalists don’t lend money for free, but charge interest) actually compounds the realization crisis by creating yet more unrealizable debt in the economy.7

Keynesian deficit spending never, in the course of the ten years leading up to World War II, succeeded in reviving production here in the U.S.  It took the mobilization for war and the opportunities for profit and capital accumulation that the war opened up to the winners–rebuilding the shattered plant and equipment of the losers, Germany and Japan–temporarily to revive accumulation for the U.S. economy.  That this solution to the crisis of realization was not progressive is suggested by the fact that it entailed the destruction of hundreds of cities and the death of about 100 million people.

The United States was the only major capitalist power to emerge from the war with its productive plant intact.  This advantage, along with the sizeable advantages derived from the privileged status accorded the U.S. dollar by the Bretton Woods monetary arrangements,8 put U.S. capital in a position to begin expanding once again.

But this time, the weakened state of capitalism as a whole was reflected in the reliance of U.S. capitalism on institutionalized deficit spending, no longer as a crisis measure, but as part of the status quo.  The end of the 1960s saw the resurgence of European and Japanese capitals as competitors with U.S. capital, and the consequent downfall of the Bretton Woods system.  Under these circumstances, as we have noted, the under-consumptionist solutions of deficit spending have proven utterly powerless to realize enough value to stimulate real production.

The consequence, as we are seeing day by day, is that capitalist production is declining steadily, and there is no solution within capitalism to this decline.  Capital continues to accumulate within the capitalist system, but this capital is more and more neither realized nor realizable.  This explains why all attempts to stimulate production fail.  Purchasing power which is intended to call forth greater production simply results in higher prices, as the capitalists use the money to realize the existing over-production of capital.

The issue of the terminal crisis of capitalism is one,. which has generally been neglected by Marxist political economists.  The generally accepted “orthodox” view of capitalist crisis tends to equate it with the business cycle.  It is our position that this neglect marks a critical gap in Marxist crisis theory.  The failure to recognize that we are now going through the terminal crisis of world capitalism (not just the last business cycle “bust,” but a wholly different kind of crisis) obviously has implications for socialist strategy.  Moreover, the same methodological approach that fails to recognize terminal crisis leads to other political mistakes as well.  (We will have more to say about this in the last section of this paper.)

Of all the leading classical practitioners of Marxism,, Rosa Luxemburg is the only one who attempted to fill this gap in Marxist political economy in the area of crisis theory.  In the sections that follow, we will give a formal presentation of Luxemburg’s thesis on the accumulation of capital and the issue of terminal crisis, a critique of her analysis by a leading “orthodox” theoretician, and a methodological critique of both.

Luxemburg’s Thesis on the Accumulation of Capital

All modes of production must make provision for their own reproduction.  In the process of production, there must be produced (at least) more of the very things that are being consumed in the process of production itself, so that once the current cycle of production is over, production can begin again. Obviously, a mode of production that failed to meet this material criterion could not exist for long.

We can identify the sum total of all the useful goods and. services produced in any mode of production as the “total social product.”  Within this total social product, we can identify three constituents:

1.   Means of production produced (tools, machines, raw materials, etc.)

2.   Consumption goods produced (food, clothing, education, housing, etc.)

3.   Social surplus produced (composition unspecified for the moment).

Using this concept of social reproduction and the conception of total social product, we can identify, following Marx and Luxemburg, two basic types of reproduction.  They are “simple reproduction” and “expanded reproduction.”

Simple reproduction corresponds to the situation in which enough means of production are produced to replace those worn out in the process of production itself, and enough consumption goods are produced to replace those consumed by the productive class(es) during the process of production.  Furthermore, the social surplus must be produced in a form that is suited only for unproductive consumption by the unproductive class(es).  If these criteria are met, we have simple reproduction.

However, simple reproduction cannot be the basis for a culture that is growing, either quantitatively or qualitatively. Growth requires expanded reproduction.  Expanded reproduction must meet the same criteria as simple reproduction with respect to the means of production and consumption goods consumed during the current cycle of production.  The social surplus,, however, cannot be made up of goods and services that are suited only to unproductive consumption (luxury goods) by the unproductive classes.  Rather, the social surplus must be produced as more means of production and more consumption goods.  Thus, when production resumes, it resumes on an expanded scale.  As Marx pointed out, of all modes of production known to history, none had come close to capitalist production in its capacity to develop the forces of production.  It was the great capacity of capitalist production for its own expanded reproduction that made rising standards of living possible for some people during the period when expanded reproduction was taking place.

The Problem of Realization

However, Luxemburg identifies a problem with expanded reproduction of the capitalist mode of production, a problem which she credits Marx with having formulated more clearly than anyone else, while failing to solve it definitively.  Luxemburg raised this problem anew in The Accumulation of Capital (1912) and arrived at a solution using Marx’s method and consistent with Marx’s analysis of value and exploitation.

To understand the problem, we must remind ourselves of the features of capitalist production that we noted in the first section of this paper.  The first feature is that capitalist production depends on a subjective motive which is unrelated to the objective requirements that production must meet.  This motive is the private appropriation of profits toward the end of expanding the individual capital of the individual capitalist.  The second feature is that capitalist production is anarchistic-all distribution takes place through the market, and all production is for the market.  (Government attempts to regulate the whole economy through fiscal and monetary policy do not change this, as we have noted in our review of the last twenty years of government intervention into the U.S. economy, as long as production itself remains in the control of private individuals and corporations).  Finally, the profits to be appropriated are embodied in the products of capitalist production, and the appropriation of these profits (and therefore the self-expansion of the capital which generated the profits) depends on the products first being realized in the market.  The capitalist is not interested in (generally having no use for) the surplus product itself.  What interests the capitalist is the value embodied in the surplus.  It is this value which the capitalist seeks to appropriate in a form that will permit the expansion of his capital.  It is only if the capitalist can convert the surplus product (along with the other components of the product) into money (or other appropriate forms of realized value) that he can make use of it.  Crucial to this point is the understanding that money performs more than one function in capitalist production and distribution.  It is the means of circulation of commodities, as it is in any commodity-based economy.  In addition, however, it is a form of realized value (value being materialized labor) that is the particular object of the capitalists.10

These basic facts of capitalist production raise the question of how reproduction on an expanded scale is possible under capitalism.  Luxemburg asked how it was possible, through all the fluctuations of the capitalist economy, through all the shortages and gluts, that the capitalist mode of production was not only able to reproduce itself, but in addition displayed an historically unprecedented power to expand the productive forces of society.

With simple reproduction, we can convince ourselves, there is no systematic problem in realizing the total social product.  Luxemburg assumes (adopting the same pedagogical model that Marx uses in Capital) that the only classes in society are capitalists and workers (and dependents of both).  Under this assumption, it is easy to see that the only possible buyers of the means o£ production are the capitalists themselves.  The capitalists constitute the only possible economic demand for the means of production, since within capitalism they are the only ones who can actually make use of means of production.  The realization of this component of the social product, therefore, is accomplished when capitalists purchase from one another means of production appropriate to each particular branch of production.  When this process is completed, one condition for simple reproduction has been met.

The consumption goods are realized by the working class.  The capitalists exchange wages for the labor power of workers.  Normally (again, using the model adopted in Capital) labor power is purchased at its value, which means that workers must be paid enough to purchase the consumption goods necessary to reproduce their labor power.  Thus, the working class realizes the consumption goods, the second constituent of the social product, and the second condition of simple reproduction is satisfied.

There remains to be realized the surplus product.  Under simple reproduction, none of the surplus consists of either means of production or (working class) consumption goods.  Rather, it consists of luxuries to be consumed by the capitalists.  The capitalists themselves again make up the demand for this last component of the social product, and all that is necessary is that they purchase the luxuries from those capitalists who produce them.  This completes the realization of the total social product, and the stage is now clear for production to resume.  (The simple reproduction of capitalism is, as Luxemburg points out, really a theoretical fiction which is introduced in preparation for the discussion of expanded reproduction.  There has never actually been any such thing as the simple reproduction of capitalism.)

The picture changes, however, if we consider expanded reproduction.  Here, the means of production and the consumption goods are realized as before.  However, realization of the social surplus cannot take place as before.  Part of the social surplus must be accumulated as money for the anticipated purchase (when enough money has been accumulated) of more means of production and more consumption goods.  Therefore, the question arises: who are the buyers (from whom does the economic demand come?) who can accomplish the realization of that portion of the social surplus which is to be accumulated rather than unproductively consumed?

Luxemburg rejects the capitalists as a source o£ this demand.  What we are considering here is a general accumulation as the necessary condition for a general expansion of the forces of production.  Certainly, it often happens that one capitalist accumulates at the expense of another.  However, this produces no net change in the forces of production at the disposal of society.  When, for example, Rockefeller drove his competitors in the oil industry out of business in the late 1800s, his company, Standard Oil of New Jersey, accumulated (centralized) capital at the expense of other oil producers.  However, this in itself brought no net increase in the production of oil.

It is the class of capitalists which must be induced to resume production on an expanded scale in anticipation of producing and appropriating a greater surplus in the future.  However, they cannot be the source of value for realization of that portion of surplus which is to be accumulated.  Even if we assume that the capitalists, as a class, are in possession of money which could, abstractly speaking, realize the value contained in the part of the social surplus destined for accumulation, the purchase of the surplus using this money would not be an accumulation of capital, but rather a development of the productive forces independently of the historically specific form of this development.  Such an exchange among capitalists (capitalist buyers purchasing machines, raw materials and wholesale lots of consumption goods from one another) may seem plausible superficially in that the exchange entails a change in the form of the individual capital involved.  However, all changes in the form of capital are not equivalent to the realization of the value embodied in the capital. Possession of the collective means to expand production (the necessary material goods and money as the means of circulation) does not result in the expansion of production of material wealth unless expansion and realization of individual capitals is also anticipated.

Furthermore, the working class cannot, Luxemburg argues, provide a market for the realization of the value contained in the surplus to be accumulated.  The working class is only in possession of money equal in value to its labor power.  The difference between the value of labor power and the total value produced by the working class is the very source of the social surplus and, hence, of capitalist profits.  If the working class were in a position to consume part of the surplus, that part could not be accumulated.  (We are, of course, speaking here of the existing working class, not the working class as it would be increased by expanded reproduction).  If the existing working class could consume part of the surplus, the rate of exploitation of the working class would be lower, the standard of living of the working class would be higher, but there would be no accumulation and therefore no development of the productive forces as a totality as a result.

Of course, we can see how expanded reproduction could take place if we abstract from the actual conditions of capitalist production.  There would be no systematic problem if part of the social surplus were simply produced as extra means of production and part as extra consumption goods, and distributed to the appropriate factories and distribution points–all according to a plan.  This, however, would be socialism, not capitalism.  To reiterate, the problem arises because all production under capitalism is anarchistic, all production aims at the expansion of existing capitals, and all distribution is mediated by exchange.  No production takes place unless realization is anticipated, not only of the capitals employed, but of the surplus besides.

This “anticipation” is, to be sure, the anticipation of an individual capitalist.  Yet the confidence of the individual capitalist that realization is possible (and expanded reproduction therefore supportable) is not an individual judgment.  It is based on, among other things, the recognition that the capitalist class has secured the conditions for realization.  Thus, though investment in capitalist expanded reproduction is a voluntary decision that is apparently made individually, it is predicated on material conditions that can only be secured by the class as a whole (in large measure, through its control of the state and its military apparatus).

Luxemburg argues that the will of the capitalist notwithstanding, we cannot account for the development of capitalism if we confine our investigation to the capitalist mode of production itself.  She argues that this problem cannot be solved under the assumptions of the model employed.  If we assume that there are no sources of value other than those produced under the capitalist mode of production, it is simply impossible for capital to be accumulated, and therefore impossible for the forces of production to be developed.

The Solution to the Problem

Luxemburg argues that the accumulation of capital (and hence the development of the productive forces) cannot take place without a non-capitalist environment.  The consumers of the social surplus must be able to supply values that are produced outside of capitalist relations of production.  Though capital is the historically specific form which actually develops industry and the productivity of labor, it cannot do this without access to values which were not produced as capital, but which can still be capitalized.

The market is the institution that makes it possible to obtain these values as the realized form of the capitalist social surplus.  Although in the beginning of capitalist development there was some outright looting of primitive societies (the Conquistadors in Mexico and South America, for example) which played a role in capitalist development, such looting is not a process which can sustain developed capitalism.  The development of the productive forces as capital requires that the necessary value to support this development be obtained through exchange, i.e., through the market.

In the chapter entitled “Reproduction and its Social Setting” in The Accumulation of Capital, Luxemburg gives an account of the way imperialism appropriated values from the non-capitalist world in the second half of the nineteenth century.  Money was loaned by European banks to despotic regimes in the Middle East (Egypt and Turkey, for example).  The value that secured these loans (and the value that ultimately went to repay them) was extracted from pre-capitalist modes of production through the cooperation of the’ governments to which the loans were made.  Thus, for example, in Egypt large scale production of single crops (first cotton, then sugar) for the world market was financed by these loans, though the mode of production was not capitalist, but was based on the forced labor of the Egyptian peasants.  Similarly, in Turkey the building of railroads for the introduction of capitalist commodities was financed by loans to the Turkish state, which repaid these loans by its power to tax, in kind, the Turkish peasants.

The important thing to understand about these examples is the function that these transactions served for capitalism.  (Few Marxists will deny that these transactions have not led to the industrial development o£ Egypt and Turkey).  The making of international loans is not adequately understood as the “export of capital” for productive investment.  What these loans amount to is the creation of accounts in European and U.S. banks for foreign governments and individuals which can be drawn on for the purchase of consumer goods and/or production goods produced by capitalism.  In other words, it is basically a question of credit rather than productive investment.

While it is true that some of this credit has been used to create capitalist industry, this has not been the general trend.  In general, such credit has been used to purchase the capital goods (railroads, bridges, ports) required to build the necessary infrastructure for the further penetration of existing economic relations by capitalist commodities.  The capitalist enterprises created by this process have generally been, as we have indicated, extractive or one-crop agricultural industries producing almost exclusively for export.  The products from these operations have gone overwhelmingly to support the capital (credit) created by the loans.

No self-developing, generalized capitalist production has emerged from this process.  In some cases, the international loans were spent merely to provide the ruling oligarchies with improved standards of living through the purchase of capitalist luxury goods.  In all events, the penetration of backward economies by capitalist commodities has caused accelerated depletion of the wealth produced by those economies, as this wealth more and more goes to support accumulation of capital.

As Marx demonstrates in Capital, in a system of generalized commodity exchange commodities tend to be exchanged at their values, value being determined by the amount of socially necessary labor contained in a commodity.  Marx took great pains to explain why capitalism, though obviously exploitative, could not be explained on the basis of capitalists “cheating” those to whom they sold or from whom they bought their commodities.  With respect to Luxemburg’s thesis, this has an important relevance.  Capitalism as a system (the capitalists as a class) does not obtain value to support accumulation (and hence, expanded reproduction) through “cheating,” any more than they “cheat” their own workers.  (Of course, we know that cheating by individuals is an important part of the competitive struggle under capitalism).  The interchange of developed capitalist production with backward economies is “fair” in that it simply reflects the superiority of capitalist production to earlier modes of production.  Since capitalism produces every commodity cheaper than it can be produced by more backward economies, it can obtain goods from backward economies at prices close to the value the goods would have had if they had been produced capitalistically.  On the other hand, capitalism can value its own commodities using prices that reflect the costs of production sander the backward mode.

Not only does this interchange reflect the superiority of capitalism to all pre-capitalist economic organization, it is precisely what enables capitalism to become more superior since, as Luxemburg indicates, it is what enables capitalism to develop the productive forces.  However, this “equal” exchange, so necessary for the accumulation of capital and the development of capitalist production, makes the development of the imperialized country impossible by depleting its wealth to the point where it is no longer a source for realization of capitalist commodities.

Luxemburg also describes the way in which capital, having extirpated “natural economies” (economic systems in which little or nothing is produced for exchange, but practically all consumption is for direct consumption) and introduced commodity exchange (and petty commodity production), then sets about destroying petty commodity production through competition with capitalist commodity production.  In the chapter entitled “The Struggle Against Peasant Economy,” Luxemburg describes vividly how, in the United States, capital pushed the frontier further and further west.  The hunting and gathering culture of the native Americans was destroyed forcibly by military means.  In its place, the natural economy of independent farms operated by European immigrants arose.  Following the Civil War, the collusion of the state with the rising capitalist class to impose money taxes on the U.S. population to defray the war debt and protective tariffs for the benefit of U.S. industry created the conditions for the forced integration of the independent farmers into the commodity economy.

The need for money to pay taxes draws the independent farmer into dependency on commodity exchange.  At the same time, the superiority of capitalist production (especially as capitalist production began to dominate agriculture) forces the farmer into reliance on the cheaply produced capitalist products, while undermining the value of his own labor to the point where he is destroyed as an independent producer and forced to become a wage laborer for capital.  In this way, independent farms were increasingly destroyed (their places being taken by successive waves of European immigrants who optimistically assumed the mortgages of the abandoned farms) in the process of supplying the value to support the development of capitalist industry as well as capitalist speculation in land and railway shares.

Luxemburg summarized the process as follows:

“With the railways in the van, and ruin in the rear-capital leads the way, its passage is marked with universal destruction…

“The general result of the struggle between capitalism and simple commodity production is this: after substituting commodity economy for natural economy, capital takes the place of simple commodity economy.  Non-capitalist organizations provide a fertile soil for capitalism; more strictly: capital feeds on the ruins of such organizations, and although this non-capitalist milieu is indispensable for accumulation, the latter proceeds at the cost of this medium nevertheless, by eating it up. Historically, the accumulation of capital is a kind of metabolism between capitalist economy and those pre-capitalist methods of production without which it cannot go on and which, in this light, it corrodes and assimilates….  Only the continuous and progressive disintegration of non-capitalist organizations makes accumulation of capital possible.”

On Luxemburg’s account, the continued appropriation of the social surpluses of the backward modes of production by capitalism means that there can be no accumulation within those modes capable of supporting a development of the productive forces.  Under such conditions, the backward modes of production can engage (at best) only in simple reproduction.  Eventually, as the human and material resources on which even simple reproduction depend are depleted, the material bases of the economy are destroyed.  This, as Luxemburg makes plain, spells disaster for the imperialized country.

Of course, many progressive economists have described the destructive consequences of imperialism on backward countries.  Luxemburg’s unique contribution was to show that in the long run, the consequences of imperialism are disastrous for capitalist production too.  Capitalist accumulation at the expense of pre-capitalist economic systems destroys the very conditions of capitalist accumulation.  The more successfully capitalism develops itself, the more quickly it destroys the basis for its further development.  When this process has reached an advanced stage, capital accumulation is clearly revealed to be a process that is distinct from the development of the productive forces.  Expanded reproduction comes to an end, and the fate of the looted and devastated colonies and neo-colonies is brought home to the center of advanced industrial capitalism.

Luxemburg Versus the Orthodoxy

“The real barrier of capitalist production is capital itself.  It is that capital and its self-expansion appear as the starting and the closing point, the motive and the purpose of production; that production is only production for capital and not vice-versa, the means of production are not mere means for a constant expansion of the living process of the society of producers.  The limits within which the preservation and self-expansion of the value of capital resting on the expropriation and pauperisation of the great mass of producers can alone move–these limits come continually into conflict with the methods employed by capital for its purposes, which drive towards unlimited extension of production as an end in itself, towards unconditional development of the social productivity of labor.  The means–unconditional development of the productive forces of society–comes continually into conflict with the limited purpose, the self-expansion of the existing capital.  The capitalist mode of production is, for this reason, a historical means of developing the material forces of production and creating an appropriate world-market and is, at the same time, in continual conflict between this its historical task and its own corresponding relations of social production.”

Marx, Capital, Vol. III

Luxemburg’s economic writings have been rejected by “orthodox” Marxists of practically every persuasion.  We will here examine the substance of this disagreement.  As the exemplar of the orthodoxy, we will examine the views expressed by Nikolai Bukharin in his book Imperialism and the Accumulation of Capital (1924).  This book is the only extended critique of Luxemburg’s two major works on economics–The Accumulation of Capital and An Anti-Critique–to which Luxemburg did not respond personally,. it having been written after her death.

We believe it is vital that this theoretical dispute be re-examined today.  The hostility (or indifference) of leading Marxist political economists to the theory of terminal crisis, and the rejection of this theory by the leading political organizations of the working class, have had profound strategic implications in the struggle for socialism.  Luxemburg took up the question of the accumulation of capital because the failure to pose and answer that question correctly provided, in the period before World War I, a theoretical rationalization for the political degeneration of the German Social Democracy (at that time, the leader of the world working class movement).  The position of Bernstein and other leaders of the German Social Democracy was that imperialism was not necessary for capitalist production as a whole; it was only a policy of one section of the capitalist class that profited from it, and therefore a viable strategy for the working class movement was to seek an accommodation with the progressive, anti-imperialist elements of the capitalist class.

Following this strategy, the German Social Democracy led the German working class to ruin in 1914 in support of their “own” capitalist class in World War I.  With fundamentally this same strategic perspective (“After Hitler, us”) the German working class parties were destroyed by fascism in the 1930s.  This political perspective cannot be separated from the economic analysis that says there is no contradiction in the base of capitalist accumulation.

A strong case can be made that Bukharin’s attack on Luxemburg’s economic writings is dishonest, and that it willfully misconstrues much of what Luxemburg says to meet strictly tactical needs in the consolidation of the New Economic Policy and the building of “socialism in one country” in the Soviet Union.  However, we will not focus on this.  Bukharin’s critique of Luxemburg, whatever its motivation, is the classical critique and its influence on the “orthodox” understanding of Marxist economic theory has been profound, even if unacknowledged.  An examination of its main points is of great help in clarifying what is basically correct about Luxemburg’s economic analysis, what is incorrect or confused about some of her formulations and what is Hegelian or vulgarly materialist about the analysis of the orthodoxy.  In light of all we have said about the economic history of capitalism in this century, it is imperative that this theoretical issue be re-examined in the formulation of a viable strategic perspective for the struggle for socialism in this national sector.

Bukharin criticizes Luxemburg’s concern with the “aim” of capitalist accumulation, and ridicules this concern as teleological.  Why do capitalists accumulate?  They accumulate, from their point of view, so as to be able to expand the production and appropriation of surplus value.  For Bukharin, this more or less settles the question of “aim.”  Bukharin explicitly rejects the notion, implicit in Luxemburg’s argument (and in Marx’s formulation in the quotation at the beginning of this section), that capitalist accumulation is not identical with the development of the productive forces.  He makes use of the models of accumulation that Luxemburg criticizes from Volume II of Capital to argue that there is no problem in the realization of the portion of capital to be accumulated, and hence no contradiction in the base of capitalist accumulation.

To the extent that Bukharin confines his critique to an explication of Marx’s models of expanded reproduction(and this is the substance of the first chapter of his book) he does nothing more than assume away the very problem that Luxemburg raises.  He argues that expanded reproduction is possible because one can conceive of proportionalities and a distribution of the surplus product taking place in such a way that the conditions for reproduction on an expanded scale would be met.  He ignores the specificity of the actual distribution under capitalism and argues that since the models from Volume II of Capital show the possibility of expanded reproduction, one can infer the actuality of expanded reproduction.  This is in contrast to Luxemburg’s clearly correct insistence that a “bloodless theoretical fiction” which neglects the actual historical conditions in which accumulation takes place cannot possibly account for expanded reproduction.  One cannot account for imperialism by making use of a model that excludes imperialism–the interaction of capitalist production and distribution with non-capitalist milieu–from the field of investigation.  This is perhaps Luxemburg’s major methodological point, and a profoundly simple point it is.

Bukharin’s argument on this score constitutes a regression to the point of view of Smith and Ricardo, that capitalism can be understood adequately as a system of barter in which every purchase is equivalent to a sale, or alternatively, as a system which is socially planned.  In this view, money is only understood as a means of circulation and not as a necessary form that value must assume for production to continue.

However, Bukharin does have a point.  He goes on to argue that realization of surplus for accumulation does not require “third persons” because, although commodities must pass through the money form in the case of every individual capital, commodities need not(and in fact, do not) pass through this money form all at the same time.  Thus, he says, an increased volume of commodities can be circulated, and capital accumulated in the process, by a quantity of money that does not increase, or does not increase in the same proportion as production increases.

Bukharin lists circumstances–the extension of credit, the balancing of one account by another (the development of the banking system), and the more rapid circulation of currency so that the same piece of money realizes many different commodities in rapid succession.  These circumstances, says Bukharin, make demand by “third persons” outside of capitalist productive relations quite unnecessary.

Furthermore, Bukharin argues, there is no need for there to be a gross accumulation by the capitalist class as a whole in the form of money.  On the contrary, he says, capitalism is characterized as a mode of production by a particular form of value–namely capital (or “self-expanding value”), which makes money unnecessary for accumulation.  What separates capitalism from earlier forms of commodity economy is that value can be accumulated as capital, and need not be accumulated as a “hoard” of money.

We must agree with Bukharin that Luxemburg is wrong in claiming that the accumulation of capital implies a constantly increasing mass of money in the hands of the capitalist class.  We must also agree that Luxemburg is wrong to formulate the realization problem as the problem of realizing the surplus to be accumulated at the end of every cycle of production.  We agree that Bukharin is right in principle, at least, that any volume of social surplus can be circulated (though not realized) through economies in the means of circulation.

What then?  From Bukharin’s perspective, the problem of accumulation is thus happily resolved, and the stage is clear for the development of contradictions that are “internal” to the capitalist mode of production, namely the tendency for the rate of profit to fall, the development of the reserve industrial army and the recurring crises of overproduction.  Luxemburg, according to Bukharin, failed to understand that capitalist production is a “unity of contradictions.”  Where Tugan-Baranovsky (one of the political economists both Luxemburg and Bukharin criticize)11 failed to recognize the contradictions in capitalist production, Luxemburg, Bukharin says, failed to recognize the unity.  The crises of overproduction become worse, the rate of profit continues to fall, the masses of immiserated proletarians continue to grow.  At a certain point, the contradictions become so intense that the barricades go up and there is a decisive struggle for power by the two classes, the capitalists and the workers.

Bukharin does not seem to notice that there is no way of accounting for the very things he adduces as explanations, if one accepts his understanding of accumulation.  If capitalist production is capable of generating its own market, what is overproduction?  Why does it occur in the first place?  Why is there a reserve industrial army and why does it grow, not just cyclically, but continually.  What accounts for the periodic re-absorption of part of the reserve army, and what determines when the reserve industrial army can no longer be reabsorbed?  Bukharin’s “explanations” of capitalist crisis are in fact merely descriptions that make use of certain fetishized tendencies abstracted from the actual historical process.12 Bukharin’s (and the orthodoxy’s generally) explanation of capitalist crisis has much the character of the “explanation” that attributes the effect of sleeping potions to their dormative powers.

Bukharin’s identification of the material contradictions within capitalism are without explanatory force and are politically useless because he regards the existence of contradiction as an explanation in itself.  Capitalism will come to an end because it has contradictions.  The specification of when and where, both in consideration of the subjective states of the classes involved and in terms of the objective economic conditions, remains entirely indeterminate. Bukharin’s view combines a vulgar materialist understanding of overproduction (individual capitalist greed, i.e., competition) with a Hegelian understanding of contradiction (contradictions move to higher and higher “stages” for no compelling material reason and become transformed at a certain point, again for no compelling material reason).13

Luxemburg raises the question of the “aim” of capitalist accumulation, and Bukharin calls this “teleological.”  We agree that Luxemburg’s formulation is overly “intentional.”  However, as Marxists, we regard the question of subjectivity, correctly formulated, as critical.  The subjectivity at issue is not the individual subjectivity of individual capitalists.  As individuals, capitalists are competitors with one another, and their activity is indeed subject to objective laws that operate independently of their intentionality.  But capitalists also form a class, and the subjective state of this class, its self-consciousness of class aims, is critical to our analysis of capitalism as a mode of production.

As individuals, capitalists struggle against each other for profits, and the weapon in this struggle is the development of the productive forces.  As members of a class, they struggle to secure the conditions for the realization of existing capital.  This is the contradiction that Marx identifies in the quotation from Volume III of Capital which we have quoted at the beginning of this section.

As we have noted, Bukharin faults Luxemburg for making a distinction between the accumulation of capital and expanded reproduction. Bukharin thereby virtually gives his case away, since this distinction is largely Luxemburg’s (not to mention Marx’s) merit.  Her weakness is that she does not make it more the focus of her presentation, rather than the issue of precise accounting, in terms of cycles of production, for the surplus destined for accumulation.

Let us try to refocus this dispute in light of all we have said here.  What is the realization question, and why is it significant for the analysis of capitalism?  The fundamental contradiction of capitalist production is the contradiction between the forces of production and the social organization of production.14  Under capitalist production, the forces of production are organized as private property–as capital.  Thus, the goal of capitalist production from the point of view of those who control it, i.e., those who make the voluntary decisions about investment, etc., is different from the goal from the social point of view.  The goal from the social point of view is the development of the productive forces to meet the needs of the producing classes.  (For the capitalist class, the development of the productive forces is only the means to their end.)

From the point of view of capital, the point is to accumulate value in a negotiable form (a form that, if not money per se, can be converted into money more or less at will), and to create the conditions for the expanded appropriation of value. From this point of view, value must be realized or realizable.

The problem with Bukharin’s scenario is that it attempts to solve a real contradiction by an appeal to that technical device (a sort of Marxist analogue to deficit spending). Various forms of credit do indeed facilitate the circulation of commodities.  Credit, however, does not solve the realization problem because credit is not realized value.  Furthermore, credit is capitalized under the capitalist organization of the forces of production, and capitalized credit makes its own demands for realized value.  The accumulation of debt is the accumulation of value that cannot be realized within the capitalist mode of production itself.  Hence, this form of realization, like others, requires access to values from outside the system of capitalist production.

Thus, although Bukharin is quite correct in specifying that realization in money form is not essential for all existing capitals simultaneously, he is clearly mistaken to infer then that the realization of value, in some form that leaves open the possibility of further expansion and realization, is not critical to the whole process of capitalist production and distribution.

Bukharin’s and the orthodoxy’s mistake is failing to recognize the specificity of capital as a value form.  This is ironic, because the crux of Bukharin’s argument is that the historical development of capital as a form of value is what obviates the need for realization.  The explanation of this irony is that for Bukharin and the orthodoxy, capital obviates the need for realization by definition.  Capital, on this view, is a Hegelian logo (an ideal to which reality adjusts itself) and not an historical phenomenon (the real movement that abolished the former state of things).

Socialism or Barbarism

“Empirically, communism is only possible as the act of the dominant peoples ‘all at once’ and simultaneously, which presupposes the universal development of the productive forces and world intercourse bound up with communism.  Moreover, the mass of property-less workers–the utterly precarious position of labor-power on a mass scale cut off from capital or from even a limited satisfaction and, therefore, no longer merely temporarily deprived of work itself as a secure source of life–presupposes the world market through competition.  The proletariat can thus only exist world-historically, just as communism, its activity, can only have a ‘world-historical’ existence. World historical existence of individuals means, existence of individuals which is directly linked up with world history.

“Communism is for us not a state of affairs which is to be established, an ideal to which reality (will) have to adjust itself.  We call communism the real movement which abolishes the present state of things.  The conditions of this movement result from the premises now in existence.”

Marx and Engels,
The German Ideology
(Part I: “Feuerbach,” pp. 56-7)

We hold to the position that socialism is not merely morally preferable to capitalism, but that it is historically necessary for the progressive development of the entire human race.  The orthodoxy sometimes pays lip-service to this position, while failing to engage the question of whether there is any absolute limit on the capacity of capitalism to develop the productive forces.  On the other hand, the orthodoxy often seems to suggest that socialism is realizable “by itself,” that it is the inevitable and mechanical result of blind, historical forces.  This way of viewing socialism–not truly necessary on the one hand, and “inevitable” on the other–has had the effect of relieving those who subscribe to it from any need seriously to address strategic and tactical questions as to how to bring socialism about.

The orthodoxy’s understanding of economics is that there are capitalist crises of overproduction, and that they are indefinitely resolvable.  In our view, this perspective is one which does not take the crises of overproduction very seriously, does not recognize any material consequences flowing from these crises, does not recognize how the resolution of one such crisis affects the conditions for the resolution of future crises, and in fact gives the process of capitalist crisis resolution (and the process of socialist transformation of society) something of a metaphysical quality.

The perspective of the orthodoxy (to the extent that the orthodoxy has an articulated perspective on this matter) is that a theory of capitalist collapse is “over-determinist.”  That is, such a theory makes the activity of the working class superfluous because if capitalism collapses, it can only collapse into socialism.

This over-determinist perspective omits the possibility of barbarism as an alternative to socialism.  Indeed, our position is that if capitalist production is permitted to go through its terminal collapse, without the intervention of the working class, the only possible outcome is barbarism.  There will be no “collapsing into socialism.”

The failure to engage the theoretical question of terminal crisis bears on the critical political question of this century–the tendency towards the development of fascism.  The orthodox view of fascism is that it is primarily a political form preferred (like imperialism) by a particular faction of the capitalist class (viz., the right wing).

On the orthodox view of fascism, all that is necessary politically is to contain fascism tactically (through the popular or united front) while building the strength of the socialist forces.  On the orthodox view, the choice is between socialism and capitalism.

This point of view denies that fascism has an economic basis during the extended terminal crisis of capitalism. Fascism arose after the First World War.  It arose first in Germany and Italy because the loss of World War I precipitated a particular crisis in the accumulation of German and Italian capital.  But there is more fascism in the world today than ever before, and this growth of fascism is not simply a reflection of the political ascendancy of the right wing, but a global tendency toward barbarization grounded in the global crisis in the realization of capital.

In 1917, the Russian working class had a choice between capitalism and socialism, and it chose socialism.  Today, the choice that faces the working and poor people of the world is not socialism or capitalism, but socialism or fascism.  By “fascism,” we identify not merely a political form, but an economically necessary stage in the transition from capitalism to barbarism.

Our position is that it is not socialism that is inevitable, but socialism or barbarism.  Socialism and barbarism are alternative modes of organization, either of which could replace the capitalist mode of organization.  We have scientific reasons for believing that historical progress is represented by the working class and its struggle for socialism as a mode of societal organization.  Yet we have no scientific reason to deny that there is an alternative to historical progress: In the Junius Pamphlet, written from her jail cell during World War I, Rosa Luxemburg wrote the following:

“Frederick Engels once said:  ‘Capitalist society faces a dilemma, either an advance to socialism or a reversion to barbarism.’  What does ‘reversion to barbarism’ mean at the present stage of European civilization?  We have read and repeated these words thoughtlessly without a conception of their terrible import.  At this moment, one glance about us will show us what a reversion to barbarism in capitalist society means.  This world war means a reversion to barbarism.  The triumph of imperialism leads to the destruction of culture, sporadically during a modern war, and forever, if the period of world wars that has just begun is allowed to take its damnable course to the last, ultimate consequence.  Thus we stand today, as Frederick Engels prophesized more than a generation ago, before the awful proposition: either the triumph of imperialism and the destruction of all culture, and as in ancient Rome, depopulation, desolation, a vast cemetery; or the victory of socialism, that is, the conscious struggle of the international proletariat against imperialism, against its methods, against war.  This is the dilemma of world history, its inevitable choice, whose scales are trembling in the balance awaiting the decision of the proletariat. Upon it depends the future of culture and humanity.”

The period of world wars, the beginning of which Luxemburg lived to see, has clearly not yet been brought to an end by the victory of the proletariat.  And it becomes clearer with every passing day that the economic decline of capitalism and the political advance of socialism–in Southeast Asia, in Central America, in southern Africa, in Afghanistan–brings capitalist organization ever closer to an ultimate confrontation with socialist organization.  Nuclear holocaust entails barbarism in an obvious sense, up to and including the total destruction of the advanced productive capacity and the advanced industrial working class of both socialist and capitalist countries.

In the meantime, there is a process of barbarization that is developing independently of (though not unrelated to) the movement toward nuclear confrontation.  This process of barbarization has many manifestations, but its root cause is the overall regression in the power of social reproduction.  This regression is manifest, as we have outlined, in the inability of capitalist production to bring about a net increase in the productive labor force and the means of production, at just the time when such an increase is obviously what the human race desperately requires.

However, we do not assess the depth of the current economic and social crisis and the danger of barbarism merely in terms of a quantitative increase in poverty.  Indeed, many would argue that the present economic situation is not as serious as the Great Depression in the 1930s, since the extent and depth of poverty is now mitigated (in the United States, at least) by the existence of social institutions such as welfare benefits, unemployment insurance, food stamps, etc. which have been created to soften the effects of capitalism’s failures. From our perspective, the growth of these institutions actually constitutes the institutionalization of poverty.  These institutions are mechanisms that enable capitalism to carry on (albeit temporarily) despite the process of barbarization.

Today, poverty is not simply a lack of the consumption goods necessary to sustain individual life and health, always the misfortune of many under capitalism.  Nor is it simply the periodic result of capitalist crises of overproduction.  Poverty today is the institution that, through its controlled growth, eliminates the crises of overproduction.

The infusion of purchasing power into the economy does not go generally to expand production.  Instead, it is absorbed by the attempt to realize and speculate in the already existing overproduction of capital.  The overproduction of commodities and the explosion of credit which finances the circulation of this overproduction has resulted today in masses o£ capitalist paper (debts) itself in need of realization.  New infusions of money by the government are absorbed by realization of and speculation in this paper, since it is here and not in the production of more useful but unrealizable commodities, that the real profits are to be made.  (Real profits are to be made in unreal commodities.)

Thus, the only solution to poverty–the actual production of more real wealth–is short-circuited.  The limited redistribution of purchasing power within the working class (and between the poor and the middle strata) via taxation and “transfer” payments merely serves to generalize poverty, while attempting to maintain social control through the maintenance of a dependent welfare population..  Not incidentally, this generalization of poverty functions as a convenient scapegoat that keeps the anger of the middle strata and the working class directed at the lowest strata.

At the same time, redistribution of wealth between the capitalist class and all other strata, via both taxation and inflationary pricing by multinational monopolies (in addition to the impoverishment of the third world that we have described in the first section of this paper) is bringing about an absolute increase in the poverty of the whole working class.

From the capitalist point of view it is no exaggeration to say that poverty is no longer a problem for the capitalist system. Growing institutionalized poverty is the solution to the fundamental contradictions of capitalist production and distribution.  It is the growth of this kind of institutionalized poverty that we identify as a process of barbarization.  In a real sense, the capitalist class has found the “final solution” to the problem of overproduction.  The solution is institutionalized poverty and de-industrialization for advanced capitalism, and institutionalized underdevelopment for the third world.

For the capitalist class, of course, there is no question of socialism being necessary, desirable, or even possible.  Since the capitalists are not about to tamper with the actual source of the realization crisis (private ownership, appropriation and control of wealth), their attempted solutions must have the character of stimulating consumption and seeking limited and controlled redistribution of the diminishing amounts of useful goods that capitalism still produces.

The most authoritative expression of this point of view is found in the writings of the Trilateral Commission (see, in particular, The Crisis of Democracy).  This organization is an attempt to subdue inter-capitalist competition (competition which, though not affordable any longer tends to be spontaneously exacerbated by the realization crisis) while at the same time securing the conditions for the realization of the total capital, by developing new techniques in the ongoing joint struggle of the capitalists against the masses of working and poor people.  This organization, put together and dominated by some of the most powerful multinational capitalists (most notably the Rockefellers) argues openly not for more production to meet the desperate survival needs of the world’s population, but for the limited redistribution of what working and poor people have (certainly not what the capitalists have!), and new constraints on the effective practice of democracy.

The Crisis of Democracy takes note of the quite predictable tendency, under conditions of increasing scarcity of economic necessities, for the governing institutions (the Congress, the Presidency) to fail to function effectively as reconcilers of diverse interests.  They conclude that “democracy will have a longer life it is has a more balanced existence.”  From the Trilateral perspective, the terminal crisis of capitalism demands not a new organization of production and distribution, but either effective self policing by existing institutions (such as the unions) combined with effective prevention of new grass roots organizations of working and poor people, or completely new governing institutions (read: fascism) to contain the social antagonisms engendered by the growth of barbarism.  (It is certainly worth noting that the Trilateral perspective will be well represented whoever wins the 1980 presidential election, since Carter, Anderson and Bush are all Trilateralists.)

The appearance of an organization like the Trilateral Commission at this point in history cannot be regarded as accidental, any more than the growing convergence of the Democrats and Republicans on matters of policy can be regarded as accidental. Both are reflections of the growing self-consciousness of the capitalists as a class.  In our discussion of the issue of terminal crisis, it becomes clear that the key methodological issue in understanding the crisis turns on understanding self-consciousness, on understanding the subjectivity of a class.

Bukharin’s view, and the view of the is that the orthodoxy generally, contradictions of Marxism are entirely “objective” and that they have nothing to do with the subjective.  We agree that there are objective laws which govern capitalist development and which operate in spite of the intentionality of individual capitalists.

Yet, in addressing the question of what is to be done, we must invoke the conception of subjectivity articulated in Marx’s Theses on Feuerbach.15  We hold that there is no way to comprehend the present development of capitalism without comprehending the Marxist conception of subjectivity articulated there.  The possibility of barbarism cannot be comprehended without understanding the subjectivity of the capitalists as a class.  Nor can the possibility of socialism be understood without comprehending the subjectivity of the proletariat as a class.

At the dawn of capitalism, the necessity of securing political hegemony was the basis of the capitalists’ consciousness of themselves as a class.  Having attained this hegemony, and having established the necessary political basis for the competitive struggle, the consciousness of the class became secondary to the competitive drive among capitalists to realize profits.  As long as the possibility existed of realizing the profits embodied in production (as long as there were still areas of the world which could supply value produced outside of the capitalist relations of production) the appearance of capitalism was that of a process conditioned by purely “objective” laws which were internal to itself.

Similarly, the working class as it first developed with developing capitalism had no great consciousness of itself as a class.  What dominates in the consciousness of individual members o£ the class is the competitive struggle for survival as individuals and as members of alienated groupings along lines of ethnicity, trade, etc.

The polarization of society which we have described in the first section of this paper, accompanied as it is by the rapid concentration and centralization of capital, gave rise to rapid change in the consciousness of the capitalists as a class.  On this changed consciousness their very survival depends, for it is only in the development of new methods of accumulation (the multinational corporation) and new methods of rule (the Trilateral Commission, fascism) that their survival as individuals is possible.  The terminal crisis brings about a change in both the quantity (the centralization of capital) and quality (the changed consciousness) of the capitalist class.

According to the paradigmatic Marxism16 of the orthodoxy, classes are defined by the relationship of their members to the means of production.  But these relationships are more properly necessary, not sufficient, conditions for membership in the class.  What is it that produces the consciousness of the different strata of the class so that they do in fact form a class?  It is the material convergence of these different strata, and the material fact that their survival as individuals depends on their unity as a class.

The failure of the Marxist orthodoxy is the treatment of the processes of capitalist production and accumulation as purely objective processes, and not as processes that embody the subjectivity of a class.  The other side of this vulgar materialist tendency is a vulgar idealist tendency that attributes to capitalists and proletarians an ideal existence as classes independent of the activities in which they are actually engaged.

The orthodoxy regards Capital as essentially a paradigm of capitalist development, and one which leaves no question unanswered.  Further, the orthodoxy holds that the objective conditions for socialism have long existed, and that what is lacking is the requisite socialist consciousness.  Yet their understanding of how to bring this consciousness about is essentially through a process of individualized consciousness raising–the presentation of their paradigmatic Marxism to alienated members of the middle class and disgruntled trade unionists.  Thus their understanding of subjectivity is the very understanding that Marx criticizes in Feuerbach–they wish to produce a correct understanding of existing facts, “whereas for the real communist it is a question of overthrowing the existing state of things.”17

Overthrowing the existing state of things does indeed require a self-conscious understanding of what is happening in the world, not simply knowledge of fetishized or paradigmized facts about the world.  But the self-consciousness required is the self-consciousness of a class, not the necessarily isolated self-consciousness of a theorist.  The subjective understanding of the class is, in the final analysis, decisive.  The most pernicious aspect of bourgeois ideology’s obsession with privatized psychological explanation18 is the extent to which it has produced “objectivism” among would-be Marxists.

Where does the self-consciousness of a class about itself and its needs come from?  It is clear that the self-consciousness of the working class does not arise spontaneously in response to the terminal crisis.  In no small measure, this is due to the fact that bourgeois ideology (and paradigmized Marxism) are formidable obstacles to the recognition of the terminal crisis.  Furthermore, an abstract understanding of the terminal nature of the crisis, however “correct,” is not sufficient to create the requisite consciousness of the class.  The self-consciousness of the class, even in embryo, must be embodied from the beginning in organizations that can express in their organizing activity the reality of terminal crisis and can form, not just in their rhetoric but in the content of their political activity, the consciousness that the proletariat is coalescing as a class (in point of material conditions) and must coalesce as a class (in point of conscious self-activity).

Our political strategy identifies the unorganized internationally as the critical force in the progress of revolution. Among those nations that have historically been victims of imperialism, we have seen in recent years the unorganized organize themselves, often with incredible speed and confidence, and move rapidly onto the stage of history. Bourgeois science has shown itself to be very bad at predicting this movement, and generally the leading bourgeois states have shown themselves increasingly powerless to do anything about it.  In places such as Ethiopia, Nicaragua, Iran, southern Africa and, most recently El Salvador, it has been the rapid organizing of the unorganized that has led with startling speed to the formation of revolutionary situations and, in some cases, nonaligned countries and socialist states.

In the United States the situation is obviously different, but the unorganized remain critical.  The terminal crisis of capitalism signals the end of capitalism’s capacity to integrate more of the poor into the productive labor force.  This entails, as we have shown, the generalization of poverty.

Yet there remain crucial differences among different strata of the working class.  The organizations of labor are under attack, unemployment is rife, and the era of the “give back” has eroded many past gains of the unions.  The Democratic Party, traditionally “the party of working people,” has shown clearly that it will not fight to protect the interests and the standard of living of organized labor (much less of working and poor people generally).  The influence of organized labor has declined steadily, along with union membership, in the past ten years.

Through all of these developments organized labor grumbles loudly but shows no clear indications of fighting back.  While calling for defense of the right to organize as a matter of principle, with a few well-publicized exceptions it shows no indications of actually organizing the unorganized.  There are cries for new leadership within the unions, but no sign of a new strategy.

Organized labor has depended for so long on capitalism doing well that it is hard pressed to know what to do now that the conditions for capitalism doing well no longer obtain.  The immediate response of organized labor has been to try to save what it has.  This, of course, suits the Trilateral strategists well.  They are counting on the heavily compromised leadership of organized labor to maintain the unions in uneasy alliance with big business despite the fact that to the extent there is any material basis for this alliance, it rests not on the further expansion of capitalist production but on the further immiseration of the unorganized.

Our strategy is to build new organizations of the unorganized.  The terminal crisis of capitalism has a destabilizing effect on all the institutions of reconciliation in the United States and on the adherence of all strata of the population to these institutions.  But the crisis is most destabilizing to the poorest strata, whose very survival is immediately threatened.

Our strategy is to build a new union movement of these presently unorganized and unrecognized masses.  This movement is aptly called political unionization.  It is neither a “dual” movement nor a “red” movement.  It is neither an attempt to preempt or compete with existing unions, nor an attempt to “ultra-left” them.  The new movement is pro-organized labor, and stands firmly for the defense of the past gains of organized labor and in opposition to scabbing and union busting.

What, then, makes this movement a new one?  For the same reason that there is no longer any progressive material basis for the long alliance of organized labor with big business, there is no material basis for more unions built on the “business union” model.  (The refusal of the AFL-CIO to organize the unorganized is, in fact, a tacit recognition of this fact).  The new unions cannot be built as organizations that are concerned primarily with the wage demands of their own members.  They cannot be built as organizations which deliver labor power (for which capitalist production has diminishing need) to the capitalists in exchange for a slightly bigger piece of a disappearing pie.

The new unions are being built as organizations demanding economic representation, since the survival of their constituents depends immediately on such representation.  At the same time, they do not confront employers and welfare bureaucrats in isolation but seek at every step to link their struggles with those of other labor organizations, including those of the established union movement.  The new unions seek to confront the capitalist class in the process of consolidation with the working class in the process of consolidation.  The activity of these organizations, though grounded tactically in the bread and butter issues of survival, are directed strategically toward the acquisition of political power.  It is in this sense that we identify the new unions as political unions.

This is a strategy that flows directly from our analysis of terminal crisis and incorporates the same methodology. Organized labor is not the proletariat.  It is merely a part of the proletariat, albeit an important part for capitalist production (and for socialist reconstruction).  To identify the existing organizations of labor an the proletariat, to confuse the anger of organized labor with incipient political consciousness, to confuse the important role of organized labor in capitalist production with capacity for progressive political leadership–these are the errors in an organizing perspective that complement the failure to recognize the terminal crisis of capitalism.  They are both products of the same paradigmatic, objectified orthodox Marxism.

Our capacity to understand the terminal crisis depends, methodologically, on two things.  It depends firstly on our capacity to view capitalism not as a closed model–a paradigm-but as part of an historical process.  It depends secondly on our capacity to understand conceptions such as “capital” not merely as objects but as social relations that embody a class subjectivity.

Similarly, our capacity to organize for socialism depends on our capacity to view the working class not as rigidified under its present mode of organization, but as in fact only now coming into being as a class.  It depends on our capacity not to fetishize and objectify organizations of the proletariat any more than the present capitalist organization of production and the economic categories that go with it.

The new unions are to be understood not as things in themselves, but as transitional vehicles for reorganizing of the working class and for creating a material basis for a class (as opposed to an individual) understanding of the danger of barbarism and the necessity of socialism. Political unionization is the present organizational (tactical) embodiment of the strategic perspective of socialism or barbarism in this national sector.


1.   See Walter Heller, New Dimensions in Political Economy.

2.   In keeping with Marx’s usage, by “concentration” of capital we reference the growth of investment in machines, etc.  (as opposed to labor-power), and by “centralization” of capital we reference the growth of monopoly control.

3.   Export-platforms are basically factories of enormous technical sophistication (requiring for the most part only unskilled labor for their operation) that do not produce for the domestic market at all but only for export, often to another subsidiary of the same multinational corporation

4.   New York Times, July 8, 1980.

5.   Except where otherwise noted, the foregoing statistics on international poverty, the export of capital and the repatriation of profits are from Global Reach by Richard Barnat and Ronald Mueller.  Though the statistics we cite are primarily for the 1960s, they are projectable.  Indeed, the World Bank has compiled annual projections on poverty in the third world for 1978, 1979 and 1980.  (New York Times, August 18, 1980).  These projections show rapidly mounting pessimism about the growth of international poverty.  It is now projected, for example, that people living in sub-Saharan Africa will be poorer in 1990 than they are now.  It is also projected that 800,000,000 people living in what the World Bank calls “absolute poverty” will see the growth of their economies sink to the level of the 1960s or below.

6.   “Capital” is a property form.  It consists of legal claims on means of production and other material wealth.  As such, capital is not a “thing,” but a social relation of production.  We hope to make it clear in this paper that “capital” is not synonymous with “productive forces” and that the belief that it is, is the source of the failure to comprehend the terminal crisis.

7.   We will give an example of how credit merely aggravate the realization crisis.  A working class family wants to buy a house trailer, which retails at $10,000 The trailer only costs $5,000 to build, so at a retail price of $10,000 it yields an industrial profit of $2,500 and a profit to the dealer (who bought the trailer wholesale at $7,500) of $2,500.

However, the family doesn’t have $10,000, so the dealer arranges financing, which results in the family signing a ten-year mortgage for $20,000.  The commodity (the house trailer) has now been realized, and the dealer is in possession of a $20,000 mortgage.  However, the dealer needs cash to carry on his business, so he “discounts” this mortgage to a finance company which gives him $12,000 in cash for the mortgage.  The finance company may then rediscount the mortgage (say for $14,000) to another finance company to get cash itself.  This rediscounting may go on indefinitely, realizing a sum of money each time the mortgage changes hands. By the time the process is complete, the house-trailer has generated many thousands of dollars in sales over and above the value of the trailer itself.

In the meantime, the house-trailer has fallen apart, and the owner is unable to pay off the mortgage because s/he has been laid off.  It is easy to see from this example how, in an economy where real goods are difficult or impossible to realize, money will find its way into the sale of paper.

8.   The Bretton Woods monetary system was established at a conference in Bretton Woods, New Hampshire, in 1944.  It was an attempt to reduce competition among capitalist countries by preventing competitive currency devaluations.  The U.S. dollar was established as the leading reserve currency, acceptable equally with gold in settlement of international debts.  The International Monetary Fund was set up as arbiter of exchange rates.  The Bretton Woods system reflected the dominant position of U.S. capitalism.  Its demise in 1974, and the severing of the dollar from gold, reflect the decline in the competitive position of U.S. capitalism with respect to Japan and West Germany.

9.   The case in which no social surplus is produced corresponds to the earliest stage in human history, before the development of a division of labor and social classes (“primitive communism”) .

10.  Marx expresses this difference in Volume I of Capital with two “diagrams.”  C-M-C’ expresses the goal of simple commodity circulation.  A commodity (C) is sold for money (M) only for the purpose of buying another commodity (C’).  Here, money is only the circulating medium.  However, the circulation of commodities as capital is expressed by M-C-M’.  A given amount of money (M) is spent on commodities (C) only for the purpose of selling them again (after putting them through a process of production) for a larger amount of money (M’).

11.  Tugan-Baranovsky was a Russian economist who wrote The Theory and History of Crises in England (1902).  He held that the only crises to which capitalism was subject were crises of “disproportionality.”  This is the theory that there cannot be any general overproduction in a capitalist economy–only overproduction of some commodities and underproduction of others. Both Luxemburg and Bukharin subject this point of view to devastating criticism.

12.  Bukharin’s appeal to “capital” as the value form that makes “third persons” unnecessary in the accumulation of capital is essentially an objectification of capital and a failure to recognize that, like money, it is a social relation.  This is fetishism in Marx’s sense.  (See “The Fetishism of Commodities,” Volume I of Capital.)

13.  In contrast, we know for example that the Roman Empire was not transformed as a result of its contradictions, but simply decayed.

14.  For a lucid presentation of this seminal Marxist thesis, see The German Ideology (Part I: “Feuerbach”).

15.  Theses on Feuerbach #1

“The chief defect of all hitherto existing materialism (that of Feuerbach included) is that the thing, reality, sensuousness, is conceived only in the form of the object or of contemplation, but not as sensuous human activity, practice, not subjectively.  Hence in contradistinction to materialism, the active side was developed abstractly by idealism–which of course, does not know real, sensuous activity as such. Feuerbach wants sensuous objects, really distinct from the thought objects, but he does not conceive human activity itself as objective activity.  Hence, in Das Wesen des Christenthums, he regards the theoretical attitude as the only genuinely human attitude, while practice is conceived and fixed only in its dirty-judaical manifestation.  Hence, he does not grasp the significance of ‘revolutionary,’ or ‘practical=critical,’ activity.”

16.  For a critique of “paradigmism,” see Practical-Critical Activities (Section I), Fred Newman.

17.  Marx, The German Ideology, p. 60.

18.  For an analysis of bourgeois explanation and privatization, see, The Practice of Method, published by The New York Institute for Social Therapy and Research.

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