The Differences Between Rosa Luxemburg
and V.I. Lenin on Economic Crisis Theory

      [In February 2001, a friend of mine wrote me a brief letter inquiring about my views on the differences between the economic crisis theories of Rosa Luxemburg and V.I. Lenin. He specifically asked: “Are you familiar with the differences between Lenin and Luxemburg as to whether the overproduction of productive circuits are generally principal over circulation circuits in the establishment of the general crisis of capitalist accumulation? Let’s deal with this and go on to the more general questions of accumulation and its contradictions.” The letter below is my response. —Scott H.]

February 25, 2001

Hi .....,

I must say I was initially “stunned” by your question about the differences between Lenin and Luxemburg on the issue of the relation of productive circuits of capital to circulation circuits, in the development of accumulation crises. (Talk about really jumping into things!) My problem here is basically one of lack of adequate previous investigation, especially with respect to Luxemburg. I’m not totally sure I really understand Lenin’s position (or positions?) here either. And, on top of that, I’m not sure I even really understand the basic question at issue! However, little things like blatant ignorance and lack of investigation have never kept me from having opinions about matters in the past, and I don’t see why they should suddenly start doing so now! (But be forewarned; until I do more investigation, I really don’t have much of a “right to speak” on these issues. I think you are going to have to take the lead in what might hopefully turn out to be a joint investigation of this topic. And I am quite interested in investigating it.)

Luxemburg’s Views

I haven’t seriously studied (i.e., read through systematically) either Luxemburg’s The Accumultion of Capital, or her Anti-Critique (which is supposed to contain a pretty good summary of the first book). However, I have read portions of both, snatches here and there, based on specific topics I was looking into at the time (mostly relating to crisis theory in one way or another), and for now I’ll have to approach the current topic in the same way.

Another useful source (and the one I will use almost exclusively in this initial letter) is A History of Marxian Economics: Vol. I, 1883-1929, by M.C. Howard and J.E. King (1989). (There’s also a second volume for the period after 1929 which I am reading (intermittantly!) at present.) Have you read this book? Chapter 6 is devoted to Luxemburg and Otto Bauer. Howard & King are not really Marxists, but they seem to be strongly influenced by Marxism. Politically they seem to lean a bit in the direction of revisionist Trotskyism. I don’t agree with their basic stance on Marxist political economy, either. But despite all this, and given the relative shortage of good reference materials available, their books are still quite useful. (Their earlier book, The Political Economy of Marx, 2nd ed. (1985) has many points of interest, but isn’t as good, or useful (or as sympathetic to Marxism!) as their History... is. I think this is because they believe that Marx himself is incorrect on many points, which his various followers have sometimes straightened out. But where they think things have been “straightened out”, I often think that things have been “bent out of shape”!)

One thing Howard & King point out is that Luxemburg’s views on imperialism and the development of capitalist economic crises either derived from (to a considerable degree), or else were foreshadowed by Kautsky.

Kautsky seems to me to be the “Bertrand Russell” of late 19th century/early 20th century Marxism—i.e., somebody whose thinking was so shallow that he could never firmly settle on any definite position for any length of time. He’d write something, and then a few years later write something else that went in a totally different direction, only to change his mind again a few years later on. [This is a syndrome associated with those who read a whole lot more than they think! Their current views are those of the most recent book they have read!] Howard & King state:

“As early as 1884 Kautsky argued that colonies were a prerequisite for capitalist expansion, and that Germany’s lack of them was one of the main reasons why she had failed to industrialise at the same time as Britain. In the seventeenth and eighteenth centuries colonial possessions had been essential both for the primitive accumulation of capital and as a source of markets. The latter function (realisation) was now much the more important, Kautsky maintained. Workers received in wages less than the value of their product, and capitalist consumption was insufficient to fill the gap. Hence capitalists must find ‘a market outside the sphere of their own production’ which could offer the prospect of continuous growth. Their first target was the domestic peasantry, but its purchasing power was restricted by its steady impoverishment. Accordingly, ‘as a sales market the colonies have become a condition of existence for capitalism’.” [Howard & King, vol. I, p. 92.]

On the next page Howard & King note that “There are echoes of this essentially Luxemburgist analysis of imperialism” in Kautsky’s book The Class Struggle (1892). But they go on to show how many of Kautsky’s views changed in various directions later on.

In the chapter on Luxemburg, Howard & King state:

“Luxemburg’s central theme reasserts the position taken by Kautsky in 1884 and 1901: capitalist growth is possible only if customers are available outside the system to realise the increasing quantity of surplus value produced within it. The compulsive quest for non-capitalist markets transforms the economies of the backward areas, overwhelming traditional pre-capitalist modes of subsistence and thereby destroying the very outlets which the advanced nations so desperately need. Thus capitalism is both fundamentally contradictory and increasingly aggressive, because of the growing intensity of the struggle for economic territory. Cobdenism is dead and buried. Socialism or the barbarism of modern warfare: this is the choice which capitalism offers to humanity.” [p. 107.]

So Luxemburg seems to focus on one particular aspect of the economic imperatives of imperialism: the need to continually capture and expand new external markets, in order to keep the accumulation process going. Of course Lenin said this too, but he (following Hilferding) gave even more attention and emphasis to the need to export capital—a point which Luxemburg slights, if she appreciates it at all. This suggests an important difference in the views of Luxemburg and (the later) Lenin on the working-out of capitalist economic crises. His view implies a greater appreciation for the overproduction of capital, and not just commodities. (Of course Marx emphasized this point, so it seems a bit strange that it took so long [c. 1910!] for the importance of the export of capital in the imperialist era to dawn on Marxists.

Lenin’s Views

Although many others have also argued this point, I think it is very important to recognize that not all of Lenin’s views on political economy were uniform throughout his life. In fact, there clearly seem to be different periods to his economic thought. Some people (such as Howard & King) say there were three periods, but I think it is more reasonable to say that there were two: 1) Up until the beginning of World War I, and 2) Thereafter. For the earlier period, the dominant influences on Lenin’s political economy seem to be Marx’s writings themselves (but the three volumes of Theories of Surplus Value were not published—even in German—until 1904-1910!), Engels’ Anti-Dühring, and to very secondary degrees, the writings of prominent German Marxists, such as Kautsky. For the later period, there were two main additional influences: Hilferding and Bukharin.

Hilferding’s extremely influential book, Finance Capital, was published in 1910, and it had a profound impact on Lenin. As has often been pointed out, most of the main points in Lenin’s 1916 pamphlet, “Imperialism, the Highest Stage of Capitalism”, were covered in Finance Capital. (Some say “all the main points”—but that is ridiculous; Lenin criticizes Hilferding on some points in the pamphlet.)

But something that is not always paid sufficient attention to is that the implicit theory of capitalist economic crises in “Imperialism...” is quite different than that defended in Lenin’s earlier economic writings. In particular, Lenin’s hostility in his early writings to “underconsumptionist” interpretations of what “overproduction” means, seems to be transformed into an implicit acceptance of this view! To be frank about it, I think Lenin realized his interpretation of Marx had been a bit incorrect. In “A Characterization of Economic Romanticism” (1897), for example, Lenin actually defended Say’s Law, though not by name. (Which, I’m sure you recall, is the theory that capitalist production automatically creates its own market.) But, volume 3 of Marx’s Theories of Surplus Value which was first published in 1910, contains a blistering criticism of Say’s Law. Somebody as perspicacious as Lenin could scarcely fail to notice this, and it must have affected his thinking.

The truth is, Lenin’s understanding of economic crises in his early economic writings was pretty weak, and—despite the fact that he had studied Capital—seems to have amounted to little more than a repetition of the rather shallow analysis Engels offers in Anti-Dühring.

Initial Summing Up

There’s a lot more to say about all this, of course! And I’m looking forward to hearing your opinions on the general subject, as well as your opinions about what I’ve said so far, and also where we should go from here to dig into this further.

But for now, and tentatively, I would say:

There is fundamental disagreement between Luxemburg and the early Lenin on the basic mechanism of crises. Luxemburg would, I think, say that capitalism inevitably produces more than it can possibly sell for a profit—within its own capitalist sphere. And thus, it must frantically search for new markets, and continually bring new “pre-capitalist” regions into its marketing sphere. I assume this also means: For Luxemburg, the overproduction of productive circuits is indeed principal over circulation circuits in the development of accumulation crises. (If I correctly understand what you mean by this.)

For the early Lenin, though, crises were almost exclusively seen in terms of the “anarchy of production”; i.e., something that is the result of the lack of economic planning. However, this would also mean for Lenin that the fundamental problem leading to crises lies in the sphere of production—rather than the sphere of circulation—(though he sees it as a different problem than Luxemburg does). Still, I don’t think (the early) Lenin would then say that the problem leading to crises is that the overproduction of productive circuits is principal over circulation circuits. Putting things that way already sounds like a major step toward Luxemburg’s point of view to me.

With the later Lenin, however, I think he has—by implication, anyway—come around to that same fundamental view. The basic problem is that capitalism is too productive, that people in the home country can’t afford to buy all that is produced, and therefore that the capitalists must find a way to both sell some of their goods overseas, and, more importantly, find a way to productively employ a major, and growing, part of their capital overseas. There are still differences, for sure, between Lenin’s conception here and Luxemburg’s. [Lenin would never say that the possession of colonies and foreign markets is necessary for capitalism to exist; indeed, a major theme of his early book The Development of Capitalism in Russia disputed that whole idea.] But it seems that both would have to agree at that point that the overproduction of productive circuits (which produce both commodities and more new capital) is principal over circulation circuits, and that this consequent overproduction is the basic problem in capitalist crises.


Addendum (Added 4/20/09):

I now have a somewhat different view of one aspect of this. I don’t think it helps clarify very much to ask “Which is principal in crises, production or circulation (distribution)?”, since really they are integrated aspects of a single overall process. But if one is forced to answer this question by choosing one or the other, I would point out that Marx himself suggests that, if anything, we should choose distribution as the primary source of the problem:

      “At the same time, this reveals the significance of the distinction between the phenomena of production and of distribution. Profit, a phenomenon of distribution, is here simultaneously a phenomenon of production, a condition of production, a necessary constituent part of the process of production. How absurd it is, therefore, for John Stuart Mill and others to conceive bourgeois forms of production as absolute, but the bourgeois forms of distribution as historically relative, hence transitory. I shall return to this later. The form of production is simply the form of distribution seen from a different point of view. The specific features—and therefore also the specific limitation—which set bounds to bourgeois distribution, enter into bourgeois production itself, as a determining factor, which overlaps and dominates production.” —Marx, Theories of Surplus Value, vol. 3, pp. 83-84. Emphasis added.

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