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Rosa Luxemburg

Chapter 3
Bauer’s General Criticisms

Naturally I shall not let myself be drawn into a discussion of Bauer’s tabulated calculations. His position and his critique of my book depend mainly on the theory of population which he counterposes to my ideas as the basis of accumulation, and which in itself really has nothing to do with any mathematical models. It is this theory which we must investigate. However, we must first get acquainted with the ways and means, with the method, in which Bauer performs his tabulated manipulations. Even if they are absolutely worthless when it comes to solving the purely social and economic problems of accumulation, they are still very characteristic of Bauer himself, and of the consciousness with which he approaches a solution to the problem. This procedure can be illustrated with a few very simple examples which may even be judged by common mortals who are usually horrified by mind boggling tables and cabalistic signs.

Three examples are sufficient.

On p.836 {p.94} of Neue Zeit[1] Bauer demonstrates how the accumulation of social capital takes place. He assumes (like Marx) the two large departments of production (I, production of means of production; II, production of means of consumption). The first department begins with 120,000 as constant and 50,000 as variable capital (which can represent thousands or millions of marks, in short money value). In the second department he assumes a constant capital of 80,000 and a variable capital of 50,000. The figures are, of course, arbitrary, but their relations to each other are important, for they express certain economic assumptions from which Bauer proceeds. Thus the constant capital in both departments is greater than the variable, which expresses the stage of technical progress. This predominance of constant capital over variable is greater in the first department than in the second, as technology usually progresses at a faster rate in the first department. Finally, in accordance with this, the total capital of the first department is larger than that of the second. These are all Bauer’s own assumptions and, since they agree with Marx’s, they are quite laudable. So far so good.

Now for accumulation. This begins with Bauer increasing both constant capitals by 10,000 and both variable capitals by 2,500.[2] But he thus immediately abandons his economic premises. For (1) the smaller capital of the second department cannot possibly grow by the same amount as the larger capital of the first department, since this would upset their mutual relations, which are determined by technological progress; (2) the additional capitals cannot possibly be distributed in the same way in both departments between constant and variable capital, since the original capitals were not distributed in the same proportion. Once again, Bauer is destroying the technical basis which he himself assumed.

So Bauer begins by arbitrarily destroying his own premises with the first step he takes. Why is that? Simply for the sake of arithmetical results, to obtain a smooth calculation by addition and subtraction which would otherwise have been impossible.

After expanding production in this way Bauer tries to show us how the second act of accumulation operates, this salto mortale, the realization of surplus value. He is trying to demonstrate the exchange of the increased amount of goods in such a way that we reach a further step of accumulation, i.e. another expansion of production. This happens on p.863.

We are here concerned with the exchange of the two piles of commodities which are the result of the first year’s production: 220,000 means of production and 180,000 means of consumption. At first it proceeds as usual: each department uses the biggest portion of its commodities – partly directly, partly through exchange – to renew the old, used-up capital, and also to provide for the capitalists’ own consumption. So far everything is in order; so far, of course, Bauer is following in Marx’s footsteps. But now the situation becomes delicate: expansion of production for the next year, accumulation. This procedure is introduced with the well-known quotation: ‘Moreover, the capitalists want to use the surplus value accumulated in the first year to expand existing operations and found new ones.’ {p.97} It is no longer our task to concern ourselves with the question we dealt with earlier on: whether the ‘will’ of the capitalists is sufficient. We agree here with Bauer that ‘a man’s will’ can go a long way, and are concerned only with the manipulation which puts the independent will of the capitalist to work.

The capitalists in Bauer’s first department ‘want’ to reinvest 12,500 of their surplus value. Why so much? Because Bauer needs this figure for his calculations to work out. Well, we will submit without complaining to Bauer’s plan, and we will only allow ourselves one thing: to stick to his own freely chosen assumptions. To continue, the capitalists in the first department have decided to invest 12,500 of their surplus value in production. They have already put 10,000 of their commodities into their own constant capital, and passed on a further 2,500 to the other department to purchase provisions for the additional workers in their expanded factories, and now a situation arises where they still have 4,666 left over from the total stock of goods. They have already consumed, exchanged their old used-up capital, invested new capital for expansion, and now they still have this embarrassing remainder. What can they do with the 4,666 left over?

Of course, let us not forget that the capitalists ‘want’ to accumulate in the second department as well as in the first: These capitalists in the second department also propose to invest 12,500, although as we have seen they own a much smaller capital, and they even want to distribute them in the same way – their vanity to imitate their richer colleagues even makes them neglect technical factors. However that may be, in order for this expansion to take place they need an additional portion of means of production from the first department; could this be an opportunity to get rid of the unconsumable remainder from that department? No, that has already been taken care of, it has already happened. The expansion of Dept II has already proceeded ‘according to plan’, namely according to the plan invented by Bauer himself. There is not even room there for one more nail. And yet, after all this, there is still a remainder of 4,666 in the first department. What are we to do with this? ‘Where do they find their outlet?’ Bauer asks. And now the following happens:

The capitalists in the consumer goods industries transfer a part of the surplus value accumulated during the first year to the means of production industries: either they themselves found factories to produce means of production, or they transfer part of their accumulated surplus value via banks to the capitalists in the means of production industries for their use, or they buy shares in companies which manufacture means of production ... Thus, the means of production industry sells commodities worth 4,666 to that capital which has been accumulated in the consumer goods industry, but is to be invested in the means of production industry. Therefore, apart from means of production worth 85,334 (which fully covers their own demand), the consumer goods industry buys means of production worth 4,666, which are meant to produce means of production.[3]

So that is the solution: the first department sells the indigestible remainder of 4,666 to the second department, which does not make use of it for itself, but ‘transfers’ it ... back to the first department where it is used to further expand constant capital I.

Once again, we do not have to go into the economic fact of Bauer’s ‘transfers’ of surplus value from Dept I to Dept II. At this point we are blindly following Bauer through thick and thin; we just want to notice whether his own freely chosen operations are taking place fairly and cleanly, whether he is abiding by his own assumptions.

Capitalists I ‘sell’ their commodity-remainder of 4,666 to capitalists II who ‘buy’ it by transferring ‘part of their accumulated surplus value’ to Dept I. But wait a minute! What do they ‘buy’ it with? Where is the ‘part of the surplus value’ which pays for the purchase? There is no trace of it in Bauer’s tables! The entire amount of commodities in Dept II has already been used for the consumption of the capitalist class of both departments as well as for the renewal and enlargement of variable capital (see Bauer’s own calculations on p.865), at least except a remainder of 1,167. This 1,167 in consumer goods is all that is left, over from the surplus value of the second department. And now Bauer uses this 1,167, not as a sort of down payment on the 4,666 in means of production, but as variable capital for the additional workers, who were needed for the allegedly ‘bought’ 4,666 in means of production. Whichever way you look at the thing, the ‘Capitalists II have used up all their surplus value; they turn out their pockets and cannot find a penny to buy the stored 4,666 in means of production.

On the other hand, if this purchase had really taken place we would have to find the 4,666 worth of exchange consumer goods in Dept I. But where are they and what does Dept I do with them? Not a word about this from Bauer. The mystical 4,666 in consumer goods which would have to be exchanged at the ‘purchase’ have disappeared without a trace. Or should we imagine the proceedings as follows: perhaps the capitalists in Dept II possess some spare capital which does not appear in the table; perhaps they have some deposits in the Bank of Germany, and draw 4,666 in money to buy those means of production? Pardon me! It would be an insult to Marx’s models if Bauer had thought of that, if he had constructed his tables as illustrations of ‘aggregate social capital’ with one eye on secret drawers containing capital reserves which he can draw on if his tables don’t make any sense. Aggregate social capital is aggregate social capital! There can be no messing about with that. Everything has to be shown honestly, even the bank deposits, and the entire circulation has to take place within the framework of the model, or else the model is not worth the paper it is written on!

The fact remains that the manipulations of Bauer’s capitalists are sheer swindles. These gentlemen pretend to be buying and selling 4,666 in means of production, but in reality there are no means with which to buy them. When capitalists I give the remainder of their commodities to capitalists II it is a lovely birthday present. And, in order not to act shabbily, capitalists II reply to this noble gesture with equal high-mindedness; they give the present straight back to their colleagues and even generously add their own remainder of consumer goods worth 1,167 (they would not know what to do with it, anyway). There you are, folks, take it, God bless you, there you have the variable capital to set your superfluous machines in motion. Thus, as the last act of accumulation in Dept I (after it has been ended ‘according to plan’ in Bauer’s view) we still have a new constant capital of 4,666 and a variable capital of 1,167. And Bauer adds, turning towards his audience with a tender smile: voilà .

In this way the total productive value of both spheres, thus also the entire surplus value, is realized ... similarly, table IV clearly shows that the total productive value of both spheres, including the total surplus value, is realized without disturbance not only in the first year, but in each subsequent year too. Comrade Luxemburg’s assumption that the accumulated part of surplus value cannot be realized is therefore incorrect.[4]

The result is very nice, but the excitement is somewhat modified by the manipulations that brought it into being. To put it plainly: after the exchange between the two departments has taken place in order to renew and expand the capital, an indigestible remainder of means of production worth 4,666 is left in Dept I, and a similar remainder of consumer goods worth 1,167 is left in Dept II. What are we to do with both of them? First exchange them, at least up to the smaller sum? But there would still be a totally useless remainder in Dept I; we would only have changed the numbers, but not the embarrassment. Secondly, what economic purpose and meaning could this exchange have? What is Dept I to do with the consumer goods it has purchased in this way for its additional workers, as it would not have enough means of production to occupy these workers? Similarly what is Dept II to do with the means of production it has bought, since in this exchange it gave away the consumer goods it would need for its additional workers? Exchange is therefore impossible, the two remainders in the model are unsaleable.

Bauer uses the following tricks to get himself out of this mess. Firstly, he fabricates the ‘sale’ of the unsaleable remainder of commodities from Dept I to Dept II, without a single word about how the latter pays for it. Secondly, after the fabricated ‘sale’, he lets capitalists II do something even more original: with the newly acquired means of production they walk out of their own department into the other and invest them there as capital; and thirdly, they take with them their own unsaleable consumer goods, likewise to invest them in the other department as variable capital.

One wonders why Bauer thought up this original transaction instead of simply leaving the surplus means of production in the first department and letting it be used there for expansion, which is what finally happens according to his tricks: However, Bauer would then fall out of the frying pan into the fire; that is, he would have to explain how the necessary variable capital in the shape of 1,167 consumer commodities can be steered from the second department over to the first. Since this is just not feasible and it is absolutely impossible to use up every single product through exchange, Bauer makes up his confused contraption which makes one’s eyes swim, in order to put together these unsaleable remains of the commodities in the first department as the final act of accumulation.

It is certainly a bold idea. Marx was the first in the history of political economy to make the distinction between the two departments of social production and describe it schematically. This is a fundamental concept which put the whole problem of social reproduction on a new basis and made it possible to investigate accurately for the first time.

Marx’s distinction and his model, however, assume that only exchange relations exist between the two departments, which is precisely the basic form of capitalist or commodity-producing economy. When working with his model, too, Marx keeps strictly to this basic condition, just as he sticks to all his assumptions with relentless consistency. Bauer comes along and casually hurls Marx’s entire analysis to the ground by ‘transferring’ the commodities backwards and forwards from one department to the other without exchange, and flying about in the rigorous model like a wild goose in the sky, to use a Polish proverb.

Bauer appeals to the fact that, with technological progress, the production of means of production will grow at the expense of the consumer goods production, and the capitalists in the latter department will thus constantly place a portion of their surplus value in the former department in some form or other (through banks, share-holding or founding new enterprises). All this is excellent. However, the ‘transfer’ of accumulated surplus value from one branch of, production to another can only occur in the form of money capital, that form of capital which does not differentiate and is absolute, and is therefore essential for social fluctuation, to initiate the displacements of social commodity production. A load of unsaleable wax candles cannot buy shares in copper mines, nor can a warehouse full of unmarketable rubber shoes set up a new machine factory. The point was to show how general exchange converts capitalist commodities into money capital, which alone enables the fluctuation from one branch of production to the other. Thus, when exchange is no longer possible, it is pure escapism simply to ‘transfer’ the unmarketable products into another department of production without exchange.

Equally amazing is Bauer’s idea of letting one department of social production participate in the other. Marx’s departments do not mean registers of employers’ names, but objective economic categories. If a capitalist from Dept II wants to ‘set up’ and accumulate in Dept I with part of his money capital, that does not mean that the department of consumer commodities is producing in the department of means of production, which is an economic absurdity, but that one and the same person is acting simultaneously as an employer in each of the two departments. Thus in economic terms we are dealing with two capitals, one of which produces means of production, the other consumer goods. For the analysis of the conditions of social reproduction, the fact that both sums of capital belong to one and the same person, and that the surplus value from them both join each other in one pocket, is objectively immaterial. Thus exchange remains the sole connexion between the two departments. Otherwise, if one mixes the two into a shapeless mash, as Bauer does, Marx’s rigorous construction, the result of a hundred years of struggle for clarity in political economy, disintegrates; the analysis of the process of reproduction breaks up into the chaos where Say and similar intellects wandered boldly about in ‘thin air’.

Nota bene, at first Bauer himself proceeds from this premise. For example, right at the beginning when he is constructing his tables he says: ‘Thus the value of the products of the consumer goods industry must amount to 188,000 in the second year, for the consumer goods can only be exchanged for these amounts of value.’[5] Similarly, after his tables are complete and accumulation can proceed, he asks: ‘Who buys these commodities?’[6] Thus Bauer himself makes the condition that he will accomplish accumulation by raising the total social amount of commodities. And, finally, after various exchanges, he still has some commodities left in both departments which cannot be exchanged. He then gets himself out of trouble by making both departments give presents to each other and by letting one department participate in the other’s production. Thus, at the very point of departure of his tables, Bauer gives up his own premise and the fundamental premise of Marx’s model.

And now a third example.

As is well known, Marx develops his models for the illustration of accumulation on the assumption that constant capital is in a fixed relation to variable capital, and that the rate of surplus value is equally fixed when capital is also growing progressively. In my book I explain, amongst other things, that it is this assumption which cannot be reconciled with real life, and that facilitates the smooth process of accumulation in Marx’s models. The mere consideration of technological progress, i.e. of the gradual alteration of the relation between constant and variable capital, and the increase in the rate of surplus value, would, I said, pose insuperable problems for the explanation of accumulation in Marx’s models; it would show that accumulation simply cannot be confined to the mutual relations of purely capitalist industry.

Now Otto Bauer, unlike Marx, takes good note of technological progress in his tables, and incorporates it into his calculations in the most explicit way, so that he lets constant capital grow twice as fast as variable capital from year to year. Indeed, as he expounds his theory further he assigns a determining role to technological progress in the variation in the state of business. But what do we see over the page? In the same breath Bauer assumes a fixed and constant rate of surplus value ‘to simplify the investigation’.[7]

Nota bene, scientific analysis can ignore the conditions of reality or combine them at will to simplify the subject, as the occasion demands. The mathematician may lower or raise his equation as he wishes. A physicist may plan experiments in a vacuum to explain the relative speed of fall of bodies. Similarly, the political economist may leave out concrete conditions of economic life for certain purposes of investigation. In the whole of the first volume of Capital Marx proceeds from the assumption that (1) all commodities are sold at their value, and (2) that wages correspond to the full value of labour, an assumption which, as everyone knows, contradicts practice at every step. Marx uses this procedure to show how capitalist exploitation is accomplished even under the most favourable conditions for the workers. His analysis does not cease to be scientifically accurate because of this; on the contrary, it is precisely in this way that he gives us an unshakable foundation for the exact estimation of daily practice and its exceptions.

But what would one say to a mathematician who would multiply one half of his equation by two and leave the other half unchanged or divided by two? What is one to think of a physicist who would compare the relative speed of fall of various bodies, one in an atmosphere and the other in a vacuum? This is how Bauer behaves. Of course, in all his models of reproduction Marx assumes a permanently fixed rate of surplus value, and one can hold that this very assumption is not legitimate for the investigation of the problem of accumulation. Marx, however, did stick rigorously to his assumption, and within the limits of that assumption: he ignored technological progress in every case.

Bauer treats the subject quite differently: like Marx he assumes a fixed rate of surplus value; but unlike Marx he simultaneously assumes strong and continuous technological progress! He brings technological progress into his calculations, but this by no means raises the level of exploitation – two conditions which completely contradict and neutralize one another. He then generously leaves us to test all his calculations on the assumption of an increasing rate of surplus value, which he had at first ‘neglected’, assuring us that everything would then proceed to the satisfaction of all. It is a pity that Bauer did not consider it worth his trouble to go on to complete this little detail himself, instead of breaking off his ingenious calculations, just like the other calculation experts, and taking leave of us because of urgent delays at the very point where his proof should have begun.[8]

This at least would be the only way in which an arithmetical ‘proof’ could have been provided for Bauer’s assertion. What he has now provided is no longer an aid for scientific analysis, but quackery, which explains nothing and can prove nothing.

Up till now I have still not touched upon the economic content of Bauer’s tables. I have only, with a few examples, attempted to demonstrate the methods used by Bauer, and the way in which he keeps to his own conditions. I did not go into his handling of the tables in such detail in order to celebrate cheap victories over the clumsiness of his schematic operations. Many of his pitfalls can easily be avoided by somewhat more ingeniously constructed tables – Tugan-Baranovsky, for example, is a past-master at this – not that this would prove much more about the question. The point, however, is how Bauer uses Marx’s models; it is a fact that the confusion which Bauer engenders in his tables betrays all too clearly just how much he could do with Marx’s tables.

Bauer’s co-expert, Eckstein, can slate him as much as he likes for his ‘basic misunderstanding of Marx’s models’ and his complete ‘inability’ to work ‘with Marx’s models’. It is not because I wanted to judge Bauer so harshly, like his Austro-Marxist colleague, that I am not content with emphasizing these few tests, but because Bauer explains naïvely:

Rosa Luxemburg is content to point out the capriciousness of Marx’s models – we propose to attempt to look at Marx’s thought process in a reasonable manner and to conduct our investigation with a model freed from caprice. This is why we have erected tables here which are no longer capricious, and whose measurements necessarily follow from each other, provided one first presupposes the assumption.[9]

Now, Bauer will excuse my wanting to stay with the uncorrected Marx and his ‘capriciousness’ after the tests I have made. We will still have the opportunity at the end to see what difference there is between the mistakes of a Marx and the blunders of his ‘expert’ epigones.

Bauer, however, is not content to give me instruction, but – thorough man that he is – he also sees fit to explain my mistake. He has discovered the basis of my error: ‘Comrade Luxemburg is thus incorrect in her assumption that the accumulated part of surplus value cannot be realized,’ he writes, after his tables have worked out ‘without remainder’ through the above manipulations. ‘How can Comrade Luxemburg have come to this incorrect assumption?’ And now follows the amazing explanation:

We have assumed that in the first year the capitalists buy the means of production which will be set in motion by the increased labour force in the second year, and that in the first year the capitalists buy the consumer goods which they sell to the increased labour force in the second year. If we did not assume this, it would in fact be impossible to realize this year the surplus value which was produced in the first year.

And yet again:

Rosa Luxemburg believes that the accumulated part of surplus value cannot be realized. Indeed, it cannot be realized in the first year if the material elements of the additional productive capital will not be bought until the second year.[10]

That is the heart of the matter. I was not aware that, if one wanted to open a factory and put it into production in 1916, one had to construct the necessary buildings, buy the machines and materials and get the provisions in stock for the workers who are to be employed – in 1915. I was under the impression that one founds a business enterprise first and then buys the building site for it, that one employs workers first and then plants the rye which will be baked into bread for them! It is, in fact, ludicrous – for the very reason that such disclosures are served up in the scientific organ of Marxism.

So Otto Bauer really believes that Marx’s formulae have something to do with ‘years’, and the good soul toils through two sides of print to point this out to me in simple language with the help of three-storeyed formulae and Roman and Greek letters. But Marx’s models of capital accumulation have absolutely nothing to do with calendar years. Marx was dealing with the economic metamorphoses of products and their connexion in a capitalist economy; he was dealing with the fact that, in the capitalist world, the sequence of the economic processes is: production – exchange – consumption – production again – exchange – consumption, and so on in an endless chain. Because exchange is the unavoidable transitional phase of all products and the sole link between producers, when the commodities are realized is in the first instance irrelevant for profit-making and accumulation; the following two facts, however, are relevant:

  1. The total capitalist, like each individual capitalist, cannot plan to enlarge production until he has exchanged his quantity of commodities; and
  2. The total capitalist, like each individual capitalist, cannot plan to enlarge production if there is no indication of an enlarged market.

Where then does the entire class of capitalists find the growing market which is the basis for their accumulation? This was the question. And Bauer finally provides the following detailed elucidation:

In reality the accumulated surplus value is also realized in capitalist society. At all events, the realization is accomplished step by step, gradually. Thus, for instance, the provisions which will be used in the second year to feed the extra number of workers are normally produced in the first year and sold to wholesale capital; thus, part of the surplus value which lies in these provisions will already be realized in the first year. The realization of the other part of the surplus value would then result from the wholesaler selling these provisions to the retailer, who sells them to the workers – thus far our model is a faithful representation of reality.[11]

At least Bauer gives us a tangible example here of how he imagines surplus value is realized. Whether it be in the first or the second year, this takes place by the manufacturer selling the provisions to the wholesaler, he to the retailer, and finally the small shopkeeper selling them to the extra labour force. Thus it is the workers who, in the last analysis, realize the capitalist’s surplus value for him, who help it to turn into hard cash. ‘Thus far’ Bauer’s model is a faithful representation of the range of vision of the individual capitalist and his theoretical Sancho Panza, the bourgeois vulgar economist.

Of course, as far as the individual capitalist is concerned, Fred is as good a consumer of his commodities as Joe, workers are as good as another capitalist, nationals are as good as foreigners and farmers are as good as artisans. To whomever he sells his commodities, the individual capitalist pockets his profit and the employers in the branch of provisions who sell their commodities to the workers rake in as good a profit as the employers in the branch of luxury goods do by selling off their top quality wares, lace, gold articles and diamonds to the fair womanhood of the ‘top ten thousand’. But if Bauer, without noticing it in the least, transfers this trite empiricism as regards every individual employer, over to capital as a whole, if he cannot differentiate the conditions of social reproduction from the conditions of reproduction of individual capital – well then, why on earth did Marx write the second volume of Capital? For the very heart of Marx’s theory of reproduction, the decisive achievement of the ‘amazing work’, as Bauer’s colleague, Hilferding, calls it, lies in the fact that Marx had finally extracted out of the chaos of contradictions and fumbling attempts of Quesnay, Adam Smith and their poor imitators who followed them, for the first time and with classical clarity, the fundamental distinction between the two categories: individual capital and aggregate social capital and their movements! Let us examine Bauer’s ideas from this point of view in the simplest possible way.

Whence do the workers get the money with which they are to buy the provisions and thus realize the capitalist’s surplus value? The individual capitalist does not give a tinker’s damn where his ‘customer’s’ mammon comes from, as long as he has some – it can be given, stolen or earned by prostitution. For the entire class of capitalists, however, there remains the unshakable fact that the workers receive the means to satisfy their needs from the capitalists themselves in exchange for labour – in the form of wages. As I have explained above, they receive these in two different forms, according to the conditions of modern commodity production: first as money, then as commodity, in which way the money always returns to its point of departure, the pocket of the capitalist class. This circulation of variable capital completely exhausts the purchasing power of the workers and their contact by way of exchange with the capitalist. Thus, if provisions are allotted to the workers, that does not mean, speaking in social terms, that capital is realizing surplus value, but that it is delivering variable capital in commodities (material wages), thus retrieving its own capital from the previous period in an equal amount of money capital. Thus, according to Bauer’s formula, the so-called realization of surplus value consists in the capitalists repeatedly exchanging a portion of new capital in commodity form against an equal portion of capital in money form which already belonged to them! In reality, the class of capitalists does indeed carry out this transaction, since they must bow to the sad necessity of giving their labour force a portion of the total product as means of subsistence, so that they can produce new surplus value in commodity form. But the capitalist class never imagines that it is ‘realizing’ its previous surplus value through this process. This was reserved for Bauer to discover.[12]

At all events, Bauer himself dimly suspects that the conversion of surplus value into variable capital represents anything but ‘realization of surplus value’. For instance, he does not say a word about it as long as he is dealing with the renewal of variable capital within the old framework. That clever trick does not start until the ‘additional workers’ appear. Workers who have already been employed by capital for years simply receive wages – first as money, then as provisions – and produce surplus value in return. However, workers who have been taken on recently with the expansion of operations accomplish even more; they ‘realize’ the capitalists’ surplus value by using the money wage they receive from the capitalists to buy provisions from these same capitalists! Workers in general only realize their own commodity – labour power – for themselves and do enough for capital when they produce surplus value. But the so-called ‘additional’ workers are supposed to accomplish a double miracle for capital:

  1. they produce surplus value in commodities, and
  2. they actually realize this surplus value in money.

We have finally arrived at the basic concepts of the process of reproduction, just inside the front door of the second volume of Capital, and now it becomes very clear that Bauer is not only called upon to explain Marx’s second volume, but also to ‘free’ it from contradictions and ‘arbitrariness’ and to ‘express Marx’s thoughts in a reasonable way’.

Bauer crowns the general section of his critique of my book with the following passage:

Comrade Luxemburg believes that the commodities which contain (α + β) (for common mortals: the commodities containing the surplus value destined for capitalization – R.L.) must be sold outside the capitalist world to make the realization of their surplus value possible. What sorts of commodities are they? They are those means of production capitalists need to expand their productive apparatus and those commodities needed to feed the additional workers.

Astonished at my obtuseness, Bauer exclaims:

If those commodities were thrown out of the capitalist world there would be no production on an expanded scale possible during the following year. Neither the means of production necessary for the expansion of the productive apparatus nor the necessary provisions to feed the increased labour force can be supplied. The elimination of this part of the surplus value from the capitalist market would not make accumulation possible, as Rosa Luxemburg thinks, but rather make any accumulation impossible.[13]

Again, he states categorically at the end of his article:

‘The part of the surplus product which contains accumulated surplus value cannot be sold to the peasants and petit-bourgeoisie in the colonies as it is needed in the capitalist country itself to expand production.’[14]

Good God, are there words for such thinking, for such criticism! We are back again in the realm of economic innocence on the level of the good old von Kirchmann[15] or the honourable Russian arch-confusionist Woronzow.[16] Bauer seriously believes that capitalist commodities disappear altogether if they are ‘thrown away’ to non-capitalist strata or countries, as if they were tossed into the sea. He did not notice one fact which every child knows these days, that, if commodities are exported, they do not get lost, but are exchanged. Usually other commodities are bought from these non-capitalist countries and strata, which supply the capitalist economy with means of production and consumption! He grandly calls what is everyday reality in the history of capitalism, ignorance on my side, and, what is more, highly injurious to capitalism!

This is indeed astonishing. From the 1820s to the 1860s English capitalism ‘threw away’ coal and iron to the then non-capitalist North and South America; and it did not perish but grew and developed rosy cheeks. German capitalism eagerly exports machines, iron, locomotives and textiles to Turkey, and does not collapse. Rather, it is prepared to set the world on fire to monopolize this trade to an even greater extent. In order to open up opportunities to ‘throw away’ capitalist commodities to non-capitalist China, France and England conducted bloody wars for three decades in East Asia: the united capital of Europe undertook an international crusade against China at the turn of the century. Trade, exchange with peasants and artisans – non-capitalist producers in Europe – is one of the most common phenomena in every country today, and at the same time, as everyone knows, the unavoidable precondition for the existence of capitalist industry. And there is Otto Bauer suddenly declaring: if capitalists were to ‘throw away’ into the non-capitalist world the commodities which they and their workers do not consume themselves, accumulation would become impossible! As if capitalist development would be historically possible if capital were dependent solely on self-produced means of production and consumption.

This is how one can get entangled in one’s eagerness for theoretical stupidity! But it is characteristic, for this entire ‘expert’ epigon-tendency of Marxism in theory and practice – and we will find this amply confirmed later on – that they lose all sense of reality by burying themselves in an abstract ‘model’; the more boldly they wander around with a stick in the mist of theory, the more miserably they stumble over the glaringly obvious facts of real life.

We have now dealt with Bauer’s preliminary points; we are familiar with his methods and procedures. We still have the main thing: his population theory.

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[1] 1913, No.23. {English translation: Otto Bauer’s Accumulation of Capital, History of Political Economy, 1986, 18:1, pp.87-110.}

[2] loc. cit. {p.95}

[3] ibid., No.24, p.863. {p.98}

[4] ibid., pp.865-6. {pp.100-101}

[5] op. cit., No.23, p.837. {p.95}

[6] op. cit., No.24, p.863. {p.98}

[7] op. cit., No.23, p.835. {p.93}

[8] Pannekoek, also, after calculating his tables with quickly growing capital but with a constant rate of surplus value, says: ‘As above, a gradual alteration in the rate of exploitation comes into consideration too’ (Bremer Bürgerzeitung, 29 January 1913). But he too leaves that difficulty to the reader.

[9] op. cit., No.23, p.832. {p.96}

[10] op. cit., No.24, p.866. {pp.100-101}

[11] op. cit., No.24, p.868. {pp.103-4}

[12] A little ‘expert’ in the Dresdener Volkszeitung (of 22 January 1913) has solved the problem of accumulation in a remarkable way. ‘Each extra Mark’, he tells us, ‘which the worker receives creates a new capital investment of ten Marks or more, thus the workers’ struggle ... creates a market for surplus value and makes capital accumulation in their own country possible.’ What a clever little boy! The next time one such ‘expert’ has the brilliant idea of simply writing ‘cockadoodledoo’ in the middle of an economic observation, he can be dead certain that that too will be printed unchecked as a lead article in the Social Democratic organ. It seems that the esteemed editors, at least those of them with an academic education, who have their hands full with upturning the whole world history in parliamentary waiting rooms and corridors, have for a long time considered it a waste of time actually to get down to reading theoretical books themselves in order to form some kind of opinion about problems which emerge. It is much easier to pass that sort of thing on to the nearest scribbler who collates economic reviews out of English, American and other statistical publications.

="">[13] ibid., p.863. (All emphasis by Bauer.) {p.103}

[14] ibid., p.873. {p.108}

[15] [Julius Herman von Kirchmann (1802-84), German lawyer, philosopher and politician. For treatment of his ideas see Marx, Theories of Surplus Value, Pt.II (Progress Publishers, Moscow 1968; Lawrence & Wishart, London 1969). Also Luxemburg, op. cit.]

[16] [V.P. Woronzow (Vorontsov) (1847-1918). Theoretician of Narodnism. See G.V. Plekhanov, The Development of the Monist View of History (Foreign Language Publishing House, Moscow 1956). Also Luxemburg, op. cit.

Last updated on: 15.12.2008