LUXEMBORG THEORY OF IMPERIALISM
The most “obvious” phenomenon of the new period in the history of capitalism, which opened with the last quarter of the 19th century, was undoubtedly the series of wars and expeditions, the creation or the expansion of colonial empires: the French expeditions to Tonkin (now Vietnam), Tunisia and Morocco; the conquest of the Congo by Leopold II; the British expansion to the boundaries of India, Egypt and the Sudan, East and South Africa; the German and Italian expansions in Africa, etc.
This colonial expansion stimulated the first efforts by Marxists to interpret the development of this period of capitalism. Karl Kautsky emphasized the commercial reasons for imperialist expansion. According to him, industrial capital cannot sell the whole of its production within an industrialized country. In order to realize surplus value, it must provide itself with markets made up of non-industrialized countries, essentially agricultural countries. This was the purpose of the colonial wars of expansion and the reason for the creation of colonial empires.
Parvus, in the beginning of the 20th century, while underlining this phenomenon emphasized the role of heavy industry (above all the iron industry) in the transformation which was about to take place in the politics of the international capitalist class. He pointed out how iron played a more and more preponderant role in capitalist industry, and demonstrated that government orders, direct (armaments race) and indirect (competition in naval construction, building of railways and harbor installations in colonial countries, etc.), represented the main outlet for this industry.
It was Rosa Luxemburg who drew together in a complete theory all these concepts of an imperialism expanding to compensate for inadequate markets for the products of the biggest capitalist industries. Her theory is mainly one of crises, or to express it more correctly, a theory of the conditions of realization surplus value and of accumulation of capital. It is consistent with the theories of under-consumption worked out over the course of a century by numerous opponents of the capitalist system to show the inevitability of economic crises.
According to Rosa Luxemburg, the continual expansion of the capitalist mode of production is impossible within the bounds of a purely capitalist society. The expansion of the production of the means of production within capitalist society is only possible if it goes hand in hand with the expansion of the demand for consumer goods. Without this expansion of the latter demand, the capitalists will not buy any new machines, etc. It is not the expansion of the purchasing power of the working class which allows an adequate expansion of the demand for consumer goods. On the contrary, the more the capitalist system progresses, the more does the purchasing power of the workers represent a relatively smaller proportion of the national income.
In order for capitalist expansion to continue it is necessary to have non-capitalist classes which, with an income obtained outside the capitalist system, would be endowed with the additional purchasing power to buy industrial consumer goods. These non-capitalist classes originally are the landowners and farmers. In the countries where the industrial revolution first occurred, the capitalist mode of production developed and triumphed in a non-capitalist milieu, conquering the market which consisted above all of the mass of peasants.
Rosa Luxemburg concluded that after the conquest of the national non-capitalist markets, and the not yet industrialized markets the European and North American continents, capital had to throw itself into the conquest of a new non-capitalist sphere, that of the agricultural countries of Asia and Africa.
She tied this theory of imperialism to the importance of “compensating outlets” for the capitalist system, outlets presented above all by government purchases of armaments. She foresaw the mechanism which did not reveal its full functioning until the eve of the Second World War. Today, without this “compensating outlet,” which is created by the armaments and war economy, the capitalist system would be in danger of falling periodically into economic crises of the same gravity as that of 1929-33.
The Flaws in Luxemburg’s Views
It is beyond doubt that historically the development of capitalist industry came about in effect in a non-capitalist milieu and that the existence of the great agricultural markets, national and international, represented the essential safety-valve of the capitalist system during the entire 19th century and the beginning of the 20th.
However, from the point of view of economic theory, the Luxemburgian conception of imperialism has certain flaws. It is important to underline them because they obscure certain long run trends in the development of capitalism as a whole.
For instance, Luxemburg argued that the capitalist class could not enrich itself by passing its own money from one pocket to another. However, this ignores the fact, illuminated by Marx, that the capitalist class taken as a whole represents a useful abstraction to unveil the laws of motion of capital, but that the phenomenon of periodic crises is understandable only in the framework of the competition of antagonistic capitals and the concentration resulting from that competition.
In such a framework it is quite logical that “the capitalist class” enriches itself “by itself,” that is, that certain layers of the capitalist class enrich themselves through the impoverishment of other capitalist layers. This is what has occurred for the last forty years in the United States, at first in relation to the American capitalists, then particularly in relation to the international capitalist classes (first of all the European). This will occur more and more as the purely agricultural markets disappear.
Within today’s capitalist world, exports are directed to a large extent to other industrialized countries, and only to a small extent to the markets of “non-capitalist” countries.
The fundamental weakness of Rosa Luxemburg’s theory is that it is based simply on the capitalist class’s need for markets to realize surplus value, and ignores the basic changes which have taken place in capitalist property and production.
This colonial expansion stimulated the first efforts by Marxists to interpret the development of this period of capitalism. Karl Kautsky emphasized the commercial reasons for imperialist expansion. According to him, industrial capital cannot sell the whole of its production within an industrialized country. In order to realize surplus value, it must provide itself with markets made up of non-industrialized countries, essentially agricultural countries. This was the purpose of the colonial wars of expansion and the reason for the creation of colonial empires.
Parvus, in the beginning of the 20th century, while underlining this phenomenon emphasized the role of heavy industry (above all the iron industry) in the transformation which was about to take place in the politics of the international capitalist class. He pointed out how iron played a more and more preponderant role in capitalist industry, and demonstrated that government orders, direct (armaments race) and indirect (competition in naval construction, building of railways and harbor installations in colonial countries, etc.), represented the main outlet for this industry.
It was Rosa Luxemburg who drew together in a complete theory all these concepts of an imperialism expanding to compensate for inadequate markets for the products of the biggest capitalist industries. Her theory is mainly one of crises, or to express it more correctly, a theory of the conditions of realization surplus value and of accumulation of capital. It is consistent with the theories of under-consumption worked out over the course of a century by numerous opponents of the capitalist system to show the inevitability of economic crises.
According to Rosa Luxemburg, the continual expansion of the capitalist mode of production is impossible within the bounds of a purely capitalist society. The expansion of the production of the means of production within capitalist society is only possible if it goes hand in hand with the expansion of the demand for consumer goods. Without this expansion of the latter demand, the capitalists will not buy any new machines, etc. It is not the expansion of the purchasing power of the working class which allows an adequate expansion of the demand for consumer goods. On the contrary, the more the capitalist system progresses, the more does the purchasing power of the workers represent a relatively smaller proportion of the national income.
In order for capitalist expansion to continue it is necessary to have non-capitalist classes which, with an income obtained outside the capitalist system, would be endowed with the additional purchasing power to buy industrial consumer goods. These non-capitalist classes originally are the landowners and farmers. In the countries where the industrial revolution first occurred, the capitalist mode of production developed and triumphed in a non-capitalist milieu, conquering the market which consisted above all of the mass of peasants.
Rosa Luxemburg concluded that after the conquest of the national non-capitalist markets, and the not yet industrialized markets the European and North American continents, capital had to throw itself into the conquest of a new non-capitalist sphere, that of the agricultural countries of Asia and Africa.
She tied this theory of imperialism to the importance of “compensating outlets” for the capitalist system, outlets presented above all by government purchases of armaments. She foresaw the mechanism which did not reveal its full functioning until the eve of the Second World War. Today, without this “compensating outlet,” which is created by the armaments and war economy, the capitalist system would be in danger of falling periodically into economic crises of the same gravity as that of 1929-33.
The Flaws in Luxemburg’s Views
It is beyond doubt that historically the development of capitalist industry came about in effect in a non-capitalist milieu and that the existence of the great agricultural markets, national and international, represented the essential safety-valve of the capitalist system during the entire 19th century and the beginning of the 20th.
However, from the point of view of economic theory, the Luxemburgian conception of imperialism has certain flaws. It is important to underline them because they obscure certain long run trends in the development of capitalism as a whole.
For instance, Luxemburg argued that the capitalist class could not enrich itself by passing its own money from one pocket to another. However, this ignores the fact, illuminated by Marx, that the capitalist class taken as a whole represents a useful abstraction to unveil the laws of motion of capital, but that the phenomenon of periodic crises is understandable only in the framework of the competition of antagonistic capitals and the concentration resulting from that competition.
In such a framework it is quite logical that “the capitalist class” enriches itself “by itself,” that is, that certain layers of the capitalist class enrich themselves through the impoverishment of other capitalist layers. This is what has occurred for the last forty years in the United States, at first in relation to the American capitalists, then particularly in relation to the international capitalist classes (first of all the European). This will occur more and more as the purely agricultural markets disappear.
Within today’s capitalist world, exports are directed to a large extent to other industrialized countries, and only to a small extent to the markets of “non-capitalist” countries.
The fundamental weakness of Rosa Luxemburg’s theory is that it is based simply on the capitalist class’s need for markets to realize surplus value, and ignores the basic changes which have taken place in capitalist property and production.
These were the structural problems which Rudolf Hilferding and Lenin tackled.
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