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Rosa Luxemburg
Reform or Revolution
Part One
Chapter II: The Adaptation of Capital
According to Bernstein, the credit system, the perfected
means of communication and the new capitalist combines are the important
factors that forward the adaptation of capitalist economy.
Credit has diverse applications in capitalism. Its two most important
functions are to extend production and to facilitate exchange. When the
inner tendency of capitalist production to extend boundlessly strikes
against the restricted dimensions of private property, credit appears as
a means of surmounting these limits in a particular capitalist manner.
Credit, through shareholding, combines in one magnitude of capital a
large number of individual capitals. It makes available to each
capitalist the use of other capitalists’ money – in the form of
industrial credit. As commercial credit it accelerates the exchange of
commodities and therefore the return of capital into production, and
thus aids the entire cycle of the process of production. The manner in
which these two principle functions of credit influence the formation of
crises is quite obvious. If it is true that crises appear as a result
of the contradiction existing between the capacity of extension, the
tendency of production to increase, and the restricted consumption
capacity of the market, credit is precisely, in view of what was stated
above, the specific means that makes this contradiction break out as
often as possible. To begin with, it increases disproportionately the
capacity of the extension of production and thus constitutes an inner
motive force that is constantly pushing production to exceed the limits
of the market. But credit strikes from two sides. After having (as a
factor of the process of production) provoked overproduction, credit (as
a factor of exchange) destroys, during the crisis, the very productive
forces it itself created. At the first symptom of the crisis, credit
melts away. It abandons exchange where it would still be found
indispensable, and appearing instead, ineffective and useless, there
where some exchange still continues, it reduces to a minimum the
consumption capacity of the market.
Besides having these two principal results, credit also influences
the formation of crises in the following ways. It constitutes the
technical means of making available to an entrepreneur the capital of
other owners. It stimulates at the same time the bold and unscrupulous
utilisation of the property of others. That is, it leads to speculation.
Credit not only aggravates the crisis in its capacity as a dissembled
means of exchange, it also helps to bring and extend the crisis by
transforming all exchange into an extremely complex and artificial
mechanism that, having a minimum of metallic money as a real base, is
easily disarranged at the slightest occasion.
We see that credit, instead of being an instrument for the
suppression or the attenuation of crises, is on the contrary a
particularly mighty instrument for the formation of crises. It cannot be
anything else. Credit eliminates the remaining rigidity of capitalist
relationships. It introduces everywhere the greatest elasticity
possible. It renders all capitalist forces extensible, relative and
mutually sensitive to the highest degree. Doing this, it facilitates and
aggravates crises, which are nothing more or less than the periodic
collisions of the contradictory forces of capitalist economy.
That leads us to another question. Why does credit generally have the
appearance of a “means of adaptation” of capitalism? No matter what the
relation or form in which this “adaptation” is represented by certain
people, it can obviously consist only of the power to suppress one of
the several antagonistic relations of capitalist economy, that is, of
the power to suppress or weaken one of these contradictions, and allow
liberty of movement, at one point or another, to the other fettered
productive forces. In fact, it is precisely credit that aggravates these
contradictions to the highest degree. It aggravates the antagonism
between the mode of production and the mode of exchange by stretching
production to the limit and at the same time paralysing exchange at the
smallest pretext. It aggravates the antagonism between the mode of
production and the mode of appropriation by separating production from
ownership, that is, by transforming the capital employed in production
into “social” capital and at the same time transforming a part of the
profit, in the form of interest on capital, into a simple title of
ownership. It aggravates the antagonism existing between the property
relations (ownership) and the relations of production by putting into a
small number of hands immense productive forces and expropriating large
numbers of small capitalists. Lastly, it aggravates the antagonism
existing between social character of production and private capitalist
ownership by rendering necessary the intervention of the State in
production.
In short, credit reproduces all the fundamental antagonisms of the
capitalist world. It accentuates them. It precipitates their development
and thus pushes the capitalist world forward to its own destruction.
The prime act of capitalist adaptation, as far as credit is concerned,
should really consist in breaking and suppressing credit. In fact,
credit is far from being a means of capitalist adaptation. It is, on the
contrary, a means of destruction of the most extreme revolutionary
significance. Has not this revolutionary character of credit actually
inspired plans of “socialist” reform? As such, it has had some
distinguished proponents, some of whom (Isaac Pereira in France), were,
as Marx put it, half prophets, half rogues.
Just as fragile is the second “means of adaptation”: employers’
organisations. According to Bernstein, such organisations will put an
end to anarchy of production and do away with crises through their
regulation of production. The multiple repercussions of the development
of cartels and trusts have not been considered too carefully up to now.
But they predict a problem that can only be solved with the aid of
Marxist theory.
One thing is certain. We could speak of a damming up of capitalist
anarchy through the agency of capitalist combines only in the measure
that cartels, trusts, etc., become, even approximately, the dominant
form of production. But such a possibility is excluded by the very
nature of cartles. The final economic aim and result of combines is the
following. Through the suppression of competition in a given branch of
production, the distribution of the mass of profit realised on the
market is influenced in such a manner that there is an increase of the
share going to this branch of industry. Such organisation of the field
can increase the rate of profit in one branch of industry at the expense
of another. That is precisely why it cannot be generalised, for when it
is extended to all important branches of industry, this tendency
suppresses its own influence.
Furthermore, within the limits of their practical application the
result of combines is the very opposite of suppression of industrial
anarchy. Cartels ordinarily succeed in obtaining an increase of profit,
in the home market, by producing at a lower rate of profit for the
foreign market, thus utilising the supplementary portions of capital
which they cannot utilise for domestic needs. That is to say, they sell
abroad cheaper than at home. The result is the sharpening of competition
abroad – the very opposite of what certain people want to find. That is
well demonstrated by the history of the world sugar industry.
Generally speaking, combines treated as a manifestation of the
capitalist mode of production, can only be considered a definite phase
of capitalist development. Cartels are fundamentally nothing else than a
means resorted to by the capitalist mode of production for the purpose
of holding back the fatal fall of the rate of profit in certain branches
of production. What method do cartels employ for this end? That of
keeping inactive a part of the accumulated capital. That is, they use
the same method which in another form is employed in crises. The remedy
and the illness resemble each other like two drops of water. Indeed the
first can be considered the lesser evil only up to a certain point. When
the outlets of disposal begin to shrink, and the world market has been
extended to its limit and has become exhausted through the competition
of the capitalist countries – and sooner or later that is bound to come –
then the forced partial idleness of capital will reach such dimensions
that the remedy will become transformed into a malady, and capital,
already pretty much “socialised” through regulation, will tend to revert
again to the form of individual capital. In the face of the increased
difficulties of finding markets, each individual portion of capital will
prefer to take its chances alone. At that time, the large regulating
organisations will burst like soap bubbles and give way to aggravated
competition.
In a general way, cartels, just like credit, appear therefore as a
determined phase of capitalist development, which in the last analysis
aggravates the anarchy of the capitalist world and expresses and ripens
its internal contradictions. Cartels aggravate the antagonism existing
between the mode of production and exchange by sharpening the struggle
between the producer and consumer, as is the case especially in the
United States. They aggravate, furthermore, the antagonism existing
between the mode of production and the mode of appropriation by
opposing, in the most brutal fashion, to the working class the superior
force of organised capital, and thus increasing the antagonism between
Capital and Labour.
Finally, capitalist combinations aggravate the contradiction existing
between the international character of capitalist world economy and the
national character of the State – insofar as they are always
accompanied by a general tariff war, which sharpens the differences
among the capitalist States. We must add to this the decidedly
revolutionary influence exercised by cartels on the concentration of
production, technical progress, etc.
In other words, when evaluated from the angle of their final effect
on capitalist economy, cartels and trusts fail as “means of adaptation.”
They fail to attenuate the contradictions of capitalism. On the
contrary, they appear to be an instrument of greater anarchy. They
encourage the further development of the internal contradictions of
capitalism. They accelerate the coming of a general decline of
capitalism.
But if the credit system, cartels, and the rest do not suppress the
anarchy of capitalism, why have we not had a major commercial crisis for
two decades, since 1873? Is this not a sign that, contrary to Marx’s
analysis the capitalist mode of production has adapted itself – at
least, in a general way – to the needs of society? Hardly had Bernstein
rejected, in 1898, Marx’s theory of crises, when a profound general
crisis broke out in 1900, while seven years later, a new crisis
beginning in the United States, hit the world market. Facts proved the
theory of “adaptation” to be false. They showed at the same time that
the people who abandoned Marx’s theory of crisis only because no crisis
occurred within a certain space of time merely confused the essence of
this theory with one of its secondary exterior aspects – the ten–year
cycle. The description of the cycle of modern capitalist industry as a
ten–year period was to Marx and Engels, in 1860 and 1870, only a simple
statement of facts. It was not based on a natural law but on a series of
given historic circumstances that were connected with the rapidly
spreading activity of young capitalism.
The crisis of 1825 was in effect, the result of extensive investment
of capital in the construction of roads, canals, gas works, which took
place during the preceding decade, particularly in England, where the
crisis broke out. The following crisis of 1836–1839 was similarly the
result of heavy investments in the construction of means of
transportation. The crisis of 1847 was provoked by the feverish building
of railroads in England (from 1844 to 1847, in three years, the British
Parliament gave railway concessions to the value of 15 billion
dollars). In each of the three mentioned cases, a crisis came after new
bases for capitalist development were established. In 1857, the same
result was brought by the abrupt opening of new markets for European
industry in America and Australia, after the discovery of the gold
mines, and the extensive construction of railway lines, especially in
France, where the example of England was then closely imitated. (From
1852 to 1856, new railway lines to the value of 1,250 million francs
were built in France alone). And finally we have the great crisis of
1873 – a direct consequence of the firm boom of large industry in
Germany and Austria, which followed the political events of 1866 and
1871.
So that up to now, the sudden extension of the domain of capitalist
economy, and not its shrinking, was each time the cause of the
commercial crisis. That the international crisis repeated themselves
precisely every ten years was a purely exterior fact, a matter of
chance. The Marxist formula for crises as presented by Engels in Anti–Dühring and by Marx in the first and third volumes of Capital, applies to all crises only in the measure that it uncovers their international mechanism and their general basic causes.
Crises may repeat themselves every five or ten years, or even every
eight or twenty years. But what proves best the falseness of Bernstein’s
theory is that it is in the countries having the greatest development
of the famous “means of adaptation” – credit, perfected communications
and trusts – that the last crisis (1907–1908) was most violent.
The belief that capitalist production could “adapt” itself to
exchange presupposes one of two things: either the world market can
spread unlimitedly, or on the contrary the development of the productive
forces is so fettered that it cannot pass beyond the bounds of the
market. The first hypothesis constitutes a material impossibility. The
second is rendered just as impossible by the constant technical progress
that daily creates new productive forces in all branches.
There remains still another phenomenon which, says Bernstein,
contradicts the course of capitalist development as it is indicated
above. In the “steadfast phalanx” of middle–size enterprises, Bernstein
sees a sign that the development of large industry does not move in a
revolutionary direction, and is not as effective from the angle of the
concentration of industry as was expected by the “theory” of collapse.
He is here, however, the victim of his own lack of understanding. For to
see the progressive disappearance of large industry is to misunderstand
sadly the nature of this process.
According to Marxist theory, small capitalists play in the general
course of capitalist development the role of pioneers of technical
change. They possess that role in a double sense. They initiate new
methods of production in well–established branches of industry; they are
instrumental in the creation of new branches of production not yet
exploited by the big capitalist. It is false to imagine that the history
of the middle–size capitalist establishments proceeds rectilinearly in
the direction of their progressive disappearance. The course of this
development is on the contrary purely dialectical and moves constantly
among contradictions. The middle capitalist layers find themselves, just
like the workers, under the influence of two antagonistic tendencies,
one ascendant, the other descendant. In this case, the descendent
tendency is the continued rise of the scale of production, which
overflows periodically the dimensions of the average size parcels of
capital and removes them repeatedly from the terrain of world
competition.
The ascendant tendency is, first, the periodic depreciation of the
existing capital, which lowers again, for a certain time, the scale of
production in proportion to the value of the necessary minimum amount of
capital. It is represented, besides, by the penetration of capitalist
production into new spheres. The struggle of the average size enterprise
against big Capital cannot be considered a regularly proceeding battle
in which the troops of the weaker party continue to melt away directly
and quantitatively. It should be rather regarded as a periodic mowing
down of the small enterprises, which rapidly grow up again, only to be
mowed down once more by large industry. The two tendencies play ball
with the middle capitalist layers. The descending tendency must win in
the end.
The very opposite is true about the development of the working class.
The victory of the descending tendency must not necessarily show itself
in an absolute numerical diminution of the middle–size enterprises. It
must show itself, first in the progressive increase of the minimum
amount of capital necessary for the functioning of the enterprises in
the old branches of production; second in the constant diminution of the
interval of time during which the small capitalists conserve the
opportunity to exploit the new branches of production. The result as far
as the small capitalist is concerned, is a progressively shorter
duration of his stay in the new industry and a progressively more rapid
change in the methods of production as a field for investment. For the
average capitalist strata, taken as a whole, there is a process of more
and more rapid social assimilation and dissimilation.
Bernstein knows this perfectly well. He himself comments on this. But
what he seems to forget is that this very thing is the law of the
movement of the average capitalist enterprise. If one admits that small
capitalists are pioneers of technical progress, and if it true that the
latter is the vital pulse of the capitalist economy, then it is manifest
that small capitalists are an integral part of capitalist development,
which can only disappear together with it [capitalist development]. The
progressive disappearance of the middle–size enterprise – in the
absolute sense considered by Bernstein – means not, as he things, the
revolutionary course of capitalist development, but precisely the
contrary, the cessation, the slowing up of development. “The rate of
profit, that is to say, the relative increase of capital,” said Marx,
“is important first of all for new investors of capital, grouping
themselves independently. And as soon as the formation of capital falls
exclusively into a handful of big capitalists, the revivifying fire of
production is extinguished. It dies away.”
Next: Chap.3: The Realisation of Socialist through Social Reforms
Last updated on: 28.11.2008
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