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Rediscovering Rosa Luxemburg.

In the light of post-crisis developments in the political economy of financialisation, credit, and the money supply, Rosa Luxemburg's critique of capitalism deserves to be looked at afresh.

'I was, I am, I shall be!'

Rosa Luxemburg, 'Order reigns in Berlin', 1919. Her last written words.

Rosa Luxemburg's name lives on among left-wingers--but while she is remembered as a hero, her ideas about the intrinsic unsustainability of capitalism have been consistently misunderstood and neglected. This has begun to change recently, with reappraisals of her thought seeing her as a forerunner of contemporary understandings of the role of credit in economic growth. This renewed understanding of her ideas makes her highly relevant to current debates about the role of credit in the financial crash of 2008 and ongoing stagnation which has followed in its wake. But these reappraisals can go further. So far they have focused on showing how, according to Luxemburg's ideas, credit is required in order to make growth possible; what they have not focused on is how her ideas show that such growth cannot go on forever.

Luxemburg the woman

Born in Poland in 1871, Rosa Luxemburg became a leading figure within Germany's social democratic party, the SPD. Her central contribution to political debate was to take issue with those among the SPD's leaders who believed in working for practical gains within the capitalist system, rather than actively organising for its replacement. Her opposition to this reformism was founded on her analysis of the internal contradictions within capitalism: these doomed it to a collapse, she believed, which would in the process cause immense destruction. This led her to pose two great questions for which she is famous: 'socialism or barbarism?' and 'reform or revolution?' Her argument was that a mild policy of attempting to reform capitalism from within would leave its internal contradictions untouched, meaning whatever practical gains were made by workers in the short term would be blown away as capitalism degenerated towards its implosion. Unless there were to be a revolution which proactively replaced capitalism with socialism, the natural completion of capitalism's life-cycle--by which the system gobbled up more and more of the globe, and nations fought each other for the sources of growth until all were exhausted--would have devastating consequences for civilisation.

There is an enduring interest in Rosa Luxemburg, but one hesitates to call it an influence. For decades she has been remembered more for who she was than what she thought. She is admired as a fearless trailblazer for her sex, who took on a party establishment dominated by men, and met condescension with biting sarcasm. She is celebrated for her role within the Second International, the global alliance of socialist parties whom she sought unsuccessfully to unite in opposition to the First World War. She is admired for her equal commitment to democracy and socialism, which saw her oppose the party dictatorship Lenin created in Russia. She is admired, above all, for her courage, moral and physical; her martyrdom. In 1915, shortly before being imprisoned for her opposition to Germany's involvement in the First World War, Luxemburg co-founded the Spartacus League, which would subsequently become the German communist party. In 1919, after an uprising by Spartacus supporters was put down by the authorities, Luxemburg was arrested, then beaten and shot dead while in custody, her body tossed into a canal.

This biography has consistently overshadowed her legacy as a thinker. The tone was set by Lenin, who argued that, even though she had been wrong on all the important debates she had participated in, still she was a hero. Or as he put it, in the ultimate in backhanded compliments: 'An eagle can sometimes fly lower than a chicken, but a chicken can never rise to the same heights as an eagle' (Evenitsky, 1966, 45).

Why is it that her ideas have been largely overlooked? It is not just that they have been overshadowed by the compelling narrative of her life-story. On one side, the centre-left has marginalised her as a revolutionary communist, thus rejecting her ideas as being necessarily misguided. At the opposite pole, for years the Soviet authorities denounced her for having criticised the Leninist approach to power, 'Luxemburgism' becoming a term used to describe those who showed an heretical tendency to think they knew better than the Party. As the intellectual authority of Soviet communism dwindled among Western Marxists, such character assassination later rebounded to her favour. But still, this tended to lead to a celebration of her character rather than a rediscovery of her theory of capitalist breakdown (1).

Rediscovering Luxemburg's ideas

To treat Luxemburg the woman with the proper respect ought to mean engaging seriously with Luxemburg the thinker--this is only what she would have demanded, after all. But at last there are signs today that her ideas are ripe for rediscovery. There is something about the times we live in that makes a widely-understood rediscovery of her thought both possible and necessary.

There are three factors for discussion here. The first is the present context of economic crisis and environmental danger. The capitalist system has not been so obviously dysfunctional since the Great Depression. For decades inequality has been worsening, the real incomes of workers declining, growth in productivity receding, work-life balance getting worse. Dependence on consumer credit partly masked these flaws, but now, following the financial crash of 2008 which this helped create, capitalist economies as a whole have become mired in a condition of chronic stagnation. Meanwhile, there is now a highly-developed scientific understanding that 'business as usual' capitalism will lead to environmental disaster. In 2013, for instance, the Intergovernmental Panel on Climate Change pronounced with greater certainty than ever before that humanity was largely to blame for global warming, and that it was likely there would be a range of serious impacts over the coming decades (Intergovernmental Panel on Climate Change, 2013, 2, 15, 17-25).

It is this which makes understanding Luxemburg's argument, that capitalism is inherently unsustainable, necessary in the most obvious sense. It is necessary in the sense that people must take action to fundamentally change the social system if we are to avert a global catastrophe. But it is also necessary in another sense, that of being instrumental in helping to liberate mainstream debate from the 'tyranny of the present'--the background assumption since the fall of the Berlin Wall that history is over and capitalism triumphant until the end of time.

This is to say, there remains an unwillingness to make fundamental criticisms of capitalism as a system, even among many left-wingers and environmentalists. To talk about capitalism as having an end is nowadays, in any mainstream media, to sound gauche, adolescent, a touching relic of a bygone past. Even to name 'capitalism' as a subject for criticism is to exile oneself to the political margins, presupposing as this does that capitalism is something that can be viewed from the outside--as one of a historical succession of social systems--rather than the way things are.

A vivid illustration of this mentality was given by the left-liberal Richard Reeves, in a 2007 article entitled 'We love capitalism'. Writing for the New Statesman, he began:

Karl Marx famously predicted that capitalism would produce its own gravediggers. If so, they have been an awfully long time on the job. (Perhaps they knock off early). In fact, there is no grave. Capitalism is alive and well, having triumphed on all fronts: economic, social and political. [... It] seems unlikely that in a hundred years there will be any general need for the word capitalism at all. The only sixth-formers writing essays on 'capitalism' or 'socialism' in 2107 will be those studying history. (Reeves, 2007)

But this is still only to talk about what makes a rediscovery of Luxemburg's ideas necessary. What makes it possible are all the currents of thought on the nature of money and credit which have developed since Luxemburg's day. For example, we now have money circuit theory, such as in the works of Augusto Grazziani, which asserts that credit is essential to capitalist production. We also have the theoretical understanding, developed notably by Paul Sweezy and Monthly Review, of how mature capitalism depends on increasing financialisation as a means of staving off crisis due to lack of real growth. There are also specialist theories on the tendency towards financial crashes when an economy becomes excessively reliant on credit. Steve Keen's Debunking Economics (2012) has helped to popularise the ideas of Hyman Minsky and Irving Fisher. Finally, there is a growing literature on the impacts of banks' expanding the money supply through debt-creation, for example in the work of Richard Douthwaite and Hazel Henderson.

As a result of the growing influence of these ideas we can see today the beginnings of a new interest in Luxemburg the thinker. Not least, Riccardo Bellofiore has edited Rosa Luxemburg and the Critique of Political Economy, a 2009 collection of essays, several of which attempt to retrofit money circuit theory onto her ideas.

These new understandings of the role of credit make a difference because, when read back into Luxemburg's writing, they complete the logic of her arguments, and deal with earlier critics who effectively dismissed her ideas. The aim of this essay, drawing on these newer theories, is to provide a clear exposition of the profundity of Luxemburg's insights into the unsustainability of capitalism. At the same time, it will point towards areas where this rediscovery of Luxemburg's thought needs to go further, so as to expand on what she did and address the contemporary limits to economic growth.

Origins of Luxemburg's theory

The background to Luxemburg's theory of capitalist breakdown was the publication in 1885 of the second volume of Marx's Capital, and the schemes of expanded reproduction sketched out within it. In these, Marx divided the capitalist economy into Department I, which produced means of production, and Department II, which produced consumer goods. What perplexed Marx's followers was that these schemes appeared to suggest the theoretical possibility of capitalism's being able to expand without limit, so long as the right balance of investment between departments were maintained, with growth in Department I fuelling growth in Department II.

This became the explicit conclusion advanced by a group of Russian socialists known as the Legal Marxists. Led by the economist Mikhail Tugan-Baranovski, this school argued that growth would be self-sustaining so long as Department I took the lead in expansion. The construction of new machines would itself require the construction of new machines, as well as the employment of more workers. The variable capital (i.e. wage fund) in Department I would thus increase, leading to higher effective demand for consumer goods, providing the income for Department II to increase its investment in production, in turn providing more income for Department I.

To Luxemburg, such arguments were not only wrong but dangerous, in the sense of promoting the idea there was nothing essentially unsustainable about capitalism. To her, ideas such as these would fatally undermine the case for socialism: 'If the capitalist mode of production can ensure boundless expansion [...] it is invincible indeed' (quoted in Rousseas, 2008 [1979], 22).

But it was not only Tugan-Baranovski which inspired Luxemburg to develop her own theory of capitalist breakdown; it was Marx himself. When teaching Marx's ideas to students at the SPD's political school, she found his writings on expanded reproduction did not quite add up, and so set out to complete them. She outlined her own theory in two books, The Accumulation of Capital (1913) and the AntiCritique (published posthumously in 1921), in which she replied to critics of the first.

Luxemburg's criticism of Marx and Tugan-Baranovski centred on the way in which they placed production, rather than consumption, as the driving force for expansion. Her starting point was that for capitalists to make money, they have to sell their goods (and at a profit). To recall Marx's famous representation of capitalist accumulation, M-C-M', in order to turn their initial stock of money (M) into more money (M'), capitalists must be able to sell the commodities (C) they produce. In order for this to happen, Luxemburg insisted society must want to buy a sufficient quantity of those commodities to generate M'. Thus consumer demand is essential to growth and cannot simply be assumed (Luxemburg, 1972, 50).

By contrast, the schemes of expanded reproduction put forward by Marx and by Tugan-Baranovski did not seem to correspond with reality. Of such schemes, Luxemburg wrote:

Accumulation here takes its course, but it is not in the least indicated who is to benefit by it, who are the new consumers for whose sake production is ever more enlarged. The diagram assumes, say, the following course of events: the coal industry is expanded in order to expand the iron industry in order to expand the machine industry in order to expand the production of consumer goods. The last, in turn, is expanded to maintain both its own workers and the growing army of coal, iron and machine operatives. And so on ad infinitum. (Luxemburg, 1963, 330)

Luxemburg's take on such ideas was that they turned the capitalist economy into a 'merry-go-round which revolves around itself in mid-air' (quoted in Sweezy, 1942, 204-5).

Where does the money come from?

Luxemburg's criticism was not only that such representations of capitalism did not ring true; more importantly, they were technically impossible. The question she raised was this: where does the effective demand come from, in order to buy the expanded set of commodities whose sale is required in order for capitalists to realise a profit?

One source it could not come from was the workers. This is obvious as soon as one thinks about it: workers' only source of income is their wages; wages form only part of the sales price of any good; workers can, therefore, only purchase that proportion of goods equivalent to the ratio of wages to sales price across the economy as a whole. As Luxemburg noted, this had been clearly established by Marx, quoting him to the effect that, 'All that the working class buys is equal to the sum total of its wages, equal to the sum total of the variable capital advanced by the entire capitalist class' (Luxemburg, 1963, 165). Understood this way, it appeared impossible for workers' consumption to be the source of any profit for the capitalist class. Wages and workers' consumption were simply the flux and reflux of the same proportions of purchasing power, advanced by capitalists in the form of wages and returned to them--'down to the last penny'--in the form of sales (Luxemburg, 1972, 53).

But if the demand required to generate a profit could not come from the workers, Luxemburg was equally adamant it could not come from capitalists either. But of course: if capitalists derive their income from selling commodities, then the relationship between their purchasing power and the sales price of the goods they buy will differ only in magnitude from that of workers, not in kind. Capitalists divide their sales income between wages for their workers, payment to themselves for personal consumption, and savings and investment in production. Capitalists' personal consumption will equal that proportion of sales price allotted to it; as Luxemburg puts it: 'Once more, this money returns whence it began--into the pockets of the capitalists as a class' (Luxemburg, 1972, 53). Exactly the same will go for their investment in producer goods. Across the economy as a whole, the purchasing power required to buy the output of firms should be identical with the costs of production (2). What is entirely mysterious, Luxemburg pointed out, is where does the extra income come from, to allow capitalists and workers together to buy a greater value of commodities than were previously sold? Although she didn't put it in these terms, another way to express this might be to ask where does the"' come from, in the schematic M-C-M'?

For Luxemburg, one half of the answer was obvious: 'The sale of increasing amounts of commodities, and the realisation of profit, from A to B, B to C and C back again to A and B can only take place if at least one of them can in the end find a market outside the closed circle' (Luxemburg, 1972, 73). There must be an additional source of demand that has not already been paid for out of capitalists' own pockets; only in this way can sales price exceed production cost across the economy, enabling the capitalist class as a whole to realise a profit and the economy to grow.

Luxemburg identified this additional source of demand as coming from other economies not yet absorbed into the capitalist system. Capitalists had to sell goods to new sets of potential consumers--located both in foreign countries and less-developed areas at home--in order to receive an external stream of income.

But if this was what enabled capitalism to expand, Luxemburg argued, it was also what would doom it to collapse. For this could only be a temporary fix; the export of mass-produced goods to other countries, for example, would ruin their domestic economies. At the same time, to help them pay for these imports and stimulate the growth of investment opportunities, capitalist powers would via imperialist interventions convert less-developed countries to capitalist production. Yet what would be the result of this, but to bring these economies, too, within 'the closed circle' of capitalist production? Ultimately, as more and more of the globe were conquered and converted to capitalism, what would this mean but that the circle would be completely closed, with no more possibility of growth--at which the point the entire system would implode.

Luxemburg was clear, in fact, that the situation was even worse: competition for external markets would inevitably initiate devastating military competition among capitalist powers much sooner than that. As she wrote:

The more capitalist countries participate in this hunting for accumulation areas, the rarer the non-capitalist places still open to the expansion of capital become and the tougher the competition; its raids turn into a chain of economic and political catastrophes: world crises, wars, revolution. (Luxemburg, 1972, 60)

A reply to Luxemburg's critics

Even where aspects of Luxemburg's theory have been admired by socialist thinkers, it has been rejected again and again. To take a few examples spanning the decades, we find Nikolai Bukharin declaring in 1924 that 'both the main line and the subsidiary lines of Rosa's proof are equally untenable'; Paul Sweezy describing her theory as 'a clear failure from a logical standpoint' (1942, 178); Alfred Evenitsky, summing up the received view that 'she was mistaken in her theory' in the Monthly Review (1966, 45); Michal Kalecki finding that the 'approach of Rosa Luxemburg's is erroneous' (1967, 152); Ernest Mandel writing that 'while The Accumulation of Capital raises the correct problems, it does not provide acceptable solutions' (1978, 67); Leszek Kolakowski drawing on Kalecki to argue that her theory 'involves assumptions concerning capitalism that were either unreal or have been disproved by subsequent events' (1981, 71); and Simon Clarke, referring to 'the fallacy at the heart of Luxemburg's analysis' (1994, 55).

What are we to make of this weight of criticism? Luxemburg's theory is not without its flaws; but much of the criticism appears to be misguided, with many critics apparently failing to understand exactly what she was trying to say.

A good example is an argument put forward by Bukharin and Sweezy, that Luxemburg had made the theoretical error of assuming workers' consumption was fixed. By contrast, they argued, expansion of production would mean that firms hired more workers, and this would expand the amount of variable capital, in turn increasing the consumption of workers as a whole. Of course, this did not mean they thought capitalism would grow smoothly forever. Not least, Sweezy stressed the importance of growth in the available population of workers, arguing that where this was low, capitalists would no longer increase variable capital, resulting in economic stagnation. Nevertheless, this argument offered an explanation of where the increase in effective demand could come from, and in the process suggested Luxemburg's theory was simply erroneous. And yet, as Jan Toporowski has written (2013), this was not what she argued, and did not form the basis for her objection to Marx's schemes of expanded reproduction. Her point was rather: from where do capitalists get the money to pay these extra workers (3)?

Not only did neither Bukharin nor Sweezy supply an answer to this, it appears they did not recognise it as a valid question. Sweezy's only response was a curt aside: it was in posing this question, he wrote, that Luxemburg 'shows to least advantage'. The very way in which he dismissed this argument as embarrassingly wrong, without feeling the need for any further explanation, suggests he was not entirely focusing on the point she was trying to make. This may be the kind of comment Paul Zarembka had in mind in remarking that much of the criticism Luxemburg received has suffered from 'hasty, careless work' (2009, 73).

Latterly, in fact, a number of economic theorists have come to appreciate the profundity of that central question Luxemburg posed: where does the extra money come from? As Meghnad Desai puts it:

Unlike any other Marxist writer of her time [...] she reveals an immanent logical flaw in Marx's analysis. It is logically impossible, she says, for capitalists to invest surplus value before it is realised; there just is not the money. [...] Actual expenditure has to be incurred, value produced has to be converted into money before it can be spent on expansion. If, however, the realisation of surplus value is contingent upon the investment plans being actualised, we are in a logically circular situation. (Desai, 1992)

To make this clear, Marx's schemes of expanded reproduction do not describe flows of money. What they describe are transfers of value, based on Marx's labour theory of value (Mattick, 2009). Under this theory, capitalists derive surplus value from their workers, embodied in the commodities the workers produce above the value of those for which they receive their pay. Within Marx's schemes, firms directly translate their surplus value into investment in production (fixed capital) and workers' wages (variable capital). It was Luxemburg's original contribution as a critic to point out that this was contrary to core principles of capitalism as laid bare by Marx himself: surplus value may be embodied in commodities, but in order for it to be realised--to turn into M'--these have to be sold. And this means that the purchasers of these commodities must have the money to buy them which is to say, as a whole they must already be in possession of M'! The idea that capitalists can simply inject purchasing power by investing in each other is thus exposed as a complete non-solution.

One criticism made of Luxemburg that has more going for it is the charge that she underestimated the potential for further growth within capitalist economies. Kalecki, notably, remarked that she did not foresee the boost to effective demand that would come in the decades succeeding her death from the growth in state --not least military--expenditure (this is neatly summed up in Kolakowski, 1981, 73-4). Equally, she did not anticipate the rise of the consumer economy, driven both by the development of marketing as an industry and rises in workers' wages.

This ought to be seen, however, as a lesser-order criticism, affecting the locations in and timespan over which Luxemburg thought growth could take place. Her description of the dynamics of capitalist expansion--the continual incursion into non-capitalist spaces, their absorption into the market and exhaustion as sources of growth, necessitating further expansion into new areas--was perfectly acute, even if much of this process has taken place within existing capitalist societies, and hasn't yet entirely played itself out (though one could say we are now getting much nearer that point).

We can recognise this most simply in the way in which new sections of the populace in capitalist countries have been converted into workers (or higher-consuming workers)--the mass entry of women into the workplace in the 1970s, for instance, or the post-war conversion of a swathe of working class kids into white-collar workers. More generally we can see capitalism as continually colonising areas of personal and community life formerly outside the money economy. The increasing absorption of people's time in capitalist production operates in tandem with the encroachment of the market into personal life; where people no longer have time to cook, clean, look after children, or meet romantic partners, commercial industries appear which sell these services to them. Robert Heilbroner expressed this point beautifully when writing of the 'implosive aspect to the expansion of capital, as daily life is scanned for possibilities that can be brought within the circuit of accumulation.' As he put it: 'Much of what is called "growth" in capitalist societies consists in this commodification of life, rather than in the augmentation of unchanged, or even improved, outputs' (Heilbroner, 1985, 60). While Luxemburg may not have anticipated this internal expansion of capitalism, she had a brilliant understanding of the underlying spirit of this aggressive, self-consuming drive for growth. Indeed, viewed through the prism of her work, we could understand the kind of internal expansion Heilbroner was referring to as being a form of imperialism. For capital, the private and community life of its existing workers is just as much a foreign territory and potential market, to be broken into and remodelled along the lines of capitalist production, as any colony or protectorate.

While on the subject of her views on imperialism and the exploitation of non-capitalist markets, it must be conceded this is also where her critics have their biggest point. The likes of Sweezy and Kalecki argued that her idea, that capitalists could escape the 'closed circle' of their own market by exporting to other countries, would not actually solve the problem she had posed, even temporarily. That is to say, these less-developed countries would need to sell commodities back to the capitalist countries in order to buy from them; and these imports would soak up domestic purchasing power, reducing internal demand for goods produced by domestic firms. In short, capitalists would be back where they started; and on Luxemburg's own terms, the mystery she posed--where does 'M" come from?--would remain unsolved (4).

But this would not be entirely accurate. Because Luxemburg did in practice both identify this flaw in her theory, and provide an answer to it--even if she did not explicitly realise this herself. In some parts of her writing, she is clear as to where non-capitalist economies got their money to buy capitalist goods: the banks of capitalist countries lent it to them. Notably, in a detailed exposition of the capitalist colonisation of Egypt, she logs the repeated sequence of loans, from mainly British and French banks, in the late nineteenth century. As she notes, such behaviour would 'appear absurd to the casual observer because this loan capital pays for the orders from Egypt and the interest on one loan is paid out of a new loan.' Thus the capitalists as a class were not only paying for their own goods, but paying the interest on them! And yet, as she observed, this was actually 'extremely rational and "sound" for the accumulation of capital', because what it allowed British and French capitalists was the power to convert the nation into a source of capitalist production and a market for its goods. The Egyptian government, once indebted, was forced to raise taxes to provide repayments, in turn drawing the peasantry fully into a money economy and leading to a desperate pursuit of productivity and profit. The end result was the 'fact that European capital has largely swallowed up the Egyptian peasant economy. Enormous tracts of land, labour, and labour products without number, accruing to the state as taxes, have ultimately been converted into European capital and have been accumulated' (Luxemburg, 1963, 438).

Conclusion: Luxemburg's theory and the role of credit

So where does that leave us? The answer to the mystery Luxemburg posed is clear, and she herself identified it: M', the extra money required to purchase a growing value of commodities, comes from credit. This answer was only obliquely present in her work; but then, in her time, there was a generally under-developed understanding of the functioning of credit in a capitalist economy. Today we have the advantage of a more sophisticated understanding. As a result, it is now possible for us to complete Luxemburg's theory.

Crucially, Luxemburg (like Marx before her) appears to have viewed the central form of credit to be the recycling of firms' previously accumulated savings, rather than the creation by banks of loans 'out of thin air' (Ryan-Collins et al., 2012).

Thus she lacked an understanding of the enormous potential for firms to obtain ongoing additions to purchasing power in advance of sales (and governments to do likewise in advance of tax receipts). That we can understand this today means we are able both to treat seriously the question she posed--as to where the money for growth comes from--and to see how the capitalist economy has been able to expand far beyond the limits she envisaged.

This might seem as though we had been able to complete one half of Luxemburg's theory at the expense of destroying the other half, that which asserted capitalism was doomed to collapse. If growth depends on credit, and banks provide an inexhaustible source of credit, what's the problem? But such a conclusion would not be correct. Luxemburg's definition of the unsustainability of capitalism is absolutely valid.

Luxemburg argued that the same thing which enabled capitalism to grow compelled it to do so, that it had to keep growing or it would collapse. She described how this spirit of compulsory expansionism was intrinsically barbarous. She asserted that the sources of growth were not inexhaustible, meaning capitalism was necessarily unsustainable. If the system were allowed to continue, she wrote, then as the sources of growth began to dry up, global civilisation would tear itself to bits. Thus her call for socialist revolution: socialism was not just something to be desired morally, it was physically essential.

All of this is still true--and more to the point now than it was even in her day. Credit is not inexhaustible; it ultimately depends on growth in the real economy. And this depends on exploitation of natural resources, whose limits we are now exhausting. Growth requires credit which requires growth; and it cannot go on forever.

Thus far the recent efforts towards a rehabilitation of Luxemburg's theory have largely been a matter of finding her a new place in the history of ideas. This is important work, but being academic in character it is quite antithetical to Luxemburg's own approach to ideas. Notably, the focus has been on that part of her theory which explained how growth could proceed, not that which said it was unsustainable. What is required now is a restatement of her entire theory, updating it with contemporary understandings of credit and environmental risk, which not only sets out the intrinsic unsustainability of capitalism but aims at making a difference to political action in the present day (5).

Bill Blackwater is an Associate Editor of Renewal.

For Geoffrey Goodman, who would have been one of the first to read this.


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(1.) A good example of this concentration on the personal rather than intellectual is given by C. Wright Mills. While in his 1960 'Letter to the New Left', he urged left-wingers to read Luxemburg, his focus seems to have been on her revolutionary spirit, rather than her theoretical understanding of capitalism. This would appear to be borne out by his treatment of her in The Marxists (1973, 186-98), published posthumously in 1962. Not only is there no mention of Luxemburg's theory of capitalist breakdown in the book, but the 13 page section entitled 'Rosa Luxemburg' is entirely taken up with discussion of her reformist opponent, Eduard Bernstein, with not a single mention of Luxemburg by name!

(2.) An exception to this would be where consumers receive credit directly from the banks. In Luxemburg's day this would have been negligible.

(3.) Even on its own terms, this argument rests upon some bold assumptions. In order for an expansion in the production of Department I to result in an expansion in effective demand, it must first result in an expansion of the workforce. But an expansion in Department I's production might well not result in a commensurate hiring of new workers, to the extent to which this was a matter of machines producing machines.

(4.) This is not how Kalecki himself put it. His focus was on the importance to growth of effective demand being committed by capitalists, and the need for governments to supplement this through investment (so long as this was not financed through taxation). His focus was not on where the money came from for an expansion of effective demand in the first place.

(5.) My own effort along these lines is the forthcoming essay, 'Luxemburg, debt, and the limits to growth'
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Title Annotation:ESSAYS
Author:Blackwater, Bill
Date:Sep 22, 2015
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