Crisis and Breakdown

“Either the socialist transformation is, as was admitted up to now, the consequence of the internal contradictions of capitalism, and with the growth of capitalism will develop its inner contradictions, resulting inevitably, at some point, in its collapse, (in that case the “means of adaptation” are ineffective and the theory of collapse is correct); or the “means of adaptation” will really stop the collapse of the capitalist system and thereby enable capitalism to maintain itself by suppressing its own contradictions. In that case socialism ceases to be an historic necessity. It then becomes anything you want to call it, but it is no longer the result of the material development of society."
Rosa Luxemburg
By Doug Enaa GreeneAugust 10, 2017 — Links International Journal of Socialist Renewal — “It is easier to imagine the end of the world than to imagine the end of capitalism,” the Marxist literary critic Fredric Jameson once remarked. Capitalism does many terrible things to multitudes of people. Everyday, workers go to alienating and exploitative jobs with no purpose, save to get by, while their labor enriches the ruling class – whose sole interest is endless accumulation and profit. Throughout the world, there are billions in abject poverty. Capitalism reproduces and reinforces systems of oppression such as patriarchy, nationalism, and racism. Yet many left-wing parties and theorists argue that capitalism is here to stay. They do not see crisis and breakdown as inherent to capitalism, but that the system's contradictions can be tamed by increasing the purchasing power of workers or better regulation. In other words, none of their solutions consider ending capitalism, so the working class should just accept the system as permanent. Others argue that while capitalism is unjust and exploitative, they don't believe it has material limits, so they resort to moralistic appeals to overthrow it. Contrary to both positions, Marx argued that “within bourgeois society... there arise relations of circulation as well as of production which are so many mines to explode it.”[1] Capitalism contains within itself the seeds of its own downfall, and to claim otherwise “would be quixotic.”[2] According to Marx, capitalism is a historical and transitory system – it contains both a beginning and an end. The cause of capitalist crisis and breakdown is the law of the tendency of the rate of profit to fall.[3] The tendency of the rate of profit to fall is the underlying (although not the proximate) cause of crises, and leads the system to breakdown. Despite capitalism's internal contradictions leading to breakdown, there are countertendencies that allow it to recover from a crisis and restore profit. The breakdown theory does not mean that capitalism will collapse on its own, but reveals the objective conditions under which revolutionary action can, and will, arise to replace bourgeois society. The final breakdown of capitalism will be the socialist revolution led by the working class: “History is the judge—its executioner, the proletarian.”[4]

I. Capitalism

A. Competition and Expansion

The guiding end and aim of capitalism is the system's intrinsic drive to accumulate profits as quickly as possible. Marx lyrically describes this religion of capital as follows:
Accumulate, accumulate! That is Moses and the prophets! 'Industry furnishes the material which saving accumulates.'Therefore save, save, i.e. reconvert the greatest possible portion of surplus value or surplus product into capital! Accumulation for the sake of accumulation, production for the sake of production: this was the formula in which classical economics expressed the historical mission of the bourgeoisie in the period of its domination. Not for one instant did it deceive itself over the nature of wealth's birth-pangs.[5]
The tendency of capitalism to expand without limits makes it a dynamic and universalizing force, in contrast to other modes of production. Capital overcomes old barriers and limits and strives to remake the world in its own image:
capital drives beyond national barriers and prejudices as much as beyond nature worship, as well as all traditional, confined, complacent, encrusted satisfactions of present needs, and reproductions of old ways of life. It is destructive towards all of this, and constantly revolutionizes it, tearing down all the barriers which hem in the development of the forces of production, the expansion of needs, the all-sided development of production, and the exploitation and exchange of natural and mental forces.[6]
The accumulation of capital produces a free market that spans the globe, dominated by the laws of competition. No capitalist is alone on the market when offering their products to consumers, there are other competitors to contend with. An individual capitalist is compelled to produce, exploit and accumulate or they will be driven under. For capitalism, the pursuit of profits, 'excessive' or otherwise, always comes first and people always last. As Marx says,
The development of capitalist production makes it necessary constantly to increase the amount of capital laid out in a given industrial undertaking, the competition subordinates every capitalist to the immanent laws of capitalist production, as external coercive laws. It compels him to keep extending his capital so as to preserve it, and he can only extend it by means of progressive accumulation.[7]
Each capitalist wants as large a share of the market as possible for their products, but their success can only come by lowering prices to undersell their competitors. If prices go too low, this can threaten profits. How can a capitalist sell cheaply, but make the most money? One way is to reduce the costs of production. In other words, capitalists need to produce more in less time by increasing productivity – improving equipment, rationalizing production, increasing the division of labor, etc. The law of competition operates as a whip upon the bourgeoisie, compelling them to improve productivity before their competitors do, lest they go bankrupt. It doesn't matter if an individual capitalist is a good and noble human being who treats their workers well. They must submit to the system's dictates: "As capitalist, he is only capital personified. His soul is the soul of capital."[8] Yet a capitalist does not secure their profits in production, it must be realized by selling commodities on the market. As Marx said: “A precondition of production based on capital is therefore the production of a constantly widening sphere of circulation, whether the sphere itself is directly expanded or whether more points within it are created as points of production.”[9] There is no guaranteed return on the market – which is faceless and dominated by great risk. It is entirely possible for a capitalist to be a master of the “art of the deal” on Monday and go bankrupt on Friday. This is not simply due to competition, but because the system is governed by anarchy, not a conscious plan. The uncertainty in regards to the return on investments and the realization of profits means a capitalist must constantly expand their business – which, in turn, depends on the maximum accumulation of capital and the highest realization of profit.

B. Role of the working class

Ultimately, the drive for profit is a lust for more surplus value. So where does surplus value come from? A capitalist can gain more surplus value through outwitting their competition, or from price fluctuations, or from money speculations. However, these are all short-term measures. In the long run, capitalists need a commodity
whose use value possesses the peculiar property of being a source of value, whose actual consumption is therefore itself an objectification of labor, hence a creation of value. The possessor of money does find such a special commodity on the market: the capacity for labor, in other words labor power.[10]
The special commodity that creates surplus value is found in the proletariat. When a capitalist hires a worker for a wage, it is not actually labor that they are paying for, but their labor power. Marx explains the distinction between labor and labor power:
The use value which the worker has to offer to the capitalist, which he has to offer to others in general, is not materialized in a product, does not exist apart from him at all, thus exists not really, but only in potentiality, as his capacity. It becomes a reality only when it has been solicited by capital, is set in motion, since activity without object is nothing, or, at the most, mental activity, which is not the question at issue here. As soon as it has obtained motion from capital, this use value exists as the worker’s specific, productive activity; it is his vitality itself, directed toward a specific purpose and hence expressing itself in a specific form.[11]
Like other commodities, labor power possesses both use value and value. The use value of labor power is labor, which the capitalist utilizes by putting the proletariat to work. For the capitalist: “What was really decisive for him was the specific use value which this commodity possesses of being a source not only of value, but of more value than it has itself.”[12] The value of labor power is determined by the socially necessary labor time required to keep the worker (and their family) alive. Let us assume that in the course of a normal working day of 8 hours, the worker produces $100. However, the cost of reproducing labor power is only $50, which the worker completes in just 4 hours. This fact does not prevent the capitalist from having the proletarian labor for a normal working day of 8 hours. What the proletarian produces during the remainder of the day is surplus labor, which produces surplus value or profit, which is in turn pocketed by the capitalist. In other words, the purchase and sale of labor power by capital is the source of profit.

C. Rate of surplus value and rate of profit

Now let us look closer at capitalist production. The capitalist purchases labor power in order to produce a profit. All capitalist production can be represented in the following formula: C+V+S. The value of a commodity consists of two parts: one portion represents used up value and the other is newly created (or surplus) value. First, let us view the total capital advanced by the bourgeoisie: C+V. During the labor process, workers utilize the instruments of labor in order to transform material into finished products. Out of the final product, materials of production or investments by capital such as equipment, machines, tools, etc. are used up in the course of production to make a commodity – this is designated by Marx as “constant capital” or C. However, the means of production, no matter how expensive they are cannot produce new values, unless they are put to work by living labor. The value created by living labor thus consists of two portions: one part is variable capital or V, which is the proportion of capital that is invested in wages paid to the workers. The other portion is surplus value or S, which is new value created above the necessary labor that the worker requires to live. The rate of surplus value or the rate of exploitation of the working class is represented by the formula S/V – which is the ratio of surplus labor time that workers produce above their necessary labor time. The division of living labor time into necessary labor time and surplus labor time is the basis for the profits that sustain capitalist society. For the capitalist, it is the rate of profit that is truly decisive for them. The rate of profit is represented by the formula S/(C+V), which shows the ratio between surplus value and the total capital advanced (C+V). In turn, we can use the rate of profit in a given cycle of production (say a year) to determine the rate of profit in the abstract. For the bourgeoisie, it is the rate of profit that regulates accumulation. Let us look more closely at the drive to return to accumulate and gain profits. If the source of surplus value is surplus labor, then the capitalists can increase the length of the working day without increasing the daily wage to ensure more surplus value is produced. If the worker produces their wage in 4 hours, then increasing the working day from 8 to 10 hours will increase surplus labor time from 4 to 6 hours or by 50%. Correspondingly, the rate of surplus value increases from 100% to 150%. This method of increasing surplus value by lengthening the working day is absolute surplus value. From the onset of capitalism, there is a continual push by capital to increase the length of the working day and resistance in turn from the working class. Capitalists want to squeeze more profit from the workers, while the proletariat doesn't want to be worked to the bone. According to Marx,
We see then that, leaving aside certain extremely elastic restrictions, the nature of commodity exchange itself imposes no limit to the working day, no limit to surplus labor. The capitalist maintains his rights as a purchaser when he tries to make the working day as long as possible, and, where possible, to make two working days out of one. On the other hand, the peculiar nature of the commodity sold implies a limit to its consumption by the purchaser, and the worker maintains his right as a seller when he wishes to reduce the working day to a particular normal length. There is here therefore an antinomy, of right against right, both equally bearing the seal of the law of exchange. Between equal rights, force decides. Hence, in the history of capitalist production, the establishment of a norm for the working day presents itself as a struggle over the limits of that day, a struggle between collective capital, i.e. the class of capitalists, and collective labor, i.e. the working class.[13]
Absolute surplus value cannot be expanded without limit. Its most basic limit is the physical capacity of the workers. Workers cannot labor for 24 hours a day over the long term without dying. Generally, capitalists just want to exploit labor power, they don't want to destroy the source of their profits. Even if the capitalists have a steady supply of workers whom they are willing to work to death, the workers themselves don't wish to die. They will resort to forms of resistance such as sabotage, unionization or strikes in order to force the capitalists to shorten the working day. A second way to increase the rate of surplus value is to reduce the labor time needed for the proletariat to reproduce their wages by either increasing productivity or cutting wages. This generates relative surplus value. Again, assume that the necessary labor time for the workers to reproduce their labor power is 4 hours during an 8-hour day. If that necessary labor time can be shortened to 2 hours, then surplus labor time increases from 4 to 6 hours. The increase in relative surplus value generally results from the growth in the productivity of labor and causes the prices of commodities to fall – such as cheaper food or clothing, etc. – meaning it costs the workers less to buy their necessities. An increase in the productivity of labor can come from introducing new machines, more rationalization of the labor process, better organization of labor, etc. Another way is by cutting wages below the cost of labor power. Marx says: “The surplus labor would in this case be prolonged only by transgressing its normal limits; its domain would be extended only by a usurpation of part of the domain of necessary labor time.”[14] Naturally, wage cuts can't be reduced indefinitely without impairing the ability of workers to maintain themselves or leading to resistance.

D. Organic composition of capital

Naturally, capitalists use all these methods to increase the rate of exploitation and their profits, while the working class resists them. The collective strength of the proletariat can force their class enemy to limit the length of the working day and raise wages, so the foremost means to raise the rate of exploitation is by increasing the productivity of labor. Ironically, the ways which capitalism uses to increase the rate of exploitation lowers the rate of profit at the same time. The logic of competition drives capitalists to lower commodity prices in order to gain an advantage on the market, so they are willing to pursue any avenue that lowers costs. Capitalists are also involved in struggles over control of the labor process and production. In order to increase productivity, capital needs to mechanize production with more efficient machinery to utilize less labor. Therefore, capital can produce more commodities with more productive machinery employing the same number or even less workers than before – which lowers their labor costs. In regards to C/V, C increases in proportion to V – or the part of total capital representing raw materials, machines, equipment, etc. (constant capital or C) increases due to advances in mechanization and other methods that increase labor productivity. However, the part devoted to wages (variable capital or V) does not rise and may even fall. The fraction C/V – the organic composition of capital – is the ratio between constant and variable capital that tends to rise. In other words, the higher the productivity of labor, the organic composition of capital will be higher too. Capitalism's great advances in technology from the assembly line, robotics and computers are proof of the system's dominant tendency to raise the productivity. However, it is not enough for capital to simply produce commodities, they need to be sold for profit to be realized. Unsold goods don't make any profits. Once a stock of goods is sold, the capitalist uses a portion of the money for their own luxury and upkeep (hence it is withdrawn from the production process), but another portion is thrown back into the production process to accumulate more – by purchasing more constant capital (such as machines, buildings, etc.) or more variable capital (hiring more workers). All of this fuels the drive to accumulate capital.

E. Concentration and centralization

Due to the increasing organic composition of capital, the total value from the final commodity comes more from constant capital than from variable capital. However, this process does not mean that all capitalists progressively increase constant capital as opposed to that of variable capital. Due to competition, the increasing organic composition of capital occurs in a chaotic, unplanned and antagonistic way. In this cutthroat game, smaller capitalists are eaten up by larger ones – leading to the centralization and concentration of capital. Marx says of the concentration of capital:
Every individual capital is a larger or smaller concentration of means of production, with a corresponding command over a larger or smaller army of workers. Every accumulation becomes the means of new accumulation. With the increasing mass of wealth which functions as capital, accumulation increases the concentration of that wealth in the hands of individual capitalists, and thereby widens the basis of production on a large scale and extends the specifically capitalist methods of production.[15]
At the same time that capital is concentrated, there is also a tendency to centralization. Centralization is the grouping together of different capitals (whether by fusion, hostile takeovers or destroying competitors) into joint-stock companies or corporations. Centralization results in greater technical developments (increased capital allows more possibilities of investment and the utilization of more efficient machines) without necessarily growing the total amount of capital. Centralization enables capitalists to extend the scale of their operations and utilize a more comprehensive organization of collective labor leading to great advancements in productivity, more possibilities for investment, increased access to machinery and workers:
This fragmentation of the total social capital into many individual capitals, or the repulsion of its fractions from each other, is counteracted by their attraction. The attraction of capitals no longer means the simple concentration of the means of production and the command over labor, which is identical with accumulation. It is concentration of capitals already formed, destruction of their individual independence, expropriation of capitalist by capitalist, transformation of many small into few large capitals. This process differs from the first one in this respect, that it only presupposes a change in the distribution of already available and already functioning capital. Its field of action is therefore not limited by the absolute growth of social wealth, or in other words by the absolute limits of accumulation. Capital grows to a huge mass in a single hand in one place, because it has been lost by many in another place. This is centralization proper, as distinct from accumulation and concentration.[16]
The centralization and concentration of capital means the smaller capitalists who lose out are transformed into managers, foreman or even sink to the level of workers. Although the bourgeoisie claim to be horrified at the communist aim to abolish private property, Marx and Engels remind them that there is no greater destroyer of property than capitalism:
You are horrified at our intending to do away with private property. But in your existing society, private property is already done away with for nine-tenths of the population; its existence for the few is solely due to its non-existence in the hands of those nine-tenths. You reproach us, therefore, with intending to do away with a form of property, the necessary condition for whose existence is the non-existence of any property for the immense majority of society.[17]
It is capitalism that destroys private property through the expropriation of the many by the few. Overall, the higher the organic composition of capital in a particular branch of industry, the greater its concentration of capital. However, the opposite also applies – the smaller the organic composition of capital, then its concentration is smaller. As Ernest Mandel says, “Why? Because the smaller the organic composition of capital, the less capital is required at the beginning in order to enter this branch and establish a new venture.”[18] In general, it is easier to start a new website than to open an airplane factory. Two things fuel the centralization of capital: competition and credit. According to Marx,
the progress of accumulation increases the material amenable to centralization, i.e. the individual capitals, while the expansion of capitalist production creates, on the one hand, the social need, and on the other hand, the technical means, for those immense industrial undertakings which require a previous centralization of capital for their accomplishment. Today, therefore, the force of attraction which draws together individual capitals, and the tendency to centralization, are both stronger than ever before.[19]
Competition favors centralization since large-scale investments lowers production costs which gives firms an edge on the market. Credit is crucial to both centralization and the accumulation process since it allows individual capitalists to gather together large amounts of money for economies of scale. Marx says that credit, “soon becomes a new and terrible weapon in the battle of competition and is finally transformed into an enormous social mechanism for the centralization of capitals.”[20] Through credit, the value of capital can be reduced through both vertical integration and profit can rise due to quicker turnover time. Credit facilitates centralization since it allows capital to utilize the full potential of technology and organization for accumulation. However, credit can result in vicious competition “where little fishes are gobbled up by the sharks, and sheep by the stock-exchange wolves. In the joint-stock system, there is already a conflict with the old form, in which the means of social production appear as individual property.” Although credit speeds up the destruction of smaller capitals, overcomes problems of realization and the expansion of capitalism; at the same time, it partly contains the destructive contradictions of the system, it gives them further reach and (through casino-like speculation) ensures that crises will be more severe and widespread. Although credit is generally a force of centralization, it can also be a force of decentralization by opening up new branches of production. According to David Harvey,
The centralization of money capital can be accompanied by a decentralization in the organization of productive activity. A distinction thus arises between financial and industrial forms of organization at the same time as specific kinds of relations spring up to bind them together... The proliferation of credit devices and financial stratagems therefore appears vital to the preservation of capitalism and from this standpoint is indeed as much an effect as a cause of accumulation.[22]
Overall, the twin tendencies of centralization and concentration raise the specter of monopolies. Yet capitalist monopolies run counter to the wisdom of bourgeois “economists” and apologists, who claim that the system is defined by perfect competition. Centralization and concentration arise out of competition. Even if capitalism did begin with perfect competition, through the laws of competition, monopolies would emerge. Contrary to bourgeois economists, there are processes at work within capitalism itself that undermine perfect competition. According to Marx:
In practical life we find not only competition, monopoly and the antagonism between them, but also the synthesis of the two, which is not a formula, but a movement. Monopoly produces competition, competition produces monopoly. Monopolists compete among themselves; competitors become monopolists. If the monopolists restrict their mutual competition by means of partial associations, competition increases among the workers; and the more the mass of the proletarians grows as against the monopolists of one nation, the more desperate competition becomes between the monopolists of different nations. The synthesis is such that monopoly can only maintain itself by continually entering into the struggle of competition.[23]
Monopolies do not mean that capitalism has eradicated competition. If capitalism eliminated competition, then it would cease to be capitalism. Even with monopolies, new industries emerge to cater to new needs. Rosa Luxemburg said that small enterprises
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.[24]
The basic features of “competitive capitalism” remain with monopolies – capitalists compete with one another to gain larger shares of profit (although this is now intensified and done at a higher level). Monopolies arise due to the organic composition of capital that causes the falling rate of profit, but allow some capitalists to divide up the market and set up quotas, resulting in lowering prices. By limiting production, monopolies can increase prices on commodities, resulting in greater profits and more rapid accumulation.

F. The average rate of profit

To recap, the measure of profitability for the capitalist is not the rate of surplus value S/V, but the rate of profit S/(C+V). The capitalist does not just have an interest in obtaining the highest rate of profit possible: it is their religion. Therefore, the capitalist needs to increase mechanization of their firms – confronting the challenges of both labor and other capitalists – in order to realize profit in the marketplace. For surplus value to be realized as profit, all capitals that produce at the average level of productivity will gain profits since they sell their commodities at their values. In contrast, other capitalists who operate below the average level of productivity will not realize the full amount of profits that they produced. What does it mean for an enterprise to operate below the average level of productivity? Take the example of a car factory that produces 3,000,000 cars with approximately 2 million worker hours, but the socially average time that it normally takes to produce that many cars is 1 million worker hours. As a result, this capitalist is wasting social labor time and will not realize the entirety of the surplus value produced. Rather, this capitalist operates below the average rate of profit. Since the total amount of surplus value produced is a fixed quantity – dependent on the total number of labor from all workers in production – there will be a number of firms who will not realize all the surplus value produced because they are operating below the average level of productivity. On the other hand, there is unrealized amount of surplus value available, which is realized by firms who operate above the average level of productivity. So taking again the example above, we have another factory that produces 3 million cars are produced in 500,000 worker hours. This firm is more efficient and able to economize on labor, so it is rewarded by society with an above average level of profit. Since profit is the main driver of capitalism, there will be moves away from low-profit areas to higher-profit ones. As capital shifts from one branch to another, the rates of profit will tend to approach the average level (which is more or less an abstract idea that the real profit rates of different branches and firms hover around) without ever reaching it in a definitive manner. To determine the equalization of the rates of profit, we need to take the total amount of surplus value produced by all workers in a particular country and divide it by the total amount of capital investment during a given period of time (say a year). Now if we remember, the rate of profit is the ratio between surplus value and the total amount of capital investment: S/(C+V). This formula is what concerns capitalists the most. Yet the rate of profit depends on the rate of exploitation of the working class S/V. So if S/V equals 100%, then the value produced is equally divided between wages and surplus value (which goes to the bourgeoisie in the form of profits, interest, etc.). An 8-hour day is divided equally between four hours of necessary labor time and four hours of surplus labor time. Yet as the organic composition of capital C/V increases, the rate of profit falls.

II. Breakdown[25]

A. The law of the tendency of the rate of profit to fall

Marx's analysis brings us to the “law of the tendency of the rate of profit to fall” which is the result of the forces that give rise to capitalist accumulation and growth alongside convulsions and crises. According to Marx,
The progressive tendency for the general rate of profit to fall is thus simply the expression, peculiar to the capitalist mode of production, of the progressive development of the social productivity of labor. This does not mean that the rate of profit may not fall temporarily for other reasons as well, but it does prove that it is a self-evident necessity, deriving from the nature of the capitalist mode of production itself, that as it advances the general average rate of surplus value must be expressed in a falling general rate of profit.[26]
The importance of this law cannot be overestimated – it shows that capitalist production possesses internal barriers that prevent its continuous expansion. In contrast to the classical economists who saw capitalism as “natural” and eternal, recognition of the falling rate of profit portended its end. Marx observed of the classical economist David Ricardo:
Thus economists like Ricardo, who take the capitalist mode of production as an absolute, feel here that this mode of production creates a barrier for itself and seek the source of this barrier not in production but rather in nature (in the theory of rent). The important thing in their horror at the falling rate of profit is the feeling that the capitalist mode of production comes up against a barrier to the development of the productive forces which has nothing to do with the production of wealth as such; but this characteristic barrier in fact testifies to the restrictiveness and the solely historical and transitory character of the capitalist mode of production; it bears witness that this is not an absolute mode of production for the production of wealth but actually comes into conflict at a certain stage with the latter’s further development.[27]
In other words, the law of the rate of profit to fall showed that capitalism is not eternal, but that it was an historical mode of production – possessing a beginning and, eventually, an end. Before moving on, we need to ask: what does it mean for the average rate of profit to fall? While the average rate of profit tends to favor enterprises with the highest organic compositions of capital, what happens when the average composition of capital increases in all enterprises? Other things being equal, the average rate of profit will fall. Take the example of computer manufacturer A: Year 1: 600 million C + 200 million V + 200 million S = $1,000 million Year 2: 700 million C + 200 million V + 200 million S = $1,100 million Year 3: 800 million C + 200 million V + 200 million S = $1,200 million Rate of exploitation is S/V = 100% Rate of profit is S/(C+V) The increase in the organic composition of capital during years 1-2-3 means a fall in the rate of profit: Year 1 rate of profit: 200S/(600C+200V=800) = 25% Year 2 rate of profit: 200S/(700C+200V=900) = 22.2% Year 3 rate of profit: 200S/(800C+200V=1,000) = 20% Through competition, the organic composition rises – resulting in both increased labor productivity and mechanization in order to extract more relative surplus value. However, the higher organic composition of capital lowers the rate of profit. Capital can partially compensate for the rising organic composition of capital through increasing the rate of surplus value (or rate of exploitation). In the above example: Year 2 rate of profit: 220S/(700C+180V=880) = 25% Here, surplus value increased by 20, but variable capital decreased by 20. Therefore, the rate of exploitation went from 100% in year 1 to 122% in year 2 (instead of remaining constant), while the profit rate remained at 25% instead of falling. In other words, an increase in the rate of exploitation can cancel out a lower rate of profit due to the increasing organic composition of capital. In the long run, can an increase in the rate of exploitation neutralize falling rates of profit? Theoretically, there is no limit to rises in the organic composition of capital, but there is an absolute limit of zero for V (with total automation). In order to produce surplus value, capital needs to employ workers and the portion of the working day where wages are reproduced cannot reach zero. The amount of time devoted to necessary labor time can go from 4 hours to 20 minutes, which would be a major increase in productivity, but it cannot go past zero. Therefore, increasing the rate of exploitation cannot forever counteract the growth in the organic composition of capital and the tendency for the rate of profit to fall is inevitable. According to Marx, the tendency of the rate of profit to fall is
in every respect the most important law of modern political economy, and the most essential for understanding the most difficult relations. It is the most important law from the historical standpoint. It is a law which, despite its simplicity, has never before been grasped and, even less, consciously articulated.[28]
The falling rate of profit means capitalism contains within itself a point where “it reaches a certain point, suspends the self-valorization of capital, instead of positing it.”[29] Like other modes of production, capitalism reaches its limits:
The growing incompatibility between the productive development of society and its hitherto existing relations of production expresses itself in bitter contradictions, crises, spasms. The violent destruction of capital not by relations external to it, but rather as a condition of its self-preservation, is the most striking form in which advice is given it to be gone, and to give room to a higher state of social production.[30]
Ultimately, the internal contradictions of capitalism “promotes overproduction, speculation and crises, and leads to the existence of excess capital alongside a surplus population ... Capitalist production constantly strives to overcome these immanent barriers, but it overcomes them only by means that set up the barriers afresh and on a more powerful scale”.[31] Despite capitalist efforts to overcome its limits through reducing wages, widen the field of circulation or generating new needs, in the end, their efforts result in a further decline in profit. As Marx concludes:
The true barrier to capitalist production is capital itself It is that capital and its self-valorization appear as the starting and finishing point, as the motive and purpose of production; production is production only for capital, and not the reverse, i.e. the means of production are not simply means for a steadily expanding pattern of life for the society of the producers.[32]
Marx does not discuss the law of the tendency of the rate of profit to fall as something that works uniformly from year to year. Nor is it a natural law like gravity. Marx's elaboration of the falling rate of profit is not a divine prophecy that promises a communist future that the proletariat can just passively await as surely as the rising dawn. Rather, as the rate of profit falls, it
provoke counter effects that inhibit this fall, delay it and in part even paralyze it. These do not annul the law, but they weaken its effect. If this were not the case, it would not be the fall in the general rate of profit that was incomprehensible, but rather the relative slowness of this fall. The law operates therefore simply as a tendency, whose effect is decisive only under certain particular circumstances and over long periods.[33]
The laws of capitalist development – centralization and concentration, rate of profit to fall, etc. – if left unchecked would “entail the rapid breakdown of capitalist production, if counteracting tendencies were not constantly at work alongside this centripetal force, in the direction of decentralization.” In Capital Volume III, Marx lists six counter-tendencies that check or annul the falling rate of profit.

1. Increasing the intensity of exploitation of the working class

Marx refers to a topic we have discussed at length above – increasing absolute surplus value by lengthening the working day which increases the amount of surplus labor time extracted from workers without changing the amount of necessary labor time. Other methods such as speed-ups or stretch-outs can increase the rate of surplus value while lowering the amount of necessary labor time. Naturally, these methods can be utilized at once and are not necessarily connected to the falling rate of profit. However, a successful increase in the rate of exploitation can only occur if capitalists defeat resistance from the proletariat who will naturally fight back. Henryk Grossman pointed out: “The increasing degree of exploitation of labor that flows from the general course of capitalist production constitutes a factor that weakens the breakdown tendency.”[35]

2. Depression of wages below the value of labor powerWe simply make an empirical reference to this point here, as, like many other things that might be brought in, it has nothing to do with the general analysis of capital, but has its place in an account of competition, which is not dealt with in this work. It is none the less one of the most important factors in stemming the tendency for the rate of profit to fall.[36]3. Cheapening of the elements of constant capital This is not just through the greater utilization of machinery, but through higher labor productivity, which lessens the costs of machines in use. This increases the organic composition of capital, but it is done by lowering the costs of constant capital, annulling its effects:
In other words, the same development that raises the mass of constant capital in comparison with variable reduces the value of its elements, as a result of the higher productivity of labor, and hence prevents the value of the constant capital, even though this grows steadily, from growing in the same degree as its material volume, i.e. the material volume of the means of production that are set in motion by the same amount of labor power. In certain cases, the mass of the constant capital elements may increase while their total value remains the same or even falls.[37]
4. Relative over-population The availability of a large supply of cheap or unemployed labor that encourages capital to invest in new branches of production, which are labor intensive and employ very little machinery – where wages are below the average, “so that both the rate and mass of surplus value in these branches of production are unusually high.”[38]

5. Foreign trade

Through foreign trade, capitalists acquire materials more cheaply or sell them for higher prices abroad than would normally be the case:
In so far as foreign trade cheapens on the one hand the elements of constant capital and on the other the necessary means of subsistence into which variable capital is converted, it acts to raise the rate of profit by raising the rate of surplus value and reducing the value of constant capital.[39]
Grossman identifies foreign trade in the imperialist era as a form of unequal exchange:
In the examples cited above the gain of the more advanced capitalist countries consists in a transfer of profit from the less developed countries. It is irrelevant whether the latter are capitalist or non-capitalist. It is not a question of the realization of surplus value but of additional surplus value which is obtained through competition on the world market through unequal exchange, or exchange of non-equivalents.[40]
Through unequal exchange, advanced countries are able to gain more profit at the expense of backward areas.

Lastly, foreign trade also introduces capitalism into new areas that have lower organic compositions of capital and where higher rates of profit can be obtained (other issues related to imperialism and breakdown will be handled in more detail in the following section).

6. The increase of stock capital Marx's final countertendency is more concerned with how the rate of profit is calculated, but will be briefly discussed here. As capitalism develops, there is an increase in share-capital by joint-stock companies, which can shift production costs onto others – turning a portion of production capital into interest-bearing capital (or credit). This allows for quickened turnover times for capital, producing commodities not in a year, but six months, which allows for a greater rate of return. This fosters a growth in circulation through the development of more rapid forms of transportation and increased mechanization of production. As an example, we can just look at the modern developments of the credit industry or the internet, which have spawned astronomical accumulation. However, Marx says of the use of credit,
although invested in large productive enterprises, simply yield an interest, great or small, after all costs are deducted – so called ‘dividends’....These do not therefore enter into the equalization of the general rate of profit, since they yield a profit rate less than the average. If they did go in, the average rate would fall much lower. From a theoretical point of view, it is possible to include them, and we should then obtain a profit rate lower than that which apparently exists and is really decisive for the capitalists, since it is precisely in these undertakings that the proportion of constant capital to variable is at its greatest.[41]
Although these various counter-tendencies can blunt or even reverse the tendency of the rate of profit to decline, they operate within prescribed limits. Eventually the rate of profit to decline will reemerge as the dominant tendency.

This list is far from exhaustive and is only a brief summary from Marx's unfinished work in Capital Volume III. According to economist Paul Sweezy,
Marx's analysis is neither systematic nor exhaustive. Like so much else in Volume III it was left in an unfinished state, and it is safe to conclude that if he had lived to prepare the manuscript for the press himself, he would have introduced extensive expansions and revisions at various points.[42]
While the falling rate of profit is inherent to capitalism, the way Marx discusses the laws of political economy is not the same as the laws of nature. According to economists Ben Fine and Alfredo Saad-Filho, “laws and tendencies have to be located analytically in the context of their sources and the more complex ways in which they manifest themselves ... leading to undetermined – but, in principle, understandable – outcomes...”[43] We should not forget that Marx's Capital was written at various levels of abstraction, which means the laws described never:
coincides directly with appearances....The conditions of capitalism conceived in its pure form (which we have analyzed so far) and those of the system in its empirical manifestations (which we have to analyze now) are by no means identical. This is because a theoretical deduction involves working with simplifications; many real factors pertaining to the world of appearances are consciously excluded from the analysis."[44]
C. Henryk Grossman and breakdown According to Marx, it is possible for the rate of profit to fall while the mass of profit increases since there is greater amount of capital employed. Although this is not exactly a counter-tendency to the rate of profit to fall, it does offset some of the economic consequences of the law. For instance, if profits rise from $1 million to $2 million, this will not stop capitalists from investing if the projected returns represent a 10% as opposed to an expected 15% return.Grossman says that even a rise in the mass of profit would eventually cause the rate of profit to fall and the system would breakdown. To prove this, Grossman adopted the reproduction schemes of the social democrat Otto Bauer (in part to disprove Bauer using his own methods) who drew upon Marx’s model in Capital Volume II to prove that capitalist accumulation could be both harmonious and limitless. Bauer's calculations assumed a higher rate of accumulation of constant capital as opposed to variable capital. Grossman employed the same model because it abstracted away aspects of capitalism not considered (which could be introduced at a later stage after the main elements of capitalism had been analyzed). While the rate of profit declined in Bauer's model, he argued that it could get close to zero without ever disappearing. However, Bauer had only extended his model for four years and believed that this demonstrated “that capitalism could go on forever without crises, so long as the output of exchange values from different industries (simplified in the model to two departments of production, producing means of production and means of consumption) was kept in the correct ratios.”[45] Grossman took Bauer's assumptions and extended the model to 36 years. What he found was that although the mass of profits continued to rise, capital was unable to sustain production. Already at year 20, there is trouble “when the absolute amount of surplus value available for the private consumption of the capitalists has to fall, if the rate of accumulation of constant and variable capital is to be maintained.”[46] By year 35, there would be no surplus value available for either capitalists' private investment or to cover additional investments. Grossman states that
Bauer’s scheme represents precisely this kind of planned, organized production in which the managers know all they need to about demand and have the power to adapt production to demand. In spite of this a tendency towards breakdown emerges, valorization declines absolutely and a reserve army forms. This only shows that the problem is not whether there is a surplus of commodities or not. In fact we have assumed a state of equilibrium where, by definition, there can be no unsaleable residue of commodities. Yet still the system must break down. The real problem lies in the valorization of capital; there is not enough surplus value to continue accumulation at the postulated rate. Hence the catastrophe.[47]
Grossman emphasized that the mass of profit is the trigger of capitalist crises. Despite the rising mass of profit, at a certain point, capitalists will be unable to buy more additional constant and variable capital: “Imperfect valorization due to overaccumulation means that capital grows faster than the surplus value extortable from the given population, or that the working population is too small in relation to the swollen capital. But soon overaccumulation leads to the opposite tendency.”[48] For Grossman, the falling rate of profit was key to the breakdown of capitalism. He saw the breakdown tendency as a contradiction between production as a labor process (the creation of value through the exploitation of wage labor) and its competitive drive to accumulate profits:
As a consequence of this fundamentally dual structure, capitalist production is characterized by insoluble conflicts. Irremediable systemic convulsions necessarily arise from this dual character, from the immanent contradiction between value and use value, between profitability and productivity, between limited possibilities for valorization and the unlimited development of the productive forces. This necessarily leads to overaccumulation and insufficient valorization, therefore to breakdown, to a final catastrophe for the entire system.[49]
Grossman stated that crises were not the result of underconsumption or disproportionality, but came from the rate of profit to fall which, in turn, arose from the overaccumulation of capital. This being the case – efforts to increase the purchasing power of the workers or to “organize” capitalism cannot solve the deeper problems intrinsic to the system. The limits to capital are “specifically capitalist limits and not limits in general. Social needs remain massively unsatisfied.”[50]

Marx left no finished or worked out theory of crises – in fact, passages in Capital can give vastly different answers on the cause of crises. For example, in Capital Volume II, Marx argues against underconsumptionist causes of crisis: "It is a pure tautology to say that crises are provoked by a lack of effective demand or effective consumption.”[51] However, in Capital Volume III, Marx says the opposite: “The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit."[52] One explanation for Marx's contradictory accounts and lack of coherent crisis theory could mean he was offering only general outlines to later integrate into a fully developed theory (which he did not live to complete).[53] Arguably, capitalism has changed from the 19th to the 21st centuries and a single theory cannot explain all these changes. Efforts to create a mono-casual theory have proven difficult since reality is far more dynamic and changing than any theory.

Still, Grossman asserts that the cause of both crises and breakdown is the falling rate of profit:
Even if Marx did not actually leave us a concise description of the law of breakdown in any specific passage he did specify all the elements required for such a description. It is possible to develop the law as a natural consequence of the capitalist accumulation process on the basis of the law of value, so much so that its lucidity will dispose of the need for any further proofs.[54]
While each economic crisis has its own peculiarities and no individual crisis will conform precisely to any general theory, this does not mean crises don't have an underlying cause. Empirical investigation is needed to understand each crisis, whether the credit crunch in 2008 or the Stock Market Crash of 1929, since they are caused by different triggers. But a trigger is not an underlying cause. As the Marxist economist Guglielmo Carchedi says:
If crises are recurrent and if they have all different causes, these different causes can explain the different crises, but not their recurrence. If they are recurrent, they must have a common cause that manifests itself recurrently as different causes of different crises. There is no way around the “monocausality” of crises.[55]
Grossman agrees that Marx never developed “a comprehensive description of his theory of crisis, that he made scattered conflicting attempts at an explanation in various passages,” but the subject of his analysis was not crises, “but the capitalist process of reproduction in its totality.”[56] Grossman does not discount circulation and consumption as triggers for crises, but it is the declining rate of profit that is the underlying cause. Like Marx, Grossman believed counter-tendencies could slow down or even temporarily check the falling rate of profit:
If we can show that due to various counteracting tendencies the unfettered operation of the breakdown tendency is repeatedly constrained and interrupted... then the breakdown tendency will not work itself out completely and is, therefore, no longer describable in terms of an uninterrupted straight line... Instead it will break up into a series of fragmented lines... all tending to the same final point. In this way the breakdown tendency, as the fundamental tendency of capitalism, splits up into a series of apparently independent cycles that are only the form of its constant, periodic reassertion. Marx’s theory of breakdown is thus the necessary basis and presupposition of his theory of crisis, because according to Marx crises are only the form in which the breakdown tendency is temporarily interrupted and restrained from realizing itself completely. In this sense every crisis is a passing deviation from the trend of capitalism.[57]
Over time, counter-tendencies become progressively weaker and can not stop the onset of a crisis, which is just a breakdown “that has not been limited by counter-tendencies.”[58] Crises are a mechanism to heal the system where “equilibrium is again re-established, even if forcibly and with huge losses. From the standpoint of capital every crisis is a ‘crisis of purification’."[59] Rising unemployment, wage cuts, the expropriation of smaller capitalists by larger ones, and the restoration of profit set the stage for recovery and the next cycle. Crises are inherent to capitalism and no policy can eliminate them. This conclusion led Grossman to state that crises create “objectively revolutionary situation … the system shows that it cannot secure the living conditions of the population. From this objective situation and through it the class struggle intensifies.”[60]

Contrary to his critics' claims, Grossman never said capitalism will automatically collapse: "It should be evident that the notion that capitalism must 'by itself' or 'automatically' collapse is alien to me... But I did wish to show that the class struggle alone is not sufficient...”[61] Rather, Grossman did not elaborate on the connection between economics and politics since that
connection is obvious. However, while Marxists have written extensively on the political revolution, they have neglected to deal theoretically with the economic aspect of the question and have failed to appreciate the true content of Marx's theory of breakdown. My sole concern here is to fill in this gap in the Marxist tradition.[62]
His theory of breakdown showed the economic conditions that can create a revolutionary situation:
The meaning of a Marxist theory of breakdown is that the revolutionary action of the proletariat receives its strongest impulse only when the existing system is objectively shaken. This, at the same time, creates the conditions for successfully overcoming the resistance of the ruling classes.[63]
Class struggle is not the result on ill will by malevolent socialists, but materially exists and is caused by the immanent laws of capitalism. Communism is not a moral ideal to realize, but a material necessity that the proletariat must consciously achieve.

D. Imperialism and breakdown

The development of finance capital and imperialism poses many questions in regards to theories of breakdown. Is imperialism a new stage of capitalist development that manages to overcome the breakdown tendency?

According to Lenin's theory of imperialism, finance capital, or the merging of banking and industrial capital, became dominant at the beginning of the 20th century. Lenin drew his analysis of finance capital from the Austro-Marxist Rudolf Hilferding's 1910 work, Finance Capital. Hilferding says:
A steadily increasing proportion of capital in industry ceases to belong to the industrialists who employ it. They obtain the use of it only through the medium of the banks that, in relation to them, represent the owners of the capital. On the other hand, the bank is forced to sink an increasing share of its funds in industry. Thus, to an ever-greater degree the banker is being transformed into an industrial capitalist. This bank capital, i.e., capital in money form, which is thus actually transformed into industrial capital, I call ‘finance capital’ …Finance capital is capital controlled by banks and employed by industrialists.[64]
Following Marx, Hilferding argues that credit is essential to capital accumulation. The development of joint-stock companies and corporations bring together capital from many small shareholders and facilitate its concentration. On the surface, this appears to spread capitalist ownership to a larger group of shareholders, but in actuality, this accelerates the centralization and concentration of capital. Hilferding describes the process:
As a member of the board of directors, the large shareholder first of all receives a share of the profit in the form of bonuses; then he also has the opportunity to influence the conduct of the enterprise, and to use his inside knowledge of its affairs for speculation in shares, or for other business transactions. A circle of people emerges who, thanks to their own capital resources or to the concentrated power of outside capital which they represent (in the case of bank directors), become members of the boards of directors of numerous corporations. As a member of the board of directors, the large shareholder first of all receives a share of the profit in the form of bonuses; then he also has the opportunity to influence the conduct of the enterprise, and to use his inside knowledge of its affairs for speculation in shares, or for other business transactions. A circle of people emerges who, thanks to their own capital resources or to the concentrated power of outside capital which they represent (in the case of bank directors), become members of the boards of directors of numerous corporations...[65]
According to Hilferding, banks centralize money capital and gather together idle funds that they lend out for productive use. At earlier stages of accumulation, banks simply mediate the flow of money, but as accumulation grows, there are now larger amounts of money in the banks. When banking is competitive and a single firm is denied a loan, this didn't necessarily affect their business since they could always go to other banks. Similar to industrial capital, Hilferding observed that there was a tendency of monopolization among banks, which gave them access to enormous economic power. As banks monopolized and concentrated, this facilitated the formation of monopolies and cartels in other sectors of the economy where banks have investments. This parallel monopolization allows banks to safeguard their investments. However, the monopolization of one economic sector affects others. They will control competitive industries that deal with monopolies unless they form their own cartels or monopolies to defend their interests. The development of finance capital means the monopoly sector of the economy expands. As the financial power of banks grows, they take direct control of buying and selling, and determining investment flows of industry.Hilferding claims the separation of financial and industrial capital (characteristic of competitive capitalism) disappears in monopoly capitalism with their fusion:
Finance capital signifies the unification of capital. The previously separate spheres of industrial, commercial and bank capital are now brought under the common direction of high finance, in which the masters of industry and of the banks are united in a close personal association. The basis of this association is the elimination of free competition among individual capitalists by the large monopolistic combines. This naturally involves at the same time a change in the relation of the capitalist class to state power.[66]
Why has the development of finance capital and imperialism led to colonialism, militarism and wars? Hilferding lists three reasons: (1) finance capital's need to establish the largest possible economic territory; (2) to close territory to foreign competition by walls of protective tariffs; (3) to reserve it as an area of exploitation for natural monopolistic combinations. Capitalists must always keep the largest amount of territory open to investment and trade through state power:
But the intensity of competition arouses a desire to eliminate it altogether. The simplest way of achieving this is to incorporate parts of the world market into the national market, through a colonial policy which involves the annexation of foreign territories. Thus, while free trade was indifferent to colonies, protectionism leads directly to a more active colonial policy, and to conflicts of interest between different states.[67]
According to Hilferding, the rise of finance capital meant the different factions of the ruling class coalesced in their drive for expansion. Bankers own land; urban capitalists sit on the board of directors of banks through shared social interests, marriage and backgrounds. “Finance capital, in its maturity, is the highest stage of the concentration of economic and political power in the hands of the capitalist oligarchy. It is the climax of the dictatorship of the magnates of capital.”[68]

Hilferding saw one major process at work under finance capital: the concentration and centralization of capitalism. The Bolshevik Nikolai Bukharin developed another theory of imperialism that identifies two processes – the internationalization and nationalization of capitalism, the growing interdependence of the global economy, and its division into different blocs. The international division of labor grows as transport, economic development and improved communication create a single integrated world economy that serves finance capital:
Capitalist interest imperatively dictates these steps. The international division of labor, the difference in natural and social conditions, are an economic prius which cannot be destroyed, even by the World War. This being so, there exist definite value relations and, as their consequence, conditions for the realization of a maximum of profit in international transactions. Not economic self-sufficiency, but an intensification of international relations, accompanied by a simultaneous "national" consolidation and ripening of new conflicts on the basis of world competition—such is the road of future evolution.[69]
When monopolies controlling large sectors of the economy fuse with the state, this creates state capitalism.

Bukharin believed monopolies were now totally unified under the sway of finance capital and merging with the state “gives unprecedented significance to state power in the ‘internal’ life of the peoples, the tentacles of this monster penetrating every crack and embracing every aspect of social life.”[70] Bukharin's vision was haunting – the imperialist state was a new Levitation with an iron heel clamped down on the neck of the proletariat.

This view of the imperialist state was overly simplified and ignored the real limits of state intervention. Both Bukharin (and Hilferding) overstated the integration of the ruling class, ignored the relative autonomy of the state, and the need of the ruling class to illicit consent from the population. Lenin believed that Bukharin glossed over the contradictions that remained within the capitalist class. Lenin agreed that capitalism had reached the monopoly stage, but he did not argue that competition was eliminated within the nation-state. Monopolies expanded and deepened anarchy of capitalism both nationally and internationally, which produced “something transient, a mixture of free competition and monopoly.”[71] According to Lenin, Bukharin was dealing with imperialism as a pure abstraction, something he denied could exist. Lenin's theory of imperialism viewed the world economy as a variegated, contradictory, and constantly changing reality.

In contrast to Bukharin, Hilferding did not claim finance capital had done away with competition and crises, but maintained the dominant tendency of capitalism was towards breakdown:
The more free competition is replaced by monopoly organization on the domestic market, the more competition sharpens in the world market. If a river’s flow is artificially blocked with a dam on one side of the stream, it presses on with even less restraint on the side that is still open. Whether accumulation of capital within the capitalist mechanism occurs on the basis of competition amongst individual entrepreneurs or a series of cartelized, capitalist production associations struggling against each other is irrelevant for the emergence of the tendency to break down or crisis.[72]
Grossman questioned Hilferding's claim that finance capital is completely dominant under imperialism. At lower levels of accumulation, industrial capital did rely on banks in order to finance their firms. He said: “The building of a credit system centralizes the dispersed particles of capital and the banks acquire enormous power as mediators and donors of industrial credit.”[73] At greater levels of accumulation, “industry becomes increasingly more independent of credit flow because it shifts to self-financing through depreciation and reserves.”[74] Under imperialism, Grossman observed that finance in countries like France, Britain and the USA does not rule industry, but it was industry that dominates the banks.[75]

Now we come to the question of capital export. As monopolies grew in size, they gained a vast surplus of capital. While monopolies did restrict some production, it simply wasn't possible for the bourgeoisie to consume all the excess surplus value. To counteract this, monopolies sought investment in new industries and sectors – including in the non-industrial world. Imperialism arose to maintain the rate of profit, which was either falling or under pressure due to the increasing organic composition of capital, leading to the export of capital, colonial expansion and imperial rivalry across the globe. Lenin said that capital export
is created by the fact that a number of backward countries have already been drawn into world capitalist intercourse; main railways have either been or are being built there, the elementary conditions for industrial development have been created, etc. The necessity of exporting capital arises from the fact that in a few countries capitalism has become ‘over-ripe’ and (owing to the backward stage of agriculture and the impoverished state of the masses) capital cannot find a field for ‘profitable’ investment.[76]
Lenin's case for capital export requires qualification. For one, Lenin understood that most of the major capitalist countries had become net exporters and more investment was flowing into them than leaving (true now and in 1916). Most capital exports did not open up new investments in the colonies, but went to other imperialist powers.

Taking control of resources and preventing rivals from gaining control of them makes sense, but it does not explain why capital must be exported in order to survive. Grossman says capital export is a result of a lack of opportunities on domestic investments due to low profit rates. He claims that the reason for capital export at the end of the nineteenth century resulted from the “absolute overaccumulation of capital” in the industrialized countries. According to Marx, overaccumulation occurs when increased investment “will not produce any more profit, or will even produce less profit...[and] there would even be a sharper and more sudden fall in the general rate of profit...”[77]Therefore, overaccumulation occurs even when capital yields a high interest and there is still a profit to be made, but additional investment makes little sense. Grossman adds: “In practice the additional capital will displace a portion of the existing capital so that for the total capital a lower rate of profit results. However whereas a falling rate of profit is generally bound up with a growing mass of profit, absolute overaccumulation is characterized by the fact that here the mass of profit of the expanded total capital remains the same.”[78] Further investment would cut into the consumption of the bourgeoisie and firms reach “a state of capital saturation where the over accumulated capital faces a shortage of investment possibilities and finds it more difficult to surmount this saturation.”[79] To avoid this, the bourgeoisie will cut back on investing at home and begin exporting capital. In other words, the export of capital is a countertendency to breakdown. According to Mandel,
The export of capital thus corresponds to a fundamental law of the development of capital: the increase in its organic composition, the tendency of the average rate of profit to fall, resisted on the one hand by alliances between capitalists in the metropolitan countries, and compensated, on the other, by the investing in the colonial countries the average organic composition of capital was lower, and above all, the rate of surplus value was much higher.[80]
The drive to export and find high profits accelerates centralization and concentration of capital as monopolies overstep their national limits. While monopolies could conceivably overcome competition within their borders, this is more difficult on a global scale where they have to compete with other capitalists backed by other states. Ultimately, the drive for colonies and other sites of capital investment sharpens international competition, which can periodically lead to wars of re-division.

Through foreign trade and capital export, imperialism cheapens constant capital and increases the rate of surplus value by exploiting laborers in the underdeveloped world, transferring profits to the mother country. Imperialism spawned two world wars, from the 1950s to the early 1970s, but its countervailing factors overwhelmed the breakdown tendency. During this period, there was profitable investment at home and abroad. Declining profit rates in the imperial centers in the 1970s led the ruling class to restructure the economy to their benefit by renewing investment in countries with low wages, lowering trade barriers, ending restrictions on capital export, assaulting unions and the welfare state. For a time, these measures can revitalize profit rates, but in the end, the breakdown tendency will reassert itself.

E. Crisis and revolution[81]

There is no mechanical relation between economic crises and the development of class (or revolutionary) consciousness. Antonio Gramsci identified this misreading of a conjuncture as “economism,” or when there is an “overestimation of mechanical causes.”[82] The economistic deviation states that crises are directly determined by economic factors. The outcome of the crisis is not determined in advance by the unfolding of an inevitable economic forces, but by the interaction between various active classes and social forces, who “come into confrontation and conflict, until only one of them, or at least a single combination of them, tends to prevail.”[83]

A crisis does not mean that capitalism is utterly moribund on a straight line of collapse. If this were the case, then the system would no longer have the room or the flexibility to grant “reforms,” and so any struggle that limited itself to reforms would be ruled out; likewise, every struggle of the workers would be inherently revolutionary. This economistic approach believes that revolutionary consciousness would naturally follow from fighting for immediate needs. This underestimates the degree to which socialist and communist ideas need to be fought for and adopted by workers – including by their advanced sections. Rather, a crisis does not necessarily mean that the ruling class and the state loses their ability to maneuver and adapt, since they possess greater resources at their command. The state may still be able to grant reforms, make sacrifices or co-opt movements from below. Gramsci argued:
The crisis creates situations which are dangerous in the short run, since the various strata of the population are not all capable of orienting themselves equally swiftly, or of reorganizing with the same rhythm. The traditional ruling class, which has numerous trained cadres, changes men and programs and, with greater speed than is achieved by the subordinate classes, reabsorbs the control that was slipping from its grasp. Perhaps it may make sacrifices, and expose itself to an uncertain future by demagogic promises ; but it retains power, reinforces it for the time being, and uses it to crush its adversary and disperse his leading cadres, who cannot be very numerous or highly trained.[84]
For instance, during the Great Depression (and other crises), capital developed its own strategies to recover (reshaping class alliances, restoring profitability, and due to their control of the media, their narratives reach a wider audience). In the 1930s, capital employed different methods to manage the crisis – such as the New Deal and Fascism – with their unique mixtures of coercion, consent, demagoguery and co-option. Often, left-wing forces are disoriented by a crisis and unable to adapt themselves to the possibilities that it offers, but remain bound by outmoded formulas and strategies. What does this mean? One: economic crises are opportunities for capital to reestablish their own hegemony, but no matter how severe the crisis, the system will recover. As Lenin says:
This is a mistake. There is no such thing as an absolutely hopeless situation. The bourgeoisie are behaving like barefaced plunderers who have lost their heads; they are committing folly after folly, thus aggravating the situation and hastening their doom. All that is true. But nobody can “prove” that it is absolutely impossible for them to pacify a minority of the exploited with some petty concessions, and suppress some movement or uprising of some section of the oppressed and exploited. To try to “prove” in advance that there is “absolutely” no way out of the situation would be sheer pedantry, or playing with concepts and catchwords. Practice alone can serve as real “proof” in this and similar questions. All over the world, the bourgeois system is experiencing a tremendous revolutionary crisis. The revolutionary parties must now “prove” in practice that they have sufficient understanding and organization, contact with the exploited masses, and determination and skill to utilize this crisis for a successful, a victorious revolution.[85]
In other words, capital is generally able to find a way out of the crisis. While a crisis does not automatically produce revolution or a change in consciousness, it does alter the terrain of struggle. As Gramsci says,
It may be ruled out that immediate economic crises of themselves produce fundamental historical events; they can simply create a terrain more favorable to the dissemination of certain modes of thought, and certain ways of posing and resolving questions involving the entire subsequent development of national life.[86]
A crisis, in comparison to “normal times,” provides an opening for communists to explain their ideas to a more receptive audience.

The passive fatalism of expecting some kind of one-to-one relation of crisis to the revolutionary consciousness inhibits strategic thinking. If communists expect consciousness to spontaneously develop, then they are not taking an active role in the class struggle and neglecting the development of strategy. In the end, without the conscious intervention of the working class and the seizure of power, the crisis is resolved in favor of the ruling class. As Georg Lukács says: "Only the consciousness of the proletariat can point the way that leads out of the impasse of capitalism. As long as this consciousness is lacking, the crisis becomes permanent, it goes back to its starting point, repeats the cycle..."[87] It is possible that capitalism will survive every revolutionary onslaught and limp on from crisis upon crisis. In this case, capitalism is likely to destroy the planet and the end result is what Marx and Engels called “the common ruin of the contending classes.”[88] Rosa Luxemburg said that unless the working class leads the transition to socialism, then the fate of humanity is one of regression to barbarism: “A look around us at this moment shows what the regression of bourgeois society into barbarism means...The triumph of imperialism leads to the annihilation of civilization.”[89] The mere existence of capitalism is the real barbarism that threatens us all. There is another choice: “This is a dilemma of world history, an either/or; the scales are wavering before the decision of the class-conscious proletariat. The future of civilization and humanity depends on whether or not the proletariat resolves to bravely throw its revolutionary broadsword into the scales.”[90] Either the proletarian revolution is the breakdown of capitalism or capitalism is the destruction of humanity.

III. Conclusion[91]

Rejection of the breakdown theory has been one of the hallmarks of the abandonment of revolutionary Marxism. During the revisionist controversy at the end of the 19th century, Eduard Bernstein said it was time to end the pretense that Social Democracy was a revolutionary movement by recognizing what it was in practice – a party of social reform. He claimed that it was necessary to “update” Marxist theory to recognize that the predictions of capitalist development, class polarization, crises, and breakdown had not borne themselves out. Rather, Bernstein claimed that there was actually an increase in the number of property owners and giant businesses were not swallowing up smaller and medium-sized ones.[92]Bernstein said that Marx's contention that capitalism was destined to finally collapse was an “abstract speculation.”[93] Capitalism was expanding with only periodic, and less severe, fluctuations, and the lot of workers was growing better. The system had developed “means of adaptation” such as cartels, syndicates, trusts, systems of credit, improved communication and transportation – all of which ended the possibility of severe crises by regulating and rationalizing production. Since the system was here to stay, socialism should be conceived as an ethical ideal and not a material necessity. This all led to the total abandonment of a commitment to revolution and socialism.

Rosa Luxemburg took aim at the heart of the revisionist position – their claim that capitalism had successfully adapted itself and could avoid breakdown and collapse. She claimed that the so-called means for the adaptation of capitalism – cartels, syndicates, credit system, etc. – that far from mitigating the system's contradictions, actually intensify them. In regards to credit, she stated that itconstitutes the technical means of making available to an entrepreneur the capital of other owners. It stimulates at the same time the bold and unscrupulous utilization 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 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.[94] All these forms of combination and “adaptation” end up escalating contradictions within the world economy and sharpen the struggle between different capitalist states that lead to war. None of the new developments within capitalism brought an end to crises, but herald new and deeper ones. Bernstein did not understand
the necessity of crises as well as the necessity of new placements of small and middle-sized capitals. And that is why the constant reappearance of small capital seems to him to be the sign of the cessation of capitalist development though, it is, in fact, a symptom of normal capitalist development.[95]
For revisionists, it was necessary to deny the breakdown of capitalism because they do not “propose to suppress these contradictions through a revolutionary transformation. It wants to lessen, to attenuate, the capitalist contradictions.”[96] If the revisionists were correct and capitalism did not generate the economic preconditions and material need for socialism, then it was just a Kantian appeal. Lenin echoed Luxemburg, saying:
The position of revisionism was even worse as regards the theory of crises and the theory of collapse. Only for a very short time could people, and then only the most short-sighted, think of refashioning the foundations of Marx’s theory under the influence of a few years of industrial boom and prosperity. Realities very soon made it clear to the revisionists that crises were not a thing of the past: prosperity was followed by a crisis. The forms, the sequence, the picture of particular crises changed, but crises remained an inevitable component of the capitalist system. While uniting production, the cartels and trusts at the same time, and in a way that was obvious to all, aggravated the anarchy of production, the insecurity of existence of the proletariat and the oppression of capital, thereby intensifying class antagonisms to an unprecedented degree. That capitalism is heading for a break-down—in the sense both of individual political and economic crises and of the complete collapse of the entire capitalist system—has been made particularly clear, and on a particularly large scale, precisely by the new giant trusts.[97]
There have been many different debates on capitalist breakdown and durability in socialist and communist movements since 1900,[98] but the question always remains the same – if capitalism won't breakdown, then the need for socialism recedes into the background, replaced with “practical” plans to increase welfare spending or lowering taxes to increase workers' incomes. If capitalism is prone breakdown, then
The struggle of the working class over everyday demands is thus bound up with its struggle over the final goal. The final goal for which the working class fights is not an ideal brought into the workers’ movement “from outside” by speculative means, whose realization, independent of the struggles of the present, is reserved for the distant future. It is, on the contrary, as the law of capitalism’s breakdown presented here shows, a result of immediate everyday struggles and its realization can be accelerated by these struggles.[99]
The reality of capitalist breakdown means that communism is not simply a moral ideal to realize, but a material necessity for the proletariat.

Appendix: Rosa Luxemburg

Rosa Luxemburg's Accumulation of Capital (1913) is a major theoretical work and a political intervention on imperialism by one of the towering revolutionary Marxists of the twentieth century.[100] In this work, Luxemburg was concerned not only with imperialism, but how capitalism could reproduce itself. She described capitalist production as
primarily production by innumerable private producers without any planned regulation. The only social link between these producers is the act of exchange. In taking account of social requirement reproduction has no clue to go on other than the experiences of the preceding labor period. These experiences remain private, not integrated into a social form. They do not always refer positively and directly to the needs of society.[101]
According to Luxemburg, it was extremely difficult for the different sections of the capitalist economy to achieve equilibrium, resulting in “glut or shortage in some of the larger branches of production lead to the same phenomenon in most of the others.”[102] In Capital: Volume II, Marx demonstrated the abstract possibility of expanded capitalist reproduction through his abstract of models of reproduction schema between the departments of production and consumption. This model assumes that there are only two capitals with the interaction of many capitals brought in at a more concrete level. Marx identified two types of reproduction: simple and expanded. In the first, the capitalists consume the entire surplus value and no economic growth occurs. In expanded reproduction, the surplus produced is not simply consumed by the capitalists. Instead, the surplus is divided between capitalist consumption (luxury), workers (wages), and a remainder that can be used to purchase new raw materials and machinery. In other words, expanded reproduction is when capital accumulation and economic growth actually occur.

Luxemburg claims that for expanded reproduction to occur smoothly, the whole product must be sold (realized) – meaning that demand must be completely met. This leads her to ask where does the extra buyers for commodities needed to satisfy demand and ensure the accumulation of capital come from? Luxemburg says that demand cannot come from the proletariat since the capitalists pay them and their wages are viewed as a displacement of the bourgeoisie's money. The capitalists cannot sell to each other only for consumption, since that reverts to simple accumulation, with no surplus directed for accumulation. Marx says it is theoretically possible for capitalists to buy back the remainder and reinvest it to ensure expanded reproduction. To Luxemburg, this makes no sense, since at the beginning of the next production period, production will be greater and the capitalists would have to spend even more of their money to fully realize the product and keep accumulation going. Based on this reasoning, Luxemburg believed she had discovered a flaw in Marx's reproduction schemes: “...we have the roundabout that revolves around itself in empty space. That is not capitalist accumulation, i.e. the amassing of money capital, but its contrary: producing commodities for the sake of it; from the standpoint of capital an utter absurdity.”[103] Therefore, expanded reproduction was impossible. Ironically, other reformist socialists used Marx's reproduction schema to argue that capitalism could accumulate smoothly forever without any crises.

Luxemburg said a third force external to capitalism had to exist for expanded reproduction to occur: “Only the continuous and progressive disintegration of non-capitalist organizations makes accumulation of capital possible.”[104] According to Luxemburg, trade between capitalist and non-capitalist sectors was a necessity for the accumulation of capital. However, the search for non-capitalist markets lead to imperialism and the struggle between different states to dominate them. Some of the most moving parts of Accumulation of Capital describe the rapacious nature of colonialism throughout the world. Imperialism allows capitalism to cover the globe, but paradoxically it causes the non-capitalist sources of accumulation to shrink. As a result, capitalism is even more prone to crisis and breakdown. Luxemburg recognized that imperial rivalry explained the role of militarism as “a pre-eminent means for the realization of surplus value; it is in itself a province of accumulation.”[105] The end result of imperialism is war, breakdown and revolution: “For capital, the standstill of accumulation means that the development of the productive forces is arrested, and the collapse of capitalism follows inevitably, as an objective historical necessity.”[106]

However, Luxemburg's entire argument was built on a faulty premise – a misreading of Marx's reproduction schemes. She confused the priorities of individual capitalists with the needs of the system as a whole. For one, capitalists can and do buy products from each another to increase their own productive power. The system is not directed at increasing the consumption of its workers, but profit and wherever demand exists – they will seek to profit from it. Furthermore, capitalism can create new needs and find new profitable opportunities within existing markets. Lastly, Luxemburg assumes that capitalists have to sell all their products in each production cycle, which is not the case.

In their joint misreading Marx's reproduction schemes, Luxemburg and reformist socialists forgot their purpose. In the schemes, Marx had deliberately abstracted away non-capitalists and everyone other than workers and capitalists. The reproduction schemes aimed to prove how expanded reproduction is possible by holding many variables constant (such as constant techniques of production and the rate of exploitation) and maintaining definite proportions are between the two departments. According to Roman Rosdolsky, the reproduction schemes are “conceived at the highest level of abstraction and therefore ignored many key features of capitalist reality – such as the existence of non-capitalist classes, and areas of the world, external trade, the average rate of profit, prices of production which diverge from values, etc.”[107] However, Luxemburg ignored this and forgot Marx's dialectical method with its use of abstraction. We cannot but agree with Rosdolsky that Luxemburg “clearly underestimated the so-called 'Hegelian inheritance' in Marx's thought, and was therefore not entirely conscious of the real structure of his work."[108] Despite Accumulation of Capital's impressive theoretical edifice, its conclusions depend upon accepting Luxemburg's misinterpretation of Marx's reproduction schemes.

While Luxemburg was correct that capitalism is prone to breakdown, it was Marxists such as Grossman who provided a more viable and superior account of both imperialism and breakdown.Notes


[1] Karl Marx, The Grundrisse (New York: Penguin Books, 1973), 159.

[2] Ibid.

[3] I am drawing on the work of Marxist political economists Henryk Grossman and Michael Roberts, who both argue that the tendency of the rate of profit to fall is the cause of capitalist breakdown. See Henryk Grossman, The Law of Accumulation and Breakdown of the Capitalist System (London: Pluto Press, 1992) and Michael Roberts, The Long Depression: How It Happened, Why It Happened, and What Happens Next (Chicago: Haymarket Books, 2016), 12-29.

[4] Karl Marx, “Speech at the Anniversary of The People's Paper. Delivered in London, April 14, 1856, Marx and Engels Collected Works 14 (London: Lawrence & Wishart, 1975), 656. (henceforth MECW)

[5] Karl Marx, Capital: Volume 1 (New York: Penguin Books, 1976), 742.

[6] Marx 1973, 410.

[7] Marx 1976, 739.

[8] Ibid. 342.

[9] Marx 1973, 407.

[10] Marx 1976, 270.

[11] Marx 1973, 267.

[12] Marx 1976, 300-301.

[13] Ibid. 344.

[14] Ibid. 431.

[15] Ibid. 776.

[16] Ibid. 777.

[17] Karl Marx and Frederick Engels, The Birth of the Communist Manifesto, ed. Dirk Struik (New York: International Publishers, 1975), 106.

[18] Ernest Mandel, An Introduction to Marxist Economic Theory (New York: Pathfinder Press, 1970), 45.

[19] Karl Marx, Capital: Volume I (New York: Penguin Books, 1976), 779.

[20] Ibid. 778.

[21] Karl Marx, Capital: Volume III (New York: Penguin Books, 1981), 571.

[22] David Harvey, Limits to Capital (New York: Verso Books, 2006), 272.

[23]  “The Poverty of Philosophy,” MECW 6.195-196.

[24] Rosa Luxemburg, “Reform or Revolution,” in The Essential Rosa Luxemburg, ed. Helen Scott (Chicago: Haymarket Books, 2008), 54.

[25] Questions on the relationship of the falling rate of profit, its relationship to crises/breakdown and place in Marxist theory are a contentious field. For a sampling of some of the literature, aside from what is already cited, see: Michael Heinrich, An Introduction to the Three Volumes of Karl Marx's Capital (New York: Monthly Review Press, 2012), 141-154 and 175-8 (for does not support the law of the tendency of the rate of profit to fall); Anwar Shaikh, “An Introduction to the History of Crisis Theories,” Marxismo Critico. ; Anwar Shaikh, Capitalism: Competition, Conflict, Crises (Oxford: Oxford University Press, 2016); Jim Miller, “Must The Profit Rate Really Fall?” Marxists Internet Archive. ; Michael Roberts, The Great Recession: Profit cycles, economic crisis- A Marxist view (lulu, 2009). I found the following posts on Michael Roberts' blog especially helpful in preparing this essay: “How Capitalism Survives,” “Crisis or breakdown?” “The crisis of neoliberalism and Gerard Dumenil,” “The US rate of profit 1948-2015,” “It’s a long-term decline in the rate of profit – and I am not joking!” “Returning to Heinrich” (this last one contains links to several articles on debates related to the falling rate of profit). All can be found at Michael Roberts Blog ; Roman Rosdolsky, The Making of Marx's 'Capital' (London: Pluto Press, 1977), 376-381 and 398-411.

[26] Marx 1981, 319.

[27] Ibid. 350.

[28] Marx 1973, 748.

[29] Ibid. 749.

[30] Ibid. 749-750.

[31] Marx 1981, 350 and 358.

[32] Ibid. 358.

[33] Ibid. 346.

[34] Ibid. 355.

[35] Grossman 1992, 140.

[36] Marx 1981, 342.

[37] Ibid. 343.

[38] Ibid. 345.

[39] Ibid.

[40] Grossman 1992, 172.

[41] Marx 1981, 347-8.

[42] Paul Sweezy, The Theory of Capitalist Development: The Principles of Marxian Political Economy (New York: Monthly Review Press, 1962), 100.

[43] Ben Fine and Alfredo Saad-Filho, Marx's Capital, 4th ed. (London: Pluto Press, 2004), 112.

[44] Grossman 1992, 130.

[45] Rick Kuhn, Henryk Grossman and the Recovery of Marxism (Chicago: University of Illinois, 2006), 129.

[46] Ibid.

[47] Grossman 1992, 95.

[48] Ibid. 77.

[49] Quoted in Kuhn 2006, 137.

[50] Grossman 1992, 189.

[51] Karl Marx, Capital: Volume II (New York: Penguin Books, 1978), 486.

[52] Marx 1981, 615.

[53] Sweezy 1962, 178.

[54] Grossman 1992, 59.

[55] Quoted in Roberts 2016, 301.

[56] Grossman 1992, 83.

[57] Ibid. 85.

[58] Quoted in Kuhn 2006, 159.

[59] Grossman 1992, 84.

[60] Quoted in Kuhn 2006, 144.

[61] Ibid.

[62] Grossman 1992, 33.

[63] Quoted in Kuhn 2006, 160.

[64] Rudolf Hilferding, Finance Capital: A Study in the Latest Phase of Capitalist Development (Boston: Routledge Books, 1981), 119.

[65] Ibid. 119.

[66] Ibid. 301.

[67] Ibid. 325.

[68] Ibid. 370.

[69] Nikolai Bukharin, Imperialism and World Economy (New York: Monthly Review Press, 1973), 148.

[70] Nikolai Bukharin, “Toward a Theory of the Imperialist State,” in Selected Writings on the State and the Transition to Socialism, ed. Richard Day (Armonk: M.E. Sharpe, Inc., 1972), 7.

[71] Lenin Collected Works 22 (Moscow: Progress Publishers, 1974), 219. (henceforth LCW)

[72] Quoted in Kuhn 2006, 136. Ironically, both Hilferding and Bukharin from opposite viewpoints (social democrat and communist) argued that imperialism could overcome competition. While Bukharin believed that the imperialist state ended competition within its borders, he did believe that competition remained (and was intensified) at an international level – leading to war and revolution. Some of Hilferding's formulations in Finance Capital suggest that he believed competition was ending, but international competition remained. By the 1920s, as a Minister of Finance in the Weimar Republic, Hilferding believed that the state, finance capital and the working class could work together to achieve organized capitalism where the economy would be consciously planned and regulated – ending competition and crises – leading the way to a peaceful transition to socialism. If Hilferding was correct then the Marxist conception of both capitalism and socialism were wrong. However, the 1929 Depression (and subsequent crises), Nazism and the Second World War all proved his ideas to be mistaken.

[73] Grossman 1992, 199.

[74] Ibid.

[75] Ibid. 200.

[76] “Imperialism, The Highest Stage of Capitalism – A Popular Outline,” LCW 22.241-242.

[77] Marx 1981, 360.

[78] Grossman 1992, 187-188.

[79] Ibid. 191.

[80] Ernest Mandel, Marxist Economic Theory: Volume II (New York: Monthly Review Press, 1968), 449.

[81] This section draws heavily from my “Gramsci for Communists,” LINKS International Journal of Socialist Renewal. ; “Machiavelli and the primacy of politics,” LINKS International Journal of Socialist Renewal.

[82] Antonio Gramsci, Selections from the Prison Notebooks (New York: International Publishers, 1971), 178-9. (Henceforth SPN)

[83] Ibid. 181.

[84] Ibid. 210-211.

[85] “Report on the International Situation and the Fundamental Tasks of the Communist International,” LCW 31.227.

[86] SPN 184.

[87] Georg Lukács, History and Class Consciousness: Studies in Marxist Dialectics (Cambridge: MIT Press, 1971), 76.

[88] Marx and Engels 1975, 89.

[89] Rosa Luxemburg, “The Junius Pamphlet: The Crisis in the German Social Democracy,” in Rosa Luxemburg Speaks, ed. Mary-Alice Waters (New York: Pathfinder Press, 1970), 269.

[90] Ibid.

[91] The summary of the revisionist debate between Luxemburg and Bernstein is drawn from my “The final aim is nothing: The politics of revisionism and anti-revisionism,” LINKS International Journal of Socialist Renewal.

[92] Eduard Bernstein, Preconditions of Socialism (Cambridge: Cambridge University Press, 1993), 69.

[93] Ibid. 90.

[94] Rosa Luxemburg, The Essential Rosa Luxemburg (Chicago: Haymarket, 2008), 48.

[95] Ibid. 71.

[96] Ibid. 69.

[97] “Marxism and Revisionism,” LCW 31.35-6.

[98] For an excellent summary see F. R. Hansen, The breakdown of capitalism: A history of the idea in Western Marxism, 1883-1983 (Boston: Routledge & Kegan Paul, 1985).

[99] Kuhn 2006, 135-136.

[100] For secondary sources worth consulting on Luxemburg's Accumulation of Capital, see: Brewer 1990, 58-72; Sweezy 1962, 202-207; David Harvey, The New Imperialism (Oxford: Oxford University Press, 2003), 137-140, 144, 147-149, 176, and 233; Hansen 1985, 50 and 57-60; Alex Callinicos, Imperialism and Global Political Economy (Malden: Polity, 2009), 36-41; Richard B Day and Daniel Gaido, ed., Discovering Imperialism: Social Democracy to World War I (Boston: Brill Books, 2012), 675-752; Paul Frolich, Rosa Luxemburg (London: Pluto Press, 1972), 161-173.

[101] Rosa Luxemburg, Accumulation of Capital (New York: Routledge, 2003), 6.

[102] Ibid. 7.

[103] Rosa Luxemburg, The Accumulation of Capital--An Anti-Critique (Monthly Review Press, 1972), 56.

[104] Luxemburg 2003, 372.

[105] Ibid. 434.

[106] Ibid. 397-398.

[107] Rosdolsky 1977, 333 and 450-451.

[108] Ibid. 492.