A critique of Luxemburg’s Theory of Accumulation

Contribution to a discussion on Marx’s accumulation and crises theory of Capitalism

Bibliographic data: Phil Sutton, A Critique of Luxemburg’s Theory of Accumulation. Independently published, 30 May 2021. Paperback, 98 pages.

ISBN-13: 979-8733143033. Per copy: £6.23 Ordering information via Amazon-UK.

The Author’s Introduction

There is no doubt that Rosa Luxemburg is one of major theoreticians of the working class movement. Her writings, even in translation, are well argued and stimulating and the clarity of her views is always impressive. She was an economics lecturer at the German Social Democratic Party school in Berlin from 1907 to 1914. It seems to me that her knowledge of capitalist economics was also enhanced by her specialist knowledge in medieval society which enabled her to describe the distinctions between slave, feudal and capitalist society perhaps more clearly than Marx and Engels themselves. Her awareness of the roles of the nation, nationalism, and the state in ascendant capitalism and the implications for the relationship between reform or revolution, benefits especially from this grounding.

Alongside the theories of Lenin, Bukharin and others, Luxemburg’s analysis of the changes capitalism was going through during the late 19th and early 20th Centuries provided a really solid foundation for an understanding of the period since her death. That is not to say that they were all totally correct in their analyses but that is not the point, they all deserve a great deal of respect for what they achieved. However all these analyses need reassessment and revision in the light of the intervening events and that this is necessary should not surprise anybody.

Their theories of imperialism, war and revolution, socialism or barbarism, and capitalism’s obsolescence and decline all contribute to our understanding today of just what is going on in the 21st Century. Crisis theory, that is the attempt to understand the contradictions that capitalism generates by its basic economic relations and their impact on the outside world, is nevertheless an issue that still produces many arguments and divisions. It will probably always be contentious whatever happens – after all, we have to hope that the working class intervenes and eliminates capitalism before capitalism’s internal contradictions destroy us all.

So just to be clear, the critique I am making of her theory of accumulation does not mean I am criticising her general understanding and application of Marxist analysis nor rejecting her role as a major figure in working class history. However, as Luxemburg herself argues, criticism of existing theory should be merciless (1) and nobody, including Luxemburg herself, is correct about everything. In the recent period there has been a richly deserved increase in interest in Rosa Luxemburg and her ideas, but I do recommend reading her original works rather than just trusting the distortions of the leftists academics in their attempts to justify bourgeois feminism, anti-imperialism and ideas of national liberation. Whilst she certainly did believe in fighting for reforms, this was primarily for her a means of gaining experience in struggle in readiness for future revolutionary struggles. For Luxemburg, they were not an end in themselves. This approach should also be seen in the context of the change in period that capitalism was undergoing and she clearly identified the new period that was beginning at the end of her life as a period of wars and revolutions.

Despite the GDP growth rate in the period from the 1980s to 2020 and the massive increase in world population, (2) capitalism has faced ongoing economic crises and a continual need to improve efficiency and limit workers’ pay, yet there have been no major outbreaks of workers’ struggles confronting the system – apart from some significant but isolated examples e.g. in China, Korea, Spain and Greece. What we have seen have been significant outbreaks of social struggles e.g. in the Middle East, Spain, France, America, Nigeria, Colombia, Hong Kong, Ukraine, Belarus, Peru and others which failed to confront ruling class ideology, mainly because the working class did not or could not take the lead in these struggles.

Marx put forward two main theories of capitalist economic crisis, these are the tendency of the rate of profit to fall (TROPF) and the tendency to overproduction. They can be found at varying points in his major work, ‘Capital’, which detailed the ins and outs of the economic relations of capital and their impact. The third major theory for explaining capitalist growth and crises was developed mainly by Rosa Luxemburg in her book ‘The Accumulation of Capital’ which was written in 1913. It therefore had the advantage of being written at a time when it could incorporate the further development of the nation state and the onset of imperialism, something which adds great strength to her arguments. Her theory bases itself on what Luxemburg saw as problems or errors in Volume 2 of Marx’s ‘Capital’. This volume focussed mainly on circulation issues rather than production. I have read material on all sides of this economic argument. Ultimately it was not reading articles in favour of the TROPF theory but re-reading Luxemburg’s book which led to me to significant doubts about her theory.

The basic arguments for the TROPF and for overproduction are clearly presented by Marx (although overproduction does not receive quite so much attention) and are not in question by anybody in the Marxist tradition. However Luxemburg suggested that it is problems in the way the circulation of commodities in the market functions that are key to the capitalism’s economic crises.

The basic question that is posed by the last half century and more is how can a theory that says accumulation is dependent on non-capitalist markets be justified in a period of high growth whilst simultaneously the amount of non-capitalist markets is being continually reduced? In particular the capacity of capital to maintain itself following the end of the post war reconstruction period of the 1950s and 60s has been a surprise and has proved a much greater difficulty for Luxemburg’s theory than for an analysis based on the falling rate of profit.

This text does not aim to provide explanations to all these questions about crises within capitalism but to explain why, in the investigation of Luxemburg’s theory of accumulation in her books ‘The Accumulation of Capital’ and the ‘Anti-Critique’, (3), I became aware of major gaps of logic and inconsistencies in her arguments and the presentation of little in the way of clear evidence for her conclusions about accumulation. It became clear that even her use of key terminology such as ‘non-capitalist markets’ must be questioned. (4) In the end, despite the in-depth approach to earlier economists she takes in the book, and her clarity on the historical development of capitalism from the feudal economy of the medieval period, I find there is little evidence to support her main assertions about accumulation and it is the weaknesses in her theory that I aim to address in this current booklet.

Overall there is much to learn from her general economic writings but what is evident in her theory of accumulation is that it only provides a simplistic, explanation of capital’s crises during the last century and a superficial link to the theory of overproduction. These explanations of crises are simply convenient and easily understood answers which lack a real theoretical grounding and tend to lead to the misunderstanding of capital’s prospects over the last century.

In my view there was more justification for her theories at the time they were written and during the following period up to say the 1960s. They complemented her idea that this period of decadence or decline of capitalism would be a period of wars and revolutions. However this led to the idea of a permanent economic crisis of capital in this period but as suggested, the ongoing growth rates of population and GDP especially in the 2nd half of the 20th and the start of the 21st Centuries have posed just too many critical problems for her theory to continue to hold water.

In context, it should be recognised that her original theory was particularly aimed at the reformists of the 2nd International, like Bernstein, who were arguing that capital did not have a limit to its growth, that it was a system that could be reformed in favour of the working class. Her arguments sought particularly to explain that capitalism was only a temporary form of society and that because of its internal contradictions must inevitably lead to either a confrontation with the working class or its own degeneration. In other words the future could only be socialism or barbarism.

Her theory therefore met with vehement opposition by the reformist wings of the workers’ movement but also by some on the revolutionary wings. In undertaking a critical review of ‘The Accumulation of Capital’ I have tried to base my arguments on my own investigations and not on historical criticisms of her theory. Whilst I have, as I completed the document, included some key criticisms from respected figures in the workers’ movements to explain my own conclusions, my intention has been to present an overall view of all elements fundamental to her theory rather than rely on the rather fragmented criticisms of others.

This pamphlet begins with a section on Luxemburg’s theory of accumulation itself using her explanations in ‘The Accumulation of Capital’ and the ‘Anti-Critique’. I hope I have done her justice in this respect, since whatever my criticisms of certain theoretical aspects, at the time it was written, her theory had many positive elements in its examination of world developments

The second section is a review of the key contradictions and weaknesses of her theoretical analysis and draws together the various ideas that contribute to her theory. This is not easily done as a straightforward linear explanation which develops her argument, so it seemed to me more appropriate to present the various elements that influence her theory more in the form of a mind-map as it reflects the rather disparate arguments she uses to generate the final version of her theory.

Finally I have addressed various aspects of her analysis in relation to the empirical development of capitalism. Her theory is after all intended to explain the real world, so to be valid, it should be able to hold up against real events. With hindsight, I find that it cannot.

Phil Sutton, Spring 2021.

→Back-cover text & Table of Contents on page 2.


1 ‘Self-criticism, cruel, unsparing criticism that goes to the very root of the evil, is life and breath for the proletarian movement’. Quoted from Luxemburg, 1915, The Junius Pamphlet – The Crisis in Social Democracy.

2 See Chapter 12 and Appendices 2 & 3 for the relevant data.

3 ‘Anti-Critique’ was written by Luxemburg in 1915 as a response to the criticisms of her theory of accumulation. It summarises her theory and also responds to some of the arguments presented against it.

4 Which causes the awkward problem of what terminology should I use. I decided I had to be consistent with Luxemburg’s use and to explain this problem in Chapters 10, 15 and 16.

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