Louis Proyect: The Unrepentant Marxist

March 6, 2008

Bernstein, Luxemburg and Desai

Filed under: Introduction to Marxism class — louisproyect @ 5:28 pm

(This post was a contribution to the Introduction to Marxism mailing list, an online class.)

Over the next few days I will be posting material by and about Marxists in the “under-consumptionist” tradition. While reviewing this material for the past week or so, I was surprised to see how much the debates of the early 1900s paralleled debates within Marxism over the past 50 years or so. Given the similarities between the turn of the 20th and the turn of the 21st century, perhaps it should have not been a surprise at all.

In the late 1800s, there was little evidence that capitalism was a system that had reached its limits, especially in those countries that Karl Marx and Frederic Engels had regarded as most susceptible to socialist revolution. Despite having a powerful working class, Germany, France, the U.S. and Great Britain had seemed to discover a way to manage crisis and to offer workers improved wages and working conditions within the system. If socialism could be achieved piecemeal within the capitalist system, what need was there for risky revolutionary bids that might result in the destruction of the trade union movement and socialist parties.

These illusions were fostered by the long expansion of the capitalist system under imperialism. From the 1880s until the outbreak of WWI, there was little evidence of the system facing the kind of terminal conditions described in The Communist Manifesto of 1848:

The productive forces at the disposal of society no longer tend to further the development of the conditions of bourgeois property; on the contrary, they have become too powerful for these conditions, by which they are fettered, and so soon as they overcome these fetters, they bring disorder into the whole of bourgeois society, endanger the existence of bourgeois property. The conditions of bourgeois society are too narrow to comprise the wealth created by them. And how does the bourgeoisie get over these crises? On the one hand by enforced destruction of a mass of productive forces; on the other, by the conquest of new markets, and by the more thorough exploitation of the old ones. That is to say, by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented.

Just as the 1960s produced a New Left that questioned the viability of socialist revolution in the face of a seemingly crisis-free capitalist system, there were socialist thinkers in the earlier period that drew similar conclusions. Eduard Bernstein was the most important of them.

He lays out his perspectives in “Evolutionary Socialism“, including a sharp rebuke  to Rosa Luxemburg’s “under-consumptionist” economics:

But Marx himself has also occasionally pronounced very sharply against the derivation of crises from under-consumption. “It is pure tautology,” he writes in the second volume of Capital, “to say that crises rise from a want of consumers able to pay.” If one wished to give this tautology an appearance of greater reality by saying that the working classes receive too small a portion of what they produce, and that the grievance would therefore be redressed if they had a larger share, it can only be observed that “the crises are each time preceded by a period in which the workers’ wages rise and the working classes actually receive a relatively greater share than usual of the yearly produce destined for consumption.” It thus would appear that capitalist production “includes conditions independent of good or evil intentions – conditions which only permit of temporarily relative prosperity for the working classes and then always as a stormy bird of a crisis.”

As was the case with the Russian legal Marxists, Bernstein draws upon the chapters in Volume Two of Capital that deal with “reproduction”, one of which John Imani described on Marxmail as “long and exceedingly difficult and boring”. There really is no point in trying to wend our way through Karl Marx’s formulas. The main point is that he was trying to describe what amounted to a business cycle in modern terms.

Bernstein writes:

In another passage of this second volume [of Capital], which had been written by 1870, the periodic character of crises -which is approximately a ten-year cycle of production-is brought into conjunction with the length of the turnover of fixed (laid out in machinery, etc.) capital. The development of capitalistic production has a tendency on the one hand to extend the bulk of value and the length of life of fixed capital, and on the other to diminish this life by a constant revolution of the means of production. Hence the “moral wearing out” of this portion of fixed capital before it is “physically spent.” Through this cycle of connected turnovers comprehending a series of years in which capital is confined through its fixed portion, arises a material cause for periodic crises in which the business passes through periods following one another of exhaustion, medium activity, precipitancy, crisis.

In this instance, the word crisis has an entirely different meaning than it does in Rosa Luxemburg. When Bernstein says that “business passes through periods following one another of exhaustion, medium activity, precipitancy, crisis,” he is simply describing what amounts to a business cycle in terms that you see in the NY Times business section. The U.S. is always going though some crisis or another (savings banks, LTCM, dot.com, subprime mortgage, etc.) but is always resolving it in anticipation of the next uptick in the business cycle.

In the chapter on “Simple and Expanded Reproduction” in The New Palgrave Marxian Economics, Meghnad Desai writes:

The result given in Capital 2, Chapter 21 aroused a long debate among Marxists. How could one reconcile this picture of an economy in perpetual balanced growth with Marx’s prediction elsewhere in his work of a capitalist economy riddled with crises and liable to breakdown as a result of increasing contradictions including a falling rate of profit despite growth and accumulation? Was Marx portraying the improbability of this outcome in absence of a planning mechanism that could order capitalists to invest a given proportion? Was this another example of a glaring inconsistency between different parts of Capital, as had been argued in the case of the value-price relationship by Bohm-Bawerk?

In the long debate that followed the publication of Capital Vol. 2, many attempts were made to alter the numerical magnitudes of Marx’s example to generate business cycles. The notion that disproportionality in the investment in and/or growth of the two sectors could cause cycles was developed by Tugan-Baranovsky. The centrality of Dept I investment decisions, although arbitrarily imposed by Marx, led to the development of theories of business cycle emphasizing the capital-goods industries as the source of these fluctuations (Aftalion, Spiethoff). But the most searching critical analysis of Marx’s scheme came from Rosa Luxemburg. The Accumulation of Capital offers both a survey of the pre-1914 debate in this area and an attempt to probe the reasons for the puzzle of a balanced growth equilibrium in a Marxian model.

That Marx is open to multiple and contrary interpretations should come as no surprise to anybody. When confronted by a misinterpretation of his thought, Marx was prompted to say something to the effect of “If that is Marxism, I am no Marxist.”

Part of Bernstein’s polemic against Rosa Luxemburg in “Evolutionary Socialism” involved a defense of the growth of cartels. Unlike Lenin and Luxemburg, Bernstein viewed such monopoly combinations as having the effect of controlling the excesses of the free market and creating conditions more favorable for the socialist system, which would also favor combinations of competing firms into state-owned enterprises. Bernstein wrote:

But so far as it is a means of a hothouse forcing of over-production, the associations of manufacturers meet this inflation of production in separate countries, and even internationally here and there, ever more frequently, by trying to regulate production as a Kartel, a syndicate, or a trust. Without embarking in prophecies as to its final power of life and work, I have recognised its capacity to influence the relation of productive activity to the condition of the market so far as to diminish the danger of crises.

Within fifteen years, these very syndicates would plunge Europe into the bloodiest war in human history. Bernstein’s confidence in the ability of cartels to “diminish the danger of crises” seems misplaced, to say the least.

A glance at Meghnad Desai’s subsequent career will reveal his affinity with Bernstein and Tugan-Baranovsky. As the author of the 2002 Verso book “Marx’s Revenge”, Desai took the rather novel position that Karl Marx would have favored “globalization”. On the Verso website, you can find this description of Desai’s book: “Desai argues that globalization, in bringing the possibility of open competition on world markets to producers in the Third World, has proved that capitalism is still capable of moving forwards.” Bernstein could not put it better.

And a May 19, 2002 Observer review of “Marx’s Revenge” finds Desai in accordance with the view presented in the Palgrave article, namely that Karl Marx was a prophet of “business cycle” economics:

Marx developed some pioneering economics. He was the first economist to incorporate an explanation of boom and bust within his theory. He constructed a simple model to show how profit came from the exploitation of the ‘surplus value’ of labour. This led to the ups and downs of profitability. But in volume II of Das Kapital Marx calculates a numerical scheme of a capitalist economy which does not run into crisis and enjoys perpetual growth.

When you read that according to Desai Marx calculated a “numerical scheme of a capitalist economy which does not run into crisis and enjoys perpetual growth,” you really wonder what prompted Verso to publish such a silly book. This is not Marx the socialist revolutionary, but Marx the spiritual grandfather of Paul Krugman.

In my next post, I will deal with Rosa Luxemburg’s attitude toward colonialism, which she saw as a kind of pressure valve to deal with the contradictions of over-production. Needless to say, it has nothing to do with Desai’s assurance that “open competition on world markets to producers in the Third World” proves that capitalism is moving forward.


  1. Did you mean to say “how much the debates of the early 1900s paralleled debates within Marxism over the past FIVE years or so” ?

    Comment by Ruthless Critic — March 6, 2008 @ 7:34 pm

  2. Alain Badiou, in his new New Left Review article, says something similar to your analogy between the current 40-year “dry spell” and the 1871-1914 “dry spell” — but draws conclusions different from yours. I quote:

    “Between the end of the first sequence and the beginning of the second there was a forty-year interval during which the communist hypothesis was declared to be untenable: the decades from 1871 to 1914 saw imperialism triumphant across the globe. Since the second sequence came to an end in the 1970s we have been in another such interval, with the adversary in the ascendant once more. What is at stake in these circumstances is the eventual opening of a new sequence of the communist hypothesis. But it is clear that this will not be—cannot be—the continuation of the second one. Marxism, the workers’ movement, mass democracy, Leninism, the party of the proletariat, the socialist state—all the inventions of the 20th century—are not really useful to us any more. At the theoretical level they certainly deserve further study and consideration; but at the level of practical politics they have become unworkable. The second sequence is over and it is pointless to try to restore it.

    “At this point, during an interval dominated by the enemy, when new experiments are tightly circumscribed, it is not possible to say with certainty what the character of the third sequence will be. But the general direction seems discernible: it will involve a new relation between the political movement and the level of the ideological—one that was prefigured in the expression ‘cultural revolution’ or in the May 68 notion of a ‘revolution of the mind’. We will still retain the theoretical and historical lessons that issued from the first sequence, and the centrality of victory that issued from the second.”

    Comment by Ruthless Critic — March 7, 2008 @ 4:10 pm

  3. Marxism, the workers’ movement, mass democracy, Leninism, the party of the proletariat, the socialist state—all the inventions of the 20th century—are not really useful to us any more.

    Charles: This commentator doesn’t seem to take account of the Cuban and Venezuelan revolutions.


    At the theoretical level they certainly deserve further study and consideration; but at the level of practical politics they have become unworkable. The second sequence is over and it is pointless to try to restore it.

    Comment by Charles — March 7, 2008 @ 5:42 pm

  4. Charles,

    Chavez himself says the same thing when he asks people to look beyond the models of the twentieth-century and towards twenty-first century socialism.

    Comment by Ruthless Critic — March 8, 2008 @ 3:59 pm

  5. The most interesting thing about all this talk about whether Marx or Lenin’s thought holds for the 21st century is that none of the people who argue about whether these thinkers remain relevant seem to have come across any of the numberous passages in Marx or Lenin where both men reject any claims to omniscience. I’m not sure why “left” scholars seem to think they need to remind us of what is fairly obvious to those of us who’ve studied this stuff for awhile, but I guess it’s okay. It’s just the vanguardist qualities of their anti-vanguardism that gets on my nerves once in awhile.

    Comment by Michael Hureaux — March 11, 2008 @ 1:16 pm

  6. sorry. numerous.

    Comment by Michael Hureaux — March 11, 2008 @ 1:17 pm

  7. —-Charles: This commentator doesn’t seem to take account of the Cuban and Venezuelan revolutions.—

    Badiou states:

    “But the second sequence in turn created a further problem, which it
    could not solve using the methods it had developed in response to the
    problems of the first. The party had been an appropriate tool for the
    overthrow of weakened reactionary regimes, but it proved ill-adapted
    for the construction of the ‘dictatorship of the proletariat’ in the sense
    that Marx had intended—that is, a temporary state, organizing the
    transition to the non-state: its dialectical ‘withering away’. Instead, the
    party-state developed into a new form of authoritarianism. Some of these
    regimes made real strides in education, public health, the valorization
    of labour, and so on; and they provided an international constraint on
    the arrogance of the imperialist powers. However, the statist principle
    in itself proved corrupt and, in the long run, ineffective. Police coercion
    could not save the ‘socialist’ state from internal bureaucratic inertia;
    and within fifty years it was clear that it would never prevail in the ferocious competition imposed by its capitalist adversaries.”

    Which is directly related to the Cuban and Venezuelan ‘revolutions’. When will the left give up on the dream that the global south will wage the revolution for us and start to build it in the north.

    Comment by Brad — March 12, 2008 @ 1:31 am

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