Just consider: it is a fact that the controversies in political economy over the problem of accumulation and the possibility of the realization of surplus value have gone on for a century; in the twenties, in Sismondi’s disputes with Say, Ricardo and MacCulloch,^[1] in the eighties and nineties between the Russian ‘Populists’^[2] and Marxists. The most distinguished political economists in France, England, Germany and Russia aired the question repeatedly, both before and after the appearance of Marx’s Capital. Wherever, under the impact of sharp social criticism, active intellectual life pulsated through political economy, the problem left no peace for the researchers. It is a fact that the second volume of Capital is not really a complete work, like the first, but only a torso, a loose collection of more or less finished fragments and drafts such as a researcher writes down for his own understanding, the elaboration of which was repeatedly held back and interrupted by illness. In particular, the analysis of the accumulation of gross capital, with which we are dealing here, came off worst, being the last chapter of the manuscript: out of a volume of 523 pages it accounts for a scanty thirty-five pages and breaks off in mid-flow.

It is a fact that this last section of the volume, as Engels testifies, seemed to Marx himself to be ‘in urgent need of revision’ and remains, according to the same testimony, ‘only a preliminary treatment of the subject’. As Marx, in the process of his analysis, dealt again and again with the problem of the realization of surplus value, his doubts appeared in ever different forms, and thus he certainly bore witness himself to the difficulty of the problem.

It is a fact that there are blatant contradictions between the premises of the short fragment at the end of the second volume, where Marx deals with accumulation, and the illustrations of the third volume, where he describes the ‘total movement of capital’. The same is true of many important laws in the first volume, which I refer to in detail in my book.

It is a fact that, since its first appearance on the stage of history, capitalist production has demonstrated its enormous attraction towards non-capitalist countries. It runs like a red thread throughout its development, grows ever more important until, in the last twenty-five years, in the epoch of imperialism, it appears directly as the determining and dominant factor in social life.

It is a fact that everyone knows that there never has been, nor does there exist at present, a country with exclusively capitalist production, where there are only capitalists and wage-earners. The society for which the premises of the second volume of Capital were designed does not exist anywhere in concrete reality.

And, despite all this, the official ‘experts’ of Marxism explain that there is no problem of accumulation, that everything has already been solved once and for all by Marx! They have never been disturbed by the remarkable precondition of accumulation in the second volume, they even failed to notice it as anything peculiar! And now that the situation has been pointed out to them they find this very strangeness quite in order. They cling doggedly to this idea and violently attack anyone who thinks he sees a problem where official Marxism has been nothing but self-satisfied for decades!

This is such a blatant case of epigonism’ that it can only be compared with an anecdotal event from the realms of pettifogging academics: the well-known story of the so-called ‘Blattversetzung’ of Kant’s Prolegomena.

For a century, the philosophical world argued passionately about the various problems of Kantian theory, and about the Prolegomena in particular; the meaning of Kant’s theory gave rise to whole schools which fought bitterly among themselves. But then Professor Vaihinger^[3] cleared up one of the most obscure of these problems in the simplest possible way – by pointing out that a part of paragraph 4 of the Prolegomena, which is in fact completely unrelated to the rest of the chapter, belonged in paragraph 2: it had just been detached by a printing error in the original edition and been put in the wrong place. And anyone who now reads the text straightforwardly can immediately see this. But not the cliquish academics who for a century had been constructing profound theories upon a printing error. And there actually was a pedantic academic, a professor in Bonn, who demonstrated in four indignant articles in the Philosophische Monatshefte that the ‘alleged “Blattversetzung”’ did not exist, that it was precisely this printing error which expressed the sole correct and unadulterated Kant, and that whoever dared to locate a printing error there had not understood the smallest grain of Kant’s philosophy.

This is the sort of way in which the ‘experts’ now cling on to the premises of the second volume of Marx’s Capital and the mathematical models which are built upon it. The main doubt of my critique is directed towards the fact that, on the question of accumulation, mathematical models can prove absolutely nothing, since their historical premise is untenable. The reply is: but the models work out exactly, so the problem of accumulation is solved – it simply doesn’t exist.

Here is an example of the orthodox cult of formulas.

In Neue Zeit Otto Bauer^[4] embarks on an investigation of the question I posed – how is surplus value realized – in the following fashion. He constructs four large tables of figures in which Roman letters alone, such as Marx used for the abbreviated annotation of variable and constant capital, are not enough. Bauer adds on a few Greek letters. This makes his tables look even more intimidating than all the models in Marx’s Capital. With this contraption he then tries to show how the capitalists, after renewing the used capital, dispose of the excess commodities which contain the surplus value which is to be turned into capital for them: ‘And furthermore (after replacing the old means of production), the capitalists want to use the surplus value accumulated in the first year to enlarge existing operations or establish new ones. If in the next year they want to use capital which has grown by 12,500 they must build new workshops, buy new machines and increase their supply of raw materials, etc., etc., this year.’^[5]

Thus the problem is said to be solved. If ‘the capitalists want’ to expand production, then of course they need more means of production than before and so act mutually as their own consumers. At the same time, they need more workers and more provisions for these workers, which they make themselves anyway. This deals with the entire surplus of means of production and provisions, and accumulation can begin. As one can see, everything depends on whether the capitalists ‘want’ to undertake an expansion of production. And why not? Well, of course, ‘they want to’. ‘Consequently, the entire productive value of both spheres, thus also the entire surplus value, is realized,’ Bauer explains triumphantly, and from this he concludes:

‘Similarly, Table IV clearly shows that the total productive value of both spheres is disposed of without any trouble and the total surplus value is realized, not only in the first year, but in each subsequent year. Comrade Luxemburg is thus incorrect in her assumption that the accumulated part of surplus value cannot be realized.’^[6]

Bauer has simply not noticed that he did not need nearly such long and detailed calculations with four tables, with wide, lengthy, oval-bracketed and four-storied formulas to reach this brilliant conclusion. The conclusion which Bauer has reached does not even follow from his tables; he simply takes it as given. Bauer simply assumes what was to be proven – that is all his whole ‘proof’ consists of.

If the capitalists want to enlarge production by as much as they possess in surplus capital, then all they have to do is put this surplus capital into their own production (providing, of course, that they produce absolutely all the necessary means of production and provisions themselves!) – then they are left with no unsaleable commodity surplus. Can anything be more simple, and are any nonsensical formulas with Roman and Greek letters needed actually to ‘prove’ something so obvious?

But then the question arose as to whether the capitalists, who of course always ‘want’ to accumulate, can also do so, that is, whether they can find a continually expanding market for expanded production, and where such a market is to be found? And the answer to that cannot come from any arithmetical operations with fictitious numbers on the paper, but only from an analysis of the socio-economic relations of production.

If one asks the ‘experts’: ‘Yes, all well and good, the capitalists “want” to expand production, but then who are they going to sell their increased amount of commodities to?’ they answer: ‘The capitalists will always consume this increasing amount of commodities themselves, because they always “want” to expand production.’

‘And the models show who buys the products,’ the Vorwärts reviewer, G. Eckstein, explains.^[7]

To be brief: each year the capitalists expand by exactly as much as they have ‘saved up’ in surplus value; they are their own consumers and thus the market does not bother them. This assumption is the starting-point of the whole ‘proof’. But a mathematical formulation is both unnecessary for this assumption and completely incapable of proving it. The naive idea that mathematical formulas could prove the main point here – the economic possibility of such an accumulation – is the amusing quid pro quo of the ‘expert’ custodians of Marxism. In itself it is enough to make Marx turn in his grave.

Marx himself never dreamed of presenting his own mathematical models as any sort of proof that accumulation was in fact possible in a society consisting solely of capitalists and workers. Marx investigated the internal mechanism of capitalist accumulation and established certain economic laws on which the process is based. He started roughly like this: if the accumulation of gross capital, that is, in the entire class of capitalists, is to take place, then certain quite exact quantitative relations must exist between the two large departments of social production: the production of means of production and the production of means of consumption. Progressive expansion of production and; at the same time, progressive accumulation of capital – which is the object of it all – can only proceed unhindered if such relations are maintained so that the one large department of production continuously works hand-in-hand with the other. Marx sketched a mathematical example, a model with imaginary numbers, to illustrate his thoughts clearly and exactly, and he uses it to show that if accumulation is to proceed, then the individual points in the model (constant capital, variable capital, surplus value) must behave in such and such a way to each other.

Clearly, for Marx, mathematical models are examples, illustrations of his economic thoughts, just as Quesnay’s Tableau économique^[8] was for his theory, or as the maps from various ages are illustrations of what were then dominant astronomical and geographical concepts. Whether the laws of accumulation which Marx constructed, or more exactly indicated sketchily, are correct or not can obviously be proved only by economic analysis, comparison with other laws set up by Marx, consideration of various consequences to which they lead, examination of the premises from which they proceed, and so on. But what is one to think of ‘Marxists’ who reject any such criticism as lunacy, since the correctness of the laws is proven by the mathematical models! I doubt whether accumulation could proceed in a society composed solely of capitalists and workers, such as the one on which Marx’s models are based, and I believe that the development of capitalist production cannot in general be fitted into a schematic relation between pure capitalist concerns at all. The answer of the ‘experts’ is: But it’s certainly possible! That is demonstrated brilliantly ‘by Table IV’, ‘and the models show ...’ – i.e. the fact that a row of numbers on a piece of paper thought up for the purpose of illustration can be added and subtracted at will!

In olden times people believed in the existence of all kinds of fabulous creatures: dwarfs, people with one eye, with one arm and leg, and so on. Does anybody believe that such creatures ever really existed? But we see them drawn in precisely on the old maps. Is that not proof that those conceptions of the ancients corresponded exactly with reality?

But let us take a dull example.

A costing is produced for the planned construction of a railway from town X to town Y; precise calculations are made as to how large the annual passenger and goods traffic has to be so that, apart from depreciation, running operational costs and the normal ‘reserves’, a ‘reasonable’ dividend can be distributed, shall we say first 5 per cent, then 8 per cent. Naturally, the central question for the founders of the railway company is whether they can expect the passenger and goods traffic on the proposed stretch which would ensure the profitability calculated in the costing. Clearly, the answer to this can only come from precise and basic facts about the previous traffic on the stretch, its importance for commerce and industry, the population growth of the adjacent towns and villages and other facts concerning economic and social relations. Now, what would one say to a man who exclaimed: You ask, where will the profit of the line come from? I beg your pardon, but that is down in black and white in the costing. You can read there that it comes from the passenger and goods traffic, and that the takings from this will provide first for a 5 per cent, then for an 8 per cent dividend. If you can’t see that, gentlemen, then you have simply completely misunderstood the nature, aim and significance of the costing.^[9]

In sober circles one would probably indicate, with a shrug of one’s shoulders towards the know-all, that he belonged in the lunatic asylum or the nursery. But among the official custodians of Marxism such know-alls form the ‘supreme court’ of ‘experts’ who give reports on whether other people have understood or misunderstood the ‘nature, aim and significance of Marx’s models’!

What, then, is the essence of the argument which the models allegedly ‘prove’? My objection was that, for accumulation to take place, it must be possible to sell commodities in increasing quantity in order to convert the profit inherent in them into money. Only then is it possible to continue expanding production, therefore to continue accumulation. Where do the capitalists as an entire class find this market? My critics answer that they form their own market. As they continually expand their own operations (or start new ones), they themselves need more and more means of production for their factories and provisions for their workers. Capitalist production is its own market, thus the latter grows automatically with the growth of production. But from the standpoint of capital the main question is: can capitalist profit be obtained or accumulated in this way? Only then could there be any talk of capital accumulation.

Let us take another simple example: capitalist A produces coal, capitalist B manufactures machines, capitalist C makes food. Let us imagine that these three capitalists form the entirety of capitalist employers. If B makes more and more machines, A can sell him more and more coal and thus can buy more and more machines from him, which he uses for mining. Both need more and more workers, and these need more and more provisions, so C too finds an ever greater market and thus he in turn becomes an ever larger consumer of both coal and machines. The whole thing revolves in ever higher circles – as long as we are wandering about in thin air. But let us examine the subject more concretely.

To accumulate capital does not mean to produce higher and higher mountains of commodities, but to convert more and more commodities into money capital. Between the accumulation of surplus value there always lies a decisive leap, the salto mortale of commodity production, as Marx calls it: selling for money. Is this perhaps only valid for the individual capitalist, but not for the entire class, for society as a whole? Definitely not. For in the social observation of phenomena ‘... we must not,’ says Marx, ‘lapse into the manner copied by Proudhon^[10] from bourgeois economy and look upon this matter as though a society with a capitalist mode of production, if viewed en bloc, as a totality, would lose this its specific historical and economic character. No, on the contrary. We have, in that case, to deal with the aggregate capitalist.’^[11]

Now, the accumulation of profit as money profit is just such a specific and quite essential characteristic of capitalist production, and is as valid for the class as it is for the individual employer. Marx himself also emphasizes, precisely with the observation of the accumulation of gross capital, ‘... the formation of new money capital which accompanies actual accumulation and necessitates it under capitalist production ...’^[12] And in the process of his investigation he returns again and again to the question: how is it possible for the class of capitalists to accumulate money capital?

Let us now examine the intelligent conception of the ‘experts’ from this point of view. Capitalist A sells his commodities to B, and so receives surplus value in money from B. The latter sells his commodities to A and receives the money back from A, which converts his surplus value into money. Both sell their commodities to C and so also receive a sum of money for their surplus value from the same C. But where does the latter get his money from? From A and B. According to our premise there are no other sources for the realization of surplus value, i.e. no other commodity consumers. But can new money capital be formed in this way to enrich A, B and C? Let us for a moment assume that with all three the quantity of commodities for exchange grows, production expands uninterrupted, and therefore, the amounts of surplus value expressed in commodities can grow. Exploitation is complete, the possibility of enrichment, of accumulation, has come. But exchange, the realization of the increased surplus value in increased new money capital, has to take place in order for possibility to become reality. Notice that we do not ask here, as Marx often does in the second volume of Capital: where does the money for the circulation of surplus value come from? to answer finally: from the gold-miner. We ask rather: how does new money capital come into the pockets of the capitalists, since (apart from the workers) they are the only ones who can consume each other’s commodities? Here money capital wanders continuously out of one pocket into the other.

But wait: perhaps such questions are putting us on quite the wrong track. Perhaps profit accumulation does take place in this ceaseless wandering from one capitalist’s pocket into the other, in the successive realization of private profits, where the aggregate amount of money capital does not even have to grow, because such a thing as the ‘aggregate profit’ of all capitalists does not exist outside of obscure theory?

But – oh dear – such an assumption would simply lead us to throw the third volume of Marx’s Capital into the fire. For the doctrine of average profit, one of the most important discoveries of Marx’s economic theory, is central to its argument. This alone gives concrete meaning to the theory of value in the first volume – on which are based both the theory of surplus value and the second volume, so these would also have to find their way into the fire. Marx’s economic theory stands and falls with the concept of gross social capital as a concrete amount, which finds its tangible expression in aggregate capitalist profit and its distribution, and whose invisible movement initiates all visible movements of individual sums of capital. Gross capitalist profit is, in fact, a much more material economic amount than, for instance, the total sum of paid wages at any given time. For the latter appears as a statistical number only after retrospective addition over a period of time, whilst aggregate profit, on the other hand, expresses itself in the economic mechanism as a whole, since competition and price fluctuation are always distributing it among individual sums of capital as average profit or as extra profit.

So the problem remains: gross social capital continually realizes an aggregate profit in money-form, which must continually grow for gross accumulation to take place. Now, how can the amount grow if its component parts are always circulating from one pocket to another?

It would appear that – as we have assumed up until now – at least the aggregate amount of commodities which contain the profit can grow in this way, and the only difficulty lies in supplying the money, which is perhaps only a technical question of money circulation. But only apparently, superficially. The aggregate amount of commodities will not increase, expansion of production cannot take place, because in capitalist production the essential precondition for this is conversion into money, the universal realization of profit. The sale of increasing amounts of commodities, and the realization of profit, from A to B, B to C and C back again to A and B can only take place if at least one of them can in the end find a market outside the closed circle. If this does not happen the roundabout will grind to a halt after only a few turns.

On the basis of this one can appreciate the profundity of my ‘expert’ critics when they exclaim:

When Comrade Luxemburg continues: We are clearly going round in circles. From the point of view of the capitalists it is absurd to produce more means of consumption just to maintain more workers, and to produce more means of production just to give this increased labor force something to do! – it is difficult to fathom the relevance of these words to Marx’s models. The object of capitalist production is profit: this comes to the capitalists from the process described, and is therefore not the least bit absurd from the capitalist point of view; on the contrary, from this point of view it is the very embodiment of reason, i.e. of the striving after profit.^[13]

In point of fact, it is ‘difficult to fathom’ which is greater here, the naively admitted complete incapability of going deeply into the basic Marxist theory of gross social capital as opposed to individual capital, or the complete lack of comprehension of the question I posed. I say: production to an ever greater extent for production’s sake is, from the capitalist point of view, absurd, because in this way – according to the premise which the ‘experts’ cling to – it is impossible for the entire class of capitalists to realize profit, and therefore to accumulate. The answer is: But that is by no means absurd, because that is the way profit is accumulated! And how do you know that, oh experts? Now, it is shown ... in the mathematical models that profit is in fact accumulated. In those models, into which we have arbitrarily written rows and rows of numbers, with which mathematical operations run faultlessly, and in which money capital is entirely neglected.

Clearly, all criticism must hopelessly shatter itself against these sturdy ‘experts’, because the experts simply look from the point of view of the individual capitalists, which is to some degree sufficient for the analysis of exploitation, i.e. of the process of production, and thus to understand the first volume of Capital, but is totally insufficient where the circulation and reproduction of capital are concerned. The second and third volumes of Marx’s Capital, which are illumined by the basic concept of gross social capital, are for them dead capital, in which they have learned letters, formulas, ‘models’, but have missed the essence. Marx himself was certainly no ‘expert’. For he was not content with the arithmetical ‘process’ of his models; again and again, he asked: how is it possible for general accumulation to take place, for new money capital to be formed in the class of capitalists? It has always been the privilege of the ‘epigones’ to take fertile hypotheses, turn them into rigid dogma, and be smugly satisfied, where a pioneering mind was filled with creative doubt.

The ‘experts’, point of view, however, leads to a string of intriguing consequences, which they have obviously not taken the trouble to think over.

First consequence: if capitalist production can act limitlessly as its own consumer, i.e. production and market are identical, it becomes totally impossible to explain the periodic appearance of crises. If production can, ‘as the models show’, accumulate at will by using its own growth for new expansion, it is puzzling how and why circumstances can arise where capitalist production cannot find a sufficient market for its commodities. According to the formula of the experts, all it has to do is swallow up the commodity surplus itself, and put it into production (partly as means of production, partly as provision for the workers), ‘in each subsequent year’ as Otto Bauer’s ‘Table IV’ shows. The indigestible commodities would then be converted into the new blessing of accumulation and profit-making. At all events, it turns the specific Marxist concept of crisis into an absurdity, according to which crises come from the tendency of capital to outgrow each given limit to the market in ever shorter time. For how could production outgrow the market, since it is its own market, thus the market automatically grows as fast as production? In other words, how could capitalist production periodically outgrow itself? It could do it as easily as someone can jump over his own shadow. The capitalist crisis becomes an inexplicable phenomenon. Or there is only one explanation left for it: the crisis does not come from the incongruity between the ability of capitalist production and that of the market to expand, but only from the disproportionate relations between different branches of capitalist production. In themselves, these could be quite sufficient consumers for themselves, except that, as a result of anarchy, several things are not correctly proportioned, too much of one, too little of the other being produced. This would mean rejecting Marx and finally ending up with the man whom Marx ridiculed so thoroughly, the patriarch of vulgar economics, of the Manchester theory and bourgeois harmony, the ‘wretched man’, Say, who in 1803 propounded the dogma: It is absurd to say that too much of all commodities can be produced, there can only be partial crises, but no general ones: if for this reason a country has too much of one kind of product, that only proves that it has produced too little of some other kind.

Second consequence: capitalist accumulation becomes (objectively) limitless once capitalist production has built a sufficient market for itself. As production will still grow, i.e. the productive forces will develop without limit, even when all mankind is divided into capitalists and proletarians, as there is no end to the economic development of capitalism, the one specifically Marxist foundation crumbles. According to Marx, the rebellion of the workers, the class struggle, is only the ideological reflection of the objective historical necessity of socialism, resulting from the objective impossibility of capitalism at a certain economic stage. Of course, that does not mean (it still seems necessary to point out those basics of Marxism to the ‘experts’) that the historical process has to be, or even could be, exhausted to the very limit of this economic impossibility. Long before this, the objective tendency of capitalist development in this direction is sufficient to produce such a social and political sharpening of contradictions in society that they must terminate. But these social and political contradictions are essentially only a product of the economic indefensibility of capitalism. The situation continues to sharpen as this becomes increasingly obvious. If we assume, with the ‘experts’, the economic infinity of capitalist accumulation, then the vital foundation on which socialism rests will disappear. We then take refuge in the mist of pre-Marxist systems and schools which attempted to deduce socialism solely on the basis of the injustice and evils of today’s world and the revolutionary determination of the working classes.^[14]

Third consequence: when capitalist production builds itself a sufficient market and permits expansion of the total accumulated value, there appears another riddle of modern development: competition for the most distant markets and capital exports, the most dominant feature of modern imperialism. Indeed incomprehensible! Why all this fuss? Why conquer colonies, why the opium wars of the forties and sixties, why the squabble for swamps in the Congo, for Mesopotamian deserts? Capital should stay at home and earn an honest living. Krupp should go along and produce for Thyssen, Thyssen for Krupp, let them invest their capital in their own enterprises and expand them mutually, and so on and so on. The historical movement of capital, and with it modern imperialism, becomes quite incomprehensible.

But there is still Pannekoek’s invaluable statement in the Bremer Bürgerzeitung: the search for non-capitalist markets is ‘a fact, but not a necessity’ – a real pearl of historical materialism, and he is dead right! According to the assumption of the ‘experts’, socialism as the final stage, with imperialism as its predecessor, ceases to be a historical necessity. The one becomes the laudable decision of the working class; the other is simply a vice of the bourgeoisie.

So the ‘experts’ are faced with having to choose between two alternatives. Either – as they deduce from Marx’s models – capitalist production is identical with its market, and the historical materialist explanation for imperialism disappears, or capital accumulation can only take place in so far as customers can be found beyond capitalists and workers, in which case growing sales in non-capitalist strata and countries are the essential precondition for accumulation.

Despite my isolation I do have a truly non-suspect and also very ‘expert’ crown witness for the above consequences.

In 1902 a book was published by the Russian Marxist, Professor Michael V. Tugan-Baranovsky, The Theory and History of Crises in England. Tugan revised Marx by gradually replacing his theory with the clichéd wisdoms of bourgeois vulgar economists. Among other paradoxes, he claims that crises are merely the result of maladjustments, not of the ability of production to expand faster than the ability of the population to consume. What was so novel and astonishing about this wisdom (which he borrowed from Say) was that he used Marx’s models of social reproduction in the second volume of Capital to prove it!

‘It is only possible’, says Tugan, ‘to expand social production if the productive forces are sufficiently developed. Thus, demand must also undergo a similar expansion in the proportional division of social production, since under these conditions every newly produced commodity represents new purchasing power for the acquisition of other commodities’ (p.25)^[14a].

The ‘proof’ for this comes from Marx’s models, which Tugan has only reproduced with different figures, and which lead him to conclude:

‘The object of the above models is to prove something which in itself is very simple, but is frequently objected to be due to an insufficient understanding of the process of the reproduction of social capital, to prove in fact the basic thesis that social production creates its own market.’ (My emphasis – R.L.)

Carried along by his preference for paradoxes Tugan-Baranovsky arrives at the conclusion that capitalist production is ‘in a certain sense’ quite independent of human consumption. Anyway, we are not interested here in Tugan’s jokes, but only in the ‘actually very simple basic principle’ on which he constructs all that follows. And there we have to note:

What my ‘expert’ critics are holding against me now was said by Tugan-Baranovsky, word for word, in 1902, specifically in two typical assertions: (1) capitalist production builds a market for itself through its own expansion, so that the sales outlet should pose no difficulties for accumulation (apart from lack of proper proportion); (2) the proof that this is so is provided by mathematical models such as those used by Marx, i.e. exercises in addition and subtraction on uncomplaining paper. Thus spoke Tugan-Baranovsky in 1902. Then the man had a tough time. Immediately, Karl Kautsky started on him in Neue Zeit; he mercilessly criticized the absurdities of the Russian revisionist, including the above-mentioned ‘basic principle’.

If that were true (wrote Kautsky), the greater its capital wealth is, the faster England’s industry would have to grow. But instead, it is coming to a standstill, capital is emigrating to Russia, South Africa, China, Japan and so on. This phenomenon is explained by our theory, according to which under-consumption is the ultimate cause of crises; it is incomprehensible from Tugan-Baranovsky’s point of view.^[15]

Now, what is the theory that Kautsky opposes to Tugan’s? Here it is, in Kautsky’s own words:

Although capitalists increase their wealth and the number of exploited workers grows, they cannot themselves form a sufficient market for capitalist-produced commodities, as accumulation of capital and productivity grow even faster. They must find a market in those strata and nations which are still non-capitalist. They find this market, and expand it, but still not fast enough, since this additional market hardly has the flexibility and ability to expand of the capitalist process of production. Once capitalist production has developed large-scale industry, as was already the case in England in the nineteenth century, it has the possibility of expanding by such leaps and bounds that it soon overtakes any expansion of the market. Thus, any prosperity which results from a substantial expansion in the market is doomed from the beginning to a short life, and will necessarily end in a crisis.

This, in short, is the theory of crises which, as far as we can see, is generally accepted by ‘orthodox’ Marxists and which was set up by Marx.^[16]

Let us forget that Kautsky calls this theory by the dubious name of an explanation of crises caused ‘by under-consumption’. Marx ridicules this in the second volume of Capital (p.410).

Let us forget that Kautsky sees only the problem of crises, without noticing that capitalist production poses a problem apart from ups and downs in the state of business.

Finally, let us forget that Kautsky’s explanation – that the consumption of capitalists and workers does not grow ‘fast enough’ for accumulation, which therefore needs an ‘additional market’ – is rather vague and makes no attempt to understand the problem of accumulation in its exact terms.

We are only interested in what Kautsky shows in black and white as his own and the commonly accepted opinion among ‘orthodox Marxists’:

1. That capitalists and workers alone do not represent a sufficient market for accumulation.
2. That capitalist accumulation needs an additional market in non-capitalist strata and nations.

So far one thing is certain: in 1902, when attacking Tugan-Baranovsky, Kautsky refuted the same assertions which the ‘experts’ use to oppose my Accumulation, and the ‘experts’ attack as a horrible deviation from the true faith the same assertions, only this time dealing with the problem of accumulation in an exact manner, which Kautsky used in opposition to the revisionist Tugan-Baranovsky as the theory of crises ‘generally accepted’ by orthodox Marxists.

And how does Kautsky prove the untenability of his opponent’s thesis? Just by using Marx’s models? Kautsky shows Tugan that, even when properly used, these models do not prove his thesis but, on the contrary, prove the theory of crises as caused by ‘underconsumption

The world shakes to its very foundations. Has the supreme expert ‘understood’ the ‘nature, aim and significance of Marx’s models’ even less than Tugan? ...

But Kautsky draws some interesting conclusions from Tugan-Baranovsky’s assertion. That this assertion straightforwardly contradicts Marx’s theory of crises, that it makes the export of capital to non-capitalist countries an inexplicable phenomenon, we have already seen. And now the general tendency of this position:

What practical importance ... do our theoretical differences have? (asks Kautsky) Whether crises are caused by unstable proportions in social production or by under-consumption – is that anything more than an academic question?

That is what many ‘practical’ men might think. But in fact the question is of great practical importance, especially for tactical differences which are being discussed in our party. It is no mere accident that revisionism attacks Marx’s theory of crises with particular vigor.

And Kautsky demonstrates explicitly that Tugan-Baranovsky’s theory of crises basically leads to an alleged ‘moderation of class contradictions’. That means it is in the tradition of the theory that believes in the ‘change of social democracy from a party of proletarian class struggle into a democratic party on the left wing of a democratic party of socialist reform’.^[17]

This is how the supreme expert slew the heretic Tugan-Baranovsky fourteen years ago on thirty-six printed pages of Neue Zeit, finally walking away with his victim’s scalp in his belt.

And now I must stand by and watch the ‘expert’ pupils of this master damn my analysis of accumulation with the same ‘basic principle’ that cost the Russian revisionist his life in the hunting grounds of Neue Zeit! It is not quite clear what happens in this adventure to the ‘theory of crises which, as far as we can see, is generally accepted by orthodox Marxists’.

But something even more original happened. After my Accumulation had been destroyed with Tugan-Baranovsky’s weapons in Vorwärts, the Bremer Burgerzeitung, Dresdener Volkszeitung and the Frankfurter Volksstimme, Otto Bauer’s critique appeared in Neue Zeit. This expert also believed in the magical power of mathematical formulas to prove questions of social reproduction, as we have seen. But he is still not completely satisfied with Marx’s models. He finds them ‘not incontestable’, ‘arbitrary and not without contradictions’, which he explains by the fact that Engels ‘found this part unfinished’ in his master’s notebooks! He therefore goes to all the trouble of constructing his own formulas: ‘That is why we have constructed models which, once one accepts the assumptions, are not arbitrary.’ Only with this new model does Bauer believe he has found ‘an incontestable basis on which to approach the problems posed by Comrade Luxemburg’.^[18] But above all, Bauer has understood that capitalist production cannot float around in thin air ‘undisturbed’. He therefore looks for some objective social basis for capital accumulation, which he finally finds in the growth of the population.

And here begins the most absurd bit. The unanimous judgment of the ‘experts’, with the corporate blessing of the editorial staff of Vorwärts, declares my book to be arrant nonsense, total misunderstanding, the problem of accumulation simply does not exist, Marx already solved it, the models give a sufficient answer. Bauer is now forced to place his models on a slightly more material basis than the simple rules of addition and subtraction: he takes account of a certain social phenomenon – population growth; it is on the basis of this that he constructs his tables. The expansion of capitalist production, as his models are supposed to demonstrate, is not an autonomous movement of capital around its own axis, but follows the corresponding growth of the population:

Accumulation presupposes expansion of the range of production, and this expands through population growth ... In capitalist production there is a tendency for capital accumulation to adjust to the growth of population ... The tendency for accumulation to adjust to the population growth determines the international relations [of capital – Trans.] ... When the capitalist world economy is seen as a whole, the tendency in the industrial cycle to adjust accumulation to the population growth becomes visible ... The periodic return of prosperity and of the crisis of depression is the empirical expression of the fact that the mechanism of capitalism acts to cancel overaccumulation and underaccumulation and continually readjusts accumulation to the population growth.^[19]

Later we will take a closer look at Bauer’s population theory. But one thing is certain: the theory actually represents something quite new. For the other ‘experts’, all questions about the social and economic foundation of accumulation seemed pure nonsense, ‘indeed difficult to discover’. Bauer, on the other hand, constructs a whole theory to answer this question.

Yet Bauer’s theory is not only a novelty to the other critics of my book; it makes its very first appearance in the whole of Marxist literature. Neither in the three volumes of Marx’s Capital nor in Theories of Surplus Value or in Marx’s other writings do we find a trace of Bauer’s population theory as the basic principle of accumulation.

Let us take another look at the way in which Karl Kautsky announces and reviews the second volume of Capital in Neue Zeit. In the detailed contents of accumulation in the second volume Kautsky deals very thoroughly with the first paragraphs on circulation, showing all the formulas and cyphers as Marx uses them. He then dedicates three whole pages out of a total of twenty to the most important and original part of the volume, the Reproduction and Circulation of Aggregate Social Capital. In these three pages he deals exclusively – with, of course, complete reproduction of the unavoidable formulas – with the introductory fiction of simple reproduction’, i.e. capitalist production without profit, which Marx himself only takes as a theoretical starting point from which to approach the actual problem, the accumulation of the aggregate capital. Kautsky settles this latter problem in literally two lines: ‘Accumulation of surplus value, the expansion of the productive process, brings further complications.’ Full stop. Not another word at the time, just after the publication of the second volume, and not another word in the thirty years since then. Thus not only do we find no trace of Bauer’s population theory, Kautsky also completely failed to notice the whole section on accumulation.

He does not notice any special problem (like Bauer creating an ‘unobjectionable principle’ for its solution), nor the fact that Marx stops in the midst of his own investigation without an answer to the question he posed himself several times.

Once again (in the previously mentioned series against Tugan-Baranovsky) Kautsky talks about the second volume of Capital. Here he formulates the crisis theory, ‘commonly accepted by orthodox Marxists’, of which the central point is that consumption by capitalists and workers is insufficient as a basis for accumulation, and that an additional market is necessary in the ‘pre-capitalist producing strata and nations’. Kautsky does not seem to be aware that this ‘commonly accepted’ theory of crises neither fits Tugan-Baranovsky’s paradoxes nor his own model of Marxist accumulation with its general preconditions. This is because the premise in Marx’s analysis in the second volume is a society of capitalists and workers only. The models are to show in detail as economic law, how those two insufficient consumer classes make accumulation possible year after year merely by consuming. Kautsky does not even give us the slightest hint of a population theory such as that used by Bauer as the true principle of Marx’s model of accumulation.

Let us look at Hilferding’s Finance Capital.^[20] In Chapter XVI, after an introduction in which he praises Marx’s illustration of the conditions of reproduction of gross capital as the most brilliant effort in this ‘astonishing work’ – and indeed he is correct – he copies word for word on fourteen pages the relevant pages in Marx, including of course the mathematical models. Here he moans that these models have been neglected and only attracted some attention thanks to Tugan-Baranovsky. And what does Hilferding himself notice in the whole brilliant effort? Here are his conclusions:

Marx’s models show

that in capitalist production reproduction can take place on a simple as well as an extended scale, if only these relations can be kept stable. On the other hand even simple reproduction can produce crises if the proportions are upset; for instance that between used-up capital and capital that must be invested. It does not necessarily follow that the cause of the crisis lies in the under-consumption of the masses, which is inherent in capitalist production.

Neither does the possibility of general over-production follow from the models: rather one can show that any expansion of production is possible which takes place within the limits of the existing productive forces.^[21]

That is all. Hilferding, too, sees Marx’s analysis of accumulation as only a guide for the solution of the crisis problem. The mathematical models show the proportion which, if it is followed, allows undisturbed accumulation. From this Hilferding draws these conclusions:

1. Crises only develop from disproportionality. In this he sinks the ‘commonly accepted theory of crisis’ into the deep sea and he takes over Tugan-Baranovsky’s theory, condemned by Kautsky as revisionist heresy. Following this, he concludes with the theory of this ‘wretched man’, Say: general over-production is impossible.
2. Apart from crises as periodic interferences due to the lack of proportionality capital accumulation (in a society of only capitalists and workers) can expand as far as the actual productive forces allow, in which he again copies Tugan word for word.

Apart from crises, a problem of accumulation does not exist for Hilferding since the models show that ‘any expansion’ is limitlessly possible, i.e. that production and sales grow simultaneously. Again, no trace of Bauer’s ‘growth of population’ theory and no idea that such a theory was necessary.

Finally, even for Bauer himself his present theory was a new discovery. Only in 1904, after the arguments between Kautsky and Tugan-Baranovsky, does he especially deal with the theory of crises in the light of Marx’s theory. In two articles in Neue Zeit he himself explains that for the first time he wants to give a coherent elaboration of this theory. But he attributes the crises mainly to the special form of circulation, the ‘fixed capital’, making use of a phrase in the second volume of Capital, which tries to explain the ten-year cycle of modern industry. Not once does Bauer mention the basic importance of the relation between the expansion of production and the growth of population. Bauer’s whole theory, the ‘tendency to adjust to the growth of population’ which now explains the crises and the booms, the accumulation and the international movement of capital from country to country, and finally even imperialism: this supernatural law, which moves the whole mechanism of capitalism and ‘rules it automatically’ existed for neither Bauer nor the rest of the world. Now, in answer to my book, it has become the basic theory, the only theory, to put Marx’s models on an ‘incontestable foundation’. Suddenly and casually this basis appears, in order to solve the problem which allegedly did not exist at all.

What shall we think about all the other ‘experts’? Let us summarize what has been said:

1. According to Eckstein and Hilferding (and Pannekoek as well) a problem of capital accumulation does not exist. Everything, needless to say, is as clear as Marx’s formulas demonstrate. It is only because I am totally incapable of understanding the formulas that I am critical of them. According to Bauer, the figures used by Marx are ‘arbitrarily chosen and not free of contradictions’. Only he, Bauer, has found an ‘adequate illustration for Marx’s thoughts’ and put up a ‘model free from arbitrariness’.
2. According to Eckstein and the editorial staff of Vorwärts, my book has to be ‘rejected’ as totally worthless. According to the little ‘expert’ of the Frankfurter Volksstimme (1 February 1913) it is even highly damaging. According to Bauer there ‘is still a valid kernel hidden in the wrong explanation’: it points out the limit of accumulation of capital (Neue Zeit, 1913, No.24, p.873 {p.108}).
3. According to Eckstein and Vorwärts, my book has not the slightest thing to do with imperialism; ‘as things stand the book has so little to do with the new phenomena of today’s pulsating economic life, that it could have been written just as well twenty or more years ago’. According to Bauer, my research discovers in fact ‘not the sole ... but only one root of imperialism’ (ibid., p.874 {p.109}) which for a little person like me is quite a nice achievement.
4. According to Eckstein, Marx’s models show ‘the actual extent of social needs’; they show ‘the possibility of equilibrium’ from which capitalist reality is distant since it is governed by striving for profit, resulting in crises. Early in the next paragraph ‘the illustration corresponds to Marx’s model, but also to reality’, because the model demonstrates precisely ‘how this profit is realized for the capitalist’.^[22]
   
   According to Pannekoek, there is no state of equilibrium, but only ‘empty blue sky’; ‘the extent of production can be compared to a weightless thing floating at any level’. ‘For the extent of production is in no state of equilibrium to be drawn back when it deviates.’ The industrial cycle is not a fluctuation around an average, which is defined by some demand.’^[23]
   
   According to Bauer, Marx’s models – he having finally found their true meaning – mean nothing but the movement of capitalist production in adjustment to population growth.
5. Eckstein and Hilferding believe in the objective economic possibility of limitless accumulation; ‘the models show who buys the products’ (Eckstein). Pannekoek’s ‘weightless thing’ can all the more ‘float at any level’, as he says himself. According to Hilferding, ‘any expansion of production is possible that takes place within the limit of the existing productive forces’ because, as the models show, ‘the outlet grows automatically with production’. According to Bauer, ‘only the apologists for capitalism can talk of the endlessness of accumulation’ and assert that ‘with the production the consumption power grows automatically’.^[24]

How does it stand now? What do the gentlemen of the jury mean? Was there a problem of accumulation with Marx which none of us had noticed until now, or is the problem still (even after its latest solution by Bauer) the product of my ‘total inability to work with Marx’s models’, as the Vorwärts reviewer said? Are Marx’s models the ultimate truth, infallible dogma or are they ‘arbitrary and not free from contradictions’? Does the problem I dealt with delve to the roots of imperialism, or has it not the ‘slightest thing to do with the phenomena of today’s pulsating economic life’? And what do those (as Eckstein calls them) ‘now famous’ models of Marx finally illustrate – only a theoretical state of equilibrium of production, or a picture of reality, a proof of the possibility of ‘expansion’, or a proof of its impossibility in the face of under-consumption, or an adjustment of production to population growth, or Pannekoek’s ‘weightless’ children’s balloon, or something else altogether, perhaps a camel or a weasel? It is about time the ‘experts’ started making up their minds.

Meanwhile let us look at a beautiful picture of clarity, harmony and perfection of official Marxism in relation to the fundamental section of the second volume of Capital. A fitting reply to the arrogance of these gentlemen who attacked my book so viciously.^[25]

Since Otto Bauer has relieved me of the bother of arguing with the other ‘experts’, I can now turn to Bauer himself.

Footnotes

^[1]. [Sismondi, Say, Ricardo and MacCulloch, economists of the early nineteenth century. For exposition and criticisms of their respective ideas see Marx, Capital, Vols. I, II, and III, also Theories of Surplus Value. For a concise account see Eric Roll, A History of Economic Thought (Faber & Faber, London 1962). See also Rosa Luxemburg, The Accumulation of Capital.]

^[2] [Populists or Narodniks. A group from the Russian intelligentsia who, in the 1870s, were active in attempting to arouse the peasants against the Czar. This revolutionary activity was known as ‘going to the people’. It was largely a failure, and the most determined elements of the movement then resorted to acts of terrorism. They assassinated Czar Alexander II on 1 March 1881. Thereafter the movement declined.]

^[3] [Hans Vaihinger (1854-1933). German philosopher of the ‘as if’. Founded the journal Kant-Studien. Main work: The Philosophy of ‘As If’, English translation C.K. Ogden (New York 1924). See also W. Del Negro, Hans Vaihinger’s Philosophisches Werk mit besonderer Berucksichtigung seiner Kantforschung, in Kant-Studien (1934), pp.316-27.]

^[4] [Otto Bauer (1881-1938). Born in Vienna. In 1907 became Secretary to the Parliamentary Group of the Austro-Hungarian Social Democratic Party. Became one of the party’s leading theorists after the publication of The Question of Nationalities and Austrian Social Democracy, and was a frequent contributor to Der Kampf, the theoretical journal of the Austrian SDP. Served as a conscript in the Austro-Hungarian army after August 1914. Was captured in the autumn of 1914 by the Russians and spent the rest of the war as a prisoner until he was repatriated in August 1917. Whilst in Russia he learned to speak Russian. He was sympathetic to the Martov-Internationalist wing of the Mensheviks but was a critical supporter of the Bolshevik revolution in 1917. After the fall of the Hapsburg monarchy Bauer served as a Foreign Secretary in the Social Democratic government. In the 1920s he attempted to bridge the gulf between Social Democracy and the new Communist Parties, seeking to re-unite the workers’ parties nationally and internationally. Before 1914 Bauer was also a frequent contributor to Neue Zeit (see next note) and influenced the German party, particularly on the national question.]

^[5]Neue Zeit, 1913, No.24, p.863. [Neue Zeit was the central theoretical journal of the German Social Democratic Party (SPD). Edited by Karl Kautsky.] {English translation: Otto Bauer’s Accumulation of Capital, History of Political Economy, 1986, 18:1, pp.87-110 – p.97.}

^[6]ibid., p. 886. {Table 7 in the English translation, p.100.}

^[7]Vorwärts, 16 February 1913. Likewise A. Pannekoek [see below] in the Bremer Bürgerzeitung of 19 January 1913: ‘The model itself gives the answer very simply, for all products find their market there (i.e. on the paper of the Bremer Bürgerzeitung). The capitalists and the workers themselves are the consumers ... There is, therefore, absolutely no problem to be solved.’

[Gustav Eckstein. Austrian. Contributed to Der Kampf and Neue Zeit. Author of a book on the family, being a sociological study mainly based on Japanese family, traditions and law. This was published in Marx-Studien and Eckstein was considered to be one of the founders of the Austro-Marxist school (see note 26.]

[Dr Anton Pannekoek. Dutch astronomer. Lectured at the Central Party School of the SPD before 1914 until the Prussian police threatened to deport him. After this, he became active in Bremen as a part of the Bremen SPD left. Was active in Dutch Communist affairs after 1918, again supporting the Dutch Communist left. Was an enthusiastic supporter of workers’ control of production and of workers’ councils as a form of government.]

^[8] [Tableau economique, used by Quesnay to illustrate his views on the division of society into economic classes. These were the productive class which consisted of all those engaged in agriculture, the class which lived from the surplus, landlords, the Church, etc. and the sterile class which consisted of all those engaged in manufacturing industry. For a full exposition with diagrams see Paul M. Sweezy, The Theory of Capitalist Development.]

^[9] ‘And the models show who buys the products’: ‘Comrade Luxemburg has simply basically misunderstood the nature, aim and significance of Marx’s models.’ Eckstein, Vorwärts, 16 February 1913, supplement.

^[10] [Proudhon (1809-64). French socialist, mainly remembered today because of Marx’s polemic against him, The Poverty of Philosophy. Although he died relatively young Proudhon was a prolific writer. For bibliography see Henri de Lubac, S.J., The Un-Marxian Socialist, Sheed & Ward, London 1948.]

^[11]Capital, Vol.II, p.433.

^[12]Ibid, p.507.

^[13] Eckstein, Vorwärts, 16 February 1913, supplement.

^[14] Or else we are left with the somewhat oblique comfort provided by a little ‘expert’ from the Dresdener Volkszeitung who, after thoroughly destroying my book, explains that capitalism will eventually collapse ‘because of the falling rate of profit’. One is not too sure exactly how the dear man envisages this – whether the capitalist class will at a certain point commit suicide in despair at the low rate of profit, or whether it will somehow declare that business is so bad that it is simply not worth the trouble, whereupon it will hand the key over to the proletariat? However that may be this comfort is unfortunately dispelled by a single sentence by Marx, namely the statement that ‘large capitals will compensate for the fall in the rate of profit by mass production’. Thus there is still some time to pass before capitalism collapses because of the falling rate of profit, roughly until the sun burns out.

^[14a] {Michael von Tugan-Baranowsky, Chapter 1. The Fundamental Causes of Crises in the Capitalist Economy, Tr. Alejandro Ramos-Martinez, Value, Capitalist Dynamics and Money, 18, p.71.}.

^[15]Neue Zeit, 1902, No.5 (31), p.140.

^[16]Neue Zeit, No.3 (29), p.80. (My emphasis, – R.L.)

^[17]Neue Zeit, No.5 (31), p.141.

^[18]Neue Zeit, 1913, No.23, p.838. {pp.96-97}

^[19]Neue Zeit, 1913, No.24, pp.871-3. (All emphasis by Bauer.) {pp.104-107}

^[20] [Rudolf Hilferding (1877-1944). Austrian. One of the editors of Marx-Studien. Left Vienna in 1907 to go to Berlin where he was given the post of leader-writer on Vorwärts. His main contribution to Marxist theory was Das Finanzkapital, published in 1910. This was one of the first Marxist interpretations of the growth of monopoly and imperialism. In 1914 he was part of the minority in the SPD which was against the voting for war credits in the Reichstag by the SPD parliamentary group. He later became a leader of the USPD (Independent Social Democratic Party) formed in 1917. This party was opposed to the war and Luxemburg, Liebknecht and Mehring took their followers into this until the creation of the Spartakusbund. In 1918, with the creation of the Republic, Hilferding became a German citizen. In 1922 he led the remnants of the USPD back into the SPD. The majority of the Independents had voted to join the Third International in 1920 and had fuzed with the KPD (Spartakusbund). Hilferding became Finance Minister in the Social Democratic governments of 1923 and 1928.]

^[21] Hilferding, Finance Capital, p.318. {English translation: p.256}

^[22]Vorwärts, 16 February 1913, supplement.

^[23]Neue Zeit, 1913, No.22, Theoretisches zur Ursache der Krisen, pp.783, 792.

^[24]Neue Zeit, 1913, No.24, p.873. {p.108.}

^[25] The reviewer of Vorwärts, Eckstein, of all my critics, has understood least what it is all about. He belongs to the category of journalists who came up with the growth of the working-class press. He can write anything about anything: Japanese family laws, modern biology, the history of socialism, ethnography, culture, economics, tactical problems – whatever is needed at the time. These universal writers move about in every sector of knowledge with such scrupulous safety that they are the envy of any serious scientist. Where they have no understanding of the matter, they replace it by becoming impudent and tough. Here are two examples:

‘Let us recognize here and now’, says Eckstein at one point in his review, ‘that the author has misunderstood the meaning and purpose of Marx’s analysis, and this recognition is confirmed by the remainder of her book. Above all, she is completely incapable of understanding the technique of these models. This is already quite clear on p.100 of her book.’

There I am dealing with the fact that in his models Marx includes the production of money in the department of means of production. I criticize this in my book and attempt to demonstrate that, since in itself money is not a means of production, this confusion must inevitably result in great difficulties for a precise treatment of the subject. Eckstein carries on impudently:

‘Comrade Luxemburg objects that Marx incorporates the production of money-materials, i.e. gold and silver, in row I and calculates it with the production of means of production. That is supposed to be incorrect. For this reason she adds a third row to those constructed by Marx, which is supposed to represent the production of money-materials.’

And now he is bitterly disappointed!

‘In the model constructed by Comrade Luxemburg the difficulty is ... not only very great, it is insuperable ... She herself does not make the slightest effort to portray these “organic tangles”. The very attempt would have shown her that her model is not feasible’, and so on.

But the ‘model constructed by Comrade Luxemburg’ on p.100 was not ‘constructed’ by me at all – but by Marx! I simply wrote down the figures given in Capital, Vol.II, p.470, in order to show that, according to Marx, it is impossible to incorporate the production of money, as I explained explicitly in the following:

‘Besides, a mere glance at Marx’s model of reproduction demonstrates what inconsistencies must follow from confusing means of exchange with means of production.’

And along comes Eckstein to blame me for Marx’s model, which I criticize, and to scold me because of this model, like a stupid hussy, for having completely failed to understand ‘the technique of these models’.

Another example: on p.510 of Capital, Vol. II, Marx constructs his first accumulation model, in which he allows the capitalists of the first department always to capitalize 50 per cent of their surplus value, but lets it happen any old way in the other department, with no visible rules, purely according to the need of the first department. I attempt to criticize this assumption as an arbitrary one. Then along comes Eckstein with the following effusion:

‘The mistake lies in the very way she has made her calculations, and this shows that she has not grasped the essence of Marx’s models. She thinks that these are based on the requirement of an equal rate of accumulation, i.e. she assumes that accumulation always proceeds equally in both main departments of social production. But this assumption is quite arbitrary and contradicts the facts ... In reality there is no such general rate of accumulation and it would be a theoretical nonsense.’

Therein resides the ‘scarcely comprehensible error of the author, which shows that she is completely puzzled by the essence of Marx’s models’. The real law of equal rate of profit stands ‘in complete contradiction to the fictitious law of equal accumulation’ and so on with that meaty thoroughness, salted and peppered, with which Eckstein ensures my destruction. If indeed ... then indeed. But five pages later [three pages in the FLPH edition] Marx gives a second example of his accumulation model, the real and fundamental model, which he then uses exclusively till the end, whilst the first one was merely an attempt, a preliminary sketch. And Marx continually assumes the equal rate of accumulation, ‘the fictitious law’, in both departments in this second and definitive example! The ‘theoretical nonsense’, in ‘complete contradiction to the real law of equal rate of profit’ – these capital offenses and capital crimes can be found in their entirety on p.513 of Capital, Vol.II, and Marx is unrepentant right up to the last line of the volume. Thus the effusion goes all over the unfortunate Marx, who was obviously ‘completely puzzled’ by the ‘essence’ of his own models. At least he does not have to share this hard luck with me alone; Bauer, too, takes his fair share of it, since in his own ‘incontestable’ models he similarly stated his explicit assumption ‘that the rate of accumulation is equal in both spheres of production’ (Neue Zeit, op. cit., p.838 {p.96}). And to think that one is treated to such insolences by a fellow who has not even read Marx’s Capital properly! It is characteristic of the domination of the two central organs of Social Democracy by the ‘Austro-Marxist’^[26] school of epigones that such a ‘review’ could even appear in Vorwärts. If God grants that I am alive to see the second edition of my book I shall not be robbed of the opportunity to save this pearl for posterity by printing it in full in an appendix!

^[26] [Austro-Marxist school. This was a collective term used to denote Friedrich Adler, Rudolf Hilferding, Otto Bauer, Max Adler, Gustav Eckstein, Karl Renner et al. This was not an homogeneous school of thought but rather a collection of individuals who attempted to apply Marxism to a number of particular problems which they considered to have developed since Marx had died, or had not been dealt with by him. Their ideas were set out in a series of books under the general title of Marx-Studien (Marx Studies), and in the journal Der Kampf, founded in 1907 by Otto Bauer, Karl Renner and Adolf Braun.]