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Ingo Schmidt coordinates the Labour Studies Program at Athabasca University in
Canada. His research interests include international political economy, labour
movements, and European integration.
Mailing address:
Ingo Schmidt
#402 – 1185 Quayside Drive
New Westminster, BC
V3M 6T8
Rosa Luxemburg’s Accumulation of Capital: A Centennial Update with
Additions from Long Wave Theory and Karl Polanyi’s Great Transformation
Ingo Schmidt
Abstract: The period of economic and political crises that began with the Wall Street
crash 2007 in many ways resembles the conditions of global capitalism at the time
Rosa Luxemburg published her Accumulation of Capital. This article argues that
Luxemburg’s political economy entails the theoretical tools necessary to understand
capitalist development since the early 20th century and that capitalism indeed faces
a great crisis as it did at that time. Amended by ideas from long wave theory and
Polanyi’s concept of a great transformation, the article analyzes the subsequent
Keynesian and neoliberal waves of accumulation and the crises that led from on to
the other. It concludes that no further capitalist expansion is readily possible at this
Key Words: Accumulation, Class Struggle, Long Wave Theory, Polanyi,
Keynesianism, Neoliberalism
1. Reading Accumulation of Capital today
Rosa Luxemburg’s Accumulation of Capital (AC)1, published in 1913, speaks to
different audiences. Economists will look at her discussion of Marx’ schemes or
reproduction in part 1 of AC. They may be surprised about Luxemburg’s use of
mathematics – Joseph Schumpeter has published his Theory of Economic
Development2 two years earlier without using any formulas – and find similarities
Rosa Luxemburg, The Accumulation of Capital (London, New York: Routledge, 2003
[1913 in German]).
2 Joseph A. Schumpeter, The Theory of Economic Development (New Brunswick,
London: Transaction Publishers, 1982 [1911]).
between Marx’ and Luxemburg’s analyses of capital accumulation and the twosector growth models that were discussed in the 1960s and 1970s. Economic
historians should be fascinated by the way Luxemburg discusses the interrelated
developments of economic theories and their policy implications against the
background of the industrializations of England, Germany, and Russia in the second
part of the book. Unless they are specialists in the history of economic thought they
may actually be surprised that Luxemburg presents a whole series of demand-side
theorists – Malthus, Sismondi, Rodbertus, Nikolayon, Vorontsov – who can be, one
way or another, considered as forerunners of John Maynard Keynes. They may be
even more surprised that the family tree of supply-side economists from Say and
Ricardo to today’s neoclassical economists contains the Russian Marxists Struve,
Bulgakov, and Tugan-Baranovski. In the last part of AC, Luxemburg looks at the
capitalist penetration of, and imperialist expansion into, non-capitalist economies
and concludes that, once all of the latter will be integrated into the circuits of capital
accumulation, a period of recurrent economic crises and social and political conflict
will begin. Reading this part of AC, sociologists may wonder whether Luxemburg
was an early theorist of modernization, whereas anthropologists may be impressed
with her sensitivity to the plight of traditional societies when they were confronted
by the powers of modernization. And finally, progressive activists may have déjà vu
moments from Luxemburg’s analyses of international finance, militarism, and crises.
What she wrote about these issues a century ago reads like speeches given at antiIMF or anti-war rallies today.
From contemplative academics to zealous activists, people reading AC one hundred
years after its publication can find different stories in it. And more than that: There
is a common thread running through AC that starts with the abstract question
where the effective demand that keeps accumulation going comes from. It continues
with pondering the answers that economists have given to that question at different
times, when, in fact, accumulation was spurred by industrialization in the centres
and colonial conquest in the periphery. And it ends with the conclusion that, once
the whole world is divided among imperial powers, ‘accumulation can go on no
longer’ and capitalist history, therefore, ‘becomes a string of political and social
disasters and convulsions.’3 A year after its publication a thirty-year period of wars,
revolutions, counter-revolutions and economic crises – Hobsbawm’s ‘Age of
AC, p. 447
Catastrophe’ from 1914 to 19454 – started that confirmed Luxemburg’s predictions.
The startling impression that today’s readers can get from following Luxemburg’s
train of thought is that the history train may just have arrived at another age of
catastrophe. At least, this is what this article will argue. It will use Luxemburg’s
political economy, supplemented by arguments developed by long wave theorists
and Karl Polanyi’s theory of the great transformation, as a framework to analyze the
accumulation of capital from the early 20th century to the present. Coming to terms
with the long boom after World War II is certainly the greatest challenge for such an
effort. After all, unprecedented growth from the 1950s to the early 1970s doesn’t fit
at all into Luxemburg’s picture of capitalist decline. It will be shown, though, that the
class struggles and wars from the 1910s to 1940s opened new grounds for capitalist
penetration that weren’t available to the accumulation strategies pursued during
the industrialization of the North and the colonization of the South in the 19th
century. Without exaggerating too much, one can say that the 20th century saw the
opposite development – the industrialization of the South and the colonization of
lifeworlds5 in the North. The replacement of simple commodity producers by large
corporations and the invasion of mass consumer goods into private households,
superseding old ways of household production, complemented by industrialization
in the South, carried the Keynesian wave of accumulation into the 1970s. Byproducts of this wave were the development of large-scale public enterprises and
services. Their privatization, plus continued industrialization of parts of the South
and the colonization of lifeworlds North and South, carried the neoliberal wave of
accumulation from the 1980s until the Great Recession 2008/9. Capitalism has gone
full circle with that. Just like during the times of Rosa Luxemburg non-capitalist
economies are still there but can’t be penetrated by the available strategies of
accumulation, at least not on a scale large enough to secure accumulation on a global
scale. Conflicts between states and classes intensify and it is by no means certain
whether we are heading towards socialism or barbarism, to use Luxemburg’s
formula in the Junius Pamphlet.6
Eric Hobsbawm, Age of Extremes (London: Abacus, 1995), Part One: Age of
5 Jürgen Habermas, The Theory of Communicative Action, Vol. II (Boston: Beacon
Press, 1987), pp. 332-373.
6 Rosa Luxemburg, The Crisis of German Social Democracy (Junius Pamphlet), (Ithaca:
Cornell University Library, 2009 [1916 in German]).
The aforementioned arguments will be developed in two parts. Part one presents
key arguments from AC, long wave theory and Polanyi’s theory of the great
transformation. This part suggests an interpretation of AC that considers class
struggles as a crucial factor for capital accumulation because, depending how these
struggles develop, they may open up non-capitalist territories that were closed to
previous accumulation strategies or, if this is not the case, turn into a final
showdown between socialism and barbarism.7 Long wave theory can enrich such an
interpretation of AC because it explicitly deals with the question whether humanity
is caught in a never-ending cycle of long ups and downs or whether the crises
following long upswings of capital accumulation represent moments of decision, in
which societies can turn from capitalism to socialism. Polanyi’s work further
enriches the analysis of capitalist accumulation and development because it
addresses the relations between capitalist and non-capitalist economies from a
different angle than Luxemburg. While the latter is concerned with the economic
question where effective demand originates, and finds the answer in the capitalist
penetration of non-capitalist economies, Polanyi points at social countermovements triggered by such penetration.
The second part of the article presents a sketch of a Luxemburgian analysis of
capitalist development from the early 20th century until now. This part will show
that the first part of the century was marked by a lack of access to non-capitalist
economies and thus a lack of effective demand. This age of catastrophe was followed
by two long waves of accumulation, each opening new frontiers for capital
accumulation. The first – Keynesian – wave saw a combination of market
regulations by welfare and developmental states, respectively, and capitalist
penetration of hitherto non-capitalist economies. The second – neoliberal – wave
was driven by the privatization and re-commodification of public enterprises,
services, and social security schemes that had developed under the welfare and
developmental state regimes of the Keynesian wave of accumulation.
Another factor that plays a role in determining capitalist development – the role of
hegemonic powers – will not be discussed in this article. As I have argued elsewhere
this question is also compatible with a Luxemburgian approach to political
economy, see: I. Schmidt, ‘Rosa Luxemburg’s Accumulation of Capital – New
Perspectives on Capitalist Development and American Hegemony’, Socialist Studies
6:2 (2010), pp. 92-117.
2. Getting the theories ready: Luxemburg, Kondratiev, Trotsky, and Polanyi
2.1 Luxemburg’s Accumulation of Capital
Luxemburg wrote AC during a time of prosperity and peace. The Great Depression
1873/96 and the Franco-German War 1870/71 were almost forgotten. Rudolf
Hilferding had just published Finance Capital8, in which he argued that crisis might
occur because of the disproportionate growth in the production of consumer and
investment goods but that the merger of industry and banks had created the tools to
correct such disproportions through the targeted allocation of credit. Moreover, he
argued that protectionism and colonial expansion, in short: imperialist rivalry, were
the preferred policies of finance capital but that these policies could be replaced by
more cooperative policies. Karl Kautsky further developed this idea into his theory
of ultraimperialism, which, ironically enough, was published shortly after the
breakout of World War I.9 Luxemburg struck a different chord. She argued that
prosperity was largely based on colonial expansion and would end as soon as the
world was divided among the imperial powers. To develop a proper understanding
of the arguments leading to such a far reaching conclusion it is important to be clear
about a few things that she didn’t say. First, hers is not a theory of business cycles
but a theory of long-term trends of capital accumulation. She recognizes ‘periodical
cycles and crises (as) specific phases in the reproduction of a capitalist system’ and
argues that: ‘In order to demonstrate the pure implications of capitalist
reproduction we must rather consider it quite apart from the periodical cycles and
crises.’10 Capitalist reproduction, Luxemburg continues, means expanded
reproduction: ‘Expansion becomes in truth a coercive law, an economic condition
for the existence for the individual capitalist.’11 While individual capitalists have to
expand production and sales to stay in business under the competitive pressure of
the capitalist system, the crucial question for understanding the expansion of the
Rudolf Hilferding, Finance Capital – A Study in the Latest Phase of Capitalist
Development (London, New York: Routledge, 2006 [1910]).
9 K. Kautsky, ‘Der Imperialismus’, Die Neue Zeit, 32:2 (1914), pp. 908-922.
10 AC, p. 7.
11 AC, p. 12.
system as a whole is ‘where is (the) continually rising demand come from.’12 With
regard to this question Luxemburg is often seen as a theorist of
underconsumption.13 Her point, though, is not that wages are too low, implying that
rising wages could spur accumulation, it’s rather ‘that the surplus value cannot be
realized by sale either to workers or to capitalists, but only if it is sold to such social
organisations or strata whose own mode of production is not capitalistic.’14 In other
words, a closed capitalist system is plagued with a lack of consumer and investment
demand, the internal barrier to further accumulation is overproduction rather than
underconsumption. Only external expansion, i.e. the integration of non-capitalist
economies into the capitalist economy, can overcome this barrier.
Luxemburg’s theory of the long-term trend of capital accumulation is developed in
the following way. At first, she derives an abstract mathematical model from a
critique of Marx’ schemes of reproduction, according to which a closed capitalist
system does not generate enough effective demand to realize the surplus value in
period one. Without such realization in the next period, she concludes, accumulation
won’t happen – even though capitalism can’t exist without it. She concedes that it is
possible, as Marx did, to develop a theoretically consistent model of unlimited
accumulation but cautions her readers to inquire whether such results were
achieved ‘because mathematical equations are easily put on paper.’15 This inquiry
leads her to ‘look for the concrete social conditions of accumulation.’16 She analyses
these conditions from two angles. First by looking at theoretical debates between
economists that either argued for the possibility of unlimited accumulation, a
tradition going back to Say and Ricardo, or, like Luxemburg, claim that insufficient
demand would bring accumulation to a halt. She discusses three ‘rounds’17 of debate
that took place between the early and the late 19th century and puts each of them
into the historical context of their respective times. Each of these rounds took place
AC, p. 104.
Paul Sweezy awards her the title “queen of underconsumptionists” in his Theory
of Capitalist Development (New York: Monthly Review Press, 1942 [1970]), p. 171.
For recent critiques of such views see Bellofiore’s introduction and Trigg’s chapter
in: Riccardo Bellofiore (ed.), Rosa Luxemburg and the Critique of Political Economy
(London, New York: Routledge, 2009).
14 AC, p. 332.
15 AC, p. 91.
16 Ibd.
17 AC, Section II: Historical Exposition of the Problem.
against the background of the industrializations of the countries where they took
place, England, Germany, and Russia, respectively. These debates also coincided
loosely with the three long Kondratiev waves of accumulation that Schumpeter
identified in his Business Cycles.18 Each of these waves started with the build-up of
new industries and new technologies, giving the impression of the possibility of
unlimited growth, and was eventually constrained by insufficient growth of effective
demand. Can this industrializing one country at a time model continue until the
whole world reaches some kind of industrial maturity? This is the impression one
could get from reading through Luxemburg’s three rounds of economic debates and
industrialization moving from one country to another.19
But this is not the view of Rosa Luxemburg. In the third part of AC – The Historical
Conditions of Accumulation – she gives her own answer to the question where the
effective demand to keep the accumulation process going comes from. To her,
industrialization in parts of the world is less a driving force of accumulation rather
the consequence of the integration of non-capitalist economies into the capitalist
reproduction and accumulation process. In developing her argument she moves the
focus from the schemes of reproduction, with one sector producing investment
goods and one making consumer goods, to the relations between the capitalist
economy and non-capitalist economies. In this regard it is important to recognize
that by capitalist she doesn’t refer to particular countries, such as England,
Germany, or Russia, but to processes of capitalist production and exchange all over
the world. At the same time she finds non-capitalist economies in all countries
including industrialized ones:
‘In actual fact, capitalist production is by nature production on a universal
scale…it is producing for a world market already from the word go. The
various pioneering branches of capitalist production in England, such as the
textile, iron and coal industries, cast about for markets in all countries and
Joseph A. Schumpeter, Business Cycles: A Theoretical, Historical, and Statistical
Analysis of the Capitalist Process (Eastford: Martino Publishing, 2005 [1939]), ch. VI
& VII.
19 It should be noted that many economists presented stages of growth from
industrialization to mass consumer society as a model that all countries of the world
would have to go during the de-colonization in the 1950s and 1960s, see for
example: W. W. Rostow, The Stages of Economic Growth – A Non-Communist
Manifesto (Cambridge: Cambridge University Press, 1960).
continents, long before the process of destroying peasants’ property, the
decline of handicraft and of the old domestic industries within the country
had come to an end.’20
The relations between capitalism and non-capitalist economies are marked by a
dialectic wherein the exploitation of wage labour by capitalist employers relies on
the penetration of non-capitalist territories and social strata. Luxemburg analyses
this penetration as destruction of natural and peasant economies, the subsequent
introduction of simple commodity production and their final subjugation to the
imperatives of capital accumulation.21 Credit and military force are the means to
initiate and further capitalist penetration.22 Yet, with the depletion of non-capitalist
economies that are available for penetration the accumulation process comes to an
end and ushers into a period of economic and political crises:
‘The accumulative process endeavours everywhere to substitute simple
commodity economy for natural economy. Its ultimate aim, that is to say, is
to establish the exclusive and universal domination of capitalist production
in all countries and for all branches of industry. Yet this argument does not
lead anywhere. As soon as this final result is achieved – in theory, of course,
because it can never actually happen – accumulation must come to a stop.’23
In deed, World War I broke out before accumulation came to a stop during the Great
Depression. After a quick look at Kondratiev’s and Trotsky’s controversy over long
waves of accumulation and Polanyi’s Great Transformation we will see how
capitalism came out of it’s early 20th century deadlock to end up their again a
century later.
2.2 Kondratiev and Trotsky on Long Waves of Capital Accumulation
AC, pp. 275-276.
AC, ch. 27, 28&29.
22 AC, ch. 30&32.
23 AC, p. 397.
The possibility of long waves of capital accumulation was already pondered around
the time Luxemburg developed her own theory of capitalist development.24 In the
1920s, an intense debate arose in the Soviet Union over the existence of such waves,
and particularly the question whether they are expressions of an endogenous cycle
of capitalist development.25 The urgency of this debate had less to do with the
interpretation of empirical data or the construction of theoretical models than with
their political implications. Lenin and Trotsky had understood the Russian
Revolution as opening shots for worldwide revolution. When the revolutionary
wave that had started in 1917 died down in 1923 the question arose whether
capitalism could stabilize after the post-war crisis 1920/1 and what this would
imply for the prospect of revolution in the West. Answers to this question where
also highly relevant for future developments in the Soviet Union. Revitalized
capitalism would leave the Soviet Union isolated and thus curtail the prospect of
socialist development whereas a revolution in the West could facilitate such a
Kondratiev originally derived his long wave hypothesis from statistical
observations, namely time series on prices, interest rates, wages, and foreign trade.
He identified three long waves, similar to the ones Schumpeter would later find, and
concluded that ‘long waves arise out of causes which are inherent in the essence of
the capitalist economy.’26 He later developed a model according to which the
financing of investments in fixed capital and infrastructure require the accumulation
of loanable funds. According to this model, a long boom begins once sufficient funds
are available to pay for such investments, the boom ends and turns into a long
downswing when the depletion of loanable funds causes interest rates, and thus the
cost of investment financing, to rise. This model also included factors such as wars
and colonial conquest, which Kondratiev saw as ramifications of Marx ‘law of
Alexander Helpand, Die Handelskrisis und die Gewerkschaften (München: M. Ernst,
1901). J. van Gelderen, ‘Springvloed, Beschuwingen over Industrielle
Outwikkelning’, Die Nieuwe Tijd, 18: 4,5,6 (1913), pp. 253-277, 369-384, 445-464.
25 R. B. Day, ‘The Theory of the Long Cycle: Kondratiev, Trotsky, Mandel’, New Left
Review, September-October 1976, pp. 67-82.
26 N. D. Kondratieff, ‘The Long Waves of Economic Life’, Review of Economics and
Statistics, 17:6 (1935 [1926 in German]), p. 105-115. Kondratiev had published his
views on long waves in series of books and papers since 1922 in Russian, see: G.
Garvy, Kondratieff’s Theory of Long Cycles’, Review of Economics and Statistics, 25:4
(1943), pp. 203-220.
motion of modern society’. However, Kondratiev’s interpretation of this law
included the theoretical possibility of an endless series of long waves of capital
accumulation. Moreover, he saw class struggles just as another ramification of the
long waves of capital accumulation rather than an independent factor that might
break the capitalist cycle and open the door to socialist development. This is exactly
the point Trotsky criticized. Trotsky didn’t question the existence of long booms and
extended periods of slow growth but didn’t see these as expressions of an
endogenous cycle:
‘As regards the large segments of the capitalist curve of development (fifty
years) which Professor Kondratiev incautiously proposes to designate also as
cycles, their character and duration are determined not by the internal
interplay of capitalist forces but by those external conditions in which
capitalist development occurs.’27
As most relevant factors ‘straddling the borderline between two different epochs of
economic development’ he mentions wars and revolutions.28 With hindsight it is
easy to see that wars and revolutions from 1914 to 1945 were parts of a straddling
phase between two rather different epochs of capitalist development.29 Yet, it is also
clear that the capitalist decline that Trotsky, Luxemburg and many other
revolutionary Marxists had expected gave way to further capitalist development.
Moreover, this development saw further long waves of accumulation interrupted by
another straddling period in the 1970s. Maybe not surprisingly, the wars, class
struggles and economic crises during that decade triggered a renewed interest in
long wave theory, which had been dormant since the 1930s.30
2.3 Polanyi and the Great Transformation
Leon Trotsky, ‘The Curve of Capitalist Development’, Fourth International, 2:4
(1943 [1923 in Russian]), pp. 111-114.
28 Ibd.
29 The relations between the logic of capital and class struggle in determining long
waves is also discussed in: Ernest Mandel, Long Waves of Capitalist Development
(Cambridge: Cambridge University Press, 1980), ch. 2, and: Beverly J. Silver: Forces
of Labor – Workers’ Movements and Globalization since 1870 (Cambridge: Cambridge
University Press, 2003).
30 For a survey see: Klas Eklund, ‘Long Waves in the Development of Capitalism?’,
Kyklos, 33:3 (1980), pp. 383-419.
Karl Polanyi’s Great Transformation31 analyses the effects of capitalist expansion in
a non-capitalist environment. This is actually the same subject as Luxemburg’s in
AC. Yet, while Luxemburg is mainly interested in finding out how, and for how long,
this expansion can last economically,32 Polanyi is mostly concerned with the social
dislocations it produces. In other words, Luxemburg looks at capital accumulation
made possible by the social transformation of non-capitalist economies into
capitalist relations of production whereas Polanyi is mostly concerned with the
social consequences of this transformation. Pre-capitalist economies, Polanyi
argues, are embedded in social relation where the distribution of material goods is
regulated by reciprocity or redistribution rather than by market value.33 Yet, this
started to change with the enclosures in England that turned, after long struggles,
land and labour into commodities or rather, as Polanyi calls them, fictitious
commodities.34 Fictitious because they weren’t produced for market sale,
commodities because they are bought and sold like anything produced for the
market. The transformation of land and labour into fictitious commodities, the same
process that Marx called ‘original accumulation’35 and that Luxemburg and Polanyi
see as a constant factor in capitalist development, feeds into concurrent
transformations of production processes. While landowners turn into a section of
the emergent capitalist class, peasants pushed off the land find themselves in the
factories – Polanyi calls them ‘satanic mills’36 – of the English industrial revolution
where they suffer impoverishment, exploitation and moral degradation. Yet, the
commodification of land and labour is just one side of a ‘double movement’, by
which Polanyi means that there were:
Karl Polanyi, The Great Transformation – The Political and Economic Origins of Our
Time (Boston: Beacon Press, 2001 [1944]).
32 Luxemburg’s economic focus should not obscure the fact that she was acutely
aware of the social devastation brought about by capitalist accumulation, see for
example: Peter Hudis, ‘Accumulation, Imperialism, and Pre-Capitalist Formations –
Luxemburg and Marx on the non-Western World’, Socialist Studies 6:2 (2010), p. 7591.
33 Polanyi, op. cit., ch. 4.
34 Polanyi, op. cit., ch. 6
35 Karl Marx, ‘Capital’, Vol. I, Marx Engels Collected Works, Vol. 35 (New York:
International Publishers, 1996 [In German 1867]), ch. 26-32. English translations
wrongly use the term “primitive accumulation” rather than “original accumulation”.
36 Polanyi, op. cit., part 2.I: Satanic Mill.
‘…two organizing principles in society…The one was the principle of
economic liberalism, aiming at the establishment of a self-regulating market,
relying on the support of the trading classes, and using largely laissez-faire
and free trade as its methods; the other was the principle of social protection
aiming at the conservation of man and nature as well as productive
organization, relying on the varying support of those most immediately
affected by the deleterious action of the market - primarily, but not
exclusively, the working and the landed classes - and using protective
legislation, restrictive associations, and other instruments of intervention as
its methods.’37
In the 19th century, these two principles, more precisely: the social forces galvanized
around them, maintained some sort of balance. However, the ‘utopian endeavour of
economic liberalism to set up a self-regulating market system’ led to ‘cataclysm’ in
the first decades of the 20th century.38 Nazism, Stalinism and New Deal, then, were
statist responses to the economic liberalism, which had culminated in the Great
The turn to statist capitalism was later often interpreted as a re-embedding of the
market economy. This argument was made with respect to international relations
and social relations within states.40 Neoliberal capitalism, then, is often seen as
another swing of the pendulum from states to markets.41 However, such analysis
equates capitalist states with the pre-capitalist societies that were superseded by
capitalist market economies and state apparatuses. With respect to welfare state
redistribution this may seem plausible but neglects that government finance are
subject to the imperatives of capital accumulation. Where taxes and government
spending really impede accumulation, or are seen as a threat to it by the propertied
Polanyi, op. cit., p. 132.
Polanyi, op. cit., p. 29.
39 Polanyi, op. cit., ch. 2&16.
40 J. G. Ruggie, ‘International Regimes, Transactions and Change – Embedded
Liberalism in the Postwar Economic Order’, International Organization 36:2 (1982),
pp. 379-415. Mark Blyth, Great Transformations – Economic Ideas and Institutional
Change in the Twentieth Century (Cambridge: Cambridge University Press, 2002).
Ronaldo Munck, Globalisation and Labour – The New ‘Great Transformation’,
(London, New York: Zed Books, 2002).
41 Blyth, op. cit., ch. 5,6&7. Robert Boyer, Daniel Drache (eds.), States Against
Markets: The Limits of Globalization (London, New York: Routledge, 1996).
classes, fiscal crises will ensue and force governments to trim their budgets. Thus,
even to the degree that states represent, in Polanyi’s terms, the ‘principle of social
protection’ they are subordinated to the imperative of capital accumulation rather
than representing an alternative to it, as many scholars in the Polanyian tradition
argue. However misleading this states versus markets approach may be42, it
shouldn’t distract from the positive contributions Polanyi’s theory can make to the
analysis of capitalism. After all, there is no doubt that workers and people belonging
to other subordinated classes did struggle against commodification and, through
unions and the welfare state, did achieve some level of de-commodification. These
struggles were often inspired and guided by visions of a moral economy, which
represent alternatives to commodification and accumulation indeed.43 The crux of
these movements is, though, that the social protection and redistribution they
achieved went hand in hand with a reorientation of accumulation to areas still
untouched by capitalist relations of production and exchange. This reorientation of
the dual processes of accumulation and capitalist penetration of non-capitalist
environments is key to an understanding of capitalist development after the age of
3. Understanding capitalism from the publication of Accumulation of Capital until
3.1 The Keynesian wave of accumulation
Capitalism was facing a paradoxical situation at the time Luxemburg was writing
about it. On the one hand, Luxemburg noted:
‘After many centuries of development, the capitalist mode of production still
constitutes only a fragment of total world production. Even in the small
For a critique of this approach see: I. Schmidt, ‘Kollektiver Imperialismus,
Varianten des Neoliberalismus und Neue Regionalmächte’ in Ingo Schmidt (ed.)
Spielarten des Neoliberalismus (Hamburg: VSA-Verlag, 2008), pp. 7-39, here: 7-13.
43 Recent examples for this are the World Social Forum slogans “Our World is Not
For Sale” and “Another World is Possible”.
continent of Europe, where it now chiefly prevails, it has not yet succeeded in
dominating entire branches of production, such as peasant agriculture and
the independent handicrafts; the same holds true, further, for large parts of
North America and for a number of regions in the other continents.’44
On the other hand, the long wave of accumulation that had taken off in the late 19th
century was just giving way to the age of catastrophe when AC was published. The
question, then, is why further penetration of still existing non-capitalist
environments couldn’t spur continued capital accumulation, why, in Luxemburg’s
words, ‘a string of political and social disasters’ began ‘even before this natural
economic impasse of capital’s own creation is properly reached’.45 The answer lies
in the conflict between the accumulation strategies that had furthered capitalist
expansion from the industrial revolution in England to the early 20th century and
the historical bloc on which this expansion rested. Peasant agriculture and
independent handicrafts that Luxemburg mentions in the above quote delivered a
significant share of the wage goods consumed by working class households. England
was the only country where peasant agriculture had been wiped out almost
completely. Mass-produced wage goods would have been cheaper, i.e. a given basket
of goods could have been bought for less money. Economically, this would only have
been possible if large corporations had destroyed simple commodity production but
this would have destroyed the political alliance between industrial capitalists,
landowners, some of them still residing over quasi-feudal estates, and petty
bourgeoisies. In Marx’ words, the ‘material productive forces of society (came) into
conflict with the existing relations of production.’46 The same was true in the
colonial South, where infrastructure investments, notably ports and railways that
had helped to realize surplus value produced in the factories of the industrialized
North and allowed the import of cheap raw materials that partly offset the high cost
incurred by simple commodity production in the North. Industrial capitalists in the
North had no interest in nurturing competitors elsewhere and comprador
bourgeoisies in the South feared that their social position would be undermined by
the emergence of local industrialists. In fact, British industrialists who were used to
AC, p. 338.
AC, p. 447.
46 Karl Marx, ‘A Contribution to the Critique of Political Economy’, Marx Engels
Collected Works, Vol. 29 (New York: International Publishers, 1987 [1859 in
German]), pp. 257-420, here p. 264.
command the workshop of the world were already disturbed by the
industrializations of Germany, the US, and Japan. Be this as it may, the historical
blocs that carried capitalism domestically and internationally, namely their middle
class and comprador bourgeoisie elements, stood in the way of the rise of mass
consumer markets in the North and the industrialization in the South. Under these
political conditions the only option for further accumulation was further colonial
expansion, which turned militarism into a ‘province of accumulation’47 and led to
intensified imperialist rivalry and war.48
At the same time that capitalism was struggling with the contradictions between the
material productive forces and the then existing international and domestic
relations of production it was beleaguered by labour movements in the North. It is
true that rapid accumulation since the late 19th century stimulated reformism
whose leading theoreticians, such as Bernstein and Hilferding, weighed the
possibilities of turning wretched proletarians into mass consumers. Yet, their ideas
were premature because the leading capitalist factions at that time stuck to their
alliances with petty bourgeoisies and landowners rather than building a corporatist
bloc with reformist labour leaders. War and economic crises, then, led to a
radicalization of labour, culminating in the Russian revolution. The extension of the
revolution to the West, on which the revolutionary left had built its strategy, failed
but the very existence of the Soviet Union limited the global scope for capital
accumulation. Moreover, it encouraged the rise of anti-colonial movements who
threatened to limit this scope even further. These movements, whose social basis lay
mostly in urban middle classes, embryonic industrial working classes, and rural
peasantries, undermined the position of comprador bourgeoisies in the South. At
the same time, World War I, post-war inflation, and the Great Depression shattered
the old petty bourgeoisies in the North. In Germany and to some degree in other
countries also, Nazism was their last attempt to regain the social position they had
before the age of catastrophe through the terrorist suppression of domestic working
classes and enslavement of allegedly inferior races abroad. The failure of this effort
helped to establish the political conditions that would allow a new wave of capital
AC, p. 434.
Luxemburg’s Junius Pamphlet, which is informed by the theoretical analysis in AC,
explains this rivalry and how it culminated in World War I very well, see: Rosa
Luxemburg, The Crisis of German Social Democracy (Junius Pamphlet), (Ithaca:
Cornell University Library, 2009 [1916 in German]).
accumulation. World War II did not only destroy the political ambitions of the
German ruling class, it also weakened its European rivals and thus helped US
hegemony to be established. Part of this hegemony was to support anti-colonial
struggles in the South and its industrialization.49 By so doing, they created new
markets for Northern industries, notably the makers of investment goods, and
promoted capitalist development as an alternative to the post-colonial socialism
that gained traction in the aftermath of the Chinese and Cuban revolutions. Opening
and deepening these new markets in the South was all the more important since the
expansion of Soviet communism into Eastern Europe in the aftermath of World War
II had closed these areas for capitalist investments and sales. Moreover, the South
became a battlefield, economically and politically, of the Cold War.50
At the same time, the economic space that had been controlled by peasant
agriculture, independent handicrafts and corner stores in the North was taken over
by industrial agriculture, mass consumer industries and retail-chains. The era of
mass consumption that reformist theoreticians had envisioned before the age of
catastrophe came true after its close had removed the political obstacles that had
stood in its way before.51
Economically, the long boom following World War II rested on further capitalist
expansion into non-capitalist environments. In the South, whose role had been
restricted to supplier of cheap raw materials and agricultural products in the past,
industrialization took hold so that the chain of industrializations that had begun in
England and continued through the colonial centres of the North eventually reached
the post-colonial countries of the South.52 This process went hand in hand with the
proletarianization of peasant populations and the emergence of domestically
produced consumer goods. Industries in the North benefited from the
industrialization of the South through the export of investment goods and luxuries
that were sold to the new rich in post-colonial societies.
Henry Heller, The Cold War and the New Imperialism (New York: Monthly Review
Press, 2006), ch. 2.
50 Richard Saull, The Cold War and After – Capitalism, Revolution, and Superpower
Politics (London, Ann Arbor: Pluto Press, 2007).
51 Burkhart Lutz, Der kurze Traum immerwährender Prosperität (Frankfurt, New
York: Campus Verlag, 1989).
52 Ray Kiely, Industrialization and Development – A Comparative Analysis (London:
UCL Press, 1998).
More important for capital accumulation in the North, though, was the emergence of
mass consumer markets. As already noted, this became possible because large
corporations took over the markets for consumer goods from simple commodity
producers. Economies of scale that became possible with the mass production of
consumer goods allowed rising productivity and thus higher sales at given real
wages. Demand for these goods was created through the colonization of working
class lifeworlds. Mass produced consumer goods were not just cheaper than those
produced in small shops, they also included completely new goods, such as
household appliances, consumer electronics, and automobiles that changed
household economies fundamentally. Rather than buying some inputs and
processing them at home, outside the orbit of capital accumulation, more and more
goods that didn’t need much processing were bought from capitalist producers.
Sales of these goods were furthered by consumer credit and the conversion of
unpaid labour performed at home into paid labour under capital command. The
labour power that workers sold to capitalist employers has been subordinated to
capital before and the wages they received as income were spent on consumer
goods produced either by capitalist firms or simple commodity producers. Yet,
significant hours of unpaid labour were spent within working class households
without direct subordination to capital.53 This changed with the rise of mass
consumer society, which increased sales of consumer goods massively, marginalized
simple commodity production of these goods, and ‘recruited (labour power) from
social reservoirs outside the dominion of capital.’54
Emphasis on mass consumption should not conceal the role that investment
demand played in furthering the long post-war boom. As a matter of fact, the buildup of production capacity during the boom was massive and caused problems of
capacity utilization when it was over.55 It also doesn’t mean that the boom, while it
On the relations between paid and unpaid labour see for example: Nancy Folbre,
‘Exploitation Comes Home: A Critique of the Marxian Theory of Family Labour’,
Cambridge Journal of Economics 6:4 (1982), pp. 317-329. Usha Menon, ‘Women and
Household Labour’, Social Scientist 10:7 (1982), pp. 30-42.
54 AC, 342.
55 Robert Brenner, The Economics of Global Turbulence (London, New York: Verso,
lasted, was driven by real wage growth.56 The point really is that consumer and
investment demand in the ‘internal…capitalist market’ grew because of a growing
‘external market (that) is the non-capitalist social environment which absorbs the
products of capitalism and supplies producer goods and labour power for capitalist
Capital accumulation driven by expansion into external markets was complemented
by a dialectic between the commodification of natural and peasant economies and
unpaid labour on one side and the partial de-commodification of paid labour under
the emerging welfare state regimes on the other.58 To be sure, labour power was
still sold to capitalist employers under these regimes but core groups of the
workforce, mostly skilled or semi-skilled blue-collar workers, got a certain level of
job and income security so they weren’t forced any longer to take any job no matter
how poorly paid it was. Unemployment and pension insurances, along with
extended public spending on infrastructure, education, and health care, raised social
standards for significant layers of Northern working classes. In macroeconomic
terms, welfare state spending counteracted the cyclical fluctuations of private
investment spending as automatic stabilizers or discretionary spending. In this
sense, the Keynesian welfare state led to a stabilization of accumulation and
employment within the capitalist market. Yet, the growth of this market was largely
dependent on its expansion into the external, non-capitalist, market, which the
welfare state also furthered.59
A similar dialectic between commodification and de-commodification worked
through the developmental states in the South.60 By means of taxation and granting
For such a hypothesis see: S. Bowles, R. Boyer, ‘A Wage-led Employment Regime’,
in Stephen A. Marglin, Juliet B. Schor (eds.), The Golden Age of Capitalism (Oxford:
Clarendon Press, 1991), pp. 187-217.
57 AC, p. 347.
58 Göran Esping-Anderson, The Three Worlds of Welfare Capitalism (Princeton:
Princeton University Press, 1990), ch. 2.
59 Ingo Schmidt, Gewerkschaften und Keynesianismus (Münster: Verlag Westfälisches
Dampfboot, 1997).
60 Meredith Woo-Cumings (ed.), The Developmental State (Ithaca, London: Cornell
University Press, 1999). For a Marxist critique see: Dae-oup Chang, Capitalist
Development in Korea: Labour, Capital and the Myth of the Developmental State
(London, New York: Routledge, 2009). It should also be noted that developmental
states also comprised certain kinds and levels of welfare regimes, see: Stephan
Haggard, Robert R. Kaufman, Development, Democracy, and Welfare States – Latin
of credit they forced natural and peasant economies into commodity production and
thus opened these previously non-capitalist economies as further provinces of
capital accumulation. In Luxemburg’s words:
‘The backward communities must shed their obsolete political organisations,
relics of natural and simple commodity economy, and create a modern state
machinery adapted to the purposes of capitalist production.’61
However, and this is a point that’s better to understand through Polanyian than
through Luxemburgian lenses, developmental states also built public infrastructures
and state-owned enterprises in sectors that were considered crucial for the
generation of forward and backward linkages, i.e. the development of a deepening of
the social division of labour and exchange. Unlike the Keynesian welfare states of
the North, developmental states in the South remained, although to rather different
degrees, dependent on Northern capital. By means of military and financial control
they were firmly tied into the power structure of a, then, new imperialism without
colonies.62 Attempts to turn from capitalist to non-capitalist forms of development
met fierce opposition, more often than not culminating in military interventions,
from the capitalist centres in the North. Where they succeeded they soon came
under Soviet or Chinese influence. Hopes to pass through a transformative stage of
industrialization and finally reach the stage of mass consumer society like the
capitalist North had done were thwarted either way.
The Keynesian boom, carried by the colonization of working class lifeworlds in the
North and industrialization in the South, ended before all non-capitalist
environments into which it had carried capitalist relations of production were fully
integrated into the capitalist system. Similarly to the economic crises of the 1930s,
but without the world wars preceding and following the Great Depression, another
phase of crises began in the early 1970s63 and paved, after a series of intense class
America, East Asia, and Eastern Europe (Princeton: Princeton University Press,
2008), part 1.
61 AC, p. 399.
62 Harry Magdoff, Imperialism Without Colonies (New York: Monthly Review Press,
63 For a comparison of economic crises in the 1930s, 1970s and today from a
Luxemburgian perspective see: Ingo Schmidt, ‘Große Krisen seit den 1930er Jahren’,
in Prokla – Zeitschrift für kritische Sozialwissenschaft 39:4 (2009), pp. 523-540.
struggles and international conflicts, the way for the neoliberal wave of
3.2 The neoliberal wave of accumulation
In the 1970s, capitalism was facing another paradoxical situation that was similar to
the one Luxemburg had noted some six decades earlier. The ‘capitalist mode of
production still constitutes only a fragment of total world production.’64 This
fragment was greater than it was in the early 20th century but a fragment
nevertheless. The ‘string of political and social disasters’65 that marked the 1970s
was nowhere as disastrous as the age of catastrophe 1914-1945 but it certainly was
a period of intense class struggles and international conflicts that challenged not
only welfare and developmental states and Keynesian economic policies but also
capitalism more generally. Socialist challenges of different stripes ultimately failed.
Even worse, against all intentions of their protagonists they helped ushering in the
neoliberal wave of accumulation that took off in the early 1980s.66
The long post-war boom was in full swing when a series of social movements burst
to the scene that challenged the legitimacy of mass consumer societies in the North
and neo-colonial rule in the South. Workers who had just been recruited from farms,
handicrafts, many of them immigrants, or working class households, almost all of
them women, were integrated on the lower rungs of the capitalist labour market.
Toiling long hours for little pay they were excluded from the gratifications that the
corporatist deal between organized labour and capital granted to core groups in
primary labour markets. Yet, it didn’t take long until they asked for equal pay, thus
challenging existing labour market hierarchies67, and extended welfare state
AC, p. 338.
AC, p. 447.
66 Ingo Schmidt, ‘There Were Alternatives: Lessons from Efforts to Advance Beyond
Keynesian and Neoliberal Economic Policies in the 1970s’, in Working USA 14:4
67 An early analysis of segmented labour markets and the relations between paid
and unpaid labour is in: Rosa Luxemburg, ‘Einführung in die Nationalökonomie’,
Gesammelte Werke, Vol. 5 (Berlin: Dietz Verlag, 1990 [posthumously published in
1925]), ch. IV.
spending, threatening to overburden state budgets beyond the limits considered
tolerable by private creditors of the state and taxpayers in higher income brackets.
Even workers who were firmly integrated into the corporatist bargain started to
rebel. Not only were they adamantly opposed to any real wage losses that slowly
rising rates of inflation might inflict upon them; worse still, many among them
fought against the Taylorist division of labour that had degraded them to mere
appendices of capitalist machinery. By doing so, the challenged the capitalists right
to manage.
Developmental states in the South came under increasing pressure from progressive
movements to break their ties with neo-colonial powers in the North or at least
negotiate a new world economic order, in which a greater share of the world’s
wealth and income would stay in the North. Thus, there was a real threat that rising
costs for domestic labour and imported resources would squeeze profit-rates in the
South. In this light, capitalists had a good reason to call oil-price hikes in 1973 a
‘shock’; a profit-squeeze seemed imminent. Yet, in a last minute turn around, rising
input prices were passed on to output prices and investments curtailed. The ensuing
downturn in investment spending triggered a world recession in 1974/5, which
revealed that the long boom, including the industrialization of the South, had
already produced significant overcapacities.68 Capitalists now had to solve two
problems. The first was to roll back any quests for higher resource prices, wages, or
shop-floor control of workers, each of which would translate into higher costs or
weaken their control over the labour process; the other problem was to find
effective demand to avoid the losses incurred from idle capacities.
Solving the first of these two problems turned out to be quite easy. Rising
unemployment in the course of the crisis 1974/5 had already pushed labour into
defensive struggles. The unfolding of the crisis over the next years, ultimately
leading to another world recession in 1980/2, deepened economic and social
divisions within working classes so that attempts to build a progressive historical
bloc that could have carried the challenge of capitalist rule further were thwarted.
Private sector workers were squeezed between new kinds of labour-saving
technologies and the relocations of production facilities so that the cyclical
unemployment produced by the recessions of the mid-1970s and early 1980s were
transformed into long-term structural unemployment. The welfare state that was
Brenner, op. cit, ch. 2.
designed to counteract cyclical fluctuations rather than dealing with economic
stagnation and long-term unemployment was thrown into a fiscal crisis that put
pressure on the financing of public services. Private sector workers who were
already confronted with job losses and wage cuts increasingly opened their ears to
the neoliberal creed against taxes, public services, and public sector workers.
Divisions between private and public sector workers were one of the main obstacles
in building a working class movement that could have transcended existing
sectionalisms. In the absence of such a movement, capitalist employers, who were
increasingly support by anti-union legislation, achieved their goal of rolling back
labour. However, the more successful they were in this regard the more difficult it
was to find customers and solve the problem of generating effective demand.
The Keynesian wave of accumulation wasn’t a ‘wage-led employment regime’69 but
real wages rising more or less in tandem with labour productivity did stabilize the
internal capitalist market while the capitalist penetration of external markets
carried accumulation on. Since the early 1980s, real wages are lagging behind
productivity growth in all major capitalist countries and thus lost their previous role
as stabilizers of the development of effective demand. As a result, the problem of
overcapacities got worse, new markets had to be found to lift capacity utilization to
levels that secured positive rates of profit and restart the accumulation process.
And they were found. Relocations and the implementation of new technologies
triggered investment demand. While some industries, notably textile production,
moved almost completely from North to South, others, notably information
technology, moved from the innovation phase of the product cycle to maturity. Most
notable in the industrial restructuring processes since the late 1970s, though, was
the supersession of vertically integrated firms operating in the industrial districts of
the North, importing resources from the South when needed, into global production
networks linking production facilities North and South.70 Part of these networks
was the complementary build-up of information networks that were required to
manage global supply chains and transportation systems to move parts along these
Bowles, Boyer, op. cit.
John Smith, Imperialism and the Globalisation of Production (PhD-thesis,
University of Sheffield, 2010). For an early account see: Folker Fröbel, Jürgen
Heinrichs, Otto Kreye, The New International Division of Labour: Structural
Unemployment in Industrial Countries and Industrialization in Developing Countries
(Cambridge: Cambridge University Press, 1980).
chains and eventually to customers. Not surprisingly, then, information technologies
and logistics were key engines of growth during the neoliberal era – and often had
to be released from public property before they could pull the private accumulation
train. This points, beside industrial restructuring, to a second source of effective
demand during the neoliberal wave of accumulation, the privatization of public
enterprises – telecommunications, railways, roads, water, and social housing – and
public services like education and healthcare.71 Pension insurances were another
target of privatizations. The push of tax- or contribution funded pay-as-you-goschemes into financial market investments contributed significantly to the
financialization of the accumulation process in the neoliberal era.72 If industrial
restructuring and privatizations were the sources of growing effective demand
during this era, financialization was the lever that enforced the commodification of
economic areas previously protected by the welfare state.
The fiscal crisis of the welfare state created an opening for state creditors, i.e.
private wealth owners, to gain control over public policies. They effectively used the
threat to withdraw monies or buy new government bonds only at higher interest
rates to push the privatization agenda. Based on a stock of secure government
bonds they also embarked into increasingly risky private investments thus creating
a financial superstructure that boosted expected profit rates and, as a corollary,
maintained constant pressure on labour so that productivity gains swelled
capitalists’ pockets instead of finding their way into workers’ pay-checks. This
pressure fed into the restructuring of industrial production on a global scale. It also
led to the redistribution from wages to profits that validated rising profit
expectations – but only to some degree. Public sector austerity and real wages
lagging behind productivity growth also reproduced a growing gap of effective
demand in the internal capitalist market that was, as already shown, partially offset
by growing investment demand in the course of industrial restructuring and the
privatization of public enterprises and services, i.e. an expansion into external
markets. Part of this expansion and also part of the stabilization of demand in the
Marica Frangakis, Christoph Hermann, Jörg Huffschmid, Karoly Lorant,
Privatisation Against the European Social Model: A Critique of European Policies and
Proposals for Alternatives (Houndmills, Basingstoke: Palgrave Macmillan, 2009)
72 Doug Henwood, Wall Street – How it Works and for Whom (London, New York:
Verso, 1997). Gérard Duménil, Dominique Lévy, The Crisis of Neoliberalism
(Cambridge, MS: Harvard University Press, 2011), ch. 1-11.
internal market was the ‘explosion of debt and speculation’ that lay at the heart of
the ‘financialization of capitalism’.73
Financialization was not confined to the North. Following the debt crisis of the early
1980s it helped to open the doors to privatization in the South and a reassertion of
Northern centres of global capitalism over their Southern peripheries. As if she
knew about the debt crisis, Luxemburg wrote in AC:
‘Though foreign loans are indispensable for the emancipation of the rising
capitalist states, they are yet the surest ties by which the old capitalist states
maintain their influence, exercise financial control and exert pressure on the
customs, foreign and commercial policy of the young capitalist states.’74
Key instruments of financial control, aided by military intervention when necessary,
were the International Monetary Fund (IMF) and the World Bank (WB) who,
rigorously disregarding the principle of national sovereignty that had geared up
support for developmental states, brought the same privatization agenda to the
South that Northern governments implemented at home.75 In the South, it was
supplemented by the subjugation of rural economies, which had been modernized
under developmental state regimes so they could serve domestic markets, to the
imperatives of global capital accumulation. A new wave of enclosures pushed
peasants off their land and, by do doing, produced cheap workforces for sweatshops
in the South and service industries in the North.76 This ‘accumulation by
dispossession’77 was accompanied by a series of financial crisis. Just as the fiscal
crisis of Northern welfare states had opened the door to public austerity and a
parallel explosion of private debt and speculation so did the debt crisis in the South.
IMF and WB imposed austerity in the public sector went hand in hand with the
John Bellamy Foster, Fred Magdoff, The Great Financial Crisis – Causes and
Consequences (New York: Monthly Review Press, 2009), ch. 2&4. Brenner aptly calls
the complementary growth of debt and stock-market prices “stock-market
Keynesianism”, op. cit., p. 294. In a similar vain: Colin Crouch, ‘Privatised
Keynesianism: Un Unacknowledged Policy Regime’, British Journal of Politics and
International Relations 11:3 (2009), pp. 382-399.
74 AC, p. 401.
75 Eric Toussaint, Your Money or Your Life – The Tyranny of Global Finance (Chicago:
Haymarket Books, 2005).
76 See the thematic issue: ‘The New Enclosures’, Midnight Notes 10 (1990), also: AC,
ch. 27-30.
77 David Harvey, The New Imperialism (Oxford: Oxford University Press, 2003), ch. 4.
financialization of private capital accumulation – and a series of financial crises,
each followed by a transfer of property from South to North, and, as far as public
debt was involved, new austerity measures.
The accumulation of dispossession also drew the Soviet Union and its satellites and
China into the orbit of capitalism. The former in the aftermath of terminal crises that
destroyed the political and economic system of Soviet-style societies, the latter after
its political leaders had decided to turn onto the capitalist road.78 These economies
may not have been socialist in anything but name79 but, by and large, lay outside the
capitalist world market. Cold War competition, namely the arms race, certainly
impacted the development of these societies. Most of them also had taken out some
level of credit from Western banks and became victims of the debt crisis of the early
1980s like so many countries in the South. Military competition with and debt
service to the West put additional pressure on societies whose political and
economic systems were notoriously unable to adjust to their internal contradictions
and thus contributed to their downfall. Only when this happened, capitalist
penetration on a large scale became possible, which, in turn, contributed to the
neoliberal wave of accumulation.
However, this didn’t mean that the contradictions inherent in the neoliberal mode of
accumulation were overcome. Financial markets continued to boost profit
expectations far and above the profits that a continuous wage-squeeze and the
privatization of public services and enterprises generated. The series of financial
crisis that, since the original debt crisis of the early 1980s, had seized the South and
the former Soviet East eventually produced a ‘crisis in the heartland’ 80. The Wall
Street crash in 2008 ushered a cyclical downturn into the Great Recesison 2008/9
and led to a raid of public coffers so that the crisis of private finances was
transformed into a fiscal crisis of the state. With this, the neoliberal wave of
accumulation had gone full circle and ended exactly where it had started. Yet, unlike
Martin Myant, Jan Drahokoupil, Transition Economies: Political Economy in Russia,
Eastern Europe, and Central Asia (Hoboken: Wiley, 2010), section 1. David Harvey, A
Brief History of Neoliberalism (Oxford: Oxford University Press, 2005), ch. 5.
79 For a discussion of the character of the Soviet Union see: Marcel van der Linden,
Western Marxism and the Soviet Union (Chicago: Haymarket Books, 2009).
80 P. Gowan, ‘Crisis in the Heartland’, in Peter Gowan, A Calculus of Power – Grand
Strategy in the Twenty-First Century (London, New York: Verso), pp. 169-196.
Duménil, Lévy, op. cit, ch. 15-20.
in early 1980s when public austerity proved to be a lever for capitalist expansion
into the de-commodified territories of welfare and developmental states, no
measure of austerity taken since the Great Recession could open new markets for
further expansion. Capitalist accumulation has reached its limits – again,
Luxemburg’s conclusion in AC rings as true today as it did in 1913: ‘…accumulation
can go on no longer’ and capitalist history, therefore, ‘becomes a string of political
and social disasters and convulsions.’81
AC, p. 447