6. Economic Development and Socialism¶
Core Argument¶
Rosa Luxemburg’s chapter “Economic Development and Socialism” delivers a systematic demolition of Eduard Bernstein’s revisionist attempt to refute the Marxist case for socialism’s historical necessity. The core argument is that Bernstein fundamentally misunderstands the economic categories he deploys, substituting vulgar fiscal and property-based notions for Marx’s analysis of production relations. This error leads him to mistake the spread of joint-stock companies for a dispersal of capital rather than its socialisation under capitalist forms.
Luxemburg first tackles Bernstein’s use of German occupational statistics from 1882 and 1895. She argues that even if the persistence of medium-sized enterprises were proven, it would not weaken Marx’s analysis, which never posited the absolute disappearance of small capitals as a precondition for socialism. Bernstein’s later reliance on shareholding statistics is subjected to sharper critique. He cites falling average foundation capital for German joint-stock companies—from 10.8 million marks before 1871 to 0.62 million in 1892—to suggest a counter-tendency of large enterprises reverting to small ones. Luxemburg retorts that this merely reflects the penetration of the shareholding form into new branches of production where small and artisan enterprises previously predominated. The economic significance of the spread of joint-stock companies is precisely the opposite of what Bernstein claims: it represents the unification of small fortunes into large productive capital and the separation of ownership from production, a double victory over the capitalist mode of production still on a capitalist base. The growing number of shareholders does not signify a proliferation of individual capitalists but the transformation of the capitalist into a collective, socialised person.
Luxemburg identifies the root of Bernstein’s error: he treats ‘capitalist’ as a fiscal unit defined by property rights rather than a category of production. By moving the question from productive relations to relations of fortune, Bernstein shifts socialism from the antagonism between capital and labour to the opposition between rich and poor, thereby locating its realisation in the attenuation of class antagonisms and the petty bourgeoisie. This, Luxemburg charges, leads from Marx and Engels back to the utopian socialism of Wilhelm Weitling.
Bernstein’s statistical comparisons across different countries—England in 1891, France in 1894, the United States in 1890—prove only the absolute relation of class forces at a given moment, not any tendency of development. Luxemburg argues that to infer from the numerical insufficiency of a socialist majority the impossibility of socialism is to fall into the Blanquist error of relying on the factor of violence, albeit from the opposite direction. Social-Democracy sees socialism as the result of economic necessity and the comprehension of that necessity, manifested above all in the anarchy of capitalism. Bernstein’s concession of partial and national crises while denying general crises is dismissed with Marx’s illustration of the foolish virgin whose child “was only very small”: in economic anarchy, little and much are equally fatal.
The chapter culminates in a defence of Marx’s law of value against Bernstein’s charge that it is a mere abstraction comparable to the abstract utility of Böhm-Bawerk and Jevons. Luxemburg insists that Marx’s abstraction is a discovery, not an invention: abstract human labour has a real social existence in market economy, developed as money. Bernstein’s failure to grasp this leaves him unable to understand capitalist economy at all. The key to Marx’s entire system, she concludes, is his conception of capitalism as a transitory historical phenomenon viewed from the standpoint of socialism. Bernstein’s complaint about Marx’s ‘dualism’—the tension between scientific analysis and the socialist goal—is really an admission that he denies the class antagonisms of bourgeois society. His ‘monism’ is the unity of a former socialist who has renounced his aim and now sees bourgeois society as eternal. To salvage his programme, he transforms socialism from a historical phase into an abstract ‘principle,’ reducing it to the meagre ‘co-operative principle’ as a concession to his own socialist past.