• The Tragedy of Rosa Luxemburg, the Underconsumption Trap and the Export of Capital
• The Mathematics of Crisis and the Dialectic of Counter-Tendencies
• Financial Capital and State-Monopoly Socialisation
• Circulation Costs and the Time of Capital
• AI, the “clearing of estates” and the reserve army of labour
• The Debate on Collapse and the Avant-Garde of the Platform Era
• Militarism: The Destruction of Value and the Redistribution of the World
• Conclusion

The Anatomy of Decay: From the Mathematics of Crisis to World War. Why Capitalism Has No Future

Contemporary global capitalism is an unprecedented historical paradox. We live in an era of staggering technological triumph: artificial intelligence writes code, robotised factories churn out electronics, and algorithms manage global logistics. The annihilation of space through time – what Marx called the immanent tendency of capital – has reached its limit in instantaneous financial transactions and ultra-fast supply chains.

Yet for all this, the world economy is suffocating under the weight of global debt. The real incomes of the working class have stagnated for decades, while international tensions have reached levels reminiscent of the eve of the world wars.

To understand how technological abundance gives rise to social catastrophe, we must dust off a tool that bourgeois political economy has worked so hard to bury – the law of the tendency of the rate of profit to fall. Attempts to revise this law began a hundred years ago and continue to this day. Yet history inexorably confirms that the objective mathematics of capital leads the system not towards a linear and automatic collapse, but towards an era of increasingly destructive crises, from which there is only one of two possible ways out: either through social revolution, or through the descent of the world into barbarism.

The Tragedy of Rosa Luxemburg, the Underconsumption Trap and the Export of Capital

Bourgeois political economy has always sought to pass off the historically transient laws of capitalism as eternal laws of nature, disregarding precisely that specific feature which makes an instrument capital – the exploitation of the labour of others. Economists such as Bastiat seriously believed that antiquity existed solely through politics and plunder, failing to understand that even centuries of plunder require the constant renewal of the object of plunder – that is, an economy and a specific mode of production. Yet throughout the 20th century, even among Marxists themselves, there was a fierce theoretical struggle over the fundamental cause of the system’s disharmonies. The epicentre of this struggle was Rosa Luxemburg’s seminal work The Accumulation of Capital, published in 1913.

The strength of this work lay in its brilliant historical analysis of imperialism. Luxemburg advanced the thesis that capitalism is organically incapable of expanded reproduction in its pure form, that is, in a system consisting solely of capitalists and workers. To realise surplus value, it is vitally dependent on an external, non-capitalist environment – peasant households, artisans and colonies. From this followed a radical conclusion: primitive accumulation is not a historical stage in the genesis of capital that has already been passed, but a permanent condition of capital itself. Luxemburg herself formulated the inseparable link between the capitalist economy and direct extra-economic plunder as follows:

«The other aspect of the accumulation of capital concerns the relations between capitalism and the non-capitalist modes of production which start making their appearance on the international stage. Its predominant methods are colonial policy, an international loan system – a policy of spheres of interest – and war. Force, fraud, oppression, looting are openly displayed without any attempt at concealment, and it requires an effort to discover, within this tangle of political violence and contests of power, the stern laws of the economic process.

Bourgeois liberal theory takes into account only the former aspect: the realm of “peaceful competition”, the marvels of technology and pure commodity exchange; it separates it strictly from the other aspect: the realm of capital’s blustering violence, which is regarded as more or less incidental to “foreign policy”, and quite independent of the economic sphere of capital.

In reality, political power is nothing but a vehicle for the economic process. The conditions for the reproduction of capital provide the organic link between these two aspects of the accumulation of capital. The historical career of capitalism can only be appreciated by taking them together. “Sweating blood and filth with every pore from head to toe” characterises not only the birth of capital but also its progress in the world at every step, and thus capitalism prepares its own downfall under ever more violent contortions and convulsions».¹

However, a Marxist critique of Luxemburg’s concept should not be directed against her historically accurate description of imperialist violence, but against the theoretical reduction of the mechanisms of accumulation to this direct plunder. The error of the concept of permanent primitive accumulation lies in conflating the historical inception of the system with its normal, day-to-day functioning, thereby obscuring the unique nature of capitalist exploitation.

For classical Marxism, primitive accumulation is a one-off act, in historical terms, of the violent separation of the producer from the means of production. Once the capitalist system stands on its own feet, the need for armed plunder as the foundation of the economy disappears. It is replaced by a legalised and systematic mechanism for the appropriation of unpaid labour. Karl Marx stated this transition unequivocally:

«Direct extra-economic force is still of course used, but only exceptional cases. In the ordinary run of things, the worker can be left to the “natural laws of production”, i.e. it is possible to rely on his dependence on capital, which springs from the conditions of production themselves, and is guaranteed in perpetuity by them».²

Reducing accumulation primarily to violent expansion pushes Marxist political economy back towards the positions that Friedrich Engels harshly criticised in his polemic against Dühring:

«Wherever private property evolved it was the result of altered relations of production and exchange, in the interest of increased production and in furtherance of intercourse – hence as a result of economic causes. Force plays no part in this at all. Indeed, it is clear that the institution of private property must already be in existence for a robber to be able to appropriate another person’s property, and that therefore force may be able to change the possession of, but cannot create, private property as such».³

It is precisely here, in Rosa Luxemburg’s attempt to provide a political-economic justification for the necessity of constant external expansion, that the root of the problem lies. While Rosa Luxemburg’s insight was unrivalled in describing the political diktat of capital, it failed her in the sphere of rigorous political-economic theory.

What, then, was Luxemburg’s actual theoretical error concerning the question of realisation? For a long time, Marxist literature – and Stalinist literature to an even greater extent – was dominated by the simplified view that Luxemburg’s main error was that she remained trapped in “Smith’s dogma” and mechanically extended the problem of the realisation of articles of consumption (Department II) to the entire mass of values produced. In other words, she was accused of ignoring the primacy of productive consumption over personal consumption and of failing to understand that capital creates a market for itself by absorbing elements of constant capital (means of production), regardless of the limits of the purchasing power of final consumers.

This interpretation, which was reproduced in Stalinist textbooks on political economy, formally drew on the polemic conducted by Lenin and Bukharin against Luxemburg. Thus, in March 1913, immediately after the publication of the book, Lenin delivered a harsh verdict in a private letter to Kamenev:

«I have read Rosa’s new book “Die Akkumulation des Kapitals”. She has got into a shocking muddle. She has distorted Marx. I am very glad that Pannekoek and Eckstein and O. Bauer have all with one accord condemned her, and said against her what I said in 1899 against the Narodniks».⁴

What, then, was this fundamental error of the Narodniks (V. Vorontsov and N. Danielson) which, in Lenin’s view, Luxemburg repeated? The Narodniks, as the direct heirs of Jean Sismondi’s economic romanticism, argued that since capitalists underpay workers, the latter are unable to purchase the entire mass of goods produced. From this they concluded that the domestic market was inevitably shrinking and that, without external markets, capitalism was doomed to collapse because of the masses’ under-consumption. Lenin had already demonstrated the fallacy of this view at the end of the 19th century. He showed that under capitalism, the domestic market grows not so much through articles of personal consumption (food, clothing, etc. – Department II) as through means of production (machinery, raw materials, etc. – Department I). Capitalism produces for the sake of the self-expansion of value, not for the satisfaction of human needs; therefore, up to a certain point, coal mines and engineering works generate enormous demand for one another, regardless of how much calico impoverished workers can actually buy in the current cycle.

Drawing on Marx’s Capital, Lenin summarised:

«The development of production (and, consequently, of the home market) chiefly on account of means of production seems paradoxical and undoubtedly constitutes a contradiction. It is real “production as an end in itself” – the expansion of production without a corresponding expansion of consumption. But it is a contradiction not of doctrine, but of actual life; it is the sort of contradiction that corresponds to the very nature of capitalism and to the other contradictions of this system of social economy. It is this expansion of production without a corresponding expansion of consumption that corresponds to the historical mission of capitalism and to its specific social structure: the former consists in the development of the productive forces of society; the latter rules out the utilisation of these technical achievements by the mass of the population. There is an undoubted contradiction between the drive towards the unlimited extension of production inherent in capitalism, and the limited consumption of the masses of the people (limited because of their proletarian status)».⁵

This is a crucial theoretical clarification. Does this mean that the revolutionary Marxist Luxemburg consciously became a petty-bourgeois romantic like Jean Sismondi? Not at all. Luxemburg herself devoted an entire chapter of her book to a scathing critique of Sismondi, who, horrified by the ills of capitalism, proposed slowing down progress and returning to small-scale production. Yet Lenin accurately identified the tragedy of her analysis: in attempting to prove the inevitability of the collapse of imperialism, she made an error in her handling of Marx’s abstractions. By reducing the problem of realisation to the search for final consumers and underestimating the capacity of constant capital (Department I) to generate colossal demand for itself, she objectively, against her own intentions, repeated Sismondi’s old argument that, without external markets, the system would suffocate under the weight of its own commodities.

Here, however, Marxist thought encounters the danger of the opposite extreme – the apologetic theory of “pure” and harmonious capitalism, most clearly formulated by M. I. Tugan-Baranovsky. By making his thesis that the market grows at the expense of the means of production an absolute law, Tugan-Baranovsky argued that Department I could develop entirely independently of Department II, and that capitalism was capable of expanding indefinitely, even if the personal consumption of the proletarian masses were to fall to zero. Such “production for production’s sake” transformed capitalist anarchy into an ideal, self-sufficient machine.

Bukharin brilliantly refuted this illusion in his book Imperialism and the Accumulation of Capital (1925). In it, he argued both against the untenability of Tugan-Baranovsky’s schemes, which severed production from consumption, and against the errors of Rosa Luxemburg. Emphasising the dialectical connection between the branches of production, he showed that Luxemburg’s main political-economic error lay in conflating the natural-material form of the commodity with its value form. Bukharin pointed out that Luxemburg consistently treated the category of consumption exclusively in terms of personal consumption. In asking to whom the capitalists would sell the surplus of commodities produced in a non-capitalist environment, she overlooked the fact that surplus value in Department I exists physically in the form of coal, steel and machinery. Bukharin pointedly remarked that a peasant in a colony has no need for a rolling mill. These means of production are not intended for sale to “third parties”, but for productive consumption by capital itself in the next cycle of expanded reproduction.

However, in demolishing Rosa Luxemburg’s argument about “external markets”, Bukharin simultaneously delivers a crushing blow to Tugan-Baranovsky and his ilk. He demonstrates that the accelerated development of Department I is subject to strict technological limits: constant capital increases not as an abstraction, but because its value is transferred to final articles of consumption. Capital can temporarily expand the limits of the masses’ effective demand through mutual demand between industrial sectors, but the independence of Department I is only relative. In the final analysis, the capacity of the market for means of production is determined by the capacity of the market for articles of consumption, and when the spontaneous separation of production from final personal consumption reaches its limit, a profound economic crisis erupts, forcibly imposing the disrupted proportions upon the system.

Thus, if we set aside the initial accusations that Luxemburg had slipped into the logic of the proponents of the vulgar theory of under-consumption, we shall see that, although Luxemburg’s logic was deeply mistaken, it was nevertheless different. An excerpt from Luxemburg’s work, to which V. I. Lenin drew attention, sheds light on this, with Lenin explicitly pointing out that this is where the «root of the error» lies.⁶ Luxemburg’s logic consists in the following proposition, on which her entire theory rests:

«The interrelations of accumulating capital and non-capitalist forms of production extend over values as well as over material conditions, for constant capital, variable capital and surplus value alike. The non-capitalist mode of production is the given historical setting for this process. Since the accumulation of capital becomes impossible in all points without non-capitalist surroundings, we cannot gain a true picture of it by assuming the exclusive and absolute domination of the capitalist mode of production».⁷

Lenin and Bukharin brilliantly exposed the essence of Luxemburg’s errors in two profound respects – the theoretical and the historico-methodological.

First, on the theoretical level, Lenin showed that Luxemburg’s error lay in her conviction that a “pure” capitalist society produces so many commodities that, in principle, it is incapable of generating sufficient aggregate effective demand – encompassing both consumer and productive demand – to absorb them. She regarded the problem of realisation within pure capitalism as insoluble, failing to see that within it the department producing the means of production (Department I) is capable of developing and creating enormous demand for itself.

Second, from a historico-methodological perspective, Bukharin analysed this error. Luxemburg proceeded from the premise that, since the actual historical development of capitalism takes place in a non-capitalist environment, fundamental theoretical analysis has no right to abstract from that environment. She saw the mechanism of interaction as follows: in order to realise the surplus value destined for accumulation, capitalists sell means of production and articles of consumption to “third parties”, receive money from them, and use that money to purchase the necessary raw materials.

However, Bukharin pointed out that such an approach leads to a profound methodological split and a logical absurdity:

«Does it not seem obvious, then, that if we are not allowed to abstract from the small producers, as Rosa Luxemburg suggests, then we are not allowed to use this abstraction in the investigation of production? If one has to sell woven cloth to the small producers in the “real process”, one also has to buy cotton from them in order to produce woven cloth.

So either one must not abstract from the “third persons”, in which case neither must one do it in the analysis of capital production, or one is allowed to, in which case one can also do it in the analysis of the process of accumulation. The dualism of the method leads to an absurdity, as we have shown».⁸

By replacing a rigorous, abstract theoretical analysis of Marx’s schemes of reproduction – which requires one to abstract from the non-capitalist environment – with an empirical-historical description, Luxemburg turned a historical fact into an immutable theoretical law. Hence her fatalistic conclusion: as soon as capitalism had absorbed the entire non-capitalist world, it would inevitably have to collapse because of a complete lack of markets for realisation.

Historical facts refuted this conception. By the end of the 19th and beginning of the 20th century, capitalism had already integrated the last major areas of pre-capitalist backwardness,⁹ yet no collapse occurred. Today, the heirs of this erroneous line of thought continue to assert that the system has entered an era of final decline solely because the world market has been geographically exhausted. By ignoring the law of the tendency of the rate of profit to fall, these currents reduce the highly complex process of the self-expansion of value to the banal problem of the realisation of commodities, effectively substituting Proudhonism for Marxism.

As Marx so brilliantly put it in Volume III of Capital:

«The real barrier of capitalist production is capital itself».¹⁰

The problem lies not in a physical shortage of external buyers, but in the internal antagonism of the system. Capitalism is suffocating because the value produced cannot increase indefinitely on the basis of a shrinking share of living labour.

As the Polish Marxist Henryk Grossman¹¹ demonstrated in his work The Law of Accumulation and Breakdown of the Capitalist System (1929), in pure capitalism, demand for means of production (constant capital) grows and creates a market for itself. The problem with the system is not that it cannot sell its commodities, but that at a certain stage it encounters a phenomenon that Marx called the absolute over-accumulation of capital. There is a mathematical limit at which the enormous additional capital thrown into production yields no additional surplus value at all because of the enormously increased organic composition of capital.

And here we encounter a striking paradox: a theorist who spent his entire life fighting against theories of under-consumption was later accused of precisely this. In Volume 6 of the collected works of Arrigo Cervetto, the founder of Lotta Comunista, Grossman is falsely characterised as an «acute underconsumptionist». Cervetto writes:

«For Grossman, the underconsumption of the proletariat prevents an increase in production and, consequently, further consumption. As a result, the realisation of surplus value is narrowed to such an extent that the organic composition of capital does not rise …».¹²

Cervetto made the same methodological error as most of Grossman’s opponents: he grossly confused the crisis of the realisation of commodities with the crisis of the self-expansion of value (a shortage of the absolute mass of profit required for further accumulation). Grossman never claimed that capitalism would suffocate because it was unable to sell commodities within the system. On the contrary, in his model, every commodity successfully finds a buyer. The impasse arises not in the market, but in the workshop: as the organic composition of capital (c/v) increases, the mass of living labour (v) becomes too small in relation to constant capital (c) to generate a sufficient mass of surplus value (s). It is precisely here that the internal limit to the accumulation of capital arises.

In his principal work, Grossman wrote:

«This only shows that the problem is not whether there is a surplus of commodities or not. In fact we have assumed a state of equilibrium where, by definition. there can be no unsaleable residue of commodities. Yet still the system must break down. The real problem lies in the valorisation of capital; there is not enough surplus value to continue accumulation at the postulated rate. Hence the catastrophe».¹³

Grossman’s letters to Paul Mattick also serve to refute Cervetto’s accusations. In a letter dated 21 June 1931, the Polish Marxist sarcastically mocked his critics’ failure to understand the method of Capital:
«Someone has ironically said, in criticism of me, that in my book capitalism does not break down because of the misery of the workers but rather because of the misery of the capitalists. This objection does not affect me but rather Bauer. […] I do not claim that surplus value becomes smaller. It can become larger. And still it is insufficient because accumulation (as it requires an ever greater organic composition) swallows up an ever larger part of the surplus value. […] Therefore the consumable portion of the surplus value, the part available for additional workers […] and that available for the consumption of the capitalists themselves […], becomes smaller and smaller both relatively and absolutely. […] But I wanted to show that the class struggle alone is not enough. The will to bring it down is not sufficient».¹⁴

According to Grossman, capital does not run up against the limits of the masses’ effective demand, but against Marx’s absolute over-accumulation: additional capital is absorbed into production, but, owing to a shortage of unpaid living labour, it no longer produces any additional profit.

Lenin’s analysis of imperialism, long before this debate began, struck a blow against the illusions of under-consumption and confirmed the validity of the Marxist core. Lenin showed that capitalism crosses national borders not simply in search of buyers for its calico and machinery. The export of capital, rather than the export of commodities, becomes paramount. Capital flows into colonies and semi-colonies because the organic composition of capital there is low, while labour and land are cheap. This makes it possible to extract monopoly super-profits and compensate for the decline in profitability in the metropolises. The heart of capital does not beat through pirate raids aimed at selling surpluses, but through the routine, legally enshrined, silent coercion of wage labour on a global scale.

The Mathematics of Crisis and the Dialectic of Counter-Tendencies

The illusion that general crises are impossible stems from commodity fetishism. As Marx wrote:

«There it is a definite social relation between men, that assumes, in their eyes, the fantastic form of a relation between things. In order, therefore, to find an analogy, we must have recourse to the mist-enveloped regions of the religious world. In that world the productions of the human brain appear as independent beings endowed with life, and entering into relation both with one another and the human race. So it is in the world of commodities with the products of men’s hands».¹⁵

This blind faith in market harmony is reinforced by the class schizophrenia of the bourgeoisie itself. The capitalist leads a double life. In the sphere of production, hidden from the eyes of outsiders, he is an absolute dictator, extracting surplus labour. But on the open market, he deals with his equals, and here begins the «battle of cunning with cunning»¹⁶. What he understands perfectly well in the workshop, he forgets in the market. When a crisis strikes, capitalists are genuinely surprised: after all, production was “healthy”, and it was only sudden “speculative ventures” that caused prices to collapse.

The bourgeoisie believes in the identity of supply and demand, forgetting that the capitalist produces commodities not for consumption, but for the multiplication of abstract wealth. Money, by becoming the universal measure of value, splits the single act of exchange in two: the seller of a commodity is under no obligation to buy another commodity immediately. Marx gave this phenomenon an exhaustive definition:

«__Crisis is nothing but the forcible assertion of the unity of phases of the production process which have become independent of each other».¹⁷

To keep production from grinding to a halt, capital creates a grand fiction – credit. It does not prevent crises, as revisionists such as E. Bernstein had hoped, but merely masks them, artificially extending the limits of production until the inevitable collapse.

But why is capital doomed to crises?

The classical Marxist formula for the rate of profit is as follows:

where s is surplus value, c is constant capital (machinery, raw materials), and v is variable capital (wages).

In its struggle to survive in competition, capital replaces living labour with machinery (an increase in c relative to v). A paradox arises:

«The rate of profit falls, although the rate of surplus-value remains the same or rises, because the proportion of variable capital to constant capital decreases with the development of the productive power of labour. The rate of profit thus falls, not because labour becomes less productive, but because it becomes more productive».¹⁸

The share of living labour – the sole source of surplus value – declines in relation to the mass of means of production employed.

However, Marxism is far from mechanistic. The fall in the rate of profit is not a straight line into the abyss. Marx himself emphasised:

«If we consider the enormous development of the productive forces of social labour in the last 30 years alone as compared with all preceding periods; if we consider, in particular, the enormous mass of fixed capital, aside from the actual machinery, which goes into the process of social production as a whole, then the difficulty which has hitherto troubled the economist, namely to explain the falling rate of profit, gives place to its opposite, namely to explain why this fall is not greater and more rapid. There must be some counteracting influences at work, which cross and annul the effect of the general law, and which give it merely the characteristic of a tendency, for which reason we have referred to the fall of the general rate of profit as a tendency to fall».¹⁹

Moreover, economic collapses do not signify the “death” of capital. Marx was explicit:

«The crises are always but momentary and forcible solutions of the existing contradictions. They are violent eruptions which for a time restore the disturbed equilibrium».²⁰

A crisis is a barbaric mechanism by which the system heals itself through the destruction of excess, over-accumulated capital that has lost its capacity for self-expansion. At the same time, Marx clearly pointed out that capital does not always require direct military destruction. Its main everyday mechanism of cleansing is the economic devaluation of capital. Mass bankruptcies, stock market crashes and the sale of assets at rock-bottom prices lead to a sharp fall in the value of constant capital (c). Bankrupt factories are bought up for next to nothing, reducing the denominator in the formula and restoring the rate of profit for the surviving predators.

The historical evolution of capitalism since the Second World War confirms this. The long economic boom (late 1940s – 1973) became possible only through the monstrous physical destruction of vast masses of constant capital in the course of the imperialist slaughter, which temporarily neutralised the contradictions and raised the rate of profit. But as early as 1965–1973, a sharp fall in profitability brought the “golden age” to an end. The decoupling of the dollar from gold (the “Nixon shock” of 1971), the oil crises and the collapse of the Bretton Woods system were the political expression of this macroeconomic impasse.

As Marx pointed out in Volume III of Capital, the system generates powerful counter-tendencies. To compensate for the fall in incomes in the 1970s, capital shifted towards a neo-liberal model: the relocation of actual production to zones of “new capitalism” (Asia, Latin America) and the massive expansion of credit to sustain demand while real wages stagnated. Modern technologies are dual in their effects: AI and automation not only increase the organic composition of capital, but also drastically reduce the cost of elements of constant capital (servers, robotics). At the same time, capital increases the degree of exploitation of labour: the modern platform economy and the blurring of the boundaries between working and personal time (remote working) are mechanisms for extracting both relative and absolute surplus value, intended to slow the fall in the rate of profit p′. The crisis unfolds as a dialectical struggle between the fundamental law and the counteracting factors.

Financial Capital and State-Monopoly Socialisation

As opportunities for increasing profitability in the real sector are exhausted, capital makes the leap into financialisation. Capitalist nations, as Marx wrote, «are periodically seized by a fever of swindling, when they want to make money without the burdensome mediation of the production process».²¹

The explosion of fictitious capital is not a sign of the “strength” of finance, but a sign of the decrepitude of the system as a whole. It is an attempt to cheat time by consuming today surplus value that has not yet been produced. Reformists, following R. Hilferding, still believe that the problem lies with “evil, parasitic bankers” who have strangled honest industrialists. Grossman emphasised that he opposed Hilferding, but agreed with Lenin. In 1931, drawing on Lenin’s precise definition, he wrote:

«Hilferding understands finance capital to be bank capital; he does not ask who stands behind this bank capital. I oppose this conception of the decisive role of bank capital. Lenin, on the other hand, understands finance capital not as bank capital, but as the merging of monopoly capital, primarily industrial capital, with state power and policy, which is a tool of this capital. That is something quite different. That the banks are facilitators of the expansion of capital is clear».²²

Financial capital is not the arbitrary rule of the banks; it is an organic symbiosis of monopolies. The collapse of the derivatives system in 2008 was the first global historical warning that fictitious capital cannot indefinitely absorb surpluses without direct state intervention.

When this unified financial capital finally becomes fused with the state apparatus, we get state-monopoly capitalism.

Lenin repeatedly emphasised that the state is neither a supra-class arbiter nor a neutral manager of the system. When the rate of profit falls, the state does not merely “help” the banks – it assumes control over the process of exploitation, centralising the financial levers in the interests of specific transnational monopolies.

The expansion of the US Federal Reserve’s balance sheet to around $9 trillion at its peak in order to buy up debt is a mechanism for transferring value through inflation from the pockets of the working class towards rescuing the falling rate of profit. It should be noted, however, that the Fed’s principal instrument was the purchase of Treasury securities and government-guaranteed mortgage-backed securities; direct purchases of corporate bonds were carried out on a limited scale only in 2020.

Today, according to various estimates, 15–20 per cent of corporations in developed countries have become “zombie companies”, earning just enough to cover the interest on their existing debts. These figures appear in studies by the Bank for International Settlements (BIS), although the specific estimates vary depending on the methodology and the period under consideration.

The private sector’s total dependence on state injections brings us back to Friedrich Engels’s important conclusion in Anti-Dühring. He pointed out that the growth of state intervention in the economy, which is compelled by capitalism, is not merely a symptom of the system’s decay, but also an objective recognition of the social character of the productive forces.

«This rebellion of the productive forces, as they grow more and more powerful, against their quality as capital, this stronger and stronger command that their social character shall be recognised, forces the capitalist class itself to treat them more and more as social productive forces, so far as this is possible under capitalist conditions».²³

Today, this social character has reached an entirely new technological level: it has taken the form of planetary systems of algorithmic logistics which, de facto, already unite the world economy into a single mechanism.

The same idea was defended in 1952 in the pages of the journal Prometeo. In the article “Il New Deal, o l’interventismo statale in difesa del grande capitale” (The New Deal, or State Intervention in Defence of Big Capital) we read:

«[…] despite differences in political form, the capitalist regime responds to its internal crises in a uniform manner, applying methods of economic policy common to both democracy and fascism. Interventionism, dirigisme and state administration – which, on the other hand, are the classic recipes of reformism for “economic and social recovery” – are common features of any bourgeois political regime at the stage of maximum intensification of its internal contradictions. At the international level, they converge in that they are manifestations of a policy of capitalist conservation».

Circulation Costs and the Time of Capital

At the dawn of its history, the bourgeoisie hated unproductive consumers, believing that their very existence merely increased overhead costs. In his draft manuscripts, Marx draws a brilliant distinction: John Milton, who sold the manuscript of Paradise Lost for £5, was an unproductive worker. He produced a poem just as a silkworm produces silk. But a talentless hack working for a publisher, or a singer hired by an impresario, are productive workers, because they produce capital. Capitalism destroys the uniqueness of the creator, turning them into a cog in the process of the self-expansion of value.

But over time, the system realised that, in order to absorb surplus commodities and avoid suffocating from overproduction, it vitally needed this parasitic stratum, as Thomas Malthus wrote with cynical candour. The capitalist class functions as a giant joint-stock company, paying for its own stability.

Today, capital has spawned a vast army of commercial workers – marketers, managers and office clerks. Unlike a factory worker or a programmer, an office clerk does not produce surplus value. Capital breeds useless positions. Today we might call them “bullshit jobs”.

However, from the standpoint of Marx’s theory, this is not simply a matter of moral parasitism. This army is necessary for the system to reduce circulation time. The faster a commodity is realised in an oversaturated market, the faster capital turns over, and the greater the annual mass of profit. At the same time, Marx makes a crucial clarification: the unpaid labour of the commercial worker does not increase the total mass of value, but allows the commercial capitalist to appropriate a share of the profit created in production. The clerk works for free for part of the working day, and it is precisely this that reduces the capitalist’s costs of selling.

AI, the “clearing of estates” and the reserve army of labour

But today capital itself is undermining this mechanism: artificial intelligence is encroaching on the sphere of intellectual labour. The essence of the genesis of capitalism lay in the expropriation of the worker’s means of production – what Marx called the «clearing of estates».²⁴ Just as in Tudor England sheep “ate people” for the sake of capitalist cloth production, so today algorithms are “eating” white-collar workers.

AI, embodying the General Intellect, acts as an alien force in relation to the cognitive worker. Programmers and analysts lose their monopoly on knowledge and become appendages of the algorithm, forming a single collective worker.

Automation inevitably creates an army of “superfluous” people. Capital vitally needs an industrial reserve army of labour to exert downward pressure on the wages of the active workforce. Platform employment (according to data from the Oxford Internet Institute and the World Bank, in 2019–2020, out of 163 million registered profiles on online platforms, only around 14 million had obtained work at least once, and only 3.3 million worked on a permanent basis)²⁵ is becoming an ideal form of piecework, leading to brutal self-exploitation. The atomisation of the precariat is one of the factors fuelling right-wing populism in the US and Europe, particularly in the “Rust Belt”, where the masses are deprived of stability and thrown into the meat grinder of the gig economy. At the same time, the electoral base of right-wing populism is heterogeneous: alongside precarious workers, it includes small business owners, a section of the labour aristocracy, and provincial communities experiencing a sense of cultural and social humiliation.

At the same time, the formation of a unified political vanguard is severely hampered by a political phenomenon described in detail by Lenin: the labour aristocracy. The vast gulf between highly paid IT specialists in the metropolises (whose status is sustained by imperialist super-profits) and the disenfranchised proletariat in the “Global South” is becoming a major obstacle to class solidarity.

It is important to note here that certain left-communist currents still cling to the dogma of an absolute, permanent stagnation of the productive forces in the era of imperialism. They fail to see that capital continues to revolutionise technology, but does so in increasingly destructive and antagonistic forms. Denying this fact leads to theoretical blindness: instead of analysing how new technologies are changing the structure of the proletariat and the ways in which relative surplus value is extracted, these groups reduce Marxism to a rigid dogmatic framework in which capitalism simply “decays” without any internal technological dynamics.

The Debate on Collapse and the Avant-Garde of the Platform Era

In 1934, in the pages of the journal Rätekorrespondenz, Anton Pannekoek offered a substantial critique of Grossman’s errors:

«The question which in the end merits attention is how can an economist who believes he is correctly reconstructing Marx’s views, and who further states with naive self-assurance that he is the first to give a correct interpretation of them, be so completely mistaken and find himself in complete contradiction with Marx. The reason lies in the lack of a historical materialist understanding. For you will not understand Marxian economics at all unless you have made the historical materialist way of thinking your own.

For Marx the development of human society, and so also the economic development of capitalism, is determined by a firm necessity like a law of nature. But this development is at the same time the work of men who play their role in it and where each person determines his own acts with consciousness and purpose — though not with a consciousness of the social whole. To the bourgeois way of seeing things, there is a contradiction here; either what happens depends on human free choice or, if it is governed by fixed laws, then these act as an external, mechanical constraint on men. For Marx all social necessity is accomplished by men; this means that a man’s thinking, wanting and acting although appearing as a free choice in his consciousness — are completely determined by the action of the environment; it is only through the totality of these human acts, determined mainly by social forces, that conformity to laws is achieved in social development.

The social forces which determine development are thus not only purely economic acts, but also the general-political acts determined by them, which provide production with the necessary norms of right. Conformity to law does not reside solely in the action of competition which fixes prices and profits and concentrates capital, but also in the establishment of free competition, of free production by bourgeois revolutions; not only in the movement of wages, in the expansion and contraction of production in prosperity ant crisis, in the closing of factories and the laying off of workers, but also in the revolt, the struggle of the workers, the conquest by them of power over society and production in order to establish new norms of right.

Economics, as the totality of men working and striving to satisfy their subsistence needs, and politics (in its widest sense), as the action and struggle of these men as classes to satisfy these needs, form a single unified domain of law-governed development. The accumulation of capital, crises, pauperisation, the proletarian revolution, the seizure of power by the working class form together, acting like a natural law, an indivisible unity, the collapse of capitalism».²⁶

Paul Mattick came to Grossman’s defence. In his reply, he showed that Pannekoek had completely failed to understand Marx’s method of scientific abstraction, and steered the discussion back towards the Marxist dialectic of the objective and the subjective. Mattick explained that Grossman had used Bauer’s abstract schema solely as a laboratory method for reducing the reformist theory of harmonious capitalism to absurdity. The mathematical schemes were constructed within the framework of “pure capitalism” (where foreign trade, monopolies and credit are abstracted from), not in order to predict a fatalistic end of the world on a particular date, but to demonstrate the very impossibility of crisis-free development of the system on its own political-economic foundations.

According to Mattick, the abstract value schema is not a prophecy, but the first stage in Marx’s method of successive approximation to concrete reality. Capitalism inevitably collapses within the framework of the «pure model» in order to demonstrate that, in living historical reality, the system is capable of surviving temporarily and postponing its objective limit only through convulsive intensification of exploitation and destructive crises. By clearly distinguishing between the abstract-theoretical endpoint and the real historical process, Mattick separated the abstract economic model from living historical reality:

«Pointing out the tendency towards collapse in the schema does not lead Grossmann, as the critic would have us believe, to the view “that the great Kladderadatsch will occur without there being a revolutionary class capable of defeating and expropriating the bourgeoisie”. For Grossmann, the existence of this class and the expropriation are self-evident given the objective situation, because for him there is simply no such thing as a purely economic problem. Indeed, these subjective factors can only exist, equally self-evidently, because the objective situation is ripe for collapse. Grossmann wrote his book on the “obviously false” assumption that, in scholarly works, self-evident matters need not be mentioned. Just as Marx did not write a separate theory of collapse, because for the dialectician it is self-evident that the accumulation of capital on the basis of value can only culminate in collapse. […] if the objective conditions for revolution are present, then for the Marxist the subjective conditions are, as a matter of course, present as well. Objective necessities are ultimately fulfilled by human beings – however long the delay may be. Demonstrating the economic collapse establishes only the inevitability of revolution».²⁷

Thus, Mattick argued, the mathematical limit in the abstract schema does not signify the automatic death of capitalism in the real world, but rather the onset of an era of permanent and extremely severe crises, which merely create the objective conditions for revolution. The final overthrow of the system, however, is impossible without the subjective factor – the active political action of the proletariat. Capitalism does not collapse of its own accord; it merely forges political-economic chains and compels the working class to break them.

Grossman’s chief contribution is his mathematical demonstration of collapse through the law of the falling rate of profit, by which he restored a proposition that had effectively been buried by Hilferding and Kautsky: the idea of an objective economic limit to capitalist accumulation.

Hilferding reduced crises to disproportionality in the distribution of capital among branches of production and concluded that, under planned distribution, they could be eliminated and production could grow indefinitely – that is, capitalism has no internal limit and can fall only through the will of the working class, not by virtue of its own laws of motion. Kautsky went further, rejecting the very idea of a historical limit to capitalism, which he had previously defended.

It is precisely against this departure from Marx that Grossman’s polemic is directed: the genuine doctrine of collapse speaks of the objective necessity of capitalism’s demise, but not in the sense of its automatic occurrence without the active intervention of the proletariat; rather, it speaks of an objectively maturing limit that makes this intervention historically necessary. Here Grossman is right: without an objective limit to accumulation, socialism, as Rosa Luxemburg had already pointed out, degenerates into a matter of pure theory – an idealistic justification divorced from the material course of development.

But Grossman’s weakness lies in the way he presents his argument: in defending the objective limit against its deniers, he himself fell into the opposite extreme. Carried away by “pure economics”, he constructed a mechanistic model (collapse in the 35th year according to Bauer’s schema), in which the class struggle appears as an artificial addition rather than the driving force of history. This is the same one-sidedness found in Kautsky and Hilferding, only with the opposite sign: whereas they dissolved objective necessity into the will of the class, Grossman separates the economic limit from the class struggle, turning the calculation of the date of collapse into a purely arithmetic problem – whereas for Marx these are two sides of a single dialectical process, not quantities independent of one another. Hence the accusation of determinism.

Marxism tolerates neither a mechanical expectation of the “final collapse” nor unstructured voluntarism. Capitalism has no final limit beyond which it simply ceases to exist. The bourgeoisie will always find a way out of even the deepest macroeconomic impasse, provided that the proletariat allows it to do so at its own expense. Without the subjective factor – the revolutionary organisation of the proletariat – the system will rot indefinitely, moving from one cycle of wars to another.

The monopoly of capital becomes a fetter on the socialised mode of production that has grown up under its cover. As Marx summarised:

«Centralisation of the means of production and socialisation of labour at last reach a point where they become incompatible with their capitalist integument. This integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated».²⁸

This is the historical negation of the negation.

Militarism: The Destruction of Value and the Redistribution of the World

When peaceful bankruptcies are no longer sufficient to clear away the debris of over-accumulation, capital demands the military destruction of the productive forces themselves. In her work The Accumulation of Capital, Rosa Luxemburg perceptively examined militarism as a sphere of capitalist accumulation, in which the state uses taxation to compel the working class to pay for the means of its own destruction.

Drawing on Marx’s theory of value, we can say that, for capital, war is not merely a large-scale write-off of surplus commodities. It is the violent, physical nullification of the value of accumulated past, objectified labour – that is, of constant capital (c). Living, functioning capital is physically incapable of self-expansion as long as old capital retains its colossal value in the denominator of the rate of profit formula cited above. In order to save the rate of profit (p′) from a fatal fall, the decaying organism of capitalism is compelled to reduce the material results of past cycles of accumulation – cities, infrastructure and individual factories – to dust. Only through the total devaluation and physical destruction of this “dead labour” (c) is the ground cleared for a new historical cycle of recovery, opening up scope for a high rate of profit and a barbaric intensification of the exploitation of living labour (v). Historically, this is brilliantly confirmed by post-war reconstruction programmes, such as the Marshall Plan, which provided a colossal stimulus for a new round of capitalist accumulation. Periods of peace under capitalism merely create the conditions for the next round of the accumulation of contradictions, the resolution of which has historically often taken the form of the military destruction of over-accumulated capital.

But, following Lenin, we must emphasise: war is not merely an economic accounting exercise for writing off surpluses. It is a brutal inter-imperialist struggle between national monopolies for the redistribution of an already divided world, for new spheres of investment and for control over resources. The current escalation of global conflicts and the colossal rise in military spending (US$2.89 trillion in 2025, according to SIPRI, an increase of 36.6 per cent in real terms compared with 2021) constitute a “rational” response by capital to the impasse of over-accumulation. The military-industrial complex functions as an ideal safety valve: it produces highly sophisticated capital, the sole use-value of which lies in being destroyed and in destroying the surplus capital of competitors.

Conclusion

Marx’s methodology provides the tools for understanding those contradictions which bourgeois political economy is incapable of either acknowledging or resolving. We find ourselves at a historical juncture where the colossal productive forces brought into being by technology are entering into a deadly conflict with the system’s impoverished attempt to measure wealth in terms of money.

Social life will cast off the mystical, hazy veil of commodity fetishism only when it becomes the product of the free association of people acting according to a conscious plan. The true wealth of society lies not in the surplus labour squeezed out of human beings, but in the free time available for the all-round development of every individual. But as long as capital reigns, this free time is transformed into pauperism and destitution at one pole for the sake of unimaginable abundance at the other.

The centralisation of the means of production has reached such a scale that the capitalist shell has become its direct fetters. As Rosa Luxemburg prophetically warned in 1915 in the Junius Pamphlet, society faces an inescapable crossroads:

«Either transition to socialism or regression into barbarism».²⁹

Capitalism will never die a natural death from “old age” or the automatic exhaustion of markets. It will rise endlessly from the ashes of world wars and devastating crises until it is consciously destroyed by the communist revolution of the proletariat. The question of our century boils down to one thing: will the working class, led by its revolutionary vanguard, succeed in harnessing the global algorithmic machine of capital to build a free and planned society, or will imperialism once again resolve the problem of the falling rate of profit in the flames of global self-destruction? And here Lenin’s law of uneven capitalist development comes into play: the proletarian blow will bring down the system not abstractly “everywhere”, but where the imperialist chain is weakest. And the question of where the weakest link in this chain – that is, the link most exposed to imperialist contradictions – is located today is one of the key problems of Marxist analysis.

May 2026

Footnotes

1. - R. Luxemburg. The Accumulation of Capital: Section Three, Chapter 31 // Marxists Internet Archive. URL: https://www.marxists.org/archive/luxemburg/1913/accumulation-capital/ch31.htm ↩

2. - K. Marx. Capital, Vol. I: Chapter 26. Translated by Ben Fowkes. New York: Vintage Books, 1977. P. 899 ↩

3. - F. Engels. Anti-Dühring: Chapter 14 // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1877/anti-duhring/ch14.htm ↩

4. - V. Lenin. Letter to L. B. Kamenev (before March 29, 1913) // Marxists Internet Archive. URL: https://www.marxists.org/archive/lenin/works/1913/mar/00lbk.htm ↩

5. - V. Lenin. The Development of Capitalism in Russia: Chapter I // Marxists Internet Archive. URL: https://www.marxists.org/archive/lenin/works/1899/dcr8i/i8vi.htm ↩

6. - Leninskii sbornik XXII [Lenin Miscellany XXII]. Ed. by M. A. Savelev and V. G. Sorin. Moscow: Partiinoe izdatelstvo, 1933. P. 381. (in Rus.) ↩

7. - R. Luxemburg. The Accumulation of Capital: Section Three, Chapter 26 // Marxists Internet Archive. URL: https://www.marxists.org/archive/luxemburg/1913/accumulation-capital/ch26.htm ↩

8. - N. Bukharin. Imperialism and the Accumulation of Capital: Chapter 26 // Marxists Internet Archive. URL: https://www.marxists.org/archive/bukharin/works/1924/impacck/ch04.htm ↩

9. - This process is known as the “division of the world” or the era of “classical imperialism”. From the 1860s to the 1880s, the Russian Empire subjugated the Central Asian khanates of Bukhara, Khiva and Kokand, transforming them into a cotton base for Russian industry. Following the suppression of the Boxer Rebellion in 1901 and the division of China into “spheres of influence”, the pre-capitalist market of China was forcibly opened up to foreign capital. By 1914, the imperialist powers had divided 90 per cent of Africa among themselves. Internal tribal and feudal structures were forcibly incorporated into world trade as suppliers of raw materials (rubber, gold, copper and cotton). Thus, by 1900–1914, there were virtually no “uncharted” or isolated territories left on the political map of the world. The entire globe had been divided among colonial empires and the spheres of influence of the major powers. The integration of the last remaining areas of backwardness was a pressing necessity for developed capitalism, which had entered the stage of monopoly capitalism. ↩

10. - K. Marx. Capital, Vol. III: Chapter 15 // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1894-c3/ch15.htm ↩

11. - A specific critique of Grossman is not the subject of this article and requires a separate treatment. ↩

12. - Cervetto A. Opere complete. Vol. 6: L’involucro politico. Milano: Edizioni Lotta Comunista, 2015. P. 328. ↩

13. - Grossman H. The Law of Accumulation and Breakdown of the Capitalist System: Pluto Press 1992. P. 95. ↩

14. - Grossman H. The Laws of Accumulation and Breakdown of the Capitalist System: A Pseudo-Scientific Pastiche? In Letters and Essays. Volume 1. Ed. by R. Kuhn. Leiden: Brill, 2018. P. 229–230. ↩

15. - K. Marx. Capital, Vol. I: Chapter 1 // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1867-c1/ch01.htm ↩

16. - Karl Marx. [Capital]. Vol. II: The Process of Circulation of Capital // Karl Marx and Frederick Engels, Collected Works. 2nd ed. Vol. 50. P. 9. (in Rus.). See also the original German manuscript: Karl Marx. Das Kapital. Ökonomisches Manuskript 1868–1870. Zweites Buch: Der Zirkulationsprozeß des Kapitals (Manuskript II) // Marx-Engels-Gesamtausgabe (MEGA²), Abt. II, Bd. 1. ↩

17. - K. Marx. Theories of Surplus Value: Chapter 17 // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch17.htm ↩

18. - K. Marx. Theories of Surplus Value: Chapter 16 // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch16.htm ↩

19. - K. Marx. Capital, Vol. III: Chapter 14 // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1894-c3/ch14.htm ↩

20. - K. Marx. Capital, Vol. III: Chapter 15 // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1894-c3/ch15.htm ↩

21. - Karl Marx. [Capital]. Vol. II: The Process of Circulation of Capital // Karl Marx and Frederick Engels, Collected Works. 2nd ed. Vol. 50. P. 33. (in Rus.). See also the original German manuscript: Karl Marx, Das Kapital. Ökonomisches Manuskript 1868–1870. Zweites Buch: Der Zirkulationsprozeß des Kapitals (Manuskript II), MEGA² II/1 ↩

22. - Grossman H. The Laws of Accumulation and Breakdown of the Capitalist System: A Pseudo-Scientific Pastiche? In Letters and Essays. Volume 1. Ed. by R. Kuhn. Leiden: Brill, 2018. P. 231. ↩

23. - F. Engels. Anti-Dühring: Chapter 24 // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1877/anti-duhring/ch24.htm ↩

24. - K. Marx. Theories of Surplus Value: Chapter 11 // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch11.htm ↩

25. - Since then, the platform sector has grown significantly. ↩

26. - Pannekoek A. Der Zusammenbruchstheorie des Kapitalismus // Ratekorrespondenz. 1934. № 1. ↩

27. - Mattick P. Zur Marxschen Akkumulations – und Zusammenbruchstheorie (In Erwiderung des Artikels: “Die Zusammenbruchstheorie des Kapitalismus” in Nummer 1 der “Ratekorrespondenz”) // Ratekorrespondenz. 1934. № 4. URL: https://www.marxists.org/deutsch/archiv/mattick/1934/theorie.htm ↩

28. - K. Marx. Capital, Vol. I: Chapter 32 // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1867-c1/ch32.htm ↩

29. - R. Luxemburg. The Junius Pamphlet: Chapter 1 // Marxists Internet Archive. URL: https://www.marxists.org/archive/luxemburg/1915/junius/ch01.htm ↩