Groucho Marxism

Rosa Luxemburg led an interesting life. Born Rozalia Luksenburg in 1871 to a Jewish family in Russian-occupied Poland, Luxemburg became a German citizen in 1898. Her opposition to WWI led her to co-found the Spartacus League, an anti-war Marxist revolutionary movement, as a result of which she was imprisoned for most of the war. After her release, during the German Revolution, Luxemburg co-founded the Communist Party of Germany and was a central figure in the January 1919 Spartacist uprising in Berlin (mentioned in a previous blog post). When the revolt was crushed by the Freikorps, a government-sponsored paramilitary group, Luxemburg and the other leaders were captured and summarily executed, leading to her becoming revered as a martyr on the left.

In 1899 Luxemburg published a short but highly influential book entitled Social Reform or Revolution? (German: Sozialreform oder Revolution?), in which she argues that trade unions, reformist political parties, and the expansion of social democracy, whilst important to the proletariat’s development of class consciousness, cannot by themselves create a socialist society. Instead, she argues that capitalism is intrinsically unsustainable and will eventually collapse, and that a revolution is necessary to transform capitalism into socialism. The book is written as a detailed critique of the thinking of Eduard Bernstein, another prominent socialist theorist of the time, who advocated for a gradual, parliamentary path to socialism.

Reading Social Reform or Revolution? today, what’s particularly striking is how prescient it seems. For example, Luxemburg identifies the expansion of credit and the stock market as things that will exacerbate capitalism’s periodic crises – not, as Bernstein argued, measures that gradually remove the tendency towards crisis. Luxemburg was proved spectacularly right by the great depression of 1929 and again by the financial crisis of 2008; both of these events were caused by over-indebtedness of the private sector and were exacerbated by speculation in the stock markets. In highlighting these factors Luxemburg foreshadowed later 20^th century economists such as Hyman Minsky, who argued that accumulation of debt (or credit) by the non-government sector pushes an economy towards crisis.

In fact the 125-year period since the publication of Social Reform or Revolution? can be seen as one long vindication of the book’s central thesis. We had a period of social reform in the Western world in the 30 years following WWII, largely as a response to the threat of socialist revolution created by the existence of the Soviet Union and its socialist allies. But this did not lead to socialism as Bernstein predicted; instead, these reforms were rolled back as soon as the Soviet Union’s power started to wane and the possibility of revolution began to diminish. Conversely, where socialism has been implemented successfully in the last 125 years – e.g. in Russia, China, Vietnam, and Cuba – it has been as the result of a revolution.

Another example of Luxemburg’s prescience is her insightful take on trade unions. The importance of trade unions, she argued, is not that they could end bourgeois ownership of capital; rather, they are the body through which workers come together and understand that they are part of a class. Trade unions will never bring down capitalism on their own – and in fact there are countless of examples of trade union bureaucracies acting as a brake on revolutionary movements. The best that can be hoped for is that by bargaining for higher wages, trade unions provide workers with a few more crumbs from the capitalists’ table. But bringing workers together is a necessary step in developing class consciousness, which in turn is a necessary step in bringing about a successful revolution.

Capitalism is fundamentally unreformable, Luxemburg argues, because of features that are baked into it. For example, we will never be able to reform away unemployment as in order to function effectively, capitalism relies on permanently maintaining a class of unemployed people (referred to by Marx as the ‘reserve army of labour’). In other words, unemployment is a feature of capitalism, not a bug. Any reforms won by labour will therefore be relatively small and insignificant, and trying to reform capitalism from within will be like trying to sweeten the ocean with lemonade. In fact Luxemburg likens union struggles to the labour of Sisyphus, the mythical figure who was condemned to push a stone up a hill over and over again for all eternity.

But rather than diminish the importance of the struggles by workers, Luxemburg argues that these struggles are central. Social Reform or Revolution? should therefore be read as a call to action. It would be great if capitalism could be gradually reformed from within, as then we could all just sit around reading poetry and let the social democrats get on with it, but it’s just not going to happen. Not only is capitalism unreformable; it will inevitably fall. The expansion of credit means that capitalism is structured as a giant Ponzi scheme, and like any Ponzi scheme, it will eventually collapse. The question is, what comes next? As Rosa Luxemburg herself said, there are two possibilities: socialism or barbarism. We have act now to make sure it’s the former and not the latter.