Is Capitalism Doomed? Discussing Rosa Luxemburg’s Reform or Revolution

“The secret of Marx’s [theories] is found in the transitory character of capitalist economy, the inevitability of its collapse…” Rosa Luxemburg

In the two years that I have helped organize study groups through Maine DSA, our best attended group yet discussed a text written in 1899: Reform or Revolution by Rosa Luxemburg. Over the course of three Wednesday evenings in October and November, approximately thirty participants, connecting by video from all over Maine, met for six hours of discussion. Why did this text stimulate such interest today, over 120 years after it was written?

On first glance, the text seems obscure, directed largely at countering the arguments of a man otherwise forgotten to history, Edward Bernstein. Bernstein urged socialists to seek reforms within the capitalist system rather than overthrow it. Luxemburg argued that struggling for economic reforms is necessary but insufficient, a means toward the all-important end of the masses taking power and replacing capitalism, a system based on exploitation of the working class, with socialism, in which the working class would democratically control the economy.  

This debate was not academic. Attempts at revolution failed in Russia in 1905 and succeeded in 1917. Luxemburg was imprisoned for her participation in the 1905 revolution in her native Poland, then part of the Russian Empire. In 1919, her adopted home of Germany was on the brink of revolution when reformists and capitalists joined forces to arrest and kill Luxemburg and her comrades. This turning point “marked the end of an epoch for the working class movement,” according to scholar Helen Scott, who edited Reform or Revolution and spoke at the study group’s first session.

Whereas Bernstein thought the goal of the working class ought to be obtaining a greater share of capitalist profits, Luxemburg argued that the capitalist mode of production itself, not its distribution of profits, was the root problem. Some basic Marxist theory is helpful here. Capitalism is premised on a certain class of people, capitalists or the “bourgeoisie,” controlling the “means of production” (the land, raw materials, and equipment that people work on to sustain human society). Because capitalists own the means of production, most people — the global working class or “proletariat” — can only survive on terms dictated by capitalists. Capitalists exploit this position by forcing workers to do more than the socially necessary labor for our collective survival; workers are compelled to do the surplus labor that creates profits for capitalists. 

And not only is capitalism based on exploitation, Luxemburg emphasized it is also inherently unstable, characterized by frequent economic crises that inflict misery on the working class. Competition for profits drives capitalists to overproduce, so periodically production must be sharply curtailed and workers laid off en masse. The resulting boom and bust cycles form part of what Luxemburg called the “anarchy of capitalism.” Whereas Bernstein believed that crises could be ameliorated or prevented, Luxemburg followed Marx’s insight that they are a feature, not a bug, of capitalism — in her words, “instruments for rekindling the fire of capitalist development.”

Why can’t capitalism be reformed to remedy these problems? Luxemburg explains in broad strokes: “During every historic period, work for reforms is carried on … only in the framework of the social form created by the last revolution…” And the social form of capitalism, unlike feudalism, is distinguished by “the fact that class domination does not rest on ‘acquired rights’ but on real economic relations…” 

In other words, domination over workers is based not in legal compulsion like master-servant or lord-serf relationships, but in capitalists’ physical control over the means of production that people need for survival. Luxemburg observes savvily: “No law obliges the proletariat to submit itself to the yoke of capitalism. Poverty, the lack of means of production, obliges the proletariat to submit itself to the yoke of capitalism.” While private ownership of the means of production has been sanctified by bourgeois property law, it is based on the brute force of violence, fraud, and expropriation that “have torn the means of production from the producers’ possession.” It will take more than legal reforms to restore the means of production to the people. 

With this encapsulation of Luxemburg’s argument, her contemporary appeal comes into view. Over 120 years later, the anarchy of capitalism still reigns. Decades of struggle for reforming capitalism — from the trade union movement and the New Deal, to the civil rights movement and Obamacare — have not given us a more benevolent capitalism. On the contrary, crises have only multiplied and intensified in the 21st century, including two devastating recessions, climate chaos, the sprawling military and prison industrial complexes, and cruel shortages of affordable housing and health care. Luxemburg’s attack against reformism stands vindicated.

But this persistence of capitalism also presented our study group with a problem for Luxemburg’s argument. Again and again she emphasizes the inevitable collapse of capitalism, and she gives the impression it is not far off. She talks about the “growing anarchy of capitalism, leading inevitably to its ruin” and how cartels “accelerate the coming of a general decline of capitalism.” Luxemburg goes so far as to say that, by rejecting the theory of capitalist collapse, “Bernstein also rejects the whole doctrine of socialism.” To which several socialists in our study group responded: But wasn’t Bernstein partially right? Doesn’t capitalism’s persistence and expansion in the last 120 years cast doubt on Luxemburg’s conviction in the inevitability of capitalism’s collapse?

Well, no, other study group participants replied, Bernstein was not right. Bernstein argued that capitalism was becoming progressively less crisis-prone and more conducive to the needs of the working class. While capitalism has proven resilient, the foregoing list of crises demonstrates how unstable and inhospitable capitalism remains for the vast majority of people. 

Still, capitalism’s resilience through cycles of catastrophic crises needs explaining. Multiple study group participants brought up Naomi Klein’s concept of “disaster capitalism,” in which each new crisis presents capitalists another opportunity to profit and reorganize in order to further entrench their grip on power. So, although Bernstein was not right, was Luxemburg wrong, too?

Other participants pointed out that Luxemburg did not mean capitalism would collapse over night, nor that it would automatically give way to socialism. Luxemburg wrote “the socialist transformation supposes a long and stubborn struggle, in the course of which, it is quite probable, the proletariat will be repulsed more than once …” And, some participants speculated, capitalism may well be in the process of collapsing before our eyes today, pointing to current events all over the world, from labor strikes and supply shortages to political instability and climate chaos. 

Seeking clarity on this issue, our group discussed an important distinction between the interests of individual capitalists and that of capitalism. While many capitalists profit from crises (e.g., Blackwater in the wake of Hurricane Katrina, Amazon during pandemic lockdowns), what is good for some capitalists may not be good for capitalism as a whole, echoing Luxemburg’s observation of the anarchy of capitalism. To this point may be added Luxemburg’s words: “In the ‘unhindered’ advance of capitalist production lurks a threat to capitalism that is much graver than crises. It is the threat of the constant fall of the rate of profit.” The historic decline in capitalism’s profitability, though not apparent in individual cases of billionaires raking in profits off workers’ backs, has been well documented in the aggregate, indicating that capitalism produces diminishing returns even for the capitalist class.

Whether or not capitalism’s collapse is approaching remains a perplexing question for our group. Thinking historically, as Marx did, capitalism must be transitory. Just as feudalism gave way to capitalism through a series of revolutions, so will today’s system one day give way to a new one. But how soon? As one participant said, they are confident capitalism will collapse — they just hope it happens before climate collapse. And what will that new system be? Luxemburg famously wrote, attributing the words to Friedrich Engels: “Bourgeois society stands at the crossroads, either transition to socialism or regression into barbarism.”

Luxemburg believed firmly in the ability of the organized working class to end capitalist exploitation and revolutionize society for the better. She drew this conviction not only from studying Marx but also from her experience in the mass strikes and revolution of 1905, which informed her work The Mass Strike. Helen Scott’s introduction describes this text as “an inspiring account of a high point in working-class struggle,” which generalizes “from one historical time and place to the benefit of future moments.” Our next study group series will take on this task of reading Luxemburg’s account of revolution as a jumping off point for examining today’s labor struggle. Anyone interested in attending the next series, beginning December 8, 2021, can RSVP here.