Last class, one of you raised the issue of whether Luxemburg’s opposition to the path of social reform implied a socialist strategy of making things worse in order to hasten the revolution. I waved my hands a bit, mentioned that this strategy has a technical name – heightening or accelerating the contradictions – and pointed to her discussion of unionism. I’d like to tackle this in greater depth today.
I want to start by looking at the case of technical innovation.
Marx spent a great deal of energy analyzing the course of technical innovation under capitalism. What he noticed and detailed was the fact that technical improvements in production operate according to the logic of an arms race. Within a given branch of production, it is in the short term interest of each capitalist to introduce technical innovations that make production more efficient. This allows the capitalist in question to save on the costs of production, and therefore to sell the product below the price of competitors. This allows the innovative capitalist to capture market share and to increase profits. Since every capitalist understands this incentive, and understands that all competing capitalists understand it, too, capitalists compete with one another to innovate in the technical aspects of production. But any effective innovation spreads, thereby bringing competing capitals back into line with one another, but at a lower market price. This forces less efficient capitals from the field of competition, exerting a concentrating force. It also lowers the rate of profit for those who remain in the game (this bit is controversial), increasing the pressure to make new innovations, driving more firms out of business and further lowering the profit margin (again, controversial), and so forth. In short, what was a rational strategy for the individual capitalist in the short run – out-innovate and out-produce rivals – ends up driving many individual capitalists out of business and leaving the profit margin of the “winners” below the point where they started out. It’s a classic prisoners’ dilemma – when everyone makes the rational choice, out of fear of being a sucker, all end up worse off than if no one had innovated in the first place. Hence, the appearance of cartels of producers, who try to prevent innovation in order to protect the good thing they have.
Widget makers A, B, C: production technology at time t à 50 workers make 10000 widgets a month, for sale at a market price of 10$ each, realizing 100,000$.
Widget maker A: introduces technical innovation (at cost x) at time t1 à 50 workers make 25000 widgets a month. Given the technical investment, A can sell these at 8$ each, realizing 160,000$.
Widget makers B & C will be in dire straits. The market only absorbs 30000 widgets a month, and now 5/6 of those are being purchased from A. If, at time t2, B goes belly up, and C adopts A’s technology, then A and C are on equal footing, but there is an oversupply of widgets. Perhaps lowering the price dramatically will allow the market to clear, but perhaps not. Either way, A & C will realize less income in this new position of over-production. If they cut back on production, they might find a new equilibrium, but, having invested in the machinery and laid off part of their workforce, they will still (controversially), realize lower profits, and will face the same pressure to invest in even newer technologies before the other one beats them to the punch. A, B, & C are all worse off.
Plus, you have workers out of work and a highly advanced mode of producing widgets, both of which make a socialist revolution look more likely.
The case is just the opposite for the workers. Increases in production efficiency mean: fewer jobs, differently skilled jobs, and, as it fuels unemployment, lower wages are likely in the short term (since it also means cheaper commodities, however, real wages may rise – indeed it is via this tendency of real wages to rise that some theorists see the tendency for technical innovation to lead to lower rates of profit).
So, as Luxemburg puts it, “isolated workers” – both individual workers and workers in one factory or one branch of industry – who act with a view to their own interests will likely oppose the technical advancements in production that will, in the long run, make possible and more likely a socialist revolution and the ascendancy of the working class. Conversely, individual capitalists, in their pursuit of short term profits, will undermine the long term interest of the capitalist class by making revolution both possible and likely.
Here, in Luxemburg’s formulation, the problem of revolutionary strategy is a problem of collective action. Will the capitalists band together in cartels that will slow the pace of technical change? Will they agree to prop up wages artificially, in order to take the steam out of the class struggle? Will the workers, emboldened by the theoretical inevitability of socialism, undergo hardship and economic insecurity in the short-term for the sake of winning the big prize – the conquest of political power and collective ownership of the means of production?
In this case, as in the case of political democracy, the question of strategy is, for Luxemburg: What will make the conquest of power by the proletariat both necessary and possible? Necessary: like the increasing mass of unemployed workers that make revolutionary action urgent; possible: like the technical changes that make collective production feasible.
So, is this “heightening the contradictions”?
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