Crowding Out Capitalism: A Law of Historical Materialism

Abstract

This paper presents a modern response to the problem imposed by Marx in Capital in 1867, “to lay bare the economic law of motion of modern society” and to provide a vision on how, on the basis of this law of motion the transformation of the capitalist mode of production to the socialist mode of production can be perceived. The analysis begins with a discussion of the Marxian analysis of labour values. To overcome the difficulties the marginal analysis of labour values is introduced and it is shown that in an optimal economy where labour is used in an efficient manner commodities exchange at their labour values. There is no transformation problem in an optimal economic system. In a further step the socially necessary character of surplus value as a fund of capital accumulation in order to increase and maintain the productivity of labour is presented and opposed to the capitalists strife for the private appropriation of surplus value. It is argued that the capitalists harmful practices, leading to economic and social crisis, can and must be overcome by the labour movement via economic democracy and collective capital formation thereby eliminating the 'ultima ratio' of the capitalists, the supply of and control over capital. Finally this process of crowding out capitalism is contrasted with the orthodox reformist and revolutionary approaches.

Keywords: Crowding out capitalism, Historical Materialism, labour theory of value, marginal analysis, Marxian economics, political economy, social revolution, Rosa Luxemburg, transformation problem

JEL Classification: B51, D46, P16, P51