The Legacy of Rosa Luxemburg, Oskar Lange and Michał Kalecki

In addition to his own contributions to economic thought, Tadeusz Kowalik has added substantially to our knowledge of three great Polish economists, Rosa Luxemburg, Oskar Lange and Michał Kalecki. He edited collections of their works and has contributed to our understanding of their contemporary relevance. He co-authored with Kalecki a sequel to the latter’s fundamental contribution to political economy, ‘Political aspects of full employment’ (Kalecki, 1943a), considering the question of whether a crucial reform had occurred in capitalist economies to allow full employment to be maintainable (Kalecki and Kowalik, 1971). Kowalik was joint editor of the Polish editions of the collected works of both Oskar Lange and (with Jerzy Osiatyński) Kalecki, as well as editing a new edition of Rosa Luxemburg’s The Accumulation of Capital. In addition, he has written extensively on the writings of Kalecki and Luxemburg, arguing that ‘Michał Kalecki’s theory is the best theoretical continuation and solution to the main problems that Rosa Luxemburg wanted to solve in her magnus opum’ [sic] (Kowalik, 2009: p. 102).

Rosa Luxemburg and Michał Kalecki are two outstanding economists from the first half of the 20th century (although Kalecki published until the end of 1960s) that had several factors in common. First, they shared similar backgrounds; both were Polish-Jewish academics not widely recognised in their countries nor in their schools of thought. Second, they were knowledgeable on Marx’s writings which, following the critical tradition, they used to understand and transform the capitalist economic system. Kalecki’s particular idea is a development of the effective demand theory that, unlike Keynes’s, was based on imperfect competition and non-neoclassical theories of value and price. It employed these in order to highlight that direct cost adjustments (wages and raw materials) and mark-up (capitalist returns) remain relatively constant to price changes; wages are the accommodative variable. Meanwhile Luxemburg introduced the concept of imperialism as a means of showing the unequal relations between countries in which imperialist countries export capital to colonial countries as a way of realising their surplus, provoking social rebellions that can limit the capital reproduction of the entire capitalist system.¹

Considering Rosa Luxemburg as an economist is not intended to be a diminutio capitis; quite the opposite. She was a great personality, great politician and great intellectual, in an extraordinary life committed to her ideals. Her masterpiece, The Accumulation of Capital (Luxemburg, 1913a), is a prodigy of scholarship on different topics.

No one contests the early influence of Hegel on Marx. Yet some act as if Hegel was to be always important for Marx. Furthermore, certain popular renderings even use a simplistic caricature of Hegel such as the thesis-antithesis-synthesis formulary and, taking that to belong to Marx as well, attack Marx through caricature. Meanwhile, the question is infrequently posed whether Hegel’s influence persisted for Marx, and if Marx himself, as his work deepened, defended the necessity of Hegel’s philosophy for his political economy. We shall demonstrate, with considerable evidence from Marx himself, the declining need for Hegelian philosophy in Marx’s evolving understanding of political economy.

In December 1976 I presented my dissertation on Rosa Luxemburg and the Marxian theory of crisis for my university degree, under the supervision of Claudio Napoleoni. The timing was desperately unlucky. In January 1977 Tadeusz Kowalik’s book on Luxemburg, published in Poland in 1971, appeared in the Italian translation by Gabriele Pastrello under the title Il pensiero economico di Rosa Luxemburg (The Economic Thinking of Rosa Luxemburg). I could not take advantage of what is by far the best and most complete interpretation of Luxemburg’s theories of accumulation and imperialism. So, this is a late and overdue encounter: more than an homage to Kowalik, it is something from which I profit the most in rethinking my first love in critical political economy.

From the viewpoint of orthodox economists, macroeconomics has no significant historical antecedents prior to the publication of Keynes’s General Theory of Employment, Interest, and Money in 1936. Theories of aggregate demand before Keynes, such as those associated with Lauderdale, Malthus, and Hobson, were generally weak theoretically. A number of important mainstream economic thinkers raised what would be considered macroeconomic questions in the context of business cycle analysis.¹ But it required Keynes to construct a monetary theory of production that broke decisively with Say’s Law (the notion that supply creates its own demand) before economic orthodoxy was able to address macroeconomic questions in a significant way.

Oskar Lange’s great breadth of interest (in the period 1931–1945) has generally been interpreted as evidence that he was an eclectic economist who cherry-picked between marginal analysis and Marxian economics. However, a consistent and alternative interpretation becomes possible once we take into account that mainstream economic theory and Marxian economics constituted two halves of a unique scientific project which included a relevant critical dimension.

Oskar Lange was unusual among Marxists in his openness to the ideas of non-Marxist economists and in his willingness to engage with their analysis. Among those non-Marxist economists was John Maynard Keynes; Lange became one of the key interpreters of Keynes’s enigmatic General Theory of Employment, Interest and Money, and one of the founders of the Neo-Classical Synthesis of Keynesian and pre-Keynesian ideas that was to dominate macroeconomics for 30 years after the death of Keynes. Lange, like Hicks and Samuelson, attempted to adapt Keynes’s ideas to his (Lange’s) own pre-Keynesian notions of money, saving and investment. This is shown in the first part of this chapter, which discusses Lange’s interpretation of Keynes’s General Theory and the concept of money and interest within which Lange framed Keynesian macroeconomics. Significantly, however, Lange chose to confront Keynes not over his macroeconomics but over Keynes’s critique of econometrics.

Tadeusz Kowalik was our guide and mentor to the economics of Michal Kalecki. His edition of Kalecki’s collected works is still a great source of knowledge for us. But he was interested in Oskar Lange not just for reasons of common national origin but also as an economist who thought differently. In this chapter I want to examine Lange’s arguments for Socialism which sparked off the Lange-Hayek controversy in the 1930s. (In the essay, Lange uses lower-case letters for socialism and capitalism. I use upper-case letters in my text but preserve his lowercase letters when I quote him. Where the words appear as adjectives for example ‘socialist economy’, I use lower-case letters.)

The study of human and social sciences in communist-era Poland is still awaiting in-depth investigation.¹ Generally speaking, the closer these disciplines were to current affairs, politics and ideology, the lower their level. Under Stalinism, sociology as a science was banned — which is actually something that may have benefited it, since it was thus able to avoid the worst compromises that others were forced to make. It was a difficult time for philosophy as well. In history it was more prudent to pursue subdisciplines dealing with distant periods. At the same time, though, politically sensitive issues could appear in an area of science that one would think was the furthest thing from the minds of the authorities and/or ideologues. If in the USSR genetics could take on a fundamental political significance, then obviously so could anything else. For example, in Polish historical writing, at a certain point it became important to prove that the territories that Poland had acquired from Germany after the Second World War had centuries ago been Polish.

The markup of prices over costs plays a central role in Kalecki’s economics. The concept originates in his microeconomic analysis of the pricing decisions of firms operating in imperfect markets under conditions of uncertainty. The ability of oligopolistic manufacturing firms to fix prices above costs, in conjunction with the assumption of constant marginal and average costs, results in a direct relationship between the price mark-up and the distribution of income between wages and profits within an industry.