In the early stages of capitalism this was not a problem. It was not a closed system. Precisely because it grew up within a precapitalist world it was surrounded by people who were not part of it-artisans, the remnants of feudal ruling classes and vast numbers of subsistence peasants. They could absorb the surplus goods, providing raw materials in return. But the more capitalism came to dominate in a particular country, the more it would be faced with this contradiction-unless it expanded outwards to seize control of other, pre-capitalist, societies. Colonisation was in this way essential for the continued functioning of the system. Without it capitalism would collapse.
Luxemburg did not simply produce this argument in an analytical form. She supplemented it with chapter after chapter showing in horrifying detail how the historical development of capitalism in Europe and North America had been accompanied by the subjugation and exploitation of the rest of the world. Her conclusion, like Lenin and Bukharin's, was that socialist revolution was the only alternative to imperialism and war.
Her analysis was, however, subject to trenchant and devastating critiques, most notably by the Austrian reformist Marxist Otto Bauer and by Bukharin. Bauer produced his own versions of the reproduction tables, claiming that there was no problem getting the inputs and outputs to balance properly over several rounds of production. Bukharin concentrated on refuting points Luxemburg made in her "anti-critique" reply to Bauer. She had argued that there had to be something outside capitalism to provide an incentive to the capitalists to keep investing. It was not good enough for ever increasing amounts of investment to absorb the growing output of society, since, she argued, this would provide no gain to the capitalists to justify such investment:
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Understanding the System: Marx and Beyond