From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Wed Aug 09 2006 - 15:55:38 EDT
Though sometimes insightful, H. Grossman's theorems are very abstract and general-theoretical, and could be read in different ways. See http://marxists.architexturez.net/archive/grossman/ He seems to argue that capital exports must occur because of a falling profit rate and overaccumulation of production capital domestically. But there is no good evidence for this, other than in the sense that bad economic conditions generally (due to any number of causes) can obviously cause capital flight or capital exit. He has very little to say specifically about the world market, except in relation to profitability. Presumably that is, because in his view the general laws of motion of production capital regulate the world market, and that accumulation is purely a function of profitability. As Ernest Mandel noted, H. Grossmann in his critique of O. Bauer did not question O. Bauer's untenable assumption of identical S/V and C/V proportions in the growth of both department I and Department II; sometimes H. Grossman suggests (i) that valorisation difficulties form an absolute limit, if they lead to a decline of the surplus value consumed unproductively by capitalists, yet at another point his argument is that (ii) the impossibility of valorising all of the accumulated capital 'profitably' brings the whole of the valorisation process to a halt. As regards (i), the consumed portion of surplus value could be shared out among a relatively smaller and smaller number of capitalists, so that a declining total share in total surplus value by capitalists as disposable personal income could go together with increasing consumption expenditure by each capitalist. As regards (ii) if the total mass of surplus value produced is insufficient to valorise the total accumulated production capital, the result is not necessarily the collapse of the whole economy, but only the destruction of the excess capital, through competition and crisis. All that Grossman proves, is an endogenous tendency towards overaccumulation, leading to devalorisation in overproduction crises. He does not really discuss credit economy in any depth at all. He also does not allow for the possibility that if a capitalist cannot achieve a profit of (say) 10% on his capital through productive investment, he would be quite happy with a 5% profit from paper securities or real estate, if the alternative is no return, or a negative return. In H. Grossman's theory, "A capital that fails to valorise itself is superfluous, overproduced capital." But at least in Marx's own theory, that is not the case at all. Valorisation in Marx's theory applies specifically to production capital, not to ALL capital. Profits can be made, and surplus-value realised, also in the circulation of money capital and commodity capital, and the more products and assets are physically produced and owned, globally, the more money can be made out of their exchange. The "excess capital" in Marx's theory, in other words, refers specifically to excess production capital, and not to every kind of capital. When reference is made to "three Departments" of capitalist investment, what is meant is production capital only, not the total social capital divided among these three sectors. Therefore the three sectors of production should I think also not be confused with the three forms of capital (money capital, commodity capital and production capital) as not infrequently happens in the transformation problem literature. For example, Duncan Foley (Understanding Capital, p. 66) writes: "We can think of the circuit of social capital as the combined circuits of all the individual capitals that make up the whole. Then it is natural to think of the capitalist production process as a closed circuit, with the different forms of capital - financial capital, production capital, and commercial capital - at the three main nodes." The circulation of capital need not be mediated by production at all. Even if you accept H. Grossman's idea that capitalism must ultimately collapse due to purely economic causes, obviously capitalism can also revive again as well (cf. Argentina in recent years). Jurriaan
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