[OPE-L] Grossmann and world trade

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

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

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).


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