Re: [OPE-L] Grossmann and world trade

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Tue Aug 15 2006 - 03:30:04 EDT

  Jurriaan wrote:

>There is plenty Marxist rhetoric about "over-accumulation crisis", but most
>of these people don't know what they are talking about.

Well, let's see if HG is clear on what he is talking about. You cite no textual
evidence in your critique.

>In Grossmann and Mattick, sometimes the argument is that the
>overaccumulation consists of not sufficient new surplus value being produced
>to valorise all (production) capital assets,

when does the surplus value produced become insufficient for the purposes
of valorization? On this we need clarity.

>  at other times sufficient new
>surplus value is produced,

when is the surplus value produced sufficient?

>  but it can no longer be reinvested profitably,

The larger capital may still yield profit. Overaccumulation
obtains even when the absolute sum of surplus value is positive.

>in any case not at, or above, the previously ruling rate of profit.

No, overaccumulation does not result from capitalization having simply
depressed the profit rate!

This is the exact position HG sets out to critique.

Overaccumulation results when in the course of accumulation
the mass of surplus value remains the same or declines in an absolute

Here is HG in the passage Francisco and I discussed:

>>Starting from considerations of this sort Marx
>  > asks, what is overaccumulation of capital? He
>>  answers the question thus: 'To appreciate what
>>  this overaccumulation is ... one need only assume
>>  it to be absolute. When would overproduction of
>>  capital be absolute?' (1959, p. 251) According to
>>  Marx absolute overproduction would start when an
>>  expanded capital could yield no more surplus
>>  value than it did as a smaller capital:
>>  As soon as capital would, therefore, have grown
>>  in such a ratio to the labouring population that
>>  neither the absolute working time supplied by
>>  this population, nor the relative surplus working
>>  time, could be expanded any further (this last
>>  would not be feasible at any rate in the case
>>  where the demand for labour were so strong that
>>  there were a tendency for wages to rise); at a
>>  point, therefore when the increased capital
>>  produced just as much, or even less, surplus
>>  value than it did before its increase, there
>>  would be absolute overproduction of capital. (p.
>>  251)
>>  According to Marx's definition of absolute
>>  overaccumulation it is not necessary for profit
>>  on the total capital to disappear completely. It
>>  disappears only for the additional capital which
>>  is accumulated. In practice the additional
>>  capital will displace a portion of the existing
>>  capital so that for the total capital a lower
>>  rate of profit results. However whereas a falling
>>  rate of profit is generally bound up with a
>>  growing mass of profit, absolute overaccumulation
>>  is characterised by the fact that here the mass
>>  of profit of the expanded total capital remains
>>  the same.

You write

>Sometimes overaccumulation applies to all capital assets,


>sometimes only to
>production capital,


>and sometimes only to the newly produced capital assets
>that are an addition to the existing physical capital stock.


>I have also
>met Jairus Banaji who translated H. Grossmann's text into English (he said
>he intends to translate the remainder of the book as well). I thought it was
>amazing H. Grossmann published this in 1929. However in some ways L. Corey
>(aka Louis Fraina)'s book "The Decline of American Capitalism" is superior.

which ways superior. I read it; it's a poorly 
organized book takes too many unrelated
shots at a declining capitalism. Little systematic coherence.

>The trouble though with fundamentalist Marxism is, that it believes economic
>life exists only of production relations. Distribution, circulation and
>consumption do not exist. This leads to warped theories of economic

You're just ignoring what HG wrote on these, including in the dynamics book
which Horkheimer did not want to publish.

>In their haste
>to demolish underconsumptionist theories of crisis, the problem of the
>realisation of surplus value is simply deleted, it doesn't exist.

No, no. Grossman is interested in theorizing the most formidable obstacle
to the realization of surplus value in his magnum 
opus. And in the dynamics book
he looks at other problems as well in the realization of surplus value.
That's where the disproportionality between departments is also analyzed. It's
not the focus of the big book. Which is thus not 
a complete presentation of HG's

More later.

>You asked rhetorically:
>"do you think Grossman denies the importance of profiteering through
>stock market speculation, real estate speculation, betting on the futures
>market, etc? Again please reconsult the text."
>No I don't, but that is a side issue - what I referred to is the false
>concept of valorisation involved. Contrary to what fundamentalists say, the
>economy consists of more than the circuit of M-C...P...C'-M' depicted in GDP
>statistics, and commercial trade consists of more than "stock market
>speculation, real estate speculation, betting on the futures market, etc".
>The concepts of the production of surplus value and the realisation of
>surplus-value have to be correctly defined.
>Cf. K. Marx:
>"As soon as all the surplus-labour it was possible to squeeze out has been
>embodied in commodities, surplus-value has been produced. But this
>production of surplus-value completes but the first act of the capitalist
>process of production - the direct production process. Capital has absorbed
>so and so much unpaid labour. With the development of the process, which
>expresses itself in a drop in the rate of profit, the mass of surplus-value
>thus produced swells to immense dimensions. Now comes the second act of the
>process. The entire mass of commodities, i.e. , the total product, including
>the portion which replaces the constant and variable capital, and that
>representing surplus-value, must be sold. If this is not done, or done only
>in part, or only at prices below the prices of production, the labourer has
>been indeed exploited, but his exploitation is not realised as such for the
>capitalist, and this can be bound up with a total or partial failure to
>realise the surplus-value pressed out of him, indeed even with the partial
>or total loss of the capital. The conditions of direct exploitation, and
>those of realising it, are not identical. They diverge not only in place and
>time, but also logically. The first are only limited by the productive power
>of society, the latter by the proportional relation of the various branches
>of production and the consumer power of society. But this last-named is not
>determined either by the absolute productive power, or by the absolute
>consumer power, but by the consumer power based on antagonistic conditions
>of distribution, which reduce the consumption of the bulk of society to a
>minimum varying within more or less narrow limits. It is furthermore
>restricted by the tendency to accumulate, the drive to expand capital and
>produce surplus-value on an extended scale. This is law for capitalist
>production, imposed by incessant revolutions in the methods of production
>themselves, by the depreciation of existing capital always bound up with
>them, by the general competitive struggle and the need to improve production
>and expand its scale merely as a means of self-preservation and under
>penalty of ruin. The market must, therefore, be continually extended, so
>that its interrelations and the conditions regulating them assume more and
>more the form of a natural law working independently of the producer, and
>become ever more uncontrollable. This internal contradiction seeks to
>resolve itself through expansion of the outlying field of production. But
>the more productiveness develops, the more it finds itself at variance with
>the narrow basis on which the conditions of consumption rest. It is no
>contradiction at all on this self-contradictory basis that there should be
>an excess of capital simultaneously with a growing surplus of population.
>For while a combination of these two would, indeed, increase the mass of
>produced surplus-value, it would at the same time intensify the
>contradiction between the conditions under which this surplus-value is
>produced and those under which it is realised."
>German original:
>Sobald das auspreßbare Quantum Mehrarbeit in Waren vergegenständlicht ist,
>ist der Mehrwert produziert. Aber mit dieser Produktion des Mehrwerts ist
>nur der erste Akt des kapitalistischen Produktionsprozesses, der
>unmittelbare Produktionsprozeß beendet. Das Kapital hat soundsoviel
>unbezahlte Arbeit eingesaugt. Mit der Entwicklung des Prozesses, der sich im
>Fall der Profitrate ausdrückt, schwillt die Masse des so produzierten
>Mehrwerts ins Ungeheure. Nun kommt der zweite Akt des Prozesses. Die gesamte
>Warenmasse, das Gesamtprodukt, sowohl der Teil, der das konstante und
>variable Kapital ersetzt, wie der den Mehrwert darstellt, muß verkauft
>werden. Geschieht das nicht oder nur zum Teil oder nur zu Preisen, die unter
>den Produktionspreisen stehn, so ist der Arbeiter zwar exploitiert, aber
>seine Exploitation realisiert sich nicht als solche für den Kapitalisten,
>kann mit gar keiner oder nur teilweiser Realisation des abgepreßten
>Mehrwerts, ja mit teilweisem oder ganzem Verlust seines Kapitals verbunden
>sein. Die Bedingungen der unmittelbaren Exploitation und die ihrer
>Realisation sind nicht identisch. Sie fallen nicht nur nach Zeit und Ort,
>sondern auch begrifflich auseinander. Die einen sind nur beschränkt durch
>die Produktivkraft der Gesellschaft, die andren durch die Proportionalität
>der verschiednen Produktionszweige und durch die Konsumtionskraft der
>Gesellschaft. Diese letztre ist aber bestimmt weder durch die absolute
>Produktionskraft noch durch die absolute Konsumtionskraft; sondern durch die
>Konsumtionskraft auf Basis antagonistischer Distributionsverhältnisse,
>welche die Konsumtion der großen Masse der Gesellschaft auf ein nur
>innerhalb mehr oder minder enger Grenzen veränderliches Minimum reduziert.
>Sie ist ferner beschränkt durch den Akkumulationstrieb, den Trieb nach
>Vergrößerung des Kapitals und nach Produktion von Mehrwert auf erweiterter
>Stufenleiter. Dies ist Gesetz für die kapitalistische Produktion, gegeben
>durch die beständigen Revolutionen in den Produktionsmethoden selbst, die
>damit beständig verknüpfte Entwertung von vorhandnem Kapital, <255> den
>allgemeinen Konkurrenzkampf und die Notwendigkeit, die Produktion zu
>verbessern und ihre Stufenleiter auszudehnen, bloß als Erhaltungsmittel und
>bei Strafe des Untergangs. Der Markt muß daher beständig ausgedehnt werden,
>so daß seine Zusammenhänge und die sie regelnden Bedingungen immer mehr die
>Gestalt eines von den Produzenten unabhängigen Naturgesetzes annehmen, immer
>unkontrollierbarer werden. Der innere Widerspruch sucht sich auszugleichen
>durch Ausdehnung des äußern Feldes der Produktion. Je mehr sich aber die
>Produktivkraft entwickelt, um so mehr gerät sie in Widerstreit mit der engen
>Basis, worauf die Konsumtionsverhältnisse beruhen. Es ist auf dieser
>widerspruchsvollen Basis durchaus kein Widerspruch, daß Übermaß von Kapital
>verbunden ist mit wachsendem Übermaß von Bevölkerung; denn obgleich, beide
>zusammengebracht, die Masse des produzierten Mehrwerts sich steigern würde,
>steigert sich eben damit der Widerspruch zwischen den Bedingungen, worin
>dieser Mehrwert produziert, und den Bedingungen, worin er realisiert wird.
>You asked also:
>"why important to relax those assumptions in addition to the many
>assumptions that he did relax in the course of study of counter-tendencies?"
>Basically because of the nature of capitalist economic growth. As E. Mandel
>(who based his Phd Thesis largely on Grossmann) noted, in the boom phase as
>well as the recessive phase of capitalist development, an unequal
>development will ocur, with regard to investment in Department I and
>Department II, and unequal growth rates will occur. Dept I industries are
>intrinsically less flexible in adapting to demand fluctuations than Dept II
>industries. This is also reflected in the differential growth rates of S/V
>and C/V. Generally C/V is higher in Dept I than in Dept II.

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