From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Tue Sep 05 2006 - 01:25:50 EDT
I do think it would have been appropriate to bring me on as a third author, and I would have been happy to collaborate with Stavros if he had only asked me to to clarify with him why Andrew's argument is helpfully understood in terms of Crotty's understanding of the relationship between investment and profit. I suppose that Stavros will suggest that there was an obvious linkage between Trigg and Crotty and that he did not have to consult my posts to make the connection. At any rate, I don't think I should be charged with petty egoism; I would have loved to talk about Grossman or Kalecki or Trigg with Stavros. Not only do I think should have been credited for some of the arguments, I also could have saved Stavros from some of his obvious mistakes regarding Grossman, as I shall show. As for the present: in a much appreciated offlist post it was suggested to me that I move beyond my perceived shafting, and I am ready to do so. So I'll stick to the issues. I don't agree with Stavros' very harsh judgement of my OPE-L posts on Grossman. I do believe that I have made some helpful clarifications to our understanding of Grossman's reconstruction of Marx's crisis theory; my offlist OPE-L interlocutor praised strongly my contributions to Grossman studies, though he is no fan of my theoretical hero. Now there is an error that both Stavros and Andrew make--conflation of Bauer's schema with Grossman's theory, a mistake which results from taking the extended Bauer scheme to be a representation of Grossman's actual arguments. Andrew writes: "Mavroudeas & Ioannides defend Grossmann's definition of capitalist consumption as a residual, calculated after capitalist investment decisions." But Grossman did not define capitalist consumption as a residual--that Bauer did. And Grossman took issue with Bauer on just this issue, for he claimed that in order to maintain their ever better way of life, capitalists would cut into wages and slow down the development of the productive forces. So when Andrew writes that "In direct contrast to Park, autonomous capitalist consumption reduces productivity" he could have noted that Grossman reached the same conclusion, though for slightly different reasons. Andrew also writes: "It is perfectly understandable that some Marxists should be wary of any attempt to give capitalist consumption an autonomous role, and that they mistakenly consider this to be "an overemphasis on demand." But Grossman did not think giving capitalist consumption an autonomous role was wrong headed: in fact just that drives the class struggle and the fettering of the productive forces, as he himself underlines! I have provided the supporting quotes offlist to Andrew (I include them at the bottom of this post). When Mavroudeas & Ioannides write "At this more abstract level of analysis capitalists are solely functioning entrepreneurs, i.e., their purpose is capital accumulation and not a norm of personal well- being." they should have noted that Grossman clearly rejected the image of capitalists as solely functioning entrepreneurs. That was the image built into the Bauer scheme, and Grossman highlighted its unreality both in the book and in his personal correspondence. No reference was made to Grossman on this point in the exchange. So when Stavros goes off on his own in defense of Grossman, he clearly makes major mistakes. I feel confident that Rick Kuhn was not asked to read the response because the errors would have been obvious to him. At present, I am confused by the tiff on the rate of surplus value. None of the interlocutors comment on Grossman's own attempt to render it variable in the conclusion to his book. Andrew's autonomous consumption expenditures require s/v to rise but there is still the question of the conditions of possibility for that to obtain. OK here are the two quotes: For accumulation to occur, surplus value must be deployable in a threefold direction and must be divided into three corresponding fractions: i) additional constant capital (ac) ii) additional variable capital (av) or additional means of subsistence for workers iii) a consumption fund for the capitalists (k) Each of these three fractions is equally essential to the further expansion of production on a capitalist basis. If the available surplus value could cover only the first two, accumulation would be impossible. For the question necessarily arises - why do capitalists accumulate? To provide additional employment to workers? From the point of view of capitalists that would make no sense once they themselves get nothing out of employing more workers. From the point of view of the distribution of income, such a mode of production would end up losing its private capitalist character. Once the k portion of surplus value vanishes, surplus value in the specific sense of an income obtained without labour would have disappeared. The other two fractions of surplus value, the additional constant capital (ac) and the additional variable capital (av), retain their character of surplus value only so long as they are means for the production of the consumption fund of the capitalist class. Once this portion disappears, not an atom of unpaid labour falls to the share of the capitalists. For the entire variable capital falls to the share of the working class, once the means of production have been replaced out of it. Surplus value in the sense of unpaid labour, of surplus labour over and above the time required to produce essential means of subsistence, would have vanished. All means of consumption would now form necessary means of consumption. So it follows that the k portion is an essential characteristic condition of the accumulation of capital. The vacuous and scholastic manner in which Luxemburg argues is apparent now. Contemptuously she dismisses this element from her analysis: And yet, the growing consumption of the capitalists can certainly not be regarded as the ultimate purpose of accumulation; on the contrary, there is no accumulation in as much as this consumption takes place and increases; the personal consumption of the capitalists must be regarded as simple reproduction. (1968, p. 334) Luxemburg does not bother to explain how under simple reproduction the consumption of the capitalists can actually grow in the long run. Regarding the purpose of accumulation Marx tells us that the aim of the entire process 'does not by any means exclude increasing consumption on the part of the capitalist as his surplus value ... increases; on the contrary, it emphatically includes it' (1956, p. 70). But to Luxemburg accumulation only seems to make sense if the consumption of capitalist commodities is left to the non-capitalist countries. This belongs completely in the tradition of mercantilism: we find that certain exponents of the mercantile system ... deliver lengthy sermons to the effect that the individual capitalist should consume only as much as the labourer, that the nation of capitalists should leave the consumption of their own commodities, and the consumption process in general, to the other, less intelligent nations. (Marx, 1956, p. 60) Obviously Marx had anticipated the whole of Luxemburg's theory. We should not suppose, however, that the capitalist simply waits passively until the entire k portion has been swallowed up. Long before any such time (at latest from in the scheme when the k portion begins to decline absolutely) he will do his utmost to halt the tendency. In order to do this he must either cut the wages of the working class or cease to observe the conditions postulated for accumulation, that is, the condition that constant capital must expand by 10 per cent annually to absorb the annual increase in the working population at the given technological level. This would mean that from now on accumulation would proceed at a slower rate, say 9.5 or 8 per cent. The tempo of accumulation would have to be slowed down, and that, too, permanently and to an increasing degree. In that case accumulation would fail to keep step with the growth of the population. Fewer machines and so on would be required or installed, and this only means that the productive forces would be constrained from developing. It also follows that from this point in time on a growing reserve army would necessarily form. The slowing down of accumulation and the formation of the industrial reserve army must necessarily follow even if wages are assumed to be constant throughout this period. At any rate, it would not be the result of an increase in wages, as Bauer supposes. http://marxists.architexturez.net/archive/grossman/1929/breakdown/ch02.htm And here is another quote: Br[aunthal] referred, with a comic smile, to the fact that Marx predicted an intensification of proletarian poverty, whereas I, on the other hand, deduce the breakdown of capitalism 'from a kind of impoverishment of the capitalists'. From Otto Bauer's numerical example, I deduce the 'amazing result' that the entrepreneur's revenue not only declines relatively, but after the 21st year declines absolutely and finally in the 35th year disappears entirely. That is, supposedly, 'in brief the idea underlying' my theory of so-called overaccumulation (p. 294). There is not a trace of this in my work. Nowhere have I said that capitalism will go under due to the impoverishment of the capitalists. I showed, rather, that an increasingly large part of surplus value (Ac) is, under the assumptions of Bauer's scheme, devoted to accumulation. The remainder, available for the consumption of the capitalists and workers, does not suffice. As a consequence an increasingly sharp struggle between workers and entrepreneurs over the level of wages necessarily flares up. If workers continue to receive the same wage, then nothing remains for the entrepreneurs. If, however, entrepreneurs maintain and where possible even increase their living standard, then they force down the level of wages, i.e. from this point on the impoverishment of the workers necessarily sets in. That, however, drives the workers to revolutionŠ http://www.marxists.org/archive/grossman/1929/breakdown/braunthal.htm As for my own work, I have recently written three pieces on debates centered around early capitalism (I am interested in the nature of wage labour, the theory of history, and the old transition debate); my credentials are in ethnic and racial studies, but I am interested in saving Marxism from dismissal as Eurocentric or Orientalist ideology, though unlike Aijaz Ahmed I do think there are real problems here. I have received very helpful comments from many OPE-L members to whom I sent the papers. I would be happy to share them offlist with other listmembers. Rakesh
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