Re: [OPE-L] Petty egoisms and pitiful absurdities

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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