From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Mon Apr 23 2007 - 03:50:13 EDT
I am almost done with a short review of Rick's excellent book. Just a quick comment. >(I sent a query on this to Rick Kuhn, author of the superb new >Grossman biography. Here's his reply, forwarded with permission...) > >Patrick > >At 23/04/2007 08:26 AM, you wrote: > >>This line seemed fairly devastating; but your view? >> >>Marx speaks of over-accumulation precipitating a crisis, of there >>being too much accumulated surplus value which is not invested and >>which depresses profits. But Grossmann's collapse comes about >>through there being too little accumulated surplus value. If minimum capital requirements are rising, there can be insufficient surplus value for accumulation precisely because capital has already been overaccumulated; surplus value which is insufficient thus becomes excessive, the rate of interest is driven down. (Similarly if new investments will require more labor than is newly becoming available and new investments are consequently not made, a shortage of labor will result in overpopulation, too little labor becomes too much labor.) Moreover, if the accumulation of capital has no longer served to maintain or enlarge the capitalist consumption fund, the surplus value which would have been earmarked for it (and is not directly consumed) now becomes potentially an idle liquid fund. The surplus value which is not sufficient to be accumulated (and has not been consumed) seeks an outlet as does the surplus value withdrawn from accumulation on account of the declining profitability of marginal investments; there may be a frenzy of speculation at best or struggle for the control of foreign investment outlets (for Grossman the greatest threat to world peace). As the mass of liquid capital which is not accumulated or consumed mounts, the commodities which would have been purchased with either ac or av now lie unsold. The general crisis is expressed in a combination of idle liquid capital, excessive or unsold goods and idle people. While in general the way out of a crisis depends on a resumption of accumulation through a reduction of capital costs and a rise in the rate of the surplus value, the struggle for the domination of the world market, including control over spheres of investment, becomes more virulent. >> > >The passage is confused. Overaccumulation in Marx refers to the >volume of constant capital involved in production, not to uninvested >capital. Where does Marx write of "there being too much accumulated >surplus value which is not invested and which depresses profits", >and what does this mean? Pannekoek is mixing up accumulated capital >and the surplus value produced in a single circuit. > >Grossman identifies increasing accumulation of capital (an >increasing mass of accumulated capital and a rising organic >composition) as leading to a declining rate of profit and hence >capitalism's tendency to break down. As Grossman puts it: "Cassel simply mixes up concepts. He speaks of a capital shortage, an insufficient supply of capital. In the language of the banker everything is capital. But Cassel is not talking about capital, but about a part of surplus value that still has to be accumulated, a part that represents capital only potentially and becomes capital only through its function in the valorisation process. So really there is not a shortage of capital, but a shortage of surplus value. In contrast, there is an overaccumulation of the already functioning capital. Overproduction of capital and imperfect valorisation are correlative concepts each of which determines the other." > >The passage you quote seems to be the conclusion of Pannekoek's >substantive argument, made several paragraphs above. Argument and >conclusion are separated by some paragraphs about crisis as opposed >to collapse, which serve to demonstrate that P does not grasp Marx's >(and Grossman's) method. Pannekoek's substantive argument is that as >the rate of profit falls, the rate of accumulation can slow down and >everything will be fine. Pannekoek misses Marx's argument. A fall in the rate of profit will tend to raise the rate of accumulation in a system of perverse positive feedback. The depression in the profit rate tends to unravel co-respective competition for one, accumulation becoming a means of fraticidal competition. Moreover, the more the rate of profit falls, the more the invested capital must grow for the mass of surplus value to grow. And the more capital is accumulated, the more the rate of profit falls. > But at the level of abstraction of the reproduction schemes, that >is not the case. If the surplus value used for accumulation (ie >additional investment beyond the level of investment in the previous >circuit) in one circuit of capital is less than the increase in >production at the end of the previous circuit, then the difference >between the two is surplus value that cannot be realised and this >results in the scheme to break down too.The point of Grossman's use >of a modified version of Bauer's reproduction scheme was precisely >to demonstrate that it results in breakdown whatever the rate of >accumulation specified in it. Yes but if the net product, i.e., the additional means of production and wage goods, is not purchased as capital, as ac and av in Bauer's table, then the growth rate of the OCC will be slowed down; moreover, once one allows for depreciation by way of technological progress, the growth rate of the OCC could be then be held in check for all practical purposes. That is, once one relaxes the assumptions in Bauer's scheme--that the net product must be fully accumulated and values are constant--then one simply cannot say a priori the direction in which the rate of profit will move. Indeed--as Rick has shown through unpublished correspondence--Grossman himself considered it an empirical question whether the OCC actually did rise, and he thought the evidence was unequivocal. Marxists are no longer so sure. There are real doubts about Grossman's theory. I do not think Pannekoek expressed the important ones. Rakesh > >Note also that parts of Pannekoek's article are lifted without >acknowledgement from Varga and Korsch, see top p. 266 of Henryk >Grossman and the recovery of Marxism. > >Having written this, it occured to me that Mattick had replied to >Pannekoek and I looked at that. His point seems to be the same as >mine: > >'Let us assume (which is not the case), that the critic is right. >But even in then nothing is raised against the theory of breakdown. >Here too under the assumptions changed according to the wishes of >the critic, the continuation of accumulation becomes more and more >difficult, and must finally, just as much, entirely cease. No >surplus of capital arises, but there is still insufficient >valorisation, although slower, which brings accukulation to a halt, >quite apart from the fact that the decline and finally disappearance >of the consumption of the capitalists makes accumulation >"pointless". In this case too, a crisis situation is unavoidable, >even without surplus capital, which can only be overcome through the >continuation of accumulation, [at a rate] which is beyond the >"ability" of the capitalists, which excludes the proportional >deployment of the reduced surplus value.' Paul Mattick 'Zur >Marx'schen Akkumulations- und Zusammenbruchstheorie' >Raetekorrespondenz 4 1934 reprinted in Korsch, Mattick, Pannekoek >Zusammenbruchstheorie des Kapitalismus oder Revolutionaeres Subjekt, >Karkin Kremer Verlag, Berlin 1973. > >Sorry about the inelegant translation which I did on the fly. >Although an English version is not listed in a detailed biblio of >Mattick's work I have just checked, perhaps the essay is in one of >Mattick's books in English, but those are at work and I am at home >at the moment. > >All the best > >Rick > >> >> >>
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