From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Fri Sep 15 2006 - 00:33:09 EDT
While I have shown that Bauer, not Grossman, treated luxury spending as a residual, I do not think this undercuts the importance of Andrew's model in which autonomous capitalist luxury spending sustains aggregate demand with an unstably increasing rate of surplus value. Andrew has shown that such an accumulation path is possible in pure economic terms. But as Duncan Foley notes; "If capitalist consumption were to fill the [demand] gap, it would mean an ever increasing and socially explosive gulf between a lavish and wasteful capitalist life style and a stagnant or declining standard living of workers." Adam's Fallacy, p. 138 Capital accumulation need not result in economic breakdown before it creates explosive social crises. I think there is much to say about this kind of critique of Grossman, and have enjoyed the friendly offlist discussion with Andrew whose models are seeming more powerful to me the better I understand them. But I don't think he need be as critical of Grossman as he has been. Rakesh
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