[OPE-L:3165] Re: Production for Production's Sake (was Need 1 and Luxemburg's *Accumulation of Capital*)

From: Rakesh Bhandari (bhandari@Princeton.EDU)
Date: Fri May 12 2000 - 19:16:40 EDT

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I will be responding to Paul Z here as well, though I'll take Andrew's
comment as my starting point:

>(c) I think the Bauer-Grossmann scheme is ludicrous. It assumes
>*constant* rates of increase in c and v even though values are *falling*,
>which implies that demand for the material components of c and v grows at
>an ever-accelerating rate and eventually outstrips supply. This excess
>demand is in fact what leads to the "breakdown" of capitalism!

Actually the scheme explicitly assumes that values are constant, and
Grossmann spends a whole section of his book attacking Bauer for building
this assumption into his scheme and thus allowing the c and v to grown
proportionately with mofp and lp.

 But I am sure Andrew has carefully read the book given his promulgation of
theoretical pluralism. More on this later.

Unlike Marx, Grossmann began his analysis with Bauer's scheme of which he
completed an immanent critique. Grossmann was able to show that even
accumulation on the basis of accelerating rate of capitalisation of surplus
value will not founder on a declining rate of profit (Bauer is right) until
(however!) the mass of surplus value becomes insufficient to continue the
process, leaving excess capacity and idle workers.

This is interesting insight into Marx's results which we are are interested
in understanding because Marx clearly thought

1. the rate of accumulation would quicken, that is, 0f sv capitalized
would accelerate even as the rate of profit falls (the scheme of course
does not explain why this is so but it does demonstrate such a process) and

2. the mass of surplus value would tend to grow as a mass though the rate
of profit would fall (Marx drew from Richard Jones).

So even if we are to overlook the difficulties or swindles in the transfer
of capital between depts as implied by the Bauer's scheme--this is what
Paul Z thinks is Rosa's decisive point--there is still an additional
difficulty in the production of surplus value.

Mattick puts the pt well in Econ Crisis and Crisis Theory (1981;
capitalisation meant for Paul Z), p. 94:

"ASSUMING for the moment that nothing stands in the way of this
realisation, Marx pointed out that even under these benign circumstances,
accumulation depresses the profit rate until accumulation finally founders
on the lack of profit. This does NOT mean that the process of realization
proceeds as smoothly as the general theory of accumulation makes it appear;
but it does mean that, quite independently of all its difficulties in
realization, capital meets a limit in surplus value production itself. If
the accumulation process can be depicted in abstraction from the
circulation process, the process of reproduction can only be traced without
considering the realization problems it encounters IN REALITY in order to
explain the meaning of the circuit of capital. One can find this mode of
procedure reasonable or not [Paul Z, I believe is rejecting this
methodologically sound use of a purely ideal case]; at any rate, Marx
believed that although this abstract model of the capitalist process of
circulation did NOT correspond to reality in some ways, it could
nevertheless contribute to a better understanding of reality."

Grossmann pointed to "how completely RL has misunderstood the significance
of Marx's methodological procedure. For who could ensure that accumulation
takes place proportionally in the 2 depts? No such regulator exists under
capitalism or CAN exist. It follows that proportional accumulation is a
PURELY IDEAL CASE; a FICTION that could actually prevail only accidently.
As a rule the actual process of accumulation is quite unequal in the
various branches."

Grossmann points to the methodological signifance of purely ideal cases in
which accumulation is proportionate b/t the two depts or the Bauer case of
where II is only allowed to accumulate just as much as is needed for the
accumulation of I.

What the latter Bauer scheme, if extended, does show is the POSSIBILITY of
a barrier in production itself, even if we allow L's fantastic supposition
that sufficient money income had thereto been generated through non
capitalist modes of surplus extraction to realize capital's excess
commodity value and prevent a crisis of realization.

Now I must refer Andrew to what Grossmann actually wrote about Bauer's
assumption of constant values in his scheme [Andrew, did you miss that
constant values were built into the scheme?]:

"Technological progress means that since commodities are created with a
smaller expenditure of labour their value falls. This is not only true of
the newly produced commodities. The fall in value reacts back on the
comodities that are still onteh market but which were produced under the
older methods, involving a greater expenditure of labor time. These
commodities are devalued.

Andrew]. He refers to devaluations but this is only due to periodic
overproduction. The implication is that if the system were in equilibrium
there would be no devaluations--the value realtions of any given point of
time would survive indefinintely. Things are quie different in Marx.
Devaluation necessarily flows out of the mechanism of capital even its
ideal or normal course. It is a necessary consequence of continual
improvements in new technology, of the fact that labor time is the measure
of exchange value.

"It follows that the assumption of a constnat values has a purely
provisional character. The question arises--how is the law of accumulation
and breakdown modified in its workings when the assumption is dropped? Both
Bauer and Tugan realized that holding values constant is a simpflying
assumption. But neither modified the assumption. For this reason their
models of production are completely UNREALISTIC fictions which cannot
reflect or explain the actual course of capitalist reproduction."

Yours, Rakesh

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