[OPE-L:3187] Re: Accelerated ACcumulation

From: Rakesh Bhandari (bhandari@Princeton.EDU)
Date: Sun May 14 2000 - 11:24:45 EDT

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Re: 3179


Leaving aside Andrew's implicit challenge, long ago made by Sweezy, that
capitalists would in the face of a shortage of SV simply adjust downward
their rate of accumulation or demand as Andrew puts it to prevent
breakdown--and there are answers to this important and difficult
challenge-- I can safely say that Andrew's characterization of the Bauer
scheme is exactly wrong:

the demand for the material components of mp and lp (not c and v as Andrew
further confuses the matter) are not in fact increasing at an accelerating
rate in the scheme because values are held constant--an assumption
Grossmann attacked at length.

And it is beneath you to accuse me of "dredging" up a passage when I noted
a major and pivotal chapter in the book.

And for anyone who 'respects' our theoretical diversity, this chapter of
Grossmann's work should be terribly well known; Mattick made much of it,
and the permanent arms theory hinged on an interpretation of it.

Grossmann located two kinds of reductions in value from which Bauer
abstracts in his completely unrealistic model--

a. those effected by crisis following upon overproduction and

b. those by effected continuous technical change, which counteracts not
only the constant rate of increase in c and v but more importantly any
upward pressure on the OCC in the course of accumulation...

HG focuses on the former while himself underlining--long before TSS--that
the latter creates problems in Marxist theory which hadn't even been
posed, much less solved. In his dynamics book he would make a further
contribution to problem.

In this section he deals mainly with the crisis-induced devaluation of
already accumulated capital and the concentration and centralization to
which that gives rise as a means by which the growth in the value elements
is arrested.

And most interestingly Grossmann shows that such devaluation is exactly
equivalent to militarism.

Here we have a criticism I would say of world historic importance of
Schumpeter's theoretic attribution of a pacific nature to the bourgeoisie
at a late stage of accumulation (Schumpeter himself repudiated his own
theory and embraced Renner's theory of social imperialism in Business
Cycles as is well known).

 By using up elements of production which had already been devalued in the
course of accumulation in orgies of militarism and war, the bourgeoisie can
actually create new scope for accumulation because a larger valorization
base, i.e., the post war population would be greater in number despite war
time deaths, could then confront a reduced capital in which backlogged
technical innovations would be embodied.

That is, Grossmann is arguing that before capital can claim the breathing space
 that comes with starting with a reduced capital base, i.e, using elements
of production which have become cheaper due to technical change, the old
capital must be used up in material terms through militarism and war. War
induces a paradoxical kind of full capacity utilization "scrapping" of
devalued capital.

We can even follow Brenner here and say that without the material using up
of this devalued capital, there won't be sufficient breathing room for the
new innovative capital which will be suffocated by the pricing strategies
of the older firms.

Moreover to the extent that the devalued capitals have become centralized
through the absoption of other firms' excess capacity--quite a bit of this
nowadays!--the newer capital has little chance of surviving at all without
the extant apparatus of reproduction being used up in terms of use value
through wars, revolutions, habitual use without simultaneous reproduction,

Keynes would understand all this as positive for profitability as well
since they would tend to restore the scarcity of capital--his fetishistic
understanding of the origins of the profit.

 On the basis of this chapter, further developed in the conclusion,
Grossmann expected in 1927-29 that full scale world war would again be on
the agenda.

I just don't think it's an argument we should be forgetting about it.

>1. To assume that the exchange values visible to capitalists are
>constant as accumulation takes place in the fashion depicted
>in the schemes is simply silly. In doing so, we would be insisting
>that capitalist invest even though each and every investment from
>period to period brings about a lower rate of profit.

Not for the innovator who then induces similar "capital intensive"
investment by which the general profit rate, assuming a one sector economy,
is reduced which induces more innovative entrepreneurial attempts to beat
off falling profitability by an immediate advantage in reduced unit costs
that comes from substituting less indirect for more direct labor, though at
the level of the economy as a whole this raises the OCC and thereby reduces
the profit rate, which sets the whole thing off again.

Isn't this what your fellow TSSer Carchedi tries to show in his Frontiers
of Political Economy?

Of course to the extent that I have abstracted from cheaper, profit
boosting inputs for other branches as a result of such technical change by
focusing on one sector, I am not doing justice to Okishio like criticism OR
Carchedi's models.

But we can assume the same process is happening in other sectors, so that
cheaper inputs are only slowing down upward pressure on the OCC, which is
growing as Marx clearly predicted more slowly than the TCC.

By the way, if you are all happy TSSers, then why don't you mention what
Carchedi's reply to your own question would be?

>2. As the rate of profit falls, there is technical change -- period.
>You can't assume away changes in technique and even pretend to
>be dealing with the Marx's notion of the falling rate of profit.

Well let's assume for some good reason we can expect that it will tend not
to be neutral over time, then capital saving innovation would then only
have the effect of elongating the scheme.

>3. As accumulation takes place, individual values are indeed falling
>no matter what one's concept of value is.

You think Grossmann does not make this point?

>3. Given simply the schemes, there is no reason to believe the
>social values would fall from period to period.

That's Grossmann's point, not yours.

> Is this accelerated accumulation "ludicrous"?

Well it is not as stupid as the dogma that production is for consumption...

Yours, Rakesh

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