[OPE-L:3373] Re: Mattick on Luxemburg

From: Rakesh Bhandari (bhandari@Princeton.EDU)
Date: Tue May 30 2000 - 03:21:52 EDT

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In 3313 Paul Z offered some criticism of Mattick's analysis of Luxemburg's
theory of accumulation. I had offered some comments offlist, but will
forward them.

One thing to remember about Mattick is that he tried to combine Luxemburg's
political theory and Grossmann's economic theory in his formulation of
council communism. Do you have access to the essay "Luxemburg vs Lenin"
(1935) in Anti Bolshevik Communism (Merlin 1978)?

Please note Mattick's point here: "RL demonstrated to him [Bauer], however
that even in his modified schema an unsaleable surplus remains over in the
department of consumption, and that in order to be realised it compels to
the conquest of new markets. To this, Bauer had nothing more to say. And
nevertheless Lenin referred to him as the 'analyst of Rosa Luxemburg's
false theory.'

"Not only did Bauer's argument leave RL unscathed, there is also the fact
that the conclusions which he drew from the schema, indicating unlimited
accumulation (independently of the question of the exchange relation
between the two departments), could be demonstrated within the refererence
to same schema as wholly unfounded."

Then Mattick notes Grossmann's critique, but Mattick's criticism of Bauer
and Lenin is as scathing as yours.

 Mattick quotes Grossmann about why Luxemburg cannot use Bauer's scheme to
prove the impossibility of surplus value realization, and this point
Luxemburg did not understand. Nor do Howard and King who don't even note
Grossmann's analysis of the Luxemburg/Bauer debate.

  Mattick quotes Grossmann (and so far you too have not discussed this
point in your paper): "in a reproduction schema built on values, different
rates of profit must arise in each dept of the schema. There is reality
however a tendency for the different rates of profit to be equalized to
average rates, a circumstance which is already embraced in the concept of
production prices. So that if one wants to take the schema as a basis for
criticizing or granting the possibility of realising surplus value, it
would first have to be transformed into a price schema."

And this neither Bauer nor Luxemburg did! Such a schema based on values can
have no objective basis in reality, and thus cannot be used to say
anything--harmonist or catastrophic--about the course of accumulation.

Now Mattick then quotes Grossmann: "'Since competition gives rise to the
transformation of values into production prices and thereby the
redistribution of the surplus value among the brances of industry (in the
schema), whereby there necessarily occurs also a change in the previous
proportionality relation of the spheres of the schema, it is quite possible
AND EVEN PROBABLE that "a consumption balance" in the value schema
subsequently vanishes in the production price schema and inversely , an
original equilibrium is subsequently transformed into the production price
schema into a disproportionality.'" my emphasis

Of course in Economic Crisis and Crisis Theory, Mattick thinks Grossmann
has given the false impression that it may be possible to have smooth
inter-departmental transfers after transformation into production prices.

 The point however is that nothing--not harmonism, underconsumption, or
disequlibrium--can be said about the real course of capital accumulation on
the basis of the schema. We even find the most sophisticated Marxists today
claiming that the "possibility of balanced growth, or accumulation without
crisis, was shown by Marx through his reproduction schemes" (Webber and
Rigby, p. 148)

But the schema have completely unrealistic conditions built into
them--Webber and Rigby go on to build one which does have an economy wide
average rate of profit and equal rates of growth between both depts (which
is supposed to be a more realistic assumption) but *fixed production
techniques* as given in an input output matrix and thus constant values;
and on this basis they then claim that they can show the possibility of a
"golden age" growth path which evidently is supposed to have some relation
to the actual course of accumulation after WWII.

But all such schema are pitched at a high level of abstraction and
constructed on the basis of completely unrealistic assumptions--to keep
this in mind is the key point--and Bauer, Luxemburg, Hilferding and others
were all caught up in trying to determine the course of accumulation, as
well as alternations between equilibrium growth and disequilibrium, on the
basis of the study of such schema. There is even Hilferding's quip that "it
is not at all so bad that this second volume is so little read, since under
certain conditions it could be interpreted as a hymn of praise for

This misunderstanding of the nature of such schema is Mattick's critique of
Luxemburg and all other participants in this debate (see also Mattick Jr's
essay in Arthur and Reuten, eds. Circulation of Capital). Such schema
cannot show the course of accumulation or lay out ever more realistically
the actual parameters of growth depending on how one varies technical
coefficients or departmental growth rates--all such schema construction
can be only be an arbitary intellectual exercise. Webber and Rigby's model
is no more realistic than Bauer's than Marx's.

What any such scheme can demonstrate however is that "the possibility of
reproduction depends on the circulation of goods containing definite
quantities of labor time, represented in the form of values and use values
and distributed in a definite way" (Mattick), and even though these
necessities will be unnoticed, they nevertheless must be respected, behind
the backs of the producers if the accumulation of capital is to be

And of course because it is this problem that Marx is in fact investigating
in vol 2 that he finds it perfectly permissible to simply assume away the
problem of constant revolutions in value, though nothing realistic about
capital accumulation can be said on the basis of such an assumption. At
this point, his system remains completely formal, lacking any relation to a
dynamic reality.

 But all this and more can be abstracted from given that Marx is focused
here on the abstract problem of the general distribution of social labor
that needs to happen if accumulation is to be possible; to then turn
around and try to make such schema more realistic to determine the actual
course of accumulation through more careful specification of parameters is
to totally miss the necessarily idealized and completely fictional status
of any scheme.

Luxemburg is guilty of this to the extent that she tries to prove the
necessity of underconsumption on the basis of the schema (and one can turn
the scheme against her by simply constructing one in terms of production
price which then shows that accumulation need not be haunted on a perennial
basis by underconsumption); Bauer is also guilty of confusion since he
tried to prove the possibility of harmonism on the basis of a scheme.

Marx's crisis theory however is not built on the reproduction schemes, no
matter how modified, but on what had already been isolated in Vol
1--upward pressure on the OCC and the falling rate of profit to which that
gives rise.

Mattick also does not agree with Bukharin in Economic Crisis and Crisis
Theory. He thinks he has given a better answer to the problem posed by RL
than either Bauer or Bukharin. That is, Mattick offers an analysis of
credit as the source of the money for the transformation of commodity
values into additional capital, and of the limits on the extension of that
credit. Please see pp.112ff of Economic Crisis and Crisis Theory.

Best, Rakesh

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