Re: (OPE-L) Rosa Luxemburg conference/ Andrew T on Marx, Luxemburg and Grossman

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sun Oct 31 2004 - 09:13:08 EST

>ANDREW B. TRIGG (Open University, Milton Keynes, UK)
>Where does the money come from? Rosa Luxemburg and the Marxian
>Reproduction Schema

In his paper on Grossmann and Kalecki Andrew Trigg wants to show no
foundering of capital accumulation on shortage of surplus value if
s/v rises.

Andrew T has the rise in s/v determined by ex ante capitalist
consumption decisions which are in turn determined by a strict rule.
The rise in s/v could be determined in other ways.

If capitalists follow this strict rule and borrow and spend ever more
on their own consumption, then (according to Andrew T) capitalist
production is possible for at least 100 periods. No forseeable
breakdown from shortage of surplus value. Capital is stable as long
as the banks are willing to advance money to
capitalists to indulge in ever greater orgies of luxury spending.

Presumably the message from Kaleckian theory to the working class is
simply this: "help the ruling class overcome any 'Protestant'
inhibitions against luxury, consumption and decadence, for the
stability of your employment depends on their use of credit lines to
finance their overconsumption."

  We can safely assume that capitalists will consume enough to realize
all of surplus value. To be sure, this puts a burden on them. Imelda
Marcos had to shop a lot and find room in her closet for new pairs of
shoes. Who cares?

Moreover since the OCC could reach a plateau much faster if Bauer's
scheme did not begin with such a low one in the first place (as Rick
Kuhn quoting Grossmann has already shown), there is no reason why the
rise in the OCC will likely be neutralized by a rise in the S/V.  So
in no way does Trigg show that it's impossible for the accumulation
of capital to founder on a shortage of surplus value. No doubt there
could be a realization crisis if the capitalists do not advance order
what will turn out be  the revenue component of surplus value. Why
Andrew T thinks that has proven to be a greater source of problems
for the capitalist system as a whole than periodic drops in
profitability from rises in the OCC I have no idea; he certainly does
not show that various phenomena can be traced to the problem that he
isolates. So his theory does not have the consilience (to mis use
Whewell's word) that Grossman's theory had.

As for Rosa L, not one of her theoretical defenders (and this
includes Paul Z) has responded to the best of my knowledge to the
following criticisms made of her by Grossmann, repeated by Mattick Sr.

That is, whatever disproportionalities or realization difficulties
she isolates in Marx's reproduction schema could be corrected through
the formation of prices of production and the redistribution of value
implicit in that formation. Luxemburg forgets that Marx's schema are
given in values, not prices of production.

"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."

Moreover, "'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

And Mattick, 1935:

"The theoretical confusion of Rosa Luxemburg is best illustrated in
the fact that on the one hand she sees in the average rate of profit
the governing factor which 'actually treats each individual capital
only as part of the total social capital, accords it profit as part
of the surplus value to which it is entitled in accordance with its
magnitude, without regard to the quantity which it has actually won',
and that she nevertheless examines the question as to whether a
complete exchange is possible; and that on the basis of a schema
which knows no average rate of profit. If one takes into account this
average rate of profit, Rosa Luxemburg's disproportionality argument
loses all value, since one department sells above and the other under
value and on the basis of the production price the undisposable part
of the surplus value may vanish."(this 1935 analysis reprinted in
Anti Bolshevik
Communism, ME  Sharpe, 1978, p. 38)

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