Re: [OPE-L] Capital in General

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Wed Oct 26 2005 - 23:18:59 EDT

On Wed, 26 Oct 2005 21:25:50 +0100
  "A.B.Trigg" <A.B.Trigg@OPEN.AC.UK> wrote:
> Rakesh.
> You say that Marx was 'ultimately' preparing the ground for the shortage of surplus value. This
>seems a bit weak. Is the shortage alluded to in the first two volumes of Capital?
Yes. In the first volume the theoryof relative surplus value already intimates
the theory of the law of the tendency for the rate of profit to fall. If the first volume is read
with the third volume in mind, the intimations of the later argument are hard to miss.

Or are you
>saying that there is nothing about surplus value drying out until Capital III?
No I am not.

(which Grossmann
>misleadingly quotes).
I don't know what Grossmann quote you have in mind, or what you think is misleading about it.

By the way, Grossmann did not abstract from the realization problem. Nor did he find a single
cause for general overproduction in the shortage of the mass of surplus as a
result of upward pressure on the OCC. See his book on Marx,
the Classical Economists and Dynamics. It is in part an attempt to read the reproduction schema
as a construct for the demonstration of blockages in the supply and demand mechanism
as a source of equlibirium and  easy adjustment. Grossmann's entire crisis theory
can only be reconstructed with all his work in mind.

At any rate, if you begin the Bauer scheme with a higher OCC and a higher rate of SV, it would
not be difficult to show that  the rising S/V that you build into your model as a result of
increases in luxury spending would soon have to find its limit, and the mass of surplus value
would decline sooner than you allow as an absolute mass as well as being short
vis a vis the stipulated accumulation requirements. Since Bauer's initital conditions are
they can be arbitrarily changed; and once
aribtrarily changed, they could  wreak havoc on on your Grossmann critique. It is important
to remember that Grossmann in no way wanted to be identified with the Bauer scheme and provided
the most comprehensive list of its abstractions from capitalist reality.

What I am saying may be "weak" but I think Grossmann's basic Marxian ideas stand up quite
strongly against your Kaleckian critique. Once you allow for a rising OCC, it is simply true that
a rising S/V cannot compensate for that forever. You grant I think that
Yaffe established that; so did Marx. When that time comes however can never be determined
by an arbitrary scheme but only by empirical investigation and assessment. Grossmann never
argued otherwise.

Yours, Rakesh

> In solidarity.
> Andrew.
>       -----Original Message-----
>       From: OPE-L on behalf of Rakesh Bhandari
>       Sent: Sun 23/10/2005 16:16
>       Cc:
>       Subject: Re: [OPE-L] Capital in General
>       On Sun, 23 Oct 2005 09:55:28 -0400
>         Fred Moseley <fmoseley@MTHOLYOKE.EDU> wrote:
>       > On Thu, 20 Oct 2005, Rakesh Bhandari wrote:
>       >
>       >> > I do not mean to minimize the importance of capitalism's tendency toward
>       >> > crises.  I have devoted a lot of years to Marx's crisis theory, especially
>       >> > the falling rate of profit as applied to the US economy.  However, I have
>       >> > come to realize that the three volumes of Capital are generally at a
>       >> > higher level of abstraction than crises.  "Crises and the world market"
>       >> > was the 6th book in Marx's original 6-book plan.  Capital was only the
>       >> > first book.  Capital provides the basis for a more concrete theory of
>       >> > crises, but such a theory is not presented in the three volumes.  Before
>       >> > concrete crises can be analyzed, the production and distribution of
>       >> > surplus-value must be explained.  These fundamental questions are
>       >> > explained in Capital on the basis of the assumption that capitalism is
>       >> > "functioning normally", i.e. that S = D and price = value or = price of
>       >> > production.
>       >> >
>       >> > Comradely,
>       >> > Fred
>       >>
>       >> I am quite worried about Fred's change of heart, seemingly away from
>       >> Mattick's interpretation of Capital as primarily a theory of crisis
>       >> and rupture (I know that Fred had said that if American capitalism
>       >> does not enter a Great Depression by the early 2000s, he would
>       >> consider Marx invalidated, but it seems that he is now simply
>       >> redefining what Marx actually did set out to do in order to maintain
>       >> allegiance to him). We have the critique of Say's Law at the
>       >> beginning, then the misery of the working class,  disproportionality
>       >> theory in the second volume (as Andrew T underlined), and FROP theory
>       >> in the third volume. I can't see how this work can be pressed into
>       >> the mould of an explanation of surplus value on the unrelaxed
>       >> assumption that S always equals D.
>       >>
>       >> In fact, this idea that Marx never really got beyond S=D in his
>       >> theoretical work only opens him to the charge that he was a prisoner
>       >> of Say's Law. This is a concession to Keynes' lumping of him into his
>       >> idiosyncratic definition of classical economics. As Bernice Shoul
>       >> showed, Marx only makes provisional use of Say's Law in order to
>       >> discover a deeper source of crises, the shortage of surplus value in
>       >> the realm of production. Marx was however a thorough going critic of
>       >> Say's Law and Keynes only "rediscovered" much of Marx's criticism.
>       >
>       >
>       > Rakesh,
>       >
>       > Assuming that S = D for certain theoretical purposes is not the same as
>       > "being a prisoner to Say's Law".  According to Say's Law, S must = D
>       > ALWAYS AND OF NECESSITY in the real world.  According to Marx, "nothing
>       > could be more foolish".  Marx assumed S = D in his theory, in order to
>       > explain the production of surplus-value and the distribution of
>       > surplus-value "in its pure form".  But Marx clearly recognized that in
>       > the real world S is almost never = D, thereby rejecting Say's Law.
>       >
>       > I remember Mattick emphasizing that there is a great distance between
>       > Marx's abstract theory in Capital and concrete reality.  He himself closed
>       > one of those big gaps with his extension of Marx's basic theory of
>       > capitalism to the effects of government intervention on the rate of profit
>       > (which is not considered at all in Captial).
>       >
>       > And it was from Mattick that I learned the crucial aspect of Marx's method
>       > that I have been emphasizing - the determination of the total
>       > surplus-value prior to its distribution (and also from David Yaffe, who
>       > was following Mattick on this point).  This principle was the basis for
>       > Mattick's critique of Baran and Sweeay's Monopoly Capital - that
>       > monopolies affect only the distribution of surplus-value, not the total
>       > amount of surplus-value.
>       >
>       > Rakesh, let me make a more modest claim, without trying to decide whether
>       > or not "Capital is primarily a theory of crisis and rupture".  I argue
>       > that, in Marx's theory of the production of surplus-value in Volume 1 and
>       > in his theory of the distribution of surplus-value in Volume 3, Marx
>       > assumed that the circulation of capital "proceeds normally".  In Volume 1,
>       > this means price = value.  In Volume 3, it means price = price of
>       > producton.  In both cases, it is assumed that S = D.
>       Fred, as I understand Mattick's argument, Marx was interested in the
>       deepest explanation for why circulation would not proceed smoothly,
>       for why S would not equal D. To be sure, disproportionality of which
>       underconsumptionism is but a form could be one reason. But the
>       redistribution of capital could overcome such problems in the
>       realization of circulation of value. Marx was ultimately--and by
>       ultimately I mean that his preceding arguments and discoveries
>       are meant to prepare the ground--interested in showing how
>       a shortage of surplus value even on the assumption that s had
>       equalled d would choke further capitalist production and thus
>       produce a crisis of realization. Marx was thus not a prisoner of Say's Law
>       but the most throrough going of critics, in fact a much more
>       profound one than Keynes whose vision did not transcend
>       the surface of the circulation of capital.
>       But Marx is at all times building up not to an analysis of capitalism
>       on the assumption of smooth circulation but to an analysis of
>       crisis and rupture--the law of motion and disturbance of capital.
>       At any rate, this is how I learned to read Marx from Mattick whose
>       emphases seem different from yours at present, no?
>       Yours, Rakesh
>       ps the most abstract basis ofcrisis theory of the third volume is all
>       but spelled out in many different places in the first volume. We are told
>       how capital both aims at the production of surplus value and drains
>       variable capital relative to total capital from the system. This is presented
>       as a contradiction in the first volume.
>       >
>       > There are also the elements in Capital that you have emphasized, that have
>       > to do with crises:  the critique of Say's Law, the likely
>       > disproportionality in reproduction, etc.  But these are separate from
>       > Marx's general theory of the production of surplus-value in Vol. 1 and
>       > from his general theory of the distribution of surplus-value in Vol. 3
>       > (including his theory of prices of production, with equal rates of
>       > profit), in which Marx assumes capitalism "in its pure shape".
>       >
>       > Rakesh, do you agree or disagree with this more modest claim?
>       >
>       >
>       > Comradely,
>       >Fred

This archive was generated by hypermail 2.1.5 : Fri Oct 28 2005 - 00:00:04 EDT