Re: [OPE-L] Capital in General

From: A.B.Trigg (A.B.Trigg@OPEN.AC.UK)
Date: Fri Oct 28 2005 - 10:37:23 EDT

OK Rakesh. I will have another look at the material on relative surplus
value in volume 1; any particular passages you have in mind on drying up
of surplus value (only if these are to hand)?

I question Grossmann's misinterpretation of Marx at the end of my
Kalecki-Grossmann article (Science and Society 2004).

It would be interesting to restart the simulation with different OCC. Am
not sure there can ever be a year-specific breakdown where surplus value
dries up, if the circuit of money is modelled. Of course, as you say,
the increase in the rate of surplus value provides a great deal of
pressure on the system. My worry is about this drying up of surplus
value scenario.

You are right, of course, that other parts of Grossmann should be taken
into account, but he did approve of the Bauer model as an example. As
always, very useful to engage with you on this.



-----Original Message-----
From: OPE-L [mailto:OPE-L@SUS.CSUCHICO.EDU] On Behalf Of Rakesh Bhandari
Sent: 27 October 2005 04:19
Subject: Re: [OPE-L] Capital in General

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 autonomous 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 arbitrary, 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
>       >> and rupture (I know that Fred had said that if American
>       >> does not enter a Great Depression by the early 2000s, he
>       >> consider Marx invalidated, but it seems that he is now simply
>       >> redefining what Marx actually did set out to do in order to
>       >> allegiance to him). We have the critique of Say's Law at the
>       >> beginning, then the misery of the working class,
>       >> 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
>       >> 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
>       >> theoretical work only opens him to the charge that he was a
>       >> of Say's Law. This is a concession to Keynes' lumping of him
into his
>       >> idiosyncratic definition of classical economics. As Bernice
>       >> showed, Marx only makes provisional use of Say's Law in order
>       >> 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
>       >
>       >
>       > 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,
>       > could be more foolish".  Marx assumed S = D in his theory, in
order to
>       > explain the production of surplus-value and the distribution
>       > 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
>       > 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 -
>       > 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
>       > producton.  In both cases, it is assumed that S = D.
>       Fred, as I understand Mattick's argument, Marx was interested in
>       deepest explanation for why circulation would not proceed
>       for why S would not equal D. To be sure, disproportionality of
>       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
>       on the assumption of smooth circulation but to an analysis of
>       crisis and rupture--the law of motion and disturbance of
>       At any rate, this is how I learned to read Marx from Mattick
>       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
>       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 : Sat Oct 29 2005 - 00:00:05 EDT