[OPE-L] If a six turned out to be nine

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Sun Oct 01 2006 - 09:38:25 EDT

Just qui ckly then,

1 I did no such thing, I merely mentioned that I personally don't care much
for pomo Marxism. You leap so quickly from one author and topic to the next
at times I wonder whether this is not just a pomo joke. Evidently I am

2 Well, we agree. Marx also does not discuss monetary theory all that much,
possibly (1) because he felt monetary relations were only the surface
expression of value relations (2) because he was trying to write something
that could be popularly understood.

3. You are correct, that is not a superficial question, but endlessly
debating about the interpretation of Marx's change of plan in my view is, in
particular because it cannot be resolved anyway, for lack of conclusive
evidence. All that it yields is the conclusion that Marx's analysis could be
developed in various directions. In Grossman's theory, foreign trade either
to stave off the breakdown, or in response to overaccumulation. I doubt
whether that is true.

4. The snag is that Marx himself deliberately discussed the simple and
expanded reproduction of the aggregate capital in abstraction from foreign
trade and monetary matters, to validate his previously developed concepts of
the capital composition, capital accumulation and surplus value. This
procedure is a theoretical simplification. His aim is to show what the
reproduction of individual capitals and the reproduction of total capital
have in common, and how they differ, validating the basic concepts of C, V
and S previously developed and shedding light on how gross product should be

5. No doubt Marx had a complete theoretical perspective. But the evidence
for many parts of that perspective is very fragmentary or absent, giving
little guidance to any scholar seeking to plug the "gaps" in the analysis.
We have to do some of our own thinking.

6. Maybe so, but it does not speak to my point, which was that production
capital is only one subset of total capital assets, and therefore
constitutes only one aspect of the total accumulation process, in which the
circuit of production capital intertwines with other circuits. Grossman aims
to show that through successive cycles or production periods in the process
of production growth, the capital composition of production capital alters
in favour constant capital, in such a way that insufficient surplus value is
produced to valorise the total mass of capital.

{ Summarising, Grossman himself says: "We have to show how, as a result of
causes which stem from the economic process itself, the capitalist process
of reproduction necessarily takes the form of cyclical and therefore
periodically recurring movements of expansion and decline and how finally it
leads to the breakdown of the capitalist system. (...) In approaching this
problem I shall refrain from constructing any scheme of my own and
demonstrate the real facts through Bauer's reproduction scheme. (...) It
follows that the system must break down. The capitalist class has nothing
left for its own personal consumption because all existing means of
subsistence have to be devoted to accumulation. (...) Analysing each of the
phases of capital in its circuit as money capital, productive capital and
commodity capital, Marx asks: what impact do they have on the process of
production, can this process advance smoothly, or does the normal course of
reproduction encounter disruptions in its various phases? (...) Marx's
theory of breakdown is thus the necessary basis and presupposition of his
theory of crisis, because according to Marx crises are only the form in
which the breakdown tendency is temporarily interrupted and restrained from
realising itself completely. In this sense every crisis is a passing
deviation from the trend of capitalism. (...) I have shown that even if all
conditions of proportionality are maintained and accumulation occurs within
the limits imposed by population, the further preservation of these limits
is objectively impossible. (...) The falling rate of profit is, moreover,
only important for Marx in so far as it is identical with a relative decline
in the mass of surplus value. Only in this sense is it possible to state
that with a falling rate of profit the system breaks down. (...) We started
by assuming complete equilibrium where, despite a continuously rising
technological level, the accumulation of capital can keep the entire working
population employed. In this state, defined by proportional increases in
capital and labour power, accumulation can proceed without any changes in
the structure of prices. I have shown that even assuming these favourable
conditions, there must come a point at which accumulation necessarily breaks
down.  (...) Starting from the sphere of production I have shown that the
very laws of capitalist accumulation impart to accumulation a cyclical form
and this cyclical movement impinges on the sphere of circulation (money
market and stock exchange). The former is the independent variable, the
latter the dependent variable. Once counteracting tendencies begin to
operate and valorisation of productive capital is again restored a further
period of accumulation sets in.(...) Throughout all this there is a growing
centralisation of money wealth which in turn accounts for the increasing
power of finance capital. (...) proportional accumulation is a purely ideal
case; a fiction that could actually prevail only accidentally. As a rule the
actual process of accumulation is quite unequal in the various branches.
(...) Marx deduces the breakdown of the capitalist system quite
independently of competition. His starting point is a state of equilibrium.
Because valorisation falters at a specific level of accumulation, the
struggle for markets and for spheres of investment must begin. Competition
is a consequence of imperfect valorisation, not its cause.
(...) }http://www.marxists.org/archive/grossman/1929/breakdown/ch02.htm

At best, Grossman illustrates theoretically the impossibility of balanced
economic growth, i.e. the inevitability of uneven development of the capital
composition of production capital. The logical proof of breakdown holds only
provided the theoretical assumptions are accepted. With a different set of
assumptions, the reproduction schemas will evolve in a different way.
Grossman focuses on the circuit of production capital only, but that is not
the only circuit.

7. OK.

8. OK - though Anwar Shaikh does not base his crisis theory on the
reproduction schemes.

9. I have written a short article on capital accumulation here:
http://en.wikipedia.org/wiki/Capital_accumulation . In modern national
accounts, the concept of capital accumulation is not used. Instead the
concept of capital formation is used. (See my article
http://en.wikipedia.org/wiki/Capital_formation). Capital formation and
capital accumulation are not the same thing at all however. Strictly
speaking, the general concept of capital formation refers to that portion of
domestic "savings" (funds not spent on consumption) which is invested (or
loaned out for investment) and thus represents an increase in capital
assets. You can however calculate the rate of reinvestment of realised
surplus-value in price terms from the data, and you can trace the growth of
capital stocks of various kinds (fixed assets by type, inventories by type,
securities and stocks, liquid funds etc.). Only when the available data is
properly considered, do we arrive at more realistic theories of capital

10. Well it was a tongue-in-cheek comment.


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