Re: / Andrew T on Marx, Luxemburg and Grossman

From: A.B.Trigg (A.B.Trigg@OPEN.AC.UK)
Date: Thu Nov 04 2004 - 19:19:57 EST



	Rakesh. Your account here of the argument I make in my recent Science and Society article is accurate.

	'...unproductive expenditure is not treated as a residual or
	passive variable. Its autonomous increase ex ante allows for the
	greater production of value and an increase in the rate of s/v ex
	post facto. Unproductive expenditure thus does not come at the
	expense of accumulation. Andrew T maintains the rates of accumulation
	built into Otto Bauer's scheme. He then shows that based on
	reasonable assumptions about the autonomous increase in luxury
	spending the rate of s/v can be shown to increase at such a rate as
	to neutralize the rise in the OCC built into the Bauer scheme: the
	scheme will thus not break down due any shortage of surplus value for
	at least one hundred periods.'

	However, I do not agree with your latter statement:
	'Setting aside whether the rise in the rate of s/v could actually be
	imposed on the working class, the whole demonstration is undermined
	by taking such a low OCC in the first place. If the starting point
	for the OCC was higher than stipulated in Bauer's scheme--and as
	Grossmann points out Bauer's starting point is unreasonably low--then
	accumulation could bring it to the point much sooner than one hundred
	periods when clearly unreasonable assumptions about the rise in s/v
	would have to be made to sustain the scheme. It's not the autonomous
	increase in luxury spending that Grossmann would have found
	unreasonable, but the rise in the s/v that the autonomous increase in
	luxury spending would have to effect to maintain profitability at
	high levels of the OCC.  A reading of Grossmann's correspondence
	about the reception of his book (collected and analyzed by Rick Kuhn)
	suggests that Grossmann would have responded at least in to Andrew's
	critique in this way.  I don't think Andrew T had kept up with Kuhn's
	latest research before he wrote his critique of Grossmann.'

	I have two points to make:

	1. Grossmann did think that the rate of surplus value should rise, as does Marx, in the falling rate of profit thesis.

	2. I cite Samuelson and Wolfson (1986) in the article as showing that the only dependent variable in the Bauer/Grossmann model is the capitalist propensity to save. Hence with the OCC rising and rate of surplus value constant, the propensity to save must reach 100%: capitalist consumption collapses. In my alternative macro-monetary model capitalist consumption becomes an exogenous variable, part of the money cast into circulation by capitalists. The dependent variable is the rate of surplus value. Now under this alternative model there cannot be a breakdown due to scarcity of surplus value. With even a small rate of increase of capitalist consumption, a rising OCC cannot eat up all the surplus value - even if we start the Bauer simulation at a higher OCC. There is no year of precise economic breakdown due to drying up of surplus value. I agree that a rising s/v is unreasonable. You say that it would be so because of workers resistance. A reading of Marx in Capital, volume 3, also shows that it is difficult to realise such a monstrous amount of surplus value. However, neither of us are talking here about Grossmann-type breakdown.

	Andrew T

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