Re: / Andrew T on Marx, Luxemburg and Grossman

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Fri Nov 05 2004 - 07:48:52 EST

At 12:19 AM +0000 11/5/04, A.B.Trigg wrote:

>  A reading of Marx in Capital, volume 3, also shows that it is
>difficult to realise such a monstrous amount of surplus value.

Difficult yes. Baran and Sweezy's difficulty of the sales effort, the
difficulty of creating ever newer Veblenian positional goods, the
Kalecki/Trigg difficulties in the financial sector subsidizing ever
more orgiastic luxury spending.

But what Grossmann's analysis predicated upon a provisional
acceptance of Say's Law uncovers is an even greater obstacle to the
realization of that monstrous amount of surplus value. As Mattick
pithily put it:"because not enough surplus value has been produced,
capital cannot expand at a rate which would allow for the full
realization of what has been produced. the relative scarcity of
surplus labour in the production process appears as an absolute
abundance of commodities in circulation."

>       I have two points to make:

Taking them in reverse order.

>       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.

OK so in your interpretation not only do capitalists earn what they
spend but they determine the rate of s/v through their spending. But
there are constraints on the growth rate of the s/v rate. And these
you do not seem to theorize in your model.

>  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

No precise year could ever be deduced from Bauer's model anyway. Each
period could represent a month or a decade. The initial conditions
are arbitrarily postulated and a change in them would obviously
change the year of economic breakdown. This was my initial point,
drawing from Kuhn's research into Grossmann's correspondence.
Grossmann was very aware of the dangers of trying to deduce too much
from Bauer's scheme. Neither Sweezy nor Howard and King are fair to
Grossmann on this point. In G's analysis B's scheme is as much
positively used as criticized. The phrase G-B model is seriously

>  I agree that a rising s/v is unreasonable.

Well then!

>  You say that it would be so because of workers resistance.

To the extent that workers cannot live on air,the rise in s/v will
necessarily find limits that the rise in the OCC will not. Cogoy
showed this. So did Yaffe before him as you recognize in your paper.
You can only be certain that  there will be no break down from a
shortage of surplus value at even very high levels of the OCC if you
allow, consequent upon autonomous increases in luxury spending, the
S/V to rise in physically and socially impossible terms. Without
determinate parameters and limits on the growth of s/v, one counters
Grossmann only by flight from living reality.

In short, an autonomous increase in luxury spending cannot be allowed
to raise the s/v without any limits at all.

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

Yes indeed. Howard and King's argument that Grossmann neglects the
effects of a rising s/v and  relative surplus value ignores that
Grossmann saves just that effect for intensive study in his
conclusion where the political implications of his variant of
breakdown theory are drawn. The conclusion is not in the English
version; it was translated by Kenneth Lapides in History of Political
Economy as I am sure you know.  The unabridged Spanish translation is
available on the American website.

Yours, Rakesh

>  However, neither of us are talking here about Grossmann-type breakdown.
>       Andrew T

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