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

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sun Oct 01 2006 - 11:42:19 EDT

I think we have reached an impasse and I don't get your jokes or
tongue in cheek comments. You think the change of plan controversy
has already run its course. I don't think it has even begun. My point
is simple: if Theodosius Dobzhansky said nothing in biology makes
sense except in the light of evolution, Grossman showed how nothing
in Marx's economic science makes sense except in the light of
expanded reproduction. This includes even the most important theory
of exploitation of formally free wage labor--see Marx's comments here
in his notes on Quesnay in TSV. This light is necessary to understand
foreign trade and crisis as well--the topics on which Marx putatively
did not write. The extension and simplification of Bauer's revised
(and improved) model of expanded reproduction allowed Grossman to
show graphically why this is true, but he did not identify his theory
with Bauer's scheme.

I don't see how my comments have been all over the place. I have
pursued a single thesis since Chris Arthur inquired about sources
about the Grundrisse, a text whose importance I think has been much
exaggerated (the influence of Negri and the Krisis group are
important here). Capital remains however the towering work, and it is
so because of its beautiful structure, inspired as it was by the
reckoning with Quesnay whose influence is at least or more important
than Hegel's on Marx's economic science.

Here begins and ends my agreement with Ajit and the Sraffians.

But this list is more Hegelian Marxist than it is Physiocratic
Marxist or Richard Jones Marxist. My sympathies are obvious.


ps. Recognizing the undeveloped nature of Marx's theory of credit,HG
tried to develop it and link it with the cycle. Grossman paid careful
attention to financialization and speculation, though he doubted
Hilferding's theory of hegemony of finance capital over industrial
capital (Franz Neumann's Behemoth accepts HG on this point as does
Sweezy, by the way).

>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.
>(...) }
>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:
> . In modern national
>accounts, the concept of capital accumulation is not used. Instead the
>concept of capital formation is used. (See my article
> 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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