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Richard Mellor

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Book Review: Grossman on capitalism?s contradictions
« on: December 07, 2017, 06:05:03 AM »
Book Review: Grossman on capitalism?s contradictions

Order here.
by Michael Roberts

Henryk Grossman, Capitalism?s contradictions: studies in  economic theory before and after Marx, edited by Rick Kuhn, published by Haymarket Books.

Rick Kuhn, the indefatigable editor, biographer and publisher of the  writings of Henryk Grossman, has another book out on his work.  Grossman  was an invaluable contributor to the development of Marxist political  economy since Marx?s death in 1883.  An activist in the Polish Social  Democrat party and later in the Communist party in Germany, Grossman, in  my view, made major contributions in explaining and developing Marx?s  theory of value and crises under capitalism.

Grossman established a much clearer view of Marx?s analysis,  overcoming the confusions of the epigones, who either dropped Marx?s  value theory for the mainstream bourgeois utility theory, or in the case  of crises, opted for variants of pre-Marxist theories of  underconsumption or disproportion.  In his works, Grossman weaved his  way through these diversions, most extensively in his Law of Accumulation and the Breakdown of the Capitalist System in 1929. Grossman put value theory and Marx?s laws of accumulation and  profitability at the centre of the cause of recurrent and regular crises  under capitalism.

This book brings together essays and articles by Grossman that  critiques the errors and revisionism of the Marxists who followed Marx  and in so doing combats the apology of capitalism offered by mainstream  (or what Grossman calls ?dominant?) economics.  Rick Kuhn provides a  short but comprehensive introduction on Grossman?s life and works, but  also on the essence of the essays in the book.

They include an analysis of the economic theories of the Swiss  political economist Simonde de Sismonde, who exercised a powerful  influence on the early socialists who preceded Marx ? and, for that  matter, Marx himself.  Then there is a critical essay by Grossman on all  the various ideas and theories presented by Marx?s epigones from the  1880s onwards; and two essays on the ideas of the so-called  ??evolutionists??, who tried to develop an alternative to the mainstream  based on history and development rather than cold theory.  Their  argument was the capitalism was changing and developing away from  competition and harmonious growth into monopoly, stagnation and  inequality. 

But, as Grossman says, Marx too recognised these trends but  only he could provide a theoretical explanation of why, based on his  laws of accumulation (p250).  Change, time and dynamics as opposed to  equilibrium, simultaneity and statics is a big theme of Grossman?s  exposition of Marxist economics and that is why the chapter on classical  political economy and dynamics in the book is the most important, in my  view.

But let me highlight the key conclusions that come out of Grossman?s  essays that Rick Kuhn also identifies.  Marx considered that one of his  greatest contributions to understanding capitalism was the dual nature  of value.  Things and services are produced for use by humans (use  value), but under capitalism, they are only produced for money (exchange  value).  This is the driver of investment and production ? value and,  in particular, surplus value.  And both use and exchange value are  incorporated into a commodity for sale.  But this dual nature of the  value also exposes capitalism?s weakness and eventual downfall.  That is  because there is an irreconcilable contradiction between production for  use and for profit (between use value and exchange value), which leads  to regular and recurring crises of production of increasing severity.

As Grossman shows, Sismondi was aware of this contradiction, which he  saw as one between production and consumption.  But he did not see, as  Marx did, the laws of motion in capitalism, from the law of value to the  law of accumulation and finally to the law of the tendency of the rate  of profit to fall, that reveal the causes of crises of overproduction.

The vulgar economists of capitalism have tried to deny this  contradiction of capitalist production ever since it was hinted at by  the likes of Sismondi, and logically suggested by the law of value based  on labour, first proposed by Adam Smith and David Ricardo. The  apologists dropped classical theory and turned to a marginal utility  theory of value to replace the dangerous labour theory.  They turned to  equilibrium as the main tendency of modern economies and they ignored  the effect of time and change.  Only the market and exchange became  matters of economic analysis, not the production and exploitation of  labour.

But as Kuhn points out that ?economic processes involve not just  the circulation of commodities but their production as use values.  The  duration of the periods of production and even the circulation of  different commodities vary.  Their coincidence if it occurs at all, can  only be accidental.  Yet vulgar economics simply assumes such  coincidence or simultaniety of transactions.  It cannot theoretically  incorporate time and therefore history.? p17.

Marx?s analysis destroys the idea that all can be explained by  exchange and markets.  You have to delve beneath the surface to the  process of production, in particular to the production of value (use  value and exchange value).  As Grossman puts it: ?Marx emphasises  the decisive importance of the production process, regarded not merely  as a process of valorisation but at the same time a labour process? when  the production process is regarded as a mere valorisation process ? as  in classical theory ? it has all the characteristics of hoarding,  becomes lost in abstraction and is no longer capable of grasping the  real economic process.? p156.

In my view, Grossman makes an important point in emphasising that the  production of value is the driving force behind the contradictions in  capitalism not its circulation or distribution, even as these are an  integral part of the circuit of capital, or value in motion.  This issue  of the role of production retains even more relevance in debates on the relevant laws of motion of capitalism today, given the development of ?financialisation? and the apparent slumber of industrial proletariat.

In the chapter on dynamics, Grossman perceptively exposes the failure  of mainstream theories which are based on static analysis.  Such  theories lead to the conclusion that crises are just shocks to an  essentially tendency towards equilibrium and even a stationary state ? something that Keynes too accepted.  Capitalism is not gradually moving on (with occasional shocks) in a generally harmonious way towards superabundance and a leisure society where toil ceases ? on the contrary it is increasingly driven by crises, inequality and destruction of the planet.

It is the ?incongruence? between the value side and the  material side of the process of reproduction that is the key to the  disruption of capitalist accumulation.  There is no symmetry as the  mainstream thinks. The value of individual commodities tends to fall  while the mass of material goods increases. Here is the essence of the  transitional nature of capitalism as expressed in Marx?s ?dual? value  theory and the law of profitability.
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