Louis Proyect: The Unrepentant Marxist

March 21, 2008

An introduction to Henryk Grossman

Filed under: Introduction to Marxism class — louisproyect @ 1:32 am

One of the motivations in scheduling a discussion of “crisis theory” in this online introduction to Marxism class is that it gave me an excuse to read Rick Kuhn’s new biography “Henryk Grossman and the Recovery of Marxism” that received the Isaac Deutscher Prize in 2007. I have heard Grossman’s name bandied about on various leftwing mailing lists for the past 10 years and was curious to see what the buzz was about. Kuhn’s book has been a rewarding experience both in terms of its scholarly treatment of a somewhat neglected figure and as an important piece of the jigsaw puzzle of capitalist crisis.

This puzzle is of course all the more compelling given the events of the past few months. A Lexis-Nexis search on “1929” for articles within the last 3 months yields 992 hits! Here’s something from one right off the top:

How will new Fed chairman Ben Bernanke’s handling of the current crisis compare to Greenspan’s record? The big worry is that the collapse in share prices has been accompanied by a banking crisis. With hundreds of billions of sub-prime mortgage losses yet to surface, most banks have given up lending to one another. This has inevitably invited comparisons with what happened between 1929 and 1933.

As against that, Bernanke has cut US interest rates four times since last September. They now stand at just 3.5 per cent as against 5.25 per cent when the crisis first began. And the Fed isn’t done cutting yet, with a further rate cut, possibly to three per cent, likely before the end of the month. While there is a chance that things could go terribly, horribly wrong, the likelihood is that cheaper money will limit the effects of any economic downturn.

–Irish Independent, January 26, 2008

Rick Kuhn has been devoted to re-establishing Grossman’s reputation since 1993. His preface gives reasons why. Part of it was personal. Like Grossman, Kuhn’s Jewish parents had to flee Nazi-controlled territory in 1938 and 1939. (Grossman made it out of Europe safely, but his wife, son and many other relatives were killed by the Nazis.)

But the main reason was what Grossman had to contribute on Marxist economics, which was of great importance to Kuhn’s peers, including Anwar Shaikh, whose “excellent survey of Marxist crisis theory provided a sympathetic account of Grossman’s position.” This survey of course was the text around which I focused my first post on this topic.

One of Kuhn’s first forays into the area of Grossman studies appeared in the Summer 1995 edition of Science and Society. It was titled “Capitalism’s collapse: Henryk Grossman’s Marxism”. The second paragraph is about as key to the discussion that we have been having on this topic as anything I have read anywhere:

Capitalism does many horrible things to people. It generates radical differences in income and wealth, with starvation on one side and immense luxury on the other. It alienates us from each other, and from our natural capacities — for work and even for sexual pleasure. The system reproduces itself by dividing humanity along arbitrary lines of nation, gender, race, religion and sexual orientation. Its wars periodically massacre huge numbers of people. All of these provide bases for socialist critiques of the capitalist mode of production. But if capitalism can go on forever, increasing the production of wealth all the time, then in principal economic problems, at least, could either be overcome through working-class action to reallocate wealth or ameliorated into unpleasant but bearable irritants. In these circumstances, Grossmann argues, the working class could just as easily reconcile itself with capitalism as voluntaristically attempt to realize socialism.

For anybody who has been discussing revolutionary politics on or off the Internet for the past 10 years, Kuhn’s posing of the question will have a strong resonance. The notion that “capitalism can go on forever” is obviously one that creeps into one’s consciousness no matter how much you hate the system. No matter how many times the system goes into some kind of meltdown, it always seems to find a way to land on its feet. Right after the 1987 market crash, many Marxists thought it was 1929 all over but within a year or two the market was off on another bull run.

Just a few words on the biographical details of Henryk Grossman. Although he is very much a figure associated with the academic left (for example, Anwar Shaikh is a disciple), his early background was that of a proletarian revolutionary. He was involved with a Jewish socialist organization in Poland that was pretty far to the left and after the Russian revolution he became a partisan of the Communist cause.

In 1923 he took a post with the Institute for Social Research in Frankfurt, the so-called Frankfurt School. While the school has a reputation of being associated with cultural studies, it was at this institute that Grossman wrote “Law of Accumulation and Breakdown of the Capitalist System”. Eventually, as the Frankfurt leadership drifted to the right, the contradictions with Grossman’s pro-Soviet and revolutionary politics became insurmountable and he was relieved of his post.

After WWII, Grossman moved to East Germany and taught Marxist economics until his death in 1950 at the age of 69. The East Germans never quite comfortable with his political independence, nor with his economics, and did nothing to celebrate his legacy, including the publishing of his works.

It was up to the New Left to revive interest in Grossman in the 1960s. In 1979 Jairus Banaji translated an abridged version of “Law of Accumulation” for an Indian Trotskyist organisation, the Platform Tendency. This text, as well as some of his others, is available on the Marxist Internet Archives and we’ll be consulting them in days to come. Unfortunately, Banaji’s edition does not contain a section that deals with slavery, something that is of great interest to me. Hopefully, it will be translated one of these days.

There’s a very succinct and useful presentation of Grossman’s main ideas by Kuhn in chapter five:

Capitalists try to reduce the value of the commodities they produce so that they can undercut their rivals. Increasing the productivity of their workers by introducing new and more expensive machinery and technology is generally an effective way of doing this. As total output grows, constant capital will tend to expand more rapidly than variable capital. So there will be a rise in the relative weight of constant capital in capitalists’ total outlays, known as the organic composition of capital. It is the variable capital alone, however, that produces new value. As profits are measured against total outlays, a decline in the weight of value-creating variable capital will mean a fall in the rate of profit, if the rate of surplus value (the ratio of new value to the value of the labor power that created it) is held constant. To the extent that capitalism increases the productivity of human labor and accelerates the production of use values, it is therefore also characterized by a tendency for the rate of profit to fall. For Grossman, this tendency was the key to capitalist breakdown.

If you stop and think about it, this formulation is exactly the opposite of Tugan-Baranowsky who argued that the capitalist system could continue even if production was done totally by machines: “Even if all workers were replaced by machinery except for one worker, this single worker would be able to put into motion the vast mass of machinery, and with its help create new machines–and means of consumption…The working class could disappear; this would not disturb in the least the self-expansion of capitalism.”

For Grossman–and for Karl Marx–it was the working class in its capacity as “value-creating variable capital” that allowed the capitalist system to continue. If workers refused to allow themselves to be exploited through the production of surplus value, the system would grind to a halt. Grossman’s insight was to see that the growing replacement of living labor by dead labor (or machines) would eventually subvert the entire purpose of capitalist production, which is making profits. As they say, however, the devil is in the details and we will have to take a look at how the system can continue to enjoy a rising profit rate despite the steady replacement of living labor by dead labor.

One of the first people in the English-speaking world to engage with Grossman’s ideas was Paul Sweezy who was sharply critical of him in the 1942 “The Theory of Capitalist Development”. This is understandable since Grossman was very critical of Rosa Luxemburg’s underconsumptionism in “Law of Accumulation”. Although Sweezy differed from Rosa Luxemburg on the details, he was an underconsumptionist himself. That being said, all of these economists were resolute revolutionaries whose contrasting ideas on how capitalism might break down periodically did not prevent them from agreeing on the political task: socialist revolution.

Grossmann would object that an increasing organic composition of capital [ie., replacement of living labor by machinery] is an essential feature of capitalism which cannot be assumed away. Quite so, but what causes the rising tendency of the organic composition of capital? The answer is that the price of labor power tends to rise under the stimulus of accumulation–“the organized efforts of workers may at certain times play quite as important a part as actual shortages in this respect”– and that this induces a continuous substitution of machines for labor power. In other words, the rate of accumulation is the independent variable; the division of accumulation between constant and variable capital is by no means fixed but depends in good part on the relation between the rate of accumulation and the rate of growth of the labor force; in general this relation is such as to produce a relatively greater rate of increase of constant than variable capital. Of all this, which is basic to the Marxian analysis of capitalism, we find not a word in Grossmann. When it is taken into account, the idea that the increasing organic composition of capital, like a Frankenstein monster, must eventually force capitalists to throw all of their surplus value into accumulation is seen to involve a complete inversion of the causal links within the accumulation process.

I want to conclude with a recommendation of two very useful items on the Internet. The first is an interview with Rick Kuhn by Radical Notes from last April. It is a very good introduction to the book and worth reading even if you have no intention of reading the book itself. When asked about Grossman’s rediscovery of the Marxist critique of political economy, Kuhn replied:

Grossman argued that the tendency for the rate of profit to fall, discussed by Marx in volume three of Capital, constitutes a propensity for the system to break down. The tendency occurs because investment in improved labour-saving technology increases the ratio of capitalists’ outlays on machinery, equipment, buildings etc. compared with what they spend on purchasing labour power. It is only labour power, however, that creates new value, the basis of profits. Following and extending Marx, Grossman identified a variety of countervailing factors that can help maintain or improve profit rates. In fact he went into some detail about all the processes critics allege that he neglected. The offsetting mechanisms mean that the tendency to break down takes, in the longer term, the shape of successive crises rather than a single downward path to collapse.

Capitalist crises can also, Grossman pointed out, be understood in terms the impossibility of the outputs of different industries being consistently in the right proportions to maintain smooth growth. Both explanations of economic crises ultimately derive from the contradiction at the heart of capitalist production which is simultaneously the creation of use values, for the satisfaction of human needs, and of values, in the pursuit of profit.

I would also strongly recommend Jim Heartfield’s review of Kuhn’s book that appeared on Spiked-online, buried among a slew of articles on why DDT is good for you, etc. As you might know, Jim is one of the few members of this group that still tries to maintain his Marxist credentials and the review is very good evidence of this. I imagine that he still retains some strong affection for Grossman’s book since it and the work of others influenced by Grossman such as Paul Mattick and David Yaffe were prominent in the thinking of the Revolutionary Communist Party (the British group, not Avakian’s cult.) The RCP published a magazine called Living Marxism that eventually became LM. As I understand it, Mattick also put out a magazine called Living Marxism in the 1940s and the RCP magazine must have been titled in homage to Mattick’s.

Here is an excerpt from Jim’s review:

Grossman’s book The Law of Accumulation in particular was dedicated to showing that the industrial crises that preoccupied economists in the 1920s were not a disruption of the market system, but the necessary result of the process of capital accumulation (that is, the reinvestment of profits in new plant and technologies). As a greater share of investment went into machinery and plant, rather than the living labour that produced surplus value (the source of capitalist profits), the rate of profit to the total capital invested declined. In Marx’s formula, the rate of profit was represented as p’ = s/c+v, where s, surplus value, was divided by both the money invested in machinery, constant capital, c, and that invested in wages, variable capital, v. As c got larger relative to v, the ratio of profit would shrink in relationship to the total capital invested (c+v), even as the mass of surplus value (s) grew.

In this way, Grossman explained, what ought to be positive for mankind, the development of new means of production, created problems for capitalists. Even though they had little choice but to reinvest their profits, accumulating capital would give rise to diminishing returns on those investments. Distinguishing between the positive growth in technology and the negative ‘overaccumulation of capital’ was the theoretical precondition to distinguishing between them in fact – that is, to organise new industry under socialist planning rather than capitalist competition.

The great clarity of Grossman’s work was that it methodically excluded all the bad excuses that people made for the system – that the economic disruption was just a problem of disproportionality between different parts of the economy, or that workers’ consumer spending was insufficient to buy overproduced goods. The barrier to capitalist accumulation, as Marx explained, was capital itself.

You can read the whole thing here .

4 Comments »

  1. Speaking of Deutscher, there is a downloadable audio of a lecture by him at

    http://www.spokenword.ac.uk/record_view.php?pbd=gcu-a0a1m2-b

    in case you or your readers were interested. It’s fun hearing his voice. What is this about an internet class? Is it open to the masses (me)?

    Comment by Marc — March 23, 2008 @ 2:00 pm

  2. Thanks for the generous write up, Louis

    Comment by James Heartfield — March 31, 2008 @ 5:30 pm

  3. I read this article by Kuhn on Grossman but couldn’t understand the content of the argument:

    http://www.isreview.org/issues/56/feat-grossman.shtml

    Thanks for this post, it helped.

    Comment by Binh — April 1, 2008 @ 4:32 pm

  4. A very good post – and a neat review that is certainly well worth coming back to.

    Comment by Courtney Hamilton — April 8, 2008 @ 11:56 am


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