THE THEORY OF THE COLLAPSE OF CAPITALISM

The Theory Of The Collapse Of Capitalism

GROSSMANN VERSUS MARX

Grossmann prides himself for having for the first time correctly reconstructed Marx's theory in the face of the distortions of the Social Democrats.

One of these new additions to knowledge,

(he proudly says at the beginning of the introduction),

is the theory of collapse, set out below, which represents the portal column of Marx's system of economic thought.

We have seen how little what Grossmann considers to be a theory of collapse has to do with Marx. Nevertheless, on his own personal interpretation, he could well believe himself to be in agreement with Marx. But there are other points where this does not hold. Because he sees his schema as a correct representation of capitalist development, Grossman deduces from it in various places explanations which, as he himself had partly noticed, contradict the views developed in Capital.

This is so, first of all, for the industrial reserve army. According to Grossmann's schema, from the 35th year a certain number of workers become unemployed and a reserve army forms.

The formation of the reserve army, viz., the laying off of workers, which we are discussing, must be rigorously distinguished from the laying off of workers due to machines. The elimination of workers by machines which Marx describes in the empirical part of the first volume of Capital (Chapter 13) is a technical fact . . . (pp. 128-9) . . . but the laying off of workers, the formation of the reserve army, which Marx speaks of in the chapter on the accumulation of capital (Chapter 23 ) is not caused - as has been completely ignored until now in the literature - by the technical fact of the introduction of machines, but by the lack of investment opportunities...(p. 130).

This amounts basically to saying: if the sparrows fly away, it is not because of the gunshot but because of their timidity. The workers are eliminated by machines; the expansion of production allows them in part to find work again; in this coming and going some of them are passed by or remain outside. Must the fact that they have not yet been re-engaged be regarded as the cause of their unemployment? If Chapter 23 of Capital Vol. I is read, it is always elimination by machines that is treated as the cause of the reserve army, which is partially reabsorbed or released anew and reproduces itself as overpopulation, according to the economic situation. Grossmann worries himself for several pages over the proof that it is the economic relation c:v that operates here, and not the technical relation means of production: labour power; in fact the two are identical. But this formation of the reserve army, which according to Marx occurs everywhere and always from the commencement of capitalism, and in which workers are replaced by machines, is not identical to the alleged formation of the reserve army according to Grossmann, which starts as a consequence of accumulation after 34 years of technical progress.

It is the same with the export of capital. In long explanations all the Marxist writers - Varga, Bukharin, Nachimson, Hilferding, Otto Bauer, Rosa Luxemburg - are one after the other demolished because they all state the view that the export of capital takes place for a higher profit. As Varga says:

It is not because it is absolutely impossible to accumulate capital at home that capital is exported....but because there exists the prospect of a higher profit abroad (quoted by Grossmann, p. 498).

Grossmann attacks this view as incorrect and un-Marxist:

It is not the higher profit abroad, but the lack of investment opportunities at home that is the ultimate reason for the export of capital (p. 561).

He then introduces numerous quotations from Marx about overaccumulation and refers to his schema, in which after 35 years the growing mass of capital can no longer be employed at home and so must be exported.

Let us recall that according to the schema, however, there was too little capital in existence for the existing population and that his capital surplus was only an error of calculation. Further, in all the quotations from Marx, Grossmann has forgotten to cite the one where Marx himself speaks of the export of capital:

If capital is sent abroad, this is not done because it absolutely could not be applied at home, but because it can be employed at a higher rate of profit in a foreign country (Vol. III, p. 251).

The fall in the rate of profit is one of the most important parts of Marx's theory of capital; he was the first to state and prove that this tendency to fall, which expresses itself periodically in crises, was the embodiment of the transitory nature of capitalism. With Grossmann it is another phenomenon which comes to the fore: after the 35th year workers are laid off en masse and capital is at the same time created in excess. As a result the deficit of surplus value in the following year is more serious, so that yet more labour ant capital are left idle; with the fall in the number of workers, the mass of surplus value produced decreases and capitalism sinks still deeper into catastrophe. Has not Grossmann seen the contradiction here with Marx? Indeed he has. Thus, after some introductory remarks, he sets to work in the chapter entitled "The Causes of the Misunderstanding of the Marxian Theory of Accumulation and Collapse":

The time is not ripe for a reconstruction of the Marxian theory of collapse (p. 195). The fact that the third chapter of Volume Ill is, as Engels says in the preface, presented, "as a series of uncompleted mathematical calculations" must be given as an external reason for the misunderstanding.

Engels was helped in his editing by his friend, the mathematician Samuel Moore:

But Moore was not an economist....The mode of origin of this part of the work therefore makes it probable even in advance that many opportunities for misunderstanding and error exist here and that these errors could then easily have been carried over also into the chapter dealing with the tendency of the rate of profit to fall...

(NB: these chapters had already been written by Marx!)

The probability of error becomes almost certain when we consider that it is a question here of a single word which, unfortunately, completely distorts the whole sense of the analysis: the inevitable end of capitalism is attributed to the relative fall in the rate instead of in the mass of profit. Engels or Moore had certainly made a slip of the pen (p. 195).

So this is what the reconstruction of Marx's theory looks like! Another quotation is given in a note which says:

In the words in brackets. Engels or Marx himself made a slip of the pen; it should read correctly and at the same time a mass of profit which falls in relative value.
(Translators note: Grossmann refers to the passage on p. 214 of Vol. III which reads: "Hence, the same laws produce for the social capital a growing absolute mass of profit, and a falling rate of profit").

So now it is Marx himself who makes mistakes. And here it concerns a passage where the sense, as given in the text of Capital, is unambiguously clear. Marx's whole analysis, which ends with the passage Grossmann finds necessary to change, is a continuation of a passage where Marx explains:

...the mass of the surplus value produced by it, and therefore the absolute mass of the profit produced by it, can, consequently, increase, and increase progressively, in spite of the progressive drop in the rate of profit. And this not only can be so. Aside from temporary fluctuations it must be so, on the basis of capitalist production (Vol. III, p. 213).

Marx then sets out the reasons why the mass of profit must increase and says once again:

As the process of production and accumulation advances therefore, the mass of available and appropriated surplus labour, and hence the absolute mass of profit appropriated by the social capital must grow (Vol. III, p. 214).

Thus the exact opposite to the onset of the collapse invented by Grossmann. In the following pages this is repeated yet more often; the whole of Chapter 13 consists of a presentation of

the law that a fall in the rate of profit due to the development of productiveness is accompanied by an increase in the mass of profit... (Vol. III, p. 221).

So there can remain not the slightest doubt that Marx wanted to say precisely what was printed there and that he had not made a slip of the pen. And when Grossmann writes:

The collapse cannot therefore result from the fall in the rate of profit. How could a percentage proportion, such as the rate of profit, a pure number, bring about the collapse of a real economic system! (p. 196).

he thereby shows yet again that he has understood nothing of Marx and that his collapse is in complete contradiction with Marx.

Here is the point at which he could have convinced himself of the instability of his construction. But if he had allowed himself to be taught by Marx here, then his whole theory would have fallen and his book would not have been written.

The fairest way of describing Grossmann's book is as a patchwork of quotations from Marx, incorrectly applied and stuck together by means of a fabricated theory. Each time a proof is required, a quotation from Marx, which does not deal with the point in question, is introduced, and it is the correctness of Marx's words which is supposed to give the reader the impression that the theory is correct.