Re: fixed capital/Grossmann

[wpc@xxxxxxxxxxxxxxxxx (Paul Cockshott)]

Rakesh
------
 I quote other people extensively for three
reasons: 1)as an autodidact, I don't want to bring the level of the
discussion down as I try to raise the level of my own understanding; 2)I
am
trying to elicit the opinion of others (like yourself) about the
argumentswhich I find persuasive so I can better understand their
weaknesses and
strengths and 3)as I have had time to read, I want to share with others
some of the relatively neglected great books which I have come across.

Paul
----
You are too modest. I am constantly amazed at the breadth of your
reading and your ability to find little known but apparently interesting
texts. I have not had the time to do that kind of thing since
I was a student. What I was trying to suggest though, is that there
is a danger of developing a scholastic workstyle where quoting
authorities subsititutes for attempting to test propositions yourself
either by formal means, hence the suggestion of calculus, or by
empirical means.

Neither of these is any 'harder' than reading the works of other
authors, it is work of a different sort, but not more difficult.
Its advantage, is that it gives you some criteria by which to form
your own judgement on issues under dispute.

Rakesh
------

Grossmann's extension of Bauer's model  shows that in order to  employ
fully additional variable and additional capital, a rising percentage of
surplus value must be accumulated.  Grossmann's model also shows that
even
though valueproducing workers are being added at half the rate of the
constant capital which  only  transfers its value, the mass of surplus
value remains adequate *even at a constant rate of exploitation*  to
continue accumulation for decades at the rates prescribed in Bauer's
model-- a five percent increase in variable capital and twice that for in
constant capital.

Paul
----
if we assume that dc   dv                s          dc   ds
                  -- > --  then constant -  implies -- > --
                  dt   dt                v          dt   dt

which is hardly a surprising result, and is clearly unsustainable
but what is the justification for the assumption in the first place?

As you say:

Rakesh
------

Why must capital accumulate a rising percentage of its surplus value
other
than to meet the requirements for full employment equilibrium in the
simplified model of one Otto Bauer?

Grossmann seems to give no justification for this, and Landauer suggests
that the assumption is grounded in Grossmann's theory of the falling
profit
rate: "The law of the tendential fall of the rate of profit presupposes
that the individual capitalist, in an effort to get ahead of other
capitalists, introduces machinery, thereby augments constant capital at
the
expense of variable capital, and thus helps digging the grave of the
capitalist order." (1584)

In other words, once we provide the microfoundations of the falling rate
of
profit argument, we can see why Grossmann takes as reasonable Bauer's
assumption that constant capital must be accumulated at a higher rate
thanvariable capital, though the latter is the only source of surplus
value.
As Landauer puts it: "competition will force [the entrepreneurs] to
continue technological improvement and thereby eventually reduce the rate
of profit below the minimum required for production."

Paul
----
One must be careful about how much reliance one places on a chain of
reasoning. The longer it is, the more tentative we must be about
accepting it in the absence of confirming evidence. We must recognise
that
these 'microfoundation' arguements are hypotheses whose empirical
validity
under varying circumstances must be tested.


Rakesh
------
Even if we drop the assumptions of a constant rate of exploitation and
theconstancy in the unit values of constant capital, it can still be
shown
that surplus value is insuffiientto amortize past investments and
continue accumulation, whatever  revolutions in value technological
changemay yield.

To show this calculus is indeed required.

But it has been done before by Mario Cogoy in the International Journal
of
Political Economy vol 17, no 3 and by Andrew Kliman in his contribution
to
the new volume edited by Guglielmo Carchedi and Alan Freeman. I most
certainly cannot improve on the mathematics of it.

Paul
----
Yes, it has been done before, and once you have read somebody elses
proof it is difficult to improve on it. Partly this is because one
then tends to accept certain implicit assumptions in the way that they
have gone about it. That is why it can be better to try and investigate
these things oneself first. You then either discover that you have
rediscovered something already known, or, alternatively you may
gain a new insight that other people missed. In either case you come
out with a better understanding.

Rakesh
------
Yet if all this is true: how are we to explain the post WWII boom in
which
variable and constant capital, as well as surplus value, all increased
together even if capital already changed qualitatively by the late 30s?

Paul
----
By qualitative change here are you assuming the correctness of
Grossmans thesis of the shortage of surplus value for accumulation?
If so why?




Rakesh
------
But based on the time series which you provided sometime ago of imperial
Britain, an immediate question arises: why did  a bourgeoisie once known
for its capitalization of surplus value in the form of ever more advanced
technology become staganant on the one  hand and increasingly parasatic
abroad on the other?

Paul
----
This is certainly a question that has worried economic historians
for a long time, and not only Marxist ones.

Rakesh
------
How are we to explain this dialectical change in the
character of British capital?  The time series in itself will not explain
the change.  Grossmann's elaboration of Marx's theory of the law of
motionof capital does offer a powerful explanation, however.

Paul
----
Can you elaborate on the last sentence?

Rakesh
------
>'Seek truth from the facts, practice marxism not
>revisionism'.

Whom are you quoting?

Paul
----
If I recall the rest of the quote was supposed to go
something like:
'Seek truth from the facts, practice marxism not
revisionism. Unite and dont split. Do not form a gang of 4.'
But since the publication of the Selected Works were terminated
at volume V ( 1957) after Deng took over, the source is
apocryphal.


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