Re: [Marxism] Grossman

[Steve Palmer <spalmer999@xxxxxxxxx>]

1. Hilferding placed a particular interpretation on Finance Capital by rigidly
defining it in terms of institutional structure, rather than as Grossman does
by relating it to different phases of capital accumulation (pp198-200). That we
have reached the third of Grossman's stages is evident when you run down the
list of Fortune 500 companies - many of them, eg Ford, General Motors, General
Electric etc have important financing arms (eg GMAC). The whole swaps market
grew out of 'industrial' companies recycling surplus currency. The commercial
paper market, which provided the short-term financing which underpinned the
SIVs and conduits, began with large industrial companies cycling funds for
short periods. Hilferding's theory supports a reformist project where, by
taking over the central bank, a reformist government could, via the banking
system, control the whole system. This presupposes a separation of the
financial system from industrial capital which is theoretically fallacious and
empirically valid only for a very specific place and time - then contemporary
Germany. The supposed dichotomy between a 'real' economy and a financial one is
totally mythical, akin to the Ricardian idea that money was just a veil.

2. Sweezy explicitly removes Finance Capital from his redefinition of
imperialism (in addition to other subtle revisions) - see p269 and the footnote
on p307 of Theory of Capitalist Development. Unfortunately Sweezy had a habit
of throwing the baby out with the bath water - see his misunderstanding of
Grossman's point about Finance Capital (p268n). It is also missing from
Monopoly Capital as Sweezy was to acknowledge later, when he bolted on
'Financialization' to his theory. Foster implies this was discovered by Sweezy
and Magdoff, whereas Grossman had already discussed it (as Sweezy
acknowledges!) much earlier. 

3. I'm surprised by your comments about the Foster article - he's continually
talking about problems of demand absorbing 'surplus', which is pure Monopoly
Capital. The *word* 'overaccumulation' appears, but this appears to be, for
Foster, a synonym for 'overproduction of surplus' (with its ambiguity of
whether he's talking about use-values or values) in relation to demand, not an
overaccumulation of capital in relation to profitability. This is underlined
when, after criticizing the idea of re-regulating finance, he advances the
Sweezy of 'solution' of expanded state expenditure and radical redistribution
of incomes - which, as he notes, was endorsed by Joseph Kennedy as a reform to
help him hang onto his fortune! - 'to stabilize the economy', ie to prop up
capitalism. For Grossmanites, such as Mattick, these would be seriously
*de*stabilizing. Radical income re-distribution means away from profits,
reducing them. Assuming the state expenditure was unproductive (ie did not
involve expropriating capitalists) it has to be financed either by increased
taxation or by borrowing. Increased taxation could only come from profits;
increased borrowing would further destabilize the financial system and only
postpone the day of reckoning. In short, this 'solution' would further
undermine profitability and worsen the problem of overaccumulation. This does
not, I submit, constitute an endorsement of the overaccumulation position.

4. There is a 'Grossmanite' analysis of the Great Depression by Paul Mattick
which usefully shows how this kind of analysis understands the role of credit
etc: http://www.marxists.org/archive/mattick-paul/1977/inflation/ch06.htm

Steve


--- Patrick Bond <pbond@xxxxxxxxxxx> wrote:

> Rakesh (and cc to Rick Kuhn who has authored the seminal study on
> Grossman),
> 
> Is it not the case, that what we would want to recover from Grossman's
> magisterial work on finance, so aptly published just before the 1929
> crash, is his rooting of financial bubbles in real-sector
> overaccumulation? If so, we would end up with a strong position on
> financial sector vulnerability, in contrast to Hilferding's
> then-dominant Finanz Kapital thesis (which so influenced Lenin's
> Imperialism).
> 
> In my reading of the recent debates (which I summed up in two ZNet
> articles in December 2004 and another in December 2006), a similar
> conflict has been evident within comrades  active in Socialist Register,
> Historical Materialism and other journals. Some stress US imperial
> power, especially emanating from financial sector dynamics; others
> stress vulnerability. (In the former category, I saw Leo Panitch at the
> Left Forum in NYC a few weeks ago and he said, "Don't say 'I told you
> so'" with his characteristic guffaw.)
> 
> (I think John Bellamy Foster has got it right in his current MR article;
> and in a seminar at Univ of Sydney Dept of Poli Econ last Monday, he
> also endorsed "overaccumulation", which I see as distinct from the
> traditional MR position from Sweezy, i.e., "underconsumption".)
> 
> The front page of today's Business Day (Johannesburg) has SA as 11th
> most vulnerable economy to sub-prime mortgage contagion. So if it's time
> for chicken little to come out again and squawk a bit, do say, comrades.
> 
> Cheers,
> Patrick


      
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