Henryk Grossmann has been called the last of the classical Marxists by Perry Anderson, editor of New Left Review; the last chapter of M.C. Howard and J.E. King's History of Marxian Economics, vol 1 is dedicated to Henry K. Grossmann. He is noted for having offered the most comprehensive review of accumulaton and crisis theories then extant (1929), while his own positive theory continues to generate a controversy. A notable rival theorist, Josef Steindl underlines that Grossmann's contribution was to analyze how the insufficiency of the mass of surplus value, not simply a fall in the profit rate, was responsible for crisis. Grossmann had only one unequivocal defender Paul Mattick who however found his fascination with 'reproduction' scheme under discussion here a diversion.
Grossmann had initially been very critical of the Soviet led German Communist Party, refused to join it but found himself defending the Soviet Union in the face of Nazi imperialism. He became alienated from his fellow members of the Frankfurt School. Mattick never wanted to know the political conclusions Grossmann himself drew from the theory as Mattick, along with Pannekoek and Korsch, had already offered the first theory of the Soviet Union as a state capitalist society in 1934 (see discussion in Michel Beaud Socialism in the Crucible of History).
I think Howard and King are correct that there is paramount political importance to Grossmann's critique for from it follows the the conclusion that the crises of the capitalist mode of production cannot be regulated though the central political control of economic activity then recommended by the most important neo Marxists. It is not surprising that Mattick then would continue the critique as one of Keynesianism, the present attempt to so control the crises of capitalist society.
Grossmann and Mattick were not leftists or left Keynesians or social democrats; Mattick completed Marx's critique of economics, as recovered by Grossmann, as a critique of the state.
*Science and Society* has devoted quite a few papers to Grossmann in the last several years (for which I am very thankful): Kenneth Lapides' translation of his analysis on the logic of Capital and a reply by Michael Lebowitz; Rick Kuhn's analysis of HG's magnum opus; and an exchange between Rick and Lapides over HG's wage theory, pitched at a very high level of abstraction.
Grossmann has been accused of offerering as a theory the reductio ad absurdum of mechanistic thinking in the social sciences and for having cast Marx's concept of the OCC as a Frankenstein monster that grows and grows and just kills off capitalism. Less recognized is that no one had a better understanding of why the scheme was only a simplified model that in no way could capture the actual course of accumulation (Mattick never tired of reminding his readers that the value theoretic model of reality should not be confused with the reality of that model, though I myself often forget that); indeed no one more than Grossmann seems to have had a better understanding of the counter tendencies of which capital can avail itself to beat off crises. Those who think Grossmann underestimated the counter-tendencies should wonder why he went to the trouble of enumerating and detailing more of them than any thinker before or since.
As for Andrew's argument, I think anyone who simply reads the Howard and King summary of Grossmann's argument will have the same difficulty I have in understanding Andrew's characterization
First, Andrew writes:
> This can be rewritten as
>
> (2) C(t+1) + V(t+1) > C(t) + V(t) + S(t).
This equation is wrong. This does not have to be an inequality for there to be breakdown.
That is, if the left hand were simply equal to the right hand, there would be breakdown in Grossmann's terms because all the additional surplus value is being capitalized, leaving nothing for capitalist consumption and thus rendering meaningless the whole accumulation process for the capitalist class. Neo mercantalists tend to forget that the whole point of capitalist accumulation is to make the fat cats fat. Accumulation has no meaning outside of that.
>
> This makes matters clear. Breakdown in Grossmann's sense occurs
> if investment demand in value terms, C(t+1) + V(t+1), exceeds the
> value produced in the preceding year.
No Andrew, breakdown occurs because Grossmann assumes that additional constant capital WILL BE the first item purchased out of surplus value even if there is not enough left to add variable capital at the presecribed rate...and, more importantly, even if there is thus nothing left for capitalist consumption. BECAUSE investment demand is met first and foremost (I think Grossmann assumes this because he thinks it will be enforced by competition, as external necessity), there is breakdown: capitalist consumption is extinguished and unemployment begins to grow. That's year 35 in the scheme.
Now eliminate the assumption that additional constant capital is the first charge from surplus value. Have surplus value capitalized as both additional constant and variable capital to the fullest extent possible and in the ratio prescribed by the model. And even forget that nothing is left for capitalist consumption, an absurdity of course.
But now there is not enough surplus value to purchase all the additional means of production. In addition to the growth of the unemployed, there is excess capacity in division one now of more than 11,000 units of constant capital. That's year 36.
How you read this EXCESS CAPACITY as a physical shortage of means of production I do not understand. What one has in Grossmann 's scheme is surplus capital and surplus population.
Someone is printing out Andrew's post for me so I can figure out the rest. I don't recognize it as Grossmann's argument but Andrew is a very careful thinker, so I will need time to figure out what he is getting at.
best, rakesh