But I will respond to Andrew.
> My proof goes through as
> before, except for a minor teminological change: demand for
> investment goods is so great that there's nothing left over for
> capitalists' consumption, so the system breaks down.
I accept that this is not a caricature. The question now becomes what Grossmann thought his extention of the Bauer model proved. Did he use his assumptions while not sharing them in order to carry out an internal critique of the possibilities of equilibriated growth (Helene Bauer's "critique" is pretty desperate)? Or was his own positive theory of accumulation and crisis based more firmly on it? Was this unnecessary as Mattick argues in Economic Crisis and Crisis Theory?
> Sure. This doesn't contradict what I wrote. If there's not
> enough surplus-value to expand V at the required rate, it follows
> that there's not enough surplus-value to expand C+V at the
> required rate.
Sometimes investment includes only the constant capital part of accumulation. That's how Sweezy uses the terms in his book, and I thought this was how you meant it. And investment demand in that narrow sense does not exceed the investment goods produced in the previous period.
> Your whole line of argument in terms of excess capacity is
> irrelevant, because the analytics simply don't require that means
> of production be bought before workers, or vice-versa, or
> whatever.
Well, really my point is that Grossmann considered investment or accumulation to be the first charge against surplus value. You forgot my parenthetical note about why Grossmann may have posited this as so in his model. That is, he may have thought investment and accumulation more broadly were forced upon capitals by competition; only by embodying the imperatives of accumulation could one remain a personification of capital: capitalists must execute the laws of capital.
But of course this is a highly simplified model; capitalist behavior is reduced to the simplest of algorithms. Let's not confuse the model of reality with the reality of the model, as Vaihinger and Bourdieu would put it.
> Equation (5) means precisely that breakdown in your sense occurs
> because demand for investment goods is so great that there's
> nothing left over for capitalists' consumption. Clearly there
> will be breakdown as well if investment demand is even greater.
But this is not what you said earlier, and your equations did not include the category of capitalist consumption.
>
> But please forget such unenlightening complexities. Can we agree
> that breakdown in Grossmann's sense occurs if, after expanding C
> & V at the required rate, capitalist consumption can't be
> positive? If so, my proof goes through.
"We" can agree on that; indeed you are now only basically quoting me, the anti boddhisatva.
> This is incorrect. You're suggesting raising S and thereby
> lowering V. But if V is lowered, so is investment demand in
> physical terms. So you're suggesting that breakdown can be
> postponed or negated by lower demand for investment goods
> relative to their supply!!
Not lowering V in absolute terms! One unit of v represents one worker; if it represents two workers (say a night shift is added and wages halved), surplus value is doubled while the demand for the product of dept 2 is not thereby reduced: v has NOT been reduced in absolute terms so there is no lowering in physical terms of demand. S/V has however doubled,and breakdown has been deferred!!
If S is raised by the production of more surplus value by the same number of workers (the prolongation or the intensification of the working day, those things that produce working class misery in the abode of production), then V is not lowered as S/V is raised. I am not talking about a more favorable distribution of surplus value deferring breakdown but a greater production of surplus value and higher rate of exploitation. And the more misery the working class is willing to endure the more breakdown is deferred; there is no automatic collapse. Or perhaps Marx and Grossmann thought the working class would revolt before the actual breakdown.
A related note. Reduced effective demand--that is a slower rate of accumulation--can help maintain the profit rate and postpone breakdown for that only relieves upward pressure on the organic composition of capital. But this would be say to capital maintains its profitability at the expense of permanent crisis conditions in society as a whole (the de facto disaccumulation of capital that mindboggling speculative capital flows represents is thus a counter-tendency to a falling profit rate!)
Indeed Mattick considers that possibility in Marxism: last refuge of the bourgeoisie? It seems relevant to understanding the world economy since Keynesianism was reduced to stagflationary ashes a couple of decades ago.
I never said you were paranoid (I have praised you throughout the exchange), but now that you mention it...Well, are you...paranoid?
best, rakesh