Now it's true that I have a long defense of Grossman in my diss and a forthcoming piece on him in Science and Society, and draw on his history of slavery for a piece in Rethinking Marxism and a forthcoming piece in Historical Materialism. But I am a minor player compared Rick or Anwar Shaikh. But thanks anyway, and Rick does thank me for discovering some interesting sources. So I have long been interested in this project; the book is very important to me, and I recommend it most highly. I know that my interest in a character like Grossman bewilders Martin Jay, an or the expert on the Frankfurt School of which Grossman was the second member. Rick's bio has fascinating details--ok at times nasty gossip--about the relations within the Frankfurt School. The book is a very good read, very carefully written.
Some notes on James' review.
1. The sharpest criticism of underconsumption is Grossman's long unpublished note discussing the practical failures of Leon Blum. Yet Grossman does not seem to have actually read and worked through Keynes as a theorist. I think he would have understood Keynes as basically advocating an inflationary policy to reduce the real wage and thereby bolster profitability. Such would be a very simplistic understanding.
2. On other aspects of method
To take John Brolin's translation:
first, the conditions for the normal process of reproduction were examined; secondly, the impact of the accumulation of capital and the resulting tendency towards breakdown were introduced; thirdly, the modifying factors counteracting this tendency were put to the test.
The character of his work was theoretical, not empirical, and introduced factual matters only to illustrate theoretical deductions, limiting himself to showing
how the sum of the empirically observable tendencies of the world economy, which are seen as the characteristic hallmarks of the latest phase of capitalist development (and have been enumerated in various writings on imperialism: monopoly organisations, export of capital, the struggle for the division of raw-material-producing areas, etc.) are secondary surface appearances, which arise from the essence of capital accumulation as the primary root. By establishing this context it is possible, without reverting to a special ad-hoc-theory, to unambiguously account for all capitalist appearances, including making comprehensible the latest imperialist phase of capitalism, from one principle, the Marxian law of value. (Grossmann 1967: x; partial trans. in Howard & King 1989: 317f.)
3. On the dynamics books: it attempts to show (not in the necessary depth) how Marx's dual understanding of the nature of commodity producing labor is at odds with the classical conception. So what? What's the importance here? I am frustrated with the first part of the book. More successfully, he shows the importance of the technical conditions of production for Marx's analysis, the importance of technology--for example how technology allowed the introduction of women and children into production, the effects on the rate of exploitation, but the problems machinery creates--moral depreciation and overwork, rising organic composition of capital. Also succsessful ( a breakthrough in fact) is emphasis on the importance of time, the difficulty in the temporal coordination of the differentially moving parts of the system, resulting in disequilibrium and the dynamic consequences thereof.
4. Bauer's scheme has the capitalists mechanically investing profits even at the expense of their own luxury consumption. Yet luxury consumption could take a priority over investment. Grossman allowed this.
5. Grossman emphasizes that Marx thought simple reproduction was not actually possible under capitalism. Capital goods are produced at a certain level each year in a scheme of simple production, but there is no reason that the same number of machines would come up for renewal each year just because that number of machines was produced. The renewal of machines depends on when they happen to wear out, and that schedule won't necessarily match the production of new machines that year. Hence, overproduction of capital goods is likely, and a likely source of anarchy. Overproduction is fine as it allows society some security but under capitalism it's a source of economic difficulty and possibly even bankruptcy. This is one way in which production as such is different from capitalist production.
6. On Grossman's crisis theory: because not enough surplus value has been produced, capital can only maintain its own luxury spending by reducing the rate of accumulation and violating the law of value in the payment of wages. Given the shortage of surplus value, luxury spending will only be sustained by reducing accumulation and wages in particular. The likely consequence is overproduction. As Grossman's student Paul Mattick once put it: "Šbecause not enough surplus value has been produced, capital cannot expand at a rate which would allow for the full realization of what has been produced. The relative scarcity of surplus labour in the production process appears as an absolute abundance of commodities in circulation. This is made evident by the fact that periods of overproduction are always terminated by an increase, not a decrease, in production and in the means of production made possible by improving the conditions of exploitation."
In other words, as minimum capital requirements rise, there may prove to be insufficient surplus value for accumulation precisely because capital has already been overaccumulated; surplus value which is insufficient thus becomes excessive, the rate of interest is driven down without encouraging new accumulation. Moreover, if the accumulation of capital has no longer served to maintain or enlarge the capitalist consumption fund, the surplus value which would have been earmarked for accumulation (and is not directly consumed) now becomes potentially an idle liquid fund.
The surplus value which is not sufficient to be accumulated (and has not been consumed) seeks an outlet as does the surplus value withdrawn from accumulation on account of the declining profitability of new investments; there may be a frenzy of speculation at best or struggle for the control of foreign investment outlets (for Grossman as for us today the greatest threat to world peace). As the mass of liquid capital which is not accumulated or consumed mounts, the commodities which would have been purchased through net investments in constant and variable capital now lie unsold. The general crisis is expressed in a combination of idle liquid capital, idled means of production, excessive or unsold goods and idle people-in short a multi-point breakdown in the normal circuit of capital: "If capital comes to a stand-still in the first phase, M-C, money capital comes into a hoard, if this happens in the production phase, the means of production cease to function, and labour-power remains unoccupied; if in the last phase, C'-M', unsaleable stocks of commodities obstruct the flow of circulation."
While for Grossman the way out of a crisis depends on a resumption of accumulation through a reduction of capital costs and a rise in the rate of the surplus value, he also underlined that the struggle for the domination of the world market, including control over spheres of investment, would necessarily become more violent.
perhaps the analysis has some contemporary relevance?
7. Profitability has been restored in the US at the expense of the loss of much heavy industry, a higher rate of exploitation, merger and acquistion booms, the emergence of low organic composition of capital industries which pay badly and structural unemployment. I am not so sure the theory has lost its empirical relevance.
And there is this difficult problem: Grossman had already written of the difficulties of confirming Marx's theory of tendencies as capitalism began systematically operating on a global scale. As a consequence of the internationalisation of capital and the redistribution of surplus value between the countries through world trade, the tendencies which Marx showed for a closed and pure capitalist economy have not manifested within an individual country but only on a world scale.
Now with new forms of vertical integration, the internationalization of financial markets, growing importance of world trade, and changes in the global movement of people, how are we to go about the empirical assessment of Marx's theory?
8. More later on Grossman's ideas about the origins of mechanistic thought. Suffice to say, he was a close student of technology.