Henryk Grossman 1929

Notes on Alfred Braunthal's review^[1]

Written:  1930?
First Published:  2004
Source:  Henryk Grossman, manuscript starting ‘Die Entwertung sollen die Zusammenbruchstendenz aufheben …’ in original Folder 45 ‘Stellungnahme zur Kritik am Hauptwerk’, Archive of the Polish Academy of Sciences, Warsaw.  From Rick Kuhn 'Economic crisis and socialist revolution: Henryk Grossman’s Law of accumulation, its first critics and his responses’, which is an early draft of a paper in Paul Zarembka and Susanne Soederberg (eds) Neoliberalism in crisis, accumulation and Rosa Luxemburg's Legacy: Research in Political Economy 21 Elsevier, Amsterdam 2004 pp. 181-22.
Translated: Rick Kuhn;
Transcription/Markup: Steve Palmer;
Proofread: Steve Palmer;
Copyleft: InternetArchive(marxists.org) 2005. Permission is granted to copy and/or distribute this document under the terms of the Creative Commons License.; Reproduced here with the permission of the translator, Rick Kuhn.

Br[aunthal] referred, with a comic smile, to the fact that Marx predicted an intensification of proletarian poverty, whereas I, on the other hand, deduce the breakdown of capitalism ‘from a kind of impoverishment of the capitalists’. From Otto Bauer’s numerical example, I deduce the ‘amazing result’ that the entrepreneur’s revenue not only declines relatively, but after the 21st year declines absolutely and finally in the 35th year disappears entirely. That is, supposedly, ‘in brief the idea underlying’ my theory of so-called overaccumulation (p. 294). There is not a trace of this in my work. Nowhere have I said that capitalism will go under due to the impoverishment of the capitalists. I showed, rather, that an increasingly large part of surplus value (Ac) is, under the assumptions of Bauer’s scheme, devoted to accumulation. The remainder, available for the consumption of the capitalists and workers, does not suffice. As a consequence an increasingly sharp struggle between workers and entrepreneurs over the level of wages necessarily flares up. If workers continue to receive the same wage, then nothing remains for the entrepreneurs. If, however, entrepreneurs maintain and where possible even increase their living standard, then they force down the level of wages, i.e. from this point on the impoverishment of the workers necessarily sets in. That, however, drives the workers to revolution…

Admittedly, nothing has yet been said about the length of time over which this tendency becomes apparent. The critique of Otto Bauer’s equilibrium theory was made using his example and this showed that the tendency to break down emerged in 35 years. But the length of this period in itself has nothing to do with the idea I demonstrated and is a coincidental result of Bauer’s concrete numerical example. This should go down on Otto Bauer’s debit account, not mine. For, if Bauer’s scheme is intended to illustrate contemporary capitalism, it shows an entirely insufficient organic composition of capital. It assumes as the social average a composition of 200,000c:100,000v; constant capital comprising only twice the value of yearly wages. Now Engels already gave ‘an example of the actual composition of capital in large modern industries’, from a cotton spinning factory in 1871 where a total capital of £12,500 was divided into £12,182 constant and £318 variable capital. In percentage terms the organic composition was 97½c+2½v=100C. The constant capital is 39 times larger than the variable. It is clear that today there is an even higher organic composition in large industries. For precisely this reason, Bauer’s numerical example, with its unusually low organic composition is not a reflection of contemporary capitalism but expresses the low organic composition under capitalism in its early phases. And the long cycles of Bauer’s scheme are precisely a consequence of this low composition, hence the necessity of calculations over 35 years. This is because the tendency to break down only takes effect in the late phase of accumulation when the organic composition is high. As a consequence long periods are necessary before Bauer’s scheme, with its slow rate of accumulation, develops a high organic composition. With a higher organic composition assumed as a basis for the enquiry from the start, which would express reality, the cycles and with them the need for ‘mathematical persistence’ would be reduced. For this too O. Bauer is responsible, not I. I demonstrated my proof under conditions dictated by O. Bauer.

Let us assume that Br. does not hide behind the hardly valid proposition that Bauer’s scheme is calculated ‘indeed only for a short period’, namely a period of 4 years (p. 300). In my critique of Bauer’s equilibrium scheme, I give a variation of Bauer’s scheme (on p. 225 of my book). It shows that with a higher organic composition of capital the reproduction process won’t survive even for this ‘short period’ …