Henryk Grossman 1929

Notes on Helen Bauer'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.

[the] proposition that devaluation of capital neutralizes the tendency to break down, necessarily entails the proposition that there is no development of an ever higher organic composition of capital in contemporary capitalist society!

The Marxist concept of a progressively higher organic composition of capital entails 2 different conclusions. First, the development of the productivity of labor means that the same mass of living labor (L) can set in motion an ever larger mass of means of production, that, as a consequence, the progress of the human economy is expressed in a progressively higher technical composition [of capital], in the relative increase of MP [means of production] in relation to L.

Second, with this technical progress, which is just another expression for the increase in the productivity of labor, the products of human labor (means of production and consumption) are devalued, that is cheapened. So we have two counterposed movements. On the one hand an ever greater mass of MP, on the other hand a cheapening of this mass of products.

Considered abstractly, one can imagine that the devaluation is greater than the increase in the mass of means of production. In that case, despite the ever larger mass of MP per worker, there would be a progressively declining value of this larger mass. Then it would be possible to speak not of a progressively higher organic composition, but merely a higher technical and a declining value composition [of capital]. A higher organic composition of capital implies that the means of production grow in both their mass and their value compared with living labor. Both will move in the same direction (even if not at the same rate).

The question arises, how do things develop in reality? Is the pace of these two counterposed movements, growth in mass and decline in value, equal so that they paralyse each other? Or does the movement of one or the other predominate?

Now the question of which of the two tendencies, growth in the mass or devaluation is stronger, that is, the question of whether devaluation occurs to the same extent as the growth in the mass of the MP and thus the growth in mass is paralysed by the decline in value, or rather whether devaluation is not as great and consequently that despite the devaluation of the MP, its value in relation to v grows, cannot be abstractly, deductively decided and has to be decided through empirical observation. Experience, indeed the experience of more than one hundred years, teaches that the value of constant capital, thus also of the total capital, in relation to variable capital grows more quickly than variable, that is, in the relationship c:v, c [constant capital] grows faster than v [variable capital].

If, then, Helene Bauer wants to contradict the tendency to collapse and show that, through the devaluation of capital the mass of surplus value in relation to this total capital is not exhausted, does not decline, she has to demonstrate the incorrectness of the empirical fact of the progressively higher organic composition of capital or, to speak with Otto Bauer, she has to demonstrate that the law of the ‘decline of V/P is incorrect’.

It is an impermissible contradiction--thoughtlessness[--]to talk about the fact of the progressively higher organic composition of capital and at the same time to assert that devaluations neutralize the tendency to break down, i.e. to deny the fact of the higher organic composition of capital…

But if the tendency to a higher organic composition of capital, that is to a relative decline in living labor, exists then the tendency to break down results from the progress of capital accumulation and at a certain level a continuously larger part of the newly created value product will be accumulated as additional capital.

[The portion of surplus value that has to be invested to sustain the accumulation process]

grows relative to the total mass of living labor and, with a correspondingly large growth of constant capital, entirely swallows the mass of value created by living labor, surplus value and the wage fund.

In addition, when one does not start with the individual commodity but considers the total mass of commodities, devaluation has indifferent consequences. The 100,000 workers in the scheme indeed produce a tremendously greater mass of use values with the same amount of labor, as the total outlay on labor has not changed. The total mass of value is unchanged even if the individual commodity is cheaper. There are now more things that the value (v+s) represents, but the amount of new value v+s produced by the same number of workers has not changed. And the same is the case with the c part in Department II [producing means of consumption]. It incorporates more commodities, useful things. Each individual commodity is cheaper, but the size of the total mass of commodities has, nevertheless, the same value which is consumed and carried over to the annual product.

If the objection that devaluation is not considered has any meaning at all, then it is only that one’s starting point is useful things. Let us assume that the entire rural economy uses 1,000 electric ploughs (each with a value of 80=80,000) which are sufficient to work the available land. If productivity now doubles, so that with the same labor 2,000 electric ploughs can be produced, then the rural economy will not be able to buy them, as they are superfluous. Devaluation must have the consequence that the rural economy now only buys 1,000 ploughs, each with a value of 40=4,000. Consideration of devaluation shows the unsaleability of the product, the disruption of all the proportions worked out so arduously by Otto Bauer.

1. The emphasis is Grossman’s rather than Bauer’s. Helene Bauer, 1929. ‘Ein neuer Zusammenbruchstheoretiker’. Der Kampf, June 22 (6), 270-280.