Law of the Accumulation and Breakdown, Henryk Grossman 1929
The present book forms part of a larger work to appear soon on the tendencies of development of capitalism in the theory of Marx. The origins of this work lie in lectures prepared in the course of 1926-7 at the Institut fur Sozialforschung for the University of Frankfurt.
The results of my research are twofold: (1) for the first time ever the method underlying Capital has been subjected to a reconstruction and (2) on this basis important areas of Karl Marx's system of theory have been presented from a fundamentally new perspective. One of the new findings is the theory of breakdown which is expounded below and which forms the cornerstone of the economic system of Marx. For decades this theory was at the centre of fierce controversies of theory. Yet in all that time no one ever attempted a reconstruction or definition of its place in the system as a whole.
It would be a useless task to increase the dogmas surrounding Marxism with a new interpretation and simply reinforce the view that Marxism has become purely a matter of interpretation. My view is that the unsatisfactory state of the literature on Marx is ultimately rooted in the fact - which will appear strange to some - that until today no one has proposed any ideas at all, let alone any clear ideas, about Marx's method of investigation. There has been a general tendency to cling to the results of the theory: these have been the focal point of interest, on the part of both critics as well as defenders. In all this the method has been totally ignored. The basic principle of any scientific investigation - that however fascinating a conclusion might appear, it is worthless divorced from an appreciation of the way in which it was established - was forgotten. A conclusion can after all only become a matter of conflicting interpretation when it is completely divorced from the path that led to its formulation.
A proper exposition of Marx's method of investigation will have to be left to my major work. The short methodological remarks that follow appear to me to be indispensable only insofar as they bear on the understanding of the arguments of this book.
The real world of concrete, empirically given appearances is that which is to be investigated. But in itself this is much too complicated to be known directly. We gain an approach to it only by stages. To this end we make various simplifying assumptions that enable us to gain an understanding of the inner structure of the object under investigation. This is the first stage of cognition in Marx's method of approximation to reality. It is the particular methodological principle that finds its specific reflection in Marx's reproduction schemes, which form the starting-point of his entire analysis, and which already underlie the arguments of Capital Volume One. Among the numerous assumptions connected with the reproduction schemes are the following: that the capitalist mode of production exists in an isolated state (foreign trade is ignored); that society consists of capitalists and workers alone (abstract from all so-called 'third persons' in the course of our analysis); that commodities exchange at value; that credit is ignored; that the value of money is assumed constant, and so on and so forth.
It is clear that thanks to these fictitious assumptions, we achieve a certain distance from empirical reality, even while the latter remains the target of our explanations. It follows that conclusions established on such a structure of assumptions can have a purely provisional character and therefore that the initial stage of the cognitive process must be followed by a second, concluding stage. Any set of simplifying assumptions will go together with a subsequent process of correction that takes account of the elements of actual reality that were disregarded initially. In this way, stage by stage, the investigation as a whole draws nearer to the complicated appearances of the concrete world and becomes consistent with it.
Yet an almost incredible thing happened - people saw that Marx works with simplifying assumptions but they failed to notice the purely provisional nature of the initial stages and ignored the fact that in the methodological construction of the system each of the several fictitious, simplifying assumptions is subsequently modified. Provisional conclusions were taken for final results. Otherwise it is quite impossible to understand how E Lederer could criticise Marx's method the way he does. He argues that simplification is part of any theory but he himself would not wish to go as far in this direction as Marx because “excessive simplification only creates problems in the way of our understanding. If, like Marx we suppose the whole economic universe to be composed only of workers and capitalists, then the sphere of production becomes too simple”
This pure misunderstanding of Marx's method explains why F Sternberg reproaches Marx for “having analysed capitalism under the quite unrealistic assumption that there is no non-capitalist sector. Such an analysis works with assumptions that have not been demonstrated”. K Muhs goes so far as to say that 'Marx obviously indulged in massive orgies of abstraction' and introduced “impossible because irrational assumptions that were bound to defeat any analysis of the historic process”.
Anyone who has grasped the essence of Marx's method will immediately be struck by the totally superficial character of these criticisms, and a critique of them would be quite superfluous. It is also not difficult to see why in the existing debates on Marx's theory the greatest confusion could and was bound to arise. Marx's method of approximation to reality is defined by two stages, sometimes even three. Entire phenomena and problems are tackled at least twice, initially under a set of simplifying assumptions, and later in their final form. As long as this remains an obscure mystery, we shall repeatedly run up against contradictions between the individual parts of the theory. To take one example, this is the source of the famous 'contradiction' discovered by Bohm-Bawerk between Capital Volumes One and Three.
The problem analysed in this book was tackled by Marx in three stages. Initially he examines the contradictions that define the process of reproduction in its normal trajectory, or he examines simple reproduction. At a second stage of his analysis, he focuses on the impact of the accumulation of capital with its resulting tendency towards breakdown. Finally, in the third stage Marx investigates the factors that modify this tendency.
The question I shall examine is whether fully developed capitalism, regarded as an exclusively prevalent and universally widespread economic system relying only on its own resources, contains the capacity to develop the process of reproduction indefinitely and on a continually expanding basis, or whether this process of expansion runs into limits of one sort or another which it cannot overcome. In examining this problem the moments specific to the capitalist mode of production have to be drawn in. Ever since the beginnings of human history it has always been the capacity of the individual worker with his labour power L to set into motion a greater mass of the means of production M that has indicated technological and economic progress. Technological advance and the development of mankind's productivity are directly expressed in the growth of M relative to L. Like every other form of economy, socialism too will be characterised by technological advance in its immediately natural form M:L.
The specific nature of capitalist commodity production shows itself in the fact that it is not simply a labour process in which products are created by the elements of production M and L. Rather the capitalistic form of commodity production is constructed dualistically - it is simultaneously a labour process for the creation of products and a valorisation process. The elements of production M and L figure not only in their natural form, but at the same time as values c and v respectively. They are used for the production of a sum of values w, and indeed only on condition that over and above the used up value magnitudes c and v there is a surplus s (that is, s = w - c + v). The capitalist expansion of production, or accumulation of capital, is defined by the fact that the expansion of M relative to L occurs on the basis of the law of value; it takes the specific form of a constantly expanding capital c relative to the sum of wages v, such that both components of capital are necessarily valorised. It follows that the reproduction process can only be continued and expanded further if the advanced, constantly growing capital c + v can secure a profit, s (surplus value). The problem can then be defined as follows - is a process of this sort possible in the long run?
The following study is divided into three chapters. The first chapter surveys the existing literature on Marx's theory of breakdown and describes the views of more recent Marxists about the end of capitalism. The second chapter is an attempted reconstruction of the Marxian theory of accumulation and breakdown (this being the basic element of the theory of crisis) in its pure form, unaffected by the operation of 'countertendencies'. The concluding chapter attempts to grasp these counteracting tendencies which modify the law of breakdown in its pure form. By this means it seeks to establish a certain basic consistency between the actual reality of capitalism and the law in its pure operation.
Here it is not a matter of describing in detail the actual processes that go on in the environment of capitalism. On principle I shall abstain from presenting the extensive and rather exhausting factual material. The work is intended to bear a theoretical character, not a descriptive one. To the extent that factual material is presented, the aim is to illustrate the various theoretical propositions and deductions. I have only tried to show how the empirically ascertainable tendencies of the world economy which are regarded as defining characteristics of the latest stage of capitalism (monopolistic organisations, export of capital, the struggle to divide up the sources of raw materials, etc) are only secondary surface appearances that stem from the essence of capital accumulation as their primary basis. Through this inner connection it is possible to use a single principle, the Marxian law of value, to explain clearly all the appearances of capitalism without recourse to any special ad hoc theories, and to throw light on its latest stage - imperialism. I do not need to labour the point that this is the only form in which the tremendous consistency of Marx's economic system can be clearly drawn out
Because I deliberately confine myself to describing only the economic presuppositions of the breakdown of capitalism in this study, let me dispel any suspicion of 'pure economism' from the start. It is unnecessary to waste paper over the connection between economics and politics; that there is a connection is obvious. However, while Marxists have written extensively on the political revolution, they have neglected to deal theoretically with the economic aspect of the question and have failed to appreciate the true content of Marx's theory of breakdown. My sole concern here is to fill in this gap in the Marxist tradition.
1. Lederer, 1925, p. 368.
2. Sternberg, 1926, p. 301.
3. Muhs, 1927, p. 10