Encyclopedia of Trotskyism On-Line: Revolutionary History, Vol. 9 No. 4
IN a Smithian world of abstract trade, it would be easy to imagine that a bag of apples might be taken to a market and sold there at a profit. This simple process of production and market exchange should be capable of infinite reproduction. But add contemporary capitalism, and the apple will be grown from copyrighted seeds, sprayed with insecticide manufactured by one of two or three giant producers, grown to tasteless colours and anodyne proportions, waxed, bagged, and probably binned uneaten at the end in a dump where (due to inadequate airing), the apple itself might be preserved for a hundred years without rotting. Capital is accumulated, wages are made, but finite resources (oil, land, time) are wasted indefinitely.
The widespread environmental consciousness that capitalism is an economic order barely compatible with human sustainability reminds us of an earlier set of economic arguments, which also portrayed capitalism as breakdown system. In his sixties, living in America far from the Austria into which he had been born, the Marxist economist Henryk Grossman explained to his friend the novelist Christian Stead why he had become a Marxist: ‘I feel as if I saw a dangerous badly made deadly machine running down the street, when it gets to that corner it is going to explode and kill everyone and I must stop it. Once you feel this it gives you great strength, you have no idea, there is no limit to the strength it gives you.’ The publication of Rick Kuhn’s biography is a timely opportunity to show that such insights were not accidental to Grossman’s life but in fact intrinsic to his whole way of thinking.
Born to a prosperous, assimilated Jewish family, Grossman became a socialist in his teens. His campaigning life reached an early peak in May 1905, just weeks after Grossman’s 24th birthday, when a Jewish Social Democratic Party of Galicia was launched. Grossman authored the group’s first pamphlet, on the Jewish Question. For the next three years, he was the party’s unofficial leader. Although Galicia was then part of the Austro-Hungarian empire, the majority language in the region was Polish. The JSDP was strongly influenced by the main trends of Russian socialism, including both Bundism and Bolshevism. The mass strikes seen in Russia and Poland in 1905 spread, and Grossman was soon addressing marches of up to 50,000 people. The JSDP grew, reaching its highest membership of around 3,000. For the next two years, he threw himself into party activity. Only slowly did the upturn subside. Grossman left for Vienna in 1908, but was re-elected to the party’s executive, in absentia, for several years following his departure.
From a period as a revolutionary agitator, Grossman settled into the very different life of a university academic. He spent the 1914–18 war working for the Austrian government as a statistician. Travelling to Poland in 1919, he was appointed to a professorship on economic policy and joined the Communist Party. Later Grossman settled in Germany, where he became the Frankfurt School’s leading economist. It was from this post in 1929 that he published his best-known book The Law of Accumulation and the Collapse of the Capitalist System. For most readers today, Grossman is known if at all through the Pluto 1992 edition of this study: an incomplete text which misses out the entire last chapter of Grossman’s work.
The Law of Accumulation was a polemic with at least three targets in mind. The first was Edward Bernstein’s claim, from thirty years’ previously, that capitalism was an economic system marked by increasing order and stability. Grossman disagreed. A second target was Rosa Luxemburg, the woman seen by most of Grossman’s contemporaries as the heroine of their generation. Luxemburg’s considered response to Bernstein was to argue that capitalist reproduction depended on the expansion of market relationships to the countries of the non-capitalist world. At some point, this task would be finished, and capitalism would be incapable of further expansion. Grossman argued that such a method had in essence little in common with Marx, who located the key contradictions of capitalism not in circulation but in production. A third target was the parliamentary socialist Otto Bauer, who had used a simplified version of the calculations set out in the second volume of Marx’s Capital, to show that so long as the state regularly intervened to stabilise capitalism (by maintaining the correct ratio of outputs between means of production and means of consumption), the system could go on forever without crisis.
Grossman disagreed. His basic premise was as follows: in a system of competitive exchange, producers will invest in new machinery in an attempt to achieve an advantage over their rivals. For a single producer, investment will enable the same or a rising quantity of goods to be produced with a falling labour cost. Investment enables the sole manufacturer to produce more cheaply. The same processes, however, multiplied across the system as a whole, result in a general process whereby total output grows, but so does the proportion of total spending taken up by new machinery. The ratio of constant capital (machinery) to variable capital (wages) tends to rise in favour of the former. In a passage in the third volume of Capital, whose prominence in Marxist discussions since 1929 is largely Grossman’s doing, Marx describes this process as the tendency for the organic composition of capital to rise. Bauer acknowledged that the rate of profit might decline, but argued that this process was not fatal to the system, so long as some profit was made. Decline could be offset by state investment. Grossman took the same equations, ran them for a longer period, and used them to show that where the rate of profit declines inexorably, the result is inevitably a crisis to the system. By year 35 of Bauer’s model, there was no longer any surplus either for investment or even for private consumption. The system could run no further.
There is all the difference in the world, of course, between showing that a model of private economic exchange must lead to crisis, and showing that the same dynamics are manifest not in a intellectual model, but in the real economy. In the concluding chapters of his book, Grossman listed the countervailing tendencies that might result in sustained expansion. Among these he mentioned decreases in world commodity prices, decreases in the unit cost of labour power, more efficient transport, the emergence of new commodities, even war, one of whose consequences was the destruction of capital value on a giant scale. Conversely, he identified the struggle for reforms as a major impediment to indefinite expansion: where workers could increase the unit price of labour, inevitably this placed greater costs on the system, and brought closer the possibility of social transformation.
How relevant is this model to contemporary Green thinking? While the detail of each model is different, the outline is similar. A system familiar to us as one of dynamic reproduction contains beneath its surface elements of both movement and inertia. Over time, the static becomes increasingly significant, with the result that the machine comes eventually to a halt. This breakdown is not a peaceful, natural process. It is accompanied either (to Grossman’s mind) by bitter strikes and labour tumults or (in contemporary ecological thought) by drowned cities, plains lost to the desert, the inexorable expansion of wasteland, by migration, hunger and poverty. The successful avoidance of this catastrophe will require a pooling of great collective effort, and an extraordinary redistribution of human ingenuity. In that long process, Grossman’s politics will surely seem more relevant than ever.
Updated by ETOL: 31.10.2011