Capitalism's collapse: Henryk Grossmann's Marxism Kuhn, Rick . Science & Society 59.2 (Summer 1995): 174.

Active la funcin de subrayado de resultados en los navegadores por voz Mostrar subrayado Resumen (resea) TraducirResumen Henryk Grossmann regarded an account of capitalism's tendency to breakdown as an essential element of revolutionary Marxist theory and of the case against reformism. Grossmann has been criticized as a theorist of automatic collapse, a criticism that misunderstands the method of successive approximation of reality that Grossmann both identified in Marx's work and used in his own argument. Texto completo

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HENRYK GROSSMANN (1881-1950) realized that a theory of economic crisis and collapse was not just some added optional extra in the socialist critique of capitalism. Eduard Bernstein, the leading theoretician of revisionism, had correctly seen the argument that capitalism was inherently crisisand collapse-prone as central to the logic of Marxism: "If the triumph of socialism were truly an immanent economic necessity, then it would have to be grounded in a proof of the inevitable economic breakdown of the present order of society" (quoted in Grossmann, 1992, 39). His denial that such a proof was possible constituted an important part of his case against classical Marxism. Capitalism does many horrible things to people. It generates radical differences in income and wealth, with starvation on one side and immense luxury on the other. It alienates us from each other, and from our natural capacities -- for work and even for sexual pleasure. The system reproduces itself by dividing humanity along arbitrary lines of nation, gender, race, religion and sexual orientation. Its wars periodically massacre huge numbers of people. All of these provide bases for socialist critiques of the capitalist mode of production. But if capitalism can go on forever, increasing the production of wealth all the time, then in principal economic problems, at least, could either be overcome through working-class action to reallocate wealth or ameliorated into unpleasant but bearable irritants. In these circumstances, Grossmann argues, the working class could just as easily reconcile itself with capitalism as voluntaristically attempt to realize socialism (Grossmann, 1992, 56-57). Leading social democratic theorists, such as Kautsky, Hilferding and Bauer, believed that state action could eliminate economic crises, which were the consequence of disproportion in

investments in different industries. They refuted Bernstein by asserting that there was no theory of collapse in Marx's account of capitalism. Despite formal adherence to Marxist orthodoxies, therefore, they stood on the same ground as Bernstein, the contemporary leaders of labor and social democratic parties and market socialists. Luxemburg recognized the dangers of this approach: It was a great historical contribution of Rosa Luxemburg that she, in a conscious opposition to the distortions of the "neo-harmonists," adhered to the basic lesson of Capital and sought to reinforce it with the proof that the continued development of capitalism encounters absolute limits. Frankly Luxemburg's efforts failed ... ... Her own deduction of the necessary downfall of capitalism is not rooted in the immanent laws of the accumulation process, but in the transcendental fact of an absence of non-capitalist markets. Luxemburg shifts the crucial problem of capitalism from the sphere of production to that of circulation. Hence the form in which she conducts her proof of the absolute economic limits to capitalism comes close to the idea that the end of capitalism is a distant prospect because the capitalization of the non-capitalist countries is the task of centuries. (Grossmann, 1992, 41-42, 125-126.)(1) Grossmann already maintained in 1924 that Sismondi's insight --that "an economic system based on abstract exchange value, as the sole goal and regulator of production, of necessity runs into difficulties and "unsolvable problems" -- was "one of the most important sources in the genesis of Karl Marx's conception of scientificeconomics" (Grossmann, 1924, 77). Initially, he tried to refute Bauer's position by arguing that disproportionality was inevitable (Grossmann, 1922-1925, 28590), but abandoned this argument in favor of an account based on Marx's law of the tendency of the rate of profit to fall. The Marxist explanation of capitalism's tendency to collapse, which he elaborates, is part of an important argument about socialist strategy and constitutes a substantial, though not his only, contribution to Marxism (Grossmann, 1992, 56-57). In a later summary of his theory, Grossmann argues that the meaning of a theory of collapse is that the revolutionary action of the proletariat drives forward most strongly only when the existing system is objectively shaken. At the same time this creates the conditions for the successful suppression of ruling class resistance. (Grossmann, 1971, 336.) Grossmann made a powerful case for revolutionary socialism, in the tradition of Marx and Lenin, against voluntarist, reformist and conservative politics and economics. His analysis and approach to Marxism deserve a critical assessment unprejudiced by the largely unfavorable and, in some respects, often ill-informed treatment in the Marxist economic literature of the past six decades. The Logic of Capital Accumulation Grossmann grounded his arguments about economic crises in historical materialism. Capitalism, like previous modes of production, is a transitory form of organization of human labor, whose

development is fundamentally conditioned by contradictions between the forces and relations of production. In Marx's words, capitalism "creates its own negation with the inexorability of a natural process" (quoted in Grossmann, 1992, 38); "the monopoly of capital becomes a fetter upon the mode of production which has flourished alongside and under it," paving the way for the "expropriation of the expropriators" (Marx, 1976, 929). Grossmann argued, withMarx, that this is the "Historical Tendency of Capitalist Accumulation" (Marx, 1976, 927), discussed in more detail, as the tendency for the rate of profit to fall, in Part 3 of Capital, Volume III (Grossmann, 1992, 39). He maintained that the contradiction between use value and exchange value, whose significance, Rosdolsky points out, had been overlooked by earlier Marxists (Rosdolsky, 1977, 73, 87-88),(2) was vital to Marx's theory of breakdown: The capitalist process of production has a dual character. It is a labor process for the production of commodities, or products, and it is at the same time a valorization process for obtaining surplus value or profits. Only the latter process forms the essential driving force of capitalist production, whereas the production of use values is for the entrepreneur only a means to an end, a necessary evil. (Grossmann, 1992, 61; cf. 144-147.) Commodities, as use values, satisfy human needs. The process of capitalist development involves the potentially unrestricted growth in the production of use values, given the capacity of human needs to expand and change. Production, however, is not undertaken to satisfy human needs, but to produce profits, additional exchange value for capitalists: From a purely technological aspect, as a labor process for the production of use values, nothing could impede the expansion of the forces of production. This expansion encounters a barrier in the shape of the valorization process, the fact that the elements of production figure as capital which must be valorized. if profit disappears the labor process is interrupted. (Grossmann, 1992, 119; cf. 123-124.) Grossmann demonstrated how this happens by using a reproduction scheme elaborated by Otto Bauer, theoretician and leader of Austrian social democracy between 1904 and 1938, on the basis of Marx's model in Volume II of Capital. This model involves assumptions about the combination of constant capital (machinery and equipment) and variable capital (the value of the labor power or people's ability to work used in the production process) and generates a specific pattern of growth. As a first stage in the analysis of the tendency to capitalist collapse, it abstracted from less fundamental aspects of the system such as momentary fluctuations in prices, deviations of prices from values due to monopoly, or unevenness in the development of productivity. These considerations were reintroduced at a later stage in the analysis, once the basic features of capitalism had been exposed. Bauer's scheme assumed initial values of 100,000 for variable capital v, and 200,000 for constant capital c; a constant rate of exploitation (rate of surplus value), s/v, of 100%, so that surplus value s always had the same magnitude as variable capital; accumulation of variable capital, av (and

therefore population growth) at a rate of 5% a year, and of constant capital, ac, at 100% a year (Grossmann, 1992, 168). The choice of Bauer's model and these assumptions was a political one. Bauer had let his model run for seven years and argued that it demonstrated that capitalism could go on forever, without crises, so long as output from different industries (simplified in the model to two "Departments" of production producing means of production and means of consumption) was kept in the correct ratios. Grossmann let the model go on for 36 years and found that it runs into difficulties after year 34 and collapses entirely in year 36 (Grossmann, 1992, 74-77). Realistically, Bauer's model assumed a higher rate of accumulation of constant than variable capital. Capitalists will try to reduce the value of their commodities so that they can undercut their rivals. Increasing the productivity of their workers by introducing new and more expensive machinery and technology is an effective way of doing this. As total output grows, constant capital will tend to expand more rapidly than variable capital. So there will be a rise in the weight of constant capital in capitalists' total outlays, which is measured by the organic composition of capital, c/v. It is the variable capital alone, however, that produces new value. As profits are measured against total outlays, a decline in the weight of value-creating variable capital will mean a fall in the rate of profit, s/(c + v), if the rate of exploitation is held constant. To the extent that capitalism increases the productivity of human labor and accelerates the production of use values, it is therefore also characterized by a tendency for the rate of profit to fall. This tendency is the key to capitalist collapse. Bauer's model implied a falling rate of profit. But Bauer and his fellow "neo-harmonists" thought that the rate of profit could tend downwards indefinitely getting closer and closer to zero without ever disappearing altogether. Grossmann showed why this is not the case, and his explanation is important. Some Marxists who have regarded the tendency of the rate of profit to fall as significant (Yaffe, 1973, 204; Mattick, 1974, 64-68; Harman, 1984, 18-19) have just assumed that low profit rates precipitate crises. But why should a crisis arise when the rate of profit is 8.7% rather than 10% or 27%? Grossmann showed that the mass of profit, the absolute amount of surplus value, is the trigger of capitalist crises (Grossmann, 1992, 77-78, 187). Beyond a certain point in the accumulation process, although the mass of profit continues to rise, it is insufficient to purchase the additional constant and variable capital produced in a production period. The incentive for capitalist investment already begins to decline after year 20 when the absolute amount available for the private consumption of the capitalists, k, has to fall if the rate of accumulation of constant and variable capital is to be maintained. At this stage, capitalists will start seeking other outlets for profitable investment, outside production, notably in speculative activity and the export of loan capital (Grossmann, 1992, 189). In year 35 no surplus value is available for capitalists' private consumption and surplus value is insufficient to cover investment necessary in additional variable capital, av. The process of collapse sets in.

Not only does the rate of profit fall, in other words, but the rate of growth of absolute surplus value (which remains constant at 5% per annum, reflecting the rate of growth of variable capital) also falls behind the rate of growth of the total value of production (which asymptotically approaches 10% per annum) so that a point is eventually reached when the increase in surplus value cannot cover the increase in investment, which is growing at a higher rate (Grossmann, 1992, 103). Grossmann developed a formula for calculating when this point is reached in order to highlight the factors that slow down or accelerate the collapse. The crisis is accelerated by a higher organic composition of capital and a faster rate of accumulation of constant capital. The effect of a rise in the rate of accumulation of variable capital is ambiguous, while a higher rate of surplus value slows down the tendency to breakdown (Grossmann, 1992, 96-101). Grossmann provided, contrary to Sweezy's assertion that "... the falling tendency of the rate of profit ... has nothing whatever to do with Grossmann's breakdown theory" (Sweezy, 1970, 211), a particularly precise account of the relationship between the two. Recurrent Crises Marx dealt with the issue of economic crises at different places in his work, and identified a variety of factors that can interrupt the circuit of capital. Of these he regarded the tendency towards breakdown, lying at the heart of the capitalist production process itself, rather than developments in the spheres of circulation and consumption, as "the decisively important one." It is important, nevertheless, to examine mechanisms which may offset the tendency of the rate of profit to fall if any given concrete situation is to be understood. Once these countertendencies are introduced into the model, the tendency to breakdown will take the form of recurring crises rather than an uninterrupted collapse. "In this way the breakdown tendency, as the fundamental tendency of capitalism, splits up into a series of apparently independent cycles which are only the form of its constant periodic assertion" (Grossmann, 1992, 85). A crisis is itself, what is more, "from the standpoint of capitalist production, a healing process through which the valorization of capital is restored" (Grossmann, 1992, 99). Grossmann, like Marx, took care to examine the implications of the accumulation process itself in the long and short run, while recognizing that a variety of factors could generate crises, even under circumstances of simple reproduction, i.e., when there is no accumulation and the scale of production remains constant (Grossmann, 1992, 65, 128). Grossmann's approach justified his conclusion that other theories of the business cycle ... are theories of equilibrium. They bear a static character. They cannot deduce the general crisis -- seen as a discrepancy between demand and supply -- from the system itself because in equilibrium theory prices represent an automatic mechanism for adjusting one to the other. Disruption of equilibrium can only be explained in terms of exogenous factors. There is no such defect in Marx's theory of crises. True, Marx's proof procedure starts from the assumption of equilibrium. But equilibrium forms only a tentative methodological fiction with which Marx shows that in the long run equilibrium is impossible under capitalism. (Grossmann, 1992, 126-127.)

By progressively dropping the simplifying assumptions of his initial model, Grossmann brought the analysis closer to concrete reality. He introduced the credit system and showed how it leads to the characteristic lower interest rates in the early stages of a recovery and, subsequently, as the pace of accumulation grows, to rising rates of interest (Grossmann, 1992, 112-117). This explanation, grounded in developments in the sphere of production, provides a better guide to understanding the excesses of the decade of the 1980s, with its stock exchange bubbles, as well as the current phase of economic recovery, than either the incomprehension of mainstream economists or social democratic deprecation of the irresponsibility of capitalists in the absence of closer state regulation. Grossmann lifted a series of other assumptions and examined the countertendencies in some detail, including the specific efforts of capitalists and states to overcome their problems. The capitalist's continual efforts to restore profitability might take the form of reorganizing the mechanism of capital internally (for instance, by cutting costs of production, or effecting economies in the use of energy, raw materials and labor power) or of recasting trade relations on the world market (international cartels, cheaper sources of raw material supply and so on). This involves groping attempts at a complete rationalization of all spheres of economic life. (Grossmann, 1992, 133.) Of particular interest are Grossmann's comments on rising levels of productivity, the devaluation of capital and the role of the world market, monopoly and imperialism. Countertendencies The process of capital accumulation itself lowers the value of both variable and constant capital. The introduction of new technology and superior equipment means that commodities can be produced with the expenditure of less labor. This applies to both the means of consumption that workers require to reproduce their labor power and means of production, equipment, machinery, etc. So cheapening of the cost of variable capital increases the rate of surplus value, by reducing the proportion of the working day workers have to spend reproducing their labor power. The depression of wages below the value of labor power has a similar effect. A higher rate of surplus value will tend to postpone the onset of crises; a lower rate of surplus value accelerates the approach of crises. Desirable as the defense of working-class living standards is for its own sake, Grossmann pointed out that "once this connection is clear we have a means of gauging the complete superficiality of those theoreticians in the trade unions who argue for wage increases as a means of surmounting the crisis by expanding the internal market" (Grossmann, 1992, 140). Howard and King (1988; 1989) have summarized a range of criticisms made of Grossmann's position.(3) *Capitalists would deliberately slow down the rate of accumulation to avoid the consequences of the rise in the organic composition of capital (Howard and King, 1988, 303). This, however, ignores the competitive advantages that derive from being the first capitalist in a sector to take advantage

of the productivity gains from being the first to introduce a new technology. There is a transfer of surplus value to innovators from more backward capitals, despite -- or, better, because of -- the increase in the innovator's organic composition of capital compared to rivals (Shaikh, 1978, 240246; cf. Hunt, 1983, 137-145). *Technological progress leads to a decline in the value of labor power, which increases the rate of surplus value (i.e., relative surplus value), and reduces the value of constant capital and hence the organic composition of capital. Both effects will increase the rate of profit (Howard and King, 1988, 304-305). Similarly, Trottmann maintained that Grossmann had failed to draw a balance between the tendency for the rate of profit to fall and its countertendencies (Trottmann, 1956, 66). But for Grossmann this was, in the short term, an empirical question, to be determined at any particular point in time. His own observations led him to conclude in early 1929 that another serious crisis was in the offing (Grossmann, 1992, 193).(4) Chris Harman and Anwar Shaikh, among others, have also pointed out, following Marx (for example, 1973, 375), that there is a logical limit to which increasing the rate of surplus value can contribute to the rate of profit: when all new value created in a period is appropriated by the capitalist and workers do not receive back anything to reproduce their labor power. There is no such limit on the size of constant capital, which can grow indefinitely (Harman, 1984, 28; Shaikh, 1987, 757). *In relation to the reduction in the value of constant capital, "at any point in time, the more of this surplus value an individual capitalist can get hold of and invest in means of production, the more productivity-increasing innovations he will be able to introduce compared to his competitors." Given this incentive, a capitalist faced with particular means of production whose value has declined will find it advantageous to use the savings to purchase more or better means of production (Harman, 1984, 28). Shaikh also points out that "if technical progress is more or less general across departments [producing means of consumption and means of production], the organic composition will tendentially reflect changes in the technical composition" of capital, that is the ratio in which machinery and workers are combined (Shaikh, 1978, 251). *Grossmann ignored capitalism's realization problems (Howard and King, 1988, 305). This is true in The Law of Accumulation and it was deliberate. Grossmann, in this book, sought to identify carefully those contradictions of capitalism that emerge from its core in the process of production itself (Grossmann, 1992, 29-33). A different countertendency to those discussed by Grossmann's critics was particularly important during the 1950s and 1960s. Two decades before the Cold War and the long post-World War II boom, sustained by the effect of massive arms spending on the global organic composition of capital and the rate of profit (Harman, 1984, 75-90), Grossmann pointed out that "from the Marxist theory of accumulation it follows that war and the destruction of capital values bound up with it weakens the breakdown and necessarily prove a new impetus to accumulation of capital" (Grossmann, 1992, 158).(5) Arms spending, by removing surplus value from the circuit of capital that would otherwise raise the organic composition of capital, slows down accumulation and the tendency for the rate of profit to fall.

Even if he had not offered profound insights into the crisis-prone nature of capitalism, Grossmann's analysis would deserve attention for its treatment of imperialism. In "Eine neue Theorie uber Imperialismus und die soziale Revolution" he subjected Fritz Sternberg's Der Imperialismus to a withering critique (Grossmann, 1928). The sections in The Law of Accumulation on imperialism are a continuation of this debate. They read like a critique of those post-World War II theorists who gave up on the working class in developed countries and pinned their hopes for radical change particularly on revolutions in the third world. This should not be surprising, as Grossmann's main target was underconsumptionism, a tradition continued, along with a distinctive brand of third worldism, by Paul Sweezy and Paul Baran. According to Grossmann, imperialism and monopoly can only be understood in relation to crises and the insufficiency of surplus value production in developed capitalist countries due to falling profit rates. Imperialism provides capitalists and their states with several means for improving profits in the face of their tendency to stagnate. In relation to international trade, the increased scale of production for international markets allows capitalists to reduce their production and circulation costs (Grossmann, 1992, 167-168). At the same time the formation of a world rate of profit, with commodities produced with a lower organic composition of capital selling below their value and those produced with a higher organic composition selling above theirs, means that trade can involve the transfer of surplus value from less to more developed countries. This was a rigorous formulation of a theory of "unequal exchange," a term Grossmann used, long before the idea became fashionable among third worldists (Grossmann, 1992, 172). He did not imply, however, that capital accumulation was impossible in the underdeveloped countries. Imperialism was less about the relationship between the developed and underdeveloped worlds than an aspect of capitalist countries at a high stage of development, which becomes particularly pronounced during periods of crisis: In proportion to the growth in the number of countries which export capital, competition and the struggle for profitable outlets is bound to intensify. The repercussions of this will necessarily sharpen the crisis at home. (Grossmann, 1992, 197.) Underdeveloped countries cannot, as underconsumptionists have argued, provide a market capable of absorbing the colossal output of the developed countries. In reality the reverse is the case. The more developed a country is the larger the market it provides for other developed countries (Grossmann, 1992, 173). Grossmann criticized explanations of investment in less developed countries that ran purely in terms of higher profit rates to be found there. Given the formation of a world rate of profit, this is no more likely in the underdeveloped than the developed world. On the other hand, efforts to secure access to or monopolies over cheap raw materials were means of increasing the rate of profit on capital in the imperialist lands (Grossmann, 1992, 182-183). His main example is U. S. global oil policy from World War I until 1929 (Grossmann, 1992, 176).(6) The export of capital, in the form of loans, credits and speculative investments overseas, is also a consequence of the lack of opportunities for adequate returns on investments of liquid funds due

to low profit rates and the inability of productive investments at home to increase the mass of surplus value (Grossmann, 1992, 180, 187-188). The same is true of a shift into domestic speculative activity as capitalism ages and, periodically, at particular stages of cycles of crisis and recovery. In the course of a substantial historical discussion, Grossmann identified the points at which such tendencies first emerged in different countries, starting with the Netherlands in the 17th century, and presents a large amount of illustrative material on the pursuit of cheap raw materials by imperialist powers (Grossmann, 1970, 531-557).(7) He also explained how foreign loans can be used to obtain orders for local industry at high prices, at the expense of competitors (Grossmann, 1970, 527-528). The point of capital export, in addition to the advantages already mentioned, such as securing raw materials, advantageous concessions, etc., lies in the tribute that the recipients of loans are forced to pay their creditors. (Grossmann, 1970, 529.) In other words, the inadequacies of domestic surplus value production can be offset by getting a cut of surplus value produced elsewhere through the interest earned on loans. Grossmann wrote in 1929, but his conclusions apply in the current crisis-ridden period: It is also, therefore, clear that the struggle for spheres for investment is also the greatest danger to world peace. That this does not involve prediction of the future should be clear to anyone who studies the methods of "Dollar Diplomacy" with the appropriate attention. (Grossmann, 1970, 572.) Marx's Method Grossmann repeatedly emphasizes that his use of Bauer's reproduction scheme, reflecting his understanding of Marxist methodology, is an initial stage of analysis. The scheme captures the fundamental aspects of reality, and forms the basis for a more nuanced account of the totality of capitalist society, as simplifying assumptions are relaxed and the analysis becomes more concrete. But this emphasis has been to little effect. Most of the critics of The Law of Accumulation and Breakdown of the Capitalist System have accused it of fatalistically arguing, on the basis of arbitrary assumptions, that capitalism would inevitably collapse of its own accord. This view has been expressed by representatives of radically different political currents: social democrats Bauer (1929, 280) and Braunthal (1929, 204); council communist Pannekoek (1973, 41); Stalinists Varga (1930, 95) and Behrens (1952, 46-47).(8) The orthodoxy, expressed by most of the reviews after the book's first publication through Sweezy's Theory of Capitalist Development in 1942 (1970, 213214) to Howard and King's recent text (1989, 331-332), is that Grossmann's explanation of crises is inadequate. In fact they have failed to understand Gossmann's (and Marx's) method:(9) "It is really a major misunderstanding and distortion of Marx's thought when one ... sees only [his] simplifying assumptions and not their subsequent corrections" (Grossmann, 1971, 42). This widespread misinterpretation has a great deal to do with the influence of Stalinist and reformist ideas in the labor movement. Grossmann's commitment to historical materialism and working-class self

activity are alien to those who have faith in parliamentarians or an all-knowing dictator (Howard and King, 1989, 331-332). In moving from the most abstract level to more concrete levels of analysis, Grossmann demonstrated at length the consequences of varying his assumptions -- rates of accumulation, and surplus value, initial magnitudes of constant and variable capital --and countervailing tendencies, including several not mentioned by Marx. The task of dispelling the long-standing misinterpretations of The Law of Accumulation is not made easier by the abridgements in the recent English edition. The final chapter of the German edition, where Grossmann concluded his argument at the level of concrete politics by examining the implications of the preceding analysis for the class struggle and the neo-harmonist goal of organized capitalism, has been deleted. Grossmann was very far from believing that capitalism would inevitably collapse of its own accord, a point he made briefly in the second chapter: "Obviously, as Lenin correctly remarks, there are no absolutely hopeless situations" (Grossmann, 1992, 95). Before, in and after The Law of Accumulation, the purpose of Grossmann's argument about capitalism's collapse was to clarify the necessity for revolutionary practice and the context in which it could take place. A commitment to socialist politics was a feature of Grossmann's whole life. In his early twenties he was a member of the leadership of the left-wing student organization Ruch in Krakow, along with Karl Radek. In 1905 he was a co-founder of the Jewish Social Democratic Party of Galicia. After World War I Grossmann seems to have become a member of the underground Communist Workers Party of Poland, was one of the two chairmen of the People's University that operated under Party direction, and was arrested because of his relationship with the Party in 1924 (Hass, 386). Though not subsequently involved in a socialist organization, his publications, while a member of the Institute for Social Research (the "Frankfurt School") in Germany and later, in Paris (1933-1935), London (1935-1937) and New York (1937-1949) exile, make clear that his political orientation did not change. For example, in his 1928 critique of Fritz Sternberg's book on imperialism, after outlining Lenin's description of the objective conditions necessary for a successful revolution, he maintained: It is not mere "class consciousness" (which cannot be generated by a crude hammering into heads of the final goal) that only then takes on significance as a subjective factor. Something entirely different is presupposed, "the capacity of the revolutionary class for revolutionary mass action," which requires an organization of the unified will of the masses and long experience in everyday class struggles. (Grossmann, 1928, 161-162.) Fifteen years later the same theme was apparent: The third element in Marx's general theory is that no economic system, no matter how weakened, collapses by itself in automatic fashion. It must be "overthrown".... so-called "historical necessity" does not operate automatically but requires the active participation of the working class in the historical process. (Grossmann, 1943, 520.)

Grossmann showed that as the point of collapse approaches capitalists try to rationalize their outlays on variable capital. With the onset of crisis, they will attempt to obtain the variable capital they need as cheaply as possible. To the extent that they succeed wages will be depressed below the value of labor power. If they are not successful, the scale of mass unemployment will grow. In either case, such periods are characterized by the immiseration of the working class. This is precisely the experience of the working class in most countries today. Grossmann's conclusion, following logically from the preceding analysis, is equally relevant: Only on the basis of our description of capital accumulation is it possible to understand the fact that, at the higher levels of accumulation, the struggle over the division of revenue is not merely a struggle over the living standards of the classes involved. It is also a struggle over the existence of the capitalist mechanism itself. ... In this way the struggle of the working class over everyday demands is bound up with its struggle over the final goal. The final goal, for which the working class fights, is not an ideal brought into the workers' movement from outside by speculative means whose realization, independent of the struggles of the present, is put off into the distant future. It is rather, as the law of collapse presented here shows, the result of immediate everyday struggles and its realization can be accelerated by these struggles. (Grossmann, 1970, 602-603.) Grossmann's political message is clear. And the economic argument that underpins it is still a powerful weapon for socialists. [FOOTNOTES] 1 In this respect Luxemburg's approach has been resurrected by the remnants of the "dependency" school of development, who believe capitalism still has hundreds if not thousands of years of life in it (Frank and Gills, 1993). 2 Hilferding (Rosdolsky, 1977, 73-74) and Louis Boudin (1915, 55) both regarded the study of commodities as use values as lying outside the scope of political economy. Rosdolsky mentions that Grossmann did address this issue and cites Grossmann (1977 (1941)). In fact he had emphasized the importance of the contradiction between use and exchange value many years earlier (Grossmann, 1922-1925, 289-290; 1924, 59). 3 Contemporary discussions of Grossmann's book referred to by Howard and King are Bauer, 1929, Benedikt, 1929, Caspary, 1930, Muhs, 1931, Neisser, 1931, Sternberg, 1929, Varga, 1930. They also draw on Trottmann's (1956) study. The following are of interest as well: Miksch, 1930 (who also argued that Grossmann failed to establish that Marx's "counter-tendencies" are less important than the tendency for the rate of profit to fall), Braunthal, 1929 and Sternberg, 1930. 4 For a recent empirical application of Grossmann's approach see Kuhn, 1993. 5 Yaffe (1973, 221-222) denies that arms production can have this effect, despite his adherence to Grossmann's framework.

6 For a large amount of additional illustrative material on the pursuit of cheap raw materials by the imperialist powers, see Grossmann (1970, 456-474). 7 In addition, Grossmann undertook the first detailed Marxist account of the origins and significance of the capitalist slave trade from the 15th century (Grossmann, 1970, 396-415). 8 Also noteworthy in this regard are Jay (1973, 18), Hansen (1985, 142) and Milios (1994). Ernest Mandel's understanding of Grossmann's analysis is, on a series of counts, among the least useful contributions in 65 years of confused and tendentious commentary on The Law of Accumulation. His Marxist Economic Theory (1968, 328) identifies Grossmann as a proponent of disproportionality theory. Apart from misunderstanding Grossmann's method, Mandel argues, in Late Capitalism (1978, 152), that Grossmann "forgets" to deal with the "historical and social element" of the value of labor power, which Grossmann explicitly discusses (Grossmann, 1970, 580-603, 594-595), and that Grossmann fundamentally misunderstands the role of competition in Capital (Mandel, 1978, 31). Grossmann explicitly refutes this point (Grossmann, 1971, 53-54). Scheele draws attention to Grossmann's conception of competition (1990, 62). Even someone, like Kenneth Lapides, who applauds Grossmann's exposition of Marx's method, judges his economic analysis a failure (Lapides, 1992, 150, 152). Lapides concludes that Grossmann's analysis of the method underlying Capital is superior to Rosdolsky's in The Making of Marx's "Capital." Grossmann is better understood by Walter Braeuer, 1954; 1966; Mattick, 1974; Marramao, 1975; Harman, 1993; Yaffe, 1973; and Jacoby, 1975, whose essay on the history of Marxist crisis theory is useful, though mistaken in stating that Grossmann was "fundamentally an economist," ignoring his original work as an economic historian and statistician, and in asserting that his first Marxist writings appeared in 1924, 20 years after his earliest publications, which already embraced a Marxist perspective (Grossmann, 1905). 9 Grossmann was the first to explore why Marx had altered his original plans for Capital and the implications of this change for his methodology, in both Law of Accumulation (Grossmann, 1992) and, soon after, in "Die Anderung des ursprunglichen Aufbauplans des Marxschen 'Kapital'" (Grossmann, 1971). Lapides (1992) quotes from this essay at length. REFERENCES Bauer, Helene. 1929. "Ein neuer Zusammenbruchstheoretiker." Der Kampf, 22:6, 270-280. Behrens, Fritz. 1952. Zur Methode Politkschen Okonomie. Berlin: Akademie Verlag. Benedikt, Otto. 1929. "Die Akkumulation des Kapitals bei wachsender organische Zusammensetzung." Unter dem Banner des Marxismus, 3:6, 869-911. Boudin, Louis. 1915. The Theoretical System of Karl Marx. Chicago: Kerr. Braeuer, Walter. 1954. "Henryk Grossmann als Nationalokonom." Arbeit und Wirtschaft, 8:5, 149151.

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