A short note on Grossman's theory, focusing specifically on the question of whether it can explain decadence; not that his is the only such theory but given his influence on Mattick and later the CWO etc. it may be best to deal with it first.
The Law of Accumulation and Breakdown, Pluto, 1992.
Grossman bases this theory on the simplified model of capitalist reproduction constructed by Bauer, which was intended to prove his own thesis that, as long as the expansion of capitalism is proportional to the growth of population, capitalism can create its own market and thus continue to expand the productive forces indefinitely.
By keeping all of Bauer’s assumptions but extending the model's timescale, Grossman demonstrates that the portion of surplus value reserved for capitalist consumption eventually disappears because it is all required to expand production.
From this Grossman argues that “It follows that the system must break down. The capitalist class has nothing left for its own personal consumption because […] all existing means of subsistence have to be devoted to accumulation … If this state persisted it would mean a destruction of the capitalist mechanism, its economic end.” (p76)
Since one of the assumptions of Marx’s original models is that supply and demand coincide, this theory is not based on his analysis in Capital Volume Three of capital’s inherent problem of realising surplus value, ie. its in-built tendency towards overproduction. For Grossman, the problem for capital is not that it produces too much surplus value, but too little.
In reality capital's final breakdown is averted by counteracting or modifying tendencies which have the effect of restoring the valorisation of capital. For Grossman periodic crises are the means by which the breakdown tendency is temporarily interrupted and prevented from realising itself completely.
But at a certain point these countertendencies, which include increasing the rate of exploitation and technological improvements, cease to operate and the breakdown tendency “gains the upper hand and asserts itself in the absolute form as the final crisis” (p85).In this sense, capitalism’s final breakdown is nothing but a temporary crisis that is not interrupted by countertendencies.
It is not clear why or at what point these countertendencies must cease to operate. Nor is it clear why the ‘final crisis’ is in reality final for capital, especially as he argues, in an almost throwaway line, that to preserve the existing economic order the bourgeoisie will do anything necessary to try to restore profitability:
“the class of industrialists … is directly interested in preserving the existing economic order and tries, in every conceivable way, to find means of ‘boosting’ the economy, of bringing it back into motion through restoring profitability.” (p133, my emphasis)
So far this theory is at the abstract level of the simplified models of reproduction, which are based on a purely hypothetical situation where capitalism is the exclusive mode of production and comprises only capitalists and workers. Gorssman fully recognises that this must be verified by examining the concrete circumstances of capitalist accumulation. This demands an analysis of the rise of imperialism and the intensified struggle between the advanced capitalist states which culminates in the first world war.
He agrees with Luxemburg that the rise of imperialism must be seen as a symptom of the growing crisis of capitalist accumulation: it is “a striving to restore the valorisation of capital at any cost, to weaken or eliminate the breakdown tendency” (p122). Intensified competition for a share of the world market leads to “an ever more destructive struggle among capitalist states” (p172).
This “ever more destructive struggle” of course culminates in WW1. But instead of pursuing his line of argument to conclude that capitalism has now entered into its decadent phase, he reverts instead to his schema of economic crises as a temporary interruption of the breakdown tendency, arguing that “the destructions and devaluations of war are a means of warding off the imminent collapse, of creating a breathing space for the accumulation of capital” (p157).
In this schema, wars - even global imperialist ones - are simply phases in a cycle of temporary economic crises caused by a fall in the rate of profit, leading to the devaluation of capital, followed by a new upsurge of accumulation.
In this way, despite his insights into the significance of imperialism, Grossman abstracts from his theory the very phenomena that are essential to understanding the historic change in the conditions for accumulation at the end of the 19thC: the growing crisis of accumulation; the struggle for control of markets and intensified imperialist conflicts leading to world war.
So is capitalism decadent or not? Logically in Grossman's theory 1929 rather than 1914 would be the key turning point in terms of profitability but of course the Great Depression proved not to be capital's 'final crisis' - which is in any case not the same thing as decadence, ie. the definitive fettering of the productive forces.
Elsewhere he suggests that the post-WW1 economic offensive against the working class is proof that capitalism has 'outlived itself' but ultimately it remains unclear whether capitalism is decadent or not.
Nor does Grossman’s theory appear to be confirmed by empirical evidence of capitalism’s evolution in the 20th century:
- The decade before WW1 is not preceded by a significant fall in the rate of proft (with the exception of Germany, which may indeed be a factor in the outbreak of war)
- WW1 is not followed by a significant upsurge of economic activity in the core capitalist countries. Instead, after temporarily stabilizing, profit rates plunge to new depths in the Great Depression
- Profit rates are already rising in the decade before the unprecedented destruction of WW2
- After WW2 profit rates fall instead of rise, declining throughout the post-war boom before temporarily stabilizing in the 1980s (see below).
(Source: https://www.leftcom.org/files/2015-08-07-profit-graph-2.png. There are obviously all sorts of problems in measuring the ROP but this graph is cited by the CWO in support of its own arguments.)
All this is not at all to deny the importance of the falling rate of profit; the graph above is a clear demonstration that it is proof of the historically transitory nature of capitalism; the fact that the more accumulation accelerates, the more the rate of profit falls, threatening the continuation of the production process. The FROP is also a key factor in capitalism's crisis, especially since the 1980s, as we can see from the fact that the bourgeoisie has indeed tried "in every conceivable way, to find means of ‘boosting’ the economy, of bringing it back into motion through restoring profitability”.
The question here is whether it can be the decisive factor in explaining the entry of capitalism into decadence. Grossman's theory appears deeply flawed but are these flaws specific to his particular 'theory of breakdown' or are they more general to theories of decadence based on the FROP?