Henryk Grossman
Encyclopedia
Henryk Grossmanalternative spelling: Henryk Grossmann (April 14, 1881, Kraków
- November 24, 1950), was a Polish-German economist and historian of Jewish descent.
Born Kraków
, Grossman studied economics
and law
in Kraków and Vienna
. In 1925 he joined the Institute for Social Research
in Frankfurt
. He left Germany in the 1930s and returned to become Professor of Political Economy at Leipzig University in 1949.
Grossman's key contribution to political-economic theory was his book, The Law of Accumulation and Breakdown of the Capitalist System, a study in Marxian crisis theory
. It was published in Leipzig
months before the Stock Market Crash of 1929.
, then a part of Austrian Galicia. He joined the socialist movement around 1898, becoming a member of the Social Democratic Party of Galicia (GPSD), an affiliate of the Social Democratic Workers' Party of Austria. The GPSD, led by Ignacy Daszyński
, was formally Marxist, but dominated by Polish nationalists close to the Polish Socialist Party
(PPS). When the Ukrainian Social Democratic Party
in Galicia (USPD) was formed in 1899, the GSPD became the Polish Social Democratic Party (PPSD) and the Polish nationalist current was strengthened. Grossman led the resistance of orthodox Marxists
to this current. Along with Karl Radek
, he was active in the socialist student movement, particularly in Ruch (Movement), which included members of the PPSD as well as of the two socialist parties in the Kingdom of Poland
, the PPS and the Social Democracy of the Kingdom of Poland and Lithuania
(SDKPiL - led by Rosa Luxemburg
and Leo Jogiches
). He was the main figure in the newspaper Zjednoczenie (Unification), which took a line close to the SDKPiL, against the pro-PPS politics of Ruchs main organ, Promień for which he was censured by the PPSD and its newspaper Naprzód.
During this period, Grossman learned Yiddish and became involved in the Jewish workers movement in Kraków. Grossman was the founding secretary and theoretician of the Jewish Social Democratic Party
of Galicia (JSDP) in 1905. The JSDP broke with the PPSD over the latter's belief that the Jewish workers should assimilate to Polish culture. It took a position close to the Bund
, and was critical of the labour Zionism of the Poale Zion
as well to assimilationist forms of socialism. The JSDP sought to affiliate to the Social Democratic Workers' Party of Austria (the General Party), but this was refused. However, the JSDP was active alongside the General Party, for example for universal suffrage
.
At the end of 1908, Grossman went to Vienna
to study the Marxian economic historian Carl Grünberg
, withdrawing from his leadership role in the JSDP (although he remained on its executive until 1911 and had contact with the small JSDP group in Vienna, the Ferdinand Lassalle Club). With the destruction of the Austro-Hungarian empire at the end of World War I
, Grossman became an economist in Poland
, and joined the Communist Party of Poland
.
in Frankfurt by his former tutor Carl Grunberg.
Hitler
's accession to power in 1933 forced him first to Paris, and then via Britain to New York, where he remained in relative isolation from 1937 until 1949. In that year he took up a professorship in political economy at the University of Leipzig in East Germany.
Grossman's Law of Accumulation and Breakdown of the Capitalist System was finally made available in English translation in 1979 by Jairus Banaji, for an Indian Trotskyist organisation, the Platform Tendency. A recent edition is: ISBN 0-7453-0459-1. However, it is a condensed version and lacks the important concluding chapter of the German original.
's theory in ignorance of the subtleties of "the method underlying Capital
" was causing a catastrophic vulgarisation of Marxian thought - a trend which was undermining the revolutionary possibilities of the moment.
The Law of Accumulation was his attempt to demonstrate that marxian political economy had been underestimated by its critics - and by extension that revolutionary critiques of capitalism
were still valid. Amongst other arguments, it sets forth the following demonstration (for a complete definition of the terms employed, the whole book is recommended):
Meaning of the symbols
c = constant capital
. Initial value = co. Value after j years = cj
v = variable capital. Initial value = vo. Value after j years = vj
s = rate of surplus value
(written as a percentage of v)
ac = rate of accumulation
of constant capital c
av = rate of accumulation of variable capital v
k = consumption share of capitalists
S = mass of surplus value, being:
Ω = organic composition of capital
, or c:v
(Correction with respect to Grossman's text: From the formula below it follows that Grossman means by Ω the initial value of the organic composition of capital
:
)
j = number of years
Further, let
and let
At the assumed rate of accumulation av, the variable capital v reaches the level:
The year after (j + 1) accumulation is continued as usual, according to the formula:
whence
For k to be greater than 0, it is necessary that:
k = 0 for a year n, if:
(Note this line follows the German original in Das Akkumulations- und Zusammenbruchsgesetz des kapitalistischen Systems (zugleich eine Krisentheorie), because it is misspecified in the condensed English translation.)
The timing of the absolute crisis is given by the point at which the consumption share of the entrepreneur vanishes completely, long after it has already started to decline. This means:
whence n =
This is a real number as long as s > av
But this is what we assume anyway throughout our investigation. Starting from time-point n, the mass of surplus value S is not sufficient to ensure the valorisation of c and v under the conditions postulated.
The accumulation process could be continued if the earlier assumptions were modified:
These four major cases allow us to deduce all the variations that are actually to be found in reality and which impart to the capitalist mode of production
a certain elasticity ...
Much of the remainder of Grossman's book is devoted to exploring these "elasticities" or counter-crisis tendencies, tracking both their logical and their actual, historical development. Examples of each would include:
Paul Mattick
's Economic Crisis and Crisis Theory published by Merlin Press in 1981 is an accessible introduction and discussion derived from Grossman's work.
Kraków
Kraków also Krakow, or Cracow , is the second largest and one of the oldest cities in Poland. Situated on the Vistula River in the Lesser Poland region, the city dates back to the 7th century. Kraków has traditionally been one of the leading centres of Polish academic, cultural, and artistic life...
- November 24, 1950), was a Polish-German economist and historian of Jewish descent.
Born Kraków
Kraków
Kraków also Krakow, or Cracow , is the second largest and one of the oldest cities in Poland. Situated on the Vistula River in the Lesser Poland region, the city dates back to the 7th century. Kraków has traditionally been one of the leading centres of Polish academic, cultural, and artistic life...
, Grossman studied economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
and law
Law
Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...
in Kraków and Vienna
Vienna
Vienna is the capital and largest city of the Republic of Austria and one of the nine states of Austria. Vienna is Austria's primary city, with a population of about 1.723 million , and is by far the largest city in Austria, as well as its cultural, economic, and political centre...
. In 1925 he joined the Institute for Social Research
Institute for Social Research
The Institute for Social Research is a research organization for sociology and continental philosophy, best known as the institutional home of the Frankfurt School and critical theory....
in Frankfurt
Frankfurt
Frankfurt am Main , commonly known simply as Frankfurt, is the largest city in the German state of Hesse and the fifth-largest city in Germany, with a 2010 population of 688,249. The urban area had an estimated population of 2,300,000 in 2010...
. He left Germany in the 1930s and returned to become Professor of Political Economy at Leipzig University in 1949.
Grossman's key contribution to political-economic theory was his book, The Law of Accumulation and Breakdown of the Capitalist System, a study in Marxian crisis theory
Crisis theory
Crisis theory is generally associated with Marxian economics. In this context crisis refers to what is called, even currently and outside Marxian theory in many European countries a "conjuncture" or especially sharp bust cycle of the regular boom and bust pattern of what Marxists term "chaotic"...
. It was published in Leipzig
Leipzig
Leipzig Leipzig has always been a trade city, situated during the time of the Holy Roman Empire at the intersection of the Via Regia and Via Imperii, two important trade routes. At one time, Leipzig was one of the major European centres of learning and culture in fields such as music and publishing...
months before the Stock Market Crash of 1929.
Early life and education
Grossman was born, as Chaskel Grossman, into a relatively prosperous Jewish family in KrakówKraków
Kraków also Krakow, or Cracow , is the second largest and one of the oldest cities in Poland. Situated on the Vistula River in the Lesser Poland region, the city dates back to the 7th century. Kraków has traditionally been one of the leading centres of Polish academic, cultural, and artistic life...
, then a part of Austrian Galicia. He joined the socialist movement around 1898, becoming a member of the Social Democratic Party of Galicia (GPSD), an affiliate of the Social Democratic Workers' Party of Austria. The GPSD, led by Ignacy Daszyński
Ignacy Daszynski
Ignacy Ewaryst Daszyński was a Polish politician, journalist and Prime Minister of the Polish government created in Lublin in 1918....
, was formally Marxist, but dominated by Polish nationalists close to the Polish Socialist Party
Polish Socialist Party
The Polish Socialist Party was one of the most important Polish left-wing political parties from its inception in 1892 until 1948...
(PPS). When the Ukrainian Social Democratic Party
Ukrainian Social Democratic Party
-History:The party was founded in 1998 when the Social Democratic Party of Ukraine and Party of Human Rights were united. The first leader of the party was Vasyl Onopenko who in the Presidential elections in 1999 got 0,47% of the votes. Since November 2006 Yevhen Korniychuk is the chairman of the...
in Galicia (USPD) was formed in 1899, the GSPD became the Polish Social Democratic Party (PPSD) and the Polish nationalist current was strengthened. Grossman led the resistance of orthodox Marxists
Orthodox Marxism
Orthodox Marxism is the term used to describe the version of Marxism which emerged after the death of Karl Marx and acted as the official philosophy of the Second International up to the First World War and of the Third International thereafter...
to this current. Along with Karl Radek
Karl Radek
Karl Bernhardovic Radek was a socialist active in the Polish and German movements before World War I and an international Communist leader after the Russian Revolution....
, he was active in the socialist student movement, particularly in Ruch (Movement), which included members of the PPSD as well as of the two socialist parties in the Kingdom of Poland
Congress Poland
The Kingdom of Poland , informally known as Congress Poland , created in 1815 by the Congress of Vienna, was a personal union of the Russian parcel of Poland with the Russian Empire...
, the PPS and the Social Democracy of the Kingdom of Poland and Lithuania
Social Democracy of the Kingdom of Poland and Lithuania
The Social Democracy of the Kingdom of Poland and Lithuania was a Marxist political party founded in 1893. Its original name was the "Social Democracy of the Kingdom of Poland" and it eventually became part of the Communist Workers Party of Poland...
(SDKPiL - led by Rosa Luxemburg
Rosa Luxemburg
Rosa Luxemburg was a Marxist theorist, philosopher, economist and activist of Polish Jewish descent who became a naturalized German citizen...
and Leo Jogiches
Leo Jogiches
Leo Jogiches , also known by his party name of Leon Tyszka was a Marxist revolutionary active in Lithuania, Poland, and Germany....
). He was the main figure in the newspaper Zjednoczenie (Unification), which took a line close to the SDKPiL, against the pro-PPS politics of Ruchs main organ, Promień for which he was censured by the PPSD and its newspaper Naprzód.
During this period, Grossman learned Yiddish and became involved in the Jewish workers movement in Kraków. Grossman was the founding secretary and theoretician of the Jewish Social Democratic Party
Jewish Social Democratic Party
The Jewish Social Democratic Party was a political party in Galicia and later also Bukovina, established in a split from the Polish Social Democratic Party of Galicia in 1905...
of Galicia (JSDP) in 1905. The JSDP broke with the PPSD over the latter's belief that the Jewish workers should assimilate to Polish culture. It took a position close to the Bund
Bund
- Organizations :* German American Bund, a pro-Nazi pre-World War II organisation* General Jewish Labour Bund in Lithuania, Poland and Russia, a political party founded in the Russian Empire* General Jewish Labour Bund in Poland, a political party founded in Poland...
, and was critical of the labour Zionism of the Poale Zion
Poale Zion
Poale Zion was a Movement of Marxist Zionist Jewish workers circles founded in various cities of the Russian Empire about the turn of the century after the Bund rejected Zionism in 1901.-Formation and early years:Poale Zion parties and organisations were started across the Jewish diaspora in the...
as well to assimilationist forms of socialism. The JSDP sought to affiliate to the Social Democratic Workers' Party of Austria (the General Party), but this was refused. However, the JSDP was active alongside the General Party, for example for universal suffrage
Universal suffrage
Universal suffrage consists of the extension of the right to vote to adult citizens as a whole, though it may also mean extending said right to minors and non-citizens...
.
At the end of 1908, Grossman went to Vienna
Vienna
Vienna is the capital and largest city of the Republic of Austria and one of the nine states of Austria. Vienna is Austria's primary city, with a population of about 1.723 million , and is by far the largest city in Austria, as well as its cultural, economic, and political centre...
to study the Marxian economic historian Carl Grünberg
Carl Grünberg
Carl Grünberg was the first director of the Institute for Social Research. He established and edited a journal of labour and socialist history today known as Grünbergs Archiv . He retired in 1929 and left the Institute to Max Horkheimer....
, withdrawing from his leadership role in the JSDP (although he remained on its executive until 1911 and had contact with the small JSDP group in Vienna, the Ferdinand Lassalle Club). With the destruction of the Austro-Hungarian empire at the end of World War I
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...
, Grossman became an economist in Poland
Poland
Poland , officially the Republic of Poland , is a country in Central Europe bordered by Germany to the west; the Czech Republic and Slovakia to the south; Ukraine, Belarus and Lithuania to the east; and the Baltic Sea and Kaliningrad Oblast, a Russian exclave, to the north...
, and joined the Communist Party of Poland
Communist Party of Poland
The Communist Party of Poland is a historical communist party in Poland. It was a result of the fusion of Social Democracy of the Kingdom of Poland and Lithuania and the Polish Socialist Party-Left in the Communist Workers Party of Poland .-1918-1921:The KPRP was founded on 16 December 1918 as...
.
Career
From 1922 to 1925, Grossman was Professor of economics at the Free University of Poland in Warsaw. He emigrated in 1925 to escape political persecution. He was invited to join the Marxian Institute for Social ResearchInstitute for Social Research
The Institute for Social Research is a research organization for sociology and continental philosophy, best known as the institutional home of the Frankfurt School and critical theory....
in Frankfurt by his former tutor Carl Grunberg.
Hitler
Adolf Hitler
Adolf Hitler was an Austrian-born German politician and the leader of the National Socialist German Workers Party , commonly referred to as the Nazi Party). He was Chancellor of Germany from 1933 to 1945, and head of state from 1934 to 1945...
's accession to power in 1933 forced him first to Paris, and then via Britain to New York, where he remained in relative isolation from 1937 until 1949. In that year he took up a professorship in political economy at the University of Leipzig in East Germany.
Grossman's Law of Accumulation and Breakdown of the Capitalist System was finally made available in English translation in 1979 by Jairus Banaji, for an Indian Trotskyist organisation, the Platform Tendency. A recent edition is: ISBN 0-7453-0459-1. However, it is a condensed version and lacks the important concluding chapter of the German original.
Contribution to Theory
While at Frankfurt in the mid-1920s, Grossman contended that a "general tendency to cling to the results" of MarxKarl Marx
Karl Heinrich Marx was a German philosopher, economist, sociologist, historian, journalist, and revolutionary socialist. His ideas played a significant role in the development of social science and the socialist political movement...
's theory in ignorance of the subtleties of "the method underlying Capital
Das Kapital
Das Kapital, Kritik der politischen Ökonomie , by Karl Marx, is a critical analysis of capitalism as political economy, meant to reveal the economic laws of the capitalist mode of production, and how it was the precursor of the socialist mode of production.- Themes :In Capital: Critique of...
" was causing a catastrophic vulgarisation of Marxian thought - a trend which was undermining the revolutionary possibilities of the moment.
The Law of Accumulation was his attempt to demonstrate that marxian political economy had been underestimated by its critics - and by extension that revolutionary critiques of capitalism
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...
were still valid. Amongst other arguments, it sets forth the following demonstration (for a complete definition of the terms employed, the whole book is recommended):
The logical and mathematical basis of the law of breakdown
... Apart from the arithmetical and logical proofs that we have been given already, mathematicians may prefer the following more general form of presentation which avoids the purely arbitrary values of a concrete numerical example.Meaning of the symbols
c = constant capital
Constant capital
Constant capital , is a concept created by Karl Marx and used in Marxian political economy. It refers to one of the forms of capital invested in production, which contrasts with variable capital...
. Initial value = co. Value after j years = cj
v = variable capital. Initial value = vo. Value after j years = vj
s = rate of surplus value
Surplus value
Surplus value is a concept used famously by Karl Marx in his critique of political economy. Although Marx did not himself invent the term, he developed the concept...
(written as a percentage of v)
ac = rate of accumulation
Capital accumulation
The accumulation of capital refers to the gathering or amassing of objects of value; the increase in wealth through concentration; or the creation of wealth. Capital is money or a financial asset invested for the purpose of making more money...
of constant capital c
av = rate of accumulation of variable capital v
k = consumption share of capitalists
S = mass of surplus value, being:
Ω = organic composition of capital
Organic composition of capital
The organic composition of capital is a concept created by Karl Marx in his critique of political economy and used in Marxian economics as a theoretical alternative to neo-classical concepts of factors of production, production functions, capital productivity and capital-output ratios. Marx first...
, or c:v
(Correction with respect to Grossman's text: From the formula below it follows that Grossman means by Ω the initial value of the organic composition of capital
:)j = number of years
Further, let
and let
The formula
After j years, at the assumed rate of accumulation ac, the constant capital c reaches the level:At the assumed rate of accumulation av, the variable capital v reaches the level:
The year after (j + 1) accumulation is continued as usual, according to the formula:
whence
For k to be greater than 0, it is necessary that:
k = 0 for a year n, if:
(Note this line follows the German original in Das Akkumulations- und Zusammenbruchsgesetz des kapitalistischen Systems (zugleich eine Krisentheorie), because it is misspecified in the condensed English translation.)
The timing of the absolute crisis is given by the point at which the consumption share of the entrepreneur vanishes completely, long after it has already started to decline. This means:
whence n =
This is a real number as long as s > av
But this is what we assume anyway throughout our investigation. Starting from time-point n, the mass of surplus value S is not sufficient to ensure the valorisation of c and v under the conditions postulated.
Discussion of the formula
The number of years n down to the absolute crisis thus depends on four conditions:- The level of organic composition Ω. The higher this is the smaller the number of years. The crisis is accelerated.
- The rate of accumulation of the constant capital ac, which works in the same direction as the level of the organic composition of capital.
- The rate of accumulation of the variable capital av, which can work in either direction, sharpening the crisis or defusing it, and whose impact is therefore ambivalent.
- The level of the rate of surplus value s, which has a defusing impact; that is, the greater is s, the greater is the number of years n, so that the breakdown tendency is postponed.
The accumulation process could be continued if the earlier assumptions were modified:
- the rate of accumulation of the constant capital ac is reduced, and the tempo of accumulation slowed down;
- the constant capital is devalued which again reduces the rate of accumulation ac;
- labour power is devalued, hence wages cut, so that the rate of accumulation of variable capital av is reduced and the rate of surplus value s is enhanced;
- finally, capital is exported, so that again the rate of accumulation ac is reduced.
These four major cases allow us to deduce all the variations that are actually to be found in reality and which impart to the capitalist mode of production
Capitalist mode of production
In Marx's critique of political economy, the capitalist mode of production is the production system of capitalist societies, which began in Europe in the 16th century, grew rapidly in Western Europe from the end of the 18th century, and later extended to most of the world...
a certain elasticity ...
Much of the remainder of Grossman's book is devoted to exploring these "elasticities" or counter-crisis tendencies, tracking both their logical and their actual, historical development. Examples of each would include:
- Depressed interest rates, investment capital transferred to unproductive speculation, e.g. housing stock, art objects.
- Enlarged state sector bleeds value from the accumulation process via taxes. Wars destroy capital values.
- The Reserve army of labourReserve army of labourReserve army of labour is a concept in Karl Marx's critique of political economy. It refers basically to the unemployed in capitalist society. It is synonymous with "industrial reserve army" or "relative surplus population", except that the unemployed can be defined as those actually looking for...
(unemployed) created to discipline wage claims. - Imperialism
Influence
Grossman's work has been of slight influence beyond the small fraction of the many Trotskyist political currents that have maintained awareness of it.Paul Mattick
Paul Mattick
Paul Mattick Sr. was a Marxist political writer and social revolutionary, whose thought can be placed within the council communist and left communist traditions...
's Economic Crisis and Crisis Theory published by Merlin Press in 1981 is an accessible introduction and discussion derived from Grossman's work.
Further reading
- Grossman, Henryk The Law of Accumulation and Breakdown of the Capitalist System Pluto 1992 ISBN 0-7453-0459-1
- Kuhn, Rick Henryk Grossman and the Recovery of Marxism Urbana and Chicago: University of Illinois Press, 2007. ISBN 0-252-07352-5.
- Scheele, Juergen Zwischen Zusammenbruchsprognose und Positivismusverdikt. Studien zur politischen und intellektuellen Biographie Henryk Grossmanns (1881–1950) Frankfurt a.M., Berlin, Bern, Bruxelles, New York, Wien: Peter Lang, 1999. ISBN 3-631-35153-4.
See also
- Reproduction (economics)Reproduction (economics)In Marxian economics, economic reproduction refers to recurrent processes by which the initial conditions necessary for economic activity to occur are constantly re-created...
- Capital accumulationCapital accumulationThe accumulation of capital refers to the gathering or amassing of objects of value; the increase in wealth through concentration; or the creation of wealth. Capital is money or a financial asset invested for the purpose of making more money...
- Crisis theoryCrisis theoryCrisis theory is generally associated with Marxian economics. In this context crisis refers to what is called, even currently and outside Marxian theory in many European countries a "conjuncture" or especially sharp bust cycle of the regular boom and bust pattern of what Marxists term "chaotic"...
- Tendency of the rate of profit to fallTendency of the rate of profit to fallThe tendency of the rate of profit to fall is a hypothesis in economics and political economy, most famously expounded by Karl Marx in chapter 13 of Das Kapital Vol. 3. It was generally accepted in the 19th century...
- Surplus valueSurplus valueSurplus value is a concept used famously by Karl Marx in his critique of political economy. Although Marx did not himself invent the term, he developed the concept...
- Organic composition of capitalOrganic composition of capitalThe organic composition of capital is a concept created by Karl Marx in his critique of political economy and used in Marxian economics as a theoretical alternative to neo-classical concepts of factors of production, production functions, capital productivity and capital-output ratios. Marx first...
External links
- Grossman, Henryk, The Henryk Grossman Internet Archive. A collection of Grossman's writings.
- Harman, ChrisChris HarmanChris Harman was a British journalist and political activist, and a member of the Central Committee of the Socialist Workers Party...
, "Forgotten treasure: a new biography of Grossman", International Socialism, No. 114, Spring 2007. A review of Kuhn's Grossman biography.
- Heartfield, James, "Why Grossman still matters", Spiked Review of Books, No. 3, July 2007. Another review of Kuhn's Grossman biography.
- Kuhn, Rick, "Capital development", Socialist Review, No. 245, October 2000. A short biography of Henryk Grossman.
- Kuhn, Rick, "Economic crisis and socialist revolution: Henryk Grossman's Law of accumulation, its first critics and his responses", preprint version of an essay 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. A discussion of aspects of Grossman's contribution to the Marxist theory of economic crisis.
- Kuhn, Rick, "Henryk Grossman and the recovery of Marxism", preprint version of an article in Historical Materialism 13 (3), 2005. On Grossman's contributions to and place in the history of Marxism.
- Kuhn, Rick, "Henryk Grossman - Capitalist Expansion and Imperialism", International Socialist Review, No. 56, November 2007. Study on the relevance of Grossman's analysis for understanding globalisation and the current crisis.
- "On Henryk Grossman, A Revolutionary Marxist: An Interview with Rick Kuhn", Radical Notes, 9 April 2007