Henryk Grossmann

Henryk Grossmann , also Henryk Grossman , (born April 14, 1881 in Cracow , Austria-Hungary ; died November 24, 1950 in Leipzig ) was a German - Polish economist , statistician and historian . In German-language publications he used the spelling "Grossmann", in his Polish, Yiddish and English publications he spelled himself "Grossman".

As a member of the Frankfurt Institute for Social Research in its early phase, he got through his major work The Accumulation and Collapse Law of the Capitalist System , published on the eve of the global economic crisis of 1929 . (At the same time a crisis theory) to a greater degree of awareness. Within Marxism he is considered a representative of the collapse theory .

Life

Grossmann was born as the son of a relatively wealthy Jewish family in Galicia , which at the time was part of Austria-Hungary due to the partition of Poland in the 18th century . He studied law at the Jagiellonian University in Kraków, where he received his doctorate in 1908. jur. During his studies he appeared in various socialist organizations and soon as an opposition member within the Polish Social Democratic Party of Galicia and Cieszyn Silesia ( Polska Partia Socjalno-Demokratyczna Galicji i Śląska Cieszyńskiego , PPSD). He worked in the radical student organization Ruch ( The Movement ) and in 1905 became editor of the magazine Zjednoczenie ( Association ). Also in 1905 he was co-founder and first executive secretary of the Jewish Social Democratic Party in Galicia ( Żydowska Partia Socjal-Demokratieyczna , ŻPSD).

In 1908 he went to Vienna to take up the mandatory 7-year candidacy period as a lawyer and to attend lectures at the University of Vienna with Eugen von Böhm-Bawerk and Carl Grünberg . At the same time, under the guidance of Grünberg, he devoted himself to scientific research on statistical and economic history. An upcoming academic career was denied him by the beginning of the First World War . Grossmann completed the summer campaign in Volhynia in the Association of the Austro-Hungarian Army and, having been appointed lieutenant, served in the Scientific Committee for War Economics of the Austrian War Ministry from 1917 .

After the restoration of an independent state , Grossmann became a Polish citizen. In December 1919 he took up a position as a ministerial advisor in the Warsaw Main Statistical Office ( Główny Urząd Statystyczny , GUS) and was entrusted with the preparation of the first Polish census of 1921 in a leading position. In 1921 he left this institution and in 1922 became professor of economic history , economic policy and statistics at the Warsaw Free University ( Wolna Wszechnica Polska ). As a member of the Communist Workers' Party of Poland ( Komunistyczna Partia Robotnicza Polski , KPRP) since 1920, he again emerged politically. Among other things, he worked after 1921 as chairman of a communist-dominated people 's university ( Uniwersytet Ludowy ). In 1924, Grosmann was temporarily imprisoned in connection with his political activities for reasons that have not yet been clarified. After his release from prison in 1925, he left Poland before Piłsudski's coup in May 1926.

He moved to Frankfurt am Main in November 1925 and worked at the Institute for Social Research under its first director, Grünberg. In addition to Friedrich Pollock , Grossmann was from now on one of two main assistants at the institute. In 1927 he also received the Venia legendi for economics at the University of Frankfurt . Topic of the public inaugural lecture: Oresmius and Copernicus as monetary theorists. (A contribution to the price revolution of the 14th and 16th centuries) . In 1930 he was appointed as a non-official extraordinary professor there. In the same year the International Agricultural Institute in Moscow made him an honorary member for its main work. With Hitler's appointment as Chancellor , Grossmann's probably most productive academic period was interrupted.

On February 25, 1933, two days before the Reichstag fire , he fled to Paris . In 1936 he emigrated to London and in 1937/38 to New York . Grossmann remained an employee of the institute until the end of 1948, which had been headed by Max Horkheimer since 1931 and which operated under the name Institute of Social Research during the US emigration . There, however, his work met with increasing criticism, so that there was no longer any question of collaboration in the true sense of the word. The reasons for this were personal and theoretical conflicts with Friedrich Pollock as well as the anti- positivist turn in the general theoretical orientation of the institute under Horkheimer's directorate . In addition, there were political tensions: at the latest since the German attack on the Soviet Union in June 1941, he had given up his critical attitude towards Comintern politics since 1933 - a turn that the inner circle around Horkheimer was not ready to understand.

Grossmann felt increasingly politically uncomfortable and threatened in the USA after the end of the war and at the beginning of the McCarthy era . Therefore, in the spring of 1949, he moved to the Soviet Occupied Zone (SBZ) in Germany to take up a professorship for political economy at the University of Leipzig with the research assignment “The future prospects of the industrialization of European agricultural countries”. Although Grossmann was already seriously ill, he still gave lectures, especially on the history of the labor movement and the history of economic systems. In June 1949 he became a member of the SED . However, it could no longer develop a greater effect. A manuscript with essays from the 1930s and 1940s that was submitted to East Berlin's Dietz Verlag for publication remained unprinted. In 1950 he died in Leipzig after a long illness .

theory

starting point

The reason for Grossmann's investigation was a number scheme by the Social Democrat Otto Bauer . Bauer wanted to show that with full employment the rate of profit does fall , as Karl Marx claims, but that this does not have to lead to a collapse of capitalism because all sizes are increasing absolutely constantly, even if perhaps with a decreasing rate of growth. So the workers get more and more, the capitalists can consume more and more, more and more can be invested. The rate of profit is falling, but the mass of profit is constantly increasing. Bauer draws the conclusion from this that capitalism must be fought morally. Only when people no longer want capitalism can it be dealt with. There are no economic constraints that could drive capitalism into “collapse”.

Bauer, however, had only calculated his numbering scheme for four years. Grossmann continued to calculate and was able to show that in the 35th year of Bauer's scheme, the increase in the mass of surplus value was no longer sufficient to maintain the conditions of the accumulation scheme. The growth model therefore contained a point of collapse. Grossmann generalized this knowledge in an arithmetically written growth model, on the basis of which the collapse could be calculated.

Model of the “collapse” at Grossmann

Grossmann assumes a production for the following demand :

• Consumption of workers
• Investments by the capitalists
• Consumption of the capitalists.

Grossmann takes over from Marx the assumption that the value composition of capital tends to increase. Production for the

• Investments by the capitalists

grows faster than the production for the

• Consumption of workers.

In this way the capitalists can achieve a greater increase in production than if they expanded the demand for labor and investment in lockstep. The demand for capital goods therefore grows faster than production as a whole, which is possible as long as the demand for consumer goods for the capitalists grows less to compensate.

The collapse threatens when finally all production is used on the one hand for the consumption of the workers and on the other hand for the investments of the capitalists. Investments can then no longer be expanded faster than production as a whole. A displacement fight begins among the capitalists and a fight against the workers for the division of the product. Individual capitalists can continue to rapidly expand their investments by forcing others out of the investment market. They can then no longer make the investments required in the competition to the required extent, they fall behind technologically and are forced out of the market .

On the other hand, an attempt can be made to lower wages. The surplus value thus increasing for the capitalists can be used to continue to expand investments to the required extent. However, wages cannot be lowered at will. If wage expenditure is reduced by hiring fewer workers, unemployment will result. In addition, there is then a lack of workers to service the capital stock (= accumulated investments). On the one hand workers are unemployed, on the other hand capital lies fallow. Marx describes this paradox in the fifteenth chapter of Volume III of Capital .

Grossmann then goes on to say that this displacement struggle crosses national borders, so that imperialist tendencies with war arise. The idle capital also appears in the form of idle financial capital facing an " investment crisis " as is sometimes said nowadays. In the face of the "collapse" there are no longer any profitable investment opportunities. The result is “asset inflation”, which is also a newer term. H. paradoxically, the price of stocks, real estate, land, etc. keeps going up even though the economy is stagnating. When profitability generally falls, the few remaining profit sources are always worth more, hence the speculative bubbles in the financial markets.

Grossmann's book was published in 1929, shortly before the Great Depression . Despite this at first glance impressive confirmation, it met with criticism from both Marxist and non-Marxist sides from the start. However, at the secret conference of the Friedrich List Society in September 1931 , Rudolf Hilferding argued against an active economic policy (against the “ Lautenbach Plan”) in the spirit of Grossmann .

Grossmann presents his model in his main work also expressed in mathematical formulas. The model is reproduced in the following based on Grossmann's text:

"The logical and mathematical justification of the law of collapse."

In addition to an "arithmetic and logical argumentation", Grossmann also gives a general presentation for "mathematicians" that is free of the randomness of a specific arithmetic example scheme:

Meaning of the symbols

c = constant capital . Initial value = c _o . Value after j years = c _j
v = variable capital . Initial value = v _o . Value after j years = v _j
m = rate of surplus value as a percentage of v
a _c = rate of accumulation of constant capital c
a _v = rate of accumulation of variable capital v
k = share of consumption of capitalists
M = mass of surplus value =

${\displaystyle k+{\frac {a_{c}\cdot c}{100}}+{\frac {a_{v}\cdot v}{100}}}$

Ω = organic composition of capital , or c : v
(Grossmann means here the initial value of the organic composition of capital c _o : v _o )
j = number of years

Further be

${\displaystyle r=1+{\frac {a_{c}}{100}}}$

and

${\displaystyle s=1+{\frac {a_{v}}{100}}}$

The formula

After j years the constant capital c below the assumed rate of accumulation a _{c has} the amount

${\displaystyle c_{j}=c_{o}\cdot r^{j}}$

Under the assumed rate of accumulation a _v , the variable capital v has the value:

${\displaystyle v_{j}=v_{o}\cdot s^{j}}$

reached.

In the following year ( j + 1) the usual accumulation is continued according to the formula:

${\displaystyle M=k+{\frac {c_{o}\cdot r^{j}\cdot a_{c}}{100}}+{\frac {v_{o}\cdot s^{j}\cdot a_{v}}{100}}={\frac {m\cdot v_{o}\cdot s^{j}}{100}}}$

It follows from this:

${\displaystyle k={\frac {v_{o}\cdot s^{j}(m-a_{v})}{100}}-{\frac {c_{o}\cdot r^{j}\cdot a_{c}}{100}}}$

For k to be greater than 0, it must be:

${\displaystyle {\frac {v_{o}\cdot s^{j}(m-a_{v})}{100}}>{\frac {c_{o}\cdot r^{j}\cdot a_{c}}{100}}}$

It is k = 0 for a year n if

${\displaystyle {\frac {v_{o}\cdot s^{n}(m-a_{v})}{100}}={\frac {c_{o}\cdot r^{n}\cdot a_{c}}{100}}}$

The point in time for the absolute crisis is there, where the consumptive part of the entrepreneur disappears completely after it had already shrunk long before. That means:

${\displaystyle \left({\frac {r}{s}}\right)^{n}={\frac {m-a_{v}}{\Omega \cdot a_{c}}}}$

It follows:

${\displaystyle n={\frac {\log \left({\frac {m-a_{v}}{\Omega \cdot a_{c}}}\right)}{\log \left({\frac {100+a_{c}}{100+a_{v}}}\right)}}}$

This is a real number as long as m> a _v

But this premise is the basis of the whole approach. Starting from the point in time n , the mass of added value M is not sufficient to ensure the utilization of c and v under the conditions made up to now.

Discussion of the formula

The number of years n until an absolute crisis thus depends on 4 conditions:

1. From the level (from the initial value) of the organic composition Ω . The larger this, the smaller the number of years. The crisis is accelerating.
2. On the rate of accumulation of constant capital a _c , which acts in the same sense as the organic composition of capital Ω .
3. From the rate of accumulation of variable capital a _v , which can have both an aggravating and a weakening effect, the effect of which, as can be seen from the formula, is therefore ambivalent.
4. From the level of the surplus value rate m , which has a weakening effect, d. This means that the larger m , the larger the number of years n , which weakens the tendency to collapse.

The accumulation process can continue if the previous conditions are changed, namely:

1. either that the accumulation rate a _{c is} reduced, that is to say that the rate of accumulation is slowed down, or
2. that the constant capital is devalued, which in turn also reduces the rate of accumulation a _c ;
3. that labor is devalued, that is, wages are depressed, hence the rate of accumulation of variable capital a _{v is} smaller, and therefore the rate of surplus value m is greater;
4. finite through the export of capital, which in turn reduces the rate of accumulation a _c .

From these four main cases all other variations can be deduced which occur in empirical reality and which give the capitalist mode of production a certain elasticity.

In the remainder of the book, Grossmann examines these “elasticities” or counteracting tendencies. Here are mentioned:

1. Wars destroy capital values.
2. The ' reserve army ' ( unemployment ) is on the rise, putting pressure on wages downwards.
3. imperialism

A criticism

Instead of entrepreneurial consumption ...

Grossmann begins his calculation with the fact that the added value created in a period is divided into

• additional variable capital , for additional employment in the next period
• additional constant capital and
• Consumer spending of the capitalists.

The surplus value is used to employ more workers from period to period, so part of the surplus value is used to increase the expenditure for the variable capital v. Another part of the surplus value is used to increase the expenditure on the constant capital c, and the remaining part of the surplus value is used to finance the consumer spending of the capitalists.

Because of the increasing composition of capital , expenditure on constant capital increases faster than expenditure on variable capital and also than the total new value. This means that the share of consumer spending of the capitalists in the new value decreases, although it increases in absolute terms at the beginning. Ultimately, however, a point will be reached when consumer spending also begins to decline in absolute terms (first point of crisis). After all, consumer spending is approaching zero. Now spending on constant capital could only be increased at the expense of variable capital, but that means at the expense of employment. Even if firms still satisfied their constant capital investment plans, they would not have enough capital left to pay for the required employment. The result would be unemployment on the one hand and idle capital investments on the other, as Marx described in Chapter III of Volume III of Das Kapital .

... expansion investments

Critics are annoyed by the category “entrepreneurial consumption”. In Marxist models, entrepreneurial consumption is often “ abstracted ”. The reason is that in comparison to the huge income of the capitalists, their certainly considerable expenditures for luxury consumption are negligible, so that they can be neglected when describing the economy, especially since competition forces the capitalists to primarily increase their income invest, not consume.

The model can be modified, however, by assuming that the excess surplus value does not serve to finance consumption, but to use additional employment. Part of the surplus value then serves to invest more per worker in constant capital in the next period, the remaining part is used to employ more workers. Because of the increasing composition of capital , more and more is invested in constant capital per worker and less and less in additional employment.

Fonts (selection)

• Proletariat wobec kwestii żydowskiej. Z powodu niedyskutowanej dyskusji w 'Krytyce'. [ The proletariat in the face of the Jewish question. On the occasion of the non-conducted discussion in the 'Critique'. ] Kraków: Drukarni Wł. Teodorczuka, 1905. [ Polish. ]
• The bundizm in Galitsia. Kraków: Ferlag der Sotsial-democrat, 1907. [ Yidd. ]
• Austria's trade policy with regard to Galicia in the reform period 1772-1790. Vienna: C. Konegen, 1914. (Studies on social, economic and administrative history. Ed. By Karl Grünberg. X. Heft.)
• Teorja kryzysów gospodarczych. (The Theory of Economic Crises). - Meeting of June 16, 1919. In: Bulletin International de l'Académie Polonaise des Sciences et des Lettres. Class of Philology. Classe d'Histoire et de Philosophy. II. Game. Les Années 1919, 1920. Cracovie: Impr. De l'Univ., 1925. pp. 285-290. [ Engl. ]
• Simonde de Sismondi et ses théories économiques. (Une nouvelle interprétation de sa pensée). Varsaviae: Univ. Lib. Pol., 1924. (Bibliotheca Universitatis Liberae Polonae. A. 1924. Fasc. 11.)
• The law of accumulation and collapse of the capitalist system. (At the same time a crisis theory). Leipzig: CL Hirschfeld, 1929. (Writings of the Institute for Social Research at the University of Frankfurt a. M. Vol. I. Ed. By Carl Grünberg.) [ Reprint: Frankfurt a. M .: New Critique Verlag, 1967 and 1970. ISBN 3-8015-0065-9 ]
• Gold production in the reproduction scheme of Marx and Rosa Luxemburg. In: Festschrift for Carl Grünberg. For his 70th birthday, Leipzig 1932, pp. 152–184.
• The social foundations of mechanistic philosophy and manufacture. In: Journal for Social Research. Vol. IV. H. 2. Paris: F. Alcan, 1935. pp. 161-231.
• W. Playfair, The Earliest Theorist of Capitalist Development. In: The Economic History Review. Published for the Economic History Society. Vol. XVIII. No. 1/2. [ First Series. ] London: A. & C. Black, 1948. pp. 65-83.
• Marx, classical economics and the problem of dynamics. With an afterword by Paul Mattick . Frankfurt a. M., Vienna: Europäische Verlagsanstalt / Europa Verlag, 1969. [ Original: hectographed typescript. New York: Institute for Social Research, 1941. ]
• Essays on crisis theory. Frankfurt a. M .: Verlag Neue Critique, 1971. ISBN 3-8015-0071-3 [ Reprint of articles from 1928, 1929 and 1932 and a translation from the English by Joschka Fischer of an article from 1943. ]
• [together with Carl Grünberg:] Anarchism, Bolshevism, Socialism. Articles from the 'Dictionary of Economics'. Edited by Claudio Pozzoli. Frankfurt a. M .: Europäische Verlagsanstalt, 1971. [ Reprint of dictionary articles from the years 1931-1933. ]
• Writings from the estate. Edited with further materials and documents. and edit by Jürgen Scheele. Tectum Verlag, Baden-Baden 2017, ISBN 978-3-8288-3892-5 .

literature

• Rick Kuhn: Henryk Grossman and the Recovery of Marxism. University of Illinois, Urbana IL et al. 2007, ISBN 978-0-252-07352-6 .
• Jürgen Scheele: Between a collapse forecast and a verdict of positivism. Studies on the political and intellectual biography of Henryk Grossmann (1881–1950). Peter Lang, Frankfurt am Main et al. 1999, ISBN 3-631-35153-4 ( European university publications . Series 31: Political Science 398), (At the same time: Marburg, Univ., Diss., 1997). ( Eprint ).
• Walter Braeuer :  Grossmann, Henryk. In: New German Biography (NDB). Volume 7, Duncker & Humblot, Berlin 1966, ISBN 3-428-00188-5 , p. 158 f. ( Digitized version ).
• Michael Krüger: Grossmann, Henryk. In: Harald Hagemann , Claus-Dieter Krohn (Hrsg.): Biographical manual of the German-speaking economic emigration after 1933. Volume 1: Adler – Lehmann. Saur, Munich 1999, ISBN 3-598-11284-X , pp. 199-200.
• Werner Röder; Herbert A. Strauss (Ed.): International Biographical Dictionary of Central European Emigrés 1933-1945 . Volume 2.1. Munich: Saur, 1983 ISBN 3-598-10089-2 , p. 422

Web links

• Literature by and about Henryk Grossmann in the catalog of the German National Library
• Henryk Grossmann in the Marxists Internet Archive in English and German
• Henryk Grossmann in the professorial catalog of the University of Leipzig
• Rick Kuhn: “Capital development” Socialist Review 245, October 2000.
• Rick Kuhn: “Economic crisis and socialist revolution: Henryk Grossman's Law of accumulation, its first critics and his responses” preprint edition 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.
• Rick Kuhn: “Henryk Grossman and the recovery of Marxism” (33 pages pdf) preprint edition of an article in Historical Materialism 13 (3), 2005.

Individual evidence

1. ↑ Knut Borchardt, Hans Otto Schötz (ed.): Economic policy in the crisis. The (secret) conference of the Friedrich List Society in September 1931 on the possibilities and consequences of credit expansion. Baden-Baden 1991.