Interesting exchange on overproduction (from psn-l)

["Charles Brown" <cbrown@xxxxxxxxxxxxxxxxx>]

From: "David Schanoes"  

I think what we have to look for in the "over" production is the rate of
return, the rate of profit, and the immensity of the capital to be
reproduced ever larger, ever more quickly. And the best way to do that is in
the concrete studies of the semiconductor, steel, cement, copper, etc.
industries. And then it is that critical convergence or interlocking of
overproduction and the falling rate of profit that really does it up right.
We can see exactly that convergence in the FROP in the US in 97-98 with
overproduction of these industries on a world scale, particularly in the
NICs of Asia, and Brazil, leading to the "currency" crises of Thailand,
Indonesia, South Korea, etc. which quickly became debt crises, spreading to
Brazil, Russia, Argentina, etc.

^^^^^^^
DMS, 

I appreciate your introducing a concrete example, because I must confess one
of my weaknesses is almost no use of the economic data, and I have noticed
that that is one of your strengths.

>From what you say above , it does seem to me that the "over" in
"overproduction" refers to continuing to expand production when the rate of
profit has started to fall. I trust your reportage of the figures for
'97-'98. In fact, as I discuss below ( and should have said before) , I am
not maintaining here that  "exploitation => underconsumption => unrealized
surplus value => profits fall" is Marx's whole theory. But I have to ask,
couldn't it be that the rate of profit began to fall in '97-'98 because that
was the point at which the companies couldn't sell some of what they had
produced ?

Often when this debate goes on, I mention a little article by economist Rudy
Fichtenbaum, entitled "Did Marx have a Theory of the Business Cycle" printed
in the journal _Nature, Society and Thought_ about ten or so years ago.
Sorry I don't have the cite right now; I'd have to dig up my copy. I mean
what do I know, so, of course I take my lead from the pros. Anyway,
Fictenbaum argues that Marx does have a theory of the business cycle, and
it, (surprise, surprise) involves both the FROP of Cap. Vol. III and
underconsumption related dialectically. I guess in terms of what I have been
saying here I might paraphrase it that "the ultimate cause of crises is the
limited buying power of the masses, but that only comes to bite in the form
of the FROP and the mismatch between sectors and all that as the immediate
cause of any given crisis".

Now I'll look at your reiteration below. 


From: Mike Friedman <mikedf@xxxxxxxx>


>
> David, Can you clarify this passage a bit? _____________________
>
> I'll try. Don't know if I can, though-- so here goes
>
> Marx's analysis in Capital begins with the commodity as the 
>embodiment of use value within a specific social form, exchange value. 
>On the elemental level then, capital only 'allows' consumption and 
>production in this mediated economic form. The particular commodities, 
>all commodities manifest this composed contradiction, "live it out" so 
>to speak in the markets.
>
> The mediation itself is the reflection of the organizaton of the 
>means of production as private property, as capital, and labor, labor 
>power, as wage-labor. Each, capital and wage-labor, actually exists only in
the
>organization of the other. In order to aggrandize more of labor-power,
>more surplus value, capital engages itself continuously in expulsion of 
>labor itself from the production process. This developmental process 
>not only expands the productive apparatus, but most importantly, 
>changes the relations between the two components, living and dead. The 
>surplus value extracted grows, the conversion of the surplus value into 
>profit "should," or does grow until... (until....but that's what we're 
>trying to explain). The process renews itself. More labor is expelled 
>by a greater proportion of the means of production, and as the means of 
>production are themselves commodities, their expansion is the same as 
>expansion of the markets, of commodity exchange as a whole, i.e 
>conversion of surplus labor into profit; the conversion of wage-labor 
>into capital, i.e the bourgeoisie's ownership of the means of 
>production, bourgeois property.
>
>The means of production exist only to "give up" their value through the 
>creation of commodities, thus "growth" or "reproduction" process 
>compels continuous pressure on the markets as more commodities, more 
>values, are presented for exchange. The reproduction must not only 
>yield profit, but profit in a certain relation, of a certain size, at a 
>certain speed to maintain the expansion-- BUT the proportional 
>expulsion of labor, the historical changes that relation, that ratio, 
>that RATE of profit, drives it down historically.
>
>Thus (here comes a leap) capital at its very core is a system of 
>overproduction. The expansion of the means of production actually 
>overwhelms the requirements of private property for a proper ratio of 
>profit. The depth, the expanse, the power of means of production are 
>now in conflict with the relations of production-- the separation of 
>production from the producers and so enters a period of revolution.
>
>Is that any more clear. Wouldn't mind a helping hand here Brother 
>Melvin, or anyone else who is working along these lines.
>
>dms
  
^^^^^^^
CB: Yes, I think I get that. I think I usually discuss what you are saying
as follows, briefly:

You are explaining why there is a law of a tendency of the rate of profit to
fall ( as Marx terms it in Vol. III of Cap.; though  the explanation of
organic composition of capital is in Vol.I). Because of competition,
capitalists are always trying to introduce "labor-saving" devices, more
"efficient" means of production ( from the Manifesto "the bourgeoisie are
constantly revolutonizing the instruments of production" for this very same
reason). The same number of unit commodities produced with fewer labor hours
means a capitalist makes more profit with that temporary advantage of new
technology. In Marx's terms this increases the organic composition of the
capital; the ratio of constant to variable capital increases( with "organic"
used counterintuitively here because it is not the human laborers ,who are
"organisms", but the inorganic hardware that increases in the ratio,
anyway). However, because it is variable capital, living labor, that is the
source of all surplus value, this process creates a tendency for the rate of
profit to fall. My intuitive feeling is that this is exactly your point
"that capital at its very core is a system of overproduction." Am I right
about that ?
The tendency to raise the organic composition of capital is your 

"the proportional expulsion of labor, the historical changes that relation,
that ratio, that RATE of profit, drives it down historically."  

And your
"More labor is expelled by a greater proportion of the means of production,"

When you say , "The expansion of the means of production actually 
overwhelms the requirements of private property for a proper ratio of 
Profit,"  you are pointing to the contradiction that the individual
capitalists must seek to increase the organic composition of his/er capital
to get a better profit rate than competitors, but this contradictorily,
eventually (?) drives down the profit rate when everybody catches up with
the latest means of production, because it decreases proportion and absolute
size of the source of surplus value, living labor/variable capital.

If I understand Melvin's point about the rising communist class who don't
work, that results from a long term operation and accumulation of the
increasing organic composition of capital in society as a whole.
Digitalization/robotics/bioengineering etc. allow a qualitatively new
erosion of the role of human labor in technical production such that the
proportion of living labor can get very small  ( though I am not completely
persuaded that perpetual motion machines or peopleless factories are
technically possible; and Walter Reuther's point that robots don't buy cars
seems a significant barrier to a capitalist private property regime going
but so far with driving the proportion of varible capital down).


Am I right about it ?

CB



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