[Marxism] Crisis of Overproduction of commodities and capital

["Anthony Boynton" <anthony.boynton@xxxxxxxxx>]

Jon Flanders posted a link to Ernest Mandel´s "The Basic Theories of Karl
Marx" Chapter 9, on "Marx's Theory of Crises". This has to be one of the
worst things Mandel ever wrote. He belittles the importance of the
difference between crises of overproduction of commodities, and crises of
overproduction of capital, as being essentially meaningless and irrelevant.
(The passages are quoted below, along with the URL for the whole article.)



Mandel correctly notes that there are different forms of capital. Since
commodities are on form of capital, he posits that a crisis of
overproduction of commodities is a crisis of overproduction of capital, so
why bother trying to figure anything else out!



Here is why.



A crisis of overproduction can occur in any particular sector of capitalism,
and within a national or regional market. When there is a competitive
market, not a monopoly or oligopolistic market, individual producers can not
tell in advance how big of a market share they can win. All try to introduce
economies of scale and scope if they have the financial capital available to
invest and the creativeness to steal or invent new techniques, in the
process the scale of production increases, and the total production exceeds
the total demand.



You can have a crisis of overproduction of garlic in Gilroy, or shoes in
Medellin.



When you approach a crisis of overproduction of goods or services (e.g.
garlic or accounting), the rate of profit drops in that sector. Capital
seeks higher profits, especially where it can achieve either monopoly
profits or rents in addition to normal profits. Investment moves to sectors
other than garlic or accounting services.



A generalized crisis of overproduction occurs when markets in all of the
main productive sectors become saturated. At this point you also develop a
crisis of overproduction of finance capital.



For the capitalist class there are several potential solutions: A) enlarge
markets, historically by exporting and investing in other countries. B)
create new markets, historically by developing new technology. C) enlarge
markets by artificially expanding demand, especially through the extension
of credit, military production, and other government subsidies (the New
Deal). D. Regulate markets, including production and prices (also the New
Deal, especially during WWII.)



Driving down the cost of production, basically speeding up workers and
cutting wages and benefits, does not alleviate a crisis of overproduction.
In fact it aggravates it by causing the market for consumer goods to shrink.
It can however, maintain profitability for businesses as profits begin to
fall in the early stages of a crisis of overproduction.



For individual capitalists there are other measures that can be taken:
trying to drive your capitalist competitors into bankruptcy, for one.



And, if none of the above measures work, the only other solution for
capitalism is to resolve the crisis of overproduction of capital by
destroying capital. This means more than destroying fictitious capital and
values through market crashes. It means closing factories, destroying
"excess" commodities (also a New Deal policy), and if the crisis is bad
enough destroying the factories and workers in a war. This was the solution
resorted to between 1914 and 1945.



More later, Anthony



"The question of determining whether according to Marx, a crisis of
overproduction is first of all a crisis of overproduction of commodities or
a crisis of overproduction of capital is really meaningless in the framework
of Marx's economic analysis. The mass of commodities is but one specific
form of capital, commodity capital. Under capitalism, which is generalized
commodity production, no overproduction is possible which is not
simultaneously overproduction of commodities and overproduction of capital
(overaccumulation).



"Likewise, the question to know whether the crisis 'centres' on the sphere
of production or the sphere of circulation is largely meaningless. The
crisis is a disturbance (interruption) of the process of enlarged
reproduction; and according to Marx, the process of reproduction is
precisely a (contradictory) unity of production and circulation. For
capitalists, both individually (as separate firms) and as the sum total of
firms it is irrelevant whether more surplus-value has actually been produced
in the process of production, if that surplus-value cannot be totally
realised in the process of circulation. Contrary to many economists,
academic and marxist alike, Marx explicitly rejected any Say-like illusion
that production more or less automatically finds is own market."



http://www.internationalviewpoint.org/spip.php?article289
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