Sunday, 29 March 2015

Capital II, Chapter 21 - Part 18

“We know that the actual, and therefore also the additional, variable capital consists of labour-power. It is not capitalist I who buys from II a supply of necessities of life or accumulates them for the additional labour-power to be employed by him, as the slaveholder had to do. It is the labourers themselves who trade with II. But this does not prevent the articles of consumption of his additional labour-power from being viewed by the capitalist as only so many means of production and maintenance of his eventual additional labour-power, hence as the bodily form of his variable capital.” (p 519)

Is this true? I don't think so. Other than where the capitalist operates some form of Truck System, I don't think any individual capitalist has any thought or consideration of where or how their workers obtain the commodities required for their subsistence. The capitalist pays the wages and leaves it to the workers to spend them as best they might to obtain those necessities. The capitalist assumes that others of their ilk will seize an opportunity to realise their profits by supplying the workers' needs. 

The only sense in which capital has some concern in that regard is two-fold. Firstly, in the sense that Marx describes, i.e. of a concern that workers might use their wages on consumption that does not enhance or even reproduce their labour-power, i.e. a concern for temperance, and secondly, the other side of that coin, that workers do spend their wages on those commodities necessary to reproduce and enhance their labour-power. So, for example, Marx says,

“By the by. The capitalist, as well as his press, is often dissatisfied with the way in which the labour-power spends its money and with the commodities II in which it realises this money. On such occasions he philosophises, babbles of culture, and dabbles in philanthropical talk, for instance after the manner of Mr. Drummond, the Secretary of the British Embassy in Washington. According to him, The Nation (a journal) carried last October 1879, an interesting article, which contained among other things the following passages: 

'The working-people have not kept up in culture with the growth of invention, and they have had things showered on them which they do not know how to use, and thus make no market for.” [Every capitalist naturally wants the labourer to buy his commodities.] “There is no reason why the working man should not desire as many comforts as the minister, lawyer, and doctor, who is earning the same amount as himself.” [This class of lawyers, ministers and doctors have indeed to be satisfied with the mere desire of many comforts!] “He does not do so, however. The problem remains, how to raise him as a consumer by rational and healthful processes, not an easy one, as his ambition does not go beyond a diminution of his hours of labour, the demagogues rather inciting him to this than to raising his condition by the improvement of his mental and moral powers.' (Reports of H. M.’s Secretaries of Embassy and Legation on the Manufactures, Commerce, etc., of the Countries in which they reside. London, 1879, p. 404.)” (p 519-20) 

This is one reason that capital establishes the welfare state. It thereby ensures that a necessary minimum portion of workers' wages are set aside, to ensure that workers are reproduced to a minimum standard, to meet its increasing requirement for an educated and skilled labour-power, and that those workers are maintained, so as to be able to work consistently, and for a long period of years, without losses due to sickness. In this respect, capital treats its labour-power like any of its other machines, requiring it to be of the highest quality and the greatest reliability, whilst produced by the most efficient means. It develops the welfare state as the most efficient means of achieving that on a mass scale, and under its direct control and regulation.

Saturday, 28 March 2015

Liberal-Tory Lies – Labour Wrecked Growth and We Restored It

In the previous post, Liberal-Tory Lies - The Deficit and Labour Profligacy, I demonstrated that, at the heart of the Liberal-Tory narrative, was the lie that the coalition government had been necessary because of the dire state of the economy.

Indeed, the Liberals always justify their merger with the Tories on the basis that the country was facing some kind of almost wartime national crisis that had to be dealt with, rather than the truth, which is that they got the whiff of Ministerial leather, and their natural ideological affinity with the Tories led them to snap up the chance of government posts, they thought they would never achieve.

I set out that the narrative, they present, is based on the idea that the financial crisis was the result of Labour profligacy, in running up huge government debts, and this led to the seriousness of the economic crisis they had to deal with. But, I illustrated that this central argument, about Labour profligacy and debt, was a lie. The average deficit to GDP ratio under Labour had been half what it had been under Thatcher and Major, and significantly less than it has been under the Liberal-Tories. In fact, the debt to GDP ratio under the Liberal-Tories has soared, as they failed to get rid of the deficit as they promised, and in the meantime they have cratered the economy.

In this second post, I want to look at the second lie the Liberal-Tories tell, as part of this narrative, therefore, that Labour had somehow wrecked the economy, that it was on its knees, and that the Liberal-Tories have rescued it.

A look at the period of Labour Government, from 1997 up to the financial crisis of 2008, shows that the economy was far from being wrecked, or on its knees. Not even the Liberal-Tories try to pretend otherwise. Rather, they claim that this growth was based upon Labour profligacy, an encouragement of private debt, and that it was this that led to the financial meltdown, and the subsequent economic crisis. Like every good lie, there are elements of truth within it.

Labour could not claim any great credit for the growth in the UK economy for the period after it came in to office, and prior to the crash of 2008. In fact, as Marx points out in relation to bank legislation, although governments can certainly adopt policies that can cause economic crises, they cannot pursue policies that actually create economic growth out of thin air. The upturn that arose after 1999, was a consequence of the onset of the new global long wave boom. 

The weakness of its effect in the US and UK, was a consequence of the government economic policies that had been pursued in those economies since the late 1980's, which boosted profits by depressing wages, and which borrowed from future demand, by promoting an explosion of private debt, to compensate for the lower wages. Those same policies, by promoting a low wage/high debt economy, also thereby kept capital locked up in low value, inefficient, low productivity employment that relied on the continuation of those low wages, and increasing levels of state support, in the form of various in-work benefits.

In a sense, Labour also could not be blamed for a continuation of those policies, because what had been built up over the previous decade, could not be easily reversed overnight, and as the onset of the long wave boom brought the prospect of a period of more sustained growth, the large profits and success of the UK Financial Services industry, which was itself also a consequence of those policies, appeared to be a cash cow that could be used to finance a repair of the nation's infrastructure, which had been largely left to rot under the Tories. In fact, the Liberal-Tory claims, about Labour not fixing the roof whilst the sun was shining, are rather laughable, because in 18 years of Tory government after 1979, it was they that sold off the family silver, that not only left the schools and hospitals to suffer from leaking roofs, but also who allowed the roads, the railways and everything else to fall into disrepair. One reason Labour, after 1997, had to spend more, was to make up for this blatant neglect by the Tories, who had acted like Rachmanite landlords in their curating of the economy.

It was, therefore, true that the economy had high levels of debt, but this debt was private debt, which had mostly been created as a consequence of the policies of Thatcher during the 1980's, which saw the real explosion in property prices, and in the prices of fictitious capital such as shares and bonds, and other financial assets derived from them. A similar thing happened in the US under Thatcher's co-thinker Reagan, as both brought about a deregulation of credit and finance, in the late 1980's, that stoked these bubbles.

In both the UK and US, those policies adopted under Thatcher and Reagan from the late 1980's, locked the economy into a straitjacket that required a continuation of these policies, because any attempt to tighten monetary policy led to financial crashes, a bursting of the property and other bubbles, and consequently of the basis of the private debt, which underlay both the financial stability of the banks, and a large part of the consumer demand element of aggregate demand. At the same time, these very policies raised the value of labour-power.

The property bubble, meant that workers needed higher wages to be able to buy houses, or to be able to afford ever rising rents. That again was another reason that government spending on in-work benefits like Housing Benefit had to rise inexorably, as the growing proportion of workers employed by low paying employers, would otherwise have found it impossible to survive.

At the same time, the astronomic rise in the prices of shares and bonds, meant that workers' pension contributions bought fewer and fewer of them, whilst the same process caused the yields on these financial assets to drop to near zero, so they found it increasingly difficult to finance pension payments from the funds. That is the real basis of the pension black holes that have developed.

In fact, if the hyper inflation of property prices, and of the cost of financing pensions was taken into account, it would be seen that the real drop in worker's real wages since the late 1980's has been far greater than the official data suggests. But, as I've set out  elsewhere, another consequence of this is that, potential money-capital that could be used for productive investment itself, tends to get drawn instead into speculation in property, and into fictitious capital, because so long as these asset classes appear to be underpinned by the state, they are a one way bet, whereby the capital gains to be obtained, far outweigh the potential rate of profit that might be made from investment in real capital.

The problem that both the UK and US have with growth – besides the fact that both are relatively declining economies as new more dynamic economies in Asia, Latin America and Africa come to challenge them – is that the legacy of the policies of Thatcher and Reagan has been this development of a casino economy, based on short term speculative gains. Its no wonder so many people consider that their main hope of improving their position depends on winning the lottery, becoming a celebrity, or getting a big compensation payment. In fact, a large part of the growth in the economy over the last couple of years has come from an increase in consumption due to the payment of several billion pounds of compensation payments for PPI misselling.

Far from the Liberal-Tories having rescued the economy, and turned it round, the fact is that the growth in the economy that has only now arisen, in the last year or so, after they had been in office for three years, is largely down to these kinds of factors. The growth in the economy has been due to the underlying influence of the Long Wave global boom, but whereas Labour's fiscally stimulative stance worked with that trend, the Liberal-Tory stance of austerity, has worked against it! The reality is that, the UK economy, like all others suffered a severe shock as a result of the financial meltdown of 2008, but as a result of the implementation of additional fiscal stimulus, most of those economies enjoyed the typical sharp “V” shaped recovery, as the graph illustrates.

What characterises the difference between those economies like the UK, and parts of Europe that inflicted austerity on themselves, and the US, and other economies such as China, is that the US continued to rebound from the shock – and would have rebounded even faster had it not been for the attempts of conservatives there to frustrate the fiscal stimulus and impose austerity – whereas, the UK and Europe, stopped rebounding and went into a period of self-inflicted stagnation.

The Liberal-Tory claims that the economy was wrecked before they came to office, and that they have repaired it, are as much a lie as their claim that Labour had been profligate, and thereby caused the economic crisis. A simple look at the figures for growth demonstrate the extent of the lie.

The graph for 2000-2015 demonstrates the effect of the financial meltdown in causing the economic crisis, but it also shows the sharp rebound from it, during 2009. By the end of 2009, the economy was already once again experiencing positive growth; by the beginning of 2010 the economy was growing again at around 1%, or about its average rate over the previous 20 years. Far from the economy being wrecked at the time the Liberal-Tories came to office, it had returned to growth, and the graph shows that it was, in fact, the Liberal-Tories themselves who drove it back into recession.

Having peaked at 1% growth in the second quarter of 2010, the Liberal-Tory narrative, of disaster and austerity, already sent the economy into sharp reverse, even before their first budget in June 2010. The growth rate dropped by 40% in the third quarter to just 0.6%, and by the final quarter of 2010, they had sent the economy into such a nosedive that growth disappeared altogether!

In the following year, they did little better. Its only on the basis of the revised calculation of GDP that includes the earnings from prostitution and drug dealing that any growth whatsoever is now indicated. At the time, on the basis of the previous calculation of GDP, the economy flat lined, and even entered a double and then a triple dip recession. Yet even on the basis of the current method of calculation, the Liberal-Tories failed to achieve the level of growth they inherited from Labour.

As opposed to that 1% growth rate, they returned figures of just 0.5%, in the first quarter of 2011, followed by 0.2%, then 0.7%, which then collapsed again to zero at the end of 2011, as the new three year cycle set in. In 2012, they did no better. In the first quarter, growth came in at a microscopic 0.1%, followed by a 0.2% drop in the second quarter, a 0.8% surge in the third quarter, that was probably a result of increased consumer spending, from the effects of PPI compensation payments, and other temporary factors, was followed by a collapse again to record a 0.3% drop in GDP in the fourth quarter of 2012.

Far from having rescued the British economy from economic stagnation and collapse under Labour, therefore, they collapsed the growing economy they inherited from Labour. The Liberal-Tory policy of austerity brought the growth created under Labour to a halt, and sent it into a period of decline and stagnation. At the end of 2012, the economy benefited from the onset of the upswing in the next three year cycle. Yet, despite that, the Liberal-Tories have failed to achieve a level of growth equal to that they inherited, in any subsequent quarter.

Compared to the 1% growth rate they inherited from Labour in the second quarter of 2010, the best they have been able to achieve in any subsequent quarter has been 0.8%. The average rate under the Liberal-Tories has been just 0.41%.

But, as I pointed out, some time ago, despite all of the financial manipulation that the Liberal-Tories have implemented, with their bribes through the Help To Buy Scheme, which tries to keep the property bubble from bursting, despite all of the temporary boost provided by billions of pounds of PPI compensation payments, even this anaemic growth was set to slow down sharply, because the three year cycle was set to bring a slow down at the end of 2014, and many of those temporary factors were due to run out. Sure enough, the latest data indicates that having peaked at 0.8% in the second quarter, it dropped to 0.7% in the third quarter and to 0.5% in the final quarter, i.e. even the rather low level of growth had more or less halved by the final quarter of 2014.

The economy was growing when the Liberal-Tories took office. They undermined and reversed that growth. At no time since have they been able to achieve an equivalent level of growth, despite their frantic attempts to keep financial and property bubbles inflated. They have failed to shift the economy away from a reliance on private debt, and speculation and towards productive investment and production. Rather they have encouraged the former at the expense of the latter, and that is illustrated by the continued low levels of productivity.

The Liberal-Tories in their last Budget Speech placed great store in the fact of UK growth being higher than that of France. Yet, even the sclerotic French economy has much higher levels of productivity than the UK. The average French worker produces as much in four days as a British worker produces in five days. The Liberal-Tories contrasted the current UK growth with that of France, but failed to contrast the rather poor performance of the UK economy with that of the US, which has continued to grow since 2009, on the basis of a rejection of austerity, and an implementation of fiscal stimulus. That policy in the US has not only enabled it to grow, and to begin to create large numbers of jobs, but also to begin to cut its budget deficit, on the back of rising tax revenues.

The fact is that the US success reflects a continuation of the policies that Labour was following in 2010. The Liberal-Tories not only sent the economy into an unnecessary period of recession and stagnation, but even now the growth in the UK economy compares badly with what might have been expected had Labour continued in office after 2010.

Northern Soul Classics - The Laws Of Love - The Volcanos

Monster dancer from The Volcanos, who latterly were known as The Trammps..

Friday, 27 March 2015

Friday Night Disco - Who Is He and What Is He To You - Creative Source

A monster bit of disco originally penned by Bill Withers.

The Tom Brown Conundrum

Tom Brown or Flashman?
Yesterday, I heard a Daily Telegraph journalist, on TV, describe Ed Miliband's problem as follows:  "He looks like the kid who at school we all wanted to bully.  He's the kid who's lunch box we wanted to steal."   I'd like to say that this comment tells us more about the nature of Torygraph journalists than it does about Ed Miliband, but unfortunately, there is an element of truth in his comment, and it was not immediately challenged by any of the other journalists at the time.  The reason is that, this is precisely the way the media have presented Ed Miliband, and his problem, as they see it, in becoming Prime Minister.

I for one, never saw any kids at school, I wanted to bully, or whose lunch boxes I wanted to steal. Quite the contrary.  Perhaps that is what differentiates a socialist from a conservative.  Whenever I have read Tom Brown's Schooldays, or watched the film, I have always associated with the bravery and the values represented by the self-effacing Tom Brown, rather than the rich, arrogant, bullying Flashman.  Perhaps, that is why Jeremy Paxman's question to Cameron, last night, about his natural affinity with Jeremy Clarkson, and a string of other establishment figures, who have been found to have broken or bent the law, in one way or another, was particularly relevant.

As a society, Britain continually tells itself this story about being a peaceful, tolerant and sympathetic country.  Yet, the reality is that it has always been a country that has thrown its weight around across the globe; it is a country that spread racist and supremacist views, right out of its Public School system, across its Empire, partly to justify its enslavement of millions of people; it is a country where despite all of the anti-discrimination laws, bigotry abounds.  Whether you are black, Jewish, Muslim, a woman, gay, or disabled, or, just like Ed Miliband, portrayed as a geek, you are likely to find yourself under attack - both physical and verbal - as a result of that bigotry.

So, its no wonder that a comment from a journalist, that presents us all as a nation of Flashmans, who could never relate to Ed Miliband as a Tom Brown, as the kid who had to simply put up with such bullying, provoked no response.  Its the same establishment mindset that has no problem with the idea that any ordinary worker, who assaulted someone, should be sacked on the spot, but which rallied around their own posh boy, Jeremy Clarkson, to demand that he be let off, and instead blamed the BBC, with apparently no concern whatsoever for the poor bloke who was assaulted, and who still had to go into work with the bully who had attacked him.

This is the hypocrisy of the British establishment and its media.  It runs news stories about kids who have committed suicide because of bullying at school or on social media, and opines at what a sad state of affairs that is.  Yet, it then has spent the last few years doing exactly the same thing to Ed Miliband, and, by extension, every other person in the country who is a bit of a geek, who is the kid who reads books, and so on.  The reason Miliband shows so badly in polls, as against Cameron, is not just because incumbent Prime Ministers always have an advantage over challengers, in that respect, its because the media have continually told us that Miliband is the kid at school who always gets bullied, and Cameron is the posh, popular kid, whose friend we all want to be.  Its politics, reduced by the media to the level of Beverley Hills 90210.

Unfortunately, the TV Leaders debates only emphasise that idea that politics is all about presentation, which is why I've always thought that they are a bad idea for democracy.  In the end, Miliband did well in the programme, and it was obvious why Cameron did not want to debate with him directly, because for the last five years, he has not been able to give a straight answer to any question put to him at Prime Minister's Question Time.  The only time he has come up with anything approaching a straight answer, is in the last week, as part of an obvious political game over VAT.  But, given the Tories' record on VAT, Miliband was quite right to say nobody could believe Cameron's answer.  The Tories would be likely to get round the issue, for example, by just extending the scope of VAT to food - as they tried with the pasty tax - or to children's clothing, books and so on.

The decision Britain faces in the Election then, as presented by the media, over the Leaders' Debates, is do its people see themselves reflected in the mirror of a self-effacing Tom Brown, with basic decent values, and a commitment to fairness and principles, or do they see themselves reflected in the mirror of a rich, Public School, Posh Boy and arrogant bully like Flashman?

The Long Wave - Part 19

The slump of 1974-5, despite expansionary monetary and fiscal policies, dragged on into the recession of the early 80’s, which itself dragged on into the recession of the early 90’s. The upturn in the 90’s witnessed in the West was based actually on the cut in real wages of US workers, and the attacks on wages and conditions by Thatcher in Britain. Moreover, the upturn in those countries, during the 90’s, was based, largely, not on real economic growth, founded on increasing wealth and rising real incomes, but on the very shaky (and ultimately wealth destroying foundation) of massive amounts of debt, which led to the financial crisis of 2008, debt which was the other side of that reduction in wages.

Copper is often referred to as Dr. Copper, because of its ability
to reflect economic conditions.  Nearly all economic expansions
require an increased consumption of copper, and vice versa.  The
movement of its price tends to reflect changes in the long wave,
because it takes a long period, before the rise in demand, and price
leads to a sufficient rise in investment and production to satisfy it,
and stabilise prices.
The period between 1974-1999, was quite clearly a period of Long Wave downturn, whereas, despite the consequences, for the real economy, of the worst financial crisis in history, after 2008, the period since 1999, has followed the traditional pattern of a period of long wave boom. According to the ILO, the world labour force grew by around a third in the first decade of the century alone. The number of workers employed in industry has risen by around 30% or about 150 million workers, the number employed in services has risen by 35%. This incessant demand for labour-power pushed up nominal and real wages significantly. That was manifest in a sharp rise in global food demand, as the higher living standards of these workers was first translated into a better diet.

In 2005, Chinese consumption of Meat was 2.4 times what it was in 1990, Milk 3 times, Fruit 3.5 times, Vegetables 2.9 times, Fish 2.3 times, whilst its consumption of cereals, mostly rice, fell by 20%. The large rise in demand from China and other developing economies, was part of the reason for the spike in global food prices at the end of 2007 and beginning of 2008. Demand for food rose so sharply that shortages began to appear, which, along with the price spikes, caused riots in a number of countries in 2008. Although global food demand is higher, today, no such shortages are likely, as the higher prices have led to an expansion of supply, including the development of large scale, industrialised farming, in a number of parts of Africa, such as Angola. In fact, just as with the increased investment in oil production, a similar process has led to a global milk glut, pushing the price of a litre of milk down below the price of a litre of water!

The increasing production of China, and other rapidly growing economies, also sucked in larger and larger quantities of raw materials as well as food. Global GDP rose from around $41 trillion in 2000, to nearly $72 trillion in 2012, despite the dramatic effects, on the global economy, of the worst ever financial crisis, in 2008. Between 2002 and 2010, Global fixed capital formation rose from $7 trillion to $14 trillion. Of all the goods and services produced in Man's entire history, almost 25% have been produced in the first decade of this century alone! From 1999 on, commodity markets turned sharply upwards, as demand for all raw materials, and foodstuff increased sharply as the new Long Wave Boom began. It saw steady increases in the prices of Copper, Oil, Corn and almost every other commodity, as global demand fuelled by rising economic activity in China, and other BRIC economies, as well as the rising demand of millions of new consumers in those economies rose sharply.

The extent of the new Boom starting from 1999 can be seen in the change in the figures for world trade. Between 1980 and 1990 global trade rose from around $4,000 billion to around $6,000 billion, remaining flat until around 1994 (i.e. 50% rise in 14 years). Between 1994 and 2000 it rose from around $6,000 billion to $12,000 billion (i.e. 100% rise in 6 years). But, the sharpest rise has most notably been since 2002 where it rose from around $12,000 billion to around $28,000 billion by 2007 (133% rise in just 5 years!). (Source: WTO Thomson Datastream). The average annual rise in this last period is about 15 times what it was between 1980-1990.

In 2007, Bridgewater Associates, in its comprehensive survey found that, for the first time since 1969, not one single economy in the world was in recession.

It was not just the BRIC economies that were experiencing rapid growth, like China's growth of around 10-12%. On the back of its demand for food and raw materials, economies in Latin America were growing rapidly, and for the first time economies in Africa and Central Asia were beginning to grow rapidly too. Azerbaijan grew at around 26% as did Angola, whereas Mauritania grew at around 18%. Today, it is newly industrialising economies in Sub-Saharan Africa that are the fastest growing on the planet, with seven of the ten fastest growing economies being based there, and growth rates of around 10% p.a.

However you look at it, this means that the growth, in the rate and mass of surplus value, during this period, is undeniable, because, despite huge amounts of potential money-capital flooding into money markets, to fund speculation, the extent of new capital formation has been huge. For a Marxist, capital is congealed surplus value. In other words, we have here an almost identical situation to that described by Marx and Engels in relation to the Long Wave boom that began around 1843, and led to a similar massive growth of productive capital, and also of speculation in railway shares.

Thursday, 26 March 2015

Capital II, Chapter 21 - Part 17

The scenario, presented by Marx, appears the wrong way around. It proceeds from accumulation in Department 1 rather than Department 2. Why would Department 1 capital accumulate unless it saw the potential to meet increased demand from Department 2? It's clear why Department 2 capitalists should seek to accumulate to satisfy consumer demand, but why would a machine maker, for instance, seek to increase supply unless they saw the potential for selling their additional machines. For Department 1 to take the lead in expanding seems to be a recipe for overproduction, leading to falling prices, and business failure.

Things do not normally proceed in that manner. Usually, Department 2 demand rises, leading first to the run down of inventories, as Department 2 capitalists wait to see if the upturn is real. Then they place orders for additional material, utilising existing capacity and workers; then they take on additional workers, working shifts etc. Then they invest in additional production capacity, more machines, factories etc.
A look at what happens with materials is an illustration. The development of new mines etc. only occurs some time after demand for iron ore etc. has risen. In the meantime, existing mines are worked more intensively. That is why at the start of new periods of growth, prices for materials rise sharply as the bringing on stream of new productive capacity seriously lags consumer demand. 

During a period of boom, its quite possible accumulation in Department 1 could get ahead of Department 2, especially given long development time for new mines etc. The kind of investment currently being seen in things such as shale gas, as well as the opening up of vast new mines in Central Asia, Africa and Latin America are part of that process. That does then lead to overproduction in Department 1, or at least to stagnant or falling primary product prices, followed by long periods of under investment. The sharp fall in oil prices that began in 2014, and the fall in the prices of a range of other primary products, including food, around the same time, are an illustration of that point.

There seems no reason, why, if Department 1 capitalists have produced additional means of production, Department 2 capitalists will oblige them by buying them, unless they also experience rising demand for their products, which in itself is unlikely, other things being equal, if Department 1 capitalists have reduced their consumption of consumer goods in order to invest more in production. Its far more likely that Department 2 capitalists will take advantage of the relative over production in Department 1, to force down prices of inputs, increase their profits and realise them in a shift towards 2(b) production.

If demand for necessities in Department 2 is rising so that 2(a) prices and profits rise, then there is a reason why Department 2 capitalists shift resources to 2(a) from 2(b), but its hard to see why they would also accumulate, but without that impetus. I'll come back to this later. 

There is a simple answer, which Marx gives in his analysis of rent, in Capital III. Ricardo, made the argument set out above, to suggest that additional land can only be brought into use (so additional capital advanced, and production expanded), if prices were rising, caused by rising demand, thereby increasing the rate of profit. But, Marx points out that, every year, the population is expanding, and with the increase in population comes a natural rise in the demand for all commodities. The producers of all commodities, therefore, do not need to see some specific rise in demand that causes higher prices, which then leads them to invest in additional supply. Each capitalist expects demand for their commodities to rise every year, therefore, and as each capitalist seeks to capture their share of this increased demand, and thereby increase their profits, each builds in a natural increase in their production, and the size of their capital.

This is the basis of expanded reproduction. It does not require higher prices of commodities, or higher rates of profit to bring it about, only a steadily rising level of demand, as a result of population growth, or a natural expansion in the standard of living of the existing population. That is what Marx is describing here, as opposed the mechanism by which the business cycle operates.  Having said that, it should be fairly clear that these periods of expansion in demand are not uniform. That is the nature of the long wave cycle, and of the shorter run business cycle. During certain periods, demand may rise sharply, causing sharp rises in prices and profits, which in turn leads to noticeably increased levels of investment in those forms of production, and production of the inputs required.