Keynesians
see events like the storms as the basis of increasing economic activity.
Things like natural disasters, or better still wars, that physically
destroy large amounts of capital and wealth, mean that it has to be
replaced, people are put to work replacing what has been destroyed,
firms see demand for their products rise as this replacement is
undertaken, and as newly employed workers spend their wages. This
process raises aggregate demand in the economy, and thereby national
income (wages, profits, rents, interest and taxes). Even were this
argument correct, which it isn't, it would demonstrate only what a
ridiculous system Capitalism is that destruction is seen as
beneficial!
To see why
it is ridiculous, but also why the Keynesian argument is false,
consider our old friend Robinson Crusoe, whose economy, Marx says,
tells us everything we need to know about the Law of Value (Capital
I, Chapter 1, p 81) Robinson, instead of spending all his time
hunting animals for food, builds a stock-pen. He breeds animals for
food, thereby saving considerable time in catching them, and so
massively reduces the time required to meet his consumption needs.
The time saved then forms part of his surplus labour-time, available
to be used as he chooses. He can either use this time to increase
his consumption further, as leisure time, or else to invest in
additional productive-capacity so as to increase his future
consumption. The proportional relation of this surplus-labour-time
to the labour-time he has to expend to replace his means of
production, and meet his consumption needs, represents the equivalent
of his rate of profit, it represents his potential to expand his
economy.
If a storm
comes along and destroys his stock-pen, would Robinson see this as
something fortuitous, because it gives him the opportunity to engage
in work he otherwise would not have needed to undertake? Of course,
not! In fact, the time he now needs to spend simply rebuilding his
stock-pen, rounding up the escaped animals etc., may require him to
use all of his surplus labour-time just for that purpose, rather than
be able to use it, for his enjoyment or to expand his productive
capacity. In other words, rather than increasing his wages
(consumption) or his profits (his surplus labour-time) not only may
he find that his profits – and therefore rate of profit – sinks
to zero, but the time he has to spend simply replacing his means of
production, might even eat into the time he would previously have set
aside to meet his consumption needs!
As Marx
points out, these underlying value relations, determined by the Law
of Value, do not change just because the mode of production changes,
only the form of their manifestation changes. These underlying value
relations, for example, explain why such tragedies severely affect
those economies that already have little in the way of capital
compared to those which have huge amounts of it. As Marx makes
clear, it is not the physical destruction of capital, which is
beneficial, and raises the rate of profit, as the Keynesians believe,
but the destruction of capital-value. In other words, for the rate
of profit to rise, and the potential for accumulation, thereby to
rise, the physical capital must continue to exist – it is after all
needed to produce the commodities, in which the surplus value is
embodied – but its value must be reduced by the process of “moral
depreciation”, or by simply being written down, as one
capitalist goes bust, and their business is taken over by another.
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