Marx argues that this is wrong, because farmers, and every other capitalist makes the assumption that the market will continue to expand, and so they will need to expand their own production to meet it. Competition will drive them to do that, because if they do not their competitors will, and those competitors will then grab a larger market share, and more profits. Its not a higher rate of profit which drives that accumulation, but the increased demand, and along with it, the potential to obtain a larger mass of profit, combined with the risk of losing market share.
“Finally, the extension of cultivation to larger areas ... does not by any means presuppose a previous rise in grain prices any more than the preceding annual expansion of cotton spinning, for instance, requires a constant rise in yarn prices. Although considerable rise or fall in market-prices affects the volume of production, regardless of it there is in agriculture (just as in all other capitalistically operated lines of production) nevertheless a continuous relative over-production, in itself identical with accumulation, even at those average prices whose level has neither a retarding nor exceptionally stimulating effect on production... The demand increases constantly, and, in anticipation of this new capital is continually invested in new land, although this varies with the circumstances for different agricultural products. It is the formation of new capitals which in itself brings this about. But so far as the individual capitalist is concerned, he measures the volume of his production by that of his available capital, to the extent that he can still control it himself. His aim is to capture as big a portion as possible of the market. Should there be any over-production, he will not take the blame upon himself, but places it upon his competitors. The individual capitalist may expand his production by appropriating a larger aliquot share of the existing market or by expanding the market itself.” (Capital III, Chapter 39, p 672-3)
Marx has demonstrated that the more producers can expand production the more efficient they become. In orthodox economics this is called the economies of scale. Each individual producer wants to produce on the largest scale they can, therefore, because this reduces their costs, makes them more competitive, and able then to grab more market share, and/or make greater profits than their competitors. But, this expansion of production is only possible if the market itself expands, otherwise there is overproduction, crisis, and a collapse in market prices and profits. The market cannot expand rapidly if it is constrained by advance money payments. This is where commercial credit comes in.
Think about the situation of a farmer and someone who spins, weaves, and produces clothes. The farmer would like to sell their wool. They would also like some clothes. The clothes producer, however, cannot afford to buy wool from the farmer. So, they say to the farmer, sell me your wool; it has a value of £100, which is the value of a suit of clothes, including all of my labour. I will give you an IOU for £100, in exchange for the wool, and, in thirty days, I will have produced the clothes, and you can exchange the IOU for a suit of clothes.
In this situation, everyone is a winner. The farmer sells the wool, which otherwise would have been overproduced. The clothes producer finds employment, and is able to sell the suit of clothes to the farmer. The farmer gets the clothes they wanted, and the clothes producer has additional wool available to produce more clothes to exchange with others, who perhaps provide him with food, and expand their own capital.
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