But, as seen in the previous section, this problem may arise from the opposite direction. In other words, demand, at the old price of production may remain constant, or even rise, but, if the price of inputs rises sharply, the price of production rises with it, and the demand will fall, at this new price of production. The result will be an excess supply over demand at the new price of production, causing the market price to fall, or will result in the market price failing to cover the price of production. And so, Marx says, Ricardo's view is wrong, because capitalist producers, having produced, have to sell. They do not sell just to buy to consume, but for many reasons, such as having to pay for what they have already bought, in order to produce. And, in these instances, they can become forced sellers.
“Ricardo even forgets that a person may sell in order to pay, and that these forced sales play a very significant role in the crises.” (p 503)
And, it might be thought of in terms of things that have been seen more recently. If someone, in 1990, had had the foresight to see that house prices, in the UK, were going to drop 40%, having previously been hugely inflated, they might have sold their house ahead of the fall. But, having sold, and obtained the money from its sale, they would not rush to spend this money buying another house. Instead, they would rent, and then when house prices fell by 40%, the proceeds from the sale of their house would buy them a much better house. The same would be true of a builder who, having sold the houses they had just constructed, saw a slowing of the market, and then held that money back, before looking to acquire additional land on which to build.
“Everyone sells first of all in order to sell, that is to say, in order to transform commodities into money.
During the crisis, a man may be very pleased, if he has sold his commodities without immediately thinking of a purchase. On the other hand, if the value that has been realised is again to be used as capital, it must go through the process of reproduction, that is, it must be exchanged for labour and commodities. But the crisis is precisely the phase of disturbance and interruption of the process of reproduction.” (p 503)
In the case of a sharp rise in input costs, this may be the case, where there has been some natural disaster, or as with cotton, in the 1860's, could be the result of war, or some other political event. Or, it might be that the rise in the price is itself the consequence of a sharp rise in demand that cannot immediately be met. This might explain some partial crises, i.e. crises in those spheres where inputs become unavailable, or only at high prices.
Ricardo having explained the crises at the start of the 19th century in that way, then argued that, whilst such partial overproduction was possible, a generalised crisis of overproduction was not. Trying to explain this in terms of a general fall in market prices then only begs the question of what causes the fall, and if the answer is a fall in demand, the question then arises, what caused the fall in demand.
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