The possibility of crisis under earlier forms of commodity production and exchange did not result in crises of overproduction because, production did not continue if what had been produced had not been sold, and as Engels states above, the shorter the period that such overproduction is enabled to continue the less the severity of the overproduction. Of course, under industrial capitalism, if production is curtailed, because, for example, modern systems of Just in Time production and stock control, along with modern electronic point of sale systems, send instantaneous signals to merchants and producers, whose long term plans are also formed on the basis of significant information on demographics and market trends, that does not mean that a crisis also may not arise. But, such a crisis is then not a crisis of overproduction. If capital stands back from production, in the knowledge that it would not be able to sell what it might otherwise have produced, that does not constitute a crisis of overproduction, but the avoidance of such a crisis, in the way that Marx and Engels describe above. It is then not a crisis for that capital, but for all of those workers who do not then get employed. It is not then a crisis of overproduction, but of underproduction, which results in economic stagnation. But, unlike the crises of underproduction of previous societies caused by natural disasters, crop failures etc., this underproduction is entirely man made, it is underproduction caused simply by the fact that control of the means of production are in the hands of a tiny section of society, who will not put those means of production to work, unless they result in production that can be sold at a sufficient profit.
The crisis of underproduction can also metamorphose into a crisis of overproduction, for the reasons Marx sets out in Capital II, and III. If firms even fail to expand at their normal rate, the fixed capital they would normally have accumulated, and so bought from fixed capital producers, does not get bought, and so, as Marx sets out in Capital II, the under consumption of buyers of fixed capital, is simultaneously turned into an overproduction by the fixed capital producers, even though the latter have not, in fact, increased their output!
“There would be a crisis — a crisis of over-production — in spite of reproduction on an unchanging scale.”
(Capital II, Chapter 20)
He continues,
“This illustration of fixed capital, on the basis of an unchanged scale of reproduction, is striking. A disproportion of the production of fixed and circulating capital is one of the favourite arguments of the economists in explaining crises. That such a disproportion can and must arise even when the fixed capital is merely preserved, that it can and must do so on the assumption of ideal normal production on the basis of simple reproduction of the already functioning social capital is something new to them.”
If capital does not increase output, so as to avoid a crisis of overproduction, the working-class will still increase in size. It is a crisis for labour. A surplus working-population arises, whose wages are thereby squeezed, below the value of labour-power, but, as Marx sets out in Capital III, the production of commodities, and the value and surplus value embodied in them, is only the first stage of the process. There is no point in producing the value and surplus value unless it can also be realised, which requires sale at the price of production. If wages, in total, fall, although this acts to increase the mass of produced surplus value, it similarly hinders the realisation of that surplus value, as workers do not have the wages to consume on their previous level. Even a constant level of output of wage goods, then represents an overproduction, because there are no longer sufficient wages to realise their full value. Moreover, even if the working population does not rise in absolute terms (or alternatively assuming some modest rise in output of wage goods), this situation still exists, for the reason Marx describes in Capital III. That is a relative surplus population is created, because continual rises in social productivity mean that this modest increase in output can be achieved with less labour. The same downward pressure on wages, thereby arises.
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