Another cause of crisis can be due to a large fluctuation in prices that has nothing to do with any change in the value of commodities. Variation in market prices around the price of production, are the normal condition, as demand and supply, at the price of production, only ever coincide by accident. The movement of market prices, under the influence of competition, is the real means by which this disproportion is equalised. But, these small variations around the price of production cancel each other out, over time, and do not lead to crises. Only when a large disproportion, and change in prices arises does it create a partial crisis of overproduction that can lead into a generalised crisis.
For now, the assumption is that prices accord to values or prices of production, and the examination of the possibility of crises, due solely to large variations in market prices, Marx says, he will leave to an examination of the role of competition. But, there is one aspect of these sharp variations in prices that itself relates directly to the process of production and accumulation of capital itself. That is where a rapid accumulation of capital causes the demand for inputs to rise so sharply that supply cannot rise adequately, so that prices of these inputs increases significantly.
“The general possibility of crisis is the formal metamorphosis of capital itself, the separation, in time and space, of purchase and sale. But this is never the cause of the crisis. For it is nothing but the most general form of crisis, i.e., the crisis itself in its most generalised expression. But it cannot be said that the abstract form of crisis is the cause of crisis. If one asks what its cause is, one wants to know why its abstract form, the form of its possibility, turns from possibility into actuality.
“The general conditions of crises, in so far as they are independent of price fluctuations (whether these are linked with the credit system or not) as distinct from fluctuations in value, must be explicable from the general conditions of capitalist production.” (p 515)
The crisis then arises because either the commodity-capital cannot be realised, i.e. converted into money-capital, or else, having been converted into money, it cannot be converted once more into productive-capital, because either the components of the constant capital are not available, or else the value of those components has risen significantly, so that the realised money-capital can no longer be metamorphosed into the same quantity of productive-capital; “particularly of raw material, for example when there is a decrease in the quantity of cotton harvested. Its value will thus rise.” (p 515) But, as indicated in earlier chapters, and as set out in Capital III, Chapter 15, this same argument applies in relation to the variable-capital, i.e. in relation to labour-power. Capital only acts as capital when any additional accumulation results in an increase in the mass of surplus value. Any expansion beyond that represents overproduction. It may be possible to metamorphose the realised money-capital into additional labour-power, i.e. the workers are available to be employed, but if employing these additional workers results in a rise in the general level of wages, the result may be that it results in not only the rate of surplus value, but also the mass of surplus value being reduced. In other words, in a Smithian profits squeeze.
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