In terms of agricultural products, the phenomenon, over a much shorter time period has been theorised by Kaldor, with the Cobweb Theorem. It suggests that, instead of market prices acting to neutralise disproportions, it can do the opposite. For example, if potato prices are high, farmers respond by planting potatoes for next year, but that results in an oversupply of potatoes, in the following year, causing prices to fall, so farmers plant much fewer potatoes, leading to a shortage, and so on. This is one argument for, and reason for the introduction of futures markets.
In terms of Marx's explanation here then, all of these primary products could be overproduced, even if there is no overproduction of the commodities that comprise final output. There can be overproduction of oil, even if there is no overproduction of petrochemicals, for instance, or of vehicles and so on. But, an overproduction of petrochemicals, for instance, implies also an overproduction of oil.
“There cannot, therefore, be any question of the under-production of those articles whose over-production is implied because they enter as an element, raw material, auxiliary material or means of production, into those articles (the “particular commodity of which too much may be produced, of which there may be such a glut in the market, as not to repay the capital expended on it” [l.c., pp. 341-42], whose positive over-production is precisely the fact to be explained.” (p 530)
What still has to be explained is the overproduction of all those commodities, in those separate spheres that are not affected by this initial overproduction. The overproduction in the most significant spheres of industry may result in a relative overproduction, in totally unrelated spheres. If the overproduction in textile production, steel production, coal production, etc. results in the workers in these industries being laid off, they will not have the wages to consume food, TV's, mobile phones, etc. At the least, they will prioritise what they spend any revenue and savings on, so that other elements of their discretionary spending get hit even harder. All of those commodities that comprise this discretionary spending will then have been relatively overproduced.
The same thing applies to the capitalists, landlords and rentiers who may see their revenues diminished, as profits cannot be realised. Their spending on luxury items is reduced, so that pianos, jewellery and so on is relatively over produced. But, this relative overproduction can also result from underproduction. If there is a crop failure, so that grain prices rise sharply, the price of bread and other food prices will rise. Workers still need to consume these essential items, and may reduce spending on other commodities, which are then relatively overproduced. Alternatively, the rise in price may mean the price of the end product, into which the input enters, rises, so that demand for it falls, so that what is produced exceeds the demand at that price. But, the idea that there is no overproduction, only under-consumption, caused by underproduction, takes its even more absurd form when applied, for example, by Say, in relation to international trade.
“For instance, that England has not over-produced but Italy has under-produced. There would have been no over-production, if in the first place Italy had enough capital to replace the English capital exported to Italy in the form of commodities; and secondly if Italy had invested this capital in such a way that it produced those particular articles which are required by English capital—partly in order to replace itself and partly in order to replace the revenue yielded by it. Thus the fact of the actually existing over-production in England—in relation to the actual production in Italy—would not have existed, but only the fact of imaginary under-production in Italy; imaginary because it presupposes a capital in Italy and a development of the productive forces that do not exist there, and secondly because it makes the equally utopian assumption, that this capital which does not exist in Italy, has been employed in exactly the way required to make English supply and Italian demand, English and Italian production, complementary to each other. In other words, this means nothing but: there would be no overproduction, if demand and supply corresponded to each other, if the capital were distributed in such proportions in all spheres of production, that the production of one article involved the consumption of the other, and thus its own consumption. There would be no over-production, if there were no over-production.” (p 531-2)
Underlying this is the point made earlier that it requires capitalism not to operate as capitalism, but to either operate as some form of direct production, or system of barter, or else to operate as a planned economy, in which inputs are deliberately produced so as to exactly meet the requirements of outputs.
“Since, however, capitalist production can allow itself free rein only in certain spheres, under certain conditions, there could be no capitalist production at all if it had to develop simultaneously and evenly in all spheres. Because absolute over-production takes place in certain spheres, relative over-production occurs also in the spheres where there has been no over-production.” (p 532)
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