Thursday, 13 September 2018

Theories of Surplus Value, Part II, Chapter 17 - Part 77

Whilst one group admits the overproduction of capital, whilst denying the overproduction of commodities, another group admits the overproduction of commodities, but not of capital. The overproduction of commodities is reduced to a disproportion in their production, and a lack of adequate diversification of production. 

“That it is not a matter of industrial consumption is obvious, for the manufacturer who over-produces linen, thereby necessarily increases his demand for yarn, machinery, labour etc. It is therefore a question of personal consumption. Too much linen has been produced, but perhaps too few oranges. Previously the existence of money was denied, in order to show [that there was no] separation between sale and purchase. Here the existence of capital is denied, in order to transform the capitalists into people who carry out the simple operation C—M—C and who produce for individual consumption and not as capitalists with the aim of enrichment, i.e., the reconversion of part of the surplus-value into capital.” (p 534) 

In my book, Marx and Engels' Theories of Crisis, I have also dealt with the issue of the diversification of production, in relation to the long wave. But, the point that I make there is different to the argument made by the Ricardians, here. It is different precisely because of the concept of overproduction in terms of the overproduction of capital. The point being made here is that the overproduction is essentially a disproportion. More capital should produce oranges, then oranges would be exchanged for linen. It rejects the idea of a general overproduction. Yet, its clear from Marx's earlier statement that such a general overproduction only requires that people hold money, as the general commodity, rather than converting it once more into commodities. In other words, the savings rate rises, or in Keynesian terms, the marginal propensity to consume falls. 

The Keynesian argument here would also be that if the savings rate rises, although this may result in a lower rate of interest, this may not cause investment to rise, because firms, seeing falling or sluggish demand, for their output, will be reluctant to expand their production further. Investment will rather take the form of a rise in inventories, equal to the rise in savings. (As the period, from around 1987 also shows, this money can be spent in speculation on financial assets, traded on financial markets themselves now as commodities, especially where the prices of those financial assets are underpinned by central banks).  The Keynesian solution is to fill this gap by government spending. It is the same argument as was put forward by Malthus, as will be seen in Theories of Surplus Value III, where Malthus argues that the problem is one of realising the surplus value embodied within the value of the commodities. The only way that can be done, Malthus argues is if there is a section of society who are consumers who are not producers. That section of society, for Malthus is the landed aristocracy, and their lackeys amongst the state, whose paid apologist he was. 

It is also essentially the same argument as put by some of the post-Ricardians, which is to say if there is surplus production, it could just be consumed unproductively, by the capitalists themselves, as though capitalist production were production of use values, for consumption, rather than the production of commodities for the purpose of producing and realising surplus value, so as to accumulate additional capital. 

“Why does the producer of linen demand from the producer of corn, that he should consume more linen, or the latter demand that the linen manufacturer should consume more corn? Why does the man who produces linen not himself convert a larger part of his revenue (surplus-value) into linen and the farmer into corn? So far as each individual is concerned, it will be admitted that his desire for capitalisation (apart from the limits of his needs) prevents him from doing this. But for all of them collectively, this is not admitted.” (p 534) 

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