The workers, as producers, can only work so long as they produce surplus value, indeed they must produce more than a minimum amount of surplus value for the capitalist to consume and accumulate. Unless the worker produces this surplus value, they cannot work, and so cannot consume. But, if they do produce this surplus value, it is an indication that they produce more than they consume, and so that their own consumption is restricted. Given that the workers become an increasingly large proportion of society, this restriction of their own consumption, in relation to their production, which is a necessary factor in the creation of ever larger masses of surplus value, is, at the same time, a constraint on the realisation of that produced surplus value.
“that the majority of the producers, the workers, can consume an equivalent for their product only so long as they produce more than this equivalent, that is, so long as they produce surplus-value or surplus-product. They must always be over-producers, produce over and above their needs, in order to be able to be consumers or buyers within the limits of their needs.” (p 520)
Ricardo denies the contradiction and bases himself on Say's Law, so that supply creates its own demand, and this applies to capitalist production as much as with any other form of commodity production. For Ricardo, production and consumption coincide and the only limit to demand is capital. So, there can never be too much capital, an overproduction of capital, because this capital will employ additional workers, who will, thereby, provide the additional demand for what is produced, the additional means of production will, in turn, require the employment of additional workers who, thereby provide additional demand.
Capital certainly provides a limit to demand, in the sense that more cannot be consumed than is produced, but the question is whether the reverse is true, that everything that is produced must be consumed. Ricardo believes it is, and that this enables capital to continuously accumulate, and expand production without regard to the market, without regard to the existence of demand.
“And this is indeed characteristic of this mode of production.
Thus according to the assumption, the market is glutted, for instance with cotton cloth, so that part of it remains unsold or all of it, or it can only be sold well below its price.” (p 520)
Marx equates price with exchange-value here, so as to demonstrate the basis of overproduction without recourse to consideration of the role of price of production or market price.
This glut of cotton cloth or some other commodity is not denied by Ricardo, but only the potential for a generalised glut. The market necessarily involves changes in preferences that raise or lower demand, so that the balance of supply and demand is continually fluctuating, causing market prices to rise or fall. It represents a continual disproportion in the allocation of capital that is too small and too frequent to justify actual reallocation of capital, but which are resolved in the rationing mechanism of market prices. Where such disproportions are more durable, reflecting a stable shift in consumer preferences, the higher or lower market prices, which result in higher or lower profits, then does result in a reallocation of capital, so as to remedy the disproportion. These instances of partial overproduction are then instances of disproportion of too much capital employed in one sphere, and too little in another. But, the question is whether a generalised overproduction can exist, and it is that which Ricardo denies.
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