The revenue first assumes the form of commodities. In other words, take a spinner who produces yarn. The yarn they produce is sold, and the money received goes partly to buy wool or cotton, partly to cover wear and tear of machinery, whilst part goes as revenue – wages to workers, profits to capitalists. If a machine is introduced, this still applies. They produce yarn, which is sold, and a portion of the money received goes to buy cotton, a part to cover wear and tear, and another part is revenue as wages and profit. The difference here is more goes to wear and tear, and less goes to wages.
“With some exceptions in agriculture, he will produce more of these commodities than before, although his discharged workers have ceased to consume, and therefore to buy his own articles, though they did so before. More of these commodities will now be present on the market, although for the workers thrown on the street, they have ceased to exist [as objects of consumption] or have ceased to exist in their previous quantity.” (p 562)
The excess supply of these commodities can, as previously described, be consumed in greater quantities by other classes, or workers still in employment, or they might be exported. But, there is no necessity that this will be the case. The commodities consumed as wage goods by workers may already be consumed in sufficient quantities by capitalists, landlords and rentiers. The price of such goods may have to fall substantially before they would buy any more of them. If wages fall, as a result of machinery causing unemployment, other workers may not be in a position to increase their demand. But, capitalists may take on more unproductive workers as domestic servants etc. that will absorb some of the excess. Some of the excess may be exported, but this only widens the potential crisis, if oversupply exists simultaneously in several important countries. The increased supply, at a time when the reduction in employment brings about a reduction in demand illustrates the potential for crisis.
“If the increase in commodities through machinery and the decrease in a previously existing demand (namely in the demand of the workers that have been discharged) for the commodities produced by this machinery were contradictory, then in most cases, no machinery could in fact be introduced. The mass of commodities produced and the portion of these commodities which is reconverted into wages, therefore, have no definite relationship or necessary connection, when we consider the capital of which a part is transformed into machinery instead of into wage labour.” (p 563)
In other words, although this illustrates the potential for crisis, it does not necessitate a crisis, because although the displaced workers cannot consume this surplus product, other consumers can. Moreover, as with the instance cited above, where more domestic servants are taken on, the surplus commodities can be consumed in other ways. And, that can also take the form that capital currently involved in producing a type of commodity that constitutes a wage good becomes involved in production of a similar commodity, but which represents a luxury item consumed by capitalists. So, as a result of the introduction of a machine, output rises, but workers are laid off, reducing demand. Unless the demand is made up from somewhere, the price of the commodity will fall. If the supply continues to exceed the demand, the price and profit will fall, and capital will reduce production. But, having done so, it might move to simply a more luxury version. In the 1970's, I worked for a large pottery manufacturer, and its products ranged in price from a £1 dinner plate, in one range, to a £1,000 dinner plate in the most expensive range.
“Perhaps more meat or commercial crops or luxury foods are produced [and] less wheat or more oats for horses etc. or fewer fustian jackets and more bourgeois frock-coats. But none of these consequences need necessarily materialise, if, for instance, as a result of the cheapening of cotton goods, the employed workers are able to spend more on food etc. The same quantity of commodities and even more of them—including those consumed by the workers—can be produced, although less capital, a smaller portion of the total product, is transformed into variable capital, that is laid out in wages! (p 563-4)
For the smarter producers, the same effect can be obtained by stratified marketing. Soap powder producers put the same product into different boxes, with just a slightly different scent, and use marketing to sell the same product, at different prices, to different segments of the market. Car makers always have a range of models from basic through to high end luxury or sports cars. When workers have less wages to spend, the car companies can always produce fewer basic models, and use their capital to produce more high end luxury and sports cars, aimed at those who have obtained more in profits, interest and rent.
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