In terms of the value of commodities laid out for the production of cutlery, these are unchanged by the fact that the cutlery producer has overproduced. If they come to replace the steel etc. consumed, they will be unable to do so, if their overproduction causes them to sell each item of cutlery below its cost of production. They can only avoid this if they can find new demand for their increased output, as suggested above. But, even if the other capitals in the economy have accumulated capital, on the same basis, there is no reason why their output will have risen in the same proportion, because different levels of productivity exist in each industry. Moreover, even if the volume of output rises proportionately to the increase in capital employed, there is no reason why demand for each type of commodity will increase proportionally, because demand is determined by use value, not by exchange-value. An end consumer does not demand commodity X, in order to obtain its exchange-value. They have to give up exchange-value to obtain it. They demand commodity X, for its use value, which provides some utility for them.
So, nor is there any reason why the increased output and revenues of one industry should result in a proportionate increase in the demand for the output of other industries. Just because the output of shoes rise by 10%, and is fully absorbed by demand, that is no reason why workers and capitalists engaged in shoe production will use their additional wages and profits to demand 10% more of the commodities they currently consume, or any other commodities for that matter. They may buy more, or not, of those other commodities, or they may simply hoard the additional money they have received. This is why those Marxist theories seeking to resolve the transformation problem at a purely abstract mathematical level, must always be wrong, because, the transformation of exchange-values into prices of production, involves the movement of capital from one sphere of production to another, which brings about changes in market prices. But, the movement of those market prices depends upon also the demand for the respective commodities, and that demand depends upon use value, not exchange value. It depends upon the price elasticity of demand, so that in one sphere, a lot of capital will be required so as to increase output sufficiently, so as to cause the market price to fall to the price of production, whereas in another sphere, a smaller amount of capital will be required to achieve the same result. Similarly, in one sphere a lot of capital might need to be withdrawn, causing a sharp reduction in supply, so as to raise market prices to the price of production, whereas in another, a small reduction in supply will be enough to raise market prices to the price of production. It is also the flaw in all of those Marxist theories of crisis that try to explain crises in purely value terms, in terms, for example, of the falling rate of profit, because they ignore the question of demand, of use value, and remain on the abstract level of supply, which means essentially accepting Say's Law, and the assumption that because the produced value in A and B rises proportionately, they must be able to continue to exchange their output, and so if a crisis erupts it must be caused by some other factor, such as the rate of profit.
“If all other capitals have accumulated at the same rate, it does not follow at all that their production has increased at the same rate. But if it has, it does not follow that they want one per cent more of cutlery, as their demand for cutlery is not at all connected, either with the increase of their own produce, or with their increased power of buying cutlery.” (p 118)
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