Friday, 8 February 2019

Theories of Surplus Value, Part III, Chapter 20 - Part 49

Marx was not at all afraid of the charge of being an underconsumptionist in including in his explanation of crisis the role of demand, and as set out above, of explaining it in terms of what, today, we would describe as the price elasticity of demand. And, as he also sets out, in Capital III, Chapter 15, the demand for commodities is far from homogeneous, because producers and consumers are not coterminous. Consumers are not just divided into productive and unproductive consumers, but consumers whose revenue sources are divergent, and whose revenues are also, thereby, divergent, in terms of purchasing power. Not only does demand, thereby, become dependent upon price elasticity, but it is also affected by income elasticity of demand, and the changing distribution of revenues between workers, capitalists, landlords, money-lending capitalists, and the state, at different stages within the cycle. 

“Apart from the fact that the workers do not sell commodities, but labour, a great number of people who do not produce commodities at all buy things with money. Buyers and sellers of commodities are not identical. The landlord, the moneyed capitalist and others obtain in the form of money commodities produced by other people. They are buyers without being sellers of “commodities”. Buying and selling occurs not only between industrial capitalists, but they also sell to workers; and likewise to owners of revenue who are not commodity producers. Finally, the purchases and sales transacted by them as capitalists are very different from the purchases they make as revenue-spenders.” (p 119) 

The author of the “Inquiry” says, 

““Mr. Ricardo (p. 359, second ed.), after quoting the doctrine of Smith about the cause of the fall of profits, adds, ‘M. Say has, however, most satisfactorily shown, that there is no amount of capital which may not be employed in a country, because demand is only limited by production’” [An Inquiry into those Principles, London, 1821, p. 18].” (p 119) 

But, of course, whilst demand is limited by production, that does not at all mean that production is limited by demand. It is tautologically true that nothing can be demanded that either is not already available, in the market, or cannot be supplied to meet that demand. Where demand exceeds such potential supply, the price rises, so as to eradicate the excess demand. As Marx described in Capital III, as against Ricardo, who believed that farmers would only accumulate additional capital if prices were rising, all capitalists, generally, assume an annual expansion of the market, and accumulate capital on that basis. Even if they plan for only marginal increases in the market, which may be met by normal increases in productivity, this still requires an accumulation of additional circulating constant capital, i.e. the purchase of additional materials for processing. 

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