2. Overproduction of Capital
2.3 Cyclicality of Crises
a) Crises are cyclical because of the operation of the Long Wave Cycle
- The Winter Phase
In the Winter Phase, the new technologies developed to respond to the crisis of overproduction are rolled out intensively to replace existing fixed capital. This means that the mass of fixed capital grows more slowly, because 1 new machine replaces 2 or more old machines. Moreover, as Marx previously described, the technological revolution means that the existing fixed capital stock is massively devalued due to moral depreciation. Therefore, not only does the mass of fixed capital grow more slowly, but the value of this stock grows even more slowly, or even declines. The total mass of capital increases, even if the mass of fixed capital remains constant or declines, precisely because of this fact, i.e. the one new machine processes more material than was previously processed by two or more older machines. In other words, consistent with Marx's Law of the Tendency for the Rate of Profit to Fall, the proportion of raw materials in final output rises relative to both fixed capital and labour. This is a period of intensive rather than extensive accumulation.
The same process means that growth in output involves a proportionately smaller growth in employment, because the one new machine also requires only one worker, whereas the replaced 2 old machines required 2 workers. This is the basis for the creation of the relative surplus population, and fall in wages. Alongside the fall in the value of labour-power, caused by rising productivity, it leads to a corresponding rise in the rate of surplus value. During this Winter Phase, therefore, growth in total output, gross product, is relatively stagnant, but the net product, rises in relation to it. This also means that the supply of money-capital from realised profits increases relative to the demand for money-capital for capital accumulation. Hence, interest rates fall during this period. The fall in interest rates causes the prices of assets (capitalised revenues) to rise. This encourages speculation and the blowing up of bubbles. This is what is seen in the 1980's and 1990's, and into the early 2000's. Compared to the real terms fall in the Dow Jones between 1965-1982, it rises by 1300% between 1980-2000, which is an increase that was around five times the growth in US GDP over the same period.
The new technologies that start to be developed in the Autumn Phase reach their peak of development, as base technologies, near the start of the Winter Phase. For example, Mensch dates the peak of the Innovation Cycle, corresponding to the third long wave, as occurring in 1935, and he predicted a corresponding peak for 1985. This peak does not mean a peak for the development of new technologically based products, but for the development of the underlying technology itself. In 1935, that is for things like the development of electronics, and petrochemicals. These technologies are developed as labour-saving technologies in the production process, but having been developed, they become the base technologies for the development of whole new consumer industries, and it is these new consumer products that are the growth area that leads the economy into a new period of upturn, in the next Spring Phase. In 1985, it is the development of the microchip, and of the telecommunications revolution that goes with it that performs this function.
The Winter Phase is not a period characterised by crises of overproduction, but of stagnation. In other words, the opposite of overproduction. It is often characterised as a crisis for capitalism, because of the attendant high levels of unemployment. For example, the Winter Phase of the first long wave cycle occurs between around 1830-1843, the Winter Phase of the second long wave cycle corresponds to the period of the first great depression that ran from around 1873-1890, for the third it corresponds to the period running from around 1930-1945, and for the fourth wave the period from around 1987 to 1999.
In all these periods, the high levels of unemployment, creation of a large relative surplus population, do not represent a crisis for capitalism, but represent its resolution of such a crisis in the previous period. Far from it being a crisis period for capital, it is a period in which it is able to raise the rate of surplus value, and rate of profit, and to substantially raise levels of productivity. Rather than being a period of crisis for capital, such periods of stagnation represent a period of crisis for the working-class, where competition between workers is intensified, where wages fall (though as Marx points out, for workers who are in employment, living standards tend to rise, sometimes significantly. That was the case in the 1930's when workers employed in the new car and electronics industries in the Midlands and South-East saw a significant rise in living standards, even as unemployed workers in the North-East were still starving). It is a period in which this intensified competition between workers acts to destroy their solidarity and the organisations built upon it. It is a period in which the power of capital grows relative to that of the working-class.
No comments:
Post a Comment