1. Overproduction of Commodities
The overproduction of commodities has to be analysed in terms of its characteristics under all forms of commodity production and exchange, and its specific characteristics under capitalism. As Marx sets out in Theories of Surplus Value, Chapter 17, it was the failure to do that which led to the errors of James Mill, Say and Ricardo, in the formulation of Say's Law, and its rejection of the idea that commodities can be overproduced.
“The conception (which really belongs to [James] Mill), adopted by Ricardo from the tedious Say (and to which we shall return when we discuss that miserable individual), that overproduction is not possible or at least that no general glut of the market is possible, is based on the proposition that products are exchanged against products, or as Mill put it, on the “metaphysical equilibrium of sellers and buyers”, and this led to [the conclusion] that demand is determined only by production, or also that demand and supply are identical. The same proposition exists also in the form, which Ricardo liked particularly, that any amount of capital can be employed productively in any country...
Here, therefore, firstly commodity, in which the contradiction between exchange-value and use-value exists, becomes mere product (use-value) and therefore the exchange of commodities is transformed into mere barter of products, of simple use-values. This is a return not only to the time before capitalist production, but even to the time before there was simple commodity production; and the most complicated phenomenon of capitalist production—the world market crisis—is flatly denied, by denying the first condition of capitalist production, namely, that the product must be a commodity and therefore express itself as money and undergo the process of metamorphosis.”
(Theories of Surplus Value, Chapter 17)
1.1 All Commodity Production
In all modes of production, commodities can be overproduced, because they are produced in excess of the market for them. There are a number of potential causes for this overproduction.
a) Due to separation of production from consumption
If I produce potatoes for my own consumption, I will only produce a quantity that I want to consume. Knowing how much labour, on average, I require for this, I will allocate my labour accordingly. Any accidental overproduction, resulting from a good harvest, will simply mean good fortune, enabling me to consume more, or to exchange the surplus for something else. However, if I deliberately produce potatoes, as a commodity, to be exchanged, I do not have the same knowledge, in advance, of how much others may desire to consume potatoes. Even under systems of barter, I may take my potatoes to market only to find that no one is of a mind to consume potatoes. This is a direct consequence of production and consumption being separated. Moreover, it doesn't require that no one wants to consume potatoes, only that they do not want to consume as many potatoes as I, and other sellers of potatoes, have produced. Marx notes,
“The value supplied (but not yet realised) and the quantity of iron which is realised, do not correspond to each other. No grounds exist therefore for assuming that the possibility of selling a commodity at its value corresponds in any way to the quantity of the commodity I bring to market. For the buyer, my commodity exists, above all, as use-value. He buys it as such. But what he needs is a definite quantity of iron. His need for iron is just as little determined by the quantity produced by me as the value of my iron is commensurate with this quantity.
It is true that the man who buys has in his possession merely the converted form of a commodity—money—i.e., the commodity in the form of exchange-value, and he can act as a buyer only because he or others have earlier acted as sellers of commodities which now exist in the form of money. This, however, is no reason why he should reconvert his money into my commodity or why his need for my commodity should be determined by the quantity of it that I have produced. Insofar as he wants to buy my commodity, he may want either a smaller quantity than I supply, or the entire quantity, but below its value. His demand does not have to correspond to my supply any more than the quantity I supply and the value at which I supply it are identical.”
(Theories of Surplus Value 3, Chapter 20)
And, in a money economy, it does not have to be that consumers have some absolute disdain for potatoes, iron etc., it can simply be that they have a greater desire to hold money, rather than to exchange that money for other commodities. In other words, as Marx says above, having sold their own commodity to me, and other sellers of potatoes/iron or whatever, and obtained money, they prefer to hold on to the money, rather than buy potatoes, iron, or any other commodity. As Marx puts it,
“At a given moment, the supply of all commodities can be greater than the demand for all commodities, since the demand for the general commodity, money, exchange-value, is greater than the demand for all particular commodities, in other words the motive to turn the commodity into money, to realise its exchange-value, prevails over the motive to transform the commodity again into use-value.”
(TOSV2, Chapter 17)
The reasons they may do so are numerous. They may feel that prices will fall (deflation) and so speculate that the money they hold will appreciate in value; they may fear economic uncertainty, which leads them to save money for precautionary purposes; they may need the money for other purposes, to pay taxes and so on; their consumption of commodities may already have risen, so that the marginal utility they obtain from consuming more of them has fallen, which means they would require the market prices of those commodities to fall before they would buy more, and there may not be any new types of commodity available for them to buy, so as to tempt them to put their money back into circulation. As Marx says, even if the value of commodities falls, as a result of a rise in productivity, which also puts more of these commodities into the market, it will not necessarily create the required additional demand, because of the price elasticity of demand for these commodities.
“The same value can be embodied in very different quantities [of commodities]. But the use-value—consumption—depends not on value, but on the quantity. It is quite unintelligible why I should buy six knives because I can get them for the same price that I previously paid for one.”
(TOSV3, Chapter 20)
This potential that more of any one commodity, or all commodities, may be produced than there is a market for exists under all forms of commodity production and exchange. It means that the potential exists for a crisis of overproduction as a result of this separation of production from consumption, of supply from demand, and of use value from value. As a result, the surplus production does not constitute use value, and a commodity only has value if it is a use value, i.e. if there is a demand for it. The surplus production has no value, even though labour has been expended on its production. The effect is to reduce the value of the total production. Under pre-capitalist forms of commodity production, such a situation only creates a crisis for the individual commodity producers. Its what leads these particular producers into needing to borrow from usurers, a path that leads towards penury, and slavery. In the period of the primitive accumulation of capital, it leads to their means of production becoming concentrated in the hands of capitalists, and turns the labourer into a wage labourer. It is only under capitalism, and particularly under capitalist machine production, that output is revolutionised to such an extent that the surplus so greatly exceeds demand that it leads to a wider crisis.
As Marx puts it,
“In reproduction, just as in the accumulation of capital, it is not only a question of replacing the same quantity of use-values of which capital consists, on the former scale or on an enlarged scale (in the case of accumulation), but of replacing the value of the capital advanced along with the usual rate of profit (surplus-value). If, therefore, through any circumstance or combination of circumstances, the market-prices of the commodities (of all or most of them, it makes no difference) fall far below their cost-prices, then reproduction of capital is curtailed as far as possible.”
(Theories of Surplus Value, Chapter 17)
By “cost-prices”, here, Marx means prices of production. And, by “value of the capital advanced”, Marx does not mean the historic price paid for those inputs (which might be higher or lower than their value/current reproduction cost), but means their value, their current reproduction cost, which must be reproduced out of the selling price for production to continue on the same scale. In other words, Marx is not talking about a fall in the value of the constant or variable-capital, but merely the market price of the end product, which falls dramatically due to the overproduction. The market price does not enable the inputs to be reproduced at their value, and so the circuit of capital is ruptured. But, capitalism, unlike former modes of production, is based upon continuous production, and reproduction. The capitalist producer cannot simply stop their production of commodities, and concentrate on their own direct production in the way a peasant producer can. And, even a reduction in the scale of production will have further effects, as workers are laid off, suppliers of inputs see the orders for their commodities reduced, so that even at a constant level of production, they have overproduced, and so on. The same effect arises, for the capitalist producer, if they have sold their output, but cannot replace their inputs because, in the intervening period, the prices of those inputs, or of a significant input, rises sharply, or becomes unavailable.
“The same hold up could occur for the opposite reasons, if the real prerequisites of reproduction were missing (for instance if grain became more expensive or because not enough constant capital had been accumulated in kind). There occurs a stoppage in reproduction, and thus in the flow of circulation. Purchase and sale get bogged down and unemployed capital appears in the form of idle money. The same phenomenon (and this usually precedes crises) can appear when additional capital is produced at a very rapid rate and its reconversion into productive capital increases the demand for all the elements of the latter to such an extent that actual production cannot keep pace with it; this brings about a rise in the prices of all commodities, which enter into the formation of capital.”
(ibid)
In Capital III, Chapter 6, Marx gives the example of the US Civil War, which made cotton physically unavailable for Lancashire textile producers. As an example of the latter scenario the development of spinning machines meant the demand for cotton rose sharply, causing cotton prices to rise, whilst at the same time creating an overproduction of yarn, because its supply rose faster than the capacity of weavers to process it. In 1999, when the fifth long wave expansion began, the rapid accumulation of capital caused the demand for many primary products to rise sharply, whilst supply of these commodities could not be increased fast enough. It led to sharp rises in the prices of copper, iron ore, steel, oil, and food.
No comments:
Post a Comment