So, the first problem with Sismondi's argument can be seen straight away. His argument is that there must be under-consumption, because, as v falls, the workers consumption must fall, and whilst, s then rises, the capitalists' relatively small numbers cannot increase their consumption enough to soak up the surplus product. This remains the argument put by under-consumptionists, today, leading to arguments about the need for the capitalist state to use up the surplus product in arms production (Permanent Arms Economy), and even to have wars to physically destroy capital, and other such nonsense.
Of course, what Sismondi misses, here, is that, whilst v may fall, as a result of the independent producers being ruined, and so their consumption falling, it is not only that s, and so the unproductive consumption of the capitalists rises. There is also an increase in c, because the increase in productivity means that more materials are now consumed productively, and more fixed capital is used, so that there is more wear and tear of it, which means that more of total output must be devoted simply to replacing it. In other words, there is more productive consumption, and it is bought out of capital, not revenue.
Sismondi also notes the other aspect of this rising social productivity that a given amount of output can be produced by less labour.
““If the manufacturer sells at a cheaper price,” says Sismondi in the chapter on “How Does the Seller Enlarge His Market?” (ch. III, livre IV, t. 1, p. 342 et suiv.), “he will sell more, because the others will sell less. Hence, the manufacturer always strives to save something on labour, or on raw. materials, so as to be able to sell at a lower price than his fellow manufacturers. As the materials themselves are products of past labour, his saving, in the long run, always amounts to the expenditure of a smaller quantity of labour in the production of the same product.”” (p 135)
Sismondi goes on to note that each capitalist will try to increase output and not reduce their workers, but that if they all do that then overall output will rise, so that, if consumption remains the same, some firms will have to lay off workers. That, in itself, would reduce consumption, because these workers would now lack incomes to fund their consumption. However, Sismondi fails to ask the question of what happens not only to the released labour, but also to the capital that was released along with it. In other words, Sismondi fails to recognise The Civilising Mission of Capital, described by Marx in The Grundrisse, whereby this rise in productivity releases capital and labour which are then utilised in ever expanding circles of production of different types of product, which itself results in an ever widening market.
"For example, if, through a doubling of productive force, a capital of 50 can now do what a capital of 100 did before, so that a capital of 50 and the necessary labour corresponding to it become free, then, for the capital and labour which have been set free, a new, qualitatively different branch of production must be created, which satisfies and brings forth a new need.”
(Grundrisse, Chapter 8)
Of course, there are limits to each. Workers and other consumers will only buy more bread as a result of its price falling up to a point. Beyond that they have no additional demand for bread, and would prefer to either save the money, or else buy some other commodity if its available.
“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.”
There is no reason why this condition, in reality, applying to one commodity, may not relate to all.
“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.”
(Theories of Surplus Value, Part 2, p 505)
Whilst other commodities may be available for workers to buy, even with the savings they achieve from the falling prices of staple wage goods, they may still not be able to afford these other commodities. For example, in the 1920's, and 30's, the prices of many wage goods fell as a result of rapidly rising social productivity. That meant that workers could satisfy their demand for these commodities more easily – at least where they were in work – but, even with these savings, most could not afford to buy a motor car, which remained the preserve of the rich. For the market to expand in breadth, it requires that these new types of commodity be developed and brought forward at prices that enable this expansion of demand. That itself requires the development of technology both as a means of producing new types of consumer products, and of raising productivity so as to produce these commodities at affordable prices.
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