Sismondi, along with Malthus, Proudhon and the Narodniks is wrong. Capitalism develops the productive forces, and this increased production itself expands the market. But, it does not do so smoothly. It involves repeated crises, and these crises are an inextricable aspect of capitalism, and its development of the productive forces, just as much as earthquakes and volcanoes are inextricable elements of the Earth's geography, and plate tectonics, without which it would be a dead planet. Moreover, as Marx makes clear, the realisation of surplus value exists as a real problem.
“The entire mass of commodities, i.e. , the total product, including the portion which replaces the constant and variable capital, and that representing surplus-value, must be sold. If this is not done, or done only in part, or only at prices below the prices of production, the labourer has been indeed exploited, but his exploitation is not realised as such for the capitalist, and this can be bound up with a total or partial failure to realise the surplus-value pressed out of him, indeed even with the partial or total loss of the capital. The conditions of direct exploitation, and those of realising it, are not identical.”
(Marx, Capital III, Chapter 15)
So surplus value is produced, but then it has to be realised. The more the produced surplus value, as a result of wages being low relative to the mass of new value created by labour, the greater the problem of realising this surplus value in the consumption of those workers. In Theories of Surplus Value, Marx quotes a Ricardian to this effect,
““… the very meaning of an increased demand by them” (the labourers) “is a disposition to take less themselves, and leave a larger share for their employers; and if it be said that this, by diminishing consumption, increases glut, I can only answer, that glut […] is synonymous with high profits…” (op. cit., p. 59).”
And, comments,
“This is indeed the secret basis of glut.”
(TOSV, Chapter 20)
If the rate of surplus value is high then the problem of realising this surplus value in the consumption of the labourers increases. If the rate of surplus value is low, because capital is overproduced, and wages rise, workers consumption rises, so that the surplus value produced can be more easily realised in that consumption, but the produced surplus value is itself smaller. Moreover, as workers consume more with these higher wages, they satisfy their consumption needs in a range of products, and can only be encouraged to buy more if market prices fall substantially, meaning that the problem of realising the surplus value manifests in a different form.
Marx continues in his description of this contradiction between the production of surplus value and its realisation.
“They diverge not only in place and time, but also logically. The first are only limited by the productive power of society, the latter by the proportional relation of the various branches of production and the consumer power of society. But this last-named is not determined either by the absolute productive power, or by the absolute consumer power, but by the consumer power based on antagonistic conditions of distribution, which reduce the consumption of the bulk of society to a minimum varying within more or less narrow limits. It is furthermore restricted by the tendency to accumulate, the drive to expand capital and produce surplus-value on an extended scale.”
(Capital III, Chapter 15)
Sismondi is right that, ultimately, foreign markets are not a solution to this problem. As Marx says, it simply transfers the crisis from being a national to an international crisis. Yet, as Marx also points out, the existence of foreign markets is not irrelevant either, because the existence of these markets means the existence of a wider range of use values to participate in the process of exchange, which itself broadens, and thereby, expands the market.
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