If the production of yarn expands much faster than the expansion of weaving then this disproportion in production will lead to a crisis of overproduction of yarn.
“When spinning-machines were invented, there was over-production of yarn in relation to weaving. This disproportion disappeared when mechanical looms were introduced into weaving.”
(Theories of Surplus Value 2, Note p 521)
Moreover, Marx makes clear that this proportionality must exist across the economy. Even in terms of the disproportion between the expansion of production, relative to consumption, this can only continue within limits. There is no point expanding steel production further, unless machine makers require it, and there is no point machine makers making more machines, unless there is a demand for these machines, and if there is no demand for the things produced by those machines, there is no demand for the machines themselves. However much the produced surplus value in any of these commodities, it is entirely theoretical until such time as the commodity itself is purchased, and that surplus value realised. Production creates the potential for demand, for what is produced – demand for both productive and non-productive consumption – i.e. consumption by both revenue and capital, but it does not mean that potential is turned into actuality. Again, Lenin, here, makes the same mistake as the Ricardians who confused and conflated exchange-value with use value.
“Here a great confusion: (1) This identity of supply, so that it is a demand measured by its own amount, is true only to the extent that it is exchange value = to a certain amount of objectified labour. To that extent it is the measure of its own demand -- as far as value is concerned. But, as such a value, it first has to be realised through the exchange for money, and as object of exchange for money it depends (2) on its use value, but as use value it depends on the mass of needs present for it, the demand for it. But as use value it is absolutely not measured by the labour time objectified in it, but rather a measuring rod is applied to it which lies outside its nature as exchange value.”
(The Grundrisse)
That measuring rod is, of course, the ability to meet the needs of the buyer, i.e. its utility for that buyer. Supply is determined by exchange-value, whereas demand is determined by use-value. Physical production has to be continually expanded to reduce individual value below social value, but Marx points out that, just because producers supply increased physical quantities to market, consumers have no reason to consume these increased physical amounts, just because they represent the same amount of value, i.e. he understands elasticity of demand.
“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)
And, Marx notes,
“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.”
(Theories of Surplus Value 3)
Nor is it just a question of proportionality in terms of producer goods to consumption goods. If A produces linen, and B produces wine, then A may find a market for its output with B, and vice versa. If both increase their capital, and, thereby, the value of their output by the same amount, then, in purely value terms, both can, theoretically still find a market for their output in the other. However, Marx says, there is no reason why this should be the case, because this increase in the value of output disguises the potential for significant differences in the quantity of actual use values produced by A and B, as a result of different levels of productivity in linen production relative to wine production. Wine production may increase in volume by 5%, whereas linen production by 20%. Linen producers may increase their demand for wine by 5%, but there is no reason that wine producers will increase their demand for linen by 20%!
Referring specifically to disproportions arising from varying rates of productivity, Marx says,
“By the way, in the various branches of industry in which the same accumulation of capital takes place (and this too is an unfortunate assumption that capital is accumulated at an equal rate in different spheres), the amount of products corresponding to the increased capital employed may vary greatly, since the productive forces in the different industries or the total use-values produced in relation to the labour employed differ considerably. The same value is produced in both cases, but the quantity of commodities in which it is represented is very different. It is quite incomprehensible, therefore, why industry A, because the value of its output has increased by 1 per cent while the mass of its products has grown by 20 per cent, must find a market in B where the value has likewise increased by 1 per cent, but the quantity of its output only by 5 per cent. Here, the author has failed to take into consideration the difference between use-value and exchange-value.
(Theories of Surplus Value 3)
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