The immediate resolution of such a crisis comes in the form of a reduction of supply, as the least efficient producers go bust. As part of this process, the average labour-time required for production also falls, so that the market value/ideal price of yarn falls, which in itself acts to increase demand. But, it is the reduction in supply, mostly, that restores balance, and, at this new equilibrium, the price again reverts to the ideal price, determined by the new market value, itself determined by the labour-time now required for production.
But, this is never the case with money. The value of gold is determined by the labour-time required for its production, and, as commodity, gold can be overproduced as with any other commodity. For example, more gold can be produced than is required by jewellery makers, gilders, producers of electronic circuits and so on. But, as money, gold is never overproduced. It never lose utility, as being always exchangeable for other commodities. The value of gold, as with any other commodity, may fall, because less labour-time is required for its production, and that means more of it must be exchanged for those commodities, so that money prices rise, but that is because its value has changed, not because it has been unable to realise its use-value.
“Because commodity circulation presupposes an advanced division of labour and therefore also a diversity of wants on the part of the individual, a diversity bearing an inverse relation to the narrow scope of his own production, the purchase M—C will at times consist of an equation with one commodity as the equivalent, and at other times of a series of commodity equivalents determined by the buyer’s needs and the amount of money at his disposal.” (p 92)
So, as described above, the wine producer, having obtained money from the linen producer, C – M, may now use this same money to buy a range of commodities from the farmer, tailor, and so on, and each of these transactions has the same contradictions inherent within them, creating the potential for crisis. In C – M – C, we have, say, linen sold for money, and the linen producer uses the money to buy wine. The linen itself, having been bought, is consumed, and drops out of circulation. But, its metamorphosis into money means this value continues in circulation. The money is now metamorphosed into wine, and also is now consumed, so dropping out of circulation. The linen has, thereby, passed through its full circuit of metamorphosis. However, in buying wine, M – C, for the wine producer, this appears as C – M, so that, for the wine, it has only now undergone this first process of metamorphosis. For the wine producer, the metamorphosis of wine into other commodities lies ahead.
Looking ahead, the wine producer now exchanges the money they have received, C – M, for a suit from the tailor, so that the wine now completes its cycle of metamorphosis, but, now, this appears as C – M, for the tailor, and so on. Looking backwards, the linen producer sold linen to the tailor for money, C – M, which, for the tailor, appears as M – C, whilst the tailor obtained the money from selling a suit, C – M.
“Thus the total circuit C—M—C representing the complete metamorphosis of a commodity is simultaneously the end of a complete metamorphosis of a second commodity and the beginning of a complete metamorphosis of a third commodity; it is therefore a series without beginning or end.” (p 93)
This continuity, requiring simultaneity, also again illustrates the fallacy of the TSSI, which sees capitalist production in syllogistic terms, as simply a connected series of discrete events, rather than as a continuous process.
“In the real process of circulation C—M—C, therefore, represents an exceedingly haphazard coincidence and succession of motley phases of various complete metamorphoses. The actual process of circulation appears, therefore, not as a complete metamorphosis of the commodity, i.e., not as its movement through opposite phases, but as a mere accumulation of numerous purchases and sales which chance to occur simultaneously or successively. The process accordingly loses its distinct form, especially as each individual transaction, e.g., a sale, is simultaneously its opposite, a purchase, and vice versa. On the other hand, the metamorphoses in the world of commodities constitute the process of circulation and the former must therefore be reflected in the total movement of circulation.” (p 94)
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