In condition of an overproduction of commodities, it is not more money that is required, i.e. more liquidity. As set out, that could only reduce the value of each token, causing prices to rise, so that a condition of stagflation arises. Either the value of existing commodities must fall, so that they can be sold profitably, at a lower price, so that demand for them rises, removing the overproduction, or else incomes must rise, relative to those values, so that demand rises. But, how is that to happen? If wages rise, enabling workers to buy more, then profits will fall. Workers may buy more, but capitalists would buy less, and, in conditions of squeezed profits, its even more likely that prices may not be sufficient to avoid losses.
Alternatively, a whole range of new use values are introduced, so that consumers, instead of demanding money, demand these new commodities. That, in fact, is the way all such prolonged periods of overproduction and stagflation are resolved. In the 1930's, for example, new technologies made available motor cars, as well as domestic appliances, and demand for these commodities is enabled, first among the middle-class, and subsequently amongst workers, as the value of these commodities falls to levels at which these sectors of the population can afford them.
In the 1980's and 90's, the microchip revolution began to make available video recorders, personal computers, and so on, all of which created the industries upon which the new upswing, after 1999, was based. This is the process Marx describes, in The Grundrisse, as The Civilising Mission of Capital.
Similarly, a crisis of overproduction of capital cannot be resolved by additional liquidity. A crisis of overproduction of capital is also a crisis of overproduction of commodities, because the elements of capital are comprised of commodities. Such a crisis arises because capital has expanded relative to the social working-day. Absolute surplus value cannot be expanded, and relative surplus value is reduced as wages rise. The solution to this is a technological revolution. It creates new labour-saving technologies, which creates a relative surplus population, restoring the relation between capital and the social working-day.
Wages are pushed down, and profits rise. Fixed capital is devalued, as a result of the technological revolution, and by moral depreciation. That raises the average annual rate of profit, and creates a release of capital. Circulating constant capital is devalued as a consequence of the technological revolution, also raising the annual average rate of profit, and creating a release of capital. The value of labour-power is reduced, via the technological revolution, and rise in relative surplus value, so that again the average annual rate of profit rises, and variable-capital is released. These technological changes also raise the rate of turnover of capital, raising the annual average rate of profit. So that the crisis of overproduction is ended.
Attempts to deal with the crisis via additional liquidity, as proposed by under-consumptionists, Keynesians and proponents of MMT, are doomed to failure, and only result in stagflation as seen in Weimar and in the 1970's.
“Let us assume that £14 million is the amount of gold required for the circulation of commodities and that the State throws 210 million notes each called £1 into circulation: these 210 million would then stand for a total of gold worth £14 million. The effect would be the same as if the notes issued by the State were to represent a metal whose value was one-fifteenth that of gold or that each note was intended to represent one-fifteenth of the previous weight of gold. This would have changed nothing but the nomenclature of the standard of prices, which is of course purely conventional, quite irrespective of whether it was brought about directly by a change in the monetary standard or indirectly by an increase in the number of paper notes issued in accordance with a new lower standard. As the name pound sterling would now indicate one-fifteenth of the previous quantity of gold, all commodity-prices would be fifteen times higher and 210 million pound notes would now be indeed just as necessary as 14 million had previously been. The decrease in the quantity of gold which each individual token of value represented would be proportional to the increased aggregate value of these tokens. The rise of prices would be merely a reaction of the process of circulation, which forcibly placed the tokens of value on a par with the quantity of gold which they are supposed to replace in the sphere of circulation.” (p 120)
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