So, as Marx sets out in Theories of Surplus Value, Chapter 17 et sub, Ricardo, Mill and Say were wrong in denying the possibility of a generalised overproduction of commodities (Say's Law). Commodity production, of itself, creates the potential for such overproduction, because it separates production from consumption, value from use-value, supply from demand.
At the level of simple commodity production, and barter, it remains true that supply creates its own demand, but commodity exchange necessarily leads to the development of money, and, now, all commodities can be overproduced, because the demand for money exceeds the demand for all other commodities. Still, it remains the case that such overproduction ruins only individual producers. But, when commodity production becomes the preserve of large capitalist producers, creating large quantities of supply, ahead of demand, what was, previously, only a potential for overproduction, becomes inevitable. Sismondi, unlike Ricardo, noted this inevitability, and sought to avoid it by holding back capitalist development. It was reactionary, petty-bourgeois “anti-capitalism”, and that kind of reactionary “anti-capitalism” continues to today.
“Those who, like Sismondi, wish to return to the true proportion of production, while preserving the present basis of society, are reactionary, since, to be consistent, they must also wish to bring back all the other conditions of industry of former times.
What kept production in true, or more or less true, proportions? It was demand that dominated supply, that preceded it. Production followed close on the heels of consumption. Large-scale industry, forced by the very instruments at its disposal to produce on an ever-increasing scale, can no longer wait for demand. Production precedes consumption, supply compels demand.
In existing society, in industry based on individual exchange, anarchy of production, which is the source of so much misery, is at the same time the source of all progress.
Thus, one or the other:
Either you want the true proportions of past centuries with present-day means of production, in which case you are both reactionary and utopian.
Or you want progress without anarchy: in which case, in order to preserve the productive forces, you must abandon individual exchange.” (p 65-6)
The determination of value by labour-time was not the discovery of Proudhon, as the basis of some future harmonious society, but the discovery of Smith and Ricardo, as the basis of existing capitalist society. Nor could Proudhon claim that his application of that theory, for egalitarian purposes, was his. The Ricardian socialists had already set out those principles at least twenty years earlier.
“Anyone who is in any way familiar with the trend of political economy in England cannot fail to know that almost all the Socialists in that country have, at different periods, proposed the equalitarian application of the Ricardian theory. We quote for M. Proudhon: Hodgskin, Political Economy, 1827; William Thompson, An Inquiry into the Principles of the Distribution of Wealth Most Conducive to Human Happiness, 1824; T. R. Edmonds, Practical Moral and Political Economy, 1828 [18], etc., etc., and four pages more of etc.” (p 66-7)
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