Can A Government Run Out Of Money? - Part 6 of 9

With an overproduction of commodities, however, that may not be the case. In Capital II, and III, and in Theories of Surplus Value Part II and III, Marx sets out a whole series of causes of an overproduction of commodities that do not stem from an overproduction of capital. As, Marx sets out in Theories of Surplus Value, Chapter 20, for example, it may be that productivity rises faster in one sphere than another, so that, although both may accumulate the same amount of capital, and increase the value of their output by the same amount, the physical quantity of output in one outstrips that of the other.

“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.”

In terms of the economy as a whole, or even for each capital, there may be no overproduction of capital, here, i.e. an inability to produce additional surplus value, whilst there may be an overproduction of commodities in one sphere compared to the other, and so, in one, where the quantity of use values expands much more than the increase in the value of its output, it finds it cannot realise the full value of that output, because the market for its output does not grow as fast as its output of use values. In 2000, there was no overproduction of capital, as seen in the fact that the rate of profit was at a high point, having risen throughout the preceding 15 years, and there was a surplus of labour. But, it did not prevent there being a glut of electronic switching gear, just as, in the 1840's, at the start of that long-wave uptrend, there was a glut of railway track and rolling stock.

What consumers consume/demand is not exchange-values, but use-values.

“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.” (ibid)

What exists, here, is not a crisis of overproduction of capital, but an overproduction of commodities, a glut in the market, arising from a disproportion. And, contrary to the assertion of Mill, Say and Ricardo that no such generalised overproduction of commodities can arise, Marx, in Theories of Surplus Value, Chapter 17, shows that, of course, in a money economy, let alone a capitalist economy, it can, because all that is required is that consumers, in aggregate, demand the general commodity, money, more than they demand additional commodities that they may buy with it. It is the basis of Keynes' paradox of thrift.

Marx notes,

“At a given moment, the supply of all commodities can be greater than the demand for all commodities, since the demand for the general commodity, money, exchange-value, is greater than the demand for all particular commodities, in other words the motive to turn the commodity into money, to realise its exchange-value, prevails over the motive to transform the commodity again into use-value.”

The error for Ricardo was that, like Mill, he saw money only as currency, as the means of exchange of commodities, as though what was going on was just an exchange of products, as under barter, but with money simply facilitating the process of exchange. But, as Marx describes above, a money economy is quite different to a barter economy, and the production of commodities is quite different to the exchange of merely surplus products. The commodity producer must sell, and obtain what price they can, in order to obtain money and continue production. The owner of money, now, does not simply use it to facilitate exchange, but can hoard it as a store of value, in its own right, and, in doing so, can also, speculate on being able to buy on some more favourable terms, or may use a hoard of money to buy in bulk, with that aim in mind, or else, may hoard it, not to spend, but to lend, and so obtain interest. The money, in these changed social conditions becomes not just money, but money-capital, the start of the circuit for commercial and interest-bearing capital, and under industrial capitalism, the start of each new circuit of productive-capital.

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