A Critique Of "Under-Consumption Theories"
1. Crisis is Real
The consecutive bankruptcies this past year of banks and security firms-certainly no small matter-shocked the bourgeoisie and conservative politicians, sending them into a state of near panic while reminding them that crisis is not a thing of the past. The immediate decision to again use "public funds" which had been so heavily criticized at the time of the Jusen (Savings and Loan Scandal)-but this time the sum was ten times larger-says a great deal about the bourgeoisie's bewilderment and sense of crisis. Since the end of the war they had continuously repeated that "crisis is a thing of the past which will no longer occur since the management of capitalism has become feasible with the development of Keynesianism."
Crisis, however, is indeed very real-this reveals that as long as capitalism remains capitalism the bourgeoisie will never be able to escape their fears. They have suddenly abandoned such slogans as easing restrictions, administrative reform and financial restructuring-these were adopted by the Hashimoto administration with great fanfare and were the "officially authorized" policy of the bourgeoisie-to fall back to Keynesian expansionist policies and enlarged programs to stimulate business. This happened at the time when a critical standpoint towards Keynesianism had begun to be established following the bubble period, and the effectiveness of "small government", financial restructuring, de-regularization and free competition (market economy) was beginning to be proclaimed. What a careless and irresponsible bunch they are!
It is not easy to say what will be the result of their change in standpoint, that is the expansionist policies to stimulate business, but it is certain that a bubble, financial collapse or a slip into inflation are all possible. The bourgeoisie believe that a bubble is of more use that a recession.
It was said after the war that crises were finished, and now there are cries that there is no escape from crises. But what is a crisis in the first place? Is it something which is inescapable under capitalistic means of production? Or can it be overcome through reforming capitalism to make it a little more humane?
Since the beginning of the 19 century when the cyclical and regular occurrence of crises became visible, many theories have appeared to explain crises and their cause. Of these explanations one which has been particularly emphasized is the so-called "under-consumption theory". This, in other words, is the theory which explains the cause of crisis as "insufficient consumption" under capitalism. This theory can be broadly divided into two currents. On the one hand there is the "humanistic" theoretical current represented by Sismondi, Narodiniki (and later Rosa Luxemburg). On the other hand there is the reactionary, bourgeois (parasitic class) view connected with Malthus and Keynes. (The Japanese Communist Party's position lies within these two currents, their view is "humanistic", on the one hand, and Keynesian on the other, and is therefore not consistent at all. In the end they return to the reactionary bourgeois standpoint, and this is probably inevitable. Already no essential difference can be found between their position and the Keynesian standpoint.
Simply put, the standpoint of the theory of underconsumption states that since capitalism is a society based on the exploitation of workers, the workers' consumption is also exploited and inevitably becomes "too small". If workers produce but don't consume how can surplus value be "realized" (be sold)? Under capitalism the value of a commodity appears as constant capital + variable capital + surplus value (C+V+M). The question is how is the part M realized (Luxemburg's awareness of the problem is a little different; that is, she asks: "where does the money come from for capitalists to realize the M part", and "isn't it impossible for capitalists to find this under 'pure' capitalism?" Of course this is nothing but a different kind of underconsumption theory.)
The theory of underconsumption, represented by Sismondi, is introduced to explain (criticize) the magnification of capitalist contradictions. Thus Sismondi and Narodniki had a certain positive significance in that they exposed one essential side of capitalism. However, even in their case, this theory is nonsense and is unable to grasp the essential content of capitalism. The theory of underconsumption was a reaction to and criticism of Say, Mill and Ricardo's theory of equilibrium. In other words, this was a reaction against the view that capitalism is a mode of production essentially without contradictions in which no essential limitations exist that internally deny the market economy, and since production is consumption, sales are purchases, supply is demand (and the reverse as well), general overproduction or a general crisis can not occur.
Marx, of course, was opposed to the theory of equilibrium, but he also counterattacked the theory of under-consumption. He showed that it was based on a completely narrow and superficial understanding of the capitalist mode of production, and firmly exposed its reactionary nature. Essentially Marx explained crisis in the following way:
"Crises are never more than momentary, violent solutions for the existing contradictions, violent eruptions that re-establish the disturbed balance for the time being." (Capital Volume 3, chapter 15)
"The world trade crisis must be regarded as the real concentration and forcible adjustment of all the contradictions of bourgeois economy." (MECW Vol. 32 p. 140)
For Marx, crisis was the explosion and concentrated expression of capitalist contradictions. Marx insisted that capitalist contradictions must break out in the phenomenon of the crisis or panic because this is precisely the true character of capitalism, here lies its cause. Moreover, Marx points out that crisis is not merely the expression, or explosion of capitalist contradictions, but at the same time a violent solution, a process of forceful readjustment and the dissolution of disequilibrium.
Along with the development of capitalism, the oppositions or contradictions between value and use value, production and consumption, the production and realization of value, supply and demand, etc, also necessarily develop and deepen. Simply put, at a certain stage in the development and movement of capitalism, a situation of over-production inevitably arises where the produced commodity is not sold, cannot find a market, and the market is too limited for the produced commodity.
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