A Critique Of "Under-Consumption Theories"
4. The Contradiction Between Production and Consumption Under Capitalism
(but not as the underconsumption theorists understand it)
Just because the surplus value produced by the worker is realized doesn't mean that production and consumption, or purchases and sales, are directly the same thing without any contradictions. As Marx emphasized, under capitalism production and consumption, purchases and sales, and supply and demand, while being internally united, are externally independent moments with their own movement, and herein lies the possibility for crisis to occur and develop. Already under simple commodity production and circulation the possibility of crisis developed, but under capitalistic production this develops further with the greatest opportunity being in the relation between capital and labor.
The fools in the JCP say that "limited consumption" exists under capitalistic production. Of course! The question, however, is not whether it exists or not, but rather what is its character and significance. The balance between production and consumption, supply and demand, and sales and purchases is obvious in the case of the exchange of products, and in the case of simple commodity production this also seems a fair proposition at a glance. This is because the person who receives money for selling a commodity is also a person who purchases a commodity. Under these conditions, any "limited consumption" would be illogical. If one only abstracts from this simple relationship, one could insist in the manner of Mill, Say or Ricardo, that sales and purchases, and purchases and sales are in agreement and that production and consumption are essentially identical, and hence general overproduction and crisis could be refuted. However, under capitalistic production, this simple argument is already completely meaningless. Say's theory of equilibrium, by dissolving commodity exchange into the exchange of products, ignores the historical limitations of commodity production, and thereby the possibility of crisis can be denied.)
If we look at crisis in a purely formal manner, supply and demand are split and in disagreement. Commodities are supplied (produced) which exceed that demand able to purchase them. Here Say's simple theory of "harmony" and "market theory", which states that since production is consumption and purchases are sales, there is agreement between supply and demand, breaks down from the start.
Marx argues that the possibility of crisis-for the moment only a possibility-is given along with simple commodity production and develops further under capital.
"Nothing could be more foolish than the dogma that because every sale is a purchase, and every purchase a sale, the circulation of commodities necessarily implies an equilibrium between sales and purchasescBut no one directly needs to purchase because he has just sold. Circulation bursts through all the temporal, spatial and personal barriers imposed by the direct exchange of products, and it does this by splitting up the direct identity present in this case between the exchange of one's own product and the acquisition of someone else's into the two antithetical segments of sale and purchase. To say that these mutually independent and antithetical processes form an internal unity is to say also that their internal unity moves forward through external antitheses. These two processes lack internal independence because they complement each other. Hence, if the assertion of their external independence [aausserliche Verselbstandigung] proceeds to a certain critical point, their unity violently makes itself felt by producing-a crisis. There is an antithesis, immanent in the commodity, between use-vale and value, between private labour which must simultaneously manifest itself as directly social labour, and a particular, and a particular concrete kind of labour which simultaneously counts as merely abstract universal labour, between the conversion of things into persons and the conversion of persons into things [personification of things and reification of persons-footnote in Penguin edition]; the antithetical phases of the metamorphosis of the commodity are the developed forms of motion of this immanent contradiction. These forms therefore imply the possibility of crisis, though no more than the possibility. For the development of this possibility into a reality a whole series of conditions is required, which do not even exist from the standpoint of the simple circulation of commodities." ("Capital" Volume. I, pp. 208-9; Penguin Classics)
However, this disagreement between supply and demand is simply a possibility, and in normal conditions of capitalist production it does not occur. Of course, there is some possibility for this to occur partially (i.e. in the case of individual commodities or a certain sector of industry), but this does not occur in general. While it might not be possible to sell a given product, but in fact (usually) they can be sold. In general it does a disequilibrium between supply and demand does not occur wherein too many commodities are supplied and (produced)-or too little demand (purchases) which amounts to the same thing. A perpetual crisis cannot occur in capitalism. Commodities are swallowed up by the market and are able to be sold smoothly. It is an abnormal or particular case that they are not sold.
However, in simple circulation it occurs in some cases that the agreement between supply and demand and purchases and sales is lost. For example, a person who sells a commodity hoards the money from this sale instead of purchasing a commodity. This person puts a commodity into circulation, but that is all. He does not pull a corresponding commodity out of circulation. That is, instead of using the money earned from the sale of his commodity to pull a commodity out of circulation, he elects to save this money. Since we have to admit that this is not merely a random occurrence, but a necessity that can generally occur, it appears that even in the case of simple commodity circulation, supply and demand and sales and purchases are not always in balance. This is a formal possibility but definitely not an arbitrary one. Rather, it is a possibility that is inseparably and internally linked to commodity production. Under capitalistic production this takes on an even greater scale, and appears in this production as an inevitable thing. Since the goal of the capitalist is normally accumulation and accumulation is achieved through the transformation of surplus value for capital, it is an everyday occurrence that a purchase doesn't follow a sale. Of course the actions of individual capitalists are offset. When one capitalist sells but doesn't buy, another capitalist buys but doesn't sell. Therefore, if the capitalist class is taken as a whole it could be said that supply and demand and purchases and sales are roughly in agreement. However, even with capitalists taken as a whole, can it really be said that there is a moment or time where there are only purchases and no sales, or only sales and no purchases? This occurs in the case of the individual capitalist, but even when the capitalists are taken as a whole, can the possibility be denied that this will not be offset? Considering the capitalist class en masse, can one declare that the situation would not arise in which there were only purchases and no sales, or an avalanche in the opposite direction? Formally the possibility of this occurring could not be denied (and if this occurs it would signify a crisis). This thus signifies the possibility of crisis and its development. At any rate, it can and does occur that sales and purchases can appear as the independent moments of supply and demand, as unrelated moments.
We also know, of course, that under the system of capitalist production not only are there cases where there are only sales and no purchases, but also cases with only purchases and no sales. For instance, in the case of large scale industries which require a long period of time to be established, a number of years are dedicated solely to the purchase of the means of production (machinery, factory facilities, etc.) In this case, no commodities are thrown into circulation for the simple reason that production has not yet commenced. It is worthless to insist that with the commencement of production the case will be reversed and sales would be greater than purchases and thus it could be said that in the end it is offset and purchases are sales and sales are purchases. Although this is probably true in the long term, if we take a given moment, a decisive gap and huge difference between supply and demand, and purchases and sales.
"If we were to consider a communist society in place of a capitalist one, then money capital would immediately be done away with, and so too the disguises that transactions acquire through it. The matter would be reduced to the fact that the society must reckon in advance how much labour, means of production and mass of subsistence it can spend, without dislocation, on branches of industry which, like the building of railways, for instance, supply neither means of production nor means of subsistence, nor any kind of useful effect, for a long period, a year or more, though they certainly do withdraw labour, means of production and means of subsistence from the total annual product. In capitalist society, on the other hand, where any kind of social rationality asserts itself only post festum (after the feast: too late to have any effect), major disturbances can and must occur constantly. On the one hand there is pressure on the money market, while conversely the absence of this pressure itself calls into being a mass of such undertakings, and therefore the precise circumstances that later provoke a pressure on the money market. The money market is under pressure because large-scale advances of money capital for long periods of time are always needed here. This is quite apart from the fact that industrialists and merchants throw the money capital they need for the carrying on of their businesses into railway speculations, etc., and replace it with loans from the money market. The other side of the coin is pressure on the society's available productive capital. Since elements of productive capital are constantly being withdrawn from the market and all that is put into the market is an equivalent in money, the effective demand rises, without this in itself providing any element of supply" (Capital Vol. 2. ch. 16)
In capitalist production the stage of simple commodity production has be superseded, and thus the possibility of crisis is magnified. For example, let's consider the relationship between capitalists and workers. Here the purchase and sale directly appear as two different things.
First let's look at the capitalist. He must "sell at a higher price than he purchased". This can be said because he sells commodities which includes more value than the ones he purchased. The commodities he purchases and takes out of circulation take the form of means of production and labour power (commodities as constant capital and variable capital), but the commodities he sells and puts into circulation are commodities in which the value of the means of production and labour power have been added, and which include the surplus value exploited from the workers in the process of production (commodities as the body of value in which surplus value has been added to the variable and constant capital). Of course, this has nothing to do with the arbitrary decision of the capitalist to sell the commodity at a higher price which is merely a necessary action for as long as a capitalist remains a capitalist, and a normal occurrence in a capitalist society. The motive and goal of the capitalist's productive and economic activity is the acquisition of this surplus-that is, to "buy cheap and sell dearly" gives rise to a gap between sales and purchases. For this reason, for the individual capitalist "supply" and "demand" do not, and cannot, directly be in agreement.
In the case of the workers it is the same. If the capitalist doesn't buy or doesn't sell, the worker sells more and consumes less, i.e. "under" consumes. What the worker is paid (wages, i.e. constant capital) and what he hands over to the capitalist in exchange (value) include the surplus value part in addition to the constant capital part. However, what the worker is paid is purely the constant capital part. For instance, even though the workers produces value for the capitalist of 1,000,000 Yen, they are merely paid half that amount, 500,000 Yen, in wages for the price of their labour power commodity. The capitalist receives 500,000 Yen as profit. In other words, the workers are exploited. Although this part was produced by the workers, it is not realized for them. Even though the workers (through the mediation of the capitalist) put commodities with a value of 1,000,000 Yen into circulation, they only withdraw half of that in paid compensation with commodities From the workers' viewpoint the commodities with a value of 500,000 Yen are a surplus. The workers "under-consumption" appears as an unmistakable reality. Since this phenomenon is simply accepted, the mistaken theory of under-consumption was born, this is the basis for the fact that this theory spread so easily.
Thus, under relations of capitalist production and class relations, the proposition that at a glance production and consumption are in agreement appears as something irrational because the working class cannot "purchase", and as a result "consume", everything that they themselves have produced. The workers only produce as long as they produce surplus value, i.e. as long as they produce something above their production for themselves. In other words, production and consumption only take place as long as things are produced in addition to production for their own consumption, that is, production of surplus value for the capitalist. If the worker only produces for his own consumption, that is if no unpaid labor for the capitalist is carried out, no surplus value will be produced and the worker will certainly cease to work. If the worker doesn't produce surplus value for the capitalist, he also will not (cannot) produce for his own consumption. So as long as the workers produce, they must produce surplus value for the capitalist, i.e. labor performed in excess of that done for their own consumption, in this way they are wage workers. In this sense, the workers always produces "too much", and produces in excess of consumption. Say's simple proposition that production and consumption, and supply and demand are in agreement, appears at a glance to be mistaken in the case of the workers, i.e. in the case of the relation between capital and waged labor. In the case of commodities consumed individually in which one's labor is objectified as value, not to mention those commodities industrially consumed, the workers are certainly unable to purchase all of them. Production and consumption each appear as separate, independent and mutually unconcerned moments. Here the "internal unity" between the two appears meaningless at a glance.
Of course, this is a consequence of capitalistic production but this does not directly mean that this is "impossible" or "unrealizable" in capitalism (Rosa Luxemburg and Narodnik theorists often understood it in this way). Marx emphasized in the following passage that even if the limits of workers consumption give birth to partial overproduction in the production sector of consumption goods which leads to overproduction in related production sectors, this in itself still does not signify general overproduction:
"This argument, however, cuts two ways. If it is easily understood how overproduction of some leading articles of consumption must bring in its wake the phenomenon of a more or less general overproduction, it is by no means clear how overproduction of these articles can arise. For the phenomenon of general production is derived from the interdependence not only of the workers directly employed in these industries, but of all branches of industries which produce the elements of their products, the various stages of their constant capital. In the latter branches of industry, overproduction is an effect. But whence does it come in the former? For the latter continue to produce so long as the former go on producing, and along with this continued production, a general growth in revenue, and therefore in their own consumption seems assured." (MECW Vol. 32, p. 153)
This passage shows the errors of the JCP's simplistic "theory of underconsumption" (the theory which explains crisis as a result of underconsumption, particularly the underconsumption of the workers). In other words, Marx says that the limited consumption of the workers can be understood to lead to overproduction in certain production sectors of consumption goods, but this is all; it cannot explain general overproduction. Marx's view creates serious havoc for the vulgar view of the JCP. Overproduction in general must be explained from a different moment.
Believers in the JCP's theory of underconsumption are completely unable to understand that in order for workers to continue their own production, and hence their consumption, it is necessary for them to produce in excess (extension of labor time) of the production needed for their own consumption (labor time), i.e. they must produce surplus value for the capitalist. Moreover, if this does not occur, even the production for themselves will not be carried out, and thus their own "consumption" will become impossible.
Following their pathetic wisdom they reach the conclusion that if the workers would only produce for their own consumption, overproduction would definitely not occur since the workers would only be producing for themselves and nothing would be superfluous (the JCP only vaguely say that the consumption of the workers would be increased, but they don't say that this increase would make surplus value impossible). However, this is only correct if workers are understood as small producers, not exploited by capital, whose consumption is based on the sale of what they have produced themselves. (However this can only be said in the abstract theoretical meaning.)
Incidentally, the JCP claims that crisis can be evaded through the expansion of workers consumption, but do they mean to say that consumption can be expanded to any extent, and that if consumption is expanded to any extent a crisis can be avoided? If the workers were to consume all they had produced, this would be the negation of capitalist production which aims for the production of surplus value, and would thus signify socialism. However, they usually posit their demands "within the framework of capitalism", and hence their demand for increased consumption not only does not contradict the production of surplus value, but exists comfortably within this framework. In other words, they pursue the absolutely contradictory, and utopian demand of eliminating the workers' limited consumption without eliminating the very basis of their limited consumption.
Under capitalistic production relations, production, and hence consumption, can only occur as long as surplus value is produced for capital. Herein, the "system of consumption" is included as an essential moment, and these relations can only be sublated by overcoming capitalistic production. On the one hand, the JCP appear to be opposed to the "limited consumption" of the workers, but in the next breath they say that they don't deny the base of this "limited consumption" , i.e. capitalistic production, and hence they approve of the continuation of the workers' "limited consumption". Since they declare that as long as the worker's consumption is limited recessions will continue and worsen, it could be said that they are promising the eternal existence and continuation of recession, and are defending the basis of this society.
Marx certainly emphasized that consumption is "limited" under capitalism, not in the simplistic manner of the underconsumption theorists (the impossibility of realizing surplus value), but always as the opposition under capitalism between the productive power and the anarchical development of production. Under capitalism, production and consumption (market) are separate things, mutually isolated and independent, and governed by distinct laws of motion. Therefore, even though originally they are internally united, they become decisively remote from each other. Furthermore, Marx discussed each of the laws that govern production and consumption (market). Under capitalistic production relations, production is expanded through anarchical, and accelerated development. On the other hand, consumption, or in capitalistic terms the market, cannot expand in proportion to productive power and production, but is limited under capitalistic production relations, i.e. relations underpinned by the exploitation of labor. Let's now look more closely at this phenomenon.
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