A Critique Of "Under-Consumption Theories"
6. Crisis and the Fate of the Capitalist Mode of Production
Crisis is the essence of capitalism, and thus its evaluation is at the same time a judgement on capitalism. It is nonsense to say that capitalism is good, and only crisis is bad (e.g. capitalism would be an ideal society if crisis were eliminated). Crisis is the concentrated expression of the contradictions of capitalism which explode in a visible form.
Marx emphasized that crisis revealed the inevitable limits of capitalism and the inevitable limits of this mode of production which must be transformed into socialism. This conception is precisely the same as the materialist conception of history. For Marx, the recognition of the essential content and limitations of capitalism in itself elucidates the nature of crisis. In this sense, the viewpoint that "there is no systematic theory of crisis within Marxism", or that "Marx was unwilling to construct a theory of crisis" is mistaken.
"Beyond a certain point, the development of the productive forces becomes a barrier to capital, and consequently the relation of capital becomes a barrier to the development of the productive forces of labour. Once this point has been reached, capital, i.e. wage labour, enters into the same relation to the development of social wealth and the productive forces as the guild system, serfdom and slavery did, and is, as a fetter, necessarily cast off. The last form of servility assumed by human activity, that of wage labour on the one hand and of capital on the other, is thereby shed, and this shedding is itself the result of the mode of production corresponding to capital. It is precisely the production process of capital that gives rise to the material and spiritual conditions for the negation of wage labour and capital, which are themselves the negation of earlier forms of unfree social production." (Grundrisse, MECW Volume 29 pp. 133-4)
Marx said that each of the essential sides of capitalism were represented in the theories and thought of Ricardo and Sismondi. If Ricardo represents the "positive" side of capitalism by disregarding the limits of demand, consumption and the market and how these limits impact on the development of the productive forces, and how this trend itself prepares the material conditions for socialism; Sismondi theoretically represents the "negative" side of capitalism and its limits such as the explosions of crisis. According to Marx, in the opposition between these two representative theories, the essence of capitalism, and hence the essence of crisis, was revealed.
"The universality towards which it (capital) irresistibly strives encounters barriers in its own nature, which will, at a certain stage of its development, allow it to be recognized as being itself the greatest barrier to this tendency, and hence will drive towards its own suspension.
Those economists who, like Ricardo, conceived production as directly identical with the self-realization of capital-and hence were heedless of the barriers to consumption or of the existing barriers of circulation itself, to the extent that it must represent counter-values at all points, having in view only the development of the forces of production and the growth of the industrial population-supply without regard to demand-have therefore grasped the positive essence of capital more correctly and more deeply that those who, like Sismondi, emphasized the barriers of consumption and of the available circle of counter-values, although the latter has better grasped the limited nature of production based on capital, its negative one-sidednesscSismondi, by contrast, emphasizes not only the encounter with the barriers, but their creation by capital itself, and has a vague intuition that they must lead to its breakdown. He therefore wants to put up barriers to production, from the outside, through custom, law, etc., which of course, as merely external and artificial barriers, would necessarily be demolished by capital. On the other side, Ricardo and his entire school never understood the really modern crises, in which this contradiction of capital discharges itself in great thunderstorms which increasingly threaten it as the foundation of society and of production itself." (Grundrisse pp. 410-1)
"Sismondi is profoundly conscious of the contradictions in capitalist production; he is aware that, on the one hand, its forms-its production relations-stimulate unrestrained development of the productive power and of wealth; and that, on the other hand, these relations are conditional, that their contradictions of use value and exchange value, commodity and money, purchase and sale, production and consumption, capital and wage labour, etc., assume ever greater dimensions as productive power develops. He is particularly aware of the fundamental contradiction: on the one hand, unrestricted development of the productive power and increase of wealth which, at the same time, consists of commodities and must be turned into cash; on the other hand, the system is based on the fact that the mass of producers is restricted to the necessaries. Hence, according to Sismondi, crises are not accidental, as Ricardo maintains, but essential outbreaks-occuring on a large scale and at definite periods-of the immanent contradictions. He wavers constantly: should the State curb the productive forces to make them adequate to the production relations, or should the productive relations be made adequate to the productive forces? He often retreats into the past, becomes a laudator temporis acti (eulogiser of the past), or he seeks to exorcise the contradictions by a different adjustment of revenue in relation to capital, or of distribution in relation to production, not realising that the relations of distribution are only the relations of production seen sub alia specie (from a different aspect). He forcefully criticises the contradictions of bourgeois production but does not understand them, and consequently does not understand the process whereby they can be resolved. However, at the bottom of his argument is indeed the inkling that new forms of the appropriation of wealth must correspond to productive forces and the material and social conditions for the production of wealth which have developed within captialist society; that the bourgeois forms are only transitory and contradictory forms, in which wealth attains only an antithetical existence and apears everywhere simultaneously as its opposite. It is wealth which always has poverty as its prerequisite and only develops by developing poverty as well." (V. 32 pp. 247-8)
The significance of these representative passages should be clear. Here it is revealed that the fundamental contradiction of the capitalistic mode of production is the contradiction between productive power and the relations of production, and that crisis is also determined by this.
Finally we need to consider the practical meaning of the theories which explain crisis from under-consumption. However, the answer can already be found in the history of capitalism where several varieties of under-consumption theories have appeared which have been met with unsparing criticism from the camp of revolutionary Marxists.
Marx criticized the petty bourgeois theorists who hope for "harmony" between production and consumption through the agreement of "demand and supply" in the following way:
"Fuit Troja (Troy is no more). This correct proportion between supply and demand, which is beginning once more to be the object of so many wishes, ceased long ago to exist. It has passed into the stage of senility. It was possible only at a time when the means of production were limited, when the movement of exchange took place within very restricted bounds. With the birth of large-scale industry this correct proportion had come to an end, and production inevitably compelled to pass in continuous such cession through vicissitudes of prosperity, depression, crisis, stagnation, renewed prosperity, and so on.
Those who, like Sismondi, wish to return to the correct 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 correct, or more or less correct, 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." (The Poverty of Philosophy pp. 61-2)
There is nothing add to this passage, because on a daily basis we can confirm that the JCP, have become defenders of the "old" petty bourgeois relations on the one hand, and have prostituted themselves as bourgeois clerks seeking to reform, not revolutionize, the capitalist relations of production on the other hand. Instead of choosing Marx's proposal of "one or the other", for the time being they jumble the two together. Of course their progress (degeneration) into the bourgeois-like liberalism of petty bourgeois "citizen activists" (jiminshugisha) is inevitable, and this shameless progress continues right in front of our eyes.
Lenin exposed the practical meaning of the Narodnik (today's JCP) theory in the following way:
"Indeed, if we explain crises by the impossibility of realising products, by the contradiction between production and consumption, we are thereby led to deny reality, the soundness of the path along which capitalism is proceeding; we proclaim this path to be a "false one," and go out in quest of "different paths." In deducing crises from this contradiction we are bound to think that the further it develops the more difficult will be the way out of the contradictioncOn the other hand, if we explain crises by the contradiction between the social character of production and the individual character of appropriation, we thereby recognise that the capitalist road is real and progressive and reject the search for "different paths" as nonsensical romanticism. We thereby recognise that the further this contradiction develops the easier will be the way out of it, and that it is the development of this system which provides the way out." (A Characterization of Economic Romanticis!
!
m p. 173)
At the time of Lenin's criticism capitalism was beginning to develop in Russia. This was thus a period wherein the problem was not one of overcoming the capitalistic mode of production, but what path should be pursued to break free of the feudalistic relations. Consequently, Lenin position was that the progressive meaning of the capitalistic development had to be recognized. Nonetheless, Lenin correctly described the essential nature of crisis and the meaning it held within capitalistic production, and resolutely counter-attacked petty bourgeois views.
Finally, let's examine the relation between crisis and the fate of the workers.
One conspicuous phenomenon which crisis exposes is the surplus in labor power. Companies suddenly notice that they possess too much labor power for them to be able to increase profits. As a result, they begin severe restructuring and focus their attention on firing workers. They are never short of excuses, because if the "excess" labor power is not reduced capital cannot continue to exist. As long as capital survives, "morality" can never exist in this society. Capital doesn't care if workers become homeless or don't have enough to eat. To protect itself, capital will permit anything whether it be firing workers or indirectly killing them For capital anything that is useful is "good" and ethical.
Crisis is the violent re-unification and re-adjustment of various independent moments under capital. For this reason, crisis stems from the nature of capital, and is a chance for capital to sweep away the surplus population it is burdened and get rid of the "excess" labor power in terms of production for profit, and achieve equilibrium. It is natural that labor power is subordinate with production for profit, and in this topsy-turvy society anything else is unthinkable.
Crisis and its accompanying high unemployment means that labor power has also become "surplus", and this is an essential side of overproduction and excess capital. But what is excess labor power? An absolute surplus of labor power is unthinkable, and the concept itself is self-contradictory. Under capitalism, like consumption, this is only a surplus for capital. Labor power becomes a surplus for capital when it is not possible to obtain surplus value through employing it. The rapid development of the productive power of labor has led to a contraction in labor time. For capital, however, this only appears as the contradiction of surplus labor power and the inability of obtaining surplus value through the employment of workers. It is clear that if labor time were reduced rapidly, there would be no problem of a surplus of labor time for production. Under socialistic production the problem would appear in such a simple form, but capitalist society is different. Under capitalism, for example, the reduction in labor time through the development of productive power appears as mass unemployment which prepares the resistance of the workers. Under socialism, the total labor of all the people could be reduced on a large scale-for the individual people this would appear as the rapid reduction in labor time, but in capitalist society the development of productive power leads to the abolishment of a large number of workers' jobs, i.e. the loss of the means of living, and if this progresses to an extreme it prepares a revolution. Outside of a revolution, the possibility of a large reduction in labor time of capital is turned into mass unemployment. In other words, a process which should increase the welfare of the workers, becomes a source of their misery because this upside-down system continues to exist.
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