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Copyright@ 1 9 80 b y Makoto I toh
All
rights reserved
Library of
Congress
Cataloging ir: Publ ication Dato
Itoh,
Makoto,
1936-
Value
an d
crisis.
Includes bibliographical references
and
index.
1 .
Marx ian econornics.
2.
Value.
3 .
Prices
4. Economics-Iapan-History.
I. Title.
HB97. 5.824 335.-4'12 80-8084
ISBN
U-85345-556-2
1 s B N 0 - s m s - 5 5 7 - 0 ( p b r . )
Monthly
Review
Press
62
West
14th
Street, Ne w
York,
NY. 10011
47
Red
Lion
Street,
London
WC
l R 4PF
Manufactured in the United States
ofAmerica
10 9 8 7 6
5 4 3 2
1
Contents
Pre face and Aeknowledgrnents
T
1 .
The Development ofMarxian Economics
in
Iapan ll
I. The Pre-World Warl Per od
12
Il.
The
Fervent Debates
of
the
In tervvar P er iod 15
Ill.
The
Postwar
Period
26
IV. A BriefConclusion 45
2 . A
Study
of
M : - 1 r x ' s
Theory ot
Value 4?
I.
The
Twofold
Concept
of
Value
47
ll.
The Forms of
Value 52
Ill. The Substance ofValue '5 8
IV.
Prices
of
Production 66
3. Man-is
Theory of Market Va lue 80
I.
The Problems
in
Mar:-r's
Theory of Market Value 80
Il.
The
Technical Average Theory ofMarket Va lue 8 4 -
III.
Uno's
Theory
of
Market
Value '8 6
IV. Prices ofProduction and Market Value 89
4.
The
Formation
of
Man-r's
Theory
of
Crisis
93
I. Two Types ofCrisis
Theory
94
II. Crisis Theory in the Crurrdrisse 95
Ill. Crisis Theory in
Theories ofSurplus
Value 101
IV. Cornpletion of the Crisis Theory in
Capi
tal 10 6
5 . Man-:ist
Theories of
Crisis
L 19
i I. The Diversity ofCrisis
Theories 11 9
ll. Completing
the Basic Theory of
Crisis ' _ 3
III. The Metamorphoses ofCrisis L3 8
Il
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6
Contents
6. The Inflational Crisis of
World
Capital ism
I.
II
III.
IV .
Notes
Index
The
Inflational Crisis of the
1970s
Hovv to Apply
Maris Theory ofCrisis
The Overaecumulation ofWorld Capitalisrn
The Breakdown of the
Relative Stabil ity
of
Postwar
World Capitalisrn
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IP
F - P
e v . - i r
1
1
I-
I
i
I
I
The Formation of Marx's P
t e
T h e o r y
O f
C r i s i s
e
Marx's
theory
of crisis
in
Capital forms
a
focal point of his
systematic critique of
classical
economics,
in
which capital ist
economy
is regarded a s the
ultimate
natural
order
of human
society. Unlike
the
classical school, Marx
treats
the
law
ofmotion
of
eapitalist
product ion scient ifical ly , v . - ' i t h
its
historical forms an d
mechanisms. Without
such
a
systematic
theory we cannot clarity
the logica] necessity of eyclical
crises, which
reveal the contra-
dictory nature of capitalist economy in al l
its
interrelations.
In
dealing
with
such
complex phenomena,
determning
the
level an d the
empirical
basis
of
abstraction
is particularly
irn-
portant. The crisis theory in Capitol was developed
in o rd er
to
prove the inevitabil ity ofcyclical crises at the level ofbasic principle.
lts empirical basis v v a s the typical cyel ical
crises
in the
middle
ofthe
nineteenth century,
the
most
suitable
historical foundat ion fo r
elaborating the principle of crisis.
Ifwe
were to take
a s
the basis of abstraction the whole history of
crises, including the immature crises of the mercantalist
age,
we
would either
have
to
deal rvith exeessively variegated factors (often
not
exclusively economic
factors,
such
a s
wars)
attecting the course
an d
phases of
crises,
or we would have
to
resort
to
excessively
abstract
formal
factors, in order to prove not
only
the possibility but
the logical necessity of cycl ical crises.
Kz
Uno's
systematic
division
of
levels
of study of Marxian economics in to pr inc iples ,
stages
theory, and
empirical
analysis is
essential
h ere. S tud ie s
This
essay
was firs t published in the
Bulletin
of the
Conference
of Socicrtist
Econorrrists
4,
no.
1 0
( F e h r u a r _ . ' 1 9 5 5 1 and reprinted in revised form in Science
an d S oc ie ty 4 2 , n o.
2(Surnmer
1 9 ? ` 8 ` ) .
93
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94 Value
and Crisis
of
the
role of
economic
crisis throughout the world history of
capital ism, comprising the three s t a g e s of mercantilism, liberalism,
an d imperialism,
belong
to
another, higher level of research, that
is,
stages th eo ry , r ath er th an to the leve l of principles of pol it ical
economy,
which
are developed
in
the
theoretical
system
of
Capital.
The firmer ou r understanding of the pr inc ip le o f
crises,
the bet ter
will
be
ou r ability to formulate a stages theory of
crisis, or
further,
to
anal yze th e
critical
situation of contemporary
capitalism.
lt
is
therefore
necessary to
recognize,
even in o ur
age, the
importance
ofMaris crisis
theory,
abstracted
from
the
typical
cyclical crises of
the
md-nineteenth century.
l.
Two Types
o,fC
risis
T l 1 < ? 0 t ' }
However,
Marx's
crisis theory
is
no t fully complete. ln particu-
lar, it contains two di ffe rent types of
theory which
are no t easily
reconciled
with each other.
We
ca n call these the excess capital
theory an d the excess commodity theory .
For instance,
in
the
third
section of chapter
1 5
ofVolume III of
Capital Marx tries
to
show that a steep a nd s udde n fall
in
the
general
rate of profit
d ue to
absolute over-production of capital
_ . .
in
a
ratio to
the labouring
population
(III: 251)*
brings
forth
cyclical
crises. In th is context, excess commodities in
the
market
an d
difficulties
of
realization
of
surplus value
are
regarded
a s
the
result of
the falling
rate ofprofit
caused by
the cxcess accumulation
of capital* Maris attempt
in
Capitol to deve lop
a business
cycle
theory along this line
can
be observed also in
his theory
of capital
accumulation in
Volume I (see I: 6 1 2 -2 0 , 6 3 2 -3 3 , 762-71, 784-
85 ;
s e e also ll: 410-1
1 ,
486-87) , and in
his
credit theory in
Volume
III (see Ill: 513-14).
ln contrast
with
this,
in the first section
of
the
same chapter 1 5 of
Volume
III,
Marx looks fo r
the
restriction
to
capitalist production
in
the
difficulty of
realizing
surp lus va lue
in
the circulation pro-
cess,
a s
follows:
1
l
i
_ , . -
I
L
t
i
1
i
|-
M a rx's Theory ofC
risis 95
The conditions of direct exploitation, a n d t ho se of
realising
i t, are
not. identical.
.
_
.
The
first
ar e
only
limited by
the
productive
power
of
society, the latter by the proportional
relation of the
various branches ofproduction a nd the consumer power of society.
[Alongwith the increase of productionof
surplus-value,
there
is
ari
increase
in ]
the contradiction between the conditions
under
which
this surplus-value is produced an d those under
which
it is realisecl.
(lll: 244-45)
Also, in chapter 30 of
Volume lll Mar:-r
points out that the
disproportion of production in various
branches
an d the re-
stricted
consumption of the
masses
as opposed to development of
productive
power, ar e
the
ultimate
reason
or
cause
of
crises
(Hi:
484). In
these
places,
he
considers that
crises
occnr
from
the
overproduction of
commodities
beyond
demand, d ue to either the
disproportion
among
production hranches or the restricted
con-
sumption
of
the
masses.
Excess
capital
and
the
fall
of
the
profit
rate
are
seen
a s
results ofthis process.
Need less to say, both capital
an d
commodities are g eneral ly i n
cxcess in cr is is per iods . But it
is
important to discern which ofthese
is
the fundamental cause
of economc crises.
The
excess capital
theory an d the
excess
commodity theory
are logicalljv opposed to
each other at
this
point. We cannot
keep
both theories if
we
seek to
prove the
logical
necessity
of economc
crisis in the
principle of
political economy.
Why do these two different
types
of crisis theory c o e : - i s t s o
uneasily
in
Capitol?
ln
which direction, an d how, should \larr s
crisis
theory
be
completed?
I
will
try
to give an answer to these
questions by reviewing the formation of M a r ? - ` s crisis theory from
the Crundrisse
to Capital.
ll. Crisis Theory in
the
Crundrisse
ln The Chapter on Capital
in
the Grundr isse (which is the fi rs t
manuscript fo r Capital w r it ten in 1857-1858), Marx develops his
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96 Va lue and
Crisis
theoretical
studies
of crisis mainly at the hfigiflfiing of cction zi
T
he Circulation Process of
CHPHLI
an d
lftlfi f - 1 I 1 fl l Y 5 1 S Of P m fi t
theory
in
section 3,
Capital
a s
Fructiferous.
At
the
beginning of section 2 of the Crundrisse, in contrast to
Volume II ofCapital, Marx treats the sell ing of commodity pro-
ducts
by
capital
i.e.
C -M,
a s
an
important
restr ic t ion on
the
motion of capital, 5 3 - Y i n g
lt is forgotten that,
as Malthus says, the
very
existence of
a
profit
upn
an y cmmndity
pre-supposes
a demand exterior to
that
of
the
lflbufgf who
ha s
produced it, and hence the demand
of
the
l abourer h i rnse lf c an n eve r b e an ad equte d eman d. S in ce o ne
production sets
the
other into
inotionan d
hence creates consumers
f or i tse lf
in
the alien
capital's
workers, it s e e m s t o e ach individual
capital that
the
demand of the
w * o r l < 1 ' 1
C I H S
Plifld
b l?
Pfflucffl
itself
is an adequate
demand. On
one
side,
this
demand
which
production
itself posits
drives
it forward, an d
must
drive it
forward
bgynd the
proportion in
which it
would
ha ve to
prodticfi
Wlh
regard
to the workers;
on
the other side, if the demand erieflf
U flw
demand of the labourer
himself
disappears
of Slflflkfi
U P then the
collapse
occurs.
(323, 420)3
Marx supposes
here
that cominofility
Pfductln
by Capi ta l 3 5 3
whole
must
exceed the
proper
proportion fo r consumers demand,
an d emphasizes that
the
fi nal p roduc t
finds
its
limit in direct and
final consumption (32
3;
42 ) .
lt
must be noted that
Mailx
d - p p s
not
y et
discuss the log ica l necessity of
economic
crises rn C Y C
I C -
Offli-
He tends rather to
maintain
in
the Crundr isse that economic crisis
is
almost
equivalent
or
leads
directly,
to
the
final
collapse
of
capital ist
production,
basing himself on an
excess commodity
theory of an underconsunipt ionist type. h _ _
Marx
is here apparently
trying
to
follow
an d develop
t e crisis
theory of Sismondi an d Malthus, who opposed R 1 0 ? - I d @ S C l - 2 5 5 1 0 3 1
theory Marx contrasts Sismondi with
Ricardo
a s follows:
Those econ omists
w ho , like
Ricardo, conceiveld
proiuctin
a s
directly identicalwith the self-realisation ofcapita . . .
avel
ered
foie
grasped the
positive
essence
of
capital
more correc Y
3
Ma
rx's Theory ofCrisis 97
deeply than
those
who,
like
Sismondi, emphasized the barriers
of
consumption
and
of
the available
circle of
counter-values, alhough
h e latter has better
grasped
the limted nature ofproduct ion based
on capita l, its negative
one-sidedness.
The former more its univer-
sal
tendency , the
latter its particular
restr ictedness. (314,
410)
Surely, Sismondi
an d
Malthus
tried
to
show the
inevitability of
general overproduction,
and
therefore the
particular restrictedness
of capitalist
production,
whereas economists like Ricardo
empha-
sized
one-sidedly
the adjustment of demand and supply on the
basis of the law of value, denying the possibility of the general
oveiproduct ion of commodities. According
to the labor theory
of
value of classical eco no mics , the values of yearly
commodity
products and revenues,
such a s
the
wages,
profits, and
rents
neces-
sary
to
b u y th em , always
equal
each other
in
total, fo r both are
determined
by
the total
quantities ofyearly
social labor.
Extension
of the scale of production by capital
increases
both
the
supply of
an d
the demand for commodity products equally in total value.
Sismondi
and Malthus
opposed
this theory
by in
effect throwing
overboard the labor theory of va lue , argu ing that
various
fo rm s o f
revenue
stemmed
i ridependently f rom
capital, labor,
and land,
an d
they thus questioned
wh y
the total of these revenues should be
sufficient
to
b uy the to ta l s upply of the yearl y products of labor.
Here
the social relation ofproduction and consumption , or that of
supply and demand,
is separated from
the
inner co-relation
with
social
l abor, and
only
the external balance
at
the surface ofcircula-
tion
is
called
into question.
Malthus,
fo r
example,
said,
If
production
be
in
a
great
excess
above consumption, the
motive
to
accumulate and produce must
cease
from
the
want of
an
effectual demand in
those
who have the
principal means of purchasing,'*
an d
he main ta ined th a t this
difficulty
might
be overcome through
the
unproduct ive
demand
oflaridowners, etcf
Sismondi
advanced an underconsumptioriist
theory a little
earlier and rather more decisive ly
than Malthus.
According
to
him,
the accumulation ofcapital causes the contrac-
tion ofconsumption demand through both substitution of laborers
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98 Value
an d
Crisis
(a nd fa rm ers ) b y machines in the
process of
centralization
of
production, on the
on e hand, while
it
results in the increase of
commodity
products
without
regard
to the scale of consumption
d em an d, on the
other.
Consequent ly, the snperabundance of
production,
that goes beyond
consumption,
T must occur.
In
o rd er to
make
c le ar th e
rest ricted character
of
capitalist
production an d
the
inevitability
of
general
overproduction, wliich
is neglected
by classical
economics, Marx
emphasized,
a s we have
seen, the
difficulty of
realization caused
by the restriction of
consumption
d em an d. H e thus
extended the l ine
of
thought
of
Malthus an d S ismond i. H is
intention was
to develop, along
with
the
labor theory of value of the classical school, the crisis theory of
the anti -c lass ica l (or
counter-classical)
school,
in
order
to
criticize
the
harmony postulated
by
the
classicists.
U p
to
this
point,
the crisis
theory
of an underconsumptionist
type elaborated
in
the
Cru
nd
r i s s e
tends to
lack
the
inner
relation
to
the working of
the
law of
value.
However,
in contras t to Sismondi
an d
Malthus,
Manr does no t
abandon
the
labo r theory
of value,
but
attempts
to develop it
systematically
as the law of inotion of
capital,
with its historical
forms, b y
criticizing
the
limts of
the
classical
theory
of
value.
At
the
same
time,
he
criticizes the
excess
commodity theory of an
underconsumptionist
ty pe to the exten t
that
it
is inconsistent
with
the law ofmotion of capital
based
on the
la w of value.
For instance,
Marx
says, criticizing Proudhon, that it is superfi-
c ia l to
deduce the
necessity
of
overproduct ion from
the
fact
that
the worker cannot b uy
back his
product ( 3Z6; 424),
He
goes on
to
consider
the interrelations between
the
various sectors which pro-
duce
raw
materials, machinery , workers* necessaries,
and surp lus
products.
In
this
rudimentary formulation of
a reproduction
scheme, he
shows ho w
commodity products of
each
sector ca n
be
bought
an d consumed
a s either
constant capital (which tends to
be
neglected
by
the classical economists) , variab le capi ta l, o r
surplus
value.
Thus, when
the inner relation between
production
and
consumption ofcommodity
products
is observed on the basis ofthe
i
i
i
i
'
1
I
I
t
i
1
'I
i
|i
i
i
i .
_ _ r r - i . -
.~ - - r - _ .
M a rx's Theory ofC risis 99
law of value,
it
becomes
clear
that the extens ion of capital ist
product ion brings
forth not
only an increase of consumer demand
by
the
workers,
but also an inc rease
in
th e demand fo r means of
product ion.
This
calls into question
his
previous notion that
geri-
eral overproduction occurs
because
the
fi na l p ro du ct Ends
its
limts
in
direct
and
fina l consu inpt ion.
Marx
ends
his
discussion
here,
suggesting that the main
point is not
in
merely
the balance
betweenproduction
an d
consumption,
but
rather
the restriction
to
the
value increasing
process
ofcapital. Marx writes
a s fol lows:
general over-production would take
place,
not because relatively
too little of
the
commodities
to
be
consumed
b y t he w o rk er s
or
too
little of those
to
be
consuined
by
the capitalists ha d b ee n [con-
sumedl,
but because too
much of
both
ha d
been produced-not
too much
for consumption,
but too
much
to retain
the correct
relation
between consumption and
value
increasing; too niuch
tor
value
increasing*
(346-47;
442-143)
What, then, does too much production
fo r
value increas ing
mean?
This problem is
not
y e t p re s e nt ed
in
the Crundrisse.
However,
there
is
another
sort of attempt to a pp ro ac h th e logical
necessity of
crisis
in
section 3
of The
Chapter
on Capital _
namely , the attempt
to
construct
a
crisis theory
in
r elati on to th e
law
of the
tendency
of the profit
rate
to
fall.
Profit theory in the Crundrisse
still
lacks
a
theory
of
prices
of
production. The concepts ofprofit an d profit rate are shown simply
in
terms of the ratio of
total
social surp lus va lue to
total value
of
capital.
Marx
then
goes
on
directly
to
the theory
of
the
tendential
fall ofprofit rate:
Presupposing the
same
surplus-value, the
same
surplus-labour in
,oroportion to
necessary
labour, then, the rate ofprofit depends on
the relation
between
the part
of
capital exchanged for
living
labour
and
the
part existing in
the
form of ra w
material and mearis
of
production. Hence, the
smaller
the portion
exchanged for living
labour
becomes,
the smaller
becomes
the rate
of profit. [And
the
increase
of productivity
in the
process of
capital
accurnulation
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1 0 O Value an d Crisis
expresses
itselfl a s
a
dimin ished proport ion
of
the capital
exchanged
fo r living labour relative to
the
part of
capital existing
a s
constant
value. (633, 747)
Basing hirnself on
this
notion of the
tendency
of the profit rate,
Manr
continues his discussion
a s
follows:
Beyond a
certain point,
the
development
of
the
powers of produc-
tion becomes
a barr ier
for capi ta l ; hence
the
capital relation be -
comes
a barr ier
for t he d evelopmen t
of
the productive
powers of
labour.
_ . .
The
growing
incompatibility
between
the
productive
development ofsocie ty and its hitherto
existing
relations ofproduc-
tion expresses itself in bitter contradictions, crises, spasms. (635,
749;
see
also 636; 750)
Marx's
discussion here is different
from
Ricardo 's theory of the
falling
tendency
of
the
profit
rate. Ricardo thought, assuming the
rising tendency of th e p ri ce of corn
because
of the dimnishing
fertility of the land, that with the
progress
of society the natural
price of
labour
has alway
a
tendency
to
rise, and
that the
natural
tendency of profits then is
to
fa1l. Against this, Marx
attempts to show that
it
is not
a
natural
factor
like feitility,
outside
capital, but th e inc reasing process of productive pow er in si de
capital
that causes a falling tendency of profit rate.
This
was a
theoretical achievernent, related to hi s
discovery
of the principle of
reproduction
of constant capital ,
which
had been neglected
by
the
classical
school.
However, there remain
fundamental questions
a s
to
whether
this tendency
of
the
profit
rate
to
fall
du e
to
the rising
composition
of capital indeed
brings
forth crises when it
p a s s e s
beyond a
certain point.
On
the
one
hand, it is difficult to explain
the
cycl ical nature of crises directly from
this, a s this
is not a
cyclical
but a
long-term movement. Further, the tendential
fall of
the
profit
rate does not necessarily imply a
crucial
obstacle to capital
accumulation. This is because the
tendent ial fall
of the profit
rate
d u e to th e r is in g
composition
of capital may
occur even though
the
absolute volume of surplus
value
is increasing. Depending upon
I__L _ _ J 1 I
1
4
1
i
1
i
i
E
F
1
I
_ _ - f
i
F
Mar:r's
Theory ofC
risis
1 0 1
the
production
of relative surp lus va lue , the absolute volume of
surplus
value
ca n go on
increasing an d
capital accumulation ca n
also
continue
even though
at
a dimnishing pace. 1 1
On
this point
Marx
s
theory
of the tendential fall ofprofit rate is clearly
different
from that of
Ricardo, which
contains a
formal necessity
for an
absolute
reduction
of
the
volume
of
profi t, though
basing it
on
the
incorrect
presumption
of the incapabil ity of a n i nc re as e of pro-
ductivity
in
agriculture.
If
the process of the
tendential
fall of the profit rate includes
0CC3510-ali Sflddfiflr
an d
sharp declines
in
the profit rate which
cause cycl ical crises,
we
should make cle ar ju st w hy the y must
occu
r. W e s e e that
Marx's
excess
capital
theory of crisis was still fa r
from
complete in
the
Crundrisse.
lll.
Crisis Theory iri Theories of Surplus Value
Theories ofSurplus
Value
is edited mainly
from nos. 6-15,
no .
18 , an d paitially n os . 2 1 -- 2 2, among the twenty - three notebooks
which
were
w r it ten du r ing
1861-1863
a s the second manuscript
draft fo r ,Cc1pital. lt shows in a number of ways
the development
of
Marxs theoretical
progress from
the
Grundrisse
to
Capitaf.
As fo r crisis theoiy , the
discussion
in Theories of Surplus
Value
is
concentrated
in chapter
17,
Ricardo's Theory of Accumula-
tion
an d
a
Critique of It (The
V er y N a tu re
of Capital
L ea ds to
Cnses).
T he m ain
emphasis
.o f Marx's discussion is still on the excess
Eommodi ty theory , a s in the Grundr isse. He
says, f or example ,
The mete (direcnproductiori process of
capital in
itself, cannot
add anything
new regarding the
explication of
crisis.
F or
the
problem
of
realization which
causes crises can only
emerge
in
the
circulation
process
which is
in itself also
a
process of
reproduction
(513,
513).
1 2 lt
shows
the development of the possibility ofcrisis,
which
became apparent in the simple rrietarnorphosis of the com-
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10 2 V 2 1 1
ue
and Cr is is
modity, gaining
its content
o r b as is through the motion of
capita1(508-11;
507-11).
Marx here still retains, in part, the
underconsumptionist
type of
view to e xp la in the necessity of crisis, saying over-production
arises
precisely
from the fact
that
the mass of
the peop le can never
cons ume m ore
than the
average
quantity
of
necessaries,
that
their
consumption
therefore
does not grow correspondingly with the
productivityof
labour (469; 468).
However, he
puts
more
s t r e s s
on
the
disproportionality type
of
crisis theory, ref lect ing the progress
of
his
enquiry into
the
intersectoral relations
among capitals.
Wliile criticizing R ic ar do , w ho ,
admitting
the
possibility
of
partial
overproduction, rejec ted the possibility of general over-
production
of commodities, Marx says, For a crisis (and therefore
also for overproduct ion)
to
be
general, it suffices fo r it
to affect
the
principal commodit ies (506;
505).
P o in ti ng o nt
that
if cotton
cloth
were
overproduced,
it
would
affect
not only
workers
in this
sector,
but also spinners,
cotton growers , engineers, and
iron
an d
coal producers, Marx m a in ta ins ,
If
over-production has taken
place not
only
in
cotton,
but
also in linen,
silk and
woollen
fabrics,
then it
can be understood
how over-product ion
in these few,
but
leading articles,
calls
forth a more
or l e s s general ( relative) over-
production
on
the
whole
market
(523-24 ; 523).
He continues:
Since, however, capita lis t production can al low itsel ffree rein only
in certain
spheres, under
certain
condit ions,
there could
be
no
capitalist production
at
a1l
if
it
had to
develop simuitrrrieousfy
and
evenly inall
spheres. Because absolute
over-product ion takes
place
in
certain
spheres,
relative
over-production
occurs
also
in
the
spheres where there has
been
no over-production. (532, 532)
Thus Marx asserts that
disproportional
and
partial overproduc-
tion,
which
is
regarded
by Ricardo
a s
being
always
adjusted through
the
motion of capital,
necessarily
leads
to
general overproduction
an d crisis through
intersectoral
inf iuence when
it
occurs
in
the
leading
commodities.
Marx's excess commodity
theory
of
crisis
became diversi fied, adding this disproportionality
type
to the
former
underconsumptionist
type
of
view.
i
_ _ _
t
II
I
H ' -
Marx's
Theory
ofC
risis
10 3
Even
though
Marx s ti ll lays s t r e s s on the difficulty of realization
in
the
circulation
process,
outside
of direct produc tion , he
no w
c om es to regard
the circulation
process
also a s a part of the repro-
duction
process, including relations
among various
branches of
product ion.
This seems
to suggest that
he
is
seeking to discover
the
obstacle
to
capitalist
production
arising from
i ns ide the
reproduc-
tion
process
of
capital
itself. At the
same t ime,
he no
longer
views
crises one-sidedly a s
standing
in
opposition to , a nd only destructive
o f, th e la w ofva lue or the law of
motion
ofcapital . He indicates not
only
that crises occur
a s a
breakdown of the
equalization
process
among capitals based o n th e law of value, but also that the
crisis
itself ma y be
a
form of equalisation (522;
521).
Crisis theory
is
about to be separated from
the
so-called breakdovvn
theory,
an d
to
be developed a s
the
concrete
form
of
reproduction or accumula-
tion
theory.
However , the
process
of
capital
accumulation,
while
incessantly
causing anarchical disproportions
in
the distribution of labor
quan ti ti es among
various
branches of production, can usually
adjust
these
disproportionalities through competi tion,
with
the
credit
system among
capitals
synchronizing with the motion of
market prices. This shows the concrete forms of the regulation of
th e law of
value in
the
ordinary
process
of
capital
accumulat ion- L a
Therefore, even
granted
the anarchical
nature
of
capitalisrn,
it is
still difficult to explain why serious
disproportionalit ies, including
an
overproduction
of
leading
articles
sufficient to cause a general
crisis, must necessarily
occur
an d furthennore
be cycl ical. Such
serious
disproportionalit ies
seem
unlikely
to
occur
without
the
appearance of some unusual special difficulty ins ide the
process
of
capital
accumulation
a s a
whole. Ho w then c an s uc h an
unusual
difficulty occur which
cannot
be
overcome
without
a
sharp
crisis?
Wliile the excess capital
theory
of crisis c ou ld p ro vid e an
answer,
in
Theories
ofSurplus Value
this type of
theory is
harclty
developed. Marx
raises the following question,
however, which
relates to this point.
Ric ardo denied the possibility of general
overproduction
of
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Value
an d
Crisis
commodit ies,
not merely
because of
his acceptance
ofSay's
theory
of demand
an d
supply, but because of
his understanding that an
excess
of capital accumulation
could
no t
occur except in
the
too-distant
f uture o r in a situation
too accidental and
particular
to
be treated
in principle.
This
view,
even
though in a
sense
logically
consistent , c lear ly
did not
accord
with
the
real
development
of
capital ism after Ricardo's t ime. Nevertheless,
his
successors con-
tinued, inconsistently, both
to
deny the
possibility
of
general
overproduct ion of commodities
an d to explain
the
cyclical
crises
from the
excess
of
capital.
What then
would
Ricardo have said to the
stupidity of
his succes-
sors,
who
deny over-production in
one
form (as
a
general glut of
commodities
in the market) and who,
not only
admt
its existence
in another form, as over-production of capital, plethora of capital,
over-abundance of capital,
but
actually turn it into an
essential
point
in their doctrine? . . . [Crises must
be clarified so
as to
contain
both
forms
of
over-production.
Therefore]
the
only
re-
maining
question
thus is: what is the relation between these two
forms
ofover-production?
( - 4 9 7 ;
497)
A page later he summarizes:
The question
is, therefore,
what
is the over-abundance of
capital
an d
ho w
does
it
differ from
over-production?
Marx
still
does
no t
investigate the important question he raises
in
this passage,
but goes on
to
discuss the
excess
commodity theory
a s we have seen.
Thus
wh at th e overp roduc tion or plethora of
capital really is still remains
to
be answered.
Marx 's theoret ica l
research
prior
to and
including
Theories
of
Surplus
Value seems to la ck the foundations to answer this ques-
tion
in two
respects.
On the one hand ,
in
order to
clarify the
distinction an d relation between the overproduct ion of capital an d
the
plethora of cap ita l, the latter
being, a s he
s a y s
in
Capital, a n
expression
used only
with reference to the interest-bear ing capital,
i. e. , moneyed
capital
in
t he money mark et (Ill: 476), a theoretical
t reatment of the working of the credit
system
is c lea rl y i nd is -
pensable. Marx
noticed
from the beginning
the
important
role
of
Ma
rx's Theory ofC risis 105
the
credit
system
in
the
motion
of capital ist economy, arid pointed
out already
in
the Crur idr isse that the tendency ofcapital
to
reduce
the circulation period formed
the
fundamental determinant of
credit and
credit
contrivances
of capital (551;
659). He
also
pointedly
remarked in another
place
in
the
Grundrisse:
ln a
general cr is is
of
over-product ion the
contradiction
is
not
between
the different
kinds of product ive capital , but between industrial
an d loanable
capi tal_between
capital
a s
directly involved in the
production process
an d capital
a s money existing ( relat ively ) out-
side of it (316,
413).
Then, in Theories ofSurplus V a lu e , a lo ng
with his development of
a
disproportionality theory, he begins to
pay
attention to
the
fact
that the
chain reaction
resulting
from the
fact that capitalists
are
unable
to
clear
their
bills
through
commer-
cial credit mediates the outbreak of
crises
(512;
511).
Bu t
Marx's
theory of interest up
to
Theories
of Surplus Vaiue does not yet
contain a
systematic
investigation
into
the
credit
mechanism; the re
is only an elaboration of the
abstract
form of interest-bearing
capital,
presupposing the existence of
moneyed capitalists
outside
the industrial enterprise.
lt
became
indispensable fo r Marx
to
expand his work
decisive ly beyond capital
in
general in his
original
plan
1
in
order to m ake
clear the motion of capital
in
business cycles
through
the
credit system.
On the other
hand,
a
correct
theory of the capitalist
law
of
population in the process of capital accumulation
was
also in-
dispensable,
prirnarily to
clarify the relationship of overproduc-
tion of capi ta l to the laboring popu la tion . Ma rx worked on such
a
theory
in
chapter
1 8
of
Theories
of
Surpius
Vcriue,
pointing
out that with the accumulation of capital
a
change
takes
place
in
its
organ ic composit ion
and the
constan t part of
the
capital
g ro ws a t
a
faster
rate than the variab le ( II : 564;
562),
a nd tha t
machinery
always
creates a
relative
surplus
population,
a
reserve
army
of workers (556; 554).
However,
unlike his exposition in
Capital, Marx here almost neglects cyclical changes
in
the for-
mation
and absorption of the relative surplus population, stressirig
only the former. Thus
his
study of the capital ist law of
population
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l06 Value
and Crisis
wa s too
rudimentary
to
support the excess capital theory- of crisis at
this
point.
IV.
Corripletion
of
the
Crisis
T he or y i
ri
Capital
Th e e x c e s s
capital theory
in Capital , clarifying what the
over-
production
of capital is in relation to the labor ing population, is of
great importance. lt
not only clears up the
question
of the over-
abundance
or plethora
of capital
in
Theories ofS urplus
Val
ue, b ut
in
effect formulates a
ne w crisis theory
ent irely unique
to
Capital.
'5
Although it
is
still presented a s if it were a
discussion
under
the
extreme
condit ions assumed (III:
2
5 5 )
in
Part
III
of
Volume III
ofCapital,
it
is not at a ll an accidental idea,
but a logical
outcome
of
Marx's
theoretical development from
Theories
to
Capi
to l
. For
it
is connected with an d presupposes, on the one hand , the
investiga-
tion
into
th e c re d it system
in Part
V of
Volume
III, w here the
distinction an d relation between overproduction of capital
an d
plethora of capital are clearly observed, and on the other
hand,
the progress in the theory of the capitalist law of population in
Par t
V11 of Volume I, w he re the cycl ical changes involving the
formation an d
absorption of relative surplus populations are
taken
into consideration.
However, a s
it
is formulated in Capital fo r the
Brst t ime,
this
t ype
of
crisis theory, which focuses on the absolute over-production
of
capital,
is
not
sufficiently
complete
a s
regards its
full
meaning
and log ic a l necessity.
In
Capitol we
still fin d an excess commodity
theory ofcrisis, which is an extension, a s we have seen, ofthe effort
in the
Crundr isse an d
Theories to develop
the
crisis
theory
of
Sismondi an d Malthus, while
criticizing the l imitations
of
the
classical
school. There thus
appears
in
Capitafs
crisis theory
a
kind of anti-classical residue,
which seems
to
take
intennediary
factors or results of
crises
fo r causes. This theory has fundamental
diffrculties
in proving the cycl ical nature and logical necessity of
i
3
| , . - .
| . .
*
*'.L-_
Marx's Theory ofC risis 10 7
general overproduction, particularly
with
relation
to
the working
of
the
law of value, on the basis of
which
capital ad jus ts the
ceaseless
disequil ibrium
between the s uppl y and demand of
vari-
ous commodities a s long a s compet it ive capital accumulation goes
on
a s
a
whole.
The
essential weakness
of
the
excess
commodity theory
stems
from i ts basic
effort to
look
for capital's
difficrilties no t within the
process
of
product ion , bu t
rather
in circulation.
In contrast,
the
excess
capital theory
in
Capital
shows
how the
real
barrier of
capitalist
production is capital itself (Il: 250), moving through
the processes of both production an d circulation. Marx's attempt
to clarify the logical necessity
of
cyclical crises should thus
be completed by develop ing the
latter,
n ot the
former,
type of
crisis
theory.
1 6
The
excess capital theory in Capital
is , however,
still incomplete
in
several
respects.
A s w e ha ve
mentioned,
in
contrast
with
Theories,
Capital
deals with
the
changes
in the absorption an d displacenierrt
of relative surplus populations
in its
theory of the capitalist law of
population.
Manr
no
longer considers
only
the
mechanismof
the
creation of the
relative
surplus
population.
For instance,
in
the
first
section of chapter
25
of the first
volume
of Capital, which deals
with
the
general law of capital
accumulation,
Man; disc-usses
the
increased
demand
for
labour-pover
that
accompanies ac -
cumulation, the composition of capital remaining
the
same.
Bu t
he does
not
fully
make c lear
the
theoretical necessity
an d meaning
of this
section.
After
the
second section of
the same
chapter he
emphasizes, rather
independently
of
the
first
section,
the progres-
sive
production of
a
relative surplus-population or industrial
re-
serve army
which accompanies the relative dimnution of the
variable part
of capital
simultaneously with the progress of ac -
cumulation
a s
the general
law ofaccumulation. The
definition
of the capitalist law of population,
a s
a result, still
lays
too much
stress on
the
progressive formation of
surplus
population.
lt
is possible that Marx was
strongly
impressed by
the
existence
of
various forms of
a
massive
reserve
army
in the
British
economy
of
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an d Crisis
his day, an d he cites them to
il lustrate
his theory of relative surplus
population.
Although this
analysis
of
concrete forms
of
the
reserve
army is
important
fo r
the
study
ofBritish capitalism
of
that
period,
it
should also be noted that these forms of the reserve army
include
not only the re lative surp lus population produced
inside
capitalist
production but
also
the
surplus
population
resulting
from
the
decomposing
processes of small commodity
producers and
peas-
ants.
lf
we
use
the levels ofprinciples, stages theory,
an d
empirical
analysis t ha t K z Uno suggests, we
should
not
include
the
latter
portionof surplus population
in
elucidating
the
basic pr inc iple . In
order
to m ake
clear
the
basic principle
of capitalist economy, we
must concentrate
entirely
on
the la w
of
motion
of
capitalist
pro-
duction, without re fer ring di rec tl y to the relations
with
various
other types of producers.
Besides,
it
seems t heore ti ca ll y imprope r no t
to
consider
the
specific restriction of f ixed capi ta l
while
treating changes
in the
method
of
production
under capitalist
accumulation
an d
its influ-
ence
on the laboring class. In this sense,
the theo ry
of
capital
accumulation should have been placed not at the end ofVolume I
but
after the turnover of capital
in
Volume II,
thus
theoretically
aligning the reproduction of capital with
the
theory of
reproduc-
tion
schema. Industrial capitalists
normally
have fixed capi ta ls
in
their production
processes, m a kin g th em function a s a
part of
profit-yielding capitals. And they
convert
surplus value into capi-
tal, successively, privately,
an d
on smal l
scales,
on the basis of
their
a lr eady exi sti ng means of product ion.
The accum ula tion of
c a pi ta l u n de r
these
conditions
proceeds
n o rm a lly in
a
capital-
widening rather than cap ita l-deepen ing fashion,
on
the basis
of
al ready ex is ting
methods of
product ion. Attempts to gain
extra
surplus
value through adoption of
superior methods
of
production
are
narrowly
res tr ic ted , and undertaken only partially in such
a
process. Thus
in
a period ofprosperity it is
unlikely
that capital will
str ive to produce re lative surplus value
a nd to
create a relative sur-
plus population by scrapping and
replacing existing
fixed capitals.
la
Marx
also
says, when he
explains
the notion of
the abso lu te
1
i
1
1 1 1 - _ .
li
i
i
i
: _ . l
_ _ i 1 - 1 -
r
r
F
Maris Theory of
Crisis
10 9
overproduction of
capital, that
the expansion of relative surplus
working t ime would no t be
feasible
at an y rate
in
the case when
the demand for labour were
s o strong that there
were a tendency
for
wages to r ise (lll:
251). If in
principle we
consider
the
process
of
capital
accumulation
in
relation
to the ex is ting fixed
capital,
the
increase
of
demand
fo r
labor
power that
accompanies
accumula-
tion under the same composition of capital will appear
no t
as
an
accidental, b ut
a s
a necessary process
in periods
of prosperity.
A
steep an d
sudden
fall
in
the
general
rate
of profit du e
to
a
rise in
wages would no longer be
a
mere
inference
under the extreme
condit ions
assumed,
b u t w ou ld be
seen
a s a necessary logical
result
of capitalist accumulation
in the per iod
ofprosperity.
1 The
fundamental
weak
point
of
capitalist production
which
must
treat
human labor power
a s a commodity
without
being able
to produce
it a s a commodity
comes
here
to
be
crucial
to
capital
accumulation.
However, why c anno t overacc umu la ted capital be laid .aside
partial ly
unused
without
causing
a
sharp
crisis?
Or
why
cannot
capital
slow down
the pace of accumulation a s
the profit
rate falls,
converting prosperity into stagnation without
a
drastic crisis? These
questions
still r ema in to be solved after we
have proved
the logical
necessity
fo r
overaccumulation
of
capital to
occur.
An
understand-
in g of the working of
competit ion
through
the
commodity market
an d
of the credit system
among capitals is
essential
to answer these
questions. Marx's contribution in Part V of
Volume lll
of
Capital
is absolutely
essential
here,
although it
seldom has been treated
a s
an indispensable
part
of
Marxian
crisis
theory
except
in the
Iapanese
U no
school.
W e
cannot deny that the
theoretical systematization ofthe
credit
mechanism,
w h ich Marx attempted
for the first
t im e in
Volume
Ill
of
Capital, is far
from
complete.
Credit
theory,
including
business
cycle
theory,
is
clearly
the
most unfinished
subject
in
al l ofCapi-
tol. In
particular,
the
credit system
is
no t
yet fully
abstracted
as an
inner mechanism of capitalist
production.
Marx recognized that
the
credit system
is forrried to utilize idle
capitals
or to shorterr the
unproduct ive circulat ion period
in
the turnover of
capital,
as we
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l lO Value and Crisis
have
seen
in
the
Cruridrisse an d a s
we
can also s e e
in Volume
1 1 of
Capital. However,
when
he oberved the
working
of bank cred it ,
Marx
laid
stress on money capitalists an d
other
depositors, out-
side
the
ranks of industrial an d commercial capitalists. Though
various sorts of
depositors such
a s mere money
capitalists
do exist in
the
real
capitalist economy, the
principle
of
the credit
system
should
be abstracted from these
outside
factors
in
order
to
clarify
the
substantial
function
of the credit system, which is
to
facilitate
the
setting
in
motionof idle elements ofcapital which
necessarily
result
from the turnover
ofcapitals. The
regular
movement of the money
market
through
the
business cycles is real ly detemi ined by move-
ments in the mutual utilizationof
these
idle
elements
of capital.
We
m u st n o ti ce here that Marx's inclination
to
emphasize
moneyed
capitalists
in
credit theory
comes
no t only from the
insufficiency
of theoretical
abstraction
but also from the
theory
of
interest
within
the
framework
of
capi ta l in
general
expounded
in
the Crundrisse.
The
credit system
in
principle
ought to
be
re-
garded a s a
purely
internal
mechanism of
capitalist production, no t
relying
on outside
money
lenders
or
moneyed
capitalists
who
have no substantial
function
in furthering
capitalist production.
Therefore, the commercial
credit which
the capitalists
engaged in
reproduct ion give
to
on e another
in
the form of bills of exchange
should
be
treated
a s
the basis of the
credit
system
(Ill:
479). Bank
c red i t, t hen , is the discount ing of bills of exchange brought by
industrial
an d commercial capi ta li st s, and it depends on funds
formed out of
both
the deposits of these
capitalists
and the return
payments
fo r
their
matured
bills.
The
abil i ty
of
banks to expand
credit elastically by
means of
issuing
bank notes
or
bankers
bills is
ultimately regulated by t he movement of
these
funds
originating
fromcapitalists engaged in
reproduction.
As
Marx poin ts out, Ifwe
obsenre
the cycles
in which
modern
industry moves . _ _ we shall find that a low rate of interest
generally
corresponds to periods of
prosperity
or
extra
profit,
a
rise
in
interest
separates
prosperity an d
i ts reverse, and a maximum of
interest
up to
a pointof
extreme
usury corresponds to
the
period ofcrisis (III: 360).
Maris
Theory
ofC risis 1 l l
ln periods of prosperity, the
ready
flow an d
regularity
of the
returns,
l inked
with extensive commerc ia l c red it , ens ur es the
supply of loan capi ta l
in
spite of the increased demand f or it,
an d
preven ts the leve l of the rate of interest from
rising.
This
is the
only period
during
the course of the business cycle
when
a relative
abundance
of
loanable capital co incides
with
a
real
expansion
of
industrial
capital (III: 4:88).
This
situation changes at the
end
of
the per iod of
prosperity, when overaccumulat ion ofcapital
occurs.
Marx points ou t in the context of the
excess
capital theory the
remarkable interrelated
changes
among wages, profits, and interest:
The demand for labour-power can increase because the exploita-
tion
of
labour
takes
place
under especially
favourable
eircuinstances,
but the rising demand for labour-power, a nd thu s f or v a ri ab l e
capital, does not
in
itself
increase
the profit;
it,
on the contrary,
lowers it pro ta nto . B u t
the
demand for variab le capi ta l can never-
theless
increase at the
same
t ime,
thus
also
the de ma nd for
money-
capital-which ca n
raise
the rate
of
interest.
Tlie market-price: of
labour-power
then rises
above
its average, more
than
the
average
number of labourers
are
employed,
an d
the
rate
of interest rises at
the
same t ime because under
such
circumstances the demand for
money-capital
rises. . . . If wages should rise
for
some reaso n
during an
otherwise unfavourable state of
business, the rise in
wages w o ul d l ow e r the
rate
of profit, but
raise the
rate of interest
to
the
extent that it increased the d em an d f or money-capital .
(III: 513-14)
The rising
demand
for
money
capital in the
face of a
falling
rate
of
profit
d ue to
a
rise
in
wages
becomes an
inevitable
result
of
the
capital
accumulation process when the excess capital theory
is
properly
extended. However,
if industrial
an d
commercial capitals
continue
to
sell
their
products
a s
before, paying
their
matured bil ls ,
thus
forming
disposable funds usable
by
the banks in turn, the
banks can
expand
their
credit
elastically
to meet the rising
demand
fo r money c ap ita l. Besides,
in this
case it is also possible that
capitalists
will
reduce
their investment because of
the reduct ion
in
net proht ,
without any serious collapse
in
the chain of
credi t. Thus
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l 1 2 Value and
Crisis
in
order
to prove the
theoretical
necessity of
a
sharp crisis,
a
little
more concret ization seems
indispensable.
Marx emphasizes in several places ho w the
speculative
use of
credit
raises
the rate of interest. He
points
out that
a
high rate of
interest
can be paid
(and
this
is done
in part
during times
of
speculation)
not out
of the
profit, b u t o ut
of
the borrowed capital
i tse lf , and this
can
continue
fo r
a
while
(III:
512-13).
The supply
ofan article
ca n fall below
average, a s
it does wh en c rop
failures in corn, cotton, etc. occur; a nd the de ma nd fo r
loan capita l
ca n
increase because
speculation
in these
commodit ies counts
on
further rise
in p ri ce s a nd th e
easiest wa y
to make them
rise
is to
temporarily withdraw a
poltion
of the supply from
the market.
But
in order to pa y for
the
purchased commodities without
selling
them,
money
is s ec ure d b y m ea ns of
the commercial
bill of
exchange operations.
In
this
case, the demand
fo r lo an c ap it al
increases,
an d
the
rate
of
interest
can rise
a s
a
result
of
this
attempt
to
artificially
prevent
the supply
of
this
commodity from
reaching
the
market.
The higher
rate of
interest then
reflects an
art ificial
reduction in the supply ofcommodity-capital. (III:
514-15)
Marx does
not make clear why
such speculat ive
operations
become s o i iwidespread
at
the
en d
ofprosperity periods.
Nor
does he
attempt to clarify the relation between overproduction of capital
an d
the
heightening of massive speculation. However, it is
not
difficult
to
fin d
the logically necessary relation. When wages
rise
d ue to an overaccumulat ion of capital,
this
not on ly squeezes the
general rate of
profit
but also
necessarily
affects
market prices
of
commodit ies
in
tw o
ways.
First,
the
prices
of
commodit ies pro-
duced
by
sectors
having
a lower organ ic composit ion of capital
(i.e. , more labor- intensive sectors)
must
rise continuously a s
long
a s wage
costs
rise
under the
equalization of
the profit
rate, a s
Marx
points out
in
chapter ll of Volume III of
Capital.
Second ly , the
increase indemand f or
means ofconsumption following
the
rise of
wages ma y raise
some
prices ofconsumption goods
or
goods used
to
produce
them
if
the
supply
of
these goods
cannot
be
promptly
adjusted,
a s
is often the case with agricultural products.
Maris
Theory
ofCrisis 1 1 3
ln the middle
period
of prosperity,
market prices f luctuate
only
within a
narrow range around
steady
prices
ofproduction
based
on
a s te ad y wag e level,
while.capital-widening
accumulation
con-
t inues to d ep en d on
relative
surplus
population.
At the end of
prosper it y , on
the other hand , market prices
of some
commodit ies
inevitably
rise
a s
the
result ofoveraccumulation ofcapital. There-
fore, unusual
speculative
stockpiling of these commodities is car-
ried
on
by
industrial
capitals, and especial ly by commercial
capi-
tals, which fully utilize
the elasticity
of
the
credit system.
However, wh en
subjected
to
such
massive
speculative
opera-
tions, the elasticity- of
credit diminishes. More
commercial
ex-
change
bills are
issued
and
brought to
banks
to
be
discounted. The
maturity period of bills is prolonged and payments are
delayed
or
are
made
only
by
new borrowing. Along
with
the r is ing demand for
money capital
to
meet
additional
payments fo r
wages,
such a
speculative demand
never
fails
to tighten
the money market
through
a
relative
dimnution
of
reserve
funds
in
banks,
which
results in
a rise in
interest
rates. Th e drain of
gold
reserves from
the
central bank
in
the m on ey
market demonstrates this tendency
of
the
credit system most strikingly at
the
critical point in
the
last
stages of
prosperity.
Thus, overproduction ofcapital necessarily causes
three
related
difficul ties for the capitalists: increasing
wages,
fa ll ing profit rates,
an d
rising interest rates. The prob lem ofoverproduction of
capital
in relation
to
the
laboring
population is expressed in
a
shortage of
loanable
money capital. Th e net profits of industrial and commer-
cial
capitalists
are
drastically
squeezed by
a
rise
of
both
wages
an d
interest.
In
palticular,
the
tightening
of
credit is fa ta l to speculative
stockpiling operations, which also face a
general
decline in
real
investment from ne t profits.
It
soon becomes no t only difficult but
positively
unprofitable
to
maintain speculative
stockpiling, i n v ie w
of the
rising
cost of interest.
Sacrifice sales must begin in
order to
pay
matured
b i lls. Break-
downs of large-scale speculative
operations
are ordinarily the most
concre te moments
of turning
prosperity
into sharp
crisis.
The
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11 4 Va lue and
Crisis
conflictof the opposite
movements in
the general rates ofprofitan d
in terest thus b r ings
about the
collapse of the credit
system.
The beginning of cycl ical crisis is
usually
heralded
by
the
collapse
of
speculation
among c ommer cial
capitals
engaged
in
large-scale
wholesale
trade. For a t the e nd
of
prosperity, specula-
tive
stocl-:piling
utilizing
credit
has
been developed
most
inten-
sively an d
on the
largest
scale
in
this area,
and therefore the shock
of tightening
credit
or a rising
rate
of interest is
also
most serious
here. On the
other hand,
the collapse of speculation by
these
commercial
capitals
results in
serious shock
to
both the commodity
market
an d
t he m oney market.
Marx
points
out that crises
begin this
way,
saying, Crises
do not
corne
to
the surface , do
not
break out, in
the
retail business
first,
which deals with
direct cons umption , bu t in
the
sphere
ofwhole-
sale tra de , a nd of banking, which
places
the
money-capital
of
society at
the
disposal
of the former (III: 304).
At the
same t ime,
more
or less speculative overtrading,
not only
by
commercial
capitals but also by industrial capi ta ls , on
the
basis ofoveraccumu-
lation of capital
comes
to be untenable
an d
begins to break down.
Collapse
of speculative
stockpiling causes
a
sharp
decline
in the
market prices of commodit ies which have been maintained
an d
r ais ed b y
speculative operations. The basis of credit
relations,
which have
presupposed
a
certain level of market prices, is de-
stroyed.
A
chain
reaction of
insolvency
appears. All
the capitals
an d
banks restr ict new
credit severely
in order to
secure their
ow n
reserves
of payment, in spite of
a
sharpiincrease
in
demand fo r
money
cap ital to
pay
old
debts.
Thus the in terest rate
reaches its
maximum again
a s
soon
a s
the
ne w crisis s e t s
in .
Credit suddenly stops then, payments are
suspended, the reproduction process is paralysed. _ . . a
super-
abundance
of idle industrial
capital
appears side
by
side with an
almost
absolute absence
of loan capital (III:
488).
The collapse of the commodity
market
and
general
difficulty
in
sell ing accompany
the
shrinkage and collapse of credit. Th e stop-
page of credit d isturbs and
shrinks production throughout whole
Marfs Theory
of
C
risis 1 [5
branches,
fo r the
entire
continuity of
the reproduction process
rests upon credit (III: 490)
in
capitalist production. Marx describes
the outcome of the
absolute
overproduction of capital:
The
chain of
payment
obligat ions du e at specific dates is broken
rn
a
hundred places.
The
confusion
is augmented
by
the
atten-
dant
collapse
of
the
credit
system,
which
develops
simultaneously
with
capital, an d
leads to v io le -n t a nd acute crises, to sudden
an d
forcible depreciations, to the a c tu a l s ta gna tion
an d
disruption of
the process of reproduction
an d
thu s to a real falling off in re-
production. (III:
254)
Employment of laborers
must also
be sharply reduced,
with
the
falling offof reproduction through the collapse of
the
credit
system.
A large
number
of
laborers
are forced to be
unernployed.
A sharp
decline
ln
wages occurs.
The
consumption
demand
of
laborers
is
reduced.
The
chain ofdifficulties in selling capitalist commodit ies
lscompleted.
The
coexistence
of
a
superabundance
of
idle
indus-
trlal
capital
an d an unemployed excess
laboring
population
becomes inevitable
a s a result
of the abso lu te sho itage
of
loan
capital.
Capital
values in
the form of credit
d ocum ents , com -
modities,
an d
physical
factors of production are
destroyed. Th e
contradiction between
capitalisrrfs
relations of
produc tion and its
increase of
productive
power is clearly revealed.
However, it must a ls o be noted that capitalist product ion
does
not
en d
its
existence
with a
mere economic crisis.
In principle,
the
phase of crisis
necessarily
changes into depression. The ana rch ic
a nd u ne ve n destruction of capitals gives
some
capitals a
chance to
preserve
a
portion
of
their
value.
Reproduct ion under
capital
is
resumed
by such capitals. Bu t
it
is
no t easy
fo r capital to
get
out of
the
depression, for the anarch ic
an d
uneven
destruction
of
capitals
during the crisis has caused a distorted proportionality between
branches
of product ion.
This
is difficult
to
readjust immediately
because
of the immobility of the
existing
fixed capital. The
credit
system
is
formed in principle
to fac il itate the mutual motion of
circulating
cap ita ls , and
it is almost
useless
in
mobilizing the
values
of
fixed capitals exist ing
in
the production
processes.
The
re-
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11 6
Value
and Crisis
fore,
even
though loanable money capital becomes
plentiful,
reflecting the
contraction an d paralysation
of
industrial
capital
(III:
485),
it
cannot play
a positive
role
in
removing the funda-
mental
difficulty of
depression. The
superabundance of idle in-
dustrial
capital, unused loan cap ita l, and unemployed labor ing
population, or ,
low rates of profit,
i nteres t, and wages, coexist,
unable
to
combine
in
this
period.
Throughout
th e p er io d of
depression,
however, th e fa ll
in
p rice s a nd the competitive struggle would
have
driven
every
capital ist to lower the individual value ofhis
total
product below
its
genera l v alue
b y means
of n ew m ac hin es , n ew and improved
working methods, ne w
combinations
(III: 255). Besides,
in
con-
trast with the prosper ity period,
the
existing f ixed capitals are
in
genera l no longer
profitable,
an d so there is
pressure
to depreciate
them
in
o rder t hat t hey may be renewed a s soon a s possible. W hen
most
capitals in the
main branches of production
come to
depre-
ciate
a
large proportion of the value oftheir fixed capitals and arnass
their
o wn m on ey
capital sufficientto
invest in
ne w equipment,
t hen they
can ad op t ne w methods of
production
through renewals
of
fixed
capi ta ls . These
renewals
of
fixed capitals
occur compet i-
tively an d hence
simultaneously
at
the
en d of the depression.
Capitals which
succeeded
in adopting new methods of produc-
tion
are able to resume active accumulation even under
the
re-
duced levels
of market prices ofproduction.
At the
same t ime,
the
proportionality among branches of
production
is
fundamentally
readjusted through
the process of
renewals
of
fi xe d c ap ita ls , b e-
cause capitals
can move f reely
to
invest
the
whole of their
value
in
the
most
promising
branches
during
that
process.
A
distorted
proportioiiality between branches of production is
thus
restored
corresponding to new relations ofproduction.
Not only these re lations among capitals, b ut also productive
relations between cap ita l and
wage
labor, are renewed. On the on e
hand, the
value
of labor power
is
reduced through improvements
in
methods of
production,
an d the rate ofsurplus value is increased
to
ex tend the basis of
accumulation
ofcapital. On the other hand,
i
1
entre
Morx's
Theory
ofCrisis
1
17
the
Organic C0I1P0Sf0t
Of
capital
is r ais ed to c re ate a relative
surplus popula t ion, which fomis
the
fundamental condition
for
capital to
reach
a higher
level
ofaccumulation
ofvalue than
in
the
ffmef Pfifld Of prosperity. All this clearly
reveals
the
historical
c
aracter an d
alienated nature ofcapitalist development- the rising
composition of capital necessary
to
achieve
a
relative
surplus
1-
popu
ation is realized in
the
depression phase, when labor [ 1 3 5
been made
superabundant
by the i 5 5 _
Once relat ions among capitals
an d
between capi ta l and labor
hat@ bfiffl
ffifgfllzed,
corresponding to the
ne w
value
relatiors
based
on
the
l l f -1
_ _neW eve
U
P T O U C W
P O W G Y ,
Capital resumes its
expansion
with a restored rate of
profit.
Trade
in
commodities
1 n r . ' : r ` a s e s t - l m o o ( t 1 l 1 l y , 'and
the credit
system expands
elastically.
us,
e
in
ustrial
cycle
(or business cycle),
composed
Ofthfefg
phases of prosperity, crisis,
and
depression runs
its course anew
Each
phase becomes
the
cause of
the
successive phase in
turn, and
the
same
vicious
c ir cle would
be
described
once
more
undfl
expanded conditions
of
production,
with an
expanded
market
an d
increased productive forces (III:
255).
This industrial
cycle is
of
such
a nature that
the same
circuit must
reproduce itself once the
first impulse has been
given
(III:
489).
The
l ife-cyclei
of xed
capital in
the
essential
branches of industry furnisheg
3 matfliaj
basis of the per iodic cr isis (Il:
186); in
particular
it
is
a decisiva
d . _ .
eterminant of
the
time length of the circuit of business cycles fo r
the
simultaneous
renewal
of
fixed
capitals in the
main branchgs
S
t
4 ` I
e
starting point fo r every new
p0Spny
phasg
T he i nn e r
contradiction
of
capitalist
production
whh
C o m , - S
from
the difficultyof treating
human
labor power a s i a
commodity
an d
w h ic h b u rs ts ou t in periodic crises through competition
an d
credit
am l ` -
ong capita
s ,
is given
an
actual
solu t ion in
the course of
industrial
cycles. Nevertheless,
it
cannot
be a
fundamental solu-
IQIL
an d S 0
lt I T I U S be Coristaritly repeated in these cycles.
Cyclical
crises n o t o n ly
reveal
the contradiction
in
the
motion
of
capital
bu t also form
a necessary
part of the
mechanism
of capital isi
development.
Th e supply of
the labor
power commodity
the basic
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l 1 8 Va lue and C ri si s
condition fo r capital accumulation,
is
secured in pr inc ip le through
the deve lopment of the capital ist law of population
in
the form of
busiriess cycles.
Business cycles , including
periodic c ris es , a t
the same t ime
constitute
the
mec han ism fo r ad ius ti ng value relat ions between
capital an d wage labor
an d
among various commodity products.
The
regulation of
the
values of commodities
in
accordance
with
th e la b or q ua ntitie s which are socially
necessary to reproduce
them, along
with
the adjustment of the
allocation
of social labor
necessary to maintain the reproduction of commodities, is carried
through in the course of industrial cycles. Thus industrial cycles
form th e most inclusive
mechanism
fo r the
operation
of
the
law of
value a s
the law ofmotion of capital.
Therefore, the systematic development of the value theo ry in
Capitol
mu s t
include a crisis
theory,
and
the
crisis
theory
should in
turn
synthesize
the
concrete mechanisms
of
the law
of
value
a s
the
law ofmotion of capital. The crisis theory
in
Capital in
effect
also
summarizes the fundamental cr itique against the classical school,
which regarded the necessity of general overproduction or crisis
a s
incorisistent with
their law
of
value.
Even
though
still
incompleto, the essential points necessary
to
elaborate the excess capital theory of crisis are already present
in
Capital, a s
we
have seen, through the
theories
of accumulat ion,
profit,
an d
the credit
system. Apart
from
the
concrete historical
studies of
crises
which
should
belong to d if ferent , higher levels of
research, such
a s
stages
theory
or
empir ical
analysis
of
contempo-
rary capital ism, Marx 's crisis theory can and should
be
completed
in
principle.
To
leave the incomplete parts of its theory untouchod does
an injustice t o th e
scientif ic achievement ofCapital. In
particular,
it is
essential
to
c omp le te M arx 's excess
capital theory of
crisis
together with
his
credit theory ,
in
order not
merely
to overcome the
crucial limtations of both classical and anti -classical theory, but
also to provide a
sound theoretical
standard
for analyzing the contra-
dictory movement of
capital ism,
with
its changing phases
of eco-
nomc and soc ia l