Comments on: Over-accumulation, over-production, under-consumption

By: kapitalism101

kapitalism101 — Mon, 19 May 2008 12:33:49 +0000

My understanding of these distinctions:
A falling rate of profit means a shortage of worthwhile investment opportunities for capital. Thus the circuit of capital, M-C-M, experiences interruptions. This is exacerbated by other disproportionalities within the system: between departments, between financial and productive capital, the erroneous price signals given by prices of production, between money as a measure of value and a means of circulation. It is the ceaseless flow of capital between its money and commodity phases that creates value and moves an economy forward. This shortage of worthwhile investments halts this flow and capital bunches up in either commodity or money forms. When in commodity form we experience underconsumption and hence the devaluation of commodities and labor. When in money form we experience inflation and the devaluation of money. In either form, we have an overaccumulation of capital.
The credit system is crucial in mopping up surplus by both creating demand and furnishing investments ahead of the production of real value. Thus credit creates fictitious capital in advance of the production of future values. If those values can be realized in production then capital is safe. But as soon as the dearth of profitable investments becomes apparent credit becomes the focal point of instability/ volatility in the economy. This is why crisis always begins in the credit system and appears as a crisis of the monetary system and not as a crisis of production.
Thus underconsumption, falling rate of profit and overproduction are all brought into one larger theory of the accumulation cycle, a cycle marked by the continuous problem of overaccumulation.

By: bill j

bill j — Thu, 01 May 2008 07:07:22 +0000

BTW i’ve written a brief crit of John Bellamy Foster here
http://www.permanentrevolution.net/?view=entry&entry=2066

bill

By: bill j

bill j — Fri, 25 Apr 2008 21:27:24 +0000

The point about over-accumulation is that it has to be relative to profit rates, it is in effect the same thing as saying that the rate of profit is falling.
Ticktin in his article claims that the rate of profit is falling, but produces no empirical data to substantiate his claim.
Chris Harman to his credit, at least tries to engage with the data in his latest article in ISJ 118, and registers the fact that most Marxist and bourgeois economics commentators, refer to the recovery in profit rates since the turn of the millennium, but then dismisses them, preferring instead to go with Robert Brenner.
Brenner, pretty much alone of the castrophists has at least tried to work out the rate of profit, but his estimates critically leave out financial profits, which now account for 40% of all profits, executive remuneration, which has doubled as a proportion of national income over the last couple of decades and foreign profits, which have similarly doubled.
His estimate for the rate of profit does not then include the majority of profits, unsurprisingly therefore, it doesn’t show a great recovery.
How then to explain the present crisis if rates of profit have generally recovered? Firstly of course, there has been a decline in the USA since around mid 2006, although only marginally it should be said. I think the present crisis can be best explained as a major disproportion in one section of production - residential housing - combined with a major financial crisis - rather than a general crisis of over-accumulation.
If this is correct of course, it means that there will not be a great depression or anything like it, even if the present US crisis still has some way to go, but that its effects will be very significantly offset by the growth of the world economy, which is not so dependent on US consumer demand as the left would have us believe.

By: ttaM

ttaM — Fri, 25 Apr 2008 10:43:05 +0000

David Harvey in The New Imperialism continually makes reference to over-accumulation of capital as the key driving force in his model.

By: MFB

MFB — Fri, 25 Apr 2008 06:41:34 +0000

The source of financial crises is definitely worth studying. The source of capitalist crises is also worth studying. How closely are the two related? Isn’t that also worth studying?

Obviously as an educator one has to point out the differences between theorists and how they work. On the other hand, how does that theory get applied in practice? Bond, for instance, believes what he reads in Business Day (which is much less smart than Chomsky believing what he reads in the Wall Street Journal — Business Day is run by the Johnnic corporation through its Avusa black empowerment front, and it is very dodgy corporate propaganda through and through).

Are we really in a crisis now? Looks like it. Is it a crisis because factories are making too much stuff for people to buy, or because people can’t afford to buy the stuff that the factories make? And is that because rich people are pocketing the spare cash, or is there some other factor?

Also, if we are really in a crisis now, why is the stock market doing so well? Are they in denial, or is finance capital bubble manufacture disconnected from the physical economy?

Beats me.

By: John A Imani

John A Imani — Thu, 24 Apr 2008 22:21:01 +0000

Vol 3 Chap XV Sec 3 http://marxists.org/archive/marx/works/1894-c3/ch15.htm

“Since the aim of capital is not to minister to certain wants, but to produce profit, and since it accomplishes this purpose by methods which adapt the mass of production to the scale of production, not vice versa, a rift must continually ensue between the limited dimensions of consumption under capitalism and a production which forever tends to exceed this immanent barrier. Furthermore, capital consists of commodities, and therefore over-production of capital implies over-production of commodities. Hence the peculiar phenomenon of economists who deny over-production of commodities, admitting over-production of capital. To say that there is no general over-production, but rather a disproportion within the various branches of production, is no more than to say that under capitalist production the proportionality of the individual branches of production springs as a continual process from disproportionality, because the cohesion of the aggregate production imposes itself as a blind law upon the agents of production, and not as a law which, being understood and hence controlled by their common mind, brings the productive process under their joint control. It amounts furthermore to demanding that countries in which capitalist production is not developed, should consume and produce at a rate which suits the countries with capitalist production. If it is said that over-production is only relative, this is quite correct; but the entire capitalist mode of production is only a relative one, whose barriers are not absolute. They are absolute only for this mode, i.e., on its basis.

By: Chuckie K

Chuckie K — Thu, 24 Apr 2008 19:43:17 +0000

On the question “financial crash or slowdown?”, here are arguments for ‘crash’:
http://www.marketoracle.co.uk/Article4419.html

By: plato's cave

plato's cave — Thu, 24 Apr 2008 18:07:05 +0000

I havent read Grossman yet, but it sounds as if he would consider financial speculation (as in recent high-tech and real estate bubbles) a symptom of over-accumulation, a pre-cursor of crisis, or perhaps a mini-crisis. On the other hand, the trend to shifting production off-shore could be used to support both the over-accumulation and under-consumption theses. At least in the popular press, many firms,like IBM and the aviation and automotive companies, moved production to China as a way of, and a condition of, getting access to the Chinese market.
Harry Shutt, on the other hand, seems to be in Grossman’s camp, with his view of the thirty year trend of privatizing public services as the result of excess capital with insufficient outlets for investment.