The Secular-Cyclical Nexus

E. The Secular-Cyclical Nexus

To focus on the capitalists’ drive to produce in the face of an inherent restriction on consumption by labor coupled with non-compensation by other forms of expen- diture certainly seems to imply that accumulation is necessarily accompanied by downward pressure on prices and the profit rate. But Marx in fact firmly rejected this position: “Overproduction does not call forth a lasting fall in profit, but it is last- ingly periodic. It is followed by periods of underproduction etc.” (MECW 32: 102). And this perspective will be further confirmed in relation to Marx’s observations on Smithian “competition of capitals” (below, pp. 348–9).

1861–1863 II: Sectoral Analysis, Accumulation, and Stability The cyclical dimension also emerges in a quest to explain the “reality” of over-

production and crisis – and not merely their “possibility.” Marx here selected as case study an assumed excess production of cotton, a major consumption good, which is no accident, first, since it is precisely in the consumption sector where the limited purchasing power of labor manifests itself, and second, because of its cyclical character. 16

The analysis starts out by assuming the cotton industry to be in excess supply. The first consequence is reduced consumption expenditures by the workers imme- diately affected by the resultant slowdown in activity: “Neither Ricardo’s advice ‘to increase their production,’ nor his alternative ‘to produce something else’ [1951–73

1: Chapters 19, 21] can help them. They now form a part of the temporary surplus population, of the surplus production of labourers, in this case of cotton producers, because there is a surplus production of cottons upon the market” (152). 17 Beyond this, the cotton contraction affects a variety of complementary sectors, especially those producing capital goods for the cotton industry, even if they themselves have not engaged in positive overproduction: “All these industries have this in common, that their revenue (wages and profit, in so far as the latter is consumed as revenue and not accumulated) is not consumed by them in their own product but in the product of other spheres, which produce articles of consumption, calico among others.” Accordingly, consumption expenditures – including expenditure on cot- tons – fall further: “Thus the consumption of and the demand for calico fall just because there is too much of it on the market. But this also applies to all other commodities on which, as articles of consumption, the revenue of these indirect producers of cotton is spent. . . . They are now, all of a sudden, relatively overpro- duced, because the means with which to buy them and therefore the demand for them, have contracted. Even if there has been no overproduction in these spheres,

now they are overproducing” (152–3). 18 A broadly based overproduction is thus set in motion by the assumed overproduction of cotton cloth. 19 These effects would

16 Considerable instability was revealed by available data, with contrasts in the pattern discerned around 1815 and 1846: “Between 1770 and 1815, cotton trade depressed or stagnant 5 years,

and revived and prosperous 40 years. Between 1815 and 1863 depressed or stagnant 28 years, prosperous 20 years. After 1846, since the repeal of the corn laws, cotton trade stagnant or depressed 9 years revived 8” (MECW 34: 47). 17 Marx is unconcerned here with the technical value-price issue of the Transformation, so that

he can express the assumed glut in terms of unsold accumulated inventories or sales at below “value”: “Thus according to the assumption, the market is glutted, for instance with cottons, so that part of it remains unsold or all of it, or it can only be sold well below its price. (For the time being, we shall call it value, because while we are considering circulation or the reproduction process, we are still concerned with value and not yet with cost price, even less with market price.)” (MECW 32: 150). See also note 21. 18 See also MECW 32: 159 on those “articles whose overproduction is implied because they enter as an element, raw material, mati`ere instrumentale or means of production, into those articles . . . whose positive overproduction is precisely the fact to be explained.” 19 The phenomenon of “relative” overproduction leads Marx to qualify the term “general glut”: “The possibility of overproduction in any particular sphere of production is . . . not denied

E. The Secular-Cyclical Nexus

be a fortiori generated should the initial disturbance affect a variety of leading con- sumption industries: “On the one hand there is a superabundance of all the means of reproduction and a superabundance of all kinds of unsold commodities on the market. On the other hand bankrupt capitalists and destitute, starving workers” (153).

All of this points to features of depression. But an aspect of the secular-cyclical relation now appears. For in elaborating the initial assumption of an overproduc- tion of cotton goods, Marx reiterates the secular feature involving “reproduc[tion] on an extended scale” with “[t]he market “expand[ing] more slowly than produc- tion,” and emphasizes that such overproduction “manifests” itself only periodically:

The market expands more slowly than production; or in the cycle through which cap- ital passes during its reproduction – a cycle in which it is not simply reproduced but reproduced on an extended scale, in which it describes not a circle but a spiral – there comes a moment at which the market manifests itself as too narrow for production. This occurs at the end of the cycle. But it merely means: the market is glutted. Overpro- duction is manifest. If the expansion of the market had kept pace with the expansion of production there would be no glut in the market, no overproduction (153–4).

By alluding to the secular dimension, Marx confirms that the initial disturbance – the cotton industry assumed to be in excess – must be traced to the character of the capitalist growth process. Yet for all that – in the terms noted above – “[o]verproduction does not call forth a lasting fall in profit, but is lastingly peri- odic.” It is then no accident that the discussion of the secularly falling profit rate (above Chapter 10.D) should turn primarily on the rising organic composition feature. And that overproduction is at most a cyclical problem is further confirmed by the corrective functions attributed to the crisis, its reestablishment of the unity of purchase and sale: “the contradictions existing in bourgeois production . . . are reconciled by a process of adjustment which . . . manifest itself as a crisis” (308). Again, the crisis is “nothing but the forcible assertion of the unity of phases of the production process which have become independent of each other” (140; also 144); it is the means of achieving a “forcible adjustment” of purchase and sale (142). If this is so, the conditions for hitchless accumulation become of practical relevance since they are satisfied over the entire cycle.

A convincing attribution of crises to overproduction reflecting underconsumption on the part both of labor and capitalists requires a clear demonstration of the linkages entailed. This Marx does not provide and, to the contrary, asserts that

[by Ricardo]. It is the simultaneity of this phenomenon for all spheres of production which is said to be impossible and therefore makes impossible [general] overproduction and thus a general glut in the market (this expression must always be taken cum grano salis, since in times of general overproduction, the overproduction in some spheres is always only the result, the consequence, of overproduction in the leading articles of commerce; [it is] always only relative,

i.e. overproduction because overproduction exists in other spheres)” (MECW 32: 158).

1861–1863 II: Sectoral Analysis, Accumulation, and Stability “[c]rises are usually preceded by a general inflation in prices of all articles of

capitalist production” (136), which certainly does not imply underconsumption pressures. This problem rises also in Capital (Chapter 5, p. 145).