On the “Overproduction” Literature

H. On the “Overproduction” Literature

We return to the main discussion of “overproduction” in Section D. Marx para- phrased the issue by reference to Sismondi: “the statement that there is too much capital, after all means merely that too little is consumed as revenue, and that more cannot be consumed in the given conditions” (MECW 32: 163; see Sismondi 1827: 371). Later remarks on Sismondi emphasize one of the main features we alluded to – expansion of the output of commodities in the face of restricted con- sumption by “the mass of producers,” namely the workers, generating an inbuilt tendency to systemic or “essential” overproduction: Sismondi “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

1861–1863 II: Sectoral Analysis, Accumulation, and Stability outbreaks – occurring on a large scale and at definite periods – of the immanent

contradictions” (247–8). Unfortunately in this context nothing is said explicitly of the related problem that in order to expand production, capitalists positively reduce their consumption outlays. The main features in Marx’s analysis as outlined in Section D – non- sustainability of a growth program financed by reduced consumption on the part of capitalists (or landlords) considering the constraints on laborers’ consumption – had, however, been expounded by Malthus:

It is undoubtedly possible by parsimony to devote at once a much larger share than usual of the produce of any country to the maintenance of productive labour; and suppose this to be done, it is quite true that the labourers so employed are consumers as well as those engaged in personal services, and as far as the labourers are concerned, there would be no diminution of consumption or demand. But . . . the consumption and demand occasioned by the workmen employed in productive labour can never alone furnish a motive to the accumulation and employment of capital; and with regard to the capitalists themselves, together with the landlords and other rich persons, they have, by the supposition, agreed to be parsimonious, and by depriving themselves of their usual conveniences and luxuries to save from their revenue and add to their capital. Under these circumstances, it is impossible that the increased quantity of commodities, obtained by the increased number of productive labourers, should find purchasers, without such a fall of price as would probably sink their value below that of the outlay, or, at least, so reduce profits as very greatly to diminish both the power and the will to save (Malthus 1836: 314–315). 28

Now while Marx charged Malthus with “appropriat[ing]” Sismondi and with “nau- seating” apologetics (MECW 32: 248), 29 he readily accepted Malthus’s proposition regarding the constrained consumption by labor: “Malthus rightly says of this

28 Accumulation entails reduced expenditures on “luxury” goods and increased expenditures on capital goods; and a corresponding switch of activity by part of the luxury workforce

presumably still supported by the capital hitherto at its disposal. The outcome of this transition is an increased stock of capital goods that can be set in motion to raise the flow of final output – material output – only if appropriately provided by a complement of labor. Population growth would be a possible source; but an alternative source – one which Malthus apparently here had in mind – is the service sector. The end result of the savings process is thus not only increased capacity, but also an expanded productive labor force at the expense of service labor. In this fashion we satisfy the notion of a “conversion,” by accumulation, of unproductive into productive labourers, that is of a higher share of “national produce” devoted to maintaining productive rather than unproductive labor. 29 On Malthus’s alleged “plagiarism” see also: “Who at first glance would believe that Malthus’

Principles of Political Economy is simply the Malthusianised translation of Sismondi’s Nouveaux principes d’´economie politique?. . . . Once again, with Sismondi, as previously with Townsend and Anderson, he found a theoretical basis for one of his stout economic pamphlets, in the production of which, incidentally, he also turned to advantage the new theories learned from Ricardo’s Principles” (MECW 32: 245). For “[w]hile Malthus assailed in Ricardo that tendency of capitalist production which is revolutionary in relation to the old society, he took, with unerring parsonical instinct, only that out of Sismondi which is reactionary in relation to capitalist production and modern bourgeois society.”

351 demand that it can never be adequate to the supply of the capitalist. Alias the

I. Summary and Conclusion

worker would be able to buy back the whole of his product with his wages” (252; also 308). 30 Marx made no explicit mention of Malthus’s concern with an invest- ment program financed by reduced consumption on the part of capitalists, but he himself certainly adopted this feature of the analysis as we have seen. 31

There is one final point. Malthus himself in discussing the secular trend subject to a falling profit rate had touched on periodic correction taking the form of a contraction (see Hollander 1997: 518). Marx too linked the secular pattern to the cycle, overproduction ending in crises that contained corrective mechanisms, such that “[o]verproduction . . . is followed by periods of underproduction” (above, p. 341). J. S. Mill went yet further with respect to the relation between trend and cycle though, of course, he accounted for the falling profit rate on Ricardian land- scarcity not Malthusian underconsumption lines (Hollander 1985: 461–7).