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“Under-consumption” and the Marxist Theory of Crisis – Part One
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“What did Marx mean by the contradictions of capitalism?” asks Samuel Brittan, the right-wing economist writing in the Financial Times. “Basically, that the system produced an ever-expanding flow of goods and services, which an impoverished proletarianised population could not afford to buy. Some 20 years ago, following the crumbling of the Soviet system, this would have seemed outmoded. But it needs another look, following the increase in the concentration of wealth and income.” 1

With the return of capitalist crisis, there has been a renewed interest in Marxist economic theory. Even bourgeois economists have been forced increasingly to comment on Marx’s ideas, if only to dismiss them. Hardly a day goes by without some reference in the financial press to Marx. Not

surprisingly, this increased interest has served to focus on Marx’s theory of[‫ظ‬.‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴]

“Under-consumption” and the Marxist Theory of Crisis – Part One —

crisis. This interest has served to revive the controversy surrounding the “underconsumptionist” explanation of crisis, which, in broad terms, associates the difficulties of capitalism, especially in crisis conditions, with a lack of demand in the economy. According to this theory, capitalism has an inbuilt ten dency to produce far more than can be absorbed by consumption. Modern “under-consumption” theory is closely identified with John Maynard Keynes, who believed that the problem of the lack of “effective” demand could be resolved by the intervention of the state through deficit financing. Theories of “under-consumption” are often confused with Marx’s ideas. But these are not the same as Marx explained long ago. While underconsumption certainly exists for the masses, as any worker can testify, it is not the direct cause of capitalist crisis. The idea of “under-consumption” as the cause of crisis pre-dates Keynes and even pre-dates Marx. It can be found in the writings of the great utopian socialists, such as Robert Owen. However, the best known proponents of these views were Jean Charles Sismondi (1773-1842), Thomas Malthus (1766-1834) and Johann Karl Rodbertus (1805-1875). The most consistent and developed version of the theory, as well as the least vulgarised, was put forward by Jean Charles Sismondi. As Engels pointed out: “The ‘under-consumption’ explanation of crises originated with Sismondi, and in his exposition it still had a certain meaning.” 2 This “certain meaning” was also recognized by Marx, as can be seen from his writings on the subject. Sismondi’s chief work, New Principles of Political Economy, was published[‫ظ‬.‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴]

“Under-consumption” and the Marxist Theory of Crisis – Part One — www. he made a whole number of correct observations. Sismondi was not entirely wrong in this supposition. In short. Marx paid tribute to him and regarded him as an original thinker who. Unlike the vulgar bourgeois economists who dismissed crises. which stated that the economy left unaided would reach an optimum state. The real nature and central contradictions of capitalism. for instance.‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴] . out of the classical economists. while clearly present. while more advanced. nevertheless eluded him. was striving towards an understanding of capitalism https://www. who pointed out the error of Jean Baptiste Say (supported by James Mill and David Ricardo) that every seller meets a corresponding buyer (“Say’s Law”) and they therefore regarded generalized overproduction as impossible.readability. such as J. According to Sismondi overproduction of commodities did not arise from the general overfulfillment of human needs but from the mal-distribution of income and the poverty of the masses. which is always the case under capitalism. Indeed. This vulgar “theory” of equilibrium is the real origin of the “efficient market hypothesis”. According to them. which also were accepted by Marx. Say’s Law Although one-sided.B[‫ظ‬. Despite his shortcomings. In this book he maintained that general crises were due to excess capacity. the working class did not receive enough in wages to buy back the goods that they produced. However. which in turn was due to the separation of the exchange values of commodities from the needs and wants of society.marxist. Sismondi understood that crisis was inherent in the process of commodity production. the economy would always arrive at equilibrium. resulting in insufficient demand in the society. was limited and rather one-sided. This was the Credo of modern political economy – until its falsity was exposed by the greatest collapse of the productive forces for generations in 2008-9. It was in 1819. his understanding of the real nature of capitalist crisis. which was clearly not the case.

assume ever greater dimensions as productive power develops. but essential outbreaks – occurring on a large scale and at definite periods – of the immanent contradictions. “Sismondi is profoundly conscious of the contradictions in capitalist production”. according to Sismondi. crises are not accidental. as with all the classical economists: “He [Sismondi] forcefully criticizes the contradictions of bourgeois production but does not understand them. these relations are conditional. that their contradictions of use-value and exchange-value. the outstanding representative of bourgeois classical political economy..readability. at the same time. its forms – its production relations – stimulate unrestrained development of the productive forces and of wealth. he was head and shoulders above David Ricardo. production and consumption.‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴] .com/articles/axgmyjaq[‫ظ‬. on the other hand.” Marx continues: “He is particularly aware of the fundamental contradiction: on the one hand. and that. Marx was still well aware of his shortcomings and limitations. Hence. commodity and money. In this regard. unrestricted development of the productive forces and increase of wealth which.” 3 While recognizing the great contribution of Sismondi. and consequently does not understand the process whereby they can be resolved. as Ricardo maintains. wrote Marx. the system is based on the fact that the mass of producers is restricted to the necessities. on the one hand. capital and wage-labour. 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 https://www. etc. However. consists of commodities and must be turned into cash. “he is aware that.marxist. on the other hand.“Under-consumption” and the Marxist Theory of Crisis – Part One — www. purchase and and its tendency to crisis.

com/articles/axgmyjaq[‫ظ‬.” 4 Malthus Thomas Malthus added nothing new to what Sismondi had already written. etc. in which wealth attains only an antithetical existence and appears everywhere simultaneously as its opposite. especially its chief representatives.marxist. whose effect is decisive only under certain particular circumstances and over long periods. He went on to explain: “The law operates therefore simply as a tendency. toadies.“Under-consumption” and the Marxist Theory of Crisis – Part One — www. Church. 5 Marx developed his own ideas on capitalist crisis on the basis of a very thorough study and criticism of all the classical economists. tax-eaters. That was https://www. the arch-vulgarizer and reactionary apologist attempted to crudely use these arguments to justify the interests of “the material and social conditions for the production of wealth which have developed within capitalist society. While it is without question an important tendency under capitalism. Adam Smith and David Ricardo. but this is not correct and Marx never recognized it as such.readability. describing it uniquely as “this double-edged law”.‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴] . it operates as a long-term tendency that bears down upon the system. While Marx did not manage to write a specific book on capitalist crisis. Malthus. his theory of crisis is present throughout his economic writings. Marx expressed himself in very precise terms that countervailing factors transformed this law into a tendency.” Marx accused Malthus of plagiarizing the weak side of Adam Smith and caricaturing Sismondi. Rate of Profit Some people falsely attribute the tendency of the rate of profit to decline as the real cause of capitalist crisis. that the bourgeois forms are only transitory forms. especially Capital and Theories of Surplus Value.” 6 There have been long periods where the rate of profit was falling. among others.

readability. to develop the productive forces as if production did not take place on a narrow restricted social foundation.. explained[‫ظ‬. “The English. on the one hand.marxist. described by Engels as volume four of Capital. In a market economy overproduction refers only to what can be profitably sold. reveal it as only a transitional. In the Theories of Surplus Value. “This is grasped rather crudely but nonetheless correctly by Sismondi. on the other hand. Marx gives a clear outline of the fundamental contradiction facing capitalism: “The fact that bourgeois production is compelled by its own immanent laws.“Under-consumption” and the Marxist Theory of Crisis – Part One — www. is the deepest and most hidden cause of crises. while. for example. We therefore have to look elsewhere for an explanation of crisis. as a contradiction between production for the sake of production and distribution which makes absolute development of productivity the case towards the end of the long period of capitalist upswing that followed the Second World War.‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴] . “Overproduction. for example. it can develop these forces only within these narrow limits. the credit system. of the crying contradictions within which bourgeois production is carried on and which. historical form. even at a cursory glance. are means by which capitalist https://www. which Marx reveals in his extensive writings on political economy. etc.” 7 Marx stated numerous times that the ultimate cause of capitalist crisis is overproduction. are forced to lend their capital to other countries in order to create a market for their commodities”. But this is not overproduction in relation to what people need or want.  But there were also long periods when the rate of profit was rising as in the last 30 years.

” Marx then goes on to explain that this expansion allows the whole https://www. without any consideration for the actual limits of the market or the needs backed by the ability to pay. As soon as the yarn is sold.‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴] . even though the commodities ejected from it do not actually enter either individual or productive consumption. the reproduction process may proceed on the same or on an expanded scale. “Overproduction is specifically conditioned by the general law of the production of capital: to produce to the limit set by the productive forces. the circuit of the capital value represented in the yarn can begin anew.” 8 Marx reiterates this point again and again throughout his writings. of needs to be satisfied. mass production can have only wholesale merchants as its immediate purchasers. which simultaneously drive it onward and beyond [its own limits] and force it to put on seven-league boots. Within certain bounds. to exploit the maximum amount of labour with the given amount of capital. at first irrespective of what becomes of the yarn when[‫ظ‬.readability. that is to say. for example. Besides other industrial capitalists. as far as the capitalist producer is concerned.marxist.“Under-consumption” and the Marxist Theory of Crisis – Part One — www. The circuit of the capital value that he represents is not interrupted. in volume two of Capital. and not by a predestined ambit of supply and demand.” 9 Reproduction process Again. As long as the product is sold everything follows its regular production seeks to break through its own barriers and to produce over and above its own limits… Hence crises arise. Marx explains. in order to reach a development of the productive forces which could only be achieved very slowly within its own limits. “The volume of the mass of commodities brought into being by capitalist production is determined by the scale of this production and its needs for constant expansion. The consumption of commodities is not included in the circuit of the capital from which they emerge.

But. the demand for individual consumption. Far from being an isolated and accidental remark. At this point the crisis breaks out. which is at best completely one-sided. this explanation is.marxist. The late-comers sell below the price in order to sell at all. in the reproduction process of capital. however. while payment for them is falling due. but on https://www. has absolutely nothing to do with the real state of demand. or “simply a throw away remark”. a “description”. The earlier streams have not yet been converted into ready money. absolutely central to Marx’s theory of crisis. “now follows another. or sell at any price in order to pay. even the most cursory examination of his writings shows that this is not the case. It has only to do with the demand for payment.‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴] .” 11 Overproduction Some “clever” people have tried to get round this clear explanation of crisis by claiming that this statement of Marx was an isolated phrase.” 10 The same point is again reiterated in volume three of Capital. but rather in a decline in the number of exchanges of capital. Their owners must declare themselves bankrupt. they pile up and lie unsold in the hands of retail traders and remain on the market. Commodity capitals now vie with each other for space on the reproduction process to be completed. with the absolute necessity of transforming commodities into money. where (once again) Marx emphases the fundamental contradiction of the capitalist mode of production: “The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit. This sale. “One stream of commodities”.com/articles/axgmyjaq[‫ظ‬. It first becomes evident not in the direct reduction of consumer demand. and it finally emerges that the earlier stream had only seemed to be swallowed up by consumption. writes Marx.readability. However.“Under-consumption” and the Marxist Theory of Crisis – Part One — www. in fact. This is a theory based not on “under-consumption” theory. the central contradiction of overproduction under capitalism. Howard and Senior Lecturer in Economics. assisted by Marx.marxist. the explanation in Anti-Dühring contains not a single reference to the tendency of the rate of profit to fall. in earlier epochs. in other words. They are so irritated that have even tried to argue that Engels’ views did not coincide with those of Marx.‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴] .” We are then told by these learned critics: “Indeed. by https://www.readability. King. soon became a book entitled Anti-Dühring. including the idea of “under-consumption”. not one single solitary word – not even a “throw-away remark” is to be found on the subject. who informed us in their History of Marxian Economics that Engels “interpreted Marx’s ideas in his own distinctive manner” and “came no closer than Marx to providing a coherent theory of economic crisis.” It was none other than the revisionist Eugene Dühring who borrowed and vulgarized the “under-consumptionist” explanation of crisis. “that. where overproduction is described as an epidemic.“Under-consumption” and the Marxist Theory of Crisis – Part One — www. It is significant that when dealing with capitalist crisis. J. Some academic “Marxists” are extremely irritated by this silence. and Herr Dühring has in turn copied it. Yes. The reply was so comprehensive that the series of articles published in the German party press.C. which first appeared in 1878. from Rodbertus. Engels pointed out: “Rodbertus took it from Sismondi. Marx and Engels had already alluded to this cause in the Communist Manifesto. and has become established as one of the fundamental classics of Marxist theory. in his usual vulgarizing fashion.” 12 It was left to Engels. would have seemed an absurdity – the epidemic of over-production. to rebut the false ideas of professor Dü[‫ظ‬. which he put forward in opposition to Marx’s theory of overproduction. that Engels was not really a Marxist! Typical in this respect are Professor M.

“Under-consumption” and the Marxist Theory of Crisis – Part One — www.Dühring can be taken as Marx’s final thoughts on capitalist crisis. the completed drafts were read. But can it really be true. They may have read all the right[‫ظ‬.com neglecting the tendency of the rate of profit to decline he renounced a major strand in Marx’s crisis theory. who also contributed a whole section to it.readability. and since Marx died some five years after its publication.” 13 These are unfounded trumped-up allegations. as suggested. with its determinism and its application of natural scientific reasoning to the study of human history. and for a very good reason: Although this book was written by Engels. who wrote a long section on economic theory in Anti-Dühring. it was Marx himself. that Engels misunderstood or misrepresented Marx’s views on economics – in this case in his classic work Anti-Dühring? No. and approved. but their views are not much use to Marxists or anybody else seeking a scientific explanation. it is not true. Certainly these are the last things https://www. which have no bearing in truth but are peddled around the universities like so much cheap gossip.” They conclude that “Controversy still rages as to whether his [Engels] own later thought constitutes a distinct ‘Engelsism’ which. history and science.‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴] . as Engels admitted. the section on economics in Anti. by Marx. Since this book was written more than a decade after the drafts for Capital had been completed. which is divorced from Marxism but attempts to make its mark by manufacturing differences between Marx and Engels. They are part of the academic world.marxist. is separate from and antagonistic towards Marx’s own philosophy and methods of analysis… It is conceivable that Engels took a conscious decision to suppress those of Marx’s writings with whose humanist orientation he had (by the 1880s) very little sympathy. though he was followed in this by almost all Marxian economists before 1929. Which section did Marx write? While Engels concentrated on philosophy.

‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴] . Anti-Dühring. but for now it is sufficient to observe that the views expressed in Antihttps://www. A History of Marxian Economics.marxist. p.readability. he wrote on the subject. p. Capital. p.84. 62 & 53 6 Marx.2. pp. p. pp. vol. our emphasis 12 Engels.2.3.1. Penguin 11 Marx. our emphasis 7 Marx. p. The Theories of Surplus Value.56 4 Ibid. p.56 5 Ibid.615.341 13 Howard and King. 1969 3 Marx.122 9 Marx. vol.156-57.3. p.535 10 Marx. Capital. Theories. our emphasis 8 Ibid. Penguin edition. p. Theories. vol.3.3. Capital.326 &346.17 We will deal with the tendency of the rate of profit to fall in a future article.[‫ظ‬.341. Part 2> Notes: 1 Financial Times. pp.“Under-consumption” and the Marxist Theory of Crisis – Part One — www. Moscow. 2011 2 Engels. vol. vol. vol. Anti-Dühring. 26 August.[‫ظ‬. explains the author.“Under-consumption” and the Marxist Theory of Crisis – Part One — www. “We have seen that the ever increasing perfectibility of modern machinery is. the author then goes on to explain the fundamental contradiction that plagues the capitalist system: namely the continuous outpouring of commodities which eventually crash into the limits of the market.marxist. turned into a compulsory law that forces the individual industrial capitalist always to improve his Dühring represent the standpoint of both Marx and Engels. was identical. despite all the efforts of the revisionists to misrepresent them. The enormous expansive force of modern industry. Anti-Dühring Let us see what Engels (and Marx) wrote in Anti-Dühring. which. “The bare possibility of extending the field of production is transformed for him into a similar compulsory law. both qualitative and quantitative.readability. always to increase its productive force”. that laughs at all resistance.” (14) Having described the relentless growth of the productive forces under capitalism. driven by compulsory laws. by the anarchy of social production.‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴] . compared with which that of gases is mere child’s play. appears to us now as a necessity for expansion.

. in volume one of Capital: “The enormous power. inherent in the factory system. (15) He makes the same point in the November 1886 Preface to Capital:?"While the productive power increases in a geometric.  For instance.“Under-consumption” and the Marxist Theory of Crisis – Part One — www. The life of modern industry becomes a series of periods of moderate activity. The collision becomes inevitable . they were crises of overproduction.‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴] .” (16) In other words. by sales. the extension of markets proceeds at best in an arithmetical ratio. necessarily beget feverish production.”  Engels draws the clear distinction between “under-consumption” https://www. by the markets for the products of modern industry”. This simply repeats what Marx had explained elsewhere.. Capitalist production has begotten another ‘vicious circle’. over-production. explains Engels. of the markets is primarily governed by quite different laws that work much less energetically. which operate by different laws.” (17) In explaining the Marxist theory of crisis. crisis and stagnation. followed by over-filling of the markets.marxist. “But the capacity for extension. “the character of these crises is so clearly marked that Fourier hit [the nail on the head] when he described the first as crise plethorique. prosperity. and the dependence of that system on the markets of the world. some more vigorous than others." So what is the character of crises under capitalism? Engels explains. Engels demolishes Eugene Dühring’s attempt to explain crises by the “under-consumption of the “Such resistance is offered by consumption. “The extension of the markets cannot keep pace with the extension of[‫ظ‬. extensive and intensive. whereupon contraction of the markets brings on crippling of production.” explains Engels. of expanding by jumps.” Here Engels (and Marx) describes a gap opening up between production and consumption. a crisis of superabundance.

where the capitalists appropriate the wealth produced by the social labour of the working class.readability. The problem is that under capitalism production is not rationally planned. but geared to the maximization of profit and dominated by blind market forces. completely satisfy the basic needs of society. which suffered from the opposite problem. as a result of the low level of the productive forces and the natural disasters (drought. if production was rationally planned and organized. pestilence. etc. Under capitalism. They have completely outgrown the capitalist system and private ownership. to which these societies were prone. and with it the living standards of the overwhelming majority. then. Overproduction. the productivity of labour. mainly based on the production of use-values.“Under-consumption” and the Marxist Theory of Crisis – Part One — www. and exists in no other[‫ظ‬. is peculiar to capitalism. which is applicable to capitalism alone.‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴] . The phenomenon of overproduction was unknown in these societies. could be vastly increased in a relatively short space of time. Here we are faced with the contradiction between social production and individual appropriation. Use-values Pre-capitalist societies were natural economies.marxist. as a result of the poverty of the masses) and the phenomenon of overproduction.) as well as war. On the basis of a rational plan of production. Overproduction arises under capitalism because the unlimited drive to https://www. namely the problem of under-consumption arising from the scarcity of usevalues. the productive forces have been revolutionized to such an extent that they could. plague. It arises from the anarchic laws of the market economy and commodity (which has always existed in class society.

As Marx explained. The working class receives in wages less value than they expand production periodically comes into collision with the limited confines of the market economy. according to the bourgeois economists. but why. for example. The workers can never buy back what they produce as they only receive enough to maintain themselves and their families. https://www. Profit is the unpaid labour of the working class. as they are part of the capital required for the production of necessities. “Under-consumption” also exists under capitalism. They lack “effective demand”. as a result. arises ultimately from the fact that the working class cannot buy back the full value of what it produces. “One section of capitalists produce goods which are directly consumed by the workers”.com/articles/axgmyjaq[‫ظ‬. but arises out of the anarchy of the market economy and the class structure of capitalist society. there is no permanent crisis under capitalism. where excess commodities.“Under-consumption” and the Marxist Theory of Crisis – Part One — www. This strange phenomenon of overproduction.  Surplus value cannot come from machines or buildings. explained Marx. as any working class person will testify. which simply transfer their own value to the commodities. Only human labour is able to produce new value. However. the problem is not to explain why there is crisis. goods produced for sale. “another section produce either goods which are only indirectly consumed by them. and department two. which produces capital goods (means of production). This state of affairs is irrational from any sane point of view. the capitalist system gets around this problem of insufficient “demand” with the division of the economy into two main sectors: department one. This unpaid labour is the source of surplus value. starting from day one. cannot be sold. and is appropriated by the capitalist. insofar. Plenty of people want and need things. as raw materials.readability. which produces consumer goods.‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴] . but do not have the money to buy them.marxist.

This uncontrolled drive to accumulate and produce will sooner or later hit the limits of consumption. This drives out the weaker capitalists and prepares the ground for a new boom. and likely bankruptcy. The only problem is that this increased capacity produces even more consumer goods. More significant is the capitalist’s continual drive for unlimited expansion by ploughing back the surplus extracted from the unpaid labour of the working class. etc. but only at the cost of preparing the way for a new crisis of machinery. takes the surplus and reinvests it in more new machinery. which eventually cannot be sold. as Marx explained. This takes the form under capitalism of a boom and slump cycle.” (18) As long as the capitalist class. entering only into the revenue of the non-workers. lays the basis for a new period of boom. and we have a new crisis. which appropriates the surplus value. In other words. reproduces the contradictions on a higher[‫ظ‬.marxist.“Under-consumption” and the Marxist Theory of Crisis – Part One — www. the capitalist is forced to reduce his prices below the price of production. based upon a higher rate of profit. To sell this flood of commodities.readability. the capitalist system creates its own market through the interaction between the two departments of production and temporarily overcomes this inherent contradiction. the slaughter of the values of capital arising from the slump. and accumulation for accumulation’s sake. in turn. but.. Here we have a system of production for production’s sake. This dialectical contradiction lies at the heart of the capitalist system. However. falling profits. resulting in losses. “[T]he under-consumption of the masses.‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴] . Unlimited expansion The lack of purchasing power of the working class is therefore only one side of the equation. the restriction of the consumption https://www. buildings and general infrastructure. the system can develop. or commodities which are not consumed by the workers at all.

combined with the limited consumption of the masses arising from their social position. “The part falling to the share of the working class (reckoned per head)”.” The crisis of overproduction is however a new phenomenon.” (20) This in turn becomes a barrier to the expansion of the market and therefore the realization of surplus value. “either increases only slowly and inconsiderably or not at all. Push down wages The capitalists as a whole naturally want to see an expanding market. while attempting to hold down wages to the bare minimum. while under-consumption has been a constant feature for thousands of years”.readability. continues Engels. which has arisen only under the capitalist mode of production. “It has existed as long as there have been exploiting and exploited classes. is not a new phenomenon. explains Engels.marxist. Each individual capitalist would be delighted to see all competitors increase the https://www. and under certain circumstances may even of the masses to what is necessary for their maintenance and reproduction. As a consequence.‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴] . capitalism is like a man sawing away the branch on which he is sitting.” explains Engels.” He then goes on to explain the reason in the capitalist form of production. as we are witnessing in this present period of prolonged austerity. which is unique to the capitalist mode of production. characterized by “the general shrinkage of markets which breaks out in crises as the result of a surplus of production [which] is a phenomenon only of the last fifty years. it nevertheless “tells us just as little why crises exist today as why they did not exist before. by squeezing more and more surplus-value out of the working class.” (19) The Marxist theory of crisis is based upon a dialectical contradiction: the unlimited drive to produce. It creates and destroys the market at the same time.“Under-consumption” and the Marxist Theory of Crisis – Part One —[‫ظ‬.  “Therefore.

This is precisely the false argument of the Keynesians. Marx himself had criticized the concept of “under-consumption” as the cause of crisis in volume two of Capital.” https://www. If this were the case. The capitalist system does not know [of] any other modes of consumption than effective ones. states Engels. That commodities are unsaleable means only that no effective purchasers have been found for them.marxist. written some ten years before AntiDühring. the problem could be solved by increasing the purchasing power of the masses.readability.[‫ظ‬. has nothing in common with the positions of various schools of bourgeois economists known as “underconsumptionists”.“Under-consumption” and the Marxist Theory of Crisis – Part One — www. driven by competition. Yet when it comes to their own workers. explains Engels. So the capitalists. Marx answers this as follows: “It is a sheer tautology to say that crises are caused by the scarcity of effective consumption. he explained. or effective consumers. it should be noted. “The product governs the producers”. (21) They are all caught up in this contradiction of capitalism. Engels remarks: “It requires a strong dose of deep-rooted effrontery to explain the present complete stagnation in the yarn and cloth markets by the under-consumption of the English masses and not by the overproduction carried on by the English cotton mill owners”. most notably the Keynesians.e. (22) Such a view.‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴] . Consumption alone (or rather the lack of it) is not the fundamental cause. they are determined to keep down wages in order to reduce costs and increase profits. all end up attempting to push down wages and therefore demand. In a kick against Dü wages of their workers to boost demand. consumers (since commodities are bought in the final analysis for productive or individual consumption).

including labour power. To call for the state to “create” demand is also utopian. thereby cancelling out the effects of this measure. Left reformists frequently put this Keynesian argument forward as a solution to the present crisis. shortly before a slump in the[‫ظ‬.“Under-consumption” and the Marxist Theory of Crisis – Part One — www. not backed by extra production.‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴] . From the point of view of these advocates of sound and ‘simple’ (!) common sense. Therefore. lack of demand cannot be considered the real cause of the crisis of He continues: “But if one were to attempt to give this tautology the semblance of a profounder justification by saying that the working class receives too small a portion of its own product and the evil would be remedied as soon as it receives a larger share of it and its wages increase in consequence. The laws of capitalism are determined by a system of commodity production. such a period should rather remove the crisis. the idea that this will solve the crisis of capitalism is completely wrong. will only serve to fuel inflation and reduce workers’ income.” (23) In other words. The attempt to use the printing press to “create” money. increased wages will simply eat into profits and push the capitalists to cut back on investment and production. It is precisely the Keynesians who believe that crises are caused by a lack of “effective demand” (“under-consumption”) and that wages or state spending should be raised in order to fix the problem. one could only remark that crises are always prepared by precisely a period in which wages rise generally and the working class actually gets a larger share of that part of the annual product which is intended for consumption. In fact. While we are certainly in favour of increasing wages. wages tend to rise at the peak of a boom. where labour tends to be in short supply. The only other way for the state to increase spending is to take a further https://www. It is impossible to create demand from thin air.

means of subsistence. such solutions simply intensify the problems of capitalism. its own creations. which will cut consumption. On the one hand are immeasurable riches and a superfluity [super-abundance] of products which the purchasers cannot cope with.marxist. Means of production. Engels once again returned to the fundamental contradictions of capitalism in his 1891 introduction to Marx’s Wage Labour and Capital. and precisely for that reason made incapable of appropriating for themselves this superfluity [superabundance] of products. excessively https://www. are present in abundance. on the other hand. turned into wage-workers. because it is the very thing that prevents the transformation of the means of production and subsistence into capital. It is a catch 22 situation.‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴] . Again. available labourers. But ‘abundance becomes the source of distress and want’ (Fourier). thereby reducing demand. “It is no longer able to turn all this mass of means of production into capital. We therefore leave him the last word on the subject of crisis: “this productivity of human labour which rises day by day to an extent previously unheard of. At the end of the day. It could have been written to describe the situation in the world today. not solve them. or taxing the working class. “The whole mechanism of the capitalist mode of production breaks down under the pressure of the productive forces. this will either mean cutting into profits.“Under-consumption” and the Marxist Theory of Crisis – Part One — www.” states Engels. They lie[‫ظ‬.com slice of the surplus value through taxation. It they borrow (deficit financing) they will have to pay it back with interest. The division of society into a small.” (24) Towards the end of his life. the great mass of society proletarianised. which will stop the capitalists investing.readability. finally gives rise to a conflict in which the presentday capitalist economy must perish. and for that very reason the industrial reserve army must also lie fallow. all the elements of production and of general wealth.

or even not at all.[‫ظ‬. Selected Works. vol. pp. Capital. p. The Theories of Surplus Value.322 22 Ibid.“Under-consumption” and the Marxist Theory of Crisis – Part One — www.326 15 Ibid. p. vol.414-15 24 Engels.340-4 20 Marx and Engels. vol. pp. Anti-Dühring. Selected Works.marxist.2. it can be abolished. propertyless class of wage-workers results in a society suffocating from its own superfluity [super-abundance].341 23 Marx.1.148-9 https://www.” (25) [End] Notes: 14 Engels. p. pp. This state of affairs becomes daily more absurd and – more unnecessary. while the great majority of its members is scarcely. vol. pp. Capital.148 21 Engels. London 18 Marx.326.41 19 rich class and a large. p. p. p. Anti-Dühring. our emphasis 16 Ibid.3. Anti-Dühring. protected from extreme want. vol. It must be abolished.1. p. Anti-Dühring.326-27 17 Marx.‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴] .335 25 Marx and Engels.425-27.1.

com  [‫ظ‬.“Under-consumption” and the Marxist Theory of Crisis – Part One — www.‫ ب‬۰۱:۵۱:۲۵ ۲۶/۰۳/۲۰۱۴] .marxist.readability.