ITOH - Value and Crisis (Cap 4 y 5) (OPT) R

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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


3/32

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


4/32

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


5/32

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


6/32

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


7/32

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


8/32

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-


9/32

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


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


10/32

10 4

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


11/32

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


12/32

103 Value

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


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


13/32

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


14/32

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


15/32

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-


16/32

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


17/32

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

ITOH - Value and Crisis (Cap 4 y 5) (OPT) R

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