‘Pure’ capitalism has never existed in real life and, as Engels rightly predicted, it never will exist, because ‘we shall not let it come to that’. The Russian October Revolution, and the subsequent expansion of a post-capitalist sector of world economy, indicates that Engels’s instinct was a sure one in that respect. Luxemburg’s analysis of the ways and means whereby capitalism sucks wealth and value from pre-capitalist communities and classes was an impressive first contribution to three-quarters of a century of anti-colonialist and anti-imperialist world literature. It has still to be equalled in either theoretical insight or economic lucidity.93

The final balance-sheet of Luxemburg’s critique, then, must be a nuanced one. We cannot say baldly that she is right or that she is wrong. While many of her partial theses, as well as her final answer, are inadequate, she certainly poses relevant questions and puts her finger on real problems which Volume 2 does not and cannot answer. In particular, the contradictory character of capitalist growth, discussion of which was stimulated by her seminal The Accumulation of Capital, cannot be simply subsumed under the formulas ‘anarchy of production’ and ‘disproportionality’.94 The specific place which unavoidable disproportions between production and mass consumption occupy in the dynamics of capitalism has to be integrated into any overall explanation of capitalist disequilibrium and crisis.

11. VOLUME 2 OF CAPITAL AND MARX’S EXPLANATION OF CAPITALIST CRISES OF OVER-PRODUCTION

Our discussion of Luxemburg’s critique of Marx’s reproduction schemas leads logically on to an examination of his theory of crises, as it appears in Volume 2 of Capital. It is well known that the four volumes of Capital which Marx left behind contain no systematic analysis of that key aspect of the capitalist mode of production: the inevitable periodic occurrence of such crises. In his original plan, Marx had reserved a full treatment of the question for a sixth volume dealing with the world market and crises.95 But partial considerations are interspersed through the text, especially in Volume 4 (Theories of Surplus-Value) and Volumes 2 and 3. It is on these that we wish to touch briefly here.

In Volume 2, Marx makes a number of crucial points about capitalist crises of over-production. First, he insists upon the fact that the role of commercial capital as intermediary between industrial capitalist and ‘final consumer’, while helping to shorten the circulation time of commodities and hasten the turnover of productive circulating capital, at the same time masks the growing disproportion between expanding production and lagging final demand.96 More precisely, Marx adds: ‘The periods in which capitalist production exerts all its forces regularly show themselves to be periods of over-production; because the limit to the application of the productive powers is not simply the production of value, but also its realization. However, the sale of commodities, the realization of commodity capital, and thus of surplus-value, is restricted not by the consumer needs of society in general, but by the consumer needs of a particular society in which the great majority are always poor and must always remain poor. This however belongs rather to the next part.’97 This is but an echo of the famous passage in Volume 3, in which Marx summarizes his theory of crises, ending with the following words: ‘The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses, in the face of the drive of capitalist production to develop the productive forces as if only the absolute consumption power of society set a limit to them.98

However, Marx states no less categorically in Volume 2: ‘It is a pure tautology to say that crises are provoked by a lack of effective demand or effective consumption. The capitalist system does not recognize any forms of consumer other than those who can pay, if we exclude the consumption of paupers and swindlers. The fact that commodities are unsaleable means no more than that no effective buyers have been found for them, i.e. no consumers (no matter whether the commodities are ultimately sold to meet the needs of productive or individual consumption). If the attempt is made to give this tautology the semblance of greater profundity, by the statement that the working class receives too small a portion of its own product, and that the evil would be remedied if it received a bigger share, i.e. if its wages rose, we need only note that crises are always prepared by a period in which wages generally rise, and the working class actually does receive a greater share in the part of the annual product destined for consumption. From the standpoint of these advocates of sound and ‘simple’(!) common sense, such periods should rather avert the crisis. It thus appears that capitalist production involves certain conditions, independent of people’s good or bad intentions, which permit the relative prosperity of the working class only temporarily, and moreover always as a harbinger of crisis.’99 Is there a contradiction between these two explanations? What lies behind the frenetic accusations of ‘under-consumptionism’, referred to as some grave ‘deviation’ or shameful disease, and levelled by some of Marx’s followers against others?

In our opinion, there is no contradiction whatsoever between the above two sets of comments made by Marx on capitalist crises of overproduction. What he rejects is the common-or-garden reformist or ‘liberal’ platitude, according to which crises could be avoided if, in the period immediately preceding or coinciding with the onset of overproduction, the purchasing power in the hands of the masses were to be significantly increased. This simplistic view overlooks two facts. Under capitalism, not all commodities are consumer goods; an important fraction of the total ‘commodity mountain’, namely, all means of production, cannot be, and are not intended to be, bought by workers. Therefore, an increase in sales of consumer goods, in and of itself, tells us nothing of the course of sales of equipment and raw materials. It does not lead automatically to greater productive investment. Indeed, a redistribution of the national income at the expense of profits (which would be the outcome of a sudden large rise in wages) would result in a collapse of investment, i.e. of sales of means of production. If this succeeded a period of actual decline in the rate of profit, then capital accumulation would contract very violently indeed and the crisis would remain unavoidable. Inasmuch as they forget this basic correlation of the trade cycle with medium-term fluctuations of the rate of profit, all economists (whether Marxist or non-Marxist) who explain the crisis exclusively or mainly in terms of the relation between the purchasing power of consumers and the national income are truly guilty of ‘under-consumptionism’, that is to say, of a one-sided and therefore erroneous theory of over-production and the trade cycle.100

But the same is true of the opposite theory, which concentrates exclusively or mainly on the ‘disproportion’ between the two departments, explaining crises by the anarchy of production and the difficulty (impossibility) of establishing the ‘right proportions’ spontaneously (as if ‘organized capitalism’ or a ‘general cartel’ could avoid crisis!).101 Overlooked in such a thesis is the fact, which Marx himself pointed out,102 that the ‘disproportion’ between the tendency of unlimited development of the productive forces and the narrow constraints placed upon consumption by the bourgeois mode of distribution, is itself a specific source of disequilibrium, autonomous from the disturbance of ‘equilibrium relations’ between the two departments.