Was Marx’s “Early Theory” of Overproduction/Underconsumption
Dropped by Him Later On?

      [In April 2001, a friend of mine wrote me a brief note in which he suggested that Marx’s theory of capitalist economic crises changed over time, and that his early theory—which was more along the lines of overproduction/underconsumption—was later superseded by a different theory, and was more correct. Below I provide the text of my friend’s letter, and my response in which I disagree with his position. —Scott H.]

------------------------------- Original message -----------------------------
> Date: 4/9/01
> Dear SH and [others],
> I'd like to draw attention to Itoh's contention that (more or less) Marx has
> several theories of capitalist crisis, that his earlier Grundrisse and
> Theories of Surplus Values contain mostly a theory adaptable to the
> underconsumptionist premises, but that Capital contains another theory of 
> the principal aspect of capitalist crisis (and that one needs to get into
> the credit circuit question raised in vol. three of Capital to grasp this
> more definitive final theory). Let's get into this. I think that that 
> attitude carves out a piece of Marxist wood worth our attempts to discern
> and glean from and, most of all, attempt to apply. You called our attention
> to the question of considering that Lenin's views changed over time. To 
> which I'd say that, yes, they did (and this shows what kind of a real
> thoroughgoing revolutionary he was) but that Marx's views were even more 
> changed/perfected over his times. We should all draw (as I think was your
> intention in pointing out the development of Lenin's thinking) from the 
> model that our very best scientists were not infallible, learned from 
> experience and always thought that getting the truth was more important than
> affirming their last rendition of it.
> Well that's my daily two cents.
> Yours,
> [Name withheld]

April 10, 2001

Hi ....., and everyone,

I think the situations with Lenin and Marx are different here. There were developmental stages to Lenin’s political economy, with much continuation of ideas of course, but also with some apparent and important changes in outlook. Specifically, his theory of crises seems to have changed between the first and last stage (although it was pretty much an implicit theory in the last stage). Marx too, like everyone studying a complex subject, went through developmental stages, but on the issue of explaining capitalist economic crises he did not go from championing one clear and definite theory early on, to championing a different clear and definite theory at the end. Instead, his analysis seemed to grow more complex, and perhaps more confused, as time went on, with diverse statements and arguments which seem to support multiple and, at least apparently, inconsistent crisis theories. In Capital itself, his final economic testament (which of course he never completed), you will find plenty of statements which have been taken by different people to support multiple conflicting crisis theories. So it is not really a case of the Grundrisse vs. Capital on this question.

For many people, including the early Lenin and the RCP, the dominant influence on their understanding of crisis theory comes, I think, not from Capital at all (let alone the Grundrisse, Theories of Surplus Value, or other sources), but from Engels’ Anti-Dühring. This is not entirely unreasonable since: 1) Engels says he read the entire manuscript to Marx, and thus it is unlikely that there are any major points in the work with which Marx disagreed. (Marx even contributed one long chapter to the book, though—while it is in the political economy section—it does not have much to do with crisis theory.) And 2) Marx’s discussion of capitalist crises in volume 3 of Capital was left in an unfinished, and quite unsatisfactory state. (After Marx’s death, Engels struggled with it for a long time, but still couldn’t mold it into a clear and fully coherent theory.) So, even if the discussion of crises in Anti-Dühring was a brief and popular account and certainly not a thoroughly worked-out and scientific theory, at least it seemed more coherent and easier to deal with than the much more difficult-to-handle discussion in Capital.

One problem is that even in Anti-Dühring there are at least two apparently conflicting crisis theories. (Though, mercifully, he does not get into the third most prominent crisis theory in Capital, the “falling rate of profit” theory.):

1) The “anarchy theory”: This is the dominant theory in the book, and the one which most influenced the early Lenin and the RCP. Basically Engels argues that crises are due to the lack of overall planning in capitalist production. I.e., what I call the “anarchy theory” could just as well be called the “no planning” theory of crises. (For some explicit quotes and citations which show this is what Engels, and apparently Marx, meant by “anarchy” here, see my “First Notes Towards a Critique of America in Decline.)

2) The “overproduction theory” (or what its opponents call the “underconsumption theory”): In the passage which follows please ignore for now the statement that it is the “anarchy of production” which causes this result—I’ll discuss that issue later. Focus instead on what comes after that introductory half-sentence:

“We have seen how the capacity for improvement of modern machinery, which is pushed to a maximum, is transformed by the anarchy of social production into a compulsory commandment for the individual industrial capitalist constantly to improve his machinery, constantly to increase its productive power. The bare factual possibility of extending his field of production is transformed into a similar compulsory commandment for him. The enormous expansive force of large-scale industry, compared to which that of gases is mere child’s play, now appears to us as a need for qualitative and quantitative expansion that laughs at all counteracting pressure. Such counteracting pressure is formed by consumption, by sales, by markets for the products of large-scale industry. But the capacity of the market to expand, both extensively and intensively, is primarily governed by quite different laws which operate far less energetically. The expansion of the market cannot keep pace with the expansion of production. The collision becomes inevitable, and since it can yield no solution so long as it does not burst the capitalist mode of production itself, it becomes periodic. Capitalist production generates a new ‘vicious circle’.” [Engels, Anti-Dühring, Peking edition, 1976, pp. 354-5.]

While the dominant crisis theory in Anti-Dühring is that of “anarchy of production” or “no planning”, when it comes to saying anything further about what is going on in crises and how they come about, Engels (and again, Marx) falls back on overproduction/underconsumption. However, note that even here there are a lot of unaddressed questions. Exactly what are these “quite different laws” which govern production and consumption? Why, exactly, are the laws which govern consumption “far less energetic”? And if the collision of these laws is inevitable as long as capitalism exists, how is capitalism able to temporarily overcome the problem, and thus create an endless series of crises which get resolved and then break out anew?

Questions like these have answers, but they are not in Anti-Dühring, and that is one of the reasons that we should not be focusing on that book for our basic crisis theory. It contains in fact a very superficial and limited summation of crisis theory, which was not meant to be anything else. Moreover, it is very misleading on the issue. It says that overproduction/underconsumption crises are the result of the “anarchy of production”, or the lack of any overall production plan under capitalism. But how exactly is this the case? It doesn’t say, and moreover, no Marxist economist (not even Marx or Engels) has ever been able to say! (See my “counterpoint” below, however.) Engels gives a very superficial “explanation” here that in fact seems to be no explanation at all.

In reality the basic contradiction which leads to crises is indeed inherent in capitalism, but it arises from how surplus value is generated in capitalist production. It is just this: The workers produce more value than is paid to them in the form of wages. Therefore they cannot possibly buy back all the goods and services they produce. Yes, it is true that the capitalist use some of the surplus value to buy their own necessities, and more importantly they wildly splurge on luxuries. That still leaves the vast mass of surplus value untouched. And yes, it is also true that there is still no problem, providing the capitalists invest all that remaining surplus value in the expansion of production (building new factories, buying more machines, etc.). But the problem comes from this one simple fact: It makes no sense to keep expanding production forever when the only thing that can be done with the increased production is to keep expanding production! Sooner or later a few capitalists decide that there is no point to building more and more factories when the factories they already have cannot sell the goods they already produce. (Then the “contagion” spreads and becomes generalized.) And yes, there are ways of keeping things going for a while, such as by artifically expanding the purchasing power of the masses by lending them more and more money, or by incurring public debt (government deficits) which is used to buy excess production, or completely wasteful production (such as war materiél). But eventually, and inevitably, it must all come crashing down. And most fundamentally the reason why goes back to that mass of ripped off surplus value which ultimately the capitalists themselves don’t know what to do with!

The “anarchy of production”, or lack of an overall production plan, apparently has nothing to do with any of this. It is true that a lack of overall planning is also an important characteristic of capitalism, but it gets involved in the development of economic crises only as a very secondary aggravating factor. It is not in any way part of the essential predicament.There is a thought experiment which shows that the “anarchy of production” cannot be the ultimate explanation for capitalist economic crises in general (even though it may well contribute to them as a very secondary factor, to one degree or another). I’ve used it lots of times before, but here it is again: Imagine that there is just one humongous capitalist corporation in the entire world, and that everybody—if they work for a living at all—work for it. Just to simplify matters, imagine that even the one world government is a division of this corporation. Imagine, further, that this omni-corporation works entirely and exclusively from a massive production plan, and that they do not utilize any form of market mechanism in the transfer of goods and servcies from one division to another. On the other hand, the relationship of all the workers to the Corporation is a market one. That is, the workers are paid wages (i.e., they sell their labor power on the market) and they buy the goods and services they need on the public market establish by Corporation stores. (If they didn’t do at least this much, it wouldn’t be capitalism.) The question then is, would there ever be a capitalist economic crisis under this set up?

The answer is yes. It would inevitably develop for exactly the same reasons as it does under the current “many capitals” situation. Capitalist crises are inherent in the extraction of surplus value from a working class. (It is true, however, that the competition of “many capitals” is another factor that can complicate and aggravate crises.)

(Now I know people are probably saying “But such a one-big-corporation can never come into existence!” You are right; it can’t. That is not the issue. The issue is that even if it could come to exist, capitalist crises would still continue. It is a thought experiment, and only that! In reality, the closer you approximate such a “one-big-corporation” form of capitalism, the more bureaucratic and inefficient things become, and the more subject to break-up into many capitals the monstrosity becomes. This was in fact the basic [economic] problem with the revisionist Soviet Union. Even semi-competative, western-style “monopoly capitalism” is vastly superior to Soviet-style state capitalism—even with its hidden partial market mechanisms, etc.).

In the future world communist society there will be an overall economic plan for society, and therefore a drastically reduced amount of “economic anarchy”. (There will always be some economic “anarchy” in society—even under communism—since no massive economic plan can ever be perfect and take every possible development into consideration.) And in this society there will never be any economic crises of the capitalist sort. But the first fact is not the explanation for the second fact. The real explanation for the absence of crises in communist society is the fact that there is no longer any exploitation of labor in that situation; i.e., no longer any extraction of surplus value from a proletariat.

*       *       *

A little counterpoint to what I have written above. If what someone means by eliminating “capitalist economic anarchy” includes ending the exploitation of labor, then it follows that it also includes ending capitalist economic crises. If this is what Engels (and Marx) were getting at in Anti-Dühring, then they were correct and I owe them an apology. But even in that case I still say that the book is very misleading. The problem is not that the capitalists are working without an overall economic plan. The real problem is that they are capitalists, exploiting labor, extracting surplus value—which they are incompetent to put to good use even after they rip it off!

Well, I’m sorry I got somewhat off the specific subject you brought up. Once I got started on that track, I felt I had to continue—if only for the sake of further self-clarification! About the only time I do any serious thinking is when I write.

And I should also add that I think all these points are in Capital—along with, however, many comments and implications that suggest other conclusions. Capital is a gold mine; but its ore, like all ores, needs further processing.


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