An overproduction of capital, not of individual commodities, signifies therefore simply an over-accumulation of capital — although the overproduction of capital always includes the overproduction of commodities. In order to imderstand what this over-accumulation is (its detailed analysis follows later), it is but necessary to assume it to be absolute. When would an overproduction of capital be absolute? When would it be an overproduction which would not affect merely a few important lines of production, but which would be so absolute as to extend to every field of production?
There would be an absolute overproduction of capital as Internal Contradictions. 295 soon as the additional capital for purposes of capitalist production would be equal to zero. The purpose of capitalist production is the self-expansion of capital, that is, the appropriation of surplus-labor, the production of surplus-value, of profit. As soon as capital would have grown to such a proportion compared with the laboring population, that neither the absolute labor time nor the relative surplus-labor time could be extended any further (this last named extension would be out of the question even in the mere case that the demand for labor would be very strong, so that there would be a tendency for wages to rise); as soon as a point is reached where the increased capital produces no larger, or even smaller, quantities of surplus-value than it did before its increase, there would be an absolute overproduction of capital. That is to say, the increased capital C + A C would not produce any more profit, or even less profit, than capital C before its expansion by A C. In both cases there would be a strong and sudden fall in the average rate of profit, but it would be due to a change in the composition of capital which would not be caused by the development of the productive forces, but by a rise in the money-value of the variable capital (on account of the increased wages) and the corresponding reduction in the proportion of surplus-labor to necessary labor.
In reality the matter would amount to this, that a portion of the capital would lie fallow completely or partially (because it would first have to crowd some of the active capital out before it could take part in the process of self-expansion), while the active portion would produce values at a lower rate of profit, owing to the pressure of the unemployed or but partly employed capital. Matters would not be altered in this respect, if a part of the additional capital were to take the place of some old capital crowding this into the position of additional capital. We should always have on one side the sum of old capitals, on the other that of the additional capitals. The fall in the rate of profit would then be accompanied by an absolute decrease in the mass of profits, since under the conditions assumed by us the mass of the employed labor-power could not be increased and the rate of surplus- 296 Capitalist Production.
value not raised, so that there could be no raising of the mass of surplus-value. And the reduced mass of profits M^ould have to be calculated on an increased total capital. — But even assuming that the employed capital were to continue producing value at the old rate, the mass of profits remaining the same, this mass would still be calculated on an increased total capital, and this would likewise imply a fall in the rate of profits. If a total capital of 1,000 yielded a profit of 100, and after its increase to 1,500 still yielded 100, then 1,000 in the second case would yield only 66§. The self-expansion of the old capital would have been reduced absolutely. A capital of 1,000 would not yield any more under the new circumstances than formerly a capital of 666f.
It is evident that this actual depreciation of the old capital could not take place without a struggle, that the additional capital A C could not assume the functions of capital without an effort. The rate of profit would not fall on account of competition due to the overproduction of capital. Tlie competitive struggle would rather begin, because the fall of the rate of profit and the overproduction of capital are caused by the same conditions. The capitalists who are actively engaged with their old capitals would keep as much of the new additional capitals as would be in their hands in a fallow state, in order to prevent a depreciation of their original capital and a crowding of its space within the field of production. Or they would employ it for the purpose of loading, even at a momentary loss, the necessity of keeping additional capital fallow upon the shoulders of new intruders and other competitors in general.
That portion of A C which would be in new hands would seek to make room for itself at the expense of the old capital, and would accomplish this in part by forcing a portion of the old capital into a fallow state. The old capital would have to give up its place to the new and retire to the place of the completely or partially unemployed additional capital.
Under all circumstances, a portion of the old capital would bo compelled to lie fallow, to give up its capacity of capital and stop acting and producing value as such. The com- Internal Contradictions. 297 petitive struggle would decide what part would have to go into this fallow state. So long as everything goes well, competition effects a practical brotherhood of the capitalist class, as we have seen in the case of the average rate of profit, so that each shares in the common loot in proportion to the magnitude of his share of investment. But as soon as it is no longer a question of sharing profits, but of sharing losses, every one tries to reduce his own share to a minimum and load as much as possible upon the shoulders of some other competitor. However, the class must inevitably lose. How much the individual capitalist must bear of the loss, to what extent he must share in it at all, is decided by power and craftiness, and competition then transforms itself into a fight of hostile brothers. The antagonism of the interests of the individual capitalists and those of the capitalist class as a whole then makes itself felt just as previously the identity of these interests impressed itself practically on competition.
How would this conflict be settled and the " healthy '' movement of capitalist production resumed under normal conditions? The mode of settlement is already indicated by the mere statement of the conflict whose settlement is under discussion. It implies the necessity of making unproductive, or even partially destroying, some capital, amounting either to the complete value of the additional capital C, or to a part of it. But a graphic presentation of this conflict shows that the loss is not equally distributed over all the individual capitals, but according to the fortunes of the competitive struggle, which assigns the loss in very different proportions and in various shapes by grace of previously captured advantages or positions, so that one capital is rendered unproductive, another destroyed, a third but relatively injured or but momentarily depreciated, etc.
But under all circumstances the equilibrium is restored by making more or less capital unproductive or destroying it. This Avould affect to some extent the material substance of capital, that is, a part of the means of production, fixed and circulating capital, would not perform any service as capital; a portion of the running establishments would then close down.
298 Capitalist Production.
Of course, time would corrode and depreciate all means of production (except land), but this particular stagnation would cause a far more serious destruction of means of production. However, the main effect in this case would be to suspend the functions of some means of production and prevent them for a shorter or longer time from serving as means of production.
The principal work of destruction would show its most dire effects in a slaughtering of the values of capitals. That portion of the value of capital which exists only in the form of claims on future shares of surplus-value of profit, which consists in fact of creditor's notes on production in its various forms, would be immediately depreciated by the reduction of the receipts on which it is calculated. One portion of the gold and silver money is rendered unproductive, cannot serve as capital. One portion of the commodities on the market can complete its process of circulation and reproduction only by means of an immense contraction of its prices, which means a depreciation of the capital represented by it. In the same way "the elements of fixed capital are more or less depreciated.
Then there is the added complication that the process of reproduction is based on definite assumptions as to prices, so that a general fall in prices checks and disturbs the process of reproduction. This interference and stagnation paralyses the function of money as a medium of payment, which is conditioned on the development of capital and the resulting price relations. The chain of payments due at certain times is broken in a hundred places, and the disaster is intensified by the collapse of the credit-system. Thus violent and acute crises are brought about, sudden and forcible depreciations, an actual stagnation and collapse of the process of reproduction, and finally a real falling off in reproduction.
At the same time still other agencies w^ould have been at work. The stagnation of production would have laid off a part of the laboring class and thereby placed the employed part in a condition, in which they would have to submit to a reduction of wages, even below the average. This operation has the same effect on capital as though the relative or absolute surplus-value had been increased at average wages. The time Internal Contradictions. 299 of prosperity would have promoted marriages among the laborers and reduced the decimation of the offspring. These circumstances, while implying a real increase in population, do not signify an increase in the actual working population, but they nevertheless affect the relations of the laborers to capital in the same way as though the number of the actually working laborers had increased. On the other hand, the fall in prices and the competitive struggle would have given to every capitalist an impulse to raise the individual value of his total product above its average value by means of new machines, new and improved working metliods, new combinations, which means, to increase the productive power of a certain quantity of labor, to lower the proportion of the variable to the constant capital, and thereby to release some laborers, in short, to create an artificial over-population. The depreciation of the elements of constant capital itself would be another factor tending to raise the rate of profit. The mass of the employed constant capital, compared to the variable, would have increased, but the value of this mass might have fallen. The present stagnation of production would have prepared an expansion of production later on, within capitalistic limits.
And in this way the cyole would be run once more. One portion of the capital which had been depreciated by the stagnation of its function would recover its old value. For the rest, the same vicious circle would be described once more under expanded conditions of production, in an expanded market, and with increased productive forces.
However, even under the extreme conditions assumed by us this absolute overproduction of capital would not be an absolute overproduction in the sense that it would be an absolute overproduction of means of production. It would be an overproduction of means of production only to the extent that they serve as capital, so that the increased value of its increased mass would also imply a utilisation for the production of more value.
Yet it would be an overproduction, because capital would be unable to exploit labor to a degree required by the " healthy, normal '' development of the process of capitalist production, 300 Capitalist Production.
a degree of exploitation, which would increase at least the mass of profit to the extent that the mass of the employed capital would grow; which would therefore exclude any possibility of the rate of profit falling to the same extent that capital growls, or of the rate of profits falling even more rapidly than caj^ital grows.
Overproduction of capital never signifies anything else but overproduction of means of production — means of production and necessities of life — which may serve as capital, that is, serve for the exploitation of labor at a given degree of exploitation; for a fall in the intensity of exploitation below a certain point calls forth disturbances and stagnations in the process of capitalist production, crises, destruction of capital. It is no contradiction that this overproduction of capital is accompanied by a more or less considerable relative over-population. The same circumstances, which have increased the productive power of labor, augmented the mass of produced commodities, expanded the markets, accelerated the accumulation of capital both as concerns its mass and its value, and lowered the rate of profit, these same circumstances have also created a relative over-population, and continue to create it all the time, an over-population of laborers who are not employed by the surplus-capital on account of the low degree of exploitation at which they might be employed, or at least on account of the low rate of profit, wdiich they w^ould yield with the given rate of exploitation.
If capital is sent to foreign countries, it is not done, because there is absolutely no employment to be had for it at home. It is done, because it can be employed at a higher rate of profit in a foreign country. But such capital is absolute surpluscapital for the employed laboring population and for the home country in general. It exists as such together with the relative over-population, and this is an illustration of the way in which both of them exist side by side and are conditioned on one another.
On the other hand, the fall in the rate of profit connected with accumulation necessarily creates a competitive struggle. The compensation of the fall in the rate of profit by a rise in Internal Contradictions. 301 the mass of profit applies only to the total social capital and to the great capitalists who are firmly installed. The new additional capital, which enters upon its functions, does not enjoy any such compensating conditions. It must conquer them, for itself, and so the fall in the rate of profit calls forth the com.petitive struggle among capitalists, not vice versa. This competitive struggle is indeed accompanied by a transient rise in. wages and a resulting further fall of the rate of profit for a short time. The same thing is seen in the overproduction of commodities, the overstocking of markets.
Since the aim of capital is not to minister to certain wants, but to produce profits, and since it accomplishes this purpose by methods which adapt the mass of production to the scale of production, not vice versa, conflict must continually ensue between the limited conditions of consumption on a capitalist basis and a production which forever tends to exceed its immanent barriers. Moreover, capital consists of commodities, and therefore the overproduction of capital implies an overproduction of commodities. Hence we meet with the peculiar phenomenon that the same economists, who deny the overproduction of commodities, admit that of capital. If it is said that there is no general overproduction, but that a disproportion grows up between various lines of production, then this is tantamount to saying that within capitalist production the proportionality of the individual lines of production is brought about through a continual process of disproportionality, that is, the interrelations of production as a whole enforce themselves as a blind law upon the agents of production instead of having brought the productive process under their common control as a law understood by the social mind. It amounts furthermore to demanding that countries, in which capitalist production is not yet developed, should consume and produce at the same rate as that adapted to countries with capitalist production. If it is said that overproduction is only relative, then the statement is correct; but the entire mode of production is only a relative one, whose barriers are not absolute, but have absoluteness only in so far as it is capitalistic.
Otherwise, how could there be a lack of demand for the very 302 Copifalist Production.
comiiiodities which the mass of the people want, and how would it be possible that this demand must be sought in foreign countries, in foreign markets, in order that the laborers at home might receive in payment the average amount of necessities of life? This is possible only because in this specific capitalist interrelation the surplus-product assumes a form, in which its owner cannot offer it for consumption, unless it first reconverts itself into capital for him. Finally, if it is said that the capitalists would only have to exchange and consume those commodities among themselves, then the nature of the capitalist mode of production is forgotten, it is forgotten, that the question is merely one of expanding the value of the capital, not of consuming it. In short, all these objections to the obvious phenomena of overproduction (phenomena which do not pay any attention to these objections) amounts to this, that the barriers of capitalist production are not absolute barriers of production itself and therefore no barriers of this specific, capitalistic, production. But the contradiction of this capitalist mode of production consists precisely in its tendency to an absolute development of productive forces, a development, which comes continually in conflict with the specific conditions of production in which capital moves and alone can move.
It is not a fact that too many necessities of life are produced in proportion to the existing population. The reverse is true. JS^t enough is produced to satisfy the wants of the great mass decently and humanely.
It is not a fact that too many means of production are produced to employ the able bodied portion of the population. The reverse is the case. In the first place, too large a portion of the population is produced consisting of people who are really not capable of working, who are dependent through force of circumstances on the exploitation of the labor of others, or compelled to perfonn certain kinds of labor which can be dignified with this name only under a miserable mode of production. In the second place, not enough means of production are produced to permit the employment of the entire able bodied population under the most productive conditions, Internal Contradictions. 303 3c that their absolute labor time would be shortened by the mass aud effectiveness of the constant capital employed during working hours.
On the other hand, there is periodically a production of too many means of production and necessities of life to permit of their serving as means for the exploitation of the laborers at a certain rate of profit. Too many commodities are produced to permit of a realisation of the value and surplusvalue contained in them under the conditions of distribution and consumption peculiar to capitalist production, that is, too many to permit of the continuation of this process without ever recurring explosions.
It is not a fact that too much wealth is produced. But it is true that there is periodical over-production of Avealth in » its capitalistic and self-contradictory form.
The barrier of the capitalist mode of production becomes apparent: 1) In the fact that the development of the productive power of labor creates in the falling rate of profit a law which turns into an antagonism of this mode of production at a certain point and requires for its defeat periodical crises.
2) In the fact that the expansion or contraction of production is determined by the appropriation of unpaid labor, and by the proportion of this unpaid labor to materialised labor in general, or, to speak the language of the capitalists, is determined by profit and by the proportion of this profit to the emjiloyed capital, by a definite rate of profit, instead of being determined by the relations of production to social wants to the wants of socially developed human beings. The capitalist mode of production, for this reason, meets with barriers at a certain scale of production which would be inadequate under different conditions. It comes to a standstill at a point determined by the production and realisation of profit, not by the satisfaction of social needs.
If the rate of profit falls, there follows on one hand an exertion of capital, in order that the capitalist may be enabled to depress the individual value of his commodities beiow the social average level and thereby realise an extra profit at the 304 Capitalist Production.
prevailing market prices. On the other hand, there follows swindle and a general promotion of swindle by frenzied attempts at new methods of production, new investments of capital, new adventures, for the sake of securing some shred of extra profit, which shall be independent of the general average and above it.
The rate of profit, that is, tlie relative increment of capital, is above all important for all new oftshoots of capital seeking an independent location. And as soon as the formation of capital were to fall into the hands of a few established great capitals, which are compensated by the mass of profits for the loss through a fall in the rate of profits, the vital fire of production would be extinguished. It would fall into a dormant state. The rate of profit is the compelling power of capitalist production, and only such things are produced as yield a profit. Hence the fright of the English economists over the decline of the rate of profit. That the bare possibility of such a thing should worry Ricardo, shows his profound understanding of the conditions of cfl.()italist production. The reproach moved against him, thy,t he has an eye only to the development of the productive forces regardless of " human beings," regardless of the sacrifices; in human beings and capital values incurred, strikes precisely his strong point.
The development of the productive forces of social labor is the historical task and privilege of capital. It is precisely in this way that it unconsciously creates the material requirements of a higher mode of production. What worries Ricardo is the fact that the rate of profit, the stimulating principle of capitalist production, the fundamental premise and driving force of accumulation, should be endangered by the development of production itself. And the quantitative proportion means everything here. There is indeed something deeper than this hidden at this point, which he vaguely feels. It is here demonstrated in a purely economic way, that is, from a bourgeois point of view, within the confines of capitalist understanding, from the standpoint of capitalist production itself, that it has a barrier, that it is relative, that it is not an absolute, but only a historical mode of productiors Internal Contradictions. 305 lorresponding to a definite and limited epoch in the developjnent of the material conditions of production.
IV. Supplementary Remarks.
Seeing that the development of the productive power of labor proceeds very disproportionately in the various lines of industry, not only in degree, but also in at times in opposite directions, it follows that the mass of the average profit (== surplus-value)- must be considerably below that level, which one would naturally assume according to the development of the productive forces in the most advanced lines of industry. The fact that the develoj^ment of the productive forces in different lines of industry proceeds in considerably different rates, or even in opposite directions, is not due merely to the anarchy of competition and the peculiarity of the bourgeois mode of production. The productivity of labor is also conditioned on natural premises, which frequently become less productive to the extent that productivity, so far as it depends on social conditions, increases. This leads to opposite movements in these different spheres, progress here, retrogression there. Consider, for instance, the mere influence of the seasons, on which the gTeater part of the raw materials depends for its mass, the exhaustion of forests, coal and iron mines, etc.
While the circulating part of constant capital, such as raw material, etc., continually increases in mass to the extent that the productivity of labor grows, it is not so with the fixed capital, such as buildings, machinery, apparatus for lighting, heating, etc. Although a machine becomes absolutely dearer with the growth of its bodily mass, it becomes relatively cheaper. If five laborers produce ten times as many commodities as formerly, this does not increase the outlay for fixed capital tenfold; although the value of this part of the constant capital increases with the development of the productive forces, it does not increase by any means in the same proportion with them. We have frequently pointed out the difference in the proportions of the constant to the variable capital, as it expresses itself in the fall of the rate of profit, 3o6 Capitalist Production.
and the difference in the same proportions as expressed with the development of the productivity of labor with reference to the individual commodity and its price.
[The value of a commodity is determined by the total labortime, whether past or living, incorporated in it. The increase in the productivity of labor consists precisely in this that the share of the living labor is reduced while that of the past labor is increased, but in such a way that the total quantity of labor incorporated in that commodity declines, so that the living labor decreases more than the past labor increases. The past labor — the constant part of capital — materialised in the value of a certain commodity consists partly of wear and tear of fixed, partly of circulating constant capital entirely consumed by that commodity, such as raw and auxiliary materials. That portion of value which comes from raw and auxiliary materials must decrease with the productivity of labor, because this productivity seeks expression through these materials by reducing their value. On the other hand, it is precisely characteristic of the rising productivity of labor, that the fixed part of the constant capital is strongly augmented and with it that portion of value which, is transferred by wear and tear to the commodities. In order that a new method of production may turn out to be a real increase in productivity, it must transfer in wear and tear a smaller portion of the value of fixed capital than is deducted from it through a saving of living labor, in short, it must reduce the value of the commodity. It must do so as a matter of course, even if an additional value is transferred to the commodity through an increase in the quantity or value of raw and auxiliary materials, as may sometimes happen. All additions of value must be more than compensated by the reduction in value resulting from a decrease in living labor.