Why is capitalism prone to overproduction crisis?

[UnknownPerson]

As the title says, why is capitalism prone to overproduction crisis? Any learning material regarding the capitalist crisis is welcome.

[Ocean Seal]

As the title says, why is capitalism prone to overproduction crisis? Any learning material regarding the capitalist crisis is welcome.
Its not so much prone to overproduction as it is to the prevention of abundance which it does so by eliminating its over-production in order to keep prices high. Also I see overproduction simply as the capitalists get new technology which enables them to produce more and the nihilistic production doesn't enable them to see that they will be producing in excess as opposed to a planned economy where production is allocated based on the needs of the people.
If an individual capitalist can produce more, they will if they assume it will lead to more profit. If all the capitalists do this, it no longer leads to more profit. Hence why the state has to regulate it.

[MaciejRozga]

Main reason of overproduction in capitalism is competition. Petit-bourgeois lose their fight with bourgeoisie and degenerate to proletarian. Bourgeoisie produced more because they have less number of competitors, but society can buy less produced because petit-bourgeois (now: proletarian) haven’t enough money (because their lose in competition).

I hope it’s clear.

[piet11111]

Capitalism forces them to produce as much as they can at the lowest cost to increase profits.

By decreasing costs you either increase productivity meaning less labor is required to produce an item or you pay the worker less.
The end result is that the workers are left with say 100 dollar of money in their pocket but the market has 150 dollar worth of goods now clearly the workers wont be buying everything the market has to offer.
Now the next day the market again has that 150 dollars worth of goods plus the 50 dollars worth that was not sold the day before but again the workers still only have 100 dollars worth to spend.

Eventually the capitalist will cut production until they get rid of the excess stock but they will cut production by sacking workers meaning even less money is coming to buy at the market.

Essentially its not really a crisis of overproduction but of under-consumption.

[MarxSchmarx]

A rather prosaic explanation is that producers can only respond to observed or short-term projected demand, not future demand. When observed demand is high production increases, but it takes longer for the products to reach the market than consumer demand shifts. As a product saturates a market demand weakens as more supply is coming into the market for a given product, resulting in over-production.

Capitalism isn't getting better at projecting demand and fixed costs of capital entail that constantly shifting production to meet immediate demand is impractical. Hence the lag between information and demand and when a product can reach the markets alone can cause overproduction.

[robbo203]

Capitalism forces them to produce as much as they can at the lowest cost to increase profits.

By decreasing costs you either increase productivity meaning less labor is required to produce an item or you pay the worker less.
The end result is that the workers are left with say 100 dollar of money in their pocket but the market has 150 dollar worth of goods now clearly the workers wont be buying everything the market has to offer.
Now the next day the market again has that 150 dollars worth of goods plus the 50 dollars worth that was not sold the day before but again the workers still only have 100 dollars worth to spend.

Eventually the capitalist will cut production until they get rid of the excess stock but they will cut production by sacking workers meaning even less money is coming to buy at the market.

Essentially its not really a crisis of overproduction but of under-consumption.


Hmmm Not really. This explanation - that there is some kind of built-in gap between what workers can purchase and what they produce - overlooks the role of the capitalists and their demand for new means of production.

Fundamentally, the problem boils down to disproportionality - the inevitablity of disproportional growth between different branches or sectors of industry and the knock-on consequences that engenders.

Here's a good article that goes into all of this in some detail

http://www.worldsocialism.org/spgb/education/Education%20Series%20Crises.html

[ZeroNowhere]

These texts may help:

Chapter 17 (http://marxists.org/archive/marx/works/1863/theories-surplus-value/ch17.htm), Theories of Surplus-Value (perhaps the most accessible of the Marx links).

The chapter on the falling rate of profit (http://marxists.org/archive/marx/works/1857/grundrisse/ch15.htm#p745) in the Grundrisse (it probably helps to have some knowledge of Marx's views on the subject, as well as to read some of the previous chapters in the Grundrisse.)


The last form of servitude assumed by human activity, that of wage labour on one side, capital on the other, is thereby cast off like a skin, and this casting-off itself is the result of the mode of production corresponding to capital; the material and mental conditions of the negation of wage labour and of capital, themselves already the negation of earlier forms of unfree social production, are themselves results of its production process. The growing incompatibility between the productive development of society and its hitherto existing relations of production expresses itself in bitter contradictions, crises, spasms. [...] Since this decline of profit signifies the same as the decrease of immediate labour relative to the size of the objectified labour which it reproduces and newly posits, capital will attempt every means of checking the smallness of the relation of living labour to the size of the capital generally, hence also of the surplus value, if expressed as profit, relative to the presupposed capital, by reducing the allotment made to necessary labour and by still more expanding the quantity of surplus labour with regard to the whole labour employed. Hence the highest development of productive power together with the greatest expansion of existing wealth will coincide with depreciation of capital, degradation of the labourer, and a most straitened exhaustion of his vital powers. These contradictions lead to explosions, cataclysms, crises, in which by momentaneous suspension of labour and annihilation of a great portion of capital the latter is violently reduced to the point where it can go on. These contradictions, of course, lead to explosions, crises, in which momentary suspension of all labour and annihilation of a great part of the capital violently lead it back to the point where it is enabled [to go on] fully employing its productive powers without committing suicide. Yet, these regularly recurring catastrophes lead to their repetition on a higher scale, and finally to its violent overthrow.

One of the clearest expositions of it is in this chapter (http://marxists.org/archive/marx/works/1894-c3/ch15.htm) of volume III of Capital. However, it is called volume 3 of Capital for a reason, so it helps to have read the previous texts, and especially chapter twenty-five of volume I (on the general law of capitalist accumulation).

If you know German or Spanish, then you can also pick up a full version of Henryk Grossman's 'The Law of Accumulation...', which is very good. It's never been fully translated into English as yet, unfortunately. It did raise the ire of Pannekoek and such, although I'm still not convinced that he read it beyond a brief skim for polemical purposes. It does put the matter quite clearly and well, as well as elaborating on multiple facets of it, for example its relation to imperialism and credit, which are very useful.

[S.Artesian]

As the title says, why is capitalism prone to overproduction crisis? Any learning material regarding the capitalist crisis is welcome.


First let's be clear: Capitalism is at some level always engaged in "overproduction"-- that is to say the origin of overproduction is that it extracts more value from the workers than it returns in the form of compensation.

It's important to keep this in mind in order to avoid confusing overproduction with "underconsumption." Capital of course does not produce for the purpose of consumption, but for the purpose of accumulation, for expanded reproduction of the social relation that converts labor-time into surplus value.

What follows from this is:

1) there is, at all points and all times, an unevenness, a disproportion, a dynamic disequilibrium to capitalist production, so that again at every point and every time some surplus value cannot be realized which is essential to the reproduction of capital as a whole as it allows, creates actually, the conditions for the centralization and concentration of capital.

2) Capital aggrandizes wage-labor through the relatively increasing expulsion of wage-labor from the production process as that is the most efficient way to reduce costs, and increase the amount of relative surplus-value available.

In so doing the amount of value, the ratio of the new value, embedded in the commodities declines. The margin of new value, which capitalists see as an arbitrage between cost of production and price of the products shrinks, narrows; requiring of course greater efforts at production, at expropriating surplus value to offset the decline in the margin, which of course only increases the tendency for the margin decline. The faster capital goes around the circle the bigger the circle and the relatively slower capital is turning over despite its speed ups.

What occurs is not just a crisis of overproduction, but is in reality a crisis of over-accumulation, where capital cannot exploit a given labor pool intensely enough to produce enough surplus value to maintain the expansion of capital-- to increase the valorization of accumulated capital.

The decline in the rate of profit is transformed into the decline in the mass of profits.

I really recommend Grossmann's The Law of Accumulation and the Breakdown of the Capitalist System.