Commodity shortages?

[Comrade Hill]

My parents seem to be having this problem where they are trying to get a snowblower or a humidifier, but all the companies that sell them always say "sorry, we're out."

So then the question I have is why don't they produce more? Wouldn't that make them more of a profit?

Are they afraid to raise their prices or something, because of the rising cost of production?

[ColonelCossack]

Maybe their profits are falling. So they can't afford any more constant capital.

[Comrade Hill]

Isn't it just a bit more complicated than that though? Is there concrete evidence that ties the falling rate of profit with supply and demand, constant capital, taxes, and bank loans?

[Vladimir Innit Lenin]

The falling rate of profit, I believe, is outlined in Marx's Capital as a constant and defining characteristic of Capitalism, especially in the future.

Within the context of the OPs particular example, it is clear that a gross market imperfection (i.e. supply =/= demand) has come into existence. I say gross, because it is not often that supply and demand are in equilibrium in terms of excludable goods, such as food, clothes, mp3 players etc. But yeah, clearly there is such a market imperfection that none are available for purchase. Clearly, if everything is sold out, then supply < demand. There are numerous reasons for this.

[Lowtech]

in what sense? are your parents needing the one item or a thousand?

the supply/demand deal really applies at a more fundamental level than that of a finished product. As the supply of plastics or certain key elements effect this issue more than say if there are enough iphones to meet demand. in fact, capitalism doesn't care if it has enough for demand, instead it says if it has enough, great, means more volume of sales, or if it has too few it will use the limited quantity as an excuse to push the price up even more. it is less dependent on "market dynamics," and rather the reverse, as companies can and do manipulate those dynamics to maximize profits.

[ckaihatsu]

Maybe their profits are falling. So they can't afford any more constant capital.


My interpretation of this -- the reason I said 'thanks' -- is that *smaller* businesses, especially, may easily reach the point of not having ready access to ('constant') capital for inventory, needed infrastructure, etc. We're seeing this happen in our post-'08 world where finance markets are slowing down, despite having tremendous excesses of liquidity -- paradoxically -- because of increased risks for lending due to uncertainty about future growth and solvency.

Scaling it down for the sake of explanation, one wouldn't just lend their money -- whatever the amount -- to just anyone, for any reason. We're *all* "bankers" and "money people" in this sense, just at smaller scales. We would want to be certain that they will be able to return the money in a timely way and that their word can be relied on and/or verified.

So, at a *global* context the same applies, and banks are uncertain that the economy will be expanding appropriately to realize simple returns, let alone profits, for potential investments in service-type segments and small businesses (particularly). Currently we're seeing that they will take their profits directly out of public tax monies instead, as an alternative, as with the bailout of Wall Street.

[ckaihatsu]

My parents seem to be having this problem where they are trying to get a snowblower or a humidifier, but all the companies that sell them always say "sorry, we're out."


Incidentally, interestingly, this same scenario works *exactly the same* for those trying to get a *different* commodity -- that of a loan from the bank.

And, like mass-produced consumer goods, capital goods are *not* in short supply by the yardstick of *production* -- in fact, there's more of *everything* than can even be consumed, a condition of *over*-production. It's entirely reasonable to ask why we aren't all just living in a neo-Garden of Eden now, with everything we could ever want at our fingertips....





http://www.wsws.org/articles/2012/feb2012/euro-f07.shtml


The background to the euro crisis—Part 1


By Peter Schwarz
7 February 2012

The following article is based on a report given by Peter Schwarz, a member of the editorial board of the World Socialist Web Site and secretary of the International Committee of the Fourth International, at a meeting of the Socialist Equality Party (PSG) held in Berlin on January 7, 2012.

For the last three years the world economy has undergone its deepest crisis since the 1930s. Europe has been especially hard hit. The survival of the euro and the European Union is now in question. To understand the significance and consequences of this crisis it is not sufficient to study its immediate economic forms. It is necessary to examine the social relations that lie behind these forms.

In general, the crisis is presented as the result of over-indebtedness on the part of several European countries. It is asserted that their debts have reached a level where they can no longer be repaid and refinanced. This assertion, however, does not stand up to a closer examination. Thus, the total indebtedness of the European Union (around 80 percent of GDP) is significantly below that of the US (100 percent) or Japan (220 percent). US debt has increased dramatically during the past five years from less than 60 percent to more than 100 percent. Nevertheless, the US is still able to finance its debt without major problems.

Apart from Greece (158 percent), even the European countries affected most by the crisis are not excessively indebted: In Spain, the national debt level is 68 percent, in Portugal 102 percent, in Ireland 112 percent, and in Italy 120 percent, about the same level as when it joined the euro zone. German (82 percent), French (85 percent) and British (80 percent) government debt are around the average level of the OECD countries.

There must be other causes to account for the fact that Europe has become the target of the international financial markets. To probe deeper it is necessary to consider the social changes that have taken place over the last three decades.

[...]