Capitalism and the Buisness Cycle

[BobKKKindle$]

Hello comrades! I am new to this site, although I have had an interest in leftism for several years (being 16 years of age now) And there is a question I would like answered:

(Correct me if I am mistaken) But Marxists believe the perioid swings in the buisness cycle are a result of sudden gluts in commodities arising from capital's ability to produce outstripping the ability of society to supply. However, Say's law notes that a glut of commodites is in fact impossible, because the demand curve slopes downwards and the supply curve slopes upwards, so any expansion of production will result in an automatic decline in price. Can someone explain the relationship, if there is one between say's law and marxism?! can they both exist? Do they contradict each other? Even with Say's law, a downturn can result from overproduction - but an answer would be most welcome!

Thank you,
Bobkindles, HK

[Martin Blank]

First of all, welcome. In terms of your questions, let me reply briefly.

Marx did acknowledge that, in his time, what you refer to as Say's Law (which is really a restatement of what earlier bourgeois economists, like Smith and Ricardo) could co-exist alongside the theory of periodic crises of overproduction. The difference, however, between Marx and economists like Smith, Say, etc., is that the latter believed that there was an "invisible hand" that could regulate between supply and demand.

The most immediately visible defect in this viewpoint is that an "invisible hand" can only work in an economic system that is based on relatively pure competition. In Marx's time, when capitalism was in its ascendancy, pure competition was more of a dominant feature, and in fact was seen as one of the system's more historically-progressive elements. However, what Smith and the other bourgeois economists either could not fathom or choose to ignore is capitalism's tendency toward monopoly.

Monopoly capital overturns the system of relatively pure competition, displacing the "invisible hand" and replacing it with corporate-state intervention. This is because, in an epoch of monopoly, the "invisible hand" is no longer able to provide the semi-regulatory role it previously did. More conscious intervention is necessary.

However, the main defect of this viewpoint, a defect that brings the whole system crashing down, has to do with the relationships in the market. The "free market" of relatively pure competition -- the "invisible hand" -- requires that both buyer and seller come to the market freely, as equals. However, in the market of labor, only one comes freely: the buyer. The seller of labor, the proletarian, does not come freely, and therefore does not come as an equal.

Because the proletarian has to sell their ability to work to survive, they are forced to accept the price that the buyer offers in wages. If the proletarian wishes to eat, or wishes their family to eat, they have to take what the capitalists give, and are thus the slave of the capitalist master. This relationship negates the "invisible hand" of Say's Law, because supply (proletarians) and demand (capitalists) are inherently unequal, and cannot achieve a balance.

I hope this answers your questions.

Miles

[Entrails Konfetti]

Originally posted by [email protected] 20 2006, 06:27 AM
If the proletarian wishes to eat, or wishes their family to eat, they have to take what the capitalists give, and are thus the slave of the capitalist master. This relationship negates the "invisible hand" of Say's Law, because supply (proletarians) and demand (capitalists) are inherently unequal, and cannot achieve a balance.
By this you also mean that during the time of monopolization there will far too few jobs for the vast proletariat, and there won't be enough people buying commodities right?

We see merges everywhere, KFC, Taco Bell, and Pizza Hut are all one companu now. Wal-Mart has stolen the business away from K Mart, and Sega and Nintendo have merged. Was there anything like this earlier in the 20th century?

[Martin Blank]

Originally posted by EL KABLAMO+Apr 20 2006, 01:59 AM--> (EL KABLAMO @ Apr 20 2006, 01:59 AM)By this you also mean that during the time of monopolization there will far too few jobs for the vast proletariat, and there won't be enough people buying commodities right?[/b]

That's a part of it, and it contributes to the unequal relationship. The masses of unemployed are used to keep proletarians from moderating the inequality.


EL [email protected] 20 2006, 01:59 AM
We see merges everywhere, KFC, Taco Bell, and Pizza Hut are all one companu now. Wal-Mart has stolen the business away from K Mart, and Sega and Nintendo have merged. Was there anything like this earlier in the 20th century?

In a way. In the first wave of monopolization, we saw the rise of the trusts, when large corporations bought out or forced out small corporations and built cartels and alliances. Corporations like U.S. Steel and Standard Oil were the outcome of that time.

Miles

[Janus]

Marxist economics is based off of classical economics, particularly from Ricardo. As far as cycles go, Marx did account for them as Miles stated though Marxian ecnomists don't believe in any sort of supply and demand curve. It's pretty much considered idealist and a part of bourgeois economics.