Crisis of overproduction

[Schrödinger's Cat]

I haven't read much on the issue: is there any evidence that this is occurring in developed countries?

[Hyacinth]

*Very* interesting question. I'd be curious to know if there are any comrades out that that either have data regarding whether or not there is overproduction, or at least know where to go and get it.

I can cite anecdote regarding what seems to be overproduction of goods, for instance, take all the cheap crap that is produced in China (such as toys, etc.) that is sold in 'dollar stores'. I doubt that there is much demand for that, but, unfortunately, I don't have raw data to back up such a claim.

[gilhyle]

I seem to recall that in the era of national economic analysis, stats on stocks of goods were quite common and were analysed quite often by economists, Keynesian economists in particular, as a way of figuring out what stage of the cycle the economy was in. I guess that was in some sense stats relating to over-production.

While this kind of analysis is now less relevant in a globalized economy where productive capacity can no longer be treated as a known given, nevertheless this kind of analysis still happens in terms of orders, eg:

http://www.marketwatch.com/news/story/Story.aspx?guid={FED51744-9FB3-4057-BFA0-FB3E5D1243FF}&siteId=mktw

[Cult of Reason]

The Great Depression came about because demand for the new gadgets of the time in the USA, motorcars, hoovers etc., fell below supply because everyone already had them who could afford them and wanted them. Workers were then fired as no new supply had to be built, so purchasing power decreased so demand fell even lower and so more workers were fired etc.. In addition, the reason the demand had fallen in the first place was because of mechanisation: the workers became disemployed by the newer machines and so purchasing power was not maintained. Classic case of overproduction.

See this graph:

http://upload.wikimedia.org/wikipedia/en/1/17/Technocracy_graph1.jpg

As you can see, in the USA industrial employment peaked in 1920 and had fallen a long way by 1929. At the time consumerism did not really exist in the way it does now and planned obsolescence wasn't so common, so the decreasing number of people who could afford the goods were not replacing their old ones, as they saw no need to, so sales crashed. Apart from the second world war, the solution to this crisis was to advertise more, tell people to consume (starting to become prominent in the 1950s), make shoddier merchandise and, eventually, outsource production of more labour intensive industry to the third world.

[bretty]

I haven't read much on the issue: is there any evidence that this is occurring in developed countries?

There is multitudes of examples of this happening. If you look at data regarding milk production in developing & developed countries a lot of governments are now paying milk producers NOT to produce milk, because the domestic and international markets will get saturated. Same goes for the meat industries in many developing countries. Historically this has happened with other products too such as wheat among other commodities & generally what ends up happening to avoid saturation of the domestic market they will send the surplus to developing countries, however the issue now becomes the exchange value of the same good that is produced in the developing countries will depreciate because of the quick dump of commodities on their domestic market. If I get some time I'll post some data on it.

[Djehuti]

This upcoming crisis is far bigger than the OPEC-crisis and that of the 90ies combined.

Capital needs crisis. Crisis for capitalism is "creative destruction" as Schumpeter said. But now we don't stand before one single crisis, or even two. We stand before several unique crisises: Financial crisis, food crisis, oil crisis, climate crisis etc. I very much doubt that capitalism can handle these combined crisises in a productive way.

How do capital solve an oil crisis? Growing agrofuels is the easiest way. But how can one do so without creating an increased food crisis? And the use of fossil fuels inevitably worsens the climate crisis, and you can not cut back on fossil fuels without hampering economic growth.

The uprisings that follows the food crisis is alone bigger than that of 1968. Already we have seen major riots and even power shifts in major cities in no less than 37 countries, that is a fourth of the world. And all we see is that food is getting more expensive...

The crisis has only begun and already it have had major impact on capital. The big bourgeoise is in total panic, they are dropping their neo-liberal doctrine one after another, monetarism practicly died before we even realized that happened. Recently the last big investment banks, Goldman Sachs & Morgan Stanley made an apology and hid behind Federal Reserve.

This is not an ordinary crisis, this going to be far bigger than that. And we are not ready. We are far, far from ready and that hurts. This can get pretty nasty, prepare for the worst. Until then, double your efforts, organize, organize, organize and study, study, study.

[Tower of Bebel]

Overproduction of key sectors in the economic has been a feature of global capitalism since the late 60s early 70s. Neoliberalism never got the chance to end it. The current crisis is based on this production crisis accompanied with a financial crisis. Overproduction prevented capital from being invested in productive ways. Since the late 70s capitalist used there surplus mostly to speculate. So most profits since then are based on "nothing but" the transaction of capital. This had to end one way or another and it current crisis is finally putting a stop to it. The financial crisis catches up with the crisis of production. And in some countries it even started a political crisis. We're only waiting for the moment when this financial crisis affects current global production relations. When will countries close their boarders like they did in the early 30s? Nobody knows for sure. The current financial crisis is more severe than the crisis of 1929. The only difference is the fact that right after 1929 the crisis started to affect global production by closing boarders; keeping the capitalist within the national boarders.

[Die Neue Zeit]

This upcoming crisis is far bigger than the OPEC-crisis and that of the 90ies combined.

Capital needs crisis. Crisis for capitalism is "creative destruction" as Schumpeter said. But now we don't stand before one single crisis, or even two. We stand before several unique crisises: Financial crisis, food crisis, oil crisis, climate crisis etc. I very much doubt that capitalism can handle these combined crisises in a productive way.

How do capital solve an oil crisis? Growing agrofuels is the easiest way. But how can one do so without creating an increased food crisis? And the use of fossil fuels inevitably worsens the climate crisis, and you can not cut back on fossil fuels without hampering economic growth.

Well, I mentioned in my CSR work the concept of vertical farming. Beneath all of these "superficial" crises that you've mentioned is a very real infrastructure crisis. The food crisis can be solved, but at the expense of aggravating the infrastructure crisis. It's too expensive to pour much-needed $$$ into infrastructure, let alone go on the offensive with stuff like vertical farming skyscrapers.

[If you're interested in my work (I don't recall you having gotten it yet :( ), feel free to PM me.]


When will countries close their borders like they did in the early 30s? Nobody knows for sure. The current financial crisis is more severe than the crisis of 1929. The only difference is the fact that right after 1929 the crisis started to affect global production by closing borders; keeping the capitalist within the national borders.

Comrade, I read a Yahoo News article awhile back on "reverse globalization" as a result of higher oil prices. This, plus the increased anti-immigration BS rhetoric, all indicate a turn towards protectionism within the next twenty years or less.

[Schrödinger's Cat]

I dug up a quote on the subject by a surprising source:

"The recent economic downturn was driven, in large measure, by the sharp falloff in the demand for capital goods that occurred when firms suddenly realized that stocks of such goods--both those already in place as well as those in inventory--were excessive."

- Greenspan

[Lynx]

What effect will increased protectionism have on developing economies such as China and India?

[Die Neue Zeit]

Well, the popular thinking is that China and India will get hurt. The problem is that they're ahead of the curve with their no-strings-attached investments in Africa. Also, if the two big countries become friendlier toward each other, they might actually realize the benefits of such, seeing that they're the two most populous countries on the planet (read: consumer markets).

[Djehuti]

Tubulence has a couple of articles on the crisis:
http://turbulence.org.uk/turbulence-4/