A Critique of "Underconsumption Theories"

How Should Crisis Be Explained, And Has Modern Capitalism Reslly Overcome
Crisis?
(From 'Prometheus' No.29 1998)
Written
Translated by Roy West

by

Hayashi

Hiroyoshi

Contents
1. Crisis is a Reality
2. Marxs Criticism of the Theory of Underconsumption
3. Workers
Under
Other
(Workers as the Sellers and Purchasers of Commodities)

Capital

4. The Contradiction Between Production and Consumption Under Capitalism

(But not as the Underconsumption Theorists Understand It)
5. The
Cause
of
Crisis
-Limited Consumption and the Development of Unrestricted Productive
Power
6. Crisis and the Fate of the Capitalist Mode of Production
7. The
Stalinists
Concept
-Mendelsons Theory and History of Crisis

of

Crisis

8. Modern Capitalism and Crisis

1. Crisis is a Reality
The consecutive bankruptcies this past year of banks and security firms -- certainly no
small matter -- shocked the bourgeoisie and conservative politicians, sending them into a
state of near panic while reminding them that crisis is not a thing of the past. The
immediate decision to again use public funds which had been so heavily criticized at the
time of the scandal involving housing loan companies (jusen) -- but this time the sum was
ten times larger -- says a great deal about the bourgeoisies bewilderment and sense of
crisis. Since the end of the war they had continuously repeated that crisis is a thing of the
past which will no longer occur since the management of capitalism has become feasible
with the development of Keynesianism.

Crisis, however, is indeed very real -- this reveals that as long as capitalism remains
capitalism the bourgeoisie will never be able to escape their fears. They have suddenly
abandoned such slogans as easing restrictions, administrative reform and financial
restructuring -- these were adopted by the Hashimoto administration with great fanfare
and were the officially authorized policy of the bourgeoisie -- to fall back to Keynesian
expansionist policies and enlarged programs to stimulate business. This happened at the
time when a critical standpoint towards Keynesianism had begun to be established
following the bubble period, and the effectiveness of small government, financial
restructuring, de-regularization and free competition (market economy) was beginning to
be proclaimed. What a careless and irresponsible bunch they are!
It is not easy to say what will be the result of their change in standpoint, that is the
expansionist policies to stimulate business, but it is certain that a bubble, financial
collapse or a slip into inflation are all possible. The bourgeoisie believe that a bubble is of
more use that a recession.
It was said after the war that crises were finished, and now there are cries that there is no
escape from crises. But what is a crisis in the first place? Is it something that is
unavoidable under capitalist means of production? Or can it be overcome through
reforming capitalism to make it a little more humane?
Since the beginning of the 19th century when the cyclical and regular occurrence of crises
became visible, many theories have appeared to explain crises and their cause. Of these
explanations one which has been particularly emphasized is the so-called
underconsumption theory. This, in other words, is a theory that explains the cause of
crisis in terms of insufficient consumption under capitalism. This theory can be broadly
divided into two currents. On the one hand there is the humanistic theoretical current
represented by Sismondi, the Narodniks (and later Rosa Luxemburg). On the other hand
there is the reactionary, bourgeois (parasitic class) view connected with Malthus and
Keynes. (The JCPs position lies somewhere in between these two currents, their view is
humanistic, on the one hand, and Keynesian on the other, and is therefore totally
inconsistent. In the end they return to the reactionary bourgeois standpoint, and this is
probably inevitable. Already no essential difference can be found between their position
and the Keynesian standpoint.
Simply put, the standpoint of the theory of underconsumption states that since capitalism
is a society based on the exploitation of workers, the workers consumption is also
exploited and inevitably becomes too small. If workers produce but dont consume how
can surplus value be realized (be sold)? Under capitalism the value of a commodity
appears as constant capital + variable capital + surplus value (C + V + M). The question is
how is the part M realized (Luxemburgs awareness of the problem is a little different since
she asks: Where does the money come from for capitalists to realize the M part? and
Isnt it impossible for capitalists to find this under pure capitalism? Of course this is
nothing but a different kind of underconsumption theory.)
The theory of underconsumption, represented by Sismondi, was introduced to explain
(criticize) the magnification of capitalist contradictions. Thus Sismondi and the Narodniks

scholars had a certain positive significance in that they exposed one essential side of
capitalism. However, even in their case, this theory is nonsense and is unable to grasp the
essential content of capitalism. The theory of underconsumption was a reaction to and
criticism of Say, Mill and Ricardos theory of equilibrium. In other words, this was a
reaction against the view that capitalism is a mode of production basically without
contradictions in which no essential limitations exist that internally negate the market
economy, and since production is consumption, sales are purchases, supply is demand
(and the reverse as well), general overproduction or a general crisis can not occur.
Marx, of course, was opposed to the theory of equilibrium, but he also opposed the theory
of underconsumption. He showed that it was based on a completely narrow and
superficial understanding of the capitalist mode of production, and firmly exposed its
reactionary nature. Essentially Marx explained crisis in the following way:
Crises are never more than momentary, violent solutions for the existing contradictions,
violent eruptions that re-establish the disturbed balance for the time being. (Capital Vol.
3, chapter 15)
The world trade crisis must be regarded as the real concentration and forcible adjustment
of all the contradictions of bourgeois economy. (MECWVol. 32 p. 140)
For Marx, crisis was the explosion and concentrated expression of capitalist
contradictions. Marx insisted that capitalist contradictions must break out in the
phenomenon of a crisis or panic because this is precisely the true character of capitalism,
here lies its cause. Moreover, Marx points out that crisis is not merely the expression, or
explosion of capitalist contradictions, but at the same time a violent solution, a process of
forceful readjustment and the dissolution of disequilibrium.
Along with the development of capitalism, the conflict or contradiction between value and
use value, production and consumption, the production and realization of value, supply
and demand, etc, also necessarily develops and deepens. Simply put, at a certain stage
in the development and movement of capitalism, a situation of overproduction inevitably
arises where the produced commodity is not sold, cannot find a market, and the market is
too limited for the produced commodity.

2. Marxs Criticism of the Theory of Underconsumption

We have seen that one example of an incorrect theory of crisis is the theory of
underconsumption, but what sort of theory is this exactly?
This theory explains crisis, i.e. the fundamental contradiction of capitalism, from capitals
exploitation of labor. Hence, it appears at first glance as a very convincing explanation.
Since this theory has a simple appearance it is extremely accessible and has the
character of being easily connected with opportunism. Already during the period of the

Second International, the Social Democrat Tarnoff offered the proposal that crisis could be
overcome through achieving high wages. Even today this is the fixed idea and common
view of the JCP and trade union opportunists.
The viewpoint of the advocates of the theory of underconsumption is simplistic. Unlike the
equilibrium theorists who deny general overproduction from the simple perspective that
production is consumption (demand) and sales are purchases (or purchases are sales),
advocates of the underconsumption theory argue that under capitalist production sales
and purchases are not in agreement because the workers are unable to buy all of what
they have produced, and thus overproduction is unavoidable. Therefore, their solution is
to expand the consumption of the workers and raise their standard of living. It is probably
a necessity that they adopted the particular slogan: Overcome depression through raising
wages. They argue that as wages are increased crisis can be easily overcome. However,
if this were indeed so, the question arises why the bourgeoisie would be unwilling to
employ such a simple and effective method. This question is either treated as an
insolvable mystery or is brushed aside with the arbitrary and nonsensical explanation that
the bourgeoisie are stupid.
This theory at first seems quite reasonable. For example, a worker sells his labor power to
the capitalist for 8,000 yen a day. In four hours of labor the worker produces products
necessary to reproduce his own labor power. In other words, necessary labor is four hours
(the currency expression of products objectified by one hour of labor is 2,000 yen).
However, the capitalist purchased the right to use one day of labor power, and has no
reason to halt labor after four hours. If he did this all of his profits would disappear and he
would probably cease being a capitalist. Thus not four, but eight hours of labor are
demanded and in this way the exploitation of labor is realized. Even though the worker
performs eight hours of labor in one day, he only receives payment for four hours. The
capitalist appropriates, without compensation, one half of the value the worker created.
Since the worker only receives one half of the total value created (16,000 yen), the
workers consumption is too low compared to production. The worker is definitely unable
to purchase 16,000-yen worth of goods with his 8,000-yen wage.
However, it should be clear at a glance that is completely nonsensical for the
underconsumption theorists to say that under capitalism surplus value should not be
realized, and that this portion (surplus) in fact represents an excess since production
exceeds consumption.
The problem is easily solved. (Lets look at the case of simple reproduction.) The surplus
value -- i.e. the part exploited from the worker -- is consumed by either the capitalist alone
or by others. This part is definitely not something that cannot be sold or find a market.
Just consider the case of the individual capitalist. For example, it does not arise that the
capitalist who invests 1 million yen and gets 1.2 million yen worth of commodities cannot
sell them. Needless to say, the capitalist who invests 1 million yen and through the
exploitation of workers becomes a capitalist with 1.2 million yen worth of commodities,
can through the mutual exchange of his commodities ? which of course includes the
surplus value -- realize the value of his own commodities. This presents no theoretical -or practical -- difficulty. At issue for the theory of the realization (i.e. its conditions of

equilibrium) is, as Marx clarified for the mode of reproduction, only that the V + M
(variable capital and surplus value) of Department I. (production of means of production)
can be exchanged with the C (constant capital) of Department II. (production of means of
consumption).
This is also essentially the same thing for expanded reproduction. The difference between
expanded reproduction and simple reproduction is that in expanded reproduction, i.e.
accumulation, materially the conditions for accumulation already exist. If these conditions
have been satisfied in the production of the previous year, theoretically it is possible for
conditions of complete equilibrium to continue to be satisfied, and it cannot be
demonstrated that the realization of expanded production is impossible.
For this reason Marx and Engels (as well as Lenin) necessarily criticized the theory of
underconsumption.
It is a pure tautology to say that crises are provoked by a lack of effective demand or
effective consumption. The capitalist system does not recognize any forms of consumer
other than those who can pay, if we exclude the consumption of paupers and swindlers.
The fact that commodities are unsaleable means no more than that no effective buyers
have been found for them, i.e. no consumers (no matter whether the commodities are
ultimately sold to meet the needs of productive or individual consumption). If the attempt
is made to give this tautology the semblance of greater profundity, by the statement that
the working class receives too small a portion of its own product, and that the evil would
be remedied if it received a bigger share, i.e. if its wages rose, we need only note that
crises are always prepared by a period in which wages generally rise, and the working
class actually does receive a greater share in the part of the annual product destined for
consumption. From the standpoint of these advocates of sound and simple (!) common
sense, such periods should rather avert the crisis. It thus appears that capitalist
production involves certain conditions independent of peoples good or bad intentions,
which permit the relative prosperity of the working class only temporarily, and moreover
always as a harbinger of crisis. (Capital Vol. 2, ch. 20)
In Anti-Duhring Engels states that although underconsumption is as old as mankind,
overproduction is a phenomenon that only exists along with capitalism. In his Theories of
Surplus Value Marx also writes:
This was indeed also the case [underconsumption of the masses--Hayashi], and to an
even higher degree, in the ancient mode of production which depended on slavery. But
the ancients never thought of transforming the surplus produce into capital. Or at least to
a very limited extent. (The fact that the hoarding of treasure in the narrow sense was
widespread among them shows how much surplus produce lay completely idle.) They
used a large part of the surplus produce for unproductive expenditure on art, religious
works and travaux publics. Still less was their production directed to the release and
development of the material productive forces -- division of labour, machinery, the
application of the powers of nature and science to private production. In fact, by and large,
they never went beyond handicraft labour. The wealth which they produced for private
consumption was therefore relatively small and only appears great because it was

amassed in the hands of a few persons, who, incidentally, did not know what to do with it.
Although, therefore, there was no overproduction among the ancients, there was
overconsumption by the rich, which in the final periods of Rome and Greece turned into
mad extravagance. The few trading peoples among them lived partly at the expense of all
these essentiellement poor nations. It is the unconditional development of the productive
forces and therefore mass production on the basis of a mass of producers who are
confined within the bounds of the necessaries on the one hand and, on the other, the
barrier set up by the capitalists profit which [forms] the basis of modern overproduction.
(MECW Vol. 32 pp. 157-8)
In ancient society, even though there was surplus consumption, there was no surplus
production. If the cause of surplus production were underconsumption, as the
underconsumption theorists claim, then there should have been more violent crises in
ancient society than in modern capitalist society. However, it is common knowledge that
there was no crisis phenomenon in ancient society. For this reason it is clear that the
theory of underconsumption is nonsense -- this is also what Marx and Engels said. Of
course, this is only a negative criticism, but for the moment it is sufficient to realize the
meaninglessness of the JCPs theory of underconsumption.
Furthermore, Marx writes of an anonymous author opposed to Malthus principle
concerning the nature of demand and the necessity of consumption, whose work
contains the essential secret of glut even though he completely misunderstood Malthus
thought. This anonymous author wrote:
The very meaning of an increased demand by them (the labourers) is a disposition to
take less themselves, and leave a larger share for their employers; and if it is said that
this, by diminishing consumption, increases glut, I can only answer, that glut is
synonymous with high profits. (MECWVol. 32)
This writer is saying that a decrease in consumption is the magnification of exploitation
(i.e. high profit ratio), thus oversupply is synonymous with high profits. With these words
he gleefully imagines he has struck at Malthus logical contradictions. If one follows
Malthus argument, high profits can signify overproduction, i.e. crisis, but since high profits
mean prosperity for capital, what Malthus is saying is a little strange.
This author is ironically saying that Malthus claims that workers are exploited and
consumption is reduced and that this is the source of surplus profit. However, as
exploitation increases, profits expand, and in a capitalist society prosperity is the
magnification of exploitation (i.e. it comes from the level of the profit margin). Therefore, a
market surplus has the same meaning as high profits. It is said that the rise in workers
wages will solve the contradiction through increased consumption, but increased wages
means that profits will be eroded and this will cause a dilemma for the solution of the
crisis. On the other hand, even if the markets for capital are expanded through increased
consumption, this would reduce surplus value and thus weaken and scale back the motive
for the activity of capital and accelerate the crisis. Therefore, this method is contradictory
and nonsensical. This is how this author ironically comments. Within these critical words,
Marx then sees the fundamental contradiction of capitalistic production. The approach of

the JCP is the exact opposite, that is, they are forever stuck in the superficial standpoint of
the theory of underconsumption.
In a different place Marx said precisely the same thing when he criticized Ricardos denial
of the plethora capital.
Secondly [he overlooks] that the output level is by no means arbitrarily chosen, but the
more capitalist production develops, the more it is forced to produce on a scale which has
nothing to do with the immediate demand but demands on a constant expansion of the
world market. He has recourse to Says absurd assumption that the capitalist produces
not for the sake of profit, for exchange value, but directly for consumption, for use value -for his own consumption. He overlooks the fact that the commodity has to be converted
into money. The demand of the workers does not suffice, since profit arises precisely from
the fact that the demand of the workers is smaller than the value of their product, and that
it [profit] is all the greater the smaller, relatively, is this demand. The demand of the
capitalists among themselves is equally insufficient. Overproduction does not call forth a
lasting fall in profit, but it is lastingly periodic. It is followed by periods of underproduction
etc. Overproduction arises precisely from the fact that the mass of the people can never
consume more than the average quantity of necessaries, that their consumption therefore
does not grow correspondingly with the productivity of labour. (MECW Vol. 32, pp. 101-2)
Marx explained that the profit of the capitalist (today one could say company) stems from
the workers demand [the demand based on the money (wage) the worker earns from
selling labor power to the capitalist] being less than the value of the products the workers
create. As this demand (i.e. wage) becomes smaller relatively, profits grow
correspondingly larger. For the capitalist the workers demand is certainly considered
important, but to expand this demand would require paying more and more to the workers
thereby reducing profits. However, for capital the reduction of profit has an absolute limit,
namely the collapse of capital itself. Capital only produces to obtain the maximum profit
possible, rather than consumption being the goal of production. If profits cease then
capital ceases production regardless of consumption. No matter how much demand there
is for a given product (i.e. in this sense, consumption), or how much a product meets the
needs of the people, if the product cannot be sold at a profit there is no demand as far as
capital is concerned. On the one hand, for capital the exploitation of the workers means
the reduction of demand, and capital needs to increase this demand. On the other hand,
however, capital cannot expand the workers demand and sufficiently secure this
demand. If this were done, profits would decrease and this would be fatal to capital. On
the one hand, demand must be increased, but on the other hand, this is not possible.
Here the limits and contradictions of capital are clearly revealed.
For capital, increasing profits is the source of prosperity and the cardinal premise. The
expansion of profit is the same thing as capitalistic prosperity, and all other conditions
being the same, the increase in profits is only possible through strengthening the
exploitation of the workers, that is by decreasing the wage which is the basis of the
workers consumption. The prosperity of capital only becomes a more certain and secure
thing through limiting the consumption of the workers within all possible limits, that is, only
through the insufficient consumption of the workers. Certainly the overproduction of the

market -- i.e. insufficient consumption, especially the insufficient consumption of the

workers -- is synonymous with high profits. However, just like Robert Owen and Sismondi,
the JCP is completely unable to understand this fact.

3.
Workers
Under
Other
(Workers as the Sellers and Purchasers of Commodities)

Capital

One reason that the theory of underconsumption can appear to be correct is that for
capital (a given capitalist or company), the expansion of the consumption of those workers
under other capital is a preferable situation since it expands the market. The spread of the
JCPs silly fantasy is based on this hypothesis.
For capital, the worker as a seller of a commodity and as a purchaser of a commodity are
two completely different phenomenon. The worker as a seller of a commodity receives
money (wage) with which to buy commodities. This sort of worker is important to capital
as the seller of commodities since it means demand. On the other hand, in the case of the
worker as the seller of labor power, the capitalist wants to control and restrict the price of
the commodity (wage) as much as possible because lower wages mean higher profits,
and higher wages mean lower profits. The JCP is completely unable to understand this
contradiction, or the confrontational nature of the wage system.
Marx wrote that capitalists (especially those producing consumption goods) see the
workers under other capitalists as purchasers or consumers of their own products, and
thus as being outside the capital/wage labor relation. The expansion of consumption (i.e.
increased wages) appears to be beneficial. However, essentially this is a fantasy and the
capitalist becomes aware of this during a crisis. The JCPs idea that a crisis can be
overcome through increased consumption (increasing the workers wages) is based on an
absolute fantasy. Increasing wages would certainly directly increase demand for the
consumption goods capitalists. However, for the individual capitalists or capital in general,
increasing wages would lower the rate of exploitation and profits, and since this would in
fact intensify the crisis, this is a cure (solution) that would kill the patient.
Capitalists take seriously and make a fuss over the consumption of millions of workers
because they see an enormous demand. Capitalists who produce consumption goods are
directly, and capitalists who produce production goods indirectly, interested in the
expansion of this demand since they see this as an expansion of the market for their own
products (in a sense they are correct). Ultimately, however, it is a fantasy to think that the
expansion of workers consumption (increased wages) is in the interest of capital. This is
because at his own point of production the capitalist is engaged in a directly
confrontational relation with the worker. In this relation (i.e. capital/wage relation), the
capitalist cannot casually think that higher wages which increase consumption are in his
interest. The reality of capitalist society directly appears here in the opposition between
capital and wage labor. This confrontational relationship penetrates each side of the
equation. The essence of capitalist society is the opposition between capital and wage
labor, not their common interest. Clearly the capitalists hope for workers consumption is

nothing but a temporary illusion, and he will soon wake up, and indeed must wake up,
from this sweet daydream. Only foolish reformists, liberals, syndicalists and the JCP pick
up the fantasy of the capitalists and (mis)use it for their own opportunism and class
collaborationism.
Certainly in capitalist society the working class is an enormous power and a consumer
class. Unlike slaves, the workers are formally (legally) an economic class (i.e.
exchangers) equal to the bourgeoisie. Once outside of the employee relationship, the
workers appear as citizens independent of the capitalist class, or as the purchasers of
capitals commodities (capitals beloved customer). Moreover, in capitalist society the
working class as consumers are flattered with all sorts of words, and flooded with
advertisements to tempt them to increase their consumption. It is plain to see that workers
who appear on the market with money earned from the sale of their labor power represent
a huge source of demand, and that this consumption has important meaning for
capitalistic prosperity. The weakening of working class consumption is considered one of
the decisive causes of capitalistic depression. However, this is simply incorrect.
This is merely a concept that comes from a capitalist looking at the relationship between
another capitalist and his workers. If seen from the real oppositional class relationship that
exists between capitalists and workers, this is nothing but a utopian concept or fantasy.
Marx discussed how this fantasy did not grasp the essential or internal relationship
between capital and labor in the following way:
Actually, the relation of one capitalist to the workers of another capitalist is none of our
concern here. It only shows every capitalists illusion, but alters nothing in the relation of
capital in general to labour. Every capitalist knows this about his worker, that he does not
relate to him as producer to consumer, and [he therefore] wishes to restrict his
consumption, i.e. his ability to exchange, his wage, as much as possible. Of course he
would like the workers of other capitalists to be the greatest consumers possible of his
owncommodity. But this is just how the illusion arises -- true for the individual capitalist as
distinct from all the others -- that apart from his workers the whole remaining working
class confronts him as consumer and participant in exchange, as money-spender, and not
as worker. (Grundrisse, Penguin Classics p.420)
Marx next discusses the relation between the limits of consumption and crisis:
It is forgotten, that, as Malthus says, the very existence of a profit upon any commodity
pre-supposes a demand exterior to that of the labourer who has produced it, and hence
the demand of the labourer himself can never be an adequate demand. Since one
production sets the other into motion and hence creates consumers for itself is an
adequate demand. On one side, this demand which production itself posits drives it
forward, and must drive it forward beyond the proportion in which it would have to produce
with regard to the workers; on the other side, if the demand exterior to the demand of the
labourer himself disappears or shrinks up, then the collapse occurs. Capital itself then
regards demand by the worker -- i.e. the payment of the wages on which this demand
rests -- not as a gain but as a loss. I.e. the immanent relation between capital and labour
asserts itself. Here again it is the competition among capitals, their indifference to and

independence of one another, which brings it about that the individual capital relates to
the workers of the entire remaining capital not as to workers: hence is driven beyond the
right proportion. What precisely distinguishes capital from the master-servant relation is
that the worker confronts him as consumer and possessor of exchange values, and that in
the form of the possessor of money, in the form of money he becomes a simple centre of
circulation -- one of its infinitely many centres, in which his specificity as worker is
extinguished. (Ibid. pp. 420-1)
Outside of production relations, in the sphere of circulation and the market, the
relationship between capitalists and workers appears to be a relationship between
mutually equal citizens with independent rights, and a mutual relationship between a
sellers of commodities and purchasers. The essential internal relationship between
capitalists and workers (a master-servant relationship) is thus abstracted from and
forgotten. The worker as one centre of circulation also has an important social role (the
JCP has actually earnestly used such an expression) to play in this society of capital. That
is, through increased consumption the worker can make an important contribution towards
overcoming the difficulties of a crisis. For the individual capitalist, other capitalists workers
are not workers but merely possessors of money, purchasers, or citizens who represent
demand. Moreover, since every bourgeois regards the worker not as a worker whose
consumption is narrowly limited by class relations, but merely as a possessor of money,
as a consumer, and based on this premise because production is strengthened,
production easily exceeds demand and must do so. If the bourgeoisie were able to
evaluate the worker rationally or from the overall social relationships, they would not
view the worker simply as a consumer, and they would know that within the
confrontational class relationships their consumption is necessarily limited. However, this
rational understanding is impossible for them because they are limited by their narrowminded class-based perspective.
If a crisis arrives, however, the brutal reality of class society immediately shakes the
bourgeoisie free from all illusions. They come to think of ideas, such as the view that
raising workers wages or expanding consumption through higher wages is of decisive
importance for profits, as optimistic foolishness or complete drivel. In other words, Marxs
so-called immanent relations penetrate their consciousness.
The individual bourgeois sees the workers of other capitalists as simply purchasers or
customers for his own commodities. Therefore, he reasons that a rise in their income
would mean increased demand for his commodities, and so he hopes for an increase in
their wages and thinks that this will increase consumption and demand. However, once a
depression worsens, and begins to have a direct effect on this capitalist, his fantasy that
an increase in wages will expand demand is blown to shreds. Furthermore, in place of this
fantasy the immanent truth of capitalism, its essential relations, are deeply felt, i.e. the
truth of the opposition between the interests of capital and labor, how a rise in wages
means a decrease in profit, how if this rise progresses without limit it would mean the
collapse and end of capitalism. The view that a rise in wages means an expansion of
consumption and demand provides no comfort because if there is no profit, it becomes
impossible for capital to exist as capital. The essence of capital is production for profit,

certainly not production for the sake of the consumption of the mass of workers and
producers. In other words, capitalism is capitalism, not socialism.
Marxs view is important since this fantasy is not only common within the bourgeoisie, but
has in fact been widely circulated not only among leftwing parties, but also within the
leadership of the labor unions. They insist that the increased consumption of the workers
would expand the market and is thus one important -- if not the only -- means of
overcoming a crisis. By emphasizing the expansion of consumption would also benefit
capital through the expansion of the market, they pursue collaboration with capital and
advocate the common interests of capital and the workers. While berating the bourgeoisie
for not being wise enough to pursue a policy of common interest between all people
(classes), they completely ignore the confrontational class relationship between the
bourgeoisie and the working class. In fact, there is nothing more convenient for
collaborationists than the fantasy that crisis can be overcome through increased
consumption. This is the idea that the only thing obstructing this fabulous win-win policy
for everyone, which would overcome the crisis for the bourgeoisie and ensure wage
increases for the workers, is the foolishness and stupidity of the bourgeoisie.
The Socialist Party, JCP and labor unionists should seriously ponder why the bourgeoisie
would not happily carry out this sort of policy if it is indeed in their own interests. In fact,
the reason is not the stupidity of the bourgeoisie or their superficial understanding. The
nonsensical argument advanced that chance, misunderstanding or stupidity would
prevent a policy that would be rooted in the interests of all classes and control their fate is
a far cry from scientific thinking (even though the expression scientific socialism is often
uttered by the JCP).
The JCP fails to understand the essential point that the system of consumption has an
immanent necessity for capitalism, and this cannot be removed through reforms. The
attempts to change this are complete nonsense and bring about no results (in the case of
the attempt to overcome a recession this effort produces the opposite result). The
expansion of consumption of the masses is thus a dilemma for capital. Even though this is
intended to overcome the recession (through the expansion of the market for capital), this
is a policy that would deepen and expand the recession (because the expansion of
consumption through a wage increase would decrease profits for capitalists). Marx clearly
recognized that limited consumption itself (i.e. the greatest possible limitation of
consumption; that is, the greatest possible exploitation of the workers) is the basis of and
starting point for large profits and thus capitalist prosperity.
An increase in workers consumption means a decrease in profit. Therefore, the dilemma
is that an expansion of the workers consumption would mean a loss of the (most
important) basis of capitals prosperity, and the conditions for the development of a crisis
would become greater. The JCP has been completely unable to solve this practical
contradiction thus far, and will be unable to do so in the future.
The JCP has been unable to understand that the idea that a rise in wages could expand
the market and play a role in reviving the economy is nothing but a simple fantasy, a
mistaken one-sided view within the bourgeoisie. If a crisis deepens, the bourgeoisie will

immediately listen to reason and drop this fantasy under the pressure of reality, but the
foolish petty bourgeoisie (i.e. JCP) scramble to pick up this discarded illusion.
The idea that the market can be expanded through increased wages and thus a crisis -the concentrated expression of the contradictions of capitalistic production -- can be
combated, is a bourgeois viewpoint, and moreover a temporary and superficial viewpoint.
If it were in fact possible under capitalism for the peoples consumption to be enlarged to
the point where profits were zero, then certainly all insufficient consumption could be
eliminated and all crisis and depression would be finished. However, this in fact cannot
and will not occur. The basis of the JCPs politics is the incredibly sweet fantasy (suitable
for the petty bourgeoisie) regarding the capitalist mode of production, which lacks an
awareness that the system of consumption that signifies the exploitation of workers is
necessary for capitalism and that essentially this base of capital cannot be alleviated
Certainly if it were possible to expand the workers consumption with no regard for profit,
then it could be said that insufficient consumption in every sense could be eliminated,
and capitalist recession could be solved. In that case the sublation of profit would mean
that capitalism had ceased to be capitalism. However, before this stage could be reached,
capital surely would have begun to counterattack. It is certainly impossible for wages to be
raised to the point where the consumption limits of the workers were decisively eliminated.
For this to happen the rule of capital would have to be abolished. Workers should never
forget for a moment the essential limits of capital, i.e. capitalism is production for profit,
not for consumption.
The fantasy of the JCP in the end revolves around the idea that capitalism is not
capitalism, and production is not for profit, but directly for consumption. As a result of this
fantasy, they replace the class struggles of the workers with collaboration with the
bourgeoisie, and attempt to convince the bourgeoisie to eliminate the contradictions of
capitalism and work together to obtain capitalist prosperity. In other words, the view that
raising the wages of the workers would be in the interest not only of the workers
themselves but also the bourgeoisie because the increased consumption would expand
the market and thus be the path towards eliminating overproduction and overcoming the
economic recession; as a result this would be a policy that would be good for all of the
people. The reason why the bourgeoisie would not be aware of such a wonderful position
can only be explained by saying that they are dim-witted. They believe that this dogma is
the truth, and that convincing the bourgeoisie of this can save society. In fact, however,
they fail to understand the reality of capitalism and have completely lost a class-based
perspective, only spending their time babbling away inside their own fantasy world. Their
policy would never succeed because it lacks (or has overcome) the awareness of the
truth of class division and class struggle in capitalist society. Consequently, the practice
of the JCP which is isolated from reality will inevitably collapse.

4. The Contradiction Between Production and Consumption Under Capitalism

(But not as the Underconsumption Theorists Understand It)

Just because the surplus value produced by workers is realized doesnt mean that
production and consumption, or purchases and sales, are directly the same thing without
any contradictions. As Marx emphasized, under capitalism production and consumption,
purchases and sales, and supply and demand, while being internally united, are externally
independent moments with their own movement, and herein lies the possibility for crisis to
occur and develop. Already under simple commodity production and circulation the
possibility of crisis developed, but under capitalistic production this develops further with
the greatest opportunity for crisis being in the relation between capital and labor.
The fools in the JCP say that limited consumption exists under capitalistic production. Of
course! The question is not whether it exists or not, but rather what its character and
significance is. The balance between production and consumption, supply and demand,
and sales and purchases is obvious in the case of the exchange of products, and in the
case of simple commodity production this also seems a reasonable proposition at a
glance. This is because the person who receives money for selling a commodity is also
the person who purchases a commodity. Under these conditions, any limited
consumption would be illogical. If one only abstracts from this simple relationship, one
could insist, in the manner of Mill, Say or Ricardo, that sales and purchases, and
purchases and sales are in agreement and that production and consumption are
essentially identical, and hence general overproduction and crisis could be refuted.
However, under capitalistic production, this simple argument is already completely
meaningless. Says theory of equilibrium, by dissolving commodity exchange into the
exchange of products, ignores the historical limitations of commodity production, and
thereby making possible the denial of the possibility of crisis.)
If we look at crisis in a purely formal manner, supply and demand are split and in
disagreement. Commodities are supplied (produced) which exceed the demand capable
of purchasing them. Here Says simple theory of harmony and market theory, which
states that since production is consumption and purchases are sales there is agreement
between supply and demand, breaks down from the start.
Marx argues that the possibility of crisis -- for the moment only a possibility ? is already
given with simple commodity production and develops further under capital.
Nothing could be more foolish than the dogma that because every sale is a purchase,
and every purchase a sale, the circulation of commodities necessarily implies an
equilibrium between sales and purchasesBut no one directly needs to purchase
because he has just sold. Circulation bursts through all the temporal, spatial and personal
barriers imposed by the direct exchange of products, and it does this by splitting up the
direct identity present in this case between the exchange of ones own product and the
acquisition of someone elses into the two antithetical segments of sale and purchase. To
say that these mutually independent and antithetical processes form an internal unity is to
say also that their internal unity moves forward through external antitheses. These two
processes lack internal independence because they complement each other. Hence, if the
assertion of their external independence [aausserliche Verselbstandigung] proceeds to a
certain critical point, their unity violently makes itself felt by producing -- a crisis. There is
an antithesis, immanent in the commodity, between use-vale and value, between private

labour which must simultaneously manifest itself as directly social labour, and a particular,
and a particular concrete kind of labour which simultaneously counts as merely abstract
universal labour, between the conversion of things into persons and the conversion of
persons into things [personification of things and reification of persons -- footnote in
Penguin edition]; the antithetical phases of the metamorphosis of the commodity are the
developed forms of motion of this immanent contradiction. These forms therefore imply
the possibility of crisis, though no more than the possibility. For the development of this
possibility into a reality a whole series of conditions is required, which do not even exist
from the standpoint of the simple circulation of commodities. (Capital Vol. I, pp. 208-9)
However, this disagreement between supply and demand is simply a possibility, and in
normal conditions of capitalist production it does not occur. Of course, there is some
possibility for this to occur partially (i.e. in the case of individual commodities or a certain
sector of industry), but this does not occur in general. It might not be possible to sell a
given product, but in fact they (usually) can be sold. In general a disequilibrium between
supply and demand does not occur wherein too many commodities are supplied and
(produced) ? or there is too little demand (purchases), which amounts to the same thing. A
perpetual crisis cannot occur in capitalism. Commodities are swallowed up by the market
and are able to be sold smoothly. It is an abnormal or particular case that they are not
sold.
However, in simple circulation it occurs in some cases that the agreement between supply
and demand and purchases and sales is lost. For example, a person who sells a
commodity hoards the money from this sale instead of purchasing a commodity. This
person puts a commodity into circulation, but that is all. He does not pull a corresponding
commodity out of circulation. That is, instead of using the money earned from the sale of
his commodity to pull a commodity out of circulation, he elects to save this money. Since
we have to admit that this is not merely a random occurrence, but a necessity that can
generally occur, it appears that even in the case of simple commodity circulation, supply
and demand and sales and purchases are not always in balance. This is a formal
possibility but definitely not an arbitrary one. Rather, it is a possibility that is inseparably
and internally linked to commodity production. Under capitalistic production this occurs on
an even greater scale, and appears in this production as something inevitable. Since the
goal of the capitalist is normally accumulation, and accumulation is achieved through the
transformation of surplus value for capital, it is an everyday occurrence that a purchase
does not follow a sale. Of course the actions of individual capitalists are offset. When one
capitalist sells but doesnt buy, another capitalist buys but doesnt sell. Therefore, if the
capitalist class is taken as a whole it could be said that supply and demand and
purchases and sales are roughly in agreement. However, even with capitalists taken as a
whole, can it really be said that there is a moment or time where there are only purchases
and no sales, or only sales and no purchases? This occurs in the case of the individual
capitalist, but even when the capitalists are taken as a whole, can the possibility be
denied that this will not be offset? Considering the capitalist class en masse, can one
declare that the situation would not arise in which there were only purchases and no
sales, or an avalanche in the opposite direction? Formally the possibility of this occurring
could not be denied (and if this occurs it would signify a crisis). This thus signifies the

possibility of crisis and its development. At any rate, it can and does occur that sales and
purchases can appear as the independent moments of supply and demand, as unrelated
moments.
We also know, of course, that under the system of capitalist production not only are there
cases where there are only sales and no purchases, but also cases with only purchases
and no sales. For instance, in the case of large-scale industries which require a long
period of time to be established, a number of years are dedicated solely to the purchase
of the means of production (machinery, factory facilities, etc.) In this case, no commodities
are thrown into circulation for the simple reason that production has not yet commenced.
It is worthless to insist that with the commencement of production the case will be
reversed and sales would be greater than purchases and thus it could be said that in the
end it is offset and purchases are sales and sales are purchases. Although this is
probably true in the long term, if we take a given moment, there is aa decisive gap and
huge difference between supply and demand, and purchases and sales.
If we were to consider a communist society in place of a capitalist one, then money
capital would immediately be done away with, and so too the disguises that transactions
acquire through it. The matter would be reduced to the fact that the society must reckon in
advance how much labour, means of production and mass of subsistence it can spend,
without dislocation, on branches of industry which, like the building of railways, for
instance, supply neither means of production nor means of subsistence, nor any kind of
useful effect, for a long period, a year or more, though they certainly do withdraw labour,
means of production and means of subsistence from the total annual product. In capitalist
society, on the other hand, where any kind of social rationality asserts itself only post
festum (after the feast: too late to have any effect), major disturbances can and must
occur constantly. On the one hand there is pressure on the money market, while
conversely the absence of this pressure itself calls into being a mass of such
undertakings, and therefore the precise circumstances that later provoke a pressure on
the money market. The money market is under pressure because large-scale advances of
money capital for long periods of time are always needed here. This is quite apart from
the fact that industrialists and merchants throw the money capital they need for the
carrying on of their businesses into railway speculations, etc., and replace it with loans
from the money market. The other side of the coin is pressure on the societys available
productive capital. Since elements of productive capital are constantly being withdrawn
from the market and all that is put into the market is an equivalent in money, the effective
demand rises, without this in itself providing any element of supply (Capital Vol. 2. Ch.16)
In capitalist production the stage of simple commodity production has been superseded,
and thus the possibility of crisis is magnified. For example, lets consider the relationship
between capitalists and workers. Here the purchase and sale directly appear as two
different things.
First lets look at the capitalist. He must sell at a higher price than he purchased. This
can be said because he sells commodities which include more value than the ones he
purchased. The commodities he purchases and takes out of circulation take the form of
means of production and labor power (commodities as constant capital and variable

capital), but the commodities he sells and puts into circulation are commodities in which
the value of the means of production and labour power have been added, and which
include the surplus value exploited from the workers in the process of production
(commodities as the body of value in which surplus value has been added to the variable
and constant capital). Of course, this has nothing to do with the arbitrary decision of the
capitalist to sell the commodity at a higher price, which is merely a necessary action for as
long as a capitalist remains a capitalist and a normal occurrence in a capitalist society.
The motive and goal of the capitalists productive and economic activity is the acquisition
of this surplus -- that is, to buy cheap and sell dearly gives rise to a gap between sales
and purchases. For this reason, for the individual capitalist supply and demand do not,
and cannot, directly be in agreement.
In the case of the workers it is the same. If the capitalist doesnt buy or doesnt sell, the
worker sells more and consumes less, i.e. under consumes. What the worker is paid
(wages, i.e. constant capital) and what he hands over to the capitalist in exchange (value)
include the surplus value part in addition to the constant capital part. However, what the
worker is paid is purely the constant capital part. For instance, even though the workers
produces value for the capitalist of 1 million yen, they are merely paid half that amount,
500,000 Yen, in wages for the price of their labour power commodity. The capitalist
receives 500,000 yen as profit. In other words, the workers are exploited. Although this
part was produced by the workers, it is not realized by them. Even though the workers
(through the mediation of the capitalist) put commodities with a value of 1 million yen into
circulation, they only withdraw half of that in paid compensation with commodities From
the workers viewpoint the commodities with a value of 500,000 yen are a surplus. The
workers underconsumption appears as an unmistakable reality. Since this phenomenon
is simply accepted, the mistaken theory of underconsumption was born, this is the basis
for the fact that this theory spread so easily.
Thus, under relations of capitalist production and class relations, the proposition that at a
glance production and consumption are in agreement appears as something irrational
because the working class cannot purchase, and as a result consume, everything that
they themselves have produced. The workers only produce as long as they produce
surplus value, i.e. as long as they produce something above their production for
themselves. In other words, production and consumption only take place as long as things
are produced in addition to production for the workers own consumption, that is,
production of surplus value for the capitalist. If the worker only produces for his own
consumption, that is if no unpaid labor for the capitalist is carried out, no surplus value will
be produced and the worker will certainly cease to work. If the worker does not produce
surplus value for the capitalist, he also will not (cannot) produce for his own consumption.
So as long as the workers produce, they must produce surplus value for the capitalist, i.e.
labor performed in excess of that done for their own consumption, in this way they are
wage workers. In this sense, the workers always produce too much, and produce in
excess of consumption. Says simple proposition that production and consumption, and
supply and demand are in agreement, appears at a glance to be mistaken in the case of
the workers, i.e. in the case of the relation between capital and waged labor. In the case
of commodities consumed individually in which ones labor is objectified as value, not to

mention those commodities industrially consumed, the workers are certainly unable to
purchase all of them. Production and consumption each appear as separate, independent
and mutually unconcerned moments. Here the internal unity between the two appears
meaningless at a glance.
Of course, this is a consequence of capitalistic production but this does not directly mean
that this is impossible or unrealizable in capitalism (Rosa Luxemburg and Narodnik
theorists often understood it in this way). Marx emphasized in the following passage that
even if the limits of workers consumption give birth to partial overproduction in the
production sector of consumption goods, which leads to overproduction in related
production sectors, this in itself still does not signify general overproduction:
This argument, however, cuts two ways. If it is easily understood how overproduction of
some leading articles of consumption must bring in its wake the phenomenon of a more or
less general overproduction, it is by no means clear how overproduction of these articles
can arise. For the phenomenon of general production is derived from the interdependence
not only of the workers directly employed in these industries, but of all branches of
industries which produce the elements of their products, the various stages of their
constant capital. In the latter branches of industry, overproduction is an effect. But whence
does it come in the former? For the latter continue to produce so long as the former go on
producing, and along with this continued production, a general growth in revenue, and
therefore in their own consumption seems assured. (MECW Vol. 32, p. 153)
This passage shows the errors of the JCPs simplistic theory of underconsumption (the
theory which explains crisis as a result of underconsumption, particularly the
underconsumption of workers). In other words, Marx says that the limited consumption of
workers can be understood to lead to overproduction in certain production sectors of
consumption goods, but this is all; it cannot explain general overproduction. Marxs view
creates serious havoc for the vulgar view of the JCP. Overproduction in general must be
explained from a different moment.
Believers in the JCPs theory of underconsumption are completely unable to understand
that in order for workers to continue their own production, and hence their consumption, it
is necessary for them to produce in excess (extension of labor time) of the production
needed for their own consumption (labor time), i.e. they must produce surplus value for
the capitalist. Moreover, if this does not occur, even the production for themselves will not
be carried out, and thus their own consumption will become impossible.
Following their pathetic wisdom, they reach the conclusion that if the workers would only
produce for their own consumption, overproduction would definitely not occur since the
workers would only be producing for themselves and nothing would be superfluous (JCP
theorists only vaguely say that the consumption of the workers would be increased, but
they dont say that this increase would make surplus value impossible). However, this is
only correct if workers are understood as small producers, not exploited by capital, whose
consumption is based on the sale of what they have produced themselves. (However this
can only be said in the abstract theoretical meaning.)

Incidentally, the JCP claims that crisis can be evaded through the expansion of workers
consumption, but do they mean to say that consumption can be expanded to any extent,
and that if consumption is expanded to any extent a crisis can be avoided? If the workers
were to consume all they had produced, this would be the negation of capitalist production
which aims for the production of surplus value, and would thus signify socialism. However,
the JCP usually posits its demands within the framework of capitalism, and hence its
demand for increased consumption not only does not contradict the production of surplus
value, but exists comfortably within this framework. In other words, the JCP pursues the
absolutely contradictory and utopian demand of eliminating the workers limited
consumption without eliminating the very basis of their limited consumption.
Under capitalistic production relations, production, and hence consumption, can only
occur as long as surplus value is produced for capital. Herein, the system of
consumption is included as an essential moment, and these relations can only be
sublated by overcoming capitalistic production. On the one hand, the JCP appears to be
opposed to the limited consumption of the workers, but in the next breath they say that
they dont deny the base of this limited consumption, i.e. capitalistic production, and
hence approve of the continuation of the workers limited consumption. Since they
declare that as long as the workers consumption is limited recessions will continue and
worsen, it could be said that they are promising the eternal existence and continuation of
recession, and are defending the basis of this society.
Marx certainly emphasized that consumption is limited under capitalism, not in the
simplistic manner of the underconsumption theorists (the impossibility of realizing surplus
value), but always as the opposition under capitalism between the productive power and
the anarchical development of production. Under capitalism, production and consumption
(market) are separate things, mutually isolated and independent, and governed by distinct
laws of motion. Therefore, even though originally they are internally united, they become
decisively distanced from each other. Furthermore, Marx discussed each of the laws that
govern production and consumption (market). Under capitalistic production relations,
production is expanded through anarchical, and accelerated development. On the other
hand, consumption, or in capitalistic terms the market, cannot expand in proportion to
productive power and production, but is limited under capitalistic production relations (i.e.
relations underpinned by the exploitation of labor). Lets now look more closely at this
phenomenon.

5.
The
Cause
of
Crisis
-Limited Consumption and the Development of Unrestricted Productive Power
Marx also emphasized that limited consumption has important meaning for crisis.
However, the question is what meaning, and in what sense does it hold important
meaning. It is completely meaningless to explain crisis as merely insufficient
consumption and thus propose solving crisis simply through an expansion of
consumption, i.e. a wage increase and an alteration of distribution.

Marx repeatedly said that the true cause of crisis is not limited consumption, but capital
itself, the limits of capital. The cause and basis of crisis is precisely the limits of capital;
crisis is not the result of insufficient consumption. Likewise, the basis of overproduction is
not insufficient production, but the limits of capital. The problem is capital itself. What
does Marx mean, exactly, by the expression the limits of capital or capital itself?
The most characteristic phenomenon of crisis is overproduction. In other words, a
situation in which commodities are produced which do not find a demand, so that unsold
commodities pile up (in some cases they are burned and in others thrown into the ocean).
The superficial view, when faced with this phenomenon (currently represented by the JCP
and trade unionists, as well as Keynesianism), says that since consumption is insufficient
there must be overproduction, i.e. production that exceeds consumption. Since capitalistic
production always keeps the workers wages at the minimum level needed for its existence
this view seems to be entirely justified. These are the actual conditions for the prevalence
of the theory of underconsumption.
Marx was in fact opposed to this common view and consistently denounced the theory of
underconsumption and emphasized that the problem was not simply one of
underconsumption, but the original limits existing in capital itself, the essential limits
within the capitalistic means of production. According to Marx, the expression
overproduction conveys a mistaken understanding because it gives the illusory
impression that societys most essential needs are satisfied. However, as any worker
knows, despite even the most urgent needs of the workers being limited, the occurrence
of crisis, i.e. overproduction, is not at all rare, but in fact common. In this sense, it is
definitely not a question of the demand or the absolute needs of society. At issue for
Marx is the capitalists profit, not the needs of society, i.e. the producers. On this same
point Marx criticized Ricardo who, following Say, offered up the concept that demand is
supply and supply is demand (or production is consumption and consumption is
production). For Marx this view completely ignored the particularity of capitalist
production. Marx wrote:
But the whole process of accumulation in the first place resolves itself into surplus
production, which on the one hand corresponds to the natural growth of the population,
and on the other hand, forms an inherent basis for the phenomenon which appear during
crises. The criterion of this surplus production is capital itself, the scale on which the
conditions of production are available and the unlimited desire of the capitalists to enrich
themselves and to enlarge their capital, but by no means consumption, which from the
outset is inhibited, since the majority of the population, the working people, can only
expand their consumption within very narrow limits, whereas the demand for labour,
although it grows absolutely, decreases relatively, to the same extent as capitalism
develops. Moreover, all equalisations are accidental and although the proportion of capital
employed in individual spheres is equalised by a continuous process, the continuity of this
process itself equally presupposes the constant disproportion which it has continuously,
often violently, to even out. (MECW Vol. 32 pp. 123-4)
Many things are discussed in this passage. The first point emphasized is that the limit of
capitalistic production, that is, production with the aim of surplus value, is not limited

production, but capital itself. Marx positions the scale on which the conditions of
production are available on one hand, and the unlimited desire of the capitalists to enrich
themselves and to enlarge their capital on the other, and emphasizes the contradiction
and struggle between them. This is the foundation for the explanation of crisis. The
repeated use of this concept in the same expressions shows us that this is fundamental to
Marxs thought. Expressed in slightly different and more general terms, this is the
contradiction between the capitalistic relations of production and the rapid, anarchical
development and expansion of the productive forces within them.
In this passage Marx also insists that the limits to the production of surplus value are not
consumption limited from the outset, which should make it even more clear that the JCPs
theory of underconsumption has nothing to do with Marxism. In terms of consumption,
under capitalistic production consumption is limited from the outset -- the exploitation of
the working masses by capital is the condition which precedes their labor and existence.
Removing this condition leads to a circular argument which amounts to the same thing as
proving the impossibility of capitalistic production.
The impulse to gain wealth and the impulse of capitalization are definitely not the same
thing. The impulse to save is not particular to the capitalist, but can be seen in ruling
classes preceding the capitalists. The essential characteristic of capitalists is not only their
impulse for surplus value, but the impulse for capitalization, i.e. to accumulate capital and
expand reproduction. This objective is not merely to expand consumption or accumulate
wealth, but to reinvest capital, exploit labor on a greater scale, and obtain ever larger
profits. Moreover, this inevitably includes, or is internally connected to, a lowering in the
value of commodities through general competition and the increase in productive power,
the ruin of many capitalists, and the concentration of capital, an increase in the organic
composition of capital, and a trend towards decreased profit ratios.
Lets look at a few representative passages:
Assuming the necessary means of production, i.e. a sufficient accumulation of capital,
the creation of surplus-value faces no other barrier than the working population, if the rate
of surplus-value, i.e. the level of exploitation of labour, is given; and no other barrier than
this level of exploitation, if the working population is given. And the capitalist production
process essentially consists of this production of surplus-value, represented in the surplus
product or the aliquot portion of commodities produced in which unpaid labour is
objectified. It should never be forgotten that the production of this surplus-value -- and the
transformation of a portion of it back into capital, or accumulation, forms an integral part of
surplus-value production -- is the immediate purpose and the determining motive of
capitalist production. Capitalist production, therefore, should never be depicted as
something that it is not, i.e. as production whose immediate purpose is consumption, or
the production of the means of enjoyment for the capitalist. This would be to ignore
completely its specific character, as this is expressed in its basic inner pattern.
It is the extraction of this surplus-value that forms the immediate process of production,
and this faces no other barriers than those just mentioned. As soon as the amount of
surplus labour it has proved possible to extort has been objectified in commodities, the

surplus-value has been produced. But this production of surplus-value is only the first act
in the capitalist production process, and its completion only brings to an end the
immediate production process itself. Capital has absorbed a given amount of unpaid
labour. With the development of this process as expressed in the fall in the profit rate, the
mass of surplus-value thus produced swells to monstrous proportions. Now comes the
second act in the process. The total mass of commodities, the total product, must be sold,
both that portion which replaces constant and variable capital and that which represents
surplus value. If this does not happen, or happens only partly, or only at prices that are
less than the price of production, then although the worker is certainly exploited, his
exploitation is not realized as such for the capitalist and may even not involve any
realization of the surplus-value extracted, or only a partial realization; indeed, it may even
mean a partial or complete loss of his capital. The conditions for immediate exploitation
and for the realization of that exploitation are not identical. Not only are they separate in
time and space, they are also separate in theory. The former is restricted only by the
societys productive forces, the latter by the proportionality between the different branches
of production and by the societys power of consumption. And this is determined neither
by the absolute power of production nor by the absolute power of consumption but rather
by the power of consumption within a given framework of antagonistic conditions of
distribution, which reduce the consumption of the vast majority of society to a minimum
level, only capable of varying within more or less narrow limits. It is further restricted by
the drive for accumulation, the drive to expand capital and produce surplus-value on a
larger scale. This is the law governing capitalist production, arising from the constant
revolutions in methods of production themselves, from the devaluation of the existing
capital which is always associated with this, and from the general competitive struggle
and the need to improve production and extend its scale, merely as a means of selfpreservation, and on pain of going under. The market, therefore, must be continually
extended, so that its relationships and the conditions governing them assume ever more
the form of a natural law independent of the producers and becomes ever more
uncontrollable. The internal contradiction seeks resolution by extending the external field
of production. But the more productivity develops, the more it comes into conflict with the
narrow basis on which the relations of consumption rest. It is in no way a contraction, on
this contradictory basis, that excess capital coexists with a growing surplus value; for
although the mass of surplus-value produced would rise if these were brought together,
yet this would equally heighten the contradiction between the conditions in which this
surplus-value was produced and the conditions in which it was realized. (Capital Vol. 3
pp. 352-3)
In short, all the objections raised against the obvious phenomena of overproduction
(phenomena that remain quite impervious to these objections) amount to saying that the
barriers to capitalist production are not barriers toproduction in general and are therefore
also not barriers to this specific, capitalist mode of production. But the contradiction in this
capitalist mode of production consists precisely in its tendency towards the absolute
development of productive forces that come into continuous conflict with the
specific conditions of production in which capital moves, and can alone move.

It is not that too many means of subsistence are produced in relation to the existing
population. On the contrary. Too little is produced to satisfy the mass of the population in
an adequate and humane way.
Nor are too many means of production produced to employ the potential working
population. On the contrary. What is produced is firstly too great a section of the
population which is in fact incapable of work, which owing to its situation is dependent on
the exploitation of the labour of others or on kinds of work that can only count as such
within a miserable mode of production. Secondly, not enough means of production are
produced to allow the whole potential population to work under the most productive
conditions, so that their absolute labour-time is curtailed by the mass and effectiveness of
the constant capital applied during this labour time.
Periodically, however, too much is produced in the way of means of labour and means of
subsistence, too much to function as means for exploiting the workers at a given rate of
profit. Too many commodities are produced for the value contained in them, and the
surplus-value included in this value, to be realized under the conditions of distribution
given by capitalist production, and to be transformed back into new capital, i.e. it is
impossible to accomplish this process without ever-recurrent explosions.
It is not that too much wealth is produced. But from time to time, too much wealth is
produced in its capitalist, antagonistic forms. (Ibid. pp. 366-7)
Overproduction is specifically conditioned by the general law of the production of capital:
to produce to the limit set by the productive forces (that is to say, to exploit the maximum
amount of labour with the given amount of capital), without any consideration for the
actual limits of the market or the needs backed by the ability to pay; and this is carried out
through continuous expansion of reproduction and accumulation, and therefore constant
reconversion of revenue into capital, while on the other hand, the mass of the producers
remain tied to the average level of needs, and must remain tied to it according to the
nature of capitalist production. (MECW vol. 32 pp. 163-4)
The ultimate reason for all real crises always remains the poverty and restricted
consumption of the masses, in the face of the drive of capitalist production to develop the
productive forces as if only the absolute consumption capacity of society set limit to them.
(Capital Vol. 3, Ch. 30)
As is clear from this last passage, for Marx it was not simply the limits of consumption in
itself that was considered the cause of crisis, but rather at issue was the limited
consumption of the masses in contrast to the impulse to develop productive power as if
the only limit were societys absolute consumption capacity. The consumption of the
people is limited by the capitalistic mode of production, and thus also by its mode of
distribution. In capitalistic development, this consumption ultimately is restricted and
explodes as crisis.
To express this contraction in the most general terms, it consists in the fact that the
capitalist mode of production tends towards an absolute development of the productive

forces irrespective of value and the surplus-value it contains, and even irrespective of the
social relations within which the capitalist production takes place; while on the other hand
its purpose is to maintain the existing capital value and to valorize it to the utmost extent
possible (i.e. an ever accelerated increase in this value). In its specific character it is
directed towards using the existing capital as a means for the greatest possible
valorization of this value. The methods through which it attains this end involve a decline
in the profit rate, the devaluation of the existing capital and the development of the
productive forces of labour at the cost of the productive forces already produced.
The true barrier to capitalist production is capital itself. It is that capital and its selfvalorization appear as the starting and finishing point, as the motive and purpose of
production; production is production only for capital, and not the reverse, i.e. the means of
production are not simply means for a steadily expanding pattern of life for the society of
the producers. The barriers within which the maintenance and valorization of the capitalvalue has necessarily to move -- and this in turn depends on the dispossession and
impoverishment of the great mass of the producers -- therefore come constantly into
contradiction with the methods of production that capital must apply to its purpose and
which set its course towards an unlimited expansion of production, to production as an
end in itself, to an unrestricted development of the social productive powers of labour. The
means -- the unrestricted development of the forces of social production -- comes into
persistent conflict with the restricted end, the valorization of the existing capital. If the
capitalist mode of production is therefore a historical means for the developing the
material powers of production and for creating a corresponding world market, it is at the
same time the constant contradiction between this historical task and the social relations
of production corresponding to it. (Capital Vol. 3, pp. 358-9)
In capitalist society, the market does not create production, production creates the market
-- no matter how illogical this appears, it is nonetheless profoundly true for capitalistic
production. In other words, production and the market are definitely not in agreement, and
usually production exceeds the market. The market does not expand in proportion to
production, or does not develop or expand as rapidly as production. This is a
contradiction, but an inescapable contradiction under capitalism. Under capitalism
production exceeding consumption and the market and supply exceeding demand appear
as one inevitable law.
According to Marx, production usually expands rapidly. This is because, first of all, the
capital invested in production always increases (capital accumulation and the
transformation of capital into surplus value is the nature of capital); and secondly, through
capital becoming increasingly productive. Hence, production increases rapidly, but the
market does not, and cannot, expand to meet this. This does not mean that surplus value,
i.e. the value exploited from the workers, is not realized (or consumed), but the failure of
the expansion of consumption to keep pace with the expansion of production is one
contradiction which at a certain stage necessitates a forced readjustment. If a certain
stage of disequilibrium is reached, a violent retraction must occur.
It is absurd to ask the question why this takes a violent form under capitalistic production,
and whether this is indeed necessary. In a society in which there is anarchy in production

and the various internally united moments, such as value and use value, production and
consumption (market), supply and demand, value and its realization, or productive capital
and money capital, etc., are externally independent and move and develop according to
their own particular laws; that is, in a society penetrated by this sort of disequilibrium, a
general crisis is the only means for a readjustment to achieve equilibrium.
Hasnt the bourgeoisie always stressed that things can be safely left to the movement of
the market economy and advocated its usefulness (the usefulness of its anarchistic
movement)? In that case, isnt crisis also one of the automatic harmonizing effects of the
market economy? If they are going to praise the splendid movement of the market, they
would also have to accept crisis to be consistent. It is self-contradictory to praise the
harmonization and adjustment function of the market, but be frightened by crisis which is
the sharpest and most decisive manifestation of this function. If one accepts the market,
one must also accept crisis; if one applauds the market, one must also applaud crisis -because they are both fundamentally the same, and are both the essence of the same
capitalistic mode of production. Apart from crisis, there is no other way that equilibrium
can be reached in such a thorough form for the sake of capital and its continuation, and
those who cant understand this reveal their ignorance. One cannot only credit the market
economy for fortunate circumstances without recognizing crisis as a characteristic
manifestation of this market economy.
The market expands more slowly than production; or in the cycle through which capital
passes during its reproduction -- a cycle in which it is not simply reproduced but
reproduced on an extended scale, in which it describes not a circle but a spiral -- there
comes a moment at which the market manifests itself as too narrow for production. This
occurs at the end of the cycle. But it merely means: the market is glutted. Overproduction
is manifest. If the expansion of the market had kept pace with the expansion of production
there would be no glut in the market, no overproduction. However, the mere admission
that the market must expand with production, is, on the other hand, again an admission of
the possibility of overproduction, for the market is limited externally in the geographical
sense, the internal market is limited as compared with a market that is both internal and
external, the latter in turn is limited as compared with the world market, which however is,
in turn, limited at each moment of time, [though] in itself capable of expansion. The
admission that the market must expand if there is to be no overproduction, is therefore
also an admission that there can be overproduction. For it is then possible -- since market
and production are two independent factors -- that the expansion of one does not
correspond with the expansion of the other; that the limits of the market are not extended
rapidly enough for production, or that new markets -- new extensions of the market -- may
be rapidly outpaced by production, so that the expanded market becomes just as much a
barrier as the narrower market was formerly. (MECW Vol. 32, pp. 153-4)
According to Marxs view, production and consumption (market) are distinct from each
other, and under capitalism develop and move in a mutually independent and autonomous
manner. Certainly both are united and internally connected, but one character of
capitalism is that because they are also inescapably mutually independent and in
opposition, at a certain stage this contradiction must explode as a crisis. Say, Mill and
Ricardo said that production and consumption are simply identical; that production is

consumption, and consumption is production (or sales are purchases, and supply is
demand). However, the underconsumption theorists as well simply juxtapose production
and consumption in the same manner as the equilibrium theorists. They are more or less
the same as the equilibrium theorists, since their theory is based on an incorrect
understanding (surplus value cannot be realized, etc.) and offers a simplistic account of
disequilibrium between production and consumption (market), thus failing to understand
the real contradiction within capitalistic production. They understand the contradictions of
capitalism in an extremely narrow way.

6. Crisis and the Fate of the Capitalist Mode of Production

Crisis is the essence of capitalism, and thus its evaluation is at the same time an
evaluation of capitalism. It is nonsense to say that capitalism is good and only crisis is bad
(e.g. capitalism would be an ideal society if crisis were eliminated). Crisis is the
concentrated expression of the contradictions of capitalism which explode in a visible
form.
Marx emphasized that crisis revealed the inevitable limits of capitalism and the inevitable
limits of this mode of production, which must be transformed into socialism. This
conception is precisely the same as the materialist conception of history. For Marx, the
recognition of the essential content and limitations of capitalism in itself elucidates the
nature of crisis. In this sense, the viewpoint that there is no systematic theory of crisis
within Marxism or that Marx was unwilling to construct a theory of crisis is mistaken.
Beyond a certain point, the development of the productive forces becomes a barrier to
capital, and consequently the relation of capital becomes a barrier to the development of
the productive forces of labour. Once this point has been reached, capital, i.e. wage
labour, enters into the same relation to the development of social wealth and the
productive forces as the guild system, serfdom and slavery did, and is, as a fetter,
necessarily cast off. The last form of servility assumed by human activity, that of wage
labour on the one hand and of capital on the other, is thereby shed, and this shedding is
itself the result of the mode of production corresponding to capital. It is precisely the
production process of capital that gives rise to the material and spiritual conditions for the
negation of wage labour and capital, which are themselves the negation of earlier forms of
unfree social production. (Grundrisse inMECW Vol. 29, pp. 133-4)
Marx said that each of the essential aspects of capitalism was represented in the theories
and thought of Ricardo and Sismondi. Ricardo represents the positive side of capitalism
by disregarding the limits of demand, consumption and the market and how these limits
impact the development of the productive forces, and how this trend itself prepares the
material conditions for socialism, while Sismondi, for his part, theoretically represents the
negative side of capitalism and its limits, such as the explosions of crisis. According to
Marx, in the opposition between these two representative theories, the essence of
capitalism, and hence the essence of crisis, is revealed.

The universality towards which it (capital) irresistibly strives encounters barriers in its own
nature, which will, at a certain stage of its development, allow it to be recognized as being
itself the greatest barrier to this tendency, and hence will drive towards its own
suspension.
Those economists who, like Ricardo, conceived production as directly identical with the
self-realization of capital -- and hence were heedless of the barriers to consumption or of
the existing barriers of circulation itself, to the extent that it must represent counter-values
at all points, having in view only the development of the forces of production and the
growth of the industrial population -- supply without regard to demand -- have therefore
grasped the positive essence of capital more correctly and more deeply that those who,
like Sismondi, emphasized the barriers of consumption and of the available circle of
counter-values, although the latter has better grasped the limited nature of production
based on capital, its negative one-sidednessSismondi, by contrast, emphasizes not
only the encounter with the barriers, but their creation by capital itself, and has a vague
intuition that they must lead to its breakdown. He therefore wants to put up barriers to
production, from the outside, through custom, law, etc., which of course, as merely
external and artificial barriers, would necessarily be demolished by capital. On the other
side, Ricardo and his entire school never understood the really modern crises, in which
this contradiction of capital discharges itself in great thunderstorms which increasingly
threaten it as the foundation of society and of production itself. (Grundrisse pp. 410-1)
Sismondi is profoundly conscious of the contradictions in capitalist production; he is
aware that, on the one hand, its forms -- its production relations -- stimulate unrestrained
development of the productive power and of wealth; and that, on the other hand, these
relations are conditional, that their contradictions of use value and exchange value,
commodity and money, purchase and sale, production and consumption, capital and
wage labour, etc., assume ever greater dimensions as productive power develops. He is
particularly aware of the fundamental contradiction: on the one hand, unrestricted
development of the productive power and increase of wealth which, at the same time,
consists of commodities and must be turned into cash; on the other hand, the system is
based on the fact that the mass of producers is restricted to the necessaries. Hence,
according to Sismondi, crises are not accidental, as Ricardo maintains, but essential
outbreaks -- occuring on a large scale and at definite periods -- of the immanent
contradictions. He wavers constantly: should the State curb the productive forces to make
them adequate to the production relations, or should the productive relations be made
adequate to the productive forces? He often retreats into the past, becomes a laudator
temporis acti (eulogiser of the past), or he seeks to exorcise the contradictions by a
different adjustment of revenue in relation to capital, or of distribution in relation to
production, not realising that the relations of distribution are only the relations of
production seen sub alia specie (from a different aspect). He forcefully criticises the
contradictions of bourgeois production but does not understand them, and consequently
does not understand the process whereby they can be resolved. However, at the bottom
of his argument is indeed the inkling that new forms of the appropriation of wealth must
correspond to productive forces and the material and social conditions for the production
of wealth which have developed within captialist society; that the bourgeois forms are only

transitory and contradictory forms, in which wealth attains only an antithetical existence
and apears everywhere simultaneously as its opposite. It is wealth which always has
poverty as its prerequisite and only develops by developing poverty as well. (MECW, Vol.
32, pp. 247-8)
The significance of these representative passages should be clear. Here it is revealed that
the fundamental contradiction of the capitalistic mode of production is the contradiction
between productive power and the relations of production, and that crisis is also
determined by this.
Finally we need to consider the practical significance of the theories that explain crisis
from underconsumption. However, the answer can already be found in the history of
capitalism where several varieties of underconsumption theories have appeared and been
met with unsparing criticism from the camp of revolutionary Marxists.
Marx criticized the petty bourgeois theorists who hope for harmony between production
and consumption through the agreement of demand and supply in the following way:
Fuit Troja (Troy is no more). This correct proportion between supply and demand, which
is beginning once more to be the object of so many wishes, ceased long ago to exist. It
has passed into the stage of senility. It was possible only at a time when the means of
production were limited, when the movement of exchange took place within very restricted
bounds. With the birth of large-scale industry this correct proportion had come to an end,
and production inevitably compelled to pass in continuous such cession through
vicissitudes of prosperity, depression, crisis, stagnation, renewed prosperity, and so on.
Those who, like Sismondi, wish to return to the correct proportion of production, while
preserving the present basis of society, are reactionary, since, to be consistent, they must
also wish to bring back all the other conditions of industry of former times.
What kept production in correct, or more or less correct, proportions? It was demand that
dominated supply, that preceded it. Production followed close on the heels of
consumption. Large-scale industry, forced by the very instruments at its disposal to
produce on an ever-increasing scale, can no longer wait for demand. Production precedes
consumption, supply compels demand.
In existing society, in industry based on individual exchange, anarchy of production,
which is the source of so much misery, is at the same time the source of all progress.
Thus, one or the other:
Either you want the true proportions of past centuries with present-day means of
production, in which case you are both reactionary and utopian.
Or you want progress without anarchy: in which case in order to preserve the productive
forces, you must abandon individual exchange. (The Poverty of Philosophy, International
Publishers, pp. 61-2)

There is nothing add to this passage, because on a daily basis we can confirm that the
JCP have become defenders of the old petty bourgeois relations on the one hand, and
have prostituted themselves as bourgeois clerks seeking to reform, not revolutionize, the
capitalist relations of production, on the other hand. Instead of choosing Marxs proposal
of one or the other, for the time being they mix up the two. Of course their progress
(degeneration) into the bourgeois-like liberalism of petty bourgeois civic activists
[jiminshugisha] is inevitable, and this shameless development continues right in front of
our eyes.
Lenin exposed the practical meaning of the Narodnik (todays JCP) theory in the following
way:
Indeed, if we explain crises by the impossibility of realising products, by the contradiction
between production and consumption, we are thereby led to deny reality, the soundness
of the path along which capitalism is proceeding; we proclaim this path to be a "false one,"
and go out in quest of "different paths." In deducing crises from this contradiction we are
bound to think that the further it develops the more difficult will be the way out of the
contradictionOn the other hand, if we explain crises by the contradiction between the
social character of production and the individual character of appropriation, we thereby
recognise that the capitalist road is real and progressive and reject the search for
"different paths" as nonsensical romanticism. We thereby recognise that the further this
contradiction develops the easier will be the way out of it, and that it is the development of
this system which provides the way out. (A Characterization of Economic
Romanticism, Collected Works Vol. 2, p. 173)
At the time of Lenins criticism, capitalism was beginning to develop in Russia. This was
thus a period in which the problem was not one of overcoming the capitalistic mode of
production, but what path should be pursued to break free of the feudalistic relations.
Consequently, Lenin position was that the progressive meaning of capitalist development
had to be recognized. Nonetheless, Lenin correctly described the essential nature of crisis
and the meaning it held within capitalist production and resolutely countered pettybourgeois views.
Finally, lets examine the relation between crisis and the fate of the workers.
One conspicuous phenomenon which crisis exposes is the surplus in labor power.
Companies suddenly notice that they possess too much labor power to be able to
increase profits. As a result, they begin severe restructuring and focus their attention on
firing workers. They are never short of excuses, because if excess labor power is not
reduced capital cannot continue to exist. As long as capital survives, morality can never
exist in this society. Capital doesnt care if workers become homeless or dont have
enough to eat. To protect itself, capital will permit anything, whether it be firing workers or
indirectly killing them For capital anything that is useful is good and ethical.
Crisis is the violent re-unification and re-adjustment of various independent moments
under capital. For this reason, crisis stems from the nature of capital and is a chance for
capital to sweep away the surplus population it is burdened by and rid itself of excess

labor power for the sake of production for profit and the achievement of equilibrium. It is
natural that labor power is subordinated to production for profit, and in this topsy-turvy
society anything else is unthinkable.
Crisis and the high unemployment that accompanies it means that labor power has also
become in excess and this is an essential side of overproduction and surplus capital. But
what is excess labor power? An absolute surplus of labor power is unthinkable, and the
concept itself is self-contradictory. Under capitalism, like consumption, this is only a
surplus for capital. Labor power becomes a surplus for capital when it is not possible to
obtain surplus value through employing it. The rapid development of the productive power
of labor has led to a contraction in labor time. For capital, however, this only appears as
the contradiction of surplus labor power and the inability of obtaining surplus value
through the employment of workers. It is clear that if labor time were reduced rapidly,
there would be no problem of an excess of labor time for production. Under socialistic
production the problem would appear in such a simple form, but capitalist society is
different. Under capitalism, for example, the reduction in labor time through the
development of productive power appears as mass unemployment which prepares the
resistance of the workers. Under socialism, the total labor of all the people could be
reduced on a large scale, and for the individual this would appear as the rapid reduction in
labor time, but in capitalist society the development of productive power leads to the
abolishment of a large number of workers jobs, i.e. the loss of the means of living, and if
this progresses to an extreme it prepares a revolution. Outside of a revolution, the
possibility of a large reduction in labor time of capital is turned into mass unemployment.
In other words, a process which should increase the welfare of the workers becomes a
source of their misery because this upside-down system continues to exist.

7.
The
Stalinists
-Mendelsons Theory and History of Crisis

Concept

of

Crisis

If we look back at the history of the theoretical debates, Engels expression of the
contradiction between the social character of production and the private character of
appropriation has frequently been cited to explain crisis (especially among Stalinists).
The plausible argument has been spread that crisis should not be explained solely
through a theory of underconsumption or disequilibrium but rather must be defined
through an explanation of the fundamental contradictions of the capitalistic mode of
production. It is not a question, then, of denying the theory of underconsumption or
disequilibrium, but of correctly positing it within an overall theory of crisis. According to this
logic, if this is not done, a correct understanding of crisis cannot be reached. Now is the
time to completely break with this vulgar theory. As a result of the spread of this Stalinist
dogma the Marxist theory of crisis has grown stale and become a boring and obscure
heap of redundancy. Today there is nothing as dried up and unappealing as the Marxist
theory of crisis, and it is no exaggeration to say that the responsibility for this lies with the
Stalinists (JCP) and their dogma.

Of course, it is absolutely correct to say that a theory of underconsumption or

disequilibrium by itself is mistaken since it superficially explains the contradictions of the
capitalistic mode of production, and is thus utilized by reformists and revisionists to serve
their own opportunism. Moreover, it is a correct formulation of the problem to say that
crisis must also be explained from the fundamental contradictions in the capitalistic mode
of production (as Marx said, crisis is the concentrated expression of the contradictions of
capitalism). Nevertheless, we certainly cannot say that the Stalinists conception is
justified. Conversely, this theory has become a source of confusion
A criticism of Stalin has already been carried out, but there has yet to be a complete
discussion of works that were written under the influence of Stalinism such as Lev
Abramovich Mendelsons representative theory of crisis in his book The Theory and
History of Crisis [title translated from Japanese]. In this work, which modeled after
Engels and Lenin, the fundamental cause of crisis is found in the contradiction between
the social nature of production and the private (capitalistic) form of acquisition. But this
Stalinist concept has many twists and turns and it is not easy to find the way out.
The total sphere of the relations which provide the conditions for the necessity of crisis
develop together with the capitalistic mode of production. Further, they stem from the
fundamental contradiction of capitalism, i.e. the contradiction between the social character
of production and the private, capitalistic form of appropriation. The social nature of
production appears in the fact that every product of labor is created through the collected
efforts of many people and satisfies some social need. (The Theory and History of
Crisis p. 44 -- passage translated from Japanese)
The cliched idea above forms governs everything else as the basis of the Stalinist theory
of crisis. This central cliche leads to a great number of cliches, one after another.
Is this concept just a different way of expressing the contradiction between the relations of
production and productive power? If so, it would mean that he has not totally
misunderstood the basis of crisis. If, however, this is something different from the concept
of the contradiction between the relations of production and productive power it would
likely be a Stalinistic dogma that cannot fundamentally explain crisis clearly or correctly.
In the conception above, the private, capitalistic form of appropriation corresponds to the
relations of production, and the social character of production corresponds to the
productive power. However, it cannot be said that this correspondence is justified. For
example, the social character of production and productive power are different things.
Although they have a close relationship to each other, this does not mean that the two are
equivalent concepts. The same thing can be said of the concept of the private, capitalistic
form of appropriation and the capitalistic production relations. It is clear that the two
concepts are not immediately the same thing. The latter concept forms the basis of the
relationship between capital and wage labor, while this is not directly true in the case of
the former. Of course, in a sense the former could be said to be the same since it is
inseparable from the concept of capital and wage labor.
Moreover, the relations of production exist prior to the relations of appropriation which is
subordinate to them. The relations of appropriation do not precede the relations of

capitalistic production as a condition. Could it be said then that relations of

appropriation is just another way of expressing the relations of private property? If this is
the case, we would have to question the necessity or importance of introducing the term
appropriation instead of private property. Furthermore, the laws of private property are
not directly the relation between capital and wage labor. Certainly private property
fundamentally determines these class relations, but there are several mediating factors
that are necessary -- in reality, and thus in theory -- between private property and the
class relation between capital and wage labor.
The socialization of labor is inseparably linked to the increase in labor productivity, and
the introduction of improved methods and means of production, transportation, and
communication. (Ibid. p. 48)
Of course, this proposition is unquestionable. However, this statement if not simply
repetitive, is nothing but a hollow truth.
The Stalinists say that this socialization of labor is not unrelated to the development of
productive power, but connected to it. However, we should not be fooled by the vague
expression connected because this is related to the decisively important question of the
basis of capitalist contradictions. Of course, to say that it is connected could mean
anything. Certainly the socialization of labor is in fact inseparable from and connected
to the development of productive power. As the socialization of labor develops the
productive power of labor also reaches a higher level. We recognize that the two progress
in parallel. Nevertheless, they are two separate things; the concept of the socialization of
labor cannot be equated with productive power.
Of course, the Stalinists dont declare that these two things are the same, they merely say
that they are connected. However, by using this expression, they create the impression
that the socialization of labor and productive power are the same concept. This vague
concept is thus perfectly suited to the Stalinists, who can use this truthful sounding
expression to conceal the reality of capitalism.
Moreover, this fundamental contradiction is also not unrelated to class struggle.
The fundamental contradiction in capitalism is the contradiction between the social
character of production and the private form of acquisition. This is because this
contradiction expresses the fundamental characteristics of the capitalistic mode of
production, and the split of bourgeois society into confrontational classes, i.e. the split
between the bourgeoisie who monopolize the social means of production, and the
proletariat who are exploited by the bourgeoisie and only possess their own labor power
The contradiction between the social character of production and the private form of
appropriation is expressed in the collision between the character of large-scale capitalistic
production relations and the capitalistic property form including all the other production
relations (? ? H. H.). At times, bourgeois economists recognize this or that contradiction in
the capitalist economy, but they always deny or conceal the contradiction between the
social character of production and private appropriation. If they were to admit this

contradiction, it would mean recognizing that the capitalistic property form of the means of
production no longer corresponds to, and collides more and more profoundly and violently
with, the character of the productive power, and for this reason historically its fate is
sealed, and it will be replaced by the socialistic form of property.
Since the contradiction between the social character of production and private,
capitalistic appropriation is the fundamental contradiction within the capitalistic system of
production, and expresses the fundamental characteristics of this system, all of the
contradictions of bourgeois society are encompassed within this contradiction. In other
words, the contradiction between the social character of production and capitalistic
appropriation is revealed and expressed in each of the other contradictions of capitalism.
The reciprocal, dialectical relation between the fundamental contradiction of capitalism
and the other various contradictions is extremely important. Starting from this reciprocal
relation, the fundamental problems of the theory of crisis could be correctly solved for the
first time. (Ibid. pp. 50-1)
What Engels, when characterizing capitalistic production, referred to as the private form of
acquisition, was the fact that even though the capitalistic commodity becomes a
thoroughly social product in the sense that it is already the product of the workers
collaborative labor, the capitalist appears as an individual property owner and as such
brings the product to market and sells it; in short, the relations of private property. Engels
emphasized that in capitalism the relations of small commodity production had already
been superceded, and that individual production had come to an end, but even though
production is carried out socially, ownership, as before, is still private and individualistic -it was here that Engels saw a contradiction. Of course this is clearly a contradiction, but it
cannot be simply (or directly) said that this is the fundamental contradiction of capitalism
and that crisis can be explained from this contradiction. We cannot understand why one
would deny the simple but fundamental and comprehensive concept of the contradiction
between the capitalistic relations of production and productive power. What is gained by
taking this or that word of Engels -- and the words alone-- and turning it into a dogma?
Only the Stalinists stand to gain from such a practice. The JCP and others employ such
means, and do nothing but scatter around their dogmas. It should be clear to anyone who
has read even a little Marx, that when he explained crisis he emphasized the contradiction
and conflict between the limits of capitalistic production (the limits of capital itself) and
the expanding productive power that crashes into these limits.
As petty bourgeois private property is transformed into capitalistic private property
(capitalistic property relations), the class conflict between the bourgeoisie and proletariat
develops. This is an unquestionable proposition. However, to call this the contradiction
between the social character of production and capitalistic appropriation and to say that
within this contradiction the capitalistic class relations are revealed (!?) only serves to
blur the essential relations of capitalistic production and sow confusion among the
workers by drawing them into a chaotic storm of meaningless jargon. This is one of the
systematic ideologies of the Stalinists which was born out of the system of state
capitalist society (the system, mistakenly called socialist, of the USSR and China), in
other words, a reactionary doctrine.

What the bourgeoisie refuses to accept is not the dogma of the the contradictions
between the social character of production and capitalistic appropriation, but rather the
contradiction and conflict between capitalistic production relations and productive power,
which is a truly revolutionary theory. Of course, under capitalism contradictions between
the social character of production and capitalistic appropriation do exist, but there is no
reason to call this the fundamental contradiction. Moreover, if one says that this is a
fundamental contradiction in a sense, but only a different and not necessarily superior
way of expressing the contradiction and conflict between the relations of production and
productive power, then all of the rationales advanced by the Stalinists appear as a
nonsensical repetition that amounts to nothing more than a different manner expression.
In other words, the contradiction between the social character of production and
capitalistic appropriation expresses the contradiction between the relations of production
and the productive power, and has the same meaning, etc. However, even though this is
too simplistic, the Stalinists say that the former includes or expresses the later, and dress
up their arguments to look plausible, which only serves to reinforce the confused and
ambiguous nature of their theory.
The contradiction between production and consumption and between the potential of
production and the low consumption ability of the masses, is an expression of the
contradiction between the social character of production and capitalistic appropriation.
(Ibid. p. 51)
The contradiction between the social character of production and capitalistic
appropriation is also an expression of the anarchy of the capitalist economy (Ibid. p. 52)
Even societies of simple commodity production were characterized by a lack of
planning, but under conditions of capitalism, based on the contradiction between the
social character of production and the capitalistic form of appropriation, the anarchy of
production begins to take a destructive form in the entire course of reproduction. (Ibid)
Furthermore, according to Mendelson, this is conditioned by a series of factors, and
these conditions are, first of all, the enormous socialization of labor, secondly, a
constant imbalance, thirdly, the conflict between classes and the contradiction between
production and consumption, which is one of its manifestations and, finally, increasingly
severe, and destructive competition.
It is extremely difficult to understand clearly what the author is trying to say here, but it is
immediately clear to us that this is nothing but a bunch of jargon. He continues in the
following way:
The contradictions between the social character of production and capitalistic
appropriation appears clearly in the antagonism between the organization of production
in the individual workshop and the anarchy of production in society in general. (Ibid. p.
55)

The contradictions between the social character of production and capitalistic

appropriation is also revealed in the form of the contradiction between the conditions for
the production of surplus value and the conditions of its realization. (Ibid. p. 56)
Of the many forms in which the contradiction between the social character of production
and capitalistic appropriation is revealed, we have only discussed those which are
particularly essential for explaining the inevitability of crisis. Of these, the most important
are the confrontation between the proletariat and the bourgeoisie and the anarchy in
production. (Ibid.)
The contradiction between the social character of production and capitalistic
appropriation is the basis and inescapable cause of crisis. This is because this
contradiction is the synthesis of all the contradictions of bourgeois society, and manifests
itself in each particular contradiction. Each contradiction (i.e. the anarchy of production,
the contradiction between production and consumption, the contradiction between the
conditions for the production of surplus value and the conditions for realizing this surplus
value, etc.), as the manifestation of this fundamental contradiction of capitalism, can
become the cause of crisis. (Ibid. p. 57)
Mendelson seems to be saying that the contradiction between the social character of
production and capitalistic appropriation is the basis of crisis, but on the other hand when
this fundamental contradiction is manifested as the contradiction between production and
consumption this in tern becomes the cause of crisis. However, this is simply the
repetition of the same thing, and is akin to saying nothing at all. This is the argument that
the fundamental contradiction is the cause of crisis, but is only the cause of crisis when it
appears as the contradiction between production and consumption, and would not be the
cause if it didnt appear as such. He says that the fundamental contradiction between
production and consumption is not inevitable, but rather that it sometimes manifests itself
and sometimes does not. In place of the contradictions of capitalistic production he
substitutes some arbitrary or random relations. This line of reasoning is nothing more than
sophistry and nonsense.
Enough already! We can already confirm that Stalinism has done nothing but bring
confusion and chaos to the workers through its flood of confusing expressions and
deceitful theory. The theory of the Stalinists is, generally speaking, dogma and the
distortion and revision of Marxism, with their theory of crisis certainly no exception to this.
Since the theory of crisis deals with the most fundamental contradictions of capitalism, it is
probably inevitable that the Stalinists theory of crisis would be total nonsense and
degenerate to the point of being nothing but thoroughly reactionary cliches. Based on this
theory of capitalism and crisis it is impossible to organize the rebellion of the working
class against capitalism. It was certainly no accident that the Stalinists stood idly by and
allowed the best opportunity for world revolution to slip away during the Second World
War -- as well as the best opportunity for revolution in Japan. They lacked a theory for the
overall rebellion and insurrection against capitalism.
The expression: the contradiction between the social character of production and the
private character of appropriation, which was used by Engels and then Lenin as a

concept to fundamentally explain crisis, has assumed a life of its own ? in words only -- in
the Stalinist movement.
In an essay criticizing Narodnik economists, Lenin exposed Sismondis theory of crisis in
the following way:
Sismondi says: crises are possible, because the manufacturer does not know the
demand; they are inevitable, because under capitalist production there can be no balance
between production and consumption (i.e., the product cannot be realised). Engels says:
crises are possible, because the manufacturer does not know the demand; they are
inevitable, but certainly not because the product cannot be realised at all. For it is not true:
the product can be realised. Crises are inevitable because the collective character of
production comes into conflict with the individual character of appropriation. (A
Characterization of Economic Romanticism, p. 171)
The Stalinists use the concept of the the contradiction between the social (collective)
character of production and the private (individual) character of appropriation to explain
crisis and smugly apply this everywhere to crush their rivals. It is as if this were a
magical charm which only required the Stalinists to declare: all enemies be gone!.

8. Modern Capitalism and Crisis

Finally, lets consider the question of modern capitalism and crisis.
Through the establishment of two financial bills, a huge sum of thirty trillion billion yen is
being allotted to come to the aid of financial institutions and capitalistic production in
general. The banks have jumped at this money and all say that if we all receive it
everything will be fine. The terrified industrial businesses that have not been able to
receive loans have also breathed a sigh of relief and are also celebrating the rise in stock
market prices. The money infused through various means by the Bank of Japan to be
circulated in the financial markets has swollen to the scale of tens of trillions of yen, and
loans issued by the state financial organs have also increased.
However, this massive infusion of state funds is not the characteristic thing about modern
capitalism. The characteristic point is that despite being criticized severely by the public
just two or three years ago for investing hundreds of billions of yen in public funds when
faced with the collapse of the housing loan companies (and solemnly pledging to never
again provide public funds to businesses who went bankrupt due to careless
management), the government has now openly infused a huge sum of public funds,
amounting to ten times the previous sums. The shamelessness, opportunism, and total
inconsistency of this action hardly merits mention
This is characteristic in the sense that without the nearly unlimited injection of state
capital, which is poured in by means of every form, as if it were water, modern capitalism
would not be able to directly exist.

In fact, even apart from the new state funds and so on, every year billions of yen in state
funds are expended on public enterprises. Expenditures on various forms of welfare are
on the scale of billions of yen, and military expenditures have grown increasingly large.
The total sum of state money thrown into circulation and trusts to improve the economy,
either consciously or by custom, has swelled.
To get a grasp of the scope of this huge sum of money, one need only look at the
accumulation of state bonds (debt) that has already reached the sum of hundreds of
trillions of yen. The state organs have no prospect (or intention) to repay this debt.
Nevertheless, a great amount of new debt is going to be accumulated to add on to this
already enormous amount.
The bourgeoisie and politicians are not unaware that there is a huge amount of state debt,
and they can vaguely foresee that this debt is a grave problem for the state and society ?
i.e., the rule of capital -- that prepares their own collapse. For this very reason they
criticize Keynesianism and find it to be the incarnation and root of evil (how very
ungrateful of them!). This is also why they are making a fuss over the necessity of state
restructuring, i.e. financial reconstruction; and neo-liberalism, the antiquated thought of
two hundred years ago, takes on a radiance unbefitting its age (of course modern
capitalism itself has already reached an advanced age and is quite senile).
However, they are unable to put an end to state expenditures. This is exactly like some
sort of drug addiction. The bourgeoisie realizes that if they continue this will harm their
health and progressively ruin their body, but nonetheless they are unable to stop. This is
because it is better for them to not know the acute pain that would arise from their chronic
disease if they were to give up their medication. They fear crisis, and for this reason they
have elected to reduce the pain through state expenditure -- this choice was unavoidable.
The arrival of the evil can thus be forestalled, but crisis and unemployment are in fact a
direct and imminent problem. The bourgeoisie makes every effort to overcome the
dangers it immediately faces and has no room to think about the consequences.
In fact, it wasnt that long ago that oaths were sworn that such a terrible economy could
never occur again after the experience of the bubble economy. The bubble economy
wreaked damage through the collapse of land and stock prices, the bank recession, and
the accumulation of enormous bad debt, which even today continues to have a seriously
corrosive effect on the Japanese economy, and is one of the reasons it cannot stay afloat.
It could be said that the task of the bourgeoisie these past ten years has been to avoid
another bubble economy, and sweep away the aftereffects of the bubble economy as
quickly as possible.
However, recent maneuvers teach us that the bourgeoisie cannot stop using inflationary
policies, and they have begun to feel that there is no salvation outside of a bubble, or
inflationary economy. Clearly they prefer the direction of inflation to that of crisis and
recession.
In the mid 1990s, for the first time since the end of the war a national debt appeared,
although the finance minister at the time, Fukuda, solemnly swore that this was only

temporary, and that when the recession was overcome and the economy revived, tax
revenues would be restored and the national debt could be easily repaid. Since that time
the bourgeoisie has repeated this same pledge innumerable times. However, not only has
the national debt not been repaid, it has grown consistently larger. The national debt
would not be repaid even if the economy were to revive, merely the speed of its
accumulation would be temporarily slowed somewhat. With the arrival of Prime Minister
Tanaka any hope of halting this process was lost.
The nearly ten years since the end of the bubble economy -- especially the experience of
the past two or three years -- have made it clear that this bourgeois society cannot cease
inflationary policies since this would lead to extraordinary failure. One cannot safely say
where this will all end up, but we do know that the bourgeoisie today will continue to rely
on inflationary policies. Despite their stated principles, they already have essentially
thrown out the slogans of financial reconstruction and reform.
For the modern bourgeois state there is no choice but to pile up inflationary policies and
accumulate state debt. Only through these policies can the actual contradictions of
overproduction and various imbalances be solved to some extent or postponed. Of
course, the contradictions and imbalances are not eliminated by this approach, but in fact
become even greater. The policies intended to solve the imbalances in turn create new
ones or expand already existing ones, and lead to an uncontrollable situation. This is the
trap into which modern capitalism has fallen. Will the bourgeoisie be able to break free,
and if they are not able to do so, who exactly (which class or political party representing a
class) will be able to show the way out of the impasse?
In one sense, the progression of inflation is a process of stabilizing disequilibrium. Apart
from the disequilibrium between production and consumption, the largest as well as most
important of these imbalances has been between real capital and money capital. The
inflationary policies or the spreading of currency has meant that compared to other forms
of capital -- industrial or real capital -- money capital has abnormally swelled. The issue of
national bonds itself is an act of self-trust, and is formally completely different from issuing
additional paper money. The former simply signifies an expansion of the national debt and
national bonds are nothing more than certificates of debt. However, in this form the
expansion of state credit (this expanded credit is not necessarily generated from private
natural necessity) causes an enormous accumulation of currency capital relative to
productive and industrial capital, i.e., it inevitably leads to disequilibrium. Moreover, it is
only through the decrease in the value of currency, i.e. inflation, that the excess money
capital can be restored close to its former equilibrium. In this sense, inflation is the
violent solution of the causes of abnormally intensified disequilibrium under the
managed currency system, and in this sense it carries out the same function as crisis.
Of course, money capital can easily be turned into currency and as it appears as
increased currency inflation can progress. If money capital is fixed as money capital, no
matter how much the Bank of Japan issues bank notes the phenomenon of inflation will
not appear. However, we must never forget that in modern capitalism, money capital is
currency, and currency is money capital, this is true even apart form the system of
controlled currency. However, presently money capital is entangled in circulation and to

some extent can become currency, and does become so in some circumstances. In this
sense, it can be distinguished from metallic money which is only absorbed into circulation
to the extent of its volume needed for circulation. This part, this excess money capital,
can easily be transformed into currency, and therefore it is clear that it can become one of
the causes of inflation. Under the current system, the excess of money capital means that
inflation penetrates as one necessity. This is an action or movement of capitalism to gain
a new equilibrium by means of reducing excess. This excess money capital must be
reduced because the foundation and basis of the capitalist mode of production is
industrial capital, not money capital, and if money capital expands at the expense of
industrial capital, this is an indication that the society is becoming increasingly parasitical
and declining. Money capital may secure an income for its owner in the form of interest.
However, since interest is only income as a part of the profit generated from industrial
capital, if industrial capital dos not produce a profit or if interest receipts swell excessively
compared to industrial profits, then this can only mean the decline of interest, and
therefore money capital. If money capital becomes excessive to the point that interest
exceeds profit, there is a necessity for this society to dissolve this excess money capital
(at least to the point where capital can obtain profit and once again resume smooth
reproduction) and regain a sound footing. For example, in Germany after the First World
War and Japan after the Second World War, there was the outbreak of strong inflation, but
in this process excess money capital was eliminated, and capital was able to begin to
reproduce and reaccumulate upon a new basis and equilibrium in order to produce
prosperity for capitalist society. Of course, however, this was also the process of the
accumulation of new contradictions.
Keynes said that one positive role of inflation is that it causes the ruin of the rentier. For
the owners of money capital, who comes to occupy a great relative importance and even
become a burden on society, and that class that garners enormous wealth from society in
the form of interest, inflation is the most severe blow, which plunders them and brings
about their ruin. Even if one has a savings of ten billion yen, the arrival of severe inflation
can shrink the value of money to one-thousandth of its former value so that this ten billion
yen comes to have the value of just ten million yen. And if this value is reduced to just
1/10,000th of its former value, this savings will have shrunk to just a million yen, so that
our hypothetical big capitalist slips down to the level of a miserable petty bourgeois. For
the class which had lived an elegant, luxurious life on the interest on savings of a 100
million or 1 billion yen, this inflation would in fact spell ruin, and this is why Keynes could
smugly speak of the euthanasia of the rentier. And this euthanasia of the enormous
rentier class, which had grown until it posed a problem to society, means that the problem
of debt disappears like magic, and this in term lightens the burden of society as a whole
and that of industrial capital.
The bourgeois state, which is suffering under enormous debt, would also likely be the
greatest beneficiary of the progression of inflation. If we look at the postwar Japanese
state, it should be perfectly clear that the state can also be saved by inflation. The postwar
Japanese state was able to free itself of the enormous debt that it had accumulated by
borrowing from the Japanese people as a whole to fund its war effort. In other words, the
state was in fact able to bilk the public, and do this by legal means. This likewise reminds

us of the inevitability and significance of the postwar inflation. This postwar inflation was of
course a harsh additional exploitation of the workers, and the process of the realization
of this exploitation. The war itself was also pursued by placing an enormous additional
burden on the people, for which they were repaid after the war with a rapid worsening of
their standard of living and collapse of their livelihood resulting from the severe inflation of
the time.
Apart from the nearly ten year long Great Depression that began in 1929 and lasted up to
the Second World War, the 20th century has not known a crisis in the true meaning of the
word on a global scale. Of course there have been several recessions since the Second
World War, and the experience of several periods of economic crisis and difficulties, such
as the dollar shock and the oil shock, but these could not be called crisis in the true
meaning of the word. In this sense, modern, post-war, monopoly capitalism has not known
crisis.
Still, it would be wrong to declare that this means that in the future there will be no
explosion of the contradictions of capitalism (crisis). It would be certainly incorrect to make
such a statement. In fact, no matter how thoroughly deregulation is carried out, or the
principles of free competition are allowed to reign supreme so that the merciless law of
the jungle penetrates society, there is no guarantee that this will not bring about a crisis in
the classic sense of the word (i.e. panic). Indeed, the crisis and bankruptcy last year of
not only small and medium size businesses, but also large-scale capital shows that crisis
is very possible under modern capitalism and this bewildered the bourgeoisie. If the
government had not intervened, it is highly possible that the situation would have
escalated to a panic. In this sense, it can be said that through the aid of the state modern
capitalism is able to temporarily avert a panic.
Even though the role of the state is enormous, it would be a fantasy to think that the
capitalist economy could become free through state policies or managed according to
the wishes of the bourgeoisie. The ability of the state to manage is temporary or partial,
only extending to a certain level or depth. Even if it may appear that a crisis or
overproduction is eliminated by means of state intervention, this intervention does not get
rid of the contradictions and disequilibrium, but rather preserves them in a twisted form
and carries them forward, so that ultimately the crisis continues and steadily worsens. In
order to reduce this aggravated crisis in turn requires state intervention on an even larger
scale, thereby representing a vicious circle that heads in the direction of bankruptcy and a
general collapse.
Seen historically, there were times when the appropriate intervention of the state was
effective. For example, in the age of Marx, the English state implemented mistaken
economic policies that aggravated the crisis of 1848-9 on the basis of Ricardos theory of
the volume of currency, but Marx wrote that by just abandoning these mistaken policies
the crisis was foiled. The mistaken policy that the state had implemented was to have
the distribution of currency strictly adhere to the circulation of metallic money -- based on
the idea that a crisis stemmed from the issuance of an excessive amount of currency and
the resultant economic bubble, and thus it was possible to avoid a crisis through the strict
management of currency -- and the technique employed was to remove bank notes from

circulation in proportion to the gold that was sent overseas. This, however, in fact lead to
an outbreak of crisis resulting from withdrawing currency from circulation at the very
moment that it was most needed, and this abnormally aggravated an economic crisis.
This experiment failed, and just by removing this system, the peak of the crisis was
surmounted and it came to an end. This is an example of the influence of a negative
action by the state, but it is certainly possible that it is possible to break the momentum of
a crisis by freely and intentionally supplying currency.
This is precisely why monopoly capital society moved from the system of metallic money
to a system of controlled currency, i.e. a system in which bank notes are the currency.
If bank notes are covered by metallic money (i.e., if the conversion of bank notes for gold
is ensured), then the issuance of bank notes (currency) clearly has a limit. This is not to
say that the number of bank notes issued cannot be increased, but if there is a
simultaneous demand for the conversion of currency to gold, the central bank will be
faced with immediate collapse. Therefore, in order for currency to be issued more freely,
the conversion of currency to gold was suspended and then banned. Indeed, it was in the
age of monopoly capital, with the intensification of capitalistic contradictions, that the
conversion of currency to gold was halted, and indeed had to be halted. Even today the
gold system in which currency was convertible has not been resurrected.
Certainly inflation is, on the one hand, the extreme development of disequilibrium, but on
the other hand this is the process whereby the great amount of disequilibrium that has
been inevitably accumulated and developed by the capitalist mode of production is
reduced, so that this is both the explosion of contradictions and at the same time the
process of the violent resolution of these contradictions and a process of attaining
equilibrium, and in this sense inflation had the identical social function as crisis. The rapid
development of inflation is indeed a crisis, and therefore it is completely wrong in this
sense to say that modern capitalism has eliminated crisis. Of course not only inflation, but
war as well is the same, since it is clear that war is a waste of an enormous amount of
capital. It was only by means of a large-scale, world war that the overproduction that was
manifested with the Great Depression could be finally eliminated, and war was able to
bring about the smooth reproduction and expanded reproduction, that is, the resumption
of the accumulation process of capital. In this sense, war can also be said to be crisis,
with the same movement as crisis -- that is, it plays the a social role that is intrinsically
necessary to capitalism. In capitalist society even war (and the bigger one the war the
better) has a certain economic role to play (an effective and meaningful role!) and a
necessity. As the possibility to evade or crush an economic crisis becomes smaller, the
social and economic pressure (desire) for a solution in the form of inflation or war grows
stronger and the likelihood of its realization increases. This is the reality of the society in
which we live, the reality of the society of monopoly capital.