Overaccumulation & Devaluation of Capital

For equilibrium to be re-established, the tendency towards overaccumulation must be counterbalanced by processes that eliminate the surplus capital from circulation.

Since capital is value in motion, value can remain value only by keeping in motion.

Capital held in money form can be devalued by inflation.

Labour power can be devalued through unemployment & falling real wages.

Commodities may have to be sold off at a loss.

The value of fixed capital may be lost as it lies idle.

The ‘Constant Devaluation’ of Capital That Results From the Rising Productivity of Labour

Since the value of a commodity is set, in the first instance, by the socially necessary labour time taken to produce it, then that value falls with the rising productivity of labour power.

This particularly affects commodities that remain for a long time in the market, or can only be consumed slowly, such as housing, public facilities, transport networks, etc.

Devaluation Through Crises

In conditions of crisis the use values of fixed capital can often be acquired for almost nothing.

Once the necessary devaluation has been accomplished, overaccumulation is eliminated & accumulation can renew its course, often upon a new social & technological basis.


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