“Thus it comes about that the overwork of some becomes the preliminary condition for the idleness of others, & that modern industry, which hunts after new consumers over the whole world, forces the consumption of the masses at home down to a starvation minimum, & that in doing so destroys its own home market.” Engels, Anti-Duhring
Capitalist overproduction is overproduction of exchange values, not use-values.
Simondi de Sismondi (1773-1842), the ‘father’ of underconsumption theory.
He held that capitalism had crises of ‘general gluts’ caused by the overproduction of commodities.
Workers can only buy a portion of the commodities that their labour produces as they get paid less than the value they create. But workers are not the only buyers, capitalists also consume.
There’s also unproductive workers, e.g. domestic servants & soldiers, who consume but don’t produce any surplus value.
Productive workers produce the value that replaces the value of the consumer goods that they consume, as well as the surplus value above & beyond it.
Thomas Malthus gave a reactionary twist to Sismondi as he saw the landowners, the clergy & the state as important consumers.
He was also a big influence on Keynes.
Paul Baran & Paul Sweezy in their book Monopoly Capital stress the important role played by the growing unproductive workers in turning the depression of the 1930’s into the post-war prosperity. They saw underconsumption & stagnation emerging as a problem for capitalism only in its monopoly stage. According to Baran & Sweezy corporations tend to price themselves out of the market, since consumers can’t afford these monopoly prices. ‘Third consumers’ are necessary to realise the monopoly profits.
Rosa Luxemburg argued that in a pure capitalist society expanded capitalist reproduction would not be possible because surplus value could not be realised. Her ‘third consumers’ at the time were the independent commodity producers, such as peasants, in the colonies. Hence the need for imperialism to plunder the colonies.
‘Productive Consumption’: some of the SV gets transformed into additional capital.
The credit system allows surplus money capital to be invested.
Say’s Law: Supply always creates its own demand
Quantity theory of money (QTM): money neutrality. Prices & wages adjust to the Q. of money.
The hoarding of money isn’t rational.