Under-Consumption Theories
It's amazing how often naive commentators on the left continue to explain recessions with theories about how workers aren't paid enough vis-a-vis capitalists, so that they can't buy up all of production. Here is a pretty trenchant critic of such theories:
"It is sheer redundancy to say that crises are produced by the lack of paying consumption or paying consumers. The capitalist system recognizes only paying consumers, with the exception of those in receipt of poor law support or the 'rogues.' When commodities are unsalable, it means simply that there are no purchasers, or consumers, for them. When people attempt to give this redundancy an appearance of some deeper meaning by saying that the working class does not receive enough of its own product and that the evil would be dispelled immediately it received a greater share, i.e., if its wages were increased, all one can say is that crises are invariably preceded by periods in which wages in general rise and the working class receives a relatively greater share of the annual product intended for consumption. From the standpoint of these valiant upholders of 'plain common sense,' such periods should prevent the coming of crises. It would appear, therefore, that capitalist production includes conditions which are independent of good will or bad will..."
OK, no Googling, who wrote the above?
"It is sheer redundancy to say that crises are produced by the lack of paying consumption or paying consumers. The capitalist system recognizes only paying consumers, with the exception of those in receipt of poor law support or the 'rogues.' When commodities are unsalable, it means simply that there are no purchasers, or consumers, for them. When people attempt to give this redundancy an appearance of some deeper meaning by saying that the working class does not receive enough of its own product and that the evil would be dispelled immediately it received a greater share, i.e., if its wages were increased, all one can say is that crises are invariably preceded by periods in which wages in general rise and the working class receives a relatively greater share of the annual product intended for consumption. From the standpoint of these valiant upholders of 'plain common sense,' such periods should prevent the coming of crises. It would appear, therefore, that capitalist production includes conditions which are independent of good will or bad will..."
OK, no Googling, who wrote the above?
It is supposedly a quote from Marx's Das Capital, but a Google books search doesn't turn up any such quotation in editions of Das Capital.
ReplyDeleteAssuming he really made such a comment, it (bizarrely) appears to pre-suppose the truth of Say's law, which seems at variance with Marx's ideas elsewhere.
Underconsumptionism can be seen as an incomplete and simple precurser to better Keynesian aggregate demand failure explantions of recession.
Since
GDP = C + I + G + (E-M),
and Keynesianism concerns itself with C and I, and the essence of Keynes's General Theory is in particular to show how I is unstable and volatile, owing to subjective expectations, and create public investment when it is necessary, an attack on naive underconsumptionism isn't really much to worry about if you're a Keyensian.
Lord Keynes, were you feeling cranky today? First of all, I noted that I was talking about *naive* commentators on the left, and not, say, Krugman.
ReplyDeleteSecondly, in your pique you seem to have forgotten that Marx did not write any English passages in Kapital at all. You simply could not find *this translation* elsewhere; no doubt, the biographer translated it himself. It is very easy to find the passage in Kapital Vol II (on, for instance, Marxists.org) if you just pull out a few key terms and don't search for an exact quote.
Thirdly, I said don't Google!
Fourthly, you might consider how, given that Marx rejected Say's Law, why what he says here does not presuppose it.
Fifthly, "an attack on naive underconsumptionism isn't really much to worry about if you're a Keyensian": Right, who said it was?
This was from Daniel Kuehn, and I accidentally deleted it when I tried to hit publish:
ReplyDeleteGene - some would (wrongly) consider Krugman and any number of others on the naive left!
I knew there were two potential "ignorant people might assume they wouldn't say this but they actually did" and I guessed the wrong one of those two. Good stuff.
I do think LK approaches underconsumptionism the right way. There's no real excuse for it now. But it is valuable insofar as it acts as a precursor. The underconsumptionists were onto something - they just didn't know quite what it was and they didn't quite know how to talk about it non-circularly.
Note that Marx is critiquing a specific sort of under consumption: the kind that says the capitalists have not paid the workers enough to consume all production. I just found this theory in a book I am reviewing for a serious publication! It's still alive.
ReplyDeleteThe simple answer of "The capitalists have all the dough? Well, just produce caviar instead of Big Macs and mansions instead of bungalows" never seems to occur to the people who forward this theory.
Marxists.org has the passage here:
ReplyDeletehttp://www.marxists.org/archive/marx/works/1885-c2/ch20_01.htm