Profound Disequilibrium
Dear Editors.
The article “World Recession Closes in Quickly” (October) makes the undeniable point that "the capitalist economy is in a period of profound disequilibrium". However, I feel that coupling this with the statement that it would get better may suggest to some readers that the Socialist Party holds the mistaken view that equilibrium is the normal state of a healthy capitalism, that is, one of boom.
Traditional bourgeois economic theory leans heavily on the concept that production serves consumption, and that equilibrium is achieved as all factors of production receive their just recompense in the market, which is supposed to regulate technical/organisational decisions necessary for this alleged balance.
Marx’s value theory demonstrates that capitalism's normal state is, in fact, disequilibrium. Quite apart from the anarchy of production, this arises from the fact that on the level of the whole economy capital accumulation can proceed only through the realisation of surplus value by reinvestment in new means of production, capitalists' and workers’ personal consumption being met out of the remainder of surplus value and by wages respectively.
This reinvestment is made by individual businesses under competitive pressure, and in anticipation of a market demand over and above that currently existing. It must bear a favourable relationship to the mass of capital already accumulated if the economy is to expand and they are to stay in business. Whether the rate of profit is maintained, and slump deferred, depends firstly on whether this new investment enables a corresponding increase in surplus value production. But this competitively-compelled investment in new means of production is a permanent feature of disequilibrium normal to capitalism, driving it forward beyond current market bounds and ultimately to a period of over-investment, declining profits and slump. Incidentally. I believe that it is only in this sense that Marx’s contentious reference to crises being ultimately caused by the restricted consumption of the masses can be seen as relevant.
As capitalist production is essentially production of and for capital, it is enabled to proceed only when it can produce enough surplus value to satisfy its accumulation needs, and ceases when it cannot. No equilibrium state is involved.
W. Robertson,
Brighton
Reply:
We didn't really suggest that equilibrium is the normal slate of the capitalist economy, did we?
Editors.
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