I’m glad to see Nat Winn’s response to my letter, but disappointed by his confusion over my own views regarding socialism. I’m not sure what part of my original reply could have led to this, but I hope to clarify my position here. There are two relevant passages, beginning with:
Ashlar seems to be making an underconsumptionist argument: that capitalists are motivated by selling. And that we communists are motivated by increasing our consumption. And this political economy often situates crisis as a phenomena of selling (of markets)—rather than the Marxist view of situating the crisis in the realm of production. That enables trade unionists to say that the solution to capitalism’s problems is to allow the people to consume more. This means, of course, higher wages etc., which, in fact, neither solve the crisis, nor the problems of capitalism.
Winn is correct to call my position underconsumptionist, but his reasoning is strange. What are capitalists motivated by if not profit, which is obtained only through sale? My view is underconsumptionist for a different reason.
Taking after Arghiri Emmanuel, I believe that there is a permanent excess of total production (P) over total revenues (R)–that is to say, there is always more supply than there is demand (P > R).1 On its own, this is the dominant position in current economic orthodoxy. Few adhere to the alternative, namely Say’s Law of Markets (P = R).2 What is not very common is to understand the full implications of rejecting this equation. The complete argument in favor of this inequality is quite long,3 but in its simplest form, it is reflected in basic accounting rules.4 At any given moment, a firm’s stock of inventory is booked at its cost-price (how much it costs to produce). It is never recorded at or updated to its market-price (how much it can be sold for), no matter how much this may diverge from cost. The market-price is only ever noted at the moment of sale, when profit (or loss) has been made, and it is always recorded in its own column, named ‘revenues.’ The inequality (P > R) follows immediately from these premises. Why? The cost-price of a firm’s inventory represents currently-existing revenues because the production expenses have been incurred–the money is already out there, ready for use. But the market-price of a firm’s inventory represents its social value (greater than cost), the revenues of which are only theoretical–that is to say, the money is still to be gained. The value of everything on the market must therefore be greater than the value of all existing funds.5 Examine: sum up all items available for sale (theoretical revenues) and compare to the sum of their costs (existing revenues). This is why it is always harder to sell than it is to buy.6 This inequality is the fundamental reason for capitalist crises.
The foregoing shows the misconception behind Winn’s point about the ‘realm of production’ as opposed to the ‘realm of selling.’ To the extent that they can be separated, the two realms hold equal parts in the capitalist crisis–every crisis of consumption is one of production and vice versa. ‘Overproduction’ and ‘underconsumption’ describe the same thing from different perspectives. The former implies that there are too many products on the market, so they cannot all be sold, which means consumers are not buying enough, or are underconsuming.
Moreover, Winn’s point about trade-unionism is misdirected. He is observing a real tendency, but it is not one which comes to my own worldview. Rather, it manifests in the real-world structure of unequal exchange, a subject for which there is no space here.7
Further, Winn oddly accuses me of social democratic politics due to an alleged fixation on ‘consumption’ over ‘socialist revolution.’
Ashlar seems to equate planning with socialism. Does that mean that social democratic planning and nationalization are degrees of “socialism” in a mixed economy? Also, again for Ashlar, it all revolves around consumption (not socialist revolution). And that, to me, is perhaps the key question.
The reading here is uncharitable. My position is not that any economic planning (e.g. dirigisme) constitutes socialism, but that the planned economy8 (e.g. Soviet 5-Year-Plans) is the socialist mode of production, the political counterpart of which is the dictatorship of the proletariat.9 His point about consumption and revolution is telling. He sets up a dichotomy between the two, but this breaks with Marx, who, in 1859, noted that if the development of the productive forces (closely related to broader consumption) has been fettered, this typically marks the need for social revolution. While I certainly agree that socialism is much more than just expanding social consumption,10 I still consider this to be a critical part of the socialist revolution, especially on the global scale, where some nations, at the expense of others, appropriate the majority of social product. Redistributing that product is one of the central elements of the global revolution.
Comradely,
R. Ashlar
- Cf. Arghiri Emmanuel, Profit and Crises, trans. N.P. Costello (New York & London: St. Martin’s Press, 1984). Henceforth, abbreviated to P&C. Unless otherwise noted, all cited works are by Emmanuel.
- Named after French economist Jean-Baptiste Say. For centuries, this equation was taken for granted in both bourgeois and Marxist political economy. We may credit Marx’s self-admitted inability to determine the causes of regular economic ‘busts’ to his implicit acceptance of Say’s Law (cf. Part I in P&C).
- Cf. Part II in P&C.
- This is not to suggest that different bookkeeping methods would prevent capitalist crises, but that historical accounting practices highlight the basic discrepancy in prices implied by profit.
- For the moment, I am ignoring credit, which can temporarily bridge this gap, and trade surpluses, which can permanently bridge this gap to the detriment of one’s trading partners.
- This observation was first made by the Legal Marxist, Mikhail Tugan-Baranovsky.
- Cf. Unequal Exchange: A Study of the Imperialism of Trade (New York: Monthly Review Press, 1972).
- That is, one in which markets no longer operate.
- At this level, I don’t see how the two of us differ.
- In the words of Emmanuel: ‘If “the quality of life” has any meaning at all, which I am not very knowledgeable about, it ought to mean, among other things and perhaps most of all, replacing individual consumption by community consumption.’ Quotation from: ‘Unequal Exchange Revisited’, IDS Discussion Paper, no. 77, (Brighton: University of Sussex, 1975), 77. (Link)