MIA > Archive > Fraina/Corey Archive > Decline of Am. Cap.
THE accumulation of capital, the production of profits and their conversion into capital, means both life and death to capitalism. For accumulation is beset with contradictions. It simultaneously promotes production and sets in motion forces antagonistic to production and accumulation.
Accumulation depends upon an increasing production and realization of surplus value and its conversion into capital by means of an increasing output and absorption of capital goods. The consequent enlargement of the scale of production results in a higher composition of capital: the proportion of variable capital (wages) falls in favor of constant capital (equipment and materials). A given quantity of labor sets in motion a larger quantity of equipment and materials. But this higher composition of capital limits the production and realization of surplus value. It means a fall in wages and a rise in output and profits. Mass purchasing power and consumption are restricted. The forces of production are developed more highly than the forces of consumption. An excess capacity arises, a capacity to produce beyond the power to consume of existing markets. If the excess capacity is unused it produces no surplus value and profit, while its fixed and semi-fixed costs eat into the realized surplus value and profit. If the excess capacity is used, it throws a mass of goods upon the market which cannot be sold at profitable prices. Competition is intensified. Profits are lowered. The rate of profit falls. In its efforts to check the fall, capitalist enterprise raises the productivity of labor and enlarges the scale of production, resulting in a still higher composition of capital, more excess capacity and competition, more limitation of the production and realization of surplus value, more downward pressure on the rate of profit. Among the efforts to check the fall is the resort to monopoly and to the export of capital and imperialism.
The fall in the rate of profit and the efforts to check it are fundamental factors in the instability of capitalist production and prosperity. Both are interlocked with cyclical crises and depressions. These breakdowns temporarily solve the contradictions of accumulation by destroying and depreciating capital, which permits of a rising rate of profit on the surviving capitals.
In the epoch of the upswing of capitalism, the accumulation of capital is renewed, after a depression, on an enlarged scale. There is an upward movement in production and prosperity because the long-time factors of economic expansion make possible an increasing output and absorption of capital goods. The rate of profit falls, but the fall is compensated by an increase in the mass of profits.
In the epoch of the decline of capitalism, the accumulation of capital is not renewed, after a depression, on an enlarged scale. There is no upward movement of production and prosperity because exhaustion of the long-time factors of economic expansion now measurably prevent an increasing output and absorption of capital goods. The rate of profit falls, but the fall is no longer compensated by an increase in the mass of profits. The contradictions of accumulation are aggravated. Greater disproportions and disturbances are created, and there is more resort to monopoly and the export of capital and imperialism.
Excess capacity, a result of the higher composition of capital and the forces it sets in motion, is merely a relative excess capacity. It is not the peculiarity of a particular enterprise. Nor is it the result of misjudging demand or of defects in the realm of exchange. Excess capacity is an inescapable result of accumulation under the social relations of capitalist production. Excess capacity – while millions of wants are unsatisfied! Unused capacity – while millions are unemployed! The condition represents a restriction of consumption among the masses of workers, farmers, and professionals. For accumulation grows by increasing that part of the output of industry which is not consumed but is transformed into capital goods. Consumption is thus restricted. Yet consumption is necessary to production; new capital goods can yield profit only if they produce and sell their output at profitable prices. But production is developed more highly than consumption. Hence excess capacity, the falling tendency of the rate of profit, and the recurrence of cyclical crises and depressions. The contradictions of accumulation are entangled with the antagonism between production and consumption.
Last updated on 29.9.2007