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Karl Marx on Say's Law: Theories of Surplus-Value, Chapter 17

Karl Marx:

Economic Manuscripts: Theories of Surplus-Value, Chapter 17: In order to prove that capitalist production cannot lead to general crises, all its conditions and distinct forms, all its principles and specific features—in short capitalist production itself—are denied.  In fact it is demonstrated that if the capitalist mode of production had not developed in a specific way and become a unique form of social production, but were a mode of production dating back to the most rudimentary stages, then its peculiar contradictions and conflicts and hence also their eruption in crises would not exist.

Following Say, Ricardo writes:

Productions are always bought by productions, or by services; money is only the medium by which the exchange is effected (l.c., p. 341).

Here, therefore... exchange of commodities is transformed into mere barter of products.... This is a return not only to the time before capitalist production, but even to the time before there was simple commodity production; and the most complicated phenomenon of capitalist production—the world market crisis—is flatly denied, by denying the first condition of capitalist production, namely, that the product must be a commodity and therefore express itself as money and undergo the process of metamorphosis.... It is quite consistent that money is then regarded merely as an intermediary in the exchange of products, and not as an essential and necessary form of existence of the commodity which must manifest itself as exchange-value, as general social labour.... Crises are thus reasoned out of existence here by forgetting or denying the first elements of capitalist production: the existence of the product as a commodity, the duplication of the commodity in commodity and money, the consequent separation which takes place in the exchange of commodities and finally the relation of money or commodities to wage-labour....

Ricardo says:

No man produces, but with a view to consume or sell, and he never sells, but with an intention to purchase some other commodity, which may be immediately useful to him, or which may contribute to future production.  By producing, then, he necessarily becomes either the consumer of his own goods, or the purchaser and consumer of the goods of some person.  It is not to be supposed that be should, for any length of time, be ill-informed of the commodities which he can most advantageously produce, to attain the object which he has in view, namely, the possession of other goods; and, therefore, it is not probable that he will continually produce a commodity for which there is no demand [l.c., pp. 339-40].

This is the childish babble of a Say, but it is not worthy of Ricardo.  In the first place, no capitalist produces in order to consume his product.... Previously it was forgotten that the product is a commodity.  Now even the social division of labour is forgotten.  In a situation where men produce for themselves, there are indeed no crises, but neither is there capitalist production.  Nor have we ever heard that the ancients, with their slave production ever knew crises, although individual producers among the ancients too, did go bankrupt.  The first part of the alternative is nonsense.  The second as well.  A man who has produced, does not have the choice of selling or not selling.  He must sell.  In the crisis there arises the very situation in which he cannot sell or can only sell below the cost-price or must even sell at a positive loss.  What difference does it make, therefore, to him or to us that he has produced in order to sell?  The very question we want to solve is what has thwarted this good intention of his?

Further: he

never sells, but with an intention to purchase some other commodity, which may he immediately useful to him, or which may contribute to future production (l.c., p. 339).

What a cosy description of bourgeois conditions!  Ricardo even forgets that a person may sell in order to pay, and that these forced sales play a very significant role in the crises.  The capitalist’s immediate object in selling, is to turn his commodity, or rather his commodity capital, back into money.... Everyone sells first of all in order to sell, that is to say, in order to transform commodities into money. During the crisis, a man may be very pleased, if he has sold his commodities without immediately thinking of a purchase.  On the other hand, if the value that has been realised is again to be used as capital, it must go through the process of reproduction, that is, it must be exchanged for labour and commodities.  But the crisis is precisely the phase of disturbance and interruption of the process of reproduction.  And this disturbance cannot be explained by the fact that it does not occur in those times when there is no crisis.  There is no doubt that no one “will continually produce a commodity for which there is no demand” (l.c., p. 340), but no one is talking about such an absurd hypothesis.  Nor has it anything to do with the problem....

Ricardo’s assertion (following James Mill):

Too much of a particular commodity may he produced, of which there may be such a glut in the market, as not to repay the capital expended on it; but this cannot be the case with respect to all commodities (l.c., pp. 341-42).

Money is not only “the medium by which the exchange is effected” (l.c., p. 341), but at the same time the medium by which the exchange of product with product is divided into two acts... independent... separate in time and space.... That only particular commodities, and not all kinds of commodities, can form “a glut in the market” and that therefore over-production can always only be partial, is a poor way out. In the first place... there is nothing to prevent all commodities from being superabundant... and therefore all falling below their price--[t]hat is all commodities, apart from money.... [J]ust as the difficulty of undergoing this metamorphosis exists for an individual commodity, so it can exist for all commodities.  The general nature of the metamorphosis of commodities—which includes the separation of purchase and sale just as it does their unity—instead of excluding the possibility of a general glut, on the contrary, contains the possibility of a general glut...