While I was waiting for my panel to start at the California Democratic Party convention last weekend, I went back through Marx's Theories of Surplus Value, chapter 17, to try to figure out if anything could be rescued from it.
It seems to me that Marx has two and only two major points to make in a long, uneven, and very discursive chapter.
The first is John Stuart Mill's point: a general glut of commodities is the same thing as an excess demand for money, and that is not only possible that that is something we see—Marx is, however, strangely unwilling to credit Mill or anybody other than himself for this point.
Marx's second major point is the balanced capitalist growth at full employment is impossible. The workings of the processes of accumulation and surplus value extraction forbid it. Because capitalists extract surplus only to reinvest it and because larger capitals extract more surplus, as a boom continues consumption must fall as a share of full-employment output. Thus the investment share of output must rise. Capitalists must be not just confident that the boom that will continue, but increasingly confident as time passes that the boom will continue faster.
From this Marx deduces the conclusion that crisis must come, and will come as soon as capitalists lose confidence in their belief that the boom will continue at an increasing rate.
In this way Marx, I think, links his value theory through Mill's monetary theory to produce a crisis theory.
Or, rather, if I were the referee on Marx's chapter 17, that is what I would conclude that he really wanted to say, and that is what I would urge him to revise his chapter when I sent him his revise and resubmit. As it stands the thing is a mess.
From one perspective, this theory of Marx is is wrong: because his value theory is wrong, his deductions that balanced capitalist growth is logically impossible because if a boom is to continue must continue at an increasing rate is not sound. From another perspective Marx is right: sooner or later as capitalist accumulation proceeds there will come a negative shocks to animal spirits, and there will come a sudden excess demand for money, and there will come a crisis
What I do not understand is Marx's rejection of monetarist or Keynesian solutions. Marx says the ancient and feudal modes of production did not have crises. Why not? Because they used their surplus for crusade or war or display or elite consumption and not for accumulation, hence the surplus was recycled into demand for labor and there was never any of the interruptions of M-C-M' that we get under the capitalist mode of production when capitalists lose confidence that if they turn their M into C they will then be able to turn it back into M'. For the government to see the surplus for public betterment in a downturn would seem to be just as effective a cure for depression under the CMP as conquering Gaul is under the AMP or building a cathedral is under the FMP.
I think—I am not sure, but I think—Marx's rejection of a monetarist or Keynesian cure is based in part on the fact that Marx is like Ron Paul: he believes there's something wrong about credit. The liquidity the government creates by printing money is to Marx, I think, fake liquidity that is bound to come to a bad end. The only real liquidity for Marx gold.
Second, Mark finds it inconceivable that a government of the ruling class would tax the ruling class in order to boost the consumption spending of the public sector and the poor. Thus expansionary fiscal policy to cure or a downturn is ruled out by Marx's theory of politics.
But of course we really do not know how Marx would have closed what seem to me to be gaping logical holes in the crisis theory I can rationally reconstruct from chapter 17 of *Theories of Surplus Value8. The problem is that Marx never made his arguments tight and coherent. The problem is Marx never engaged anybody like John Stuart Mill in a debate on business cycle theory.
So arguing about what Marx's business cycle theory was is kind of like arguing what kinds of poems the Romans would have written had they been Scott's—or whether if my grandmother had wheels she would or would not be a bus.