Notes: Sweezy on Crisis Theory. Part 1

July 19, 2009

Okay – this series of posts is about The Theory of Capitalist Development‘s discussion of crisis theory – though obviously I’m assuming some degree of broader relevance. I’m focussing on Sweezy largely because I haven’t read a whole lot of other crisis theory – but also because Sweezy’s discussion strikes me as being very lucid and contentful, and as giving clear expression to a lot of ideas that float around in less clearly stated forms elsewhere. If anyone has any suggestions of reading matter on crisis theory – especially though not necessarily from the Marxist space – please feel free to offer them.

Like the previous post on the Labour Theory of Value in Sweezy, this is largely note-taking, so don’t expect big laffs.

Okay. We’re working through more or less from the start of Part IIICrises and Depressions.

Sweezy starts by discussing Marx’s failure to give a fully worked-out and systematically explicated theory of crisis. For Sweezy this is due to the fact that Capital starts at a high level of abstraction, and gives progressively less abstract accounts of capitalist society as it unfolds. Crises, apparently, require a very concrete theory, and so Marx never got round to giving a full account of them.

To flag up some points of disagreement – I don’t think Capital moves from the more abstract to the more concrete. (I’m persuaded, as regular readers will know[1], by N. Pepperell’s argument that Capital operates through a kind of dialectical embedding of successive analyses in the social conditions that produce them – social conditions which the analyses require and therefore in some sense imply, but which they cannot describe in their own terms. This doesn’t map very cleanly onto the ‘more abstract’ > ‘less abstract’ narrative Sweezy’s got going, though there are, to be sure, points of contact.)

Moving through Sweezy, then:

“1. Simply Commodity Production and Crises.”

Because he’s an economist, when Sweezy thinks things through he moves in his head from barter economies to money economies. Barter transaction is C-C. Simple commodity production and exchange in a money economy is C-M-C. “It is thus the function and purpose of money to split the act of exchange into two parts which in the very nature of the case may be separated in time and space.”

Money economy brings possibility of crisis. “While in earlier forms of society economic disaster was synonymous with unwonted scarcity , here for the first time we meet that peculiarly civilised form of economic crisis, the crisis of overproduction.”

Put otherwise: “The familiar result of a crisis, coexistence of stocks of unsaleable commodities and unsatisfied wants, emerges.” Capitalist crises are, in the first place, crises of distribution, it would seem – money is one of the means of circulation of capitalist commodities, and when something bad happens to money, circulation stops, leaving a big heap of food in one place and a bunch of starving people in another. (Of course – there are always countless starving people, under capitalism. What’s drawing our attention is unexpectedly starving people.)

A crisis, then, is created by an interruption in the process of capitalist exchange – the question of the causes of a crisis is the question of the causes of this interruption.

“[I]f producer A sells and then, for whatever reason, fails to buy from B, B, having failed to sell to A, cannot buy from C; and C, having failed to sell to B, cannot buy from D; and so on. … Thus a rupture in the process of circulation… can spread from its point of origin until it affects the entire economy.”

Sweezy continues: “Now actually it is not easy to think of reasons why producers should behave in this disruptive way [selling but failing to buy – capitalist crises, as crises of overproduction, are going to be created by shortfalls in demand, not (at least in the first instance) by shortfalls in supply (unless we mean a shortfall in the supply of money)] in a society of simple commodity production…. The conclusion seems warranted that, barring external factors like wars and crop failures, crises are possible but rather unlikely, or at most accidental, under simple commodity production.”

Section 2.

Marx rejects Say’s law. C-M-C as opposed to C-C opens the possibility of selling without buying.

Section 3.

Under capitalism (according to Sweezy’s Marx) we move from simple commodity production to expanded reproduction – from C-M-C to M-C-M’. That is, we are dealing with production for profit or for surplus, both with regard to the individual capitalist firm and with regard to the system as a whole, which is oriented to expansion. C-M-C, simple commodity production and exchange, is incorporated within the expanding system characterised by M-C-M’. The worker is not driven by the profit motive – the worker sells labour power (C) for money (M) to buy commodities to consume (C), simply for the commodities’ use value. But because the worker’s labour power is a commodity purchased with an eye to profit, the C-M-C of the workers’ sales and purchases is part of the M-C-M’ of the capitalists’ growth-oriented system.

Fine. We’re going to want to add a fair bit of nuance to this at some stage. (Like – there is a kind of moralisation here, whereby the worker is motivated only by use-value and the capitalist is motivated only by profit. There’s obviously a lot of truth to that – including ethical and political truth – but I think care ought to be taken before incorporating this kind of distinction into our critical analysis – not least because it can incline us to overlook more systemic factors.) (With regard to the distinction between C-M-C and M-C-M’ Sweezy writes: “Through failure to make this distinction orthodox economics has often been led into one or the other of two opposite errors: the error of supposing that under capitalism every one is driven on by a desire to make profits, or the error of supposing that every one is interested only in use values and hence that all saving is to be regarded in the light of a redistribution of income over time.” This is quite good, I think – it points us towards the way lots of economics explains social formations by psychologising either the products of those formations or the formations themselves, and then explaining the social formations via the supposed nature of human psychology. [Sweezy suggests that there are two alternative psychologisations thrown up by the capitalist system here – but the good old utility-maximisation stuff surely contains at least elements of both: everything being ultimately oriented to consumption (not reproduction), but consumption being understood on the model of a profit-oriented balance sheet, maximising pleasure & minimising pain.] The point, in any case, is that neither C-M-C nor M-C-M’ are best understood as being driven by, respectively, a pure desire for use-values or a pure desire for profit. Rather these two sets of ‘desires’ are subject-positions within the social system that generates C-M-C and M-C-M’, and actual human desires can slot into these subject-positions and – potentially – be shaped by them, or by the social forces that make these the dominant subject positions in that social space, rather than others. But all this is a digression.)

So. Running quickly through Sweezy’s argument.

Capitalist wants to maximise profit.

Formal possibility of crisis present in both simple commodity production and capitalism.

You get crises practically every other fucking week under capitalism.

What’s changed (to create crisis tendencies under capitalism)?

Sweezy’s answer: profit.

“[I]f anything happens to ^M [that is – profit] the capitalist will immediately reconsider the desirability of throwing his M into circulation. ^M constitutes the Achilles heel of capitalism which was missing from simple commodity production.”

In other words, exchange gets interrupted when a capitalist sells but does not buy, because the capitalist suddenly becomes worried than he won’t make a profit when he buys and then resells.

This analysis prompts two questions. First up – what creates this anxiety about profit? Second – how does this interruption in profit-oriented buying and selling become system-wide?

I guess that’s a natural stopping point.

[1] ‘Regular readers’ here serving more as component of a hypothetical regulative ideal or condition of intelligibility than as an actual empirical entity, obviously.


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