Marxism on the overproduction crisis:
workers losing everything because they have produced too much wealth

by Joseph Green in CV #44, January 2010

The economists and the politicians are searching for this or that cause of the current economic super-crisis. They act like it's a surprise to them that the economy can crash: they would like us to believe that capitalist profits and stock market prices just naturally go up and up all the time without any major interruptions. So they focus their attention on some of the immediate features of the crash, like the collapse of the housing bubble and the resulting difficulties of the banks and financiers.

But underneath the clutter of particular causes of the great recession is the general nature of capitalism itself. The unplanned and chaotic nature of capitalist competition gives rise again and again to slowdowns, crises, and crashes. Each one has its own particular causes, yet they come again and again, just as one season follows another. And during these crises, one industry after another finds that it can't sell its goods, because it has produced too much of its goods.

In all previous economic systems, crises arose when production fell precipitously: droughts and plagues destroyed the crops; war ravaged a country; or some other disaster hit. Capitalism is the only system which lets people starve while food and supplies exist. Capitalism is the only system where people lose their homes and have their lives ruined because too much has been produced, because the producers have been too productive, because the warehouses are overflowing. The capitalists tell us to work harder and things will be fine, and yet the harder one works, the more workers are laid off, and the more the markets are glutted.

Marx and Engels wrote of this insanity as follows:

"... In these crises a great part not only of the existing products, but also of the previously created productive forces, are periodically destroyed. In these crises there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity -- the epidemic of over-production. Society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation had cut off the means of supply of every means of subsistence; industry and commerce seem to be destroyed; and why? Because there is too much civilization, too much means of subsistence, too much industry, too much commerce."(1)

World-wide excess capacity

The same market glut is taking place on a world scale. Most of the other industrialized countries in the world are suffering from overproduction. That quintessential capitalist institution, the World Bank, has come out and admitted that "excess capacity" is a general world problem. It generally likes to blame problems on anything but the free market, but now it admits to the problem of "excess capacity".

Now, "excess capacity" is another way of referring to overproduction. It means that factories could produce far more goods than they are presently turning out, but these goods couldn't be sold on the market. As the overproduction crisis gets worse, workplaces cut back on what they produce, leaving them with "excess capacity".

Justin Lin, the World Bank's chief economist, is worried that there is so much "excess capacity" around the world, that this will sabotage any attempt to get out of the present crisis. This past July he talked about German workplaces producing at only 72% of their capacity, American at 69%, Japanese at 65%, and some other countries producing only half of what they could.(2)

But, while having to admit this problem, the World Bank and its brother organization, the International Monetary Fund, don't quite know what to do about it. On one hand, Lin talks, as does the IMF, about the need for more of a "fiscal stimulus", that is, that governments should spend more. Now, it's a question how far this would work if its goal is simply to prop up the current market fundamentalist system. True, a dramatic increase of social programs would help protect working people, but that's not what they are talking about. That type of spending goes against everything the World Bank and IMF have been doing for years to cut these programs to ribbons. Instead, by fiscal stimulus the World Bank and IMF mean stimulating business and carrying out bank bailouts, not protecting the people. Meanwhile, on the other hand, in practice the World Bank and IMF have continued, without letup during the world depression, to demand that many governments avoid a fiscal stimulus and cut back spending instead. And, of course, they especially demand austerity programs, the cutting back of social spending, and letting people starve.(3)

It began with a financial collapse, but reflects something deeper

On the surface, however, it may seem that the crisis wasn't based on overproduction. The opening act of the current world depression was a major financial collapse, due to the collapse of securities based on American mortgages.

But Marx pointed out long ago that overproduction crises don't necessarily break out first in the particular markets that are being glutted. He wrote about

"the phenomenon that crises do not come to the surface, do not break out, in the retail business first, which deals with direct consumption, but in the spheres of wholesale trade, and of banking, which places the money-capital of society at the disposal of the former."(4)

In capitalism, corporations have large financial resources at their disposal, get gigantic sums of credit based on the belief that their goods will be sold, and can continue operations for a long time even while their troubles pile up. As well, the vast expansion of consumer credit has meant that personal spending too can extend for some time after people have exhausted their resources.

The housing bubble itself provides an example of this. The exuberance of the housing market wasn't based simply on a growing demand for houses by those who could afford them. Instead, the bubble was based on providing more and more dubious mortgages. Banks profited by providing these mortgages, while closing their eyes to how likely it was that these mortgages could be maintained, and the real estate and construction businesses flourished, as did speculation in mortgage-backed securities. People could even buy houses that they couldn't pay for at all, so long as rising house prices meant that one could turn around and sell the house for a profit.

For that matter, the stagnation in many branches of the economy -- the chronic overproduction that was developing -- encouraged the search for various bubbles to invest in, from the dot-com bubble to the housing bubble. For a time, the flood of paper wealth created in these bubbles helped keep the overall markets afloat. But sooner or later these bubbles were bound to burst.

In the last analysis, it's production that is primary in the economy, not the financial arrangements. That's why the trillion-dollar financial bail-outs of the banks and investment houses haven't stopped the crisis. Even if they hadn't mainly been subsidies to the rich, even if they had really been devoted to ensuring a better flow of loans and commercial credit, they could only have removed one of the aggravating factors of the crisis, not its basis cause.

Overproduction doesn't mean that more goods aren't needed

Still, some nagging doubts may remain. How can there be overproduction when people are suffering from lack of food and homes and medical care, and when there is a need to rebuild or retrofit factories, power plants, and agriculture with environmentally-friendly equipment and methods of production? Why are factories closed down and people laid off when billions of people around the world are in need of the goods that could be produced?

But under capitalism, goods won't be produced simply because they're useful or needed, but only when they can be sold for a profit. Goods are only produced when they are commodities, something that is expected to be profitable for someone to sell. Indeed, there is supposed to be profit not only for the manufacturer, but for the banker, for the merchant, and so on. So, strictly speaking, it is not goods that are overproduced, but commodities.

Marx described this as follows:

"... So long as the most urgent needs of a large part of society are not satisfied, or only the most immediate needs are satisfied, there can of course be absolutely no talk of an over-production of products -- in the sense that the amount of products is excessive in relation to the need for them. On the contrary, it must be said that on the basis of capitalist production, there is constant under-production in this sense. The limits to production are set by the profit of the capitalist and in no way by the needs of the producers. But over-production of products and over-production of commodities are two entirely different things."(5)

Thus at a time when half the world lives in poverty, and millions upon millions of people in the US itself lack adequate food, education, health care and housing, an overproduction crisis is possible because capitalists produce for profits, rather than need. In this sense, it can be said that

"the ultimate real cause for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit."(6)

Nevertheless, this doesn't mean that the economy would flow smoothly if only the workers got higher wages and could buy more of the economy's output. True, the present great recession has been preceded by a long decline in the share of the national income going to workers, but historically a number of capitalist crises were preceded by a period during which the share of income going to workers was going up. This was true of the overproduction crises in Marx and Engels' time, and they used this fact to refute those who claimed that higher wages (needed for other reasons, of course) would prevent crises. Marx wrote, in reply to the argument that "the working-class receives too small a portion of its own product and the evil [crises-JG] would be remedied as soon as it receives a larger share of it and its wages increase in consequence", that

"one could only remark that crises are always prepared by precisely a period in which wages rise generally and the working-class actually gets a larger share of that part of the annual product which is intended for consumption."(7)

Underconsumption, and the neglect of needed environmental work, explain why the markets might be glutted even though human and environmental needs haven't yet been met. But these factors don't explain why this possibility becomes a reality, and why glutting does in fact periodically take place in capitalism, but didn't in previous systems of exploitation. As Engels put it,

"But unfortunately the underconsumption of the masses . . . is not a new phenomenon. It has existed as long as there have been exploiting and exploited classes. Even in those periods of history when the situation of the masses was particularly favourable . . . , they underconsumed. . . . Therefore, while underconsumption has been a constant feature in history for thousands of years, the general shrinkage of the market which breaks out in crises as the result of a surplus of production is a phenomenon only of the last fifty years; . . . The underconsumption of the masses is a necessary condition of all forms of society based on exploitation, consequently also of the capitalist form but it is the capitalist form which first produces crises. The underconsumption of the masses is therefore also a necessary condition of crises, . . . ; but it tells us just as little why crises exist today as why they did not exist at earlier periods."(8)

And Engels goes on to explain the new factors that exist under capitalism, such as the vast expansion of the anarchy of production. This is where the source of crises can be found.

The anarchy of production

Each capitalist, each corporation, each investment house produces and invests according to its own profit, the devil take the hindmost. Each judges the state of the market as a whole, and then does what serves their individual interest, what gives each the most profit. The result is an anarchic economy run by the "invisible hand" of competing interests. The result of all these individual decisions is something that may not be desired by any of the individuals: no capitalist wants to glut the market, but the result of everyone striving to expand production for their own individual profit is, in fact, to glut the market. Contrary to what Adam Smith thought, the "invisible hand" isn't a benevolent humanitarian, but repeatedly strikes out against society in periodic temper tantrums.

Thus the planlessness of capitalist production gives rise to disproportions in the economy, with over-investment in one sphere and underinvestment in another; too much of one product, too little of another; too many laborers in one occupation, too few in another; too much "fiscal policy" one day, and too much "monetary policy" the next; etc. Much of the time these disproportions get resolved one way or another, albeit at the expense of the working class. But periodically the market gets so tangled up it collapses into recessions and depressions. One firm collapsing brings down another; one commercial disaster creates another; and the economy gets stuck in reverse as it crashes to the bottom, and sometimes just stays down and stagnates on and on for years.

Engels puts it as follows:

"... To this day, the product is master of the producer; to this day, the total production of society is regulated, not by a collectively thought-out plan, but by blind laws, which operate with elemental force, in the last resort in the storms of periodic commercial crises."(9)

This anarchy is based, not on the mistake of this or that capitalist or government official, but on the very nature of capitalism. It's based on the ownership of the means of production by private interests -- individual capitalists, corporations and groupings. Today the means of production have become socialized: masses of people cooperate in factories; factories themselves are linked in a complex web; and no major part of the economy can operate independently of the others. Yet the capitalist ownership of factories and workplaces prevents the needed social coordination of production. Capitalist ownership not only results in extreme inequality, with the fruits of production monopolized by a thin top strata, but results in each capitalist grouping fighting against the others, as well as against the working class as a whole. The result is an economy whose interconnections are so unpredictable that it is impossible to be sure how it will react to this or that new development. And with the mushrooming of new types of derivatives and other murky financial arrangements, the interconnections get more and more obscure all the time, and have many unexpected results.

Workers can and must fight for protection against the ravages of a crisis, for jobs and social programs and mass relief and to achieve their own class organization in their defense. This is all the more important because there is no magic formula which will cure capitalism of crises. No matter what the politicians and economists say, they don't know how to prevent crises, and at most they shift the crisis from one area of the economy to another or temporarily alleviate it in one form only to see it break out again later in another. Crisis is a loyal fellow-traveler of capitalism, and so workers must not only fight to prevent the capitalists from shifting the burden of the crisis onto them, but eliminate capitalism itself if the sorry repetition of one crisis after another is to come to an end.

Say's Law and today's do-nothing conservatives

The pro-capitalist apologists and economists have a different view, of course. They are divided into conservative die-hards who openly back the Hooverite plan of doing nothing in a depression, and the liberal wing of those who want to tinker with a government stimulus.

The do-nothing school advocates that there really isn't such a thing as an overproduction crisis, and that, aside from some temporary problems of individual markets, the overall market is always in balance. Or rather, it would be, if only the government would stop interfering with the free market.

This idea found expression originally in Say's Law, named after a particularly empty-headed bourgeois economist, Jean-Baptiste Say (1767-1832). It denies that there ever can be general overproduction. The Wikipedia entry on "Say's Law" formulates it as follows:

"Say's law . . . states that in a free market economy goods and services are produced for exchange with other goods and services, and in the process a precisely sufficient level of real income is created in order to purchase the economy's entire output. That is to say, the total supply of goods and services in a purely free market economy will exactly equal the total demand during any given time period -- in modern terms, 'there will never be a general glut', though there may be local imbalances, with gluts in one market balanced by shortages in others."(10)

Marx denounced Say's Law as follows:

"Nothing can be more childish than the dogma, that because every sale is a purchase, and every purchase a sale, therefore the circulation of commodities necessarily implies an equilibrium of sales and purchases. If this means that the number of actual sales is equal to the number of purchases, it is mere tautology. But its real purport is to prove that every seller brings his buyer to market with him. Nothing of the kind. . . . The purchaser has the commodity, the seller has the money, i.e., a commodity ready to go into circulation at any time. No one can sell unless some one else purchases. But no one is forthwith bound to purchase, because he has just sold. . . . if the split between the sale and the [next--JG] purchase becomes too pronounced, the intimate connexion between them, their oneness, asserts itself by producing -- a crisis."(11)

To put it another way, Say's law is based on the trivial observation that when one sells something in a market, someone else buys it, money changes hands, and the amount of money exactly compensates for the selling price (the commodity supposedly thereby creating its own market). Therefore another sale can take place, because the seller now has money, and so the market can never be glutted. Or, to put it another way, it's an attempt to say that supply supposedly creates demand. If this reasoning doesn't seem to make sense, it's because it really doesn't.(12) Say wasn't the first or only economist to advocate this nonsense, with James Mill, John Stuart Mill, and David Ricardo being among the bourgeois economists who also put it forward, but Say's name has stuck to it.

Unfortunately for this wonder-working law, there have been innumerable overproduction crises since it has been formulated. No problem, say the present-day defenders of Say's law. It's because of outside interference with that always-perfect institution, the market. The idea is that Say's Law will only work if everything has its free-market price. If only the market were left alone, things will be fine, and "markets will clear". Since there never has been, and never will be, a major capitalist economy without a government, Say's Law can never be disproved in the eyes of neo-liberal ideologists, and so it serves as a major ideological prop for brutal market fanaticism: if there's a problem, just privatize government, eliminate social programs, smash unions (they interfere with the downward slide of wages), etc. Or, as it is also put, let wages fall, and the labor market will clear (all workers will be employed).

In one form or another, Say's Law is the rationale behind today's conservative theorizing that the economy would be just fine if only nothing is done to stop people from starving, if all social programs were eliminated, if health care were made completely private, and so on. But there's a problem. This was tried before, during the last Great Depression, and it failed.

So the conservative free-marketers find themselves faced with the need to explain the historic failure of Hooverite do-nothing policies. Herbert Hoover was president from 1929-1931, thus overseeing the outbreak and the early years of ever-deepening collapse of the Great Depression of the 1930s. He became infamous among the workers due to his heartless attitude to the masses, and his presidential term saw the proliferation of "Hoovervilles" (shacks put up by the homeless) and the bloody smashing of the "Bonus March" on the national capital, in which veterans demanded the payment that had been promised them.(13) Even though Hoover advocated "voluntarism", rather than government aid for the unemployed, die-hard market advocates denounce him as too activist a president and blame his interference with the market, and lip-service to the need to maintain wage levels, for the depression not curing itself. This brutal viewpoint is put forward as the new wisdom by die-hard market advocates such as Amity Shlaes, who develops this viewpoint in her recent biography of FDR, and the von Mises Institute.

Certain capitalists do profit during crises and depressions, and this provides a certain material basis for the savage stand of the conservatives against anything that might lessen the impact of economic collapse. During crises, some firms fail and others make use of this to gain greater control of different markets. For example, in the present crisis, there has been a consolidation of financial institutions, as favored big ones are propped up as "too big to fail", while others are allowed to collapse. Thus crisis becomes a major force pushing the concentration of industry. The capitalists are also taking advantage of the crisis to cut wages, break unions, and intensify workloads, and this has resulted in a certain rebound of industrial profit in the midst of economic stagnation. That's how the market deals with crisis, and the advocates of Say's Law serve as outright capitalist apologists, putting the increased exploitation of the masses in a good light.

Keynesian bail-outs

Another branch of bourgeois economists are Keynesians. They hold, in essence, that government stimulus can make up for market imbalances. Because of the association between the Keynesians and reformist governments which have carried out certain social measures in the past, the Keynesians have appeared to be more pro-people than the conservative market economists. But as time has passed, and establishment economics has become more and more neo-liberal, the Keynesian economists themselves have become more and more conservative.

Keynesianism in in fact nothing more than the familiar counter-cyclical policy whereby the government is supposed to run deficits and stimulate the economy during a downturn, and cut back during a boom. And the evolution of Keynesianism has to been in the light of the strikes, demonstrations, and mass struggles of the time of its origin. The development of social programs in the 30s and during the post-World War II period was due to the workers' struggles of the time and the mass pressure on the bourgeoisie, and was not a benevolent gift from FDR and the Keynesian wing of the bourgeoisie.

Keynesianism does provide a rationale for certain government programs, and is, in this regard, a more realistic program than the do-nothing rhetoric of the fanatic free-marketers. It would, however, be quite mistaken to regard Keynesianism as synonymous with government programs useful to the masses, as programs such as education, health care, libraries, environmental protection, and so on must be carried on consistently, year after year, and not cycled up and down as needed to keep capitalist markets happy. Moreover, the Keynesian economic theory doesn't require that the government, when stimulating the economy, do this in ways that help the masses. And, of course, the Keynesian stimulus has not succeeded in curing capitalism of its penchant for falling into fits of depression. Despite the turn of Western capitalism towards Keynesianism for a number of years after World War II, the business cycle continued. And moreover the application of Keynesianism proved itself subject to unexpected results, such as the development of the stagflation (simultaneous inflation and stagnation) of the 1970s.

Keynesianism still maintains its image of being associated with social programs. Yet the image conflicts with the reality. For example, today the Obama administration, when providing extensions to unemployment insurance, does so only as a counter-cyclical measure, as a stimulus to the economy. As a result, the proposed funding extensions are temporary, short-term ones, designed only for the depth of the depression. There has been no rescinding of the overall cutbacks to unemployment insurance, both in terms of who is eligible and the level of payments, that have been made in the last few decades. The bourgeoisie has learned quite well how to integrate conservative policy goals -- such as tax cuts to the rich, increased military spending, and massive subsidies to big corporations -- into Keynesian policy, and to combine it with cutbacks to social programs and privatization of government. The screaming and ranting of the conservative Republicans against the Obama administration doesn't change the fact that both the ultra-free marketers and the Keynesians are both following pro-capitalist policies, and both share many neo-liberal views.

Thus in practice, the mainstream bourgeoisie has eclectically integrated Keynesian tinkering with the economy with free-market views, and created a form of neo-liberal Keynesianism. This can be seen in the huge Wall Street bail-outs, combined with Obama's repeated admonitions to the workers that everyone must have "some skin in the game" (must sacrifice). Present-day Keynesianism has nothing against keeping social programs privatized and at miserable levels.

Socialism and planned production

So long as the anarchy of production reigns, there will be repeated economic crises. Thus there's no way that the bourgeoisie will ever stop visiting this nightmare upon the population. The working class will have to continually fight for social measures and mass relief to shield itself from the devastation and misery of the repeated recessions, slowdowns, and depressions. The only way to be free of overproduction crises altogether is to eliminate the capitalist system itself, thus eliminating the anarchy of production and the system of production for profit, rather than need.

Doing this requires establishing a socialist economic system. This won't come from simply electing some reformist or Keynesian politicians who promise for the hundredth time that they can bring a kinder and gentler capitalism, nor does it mean pretending that the market itself can be converted into "market socialism". These things leave the capitalists in charge, and leave the economy subject to the struggle of capitalist groupings. Instead the economy must be owned and run by the working population. This doesn't mean having a mixed economy, with some government enterprises in an overall private economy. Nor does it mean the state-capitalist set-up in Cuba and China today or the Stalinist Soviet Union yesterday. There the old bourgeoisie was dispossessed, but the economy was run by cliques of bureaucrats in their own interest, and they formed a new bourgeoisie.

Instead it means that the working class, which eventually will be the entire population, runs both the individual workplaces and the overall government. It means putting an end to the private ownership of the powerful means of production and huge infrastructure built up by the hard labor and continual sacrifice of the working masses. It means that economy isn't run on the basis of profit, but of an overall plan of what needs to be produced. It means that the workers, instead of being passive "factors of production" that just keep their mouths shut and do whatever they're ordered to do by the bourgeoisie, have to become conscious innovators and directors of economic activity. This requires that the working class must transform itself in the process of fighting the bourgeoisie, and learn how not just to fight workplace by workplace, but to unite together in class-wide efforts.

Such an economy won't be subject to overproduction crises. This isn't because everything will always be produced in exactly the right amounts. True, when the workers run the economy on a cooperative basis, rather than through the mad competition of one firm with another for profit, it will be much easier to ensure that the proper amount of goods in a field is produced. All the workplaces involved can coordinate their efforts.

Still, there will always be unexpected developments, both good and bad, both new inventions and successes, and setbacks and mistakes. So what happens in a socialist economy when, say, clothes are overproduced? One simply has to cut back somewhat on the production to bring it back into line with the current needs. The transfer of efforts from one sphere of production to another won't be brought about by a system of impoverishment and pain, but by a planned shift of effort. And if there is a general overproduction in all fields, it will simply mean a general lessening of work hours, with everyone continuing to receive the goods they need. So a decrease of needed work hours will be something that people look forward to, rather than have nightmares about.

Under capitalism, the shifting of efforts from one field to another requires laying off workers, who no longer can buy what they need to live a decent life. It means using less resources and products from other industries, which under capitalism means that layoffs and problems spread more widely. Thus the problem escalates from one market to another, as we have seen in the current depression, where the wave of mortgage defaults brought down large financial institutions, which in turn didn't make commercial loans to business in totally different fields, which in turn collapsed. And this was only one of the ways in which an overproduction crisis in one field affects another. The "invisible hand" of the market is the cause of innumerable unintended results, and incalculable consequences.

To eliminate the law of unintended consequences, to eliminate a system whereby a surplus of good things can be the cause of massive misery and deprivation, one has to replace the anarchic capitalist economy by a planned economy -- but not just any type of planned economy, but one planned and run by the working class, one in which the economy is not owned and run by a minority in its own interests, but owned and run by the population as a whole. []


(1) The Communist Manifesto, in the middle of Section 1: "Bourgeois and Proletarians", Selected Works of Marx and Engels, vol. 1, pp. 113-114, Progress Publishers.

(2) "World Bank warns of deflation spiral", Telegraph (a British newspaper), July 15, 2009.

(3) "IMF Spells Out Need for Global Fiscal Stimulus", December 29, 2008, at the website of the IMF,, Aug. 20, 2009. Also see the account of what the IMF and World Bank have actually been doing doing, in "Empowering the IMF: Should Reform be a Requirement for Increasing the Fund's Resources?" by Mark Weisbrot, Jose Cordero, and Luis Sandovaldo, April 29, 2009, at the website of the Center for Economic and Policy Research., August 20,2009.

(4) Capital, vol. III, Part IV, Chapter XVIII: "The Turnover of Merchant's Capital. Prices", p. 304, Progress Publishers.

(5) Marx, Theories of Surplus-Value, Part ii, Chapter XVIII: "Ricardo's theory of Accumulation and a Critique of It (The Very Nature of Capital Leads to Crises)", Section 14, p. 527. Progress Publishers, 1968 edition.

(6) Capital, vol. III, Part V, Ch. XXX: "Money-Capital and Real Capital. I", p. 484.

(7) Capital, Vol. II, Part III, Section 4, p. 415. This is not, of course, an argument against the fight for higher wages, which is a crucial struggle for the working class, but only against the view that this in itself would prevent crises.

(8) Anti-Duhring, Part III, Chapter III: "Production", p. 312.

(9) Origin of the Family, Private Property and the State, Ch IX, p. 331, Selected Works, vol. 3, p. 331.

(10) Wikipedia, "Say's law",, August 30, 2009.

(11) Capital, vol. I, Chapter III, Section 2, Subsection a: "The Metamorphosis of Commodities", near the end of the section, see the Modern Library reprint of the Kerr edition, pp. 127-8, or pp. 113-4 of the International Publishers edition. Marx didn't refer to Say by name in this passage, although he does do so in many other places, but it's clear that he is denouncing the basic reasoning of Say's Law, as put forward both by Say and by a number of other bourgeois economists. Marx also went on to say, in this passage, that the possible disconnection between buying and selling thus implies "the possibility, and no more than the possibility, of crisis. The conversion of this mere possibility into a reality is the result of a long series of relations, that, from our present standpoint of simple circulation, have as yet no existence." By this he means that one has to examine the various contradictions arising from the anarchy of capitalist production to see why economic crises exist. This is why overproduction crises did not exist until capitalism, although markets arose much earlier.

(12) The exchange process that takes place in a sale does ensure the bare possibility that more sales can take place, because the money is not eliminated, but simply changes hands. And indeed, a chain of buying and selling goes on and on in any functioning commodity economy. But the bare possibility that the chain of transactions can go on and on -- provided the market always has the right commodities in it -- by no means proves that capitalists won't develop massive overcapacity, and find themselves unable to sell their goods. The mere fact that there may be someone else in the market with money doesn't mean they want your particular goods. Say's Law holds that a particular market may be oversupplied, but only if another is undersupplied, and so a minor adjustment will set everything right. That is, the "invisible hand" will supposedly always set things right.

(13) The Adjusted Service Certificate Law of 1924 promised veterans a cash payment, but anything over $20 was issued as a financial certificate that wouldn't mature until 1945. In 1932 veterans marched on Washington and camped there, but were savagely attacked and dispersed by police and federal troops, with the troops ordered into action by Hoover and commanded by General MacArthur. Some veterans were killed, and hundreds were injured. It is notable that not just Hoover, but FDR, was opposed to redeeming the certificates before their due date, but in 1936 Congress voted, over FDR's veto, to pay them.

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