A. Accumulation Crisis
The corporate liberal policies adopted to deal with under-consumption contain the seeds of an opposing crisis tendency:
under-accumulation. Labor unionism, Keynesianism, and other means of increasing aggregate demand also reduce the funds available
for investment.
Taxation to support the welfare state and other forms of what James O'Connor called "public consumption" reduces the pool
of funds available for private investment. At the same time, the increased bargaining power of labor resulting from the corporate
liberal social compact increases the portion of the product consumed by workers.
Worker resistance to wage cuts during crises, labor union implementation of supplemental unemployment benefits which expanded
demand, "job creating benefits" which shortened hours of work, expansion of consumer credit, earlier retirement and increased
pensions, and rank-and-file resistance to rationalization of production, among other factors, increased employment and working-class
demand for wage goods....1
To the extent that the value of labor-power is socially determined, the increased bargaining power of labor and the revolution
of rising expectations increases the cost of variable capital and reduces the mass of surplus value available for reinvestment.
Under the corporate liberal social compact, according to O'Connor,
the average consumption basket became too big, and its value content too high; the social consumption basket became too
great, and its "value content" likewise; class struggles in the individual form within and against the law of value interfered
with capitalist processes whereby labor-power was produced and reproduced as variable capital.2
The effect of both trends is to increase the overall level of consumption and create a shortfall in new investment.
This is potentially catastrophic for the survival of capitalism. Capitalism, paradoxically, requires constant new accumulation,
even when it suffers the consequences of past over-accumulation. One temporary solution to over-accumulation is new investment;
the latter is essential to keep previously accumulated capital profitable. As Marx pointed out in Volume Three of Capital,
the falling rate of profit due to over-accumulation can be offset by increasing the productivity of labor (i.e., the rate
of "relative surplus value"). This is accomplished by new investment in improved processes. To paraphrase Al Smith, the solution
to the crisis of over-accumulation is more accumulation. The economy is balanced on pinpoint, as in a Ponzi scheme, with further
subsidized accumulation necessary to render existing over-accumulated capital profitable. And each such new wave of accumulation,
to be profitable, will itself require still further accumulation. So statist solutions to over-accumulation directly impede
the further accumulation necessary to keep old investments profitable.
The state may also respond by eating up surplus capital with unproductive outlets like military spending; but this, too,
reduces the rate of accumulation which, paradoxically, is necessary to solve the problems of previous over-accumulation.
