Samezō Kuruma

Discussion of Marx's Theory of Crisis (part 1)

Source: Insert published with Marx-Lexikon Zur Politischen Ökonomie vol. 6, July 1972;
Translated: for by Michael Schauerte;
CopyLeft: Creative Commons (Attribute & ShareAlike) 2008.

The following discussion of Marx's theory of crisis economy was published as an insert for the sixth volume of the Marx-Lexikon zur Politischen Ökonomie edited by Kuruma. For the Marx-Lexikon, Kuruma gathered together key passages from Marx's collected works, as well as passages written by Engels, in both the original German and translated Japanese, to clarify a number of key topics, such as "historical materialism," "method," "competition," and "money." The sixth volume, which the discussion below concerns, was the first of four volumes dealing with the topic of Marx's theory of crisis. As in the other volumes, Kuruma organized the passages under headings and subheadings, and underlined or highlighted in bold those parts of particular importance. Each of the 15 volumes also included an insert with a discussion between Kuruma and the others involved in the Marx-Lexikon regarding the topic at hand. The names of the other participants are indicated by initials because the text is an altered version of the actual discussion that took place, which involved Kuruma first introducing information on his editorial approach and then fielding questions from those present. The format was altered in this way to make the content easier to understand. Kuruma, however, did not participate in this first discussion on the theory of crisis.

Essence of “industrial cycle” is within the phenomenon of the “business cycle”

B: The latest volume of Marx-Lexikon is on the topic of crisis. How many volumes on this topic will there be?

A: As of now, plans call for three volumes [in fact four volumes were published]. The first two volumes will deal with the systematic development of the theory of crisis, with the first volume looking at the industrial cycle and the history of crises and industrial cycles, although there may be some changes in this plan.

B: You just spoke of the “industrial cycle.” Is that the same as the typical “business fluctuations” or “business cycle.”

A: Good question. Well, first of all, there is a need to distinguish between “fluctuation” and “cycle.” The common expression “business fluctuation” or “economic fluctuation” differs from the term “business cycle.” In the case of “fluctuation,” the emphasis is merely on a change—it could be either an arbitrary change or a necessary or regular one—whereas in the case of “cycles” we are dealing with a regular expression of this “fluctuation.” And then there is the separate question of whether an “industrial cycle” is the same as the “business cycle”? Professor Kuruma, in his book Kyōkō-ron kenkyū (Investigation of Crisis-theory), has the following to say:

The industrial (or economic) cycle for Marx does not merely signify the periodic recurrence of a specific thing or the interval between those recurrences, but rather the movement that various aspects of modern industry necessarily passes through in the course of its development. ... Thus, in the case of a “cycle”—unlike a “fluctuation”—there is the question of what is the starting point and what is the ending point. And this can—and should—be objectively determined. The decisively important point here is the perspective that the developmental process of capitalist production is at the same time the process of the collision with its internal limitations. (p. 323)

This is what Marx seems to mean when he uses the term “industrial cycle.” There is a start at one point and an end at another point, and the movement must pass through that string of aspects along the way. And this is always starting anew. If we are solely using the term “business cycle” in the same sense as this “industrial cycle,” I suppose that would be all right, but in fact the two terms are a bit different.

B: Yes, the “business cycle” calls to mind a cycle moving from one business peak to the next, or from a low-point to the next low-point.

A: One can start at any point and then trace the cycle from that point. And this repeats itself. This is something that anyone will notice by looking at the real process of business fluctuations.

B: Does the term “industrial cycle” refer to this pattern that anyone can notice which you just mentioned now?

A: I suppose you could say that. But I think that we could also say that the phenomenon of the “business cycle” lies within the essence of the “industrial cycle.”

B: In that case, at what point does an industrial cycle start and when does it end?

A: That’s an important point. But since it is a cycle, moving circularly, we could choose any arbitrary point. Kuruma writes about this point regarding the starting and ending point of the cycle in that chapter of his book. Most Marxist economists have thought that the cycle begins with a crisis and ends with a crisis, but Kuruma argued that this view is mistaken, as he writes in the following passage:

It is true to say that a cycle ends with crisis—as crisis constitutes the final aspect of a single cycle—but can it be said that the crisis is the starting point (or initial aspect) of the following? Certainly not. ... As Marx points out in various places, for instance he writes [in Ch. 15 of Capital vol. 1] that “The life of modern industry becomes a series of periods of moderate activity, prosperity, over-production, crisis and stagnation” and it is correct to see the cycle as beginning with the period of “moderate activity.” This is because the process of rising business prosperity that leads inevitably to crisis should at the same time be understood as the process of capital breaking through its internal limits. (Kyōkō-ron kenkyū, p. 224)

B: I see. The “period of moderate activity” is the initial aspect, and crisis is the final aspect.

A: That’s right.

Before raising the question of the cyclical process it is necessary to generally elucidate crisis

B: From your earlier account, Marx-Lexikon will only begin discussing the industrial cycle from volume two. Isn’t this a bit odd? If a crisis occurs within the industrial cycle, as one of its aspects, and moreover its final aspect, shouldn’t we approach crisis as one part of the theory of the industrial cycle?

A: That is a good point because in considering the overall structure of the volumes on the topic of crisis, the biggest problem we faced was to figure out how to deal with the distinction and relation between the issue of the business cycle and the issue of crisis. Professor Kuruma gave this a lot of thought, ultimately arriving at the approach of first dealing with crisis and then the industrial cycle. This is related to the point, indicated in the passages from his book Kyōkō-ron kinkyū I quoted, of how to grasp the essence of crisis and the industrial cycle.

Because the development of capitalistic production fundamentally takes place via a certain cycle that ends up with a crisis, the problem of crisis already encompasses the problem of the industrial cycle. As far as the perspective from which Marx explains this fact inherent to capitalistic production, he says that this production contains internal limitations but is always crashing into them in an effort to expand without limit—it has this contradictory character. Marx calls this the fundamental contradiction of capitalistic production, and this contradictory character of capitalistic production explains the fact of crisis and the industrial cycle. Capitalist production crashes into these internal limitations, and when the limit is reached it explodes as a crisis. At the same time, a temporary solution is reached through this explosion and in this way the development of capitalistic production sketches out one cycle.

Thought of in this way, what needs to be done when dealing with the industrial cycle—or the theory of the industrial cycle—is to elucidate the process via those aspects through which production collides with its internal limitations and how those contradictions build up to eventually explode as a crisis. Thus, this investigation encompasses a concrete analysis of the various aspects of the cycle. The effort to elucidate the essence of crisis and the industrial cycle is for the sake of clarifying the concrete developmental process of capitalistic production, so in this sense I think that the theory of the industrial cycle has extremely important meaning.

However, before we can concretely analyze this significant industrial cycle, we need to consider problems that include: What are the inherent limitations of capitalistic production; what compels production to collide with those limitations; and what are the moments that determine this collision? These are problems that can be pondered generally and abstractly without raising the question of the aspects of the cycle leading up to a crisis. And this is something we must do. Elucidating this problem is basically what the investigation of crisis involves. All of this means that even though crisis is only the final aspect of the industrial cycle, before we can analyze the cyclical process we must generally clarify crisis.

B: Does this mean that the theory of crisis is at the same time the theory of the industrial cycle or its most fundamental part?

A: I think that we could say that. But I also think that it could be said that the theory of crisis needs to encompass the theory of the industrial cycle, or that the theory of crisis has to become concrete to the point of including the theory of the industrial cycle. It seems to me that the key point is not what we call the theory but how the theory, in its entirety, elucidates crisis and the industrial cycle.

Vols. I and II of Marx-Lexikon on “crisis” are organized comprehensively and systematically; whereas Vol. I is organized according to topic

B: At the same time, the primary topic is “crisis,” with the “industrial cycle” included within this topic—not the opposite case.

A: This ultimately was determined by the view regarding which was the main focus; the choice of whether to think in terms of crisis as one aspect of the cycle, or think of the cycle as a process leading up to a crisis. According to the latter train of thought, the theory of the cycle is also one part of the theory of crisis—or one concrete aspect of its consideration. I should note that while the industrial cycle is dealt with in Vol. III of Marx-Lexikon, this is not the fundamental “theory of the industrial cycle” in the clear meaning spoken of earlier.

B: Why is it not the fundamental theory?

A: Even if we tried to present Marx’s fundamental theory it is not possible. The issue of the industrial cycle goes beyond the inherent boundaries of Capital.

B: What do you mean by that?

A: Are you familiar with Marx’s plan regarding his overall critique of political economy?

B: Yes, I’ve heard of it.

A: He spoke of one part of this critique called “world market and crisis” at the end of his plan, as you may know. However, Marx was unable to complete his entire critique, only completely Capital in the end. Thus, the issue of crisis itself, in terms of the boundary or plan of Capital, falls outside of the realm of “capital in general” and he did not fundamentally discuss crisis. Not to mention the fact that the concrete analysis of the industrial cycle naturally exceeds the boundaries of Capital.

B: So what is the nature of that third volume on the industrial cycle?

A: In collecting the passages for the Marx-Lexikon volumes on crisis, the main texts utilized were Capital and Theories of Surplus Value. In the case of the systematic unfolding of the theory of crisis, we could not ignore the systematic limitations of Capital, which is to say, “capital in general.” So the first two Marx-Lexikon volumes on crisis can be thought of as the theory of crisis within the realm of “capital in general.”

But even though Capital corresponds to “capital in general,” this does not mean that Capital never ventures beyond “capital in general,” as you are probably aware. There is the case of overproduction which is related to crisis but because it involves a divergence from value—or more specifically from production price—and from market price, it naturally goes beyond the realm of “capital in general.” Still, this issue is discussed in some depth in Capital and Theories of Surplus Value. Capital deals with capital in general, but it was not written by adhering to a strict, systematic framework. This can be said in particular for volume three of Capital and Theories of Surplus Value, as well as Grundrisse, which Marx wrote earlier. Since none of these were manuscripts that were readied for publication, a lot of the content goes beyond capital in general. They can also be though to have content that exceeds the limits of “what is necessary for the sake of the investigation of capital in general.” This is precisely why we can learn a lot from these sources regarding issues that go beyond the original framework of Capital. Whether it be crisis or the industrial cycle, Marx did not write a systematic explanation, but he did leave various hints that can be used to advance our research. One of the goals of Marx-Lexikon is to use as many of the passages from Capital and other works as we can to elucidate such problems.

B: Does that mean, then, that the discussion of crisis in volumes I and II of Marx-Lexikon is still incomplete?

A: I think that that could be certainly be said from the perspective of the plan that Marx had in mind at the outset. However, considering the fact that the system of his critique of political economy at the same time has significance as the system of the theory of crisis, and that Capital is its most fundamental part, it could be said that within Capital the most fundamental problems of crisis are included and analyzed. Still, a comprehensive theory of crisis is not discussed. Professor Kuruma in Marx-Lexikon strived to organize this in the most comprehensive, systematic way possible, clarifying the moments through which the potentiality of crisis becomes a reality.

B: What about the case of the industrial cycle?

A: In that case, as I mentioned earlier, more than concretely and scrupulously (kokumei ni) tracing the process of the accumulation of contradictions, it was rather a matter of dealing with various problems that concern the industrial cycle that were written about in Capital and other texts—such as, what characterizes the various aspects of the cycle, what is its starting point and ending point, what is the duration of a cycle, etc. But I think that within this, the fundamental issues regarding the industrial cycle are included.

B: So volumes I and II on “crisis,” unlike the earlier Marx-Lexikon volumes on “method” and the “materialist conception of history,” have a systematic structure from the outset; whereas the volume on the industrial cycle is like those earlier volumes. Is that the case?

A: I think you could say that. And that is why editing the first two volumes on “crisis” was difficult. In terms of being systematic, those volumes are quite similar to the volume on “competition.”

Perspective of the essential determinations of crisis and the collision of the internal limitations

A: The first main heading of the first volume on “crisis” is: “Essential Determinations of Crisis.” Under this heading are the most fundamental parts of Marx’s description of the essence of crisis.

I think that there are many ways to respond to the question of “what is crisis?”; but the most fundamental response is to say that it is the comprehensive explosion of all of the contradictions of capitalistic production. The points made in the passages that are grouped under that first main heading are ones that many people are already aware of, but they are elements that determine how to grasp the essence of crisis and the approach to the theory of crisis, so they are worth reading a number of times.

B: These are points repeatedly emphasized in Professor Kuruma’s Investigation of Crisis Theory, I believe.

A: Yes, and Chapter three of that book, entitled “Marukusu no kyōkō-ron tenkyū” (An Overview of Marx’s Theory of Crisis), is worth reading in particular. I think that that chapter could be seen as a prototype of the Marx-Lexikon volumes on “crisis.”

B: Incidentally, in the part of Professor Kuruma’s book on crisis that we read earlier, he says that it is decisively important, when thinking about the starting point and ending point of the cycle, to adopt the perspective that the developmental process of capitalistic production is at the same time the process of the collision with its internal limitations.

A: Yes.

B: Isn’t this “collision with the internal limitations” also an essential issue in the case of crisis?

A: Yes, that is certainly an essential problem, but the collision between capitalistic production and its internal limitations is not, in itself, crisis. Rather, as noted a moment ago, the process of the business upswing prior to a crisis is the process when capitalistic production collides with its internal limitations. Within this collision process, as a result of the collision, the contradictions of capitalistic production are accumulated and deepen. When this progresses to a certain stage these contradictions explode. And that is a crisis. Thus, the internal limitations are unquestionably a decisively important issue regarding the essence of crisis, but the collision of these internal limitations are a premise for crisis, which is itself the explosion of the accumulated contradictions, but are not one of the essential determinations of crisis. Of course, because the analysis of the accumulation of contradictions leading up to a crisis and the unfolding of the moments of crisis is a central issue, Marx-Lexikon (volume two on “crisis”) deals with this in earnest.

B: I see.

Two problems related to the method of crisis theory

A: Moving on, the second main heading is “Method of the Theory of Crisis,” and it is also determined by the essential grasp of crisis we have spoken of, and it refers to the method of unfolding the theory of crisis. Because crisis is the comprehensive explosion of all of the contradictions of capitalistic production, the fundamental method for theoretically unfolding crisis is naturally the method of moving progressively from the most abstract and general of the contradictions of capitalistic production to the more concrete ones; in other words, we must pursue the developmental process of the contradictions. More concretely speaking, this is discussed in the first section of Volume two of Theories of Surplus Value, which is quoted under the main heading of “Method of the Theory of Crisis.”

B: In editing Marx-Lexikon, did Professor Kuruma follow the method described there?

A: Yes, of course.

B: I plan to read this section carefully on my own, but could you lay out its most important points.

A: Let’s see. Various things are important but I suppose I could point out two in particular.

First, the potential for crisis is already manifested in simple circulation. The analysis of the immediate production process of capital follows the analysis of simple circulation but this immediate production process (presented in Part two and later in Capital vol. 1), as far as crisis is concerned, does not add anything new to the abstract potential of crisis in the circulation process. That is the first point.

B: I don’t follow what you are saying very well. What does that mean?

A: In analyzing the immediate production process, any external factor that might impede this process is set aside. Thus, the simple circulation spoken of is the circulation process of capital, but it must be presupposed that this circulation does not meet with any difficulty. Once this is premised, the potential of crisis manifested in the simple circulation has this aspect so that development is not at issue at all.

B: But doesn’t some new potential or moment of crisis emerge in the immediate production process?

A: As you know, the immediate production process is the process of producing (=obtaining) surplus-value. This is the process that is analyzed, so naturally the essence of capital is elucidated, which is the determinate impulse of valorization, the movement with this ultimate aim. This is the essence of capital and at the same time its limitation. It moves to the extent of being such a thing. However, on the other hand, in the analysis of this same process, the tendency of capital to seek to expand regardless of the limitation of producing (=obtaining) surplus-value is made clear. A moment ago, I said that the contradictions which explode to become a crisis are accumulated through a collision with the internal limitations of capitalistic production. Those internal limitations of capitalistic production are in fact a sense of the limitations of the where the tendency for capital to seek to develop productive power for the sake of its own valorization collides with the essence or limitations of capital vis-a-vis its valorization. Capital collides with these limitations and rushes forward, and capital thus falls into contradiction and these contradictions explode to become a crisis. This means that the analysis of the immediate production process, which clarifies the limits of capital and that tendency of capital, includes latent elements of crisis.

B: But you just said a moment ago that it adds nothing new to crisis.

A: That’s right. I just said that latent elements of crisis are included. In the discussion of the immediate production process, the intrinsic tendency of capital to seek the absolute development of productive power, and the essence of capital to aim for valorization, are not yet at issue. Moreover, to note a point directly related to what I said earlier, the law o the production of surplus-value is clarified in the immediate production process, but Marx sets aside the conditions for the realization of this. And there it is not any of the conditions for its realizations but generally the problems related to circulation that are set aside; or rather it could be said that the conditions for the circulation process of capital are all premised as givens. But you are already aware of this so I don’t need to say more.

Let’s move on to the second point.

When the analysis of the immediate production process is finished, we enter the analysis of the circulation process of capital, and there once again the potential for crisis is manifested. This is a point that we need to note. In the passage in [8] in Marx-Lexikon, Marx says that the new element of crisis “can only emerge in the circulation process which is in itself [an und für sich] also a process of reproduction” but we should be careful not to view this circulation process as the theory of reproduction in Part three of the second volume of Capital. Here “circulation process” refers to the analysis in the entirety of that second volume on the circulation process of capital.” The commodity circulation that was analyzed in the first volume of Capital by abstracting from the capital relation is now analyzed again as a circulation process of capital, but also the circulation of the production of capital, premised on the immediate production process, is analyzed, and the earlier abstract forms of crisis take on certain content-determination. Here for the first time the issue of the realization of value and surplus value is raised. But here the analysis of the circulation process of capital, while further developing the potential of crisis, the potential still remains a potential only, and has not yet developed to the point of actuality. Its basis alone is posited. The analysis of the moment transforming the potential into actuality is dealt with in Volume three of Capital, particularly Chapter fifteen, entitled “Exposition of the Internal Contradictions of the Law.”

Fundamental perspective to correctly grasp the potential of crisis

B: The heading III and those subsequent to it seem to be organized according to the method laid out in heading I.

A: Yes. I think that there are two main stages: From III to V there are passages dealing with problems that pertain to the stage of the most abstract potential of crisis; while starting with VI are problems that pertain to the stage of this potential in the case of capital developing to be transformed into actuality. In the case of this latter stage, there is the overview of the potential of crisis in the case of capital in heading VI and the “further” potential of crisis under the circulation process of capital dealt with in heading VII. Meanwhile, heading VIII, which begins the second volume on crisis, deals with the development from potential to actuality.

B: Are we going to talk about heading VII later?

A: Certainly. But let’ start with III, which is entitled “Money Sublates the Contradictions of Direct Barter Exchange But it is Only by Transforming Those Contradictions.”

The commodity is a contradiction as the direct unity of use-value and value. But this is first manifested as a contradiction that must be mediated in the commodity’s real exchange. I’m speaking of course of the realization of the commodity as use-value and its realization as value, etc. It is money that mediates this contradiction, which it does by splitting the two moments within the exchange process of handing over and receiving a commodity, into the two metamorphoses of C-M and M-C, respectively. This does not mean, however, that the contradiction ceases to exist. The two moments that form a unity become externally independent as two process that are in opposition to each other, and it is through these two processes that the contradiction of the commodity as unity of use-value and value comes to unfold. The contradictions of the exchange process must be generalized and universalized. This independentization progresses and poses the potential to be internally united by force. This is only a potential, but it is, at any rate, the abstract potential for crisis.

B: This reminds me of what I read in Professor Kuruma’s book, Theory of the Value-form and Theory of the Exchange Process.

A: That’s right. That particular discussion did not regard the potential of crisis, but I think it can be said to provide the basic perspective needed to correctly grasp the passages under heading III. That book does not deal specifically with the issue of crisis but it offers the essential foundation for correctly grasping the theory of crisis. The importance of this problem is seen in Marx-Lexikon by setting up this third main heading, prior to heading IV.

The abstract potential of crisis is a content-less, abstract form of crisis

B: The next heading, IV, is “Potential of crisis is manifested under commodity circulation.”

A: Yes. This concerns the potential of crisis that is linked to what is clarified within the analysis of simple commodity production; in other words, the topic of the most abstract potential of crisis. Regarding this, Marx in Theories of Surplus Value [passage [23] in Marx-Lexikon] says that “The general, abstract possibility of crisis denotes no more than the most abstract form of crisis, without content, without a compelling motivating factor.” This abstract form of crisis has the first form which arises from the division between sale and purchase, and a second form that arises from the contradiction of the function of money as a means of payment. And this is dealt with in IV.

B: From your explanation, it seems to me that it would be better to call the heading “Potential of crisis is manifested under simple commodity circulation.” Is there a reason why the word “simple” was not added?

A: That word could be added, I think, but this potential for crisis also applies to capitalistic commodity circulation. With the circulation process of capital, this potential comes to be posited with content. This point would not be denied even if we add the word “simple” but a misunderstanding might arise if a person were to only read the heading so we decided not to add that word.

Mistaken theory of recognizing partial overproduction but denying general overproduction

B: Heading V takes up a lot of pages.

A: Yes. As you can see from its title, “Mistaken theory of recognizing partial overproduction but denying general overproduction,” it deals with Marx’s criticism of theories that denied the potential of crisis (general overproduction). This heading groups together passages where Marx refers to and criticizes mistaken theories that recognized partial overproduction arising from disequilibrium between production sectors while denying general overproduction. These mistaken theories are based on the argument of viewing money solely as a means of circulation, reducing commodity circulation to barter exchange or the exchange of use-values, and by so doing denying the potential of crisis. This shows how important the issues in headings III and IV are to a correct grasp of crisis, so in a sense V is a supplement to those headings in terms of the question of the perspective we need to adopt. In that sense as well, V required a lot of pages.

If you read the passages under this heading carefully, you will see that it is not merely Marx’s criticism just mentioned of those who reduced commodity production to production in general, but also a criticism of those who adopt the perspective of abstracting from the specific capitalistic historical character of capitalistic production to arrive at commodity production in general, and then, from this perspective, commit the error of overlooking both the development of the potential for crisis that arise from the circulation process of capital and the moments that transform that potential into actuality. For example, Marx criticizes those who, despite the fact that the separation of producers and consumers under capitalistic production is an important moment connected to crisis, still equate producers with consumers, thereby negating this moment and thus erasing the unique character of capitalistic production. Marx also explains that while it is possible for the overproduction of key products to generate overproduction, the core of the problem is the overproduction of those key products, not a simple disequilibrium between production sectors. We did not set up a separate heading for his criticism of each of those errors, which should be borne in mind when reading V.

VI is an overview of VII and VIII

B: The next heading, VI, entitled “Further development of the potential of crisis under capital and development of the potential of crisis into actuality (an overview).” Is this an overview of heading VII?

A: Not only that one, but heading VIII as well, which is entitled, “Moments transforming the potential for crisis into actuality,” which appears in the second volume on crisis. Heading VII unfolds the specifics of the content-determinations that the abstract form of crisis undertakes in the circulation process of capital, while VIII is a systematic unfolding of the moments that transform the potential of crisis into actuality. Compared to those two headings, VI describes the distinction and relation between these two stages of the development of the potential of crisis, while providing an overview of each of the two other headings.

Abstract form of crisis acquires content-determination in the circulation process of capital

A: Let’s look at the next heading, VII, “Further development of the potential of crisis under the circulation process of capital (abstract form of crisis acquires content-determination in the circulation process of capital).”

B: The expression in parentheses does not seem to be a familiar one.

A: That seems to be the case. Most people seem to use the expression “further development of the potential of crisis.” But for this heading VII, the parenthetical expression is probably more appropriate.

B: Why is that?

A: It is quite abstract to speak of the development of a potential. And even if we add “further” to it, so that a distinction is drawn from the abstract possibility of crisis under simple circulation, this would still seem to be an expression that includes the entire subsequent totality (the development of the potential). In the case of VII, however, as well as what is called “further development,” both are referring to the potential for crisis within the circulation process of capital, as compared to the “transformation of potential into actuality.”

B: There is the term “development” on one side and “transformation” on the other.

A: It is not quite that simple. Marx of course speaks of the “transformation (Verwandlung) of potential into actuality,” “potential becoming (warden) actuality,” or the “realization (Verwirklichung) of potential.” At the same time, however, he also uses the expression, the “development (Entwicklung) of potential into actuality.” And the content is clear in these cases. In the case of “further development,” however, the manner of development and its content “are not clear at all.” The expression does not make clear whether it includes “development into actuality” or not. Marx is saying, in the case we are dealing with, that in the circulation process of capital, the abstract potential of crisis acquires a concrete content-determination, and is posited with the basis that can develop into actuality. That is why I said that the expression in parentheses is more appropriate.

B: So why didn’t you use it as the main heading?

A: That was the original plan. But as the editorial process progressed, we decided to place it as the subheading because it was basically referring to what is typically expressed with the term “further development of potential.” If heading VIII had been included in the first volume on crisis it might have been fine to leave it as the main heading, but it turned out that VIII (“Development into actuality”) was placed in the second volume. That means that someone only looking at the headings of the first volume could not grasp the relationship between VI and VII, and we are worried that misunderstandings could even arise. So we made the change of putting “further development of potential front and center, and then add the information in parentheses to make its content clear.

B: So the heading outside of the parentheses is vague?

A: No, because the clear determination is added of “under the circulation process of capital.” Because the problems dealt with in VII are all ones that must be clarified in the analysis of the circulation process of capital. This is dealt with in the second volume of Capital and that is the source of most of the passages. And we basically followed the order of development in that volume in including the “content-determinations acquired by the abstract form of crisis.” I mentioned this point in our discussion of “Method of the theory of crisis,” but it is necessary to look at the entirety of Volume two of Capital not just Part three.

B: Can we discuss the nine subheadings in VII?

First determination of content:
Content of M-C is concretized

A: OK. I’ll try to offer a simple explanation of them. The first heading is: “In the circulation of capital M-C is not the object of an individual want but is the element of productive capital Lp + Pm [labor-power + means of production].” Already in the analysis of the simple circulation of commodities, in the split of the exchange process of the commodity into C-M and M-C, the existence of the potential of crisis is made clear. In the analysis of the circulation process of capital, C-M and M-C, which are two phenomena of circulation, are both studied as stages of the circuit of capital. M-C is the first stage of the circuit of money capital, the transformation of money capital into productive capital. For M-C to constitute this, first of all, it is not in the form of M-C per se, but rather the material content of C that M is transformed into; namely: labor-power (Lp) and means of production (Pm). Here, through the content of M-C being concretized, and to that extent, the development of the contradiction between sale and purchase, and thus the abstract form of crisis, also takes on a further content-determination.

Second content-determination:
C-M becomes C'-M'

A: The second subheading is: “In the circulation of capital C-M is at the same time C' -M' and the quantity of commodities as the bearer of valorized capital must in its totality pass through the metamorphosis of C'-M'.” Just as M-C in the circulation of capital is the transformation of money capital into productive capital, so in the case of C-M in the circulation of capital, does the reflux of commodity capital into money capital signify C'-M'. But whereas M-C formed a stage of the capital circuit as the material content of C, here C-M forms a stage of the circuit of capital as C + c - M + m; in other words, the sale of the commodity that includes surplus-value, and thus at the same time is the realization of surplus-value. Because the movement of capital is movement as self-valorizing value, surplus-value must be realized—and it would be meaningless to only seek to sell the commodities. As far as capital is concerned, therefore, the life or death question is whether or not C1 in its entirety can be transformed into M1. For capital, it is not M-C—the prelude to the production of surplus-value—but the realization of the produced surplus-value, or C'-M', that is more important. In this way, not only does the content of C-M become concrete, but through subheadings 1 and 2 the difference between the two circulation stages of capital (C-M and M-C) become clear, so that the abstract potential of crisis is posited with that content.

Third content-determination:
Interruptions provoked by fluctuations in the value of the elements of production

A: Subheading three, “Possibility of interruptions in the reproduction of capital provoked by fluctuations in the value of the elements of production,” deals with the extremely important problem of the possibility of crisis within the circuit of productive capital, which is P...C'-M'-C...P. As for the significance this issue has for the potential of crisis, the following passage from Theory of Surplus Value serves as a point of reference:

The circulation of capital contains within itself the possibilities of interruptions. In the reconversion of money into its conditions of production, for example, it is not only a question of transforming money into the same use-values (in kind), but for the repetition of the reproduction process [it is] essential that these use-values can again be obtained at their old value (at a lower value would of course be even better). ...The reconversion of money into commodity can thus come up against difficulties and can create the possibilities of crisis, just as well as can the conversion of commodity into money. When one examines simple circulation—not circulation of capital—these difficulties do not arise. (Theories of Surplus Value)

Fourth content-determination:
The intertwinement and combination of capital and revenue

A: The fourth subheading is “The intertwinement and combination of capital and revenue,” which is a very important topic that serves as an overview for the five subheadings that follow it, so perhaps we should go into a bit of detail. In Chapter three of the second volume of Capital, entitled “The Circuit of Commodity Capital,” which deals with the particularities of the circuit forms by making a comparison to the circuit of money capital and of productive capital, Marx writes: “All these peculiarities of the circuit lead us beyond its own confines as an isolated circuit of some merely individual capital.” He then adds:

If the formula [C' ... C'] and its peculiarities are grasped, it is no longer sufficient to confine oneself to indicating that the metamorphoses C'- M' and M - C are on the one hand functionally defined sections in the metamorphoses of capital, on the other are links in the general circulation of commodities. It becomes necessary to elucidate the intertwining of the metamorphoses of one individual capital with those of other individual capitals and with that part of the total product which is intended for individual consumption.

And then, in Chapter four, Marx writes the following in relation to this:

Therefore the manner in which the various component parts of the aggregate social capital, of which the individual capitals are but constituents functioning independently, mutually replace one another in the process of circulation — in regard to capital as well as surplus-value — is not ascertained from the simple intertwinings of the metamorphoses in the circulation of commodities — intertwinings which the acts of capital circulation have in common with all other circulation of commodities. That requires a different method of investigation.

Here “different method of investigation” refers of course to the analysis in Part three of the second volume of Capital, entitled “The Reproduction and Circulation of the Aggregate Social Capital,” which is the study of “the process of circulation (which in its entirety is a form of the process of reproduction) of the individual capitals as components of the aggregate social capital.” In the first section of Chapter 18 [first chapter of Part three], which is entitled “The Subject Investigated,” Marx writes:

However the circuits of the individual capitals intertwine, presuppose and necessitate one another, and form, precisely in this interlacing, the movement of the total social capital. Just as in the simple circulation of commodities the total metamorphosis of a commodity appeared as a link in the series of metamorphoses of the world of commodities, so now the metamorphosis of the individual capital appears as a link in the series of metamorphoses of the social capital. But while simple commodity circulation by no means necessarily comprises the circulation of capital — since it may take place on the basis of non-capitalist production — the circuit of the aggregate social capital, as was noted, comprises also the commodity circulation lying outside the circuit of individual capital, i.e., the circulation of commodities which do not represent capital.

I think that it is clear, from what we have read thus far, that the two stages of the circulation of capital (C'-M' and M-C) are each necessarily linked to the other M-C and C-M, which is to say, they are linked to the other metamorphoses. This intertwinement in itself is nothing more than the “intertwinement of commodity metamorphoses” that are generally applicable to commodity circulation, but in fact the “intertwinement of capital metamorphoses” that lies underneath the “intertwinement of commodity metamorphoses” is a complex social relationship that includes not only the relationship between capitals but also the relationship between capital and revenue. Whereas for the capitalist the wage is variable capital that is advanced, for workers it is just revenue. And surplus-value, for M-C, is simply the expenditure of revenue. The task of Part three of the second volume of Capital is to grasp the social relation that underlies the intertwinement and opposition between capital and revenue by analyzing “the process of circulation (which in its entirety is a form of the process of reproduction) of the individual capitals as components of the aggregate social capital, that is to say, the process of circulation of this aggregate social capital” (Capital Vol. 2, Ch. 18; passage [55] in Marx-Lexikon), and grasp the social relations that underlie the intertwinement and opposition of the various C-M and M-C. I think that the relationship between these issues and the possibility of crisis is clear, but perhaps we could read two other passages to make sure:

[A]ll these necessary premises demand one another, but they are brought about by a very complicated process, including three processes of circulation which occur independently of one another but intermingle. This process is so complicated that it offers ever so many occasions for running abnormally. (Capital, Vol, 2, Ch. 21; passage [57] in Marx-Lexikon)

This intertwining and coalescence of the processes of reproduction or circulation of different capitals is on the one hand necessitated by the division of labor, on the other hand it is accidental; and thus the content-determination of crisis is already fuller. (Theories of Surplus Value; [59] in Marx-Lexikon)

As for the relationship between subheading 4 and the five subsequent subheadings, I think it could be said that the issue addressed in subheading 4 is developed in the subsequent analysis of the circulation process of the aggregate social capital, and as for the various content-determinations of the form of crisis, it can be positioned as a premise in the overall position I noted already.

B: It’s gotten a bit difficult now. I’m not sure if I can follow what you are saying.

A: We can go over this again later if you have questions.

Fifth content-determination:
The divergence between supply and demand for the capitalist as a capitalist

A: The next subheading, 5, which is entitled “The supply for the capitalist as capitalist exceeds his demand; i.e., the maximum limit of his demand is c+v but his supply is c+v+m. Where does the money for the monetization of the surplus-value come from?”—and the passages in this subheading is in fact a concretization of the split between sale and purchase. It seems best to address this issue by dividing it into (1) the split between supply and demand for the capitalist as capitalist (vis-a-vis the non-capitalist consumer) and (2) what arises from this.

The first issue should be clear from the passages. That is, what the capitalist as a capitalist purchases on the market are the elements of productive capital, i.e., labor-power (Lp) and means of production (Pm), which in value terms is constant capital (c) and variable capital (v). For this person as a capitalist there is the demand for c+v on the one hand, and the supply of c+v+m on the other hand, so that only surplus-value (m) is in a state of excess supply on the market. From the perspective of the circulation process of the aggregate social capital that includes the exchange between capital and revenue, first of all, the part of the surplus-value (m) that the capitalist accumulates as a capitalist forms a portion of his demand as additional c+v; while, second, the part of m that is in excess of that is demand for him on the market as the expender of simple revenue. Even given this, the split between C-M and M-C, and their intertwinement and opposition, is here the concretization of the intertwinement and opposition between the supply and demand by the capitalist and his demand as expender of revenue; and thus it is clear that the abstract form of crisis takes on a further content-determination.

There is thus the question: “Where does the money for the monetarization of surplus-value come from? Even if there is a demand on the market by the capitalist as capitalist and as expender of revenue for commodities corresponding to the new surplus-value (m) obtained, the m he has in the form of commodity capital must first be turned into the form of money. So the question also arises: Where exactly does the money to realize this m come from? This can be relatively easily answered, however, if we are able to correctly follow Marx’s theoretical development as it is unfolded in Capital. In short, the problem comes down to the issue of where the money comes from for the realization of the total value of commodities. And the answer to this general question is that money as a means of social circulation is always being advanced by the capitalist class and in a case where the total commodity value is augmented, and this is not covered by an economizing of the quantity of circulating money, then hoarded money will be transformed into means of circulation and gold producing regions will supply additional gold to increase the quantity of money circulating; “the problem itself therefore does not exist (Capital Vol. 2, Ch. 17; [61] in Marx-Lexikon).

B: So why is this problem which does not exist dealt with in Marx-Lexikon?

A: Well, this is related to the following circumstances. This relation just dealt with, which is relatively simple once understood, will not be grasped, or overlooked, if one only focuses on the phenomena that arise from capitalistic production. First of all, if capitalists are only seen as the personification of capital, we will end up overlooking the fact that they also advance money for the sake of the consumption of surplus-value. Second, if we look at the capitalist class throwing money into circulation in the form of revenue, it will seem as if this class is paying compensation vis-a-vis the part of the total product, and we will not be able to understand that this is nothing more than an advance made to come into possession of surplus-value. Moreover, because commercial capitalists, money capitalists, landowners, the state, and others intervene, the source of the advance of money becomes increasingly difficult to discern.

In order to grasp the real relations behind the exterior appearance, it is essential to correctly understand the circulation process of the aggregate social capital, so it is not surprising that no one prior to Marx had been able to properly solve this problem. And even after Marx fundamentally put this into order in volume two of Capital, many mistaken arguments were presented, such as the ongoing debate that started with the views of Rosa Luxemburg. This is basically why Kuruma raised this issue in addition to the first question. In the end, more pages in Marx-Lexikon were devoted to passages from Marx that address this second issue.

Sixth content-determination:
Money Hoard from Turnover of Constant Capital

A: Subheadings 6 and 7 both deal with the issue of the money hoard; in other words, C-M that is not complemented by M-C. Therefore, the split between sale and purchase that takes on content-determination via the circulation process.

Subheading 6 is entitled, “Money hoard (i.e., purchase without sale or demand without supply) becomes necessary through the turnover of constant capital. Conditions for the formation of the equilibrium in the reproduction process of aggregate social capital.” From the perspective of individual capitals, the turnover of constant capital is carried out in the form where the amortization fund is accumulated during the period in which sales are made without purchases, and when the period of renewal arrives this accumulated amortization fund is thrown at once into circulation. But if we look at this from the perspective of the circulation process of the aggregate social capital, there is at all times, on the one hand, the capital being accumulated as an amortization fund (forming supply without demand), and on the other hand the constant capital that has reached its renewal form (forming demand without supply). And the balance between the two is a condition for the smooth progression of social reproduction.

Seventh content-determination:
Money hoard for the accumulation of capital

A: Subheading 7, “Money hoard (therefore sale without purchase and supply without demand) becomes necessary for the circulation of capital.” Individual capitals, when forming an accumulation fund, carry out supply without demand; and when this fund is invested, demand without supply is formed. From the perspective of society, there are capitals on the one hand where C-M is carried out but M-C is not, while on the other hand there are capitals were only M-C, and not C-M, is carried out. The concordance of the two is the condition for the smooth progression of social reproduction.

B: I seem to recall that Professor Kuruma dealt with the topics addressed in subheadings 6 and 7 in his book Kyoko-ron no kenkyu (Investigation of Crisis-theory).

A: Yes, I think you are referring to Chapter six, which is entitled, “The Accumulation of Capital and the Amortization Fund.” That was written in relation to the mistaken theory of the Japanese Marxian economist Tsunao Inomata—and that of Rosa Luxemburg—and it centers on the question of whether the amortization fund of constant capital can also be useful as an accumulation fund. Inomata had argued that the money for the realization of the accumulated surplus-value comes from the amortization fund of constant capital in the hands of the capitalist that is advanced. Rosa Luxemburg also, from a different angle, criticized Marx regarding this issue. Both Inomata and Luxemburg committed an error and the content discussed in subheading 5 of Marx-Lexikon applies perfectly to this case (and Professor Kuruma’s book refers to passages from that subheading). But there is still a problem that remains: The question of whether the amortization fund of constant capital can at the same time be the accumulation fund. In Marx-Lexikon, in passages from the second volume of Theories of Surplus Value, Marx seemed to be saying that the amortization fund can be used as an accumulation fund. Professor Kuruma raised the question of how we should interpret what Marx wrote; and he concludes that while Marx made that statement at the time about how it could be used as such, he later changed his mind and in the second volume of Capital he writes that the amortization fund could not be employed as an accumulation fund. It is in the key passage [69] in Marx-Lexikon that simply indicates this fact that Professor Kuruma refers to in Investigation of Crisis-theory. But he does not set out to clarify the overall significance of the amortization fund and accumulation fund. And that chapter of his book does not serve as a direct explanation of subheadings 6 and 7.

One more thing: What I said about subheadings 6 and 7 does not address the issue of the credit system, but please be aware that there are also references to the credit system in the passages in Marx-Lexikon.

Eighth content-determination:
Long working period during which there are purchases without sales

A: Next is subheading 8, “In the case of a long working period (such as the construction of a railway, etc.) there are purchases without sales and demand without supply”; this deals with the problem of the split between sale and purchase or divergence of demand and supply. Because the long working period itself stems from the material aspects of the production process, this can occur in any sort of society, but in a capitalist society a need arises in this case for the advances made by money capitalists, and this becomes one possibility for crisis. In the case of social production where the elements of production are allotted to the production spheres in a planned manner, then the production elements that over a long period of time do not supply products, and therefore even operations that absorb the means of livelihood, are handled without any great obstacle. But in the anarchistic production of capitalism that is not the case. Disturbances necessarily arise.

In this case we need to consider the great role that is played by the credit system. Marx wrote the following about this:

At the less developed stags of capitalist production, enterprises that require a long working period, and thus a large capital outlay for a longer time, particularly if they can be conducted only on a large scale, are often not pursued capitalistically at all. ... Large-scale jobs needing particularly long working periods are fully suitable for capitalist production only when the concentration of capital is already well advanced, and when the development of the credit system offers the capitalist the convenient expedient of advancing and thus risking other people’s capital instead of their own. (Capital, Vol. 2, Ch. 12)

As we can see, the credit system plays the role of breaking through the limitations of individual capital so as to play a major role in the expansion of large-scale production, but of course this means that contradictions are accumulated at a new stage.

Ninth content-determination:
Difficulties accompanying the fluctuation of the rate of accumulation

A: The final subheading under heading VII is “The inevitable change in the proportion between the two production departments arising from the shift from simple to expanded reproduction, and the difficulties that arise from it [and, mutatis mutandis, the same can be said for a general change—whether up or down—of the rate of accumulation].”

B: What does that part added in brackets mean? Up to now, such as in headings V and VII, additional information has been placed in parentheses but not brackets.

A: Ah, you noticed that. The part within the brackets could be called the opinion of Professor Kuruma or a note regarding this entire subheading. But, in terms of content, the important content of this subheading should be thought of as its entirety, including the part in brackets. Anyway, that is why we adopted a bit of an unconventional approach.

B: I see. Could you tell me more about the important meaning you just mentioned?

A: Marx, in Chapter twenty of the second volume of Capital, entitled “Simple Reproduction,” elucidates the fundamental conditions for the reproduction process of the aggregate social capital, and then moves on in the following chapter to consider “Accumulation and Reproduction on an Expanded Scale.” As for what is considered in that Chapter twenty-one, it is necessary to correctly grasp the significance that Chapter twenty on simple reproduction has for the following chapter on expanded reproduction. This involves, on the one hand, clarifying the conditions for reproduction as the basis for considering expanded reproduction, and at the same time, because simple reproduction is reproduction in which the rate of accumulation is zero, if the zero accumulation rate in the case of simple reproduction becomes a positive accumulation rate we are already dealing with the consideration of expanded reproduction. Thus, it is clear that the point which must be elucidated in Chapter twenty-one is, first of all, what changes are entailed for the conditions of social reproduction when there is a change in the value of the accumulation rate from zero to a positive figure. In other words, the changes in the conditions for social reproduction that arise when there is a shift from simple to expanded reproduction. Even though there are only a few pages dealing with this, I think there is a need to read Chapter twenty-one, particularly Section three, from this sort of perspective. Marx considered this problem, and he elucidated that in the shift from simple to expanded production, there is necessarily a change in the proportion between Department I and Department II (in other words, Department I becomes relatively larger), and he points out the difficulties that will necessarily arise from this change in the proportion between the departments.

B: So this means that the shift from simple to expanded reproduction is a particular case of the increase in the rate of accumulation?

A: Yes, that’s exactly right. If we were to speak in more general terms of Marx’s analysis, it is a situation where: when the rate of accumulation changes a need for a change in the proportion between production departments arises, which is inevitably accompanied by certain difficulties.

B: In Professor Kuruma’s heading, he specifically notes a “general change—whether up or down—of the rate of accumulation”; does that mean that there is a need to think about a fall in the rate of accumulation too?

A: Yes. In fact, in terms of the relation to the possibility of crisis, the question of what occurs in the case of a sharp drop in the accumulation rate is very important.

B: Even in the case of a socialist society, wouldn’t there be a change in the proportion between production departments if there were a change in the rate of accumulation?

A: Yes, of course. That in itself could be called a supra-historical, natural necessity. Of course, in that case the rate of accumulation is not the rate of the accumulation of capital, but the rate of production expansion. But this law penetrates in a completely different way under capitalism as opposed to socialism. In the case of social production, the various conditions for social reproduction, which include the proportion between the departments that differ in line with the magnitude of the changes in the rate of accumulation, are anticipated, and upon this basis the most appropriate rate of production expansion can (and must) be consciously planned. In contrast, under capitalistic production, the magnitude of social production, and therefore the rate of accumulation, is determined by the total volume of accumulation that happens to be carried out as determined by the profit impulse of the individual capitals, so the proportion between the departments and the other changes in the conditions for reproduction merely arise as a result of this. The rate of accumulation will change depending on changes in the profit rate and interest rate or via other exterior circumstances, and moreover it can change suddenly. But the issue of how and through what the rate of accumulation is decided is a problem that goes beyond Part three of the second volume of Capital, so even without posing that question, we can just note that at any rate the rate of accumulation changes. This means that there will be various sorts of friction within social reproduction; changes and difficulties. By elucidating this, the abstract from of crisis is given content-determination, providing a basis for the development from possibility to actuality-this is the significance that the theory of reproduction in Part three of the second volume of Capital has for the theory of crisis.

B: I see. This gives me the impression that the various explanations that have been offered by Marxian political economy are quite different from this view.

A: That does seem likely, or rather to probably be the case, but what specifically are you referring to?

B: Let’s see...for instance, recently there have been books and articles on the “rate of balanced accumulation.”

A: Oh, yes. That seems to be a popular topic, but it is a bit of a strange notion. That I believe is the idea where not only the organic composition and rate of surplus-value but also the proportion between production departments is taken as a given, and upon this basis the issue is the rate of accumulation in order to maintain that equilibrium or balance. I think from a methodological standpoint that is mistaken. The rate of accumulation is the independent variable, while the proportion between departments is the dependent variable—this is the real manner of the capitalist economy. And because this is the reality, if we do not also think theoretically in this manner, it won’t be of any use in understanding reality.

B: So the first Marx-Lexikonvolume on crisis has significance in terms of a criticism of that sort of new argument.

A: I think you could say that. But in fact the argument in that case is not all that new. Already in the prewar period Professor Kuruma criticized a similar mistaken view.

B: What was that?

A: I am referring to two of the articles published as chapters in the first edition of his book Investigation of Crisis-theory, but unfortunately they were not republished in the latter editions.

B: What is the title of the articles?

A: “A Consideration of the Accumulation Theory of Professor Takada” and “Professor Takada’s Revision of the Theory of Accumulation,” and they were written in 1933. In his preface to the new edition of his book, Professor Kuruma explained why he decided to not include the two articles:

Today there is no longer a reason for some fifty pages on that subject—because whereas at the time the articles were published I felt the need to criticize that view given the situation, today there is probably no one still adhering to that view so I felt that there is no longer any need to criticize it.

It is true that there is probably no one who is employing the exact arguments of Tamotsu Takada, but there are similarly mistaken views that are being repeated. When Professor Kuruma left out those two articles, because there was “no longer any need to criticize” that view, I think it was a bit of a miscalculation.

There is also Professor Kuruma’s discussion with Sutehiro Uesugi, published in the January 1960 issue of the journal Keizai seminar, which I think many people have read, where Professor Kuruma near the end touches on this issue addressed in subheading nine. So it is not the first time for him to criticize that argument regarding balanced equilibrium. But since the idea of the “balanced accumulation rate” has been seen as a refinement of the investigation of the theory of crisis, it has had a fair amount of influence among people. In that sense, I think it is worthwhile to explore this issue.

But let’s not go into any more detail for today’s conversation. And I think we have finished our overview of the first volume on crisis.

Is the contradiction between production and consumption an issue pertaining to the theory of reproduction in Part three of the second volume of Capital?

B: Hold on a second. Is our discussion of heading VII finished?

A: Yes.

B: So we are done with issues related to the theory of reproduction.

A: Yes, but if you have something you want to look at.

B: Actually I do.

A: OK, what is it?

B: In terms of the relation between the theory of reproduction and crisis we tend to have in mind, as an overview, the contradiction between production and consumption or the “internal contradiction.” This is the idea that the theory of reproduction is important to the theory of crisis because it elucidates the “internal contradiction.” But there does not seem to be a heading in Marx-Lexikon that deals with that particular issue. What does that fact signify?

A: I can understand that doubt. I suppose that we should discuss this.

B: It does seem to be the case that the contradiction between production and consumption is an important issue as far as crisis is concerned. Is that right?

A: Certainly. Regarding this point, Marx writes the following in the third volume of Capital: “...while the consuming power of the workers is limited partly by the laws of wages, partly by the fact that they are used only as long as they can be profitably employed by the capitalist class. The ultimate reason 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.” (Capital, Vol. 3, Ch. 30)

Capitalistic production, in other words, has the impulse or tendency on the one hand of seeking to absolutely develop productive power by breaking through any limitation, while on the other hand colliding with the contradiction of the distribution relations decided by the capitalistic relations of production—the essence of capital which aims for valorization—and therefore with the severely limited consuming power of the working class. This is what Marx means when he speaks of the “ultimate reason for all real crises.” This same thing Marx also call the “fundamental contradiction, “ the “basis of modern overproduction,” the “fundamental mystery of oversupply (Glut),” or the “most internal and concealed basis of crises.” If we see this, it shows us how much the term “internal contradiction” was emphasized by Marx in relation to crisis (as Moritaro Yamada had pointed out).

B: But this is not dealt with in the Marx-Lexikon volume on crisis.

A: Hold on. It’s not dealt with the in first volume but it is addressed in the second one.

B: That seems a bit strange. I thought it was common knowledge that the issue of “internal contradictions” is dealt with in Part three of Volume two of Capital.

A: That may be so, but that “common knowledge” may just be a pitfall.

B: Does that mean it is not the case? But I seem to remember that Marx himself clearly indicated that.

A: I think you are referring to the not inserted by Engels in Part two [Chapter 16] of Volume two of Capital, where Engels points out in a footnote that “In the manuscript, the following note is here inserted [by Marx] for future amplification.”

Contradiction in the capitalist mode of production: the laborers as buyers of commodities are important for the market. But as sellers of their own commodity — labor-power — capitalist society tends to keep them down to the minimum price. —Further contradiction: the periods in which capitalist production exerts all its forces regularly turn out to be periods of over-production, because production potentials can never be utilized to such an extent that more value may not only be produced but also realized; but the sale of commodities, the realization of commodity-capital and thus of surplus-value, is limited, not by the consumer requirements of society in general, but by the consumer requirements of a society in which the vast majority are always poor and must always remain poor. However, this pertains to the next part.

B: I see. That is quite clear.

A: It does seem so. In this case the “next part (Abschnitt)” is naturally thought to be Part three of the second volume of Capital. So if we read this without being aware of the content of Part three, the “internal contradictions” would naturally seem to be an issue raised in Part three of Volume two.

But in Part three, can it really be said that what is dealt with in the note is at issue. If we read Part three in a straightforward fashion, it would seem that we would come across this problem.

However, many—if not most—theorists have convinced themselves that Marx is saying that the contradiction between production and consumption, which is the “ultimate reason for all real crises,” is a problem pertaining to Part three of Volume two. And they seem to have tried hard to somehow connect this “internal contradiction” to Part three. There have been some “magicians” who have made this seem effortless but that feat has been difficult for most.

As I think you know, there have been various arguments regarding the significance of Part three of Volume two for the theory of crisis. In Japan, there was the debate between Tokuzo Fukuoda who based himself on Tugan-Baronovsky, and Hajime Kawakami who was based on Rosa Luxemburg, but the first argument that originated in Japan was in Yamada’s 1931 book, An Introduction to the Analysis of Reproduction Schema. This work had a major impact on subsequent debates, and the characteristics of the debate was the special emphasis placed on Part three of Book two for the theory of crisis—regardless of whether the participants adhered to Yamada’s theory or opposed it or sought to revise it. And the key issue was the relation between the “internal contradiction” and the theory of reproduction.

We spoke of the upside-down notion regarding the rate of accumulation, when we discussed the subheading 9 of heading VII in Marx-Lexikon, and I think it was just the latest mutation from the fixed idea that the “internal contradiction” is an issue pertaining the theory of reproduction.

What does “next Abschnitt” refer to?

B: But how can we help thinking that if Marx himself says that he will deal with this in Part three of Volume two?

A: Yes, but in fact the question revolves around whether Marx in fact said such a thing.

B: Does that mean that you think that the note just spoken of is a fraud?

A: No. In the passage there was the translated expression “next part” but in the original German, the word is “Abschnitt.” And in the structure of Volume two, the Abschnitt is indeed “part” so the translation is natural.

But the original meaning of the word is a “segment” or “break.” And Marx also used the term in that sense.

In Chapter 1 of Volume 2 of Capital, for instance, Marx says that, “What renders this act of the general circulation of commodities simultaneously a functionally definite section (Abschnitt) in independent circuit of some individual capital is primarily not the form of the act but its material content.

This word, by itself, could also mean some particular section of a text. For example, in Engels’ preface to the second volume of Capital, he writes:

[The] section [Abschnitt] which makes up the main body of the manuscript [is] entitled “Theories of Surplus-Value.” This section [Abschnitt] contains a detailed critical history of the pith and marrow of Political Economy...

In the case above, “Theories of Surplus-Value” could be a book, part, chapter, section, etc. In fact, in Grundrisse we can find this sort of flexible usage.

Moreover, in Capital, the divisions are along the lines of “Book—Part—Chapter (Buch—Abschnitt—Kapitiel), but that is only for the later editions of Capital. For the first German edition (1867), it was composed of Buch (book) and Kapitiel (chapter), and this only became Book—Part—Chapter in the second edition (1872). The Chapter—Section in the first edition became Part—Chapter. Thus, Abschnitt in the case of the first edition might be referring to Buch. In Theories of Surplus Value, which was written most closely the first German edition of Capital, the plan in Volume one speaks of the “production process of capital” as the first Abschnitt and “profit and capital” as the third Abschnitt. In the second volume of Theories of Surplus Value also Marx speaks of the first Abschnitt that deals with “capital—immediate production process.” And in both cases this refers to what is a Buch in Capital. And in the manuscript that includes the note we are discussing now, which Engels calls the “second manuscript” that was written around the same time in 1870.

Given this, I think we cannot say for certain that the “next Abschnitt” is referring to Part three of Volume two of Capital. There seems a good possibility that it is referring to Volume three. Thus, I think the question actually centers on whether what is written in this note is referring to what is discussed in Part three of Volume two—and through that discussion we can determine what “next Abschnitt” is referring to.

Don’t leave the reading of signs to a leader

B: I see. So why is it that no one has questioned this?

A: I didn’t mean to suggest that no one had raised this doubt before; just that I was not personally aware of anyone who has pointed out that precise point. Although I do have some vague sense of the circumstances surrounding this fact.

In Japan, the person who raised this issue in general was Moritaro Yamada, in his Introduction to the Analysis of the Reproduction Schema, where he almost definitively said that “next Abschnitt” refers to Part three of Volume two. The text is a bit old, but let’s take a look at it:

The “next Abschnitt” refers to Part three of Volume two entitled: “The Reproduction and Circulation of the Total Social Capital.” Through this part Marx clearly is incorporating the issue of the limits of consumption within the theory of reproduction.

Yamada says that his own explanation is the same as that of Lenin, and he seeks to reinforce this by quoting a section from “A Characterization of Economic Romanticism.” This is a rather subtle point so let’s first read what Lenin writes:

This quotation was from a note inserted in the manuscript of Part II of Volume II of Capital. It was inserted “for future amplification” and the publisher of the manuscript put it in as a footnote. After the words quoted above, the note goes on to say: “However, this pertains to the next part,” i.e., to the third part. What is this third part? It is precisely the part which contains a criticism of Adam Smith's theory of two parts of the aggregate social product (together with the above-quoted opinion about Sismondi), and an analysis of "the reproduction and circulation of the aggregate social capital," i.e., of the realization of the product. Thus, in confirmation of his views, which are a repetition of Sismondi's, our author quotes a note that pertains "to the part" which refutes Sismondi: "to the part" in which it is shown that the capitalists can realize surplus-value, and that to introduce foreign trade in an analysis of realization is absurd. ...

Well, it is true that Lenin thinks the “next part” is Part three of Volume two, but here Lenin is saying that in the theory of reproduction the Sismondi-style theory of underconsumpiton is refuted, so it is ridiculous for the Romanticists to insist on that theory of underconsumtion by quoting this note. So Lenin is certainly not saying that the contradiction between production and consumption, and therefore the “limits of consumption,” are discussed in the theory of reproduction. In other words, this does not support the entirety of what Yamada was saying. Nevertheless, from that time, the “Lenin-Yamada” explanation was born and widely accepted as a self-evident truth in Japan.

B: This is the “pitfall” that you referred to earlier?

A: Yes, but instead of a pitfall, it seems more apt to say that this is a case where one leaves the reading of the road signs to a leader so that if that leader makes an error even an experienced person following that leader will get lost and ends up wasting time trying to find the way out.

B: Once one ends up lost in a strange direction, even if one realizes that a misinterpretation has been made, it seems hard to get back to the original place.

A: Even setting that aside, I think that there is one point you might want to reconsider. That is, I think you should dispense with the preconceived idea that the “internal contradiction” is an issue pertaining to the theory of reproduction. And to do that would involve, on the one hand, carefully considering the content of the theory of reproduction and its significance for the theory of crisis, while on the other hand clarifying what it means to say that the “internal contradiction” is the “basis of the investigation of crisis.”

B: When did Professor Kuruma raise that question?

A: As far as I know it was relatively recently. It was after the first manuscript of the first volume on crisis was completed. As you can see from that first volume, he did not think that the “internal contradiction” was an issue pertaining to the theory of reproduction, but he seemed to have forgotten about the “Lenin-Yamada” explanation of the note. I mentioned to him that there are many theorists who connect the two and he gave me a quizzical look. He became aware of this in rereading the works of theorists related to the content of the second volume on crisis. Although I suspect, to be honest, that this might have been a case where Professor Kuruma had forgotten about something he had looked into earlier and then thought about this anew.

B: If the issue of the “internal contradiction” does not pertain to the theory of reproduction, it must be an issue for Volume three of Capital, so could we talk a little more about how the issue is dealt with there?

A: That is an issue regarding the second volume on crisis, so Professor Kuruma will probably discuss it in detail in our next conversation. I wasn’t even planning to discuss all that we have covered for this conversation, but you got me a bit carried away.