CHAPTER XIX.
OVERPRODUCTION AND MARKET SATURATION.
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We must try to keep in mind that when we are talking about overproduction, abundance and saturated markets we are talking only in relation of the effectual demand of those who have the means to pay.
The poor people and the poor Nations of the world are naturally excluded from the capitalist cycle of production, unless they have been allowed to indebt themselves. In this case, as well as being poor, they may also have become desperate as they have become enslaved, in the grips of capitalist bankers and merchants.
As we already have seen in the second part of this booklet, Capitalism must expand. It is in the nature of the system: the capitalist appropriates a part of the value produced by his employed labour, this he calls his profit; a part of this profit is used to improve his life style, a part must be added to the capital already invested to improve productivity so as to be able to compete and stay in business; therefore, more investment, more production, wider markets, more turnover and profit, and so on.
During the last two centuries with this spiral of development, moved by the basic laws and mechanism of capitalist production, the capitalist economic system has reached the limits of our planet Earth.
Turning in circles, pressing against the boundaries that contain it, Capitalism seek desperately to recreate artificially, even against Nature, the conditions necessary for its continuation.
In my opinion, the economic crisis of the thirties was the culminating point of the natural development of Capitalism in the West; it was the beginning of the stage of saturation. There should have been a change towards a democratically planned rational economy. But the establishment was too strong in relation to the progressive forces, a peaceful change was denied, Fascism developed instead, and eventually the Second World War gave a new life to the sluggish capitalist economy.
One of the main conditions for the birth and growth of Capitalism had been a situation of scarcity, an empty world, an empty market. In such an environment, Capitalism had developed and expanded, producing not so much luxuries, but essential, useful commodities. Because of their obvious utility, the main form of their advertising was their sturdiness and their lasting qualities. There was competition not only in producing cheaper but also durable commodities.
Thrift and parsimony were still considered to be virtues, as they were not yet an impediment to capitalist development; to indebt oneself to buy commodities was considered a shortcoming, almost a sin.
While there was plenty of space for capital expansion, the system developed naturally, slowing down its pace during its periodical crises but starting back each time of its own accord.
Eventually, Capitalism had to reach a point of real crisis, because at the same time that production was rising, it was becoming more difficult to find new markets. Capitalism to survive had to find artificial means by which to increase market demand.
In general terms during the 1920s and the 1930s we can see the beginning of the present stage of saturation; most capitalists had been too successful. They had concentrated most of the wealth in their own hands: on the other end, the mass of the population could not constitute an expanding market: the wages of the 'working poor', who in fact had produced all that wealth, were just enough to keep them alive and able to work. The real economy was slowing down while speculation and gambling on the stock markets was rising out of control.
It seemed like a chronic sickness had set in. The spiral of capitalist development was coming to a grinding halt and capitalist society faced its own ruin. Already, in the East, workers and peasants had dealt a deadly blow to capitalist and feudal society, and they had taken their destiny into their own hands.
Capitalism faced the danger. The merchant had to make its 'mercantile' system work: it had to provide employment for the mass of the population or face a possible revolution.
Therefore economic theories which allowed limited government intervention in the running of the economy were partly adopted. Moreover, new economic trends or devices began to develop to stimulate market demand.
In the following chapters we will examine briefly the more obvious of these devices. They derive from the logic of capitalist economy, the logic of the merchant. But, while they may be logical in the context of Capitalism, they are utterly irrational in the context of Human life on this small planet, as they contain the elements of waste and pollution and are promoting negative features in our society.
The first of these market stimulants, in my opinion, was the growth of consumer credit in all its various forms. The second was the growth of 'high pressure advertising', to convince people to buy more, whether by cash or credit. The third was the appearance of 'planned obsolescence' to shorten the life of the products.
Actually, these three devices are the interconnected components of what today is called 'consumerism', which is the almost enforced consumption of as many goods and services as possible. This is the most important device in the artificial creation of a continuous demand in the capitalist market place, a demand that is essential for the survival of the system.
Consumerism is the main immediate cause for the waste and depletion of energy and resources in the world. It is the main cause of pollution, and also the main reason why the rich people and the rich countries are becoming richer and the poor are becoming poorer.
We will look in some more detail at 'consumerism' and its effects on the societies of the developed industrial countries. These societies are indebted to the point of saturation, they have become obsessed with material consumption and they are degenerating. Having become dependent and enslaved by a consumer economy, they have lost sight of their Humanity and their future.
The same is the case for the poor developing Nations of the world. As they could not afford to buy the products of the industrial countries, they have been extended vast amounts of credit. Therefore, being deeply in debt, they have been reduced into a state of economic bondage.
The gap between the rich and the poor Nations is widening, just as Karl Marx had pointed out over a century ago: ".... Just as the bourgeoisie have made the country dependent on the towns, so it has made barbarian and semi barbarian countries dependent on the civilised ones, nations of peasants on nations of 'capitalists' , the East on the West". Today, he would have used different words; He would have said the South on the North, and he would not have made the distinction between barbarian and civilised, because, as we know now, there is no difference in substance.