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UNCOMPETITIVE PRODUCTION

Keynes first pointed out the strictly rational and deductive solution to the trade cycle in the late 1920s. At that time Britain was also trying to deal with another "problem" which was of far greater significance both to capitalists and the working class. British industry had ceased to be able to produce commodities for its own home market and the world market which could be sold at a price which would bring enough profit to enable costs to be met (i.e. wages paid, raw material bought and replacement of means of production accounted for) and capital to be accumulated (more means of production purchased). This "problem" had been visible since the l890s.

Engels drew attention to it and pointed to the features of the English bourgeoisie which he had observed in the course of managing his textile [business] in Lancashire. He had seen the total disregard for the need for conscious action in determining what to produce (what was needed by the prospective purchasers and then ensuring that it was in fact exchanged). The English bourgeoisie continued in their mills to produce "what they had always produced" and when their German middlemen deserted them in order to sell German commodities the English found that their markets had been taken from them. Engels states that the German middlemen had promoted English commodities in the first place because the English bourgeoisie had been disinterested in where their commodities were to be exchanged.  

These features were historically determined. Most mill-owners in the 19th century had originally been artisans and small commodity producers, not merchants. They understood the production process and technology; they had had no contact with the market or of the skills which it demanded. By the 19th century Britain had had a market economy for 300 years; the features of that market economy were not new or extraordinary, nor did they require to be understood, they could simply be assumed. What occupied both capitalist and working class in the 19th century were the problems arising out of industrialisation, the changes in the production process brought by machines and the factory system.

The change from an economy where needs are not met by social labour of a nation, but by at best small groups (i.e. subsistence agriculture operated by individual peasants who act as a community for jobs like ploughing and harvest which require village not individual labour) to a national economy where all needs are met by social labour, where the division of labour is so developed that village self-sufficiency is literally impossible, is a profound one: it is a change from one mode of production to another bringing with it a tremendous development of social labour and of the productiveness of the society (read Marx on the changes British rule brought to India). France and Germany were still going through this change in the 19th century. Britain had long ago undergone this change and absorbed it in the consciousness of its classes.

Then in the late 19th century, the British bourgeoisie and working class found themselves redundant. Their products could no longer command a ready market either at home or abroad because the commodities of Germany and America were underselling them. Those industries which had provided the backbone of Britain's production - textiles, shipbuilding, coal, steel and engineering - were no longer needed it seemed. The needs which these industries had met were now being met by the industries of other nations with more advanced and cheaper commodities not only abroad but also in Britain. In this situation, Keynes is no help. Increasing the consumption of the working class or purchasing new means of production only calls into production factories and workers who produce commodities which either cannot be sold or are sold at a loss.

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