Page - 108 - in Otto Bauer (1881–1938) - Thinker and Politician

108 chapter 3 of thecapitalist economy,Bauerdidnot somuch foregroundthe importance ofproductionashehighlightedthesignificanceof themarket.Differing from Marx,hedidnot linkchanges in the rateofprofitwith thepriceof commod- ities (which, according toMarx,was aderivative of the organic composition ofcapital).Hispremiseresulted inacontradictorythesis: it isenoughtoregu- latepricesinordertoexpandproductioninfinitely.64Bauerpresumedthatthe sphereofcirculation is themost important sphere for thecapitalist economy andmust thereforebe controlled.According tohim, this seemedavery easy task: itwouldbeenough toestablishabalancebetween the first and second departmentsofsocialproduction.Bauerwascertainlyunawareofthewritings of CunowandLenin,whohadbothdemonstrated that the first department is relatively independent from the second, andhadpointed to the source of this independence.65Whenanalysingthecorrelationbetweenthetwodepart- ments,Bauerconcludedthatthepaceatwhichthemanufactureof themeans of productiondevelopsmerely depends onmass consumption, this being in contrast to the production of articles of consumption. One can find a sub- stantial amount of further incorrect conclusions. Let us briefly look at two of them,keeping inmind that theyareworthless fromaneconomicpointof view: 1. Ahuge amount of commoditiesmanufactured in the first and secondde- partmentscanbeconsumed.That isbecausethesurplusvalueextractedin bothdepartmentsonlyincreasesatarateatwhichitsconsumptionmatches population growth. Hence, the workers’ capacity to consume only grows at the same rate as their numbers. The capacity of the whole of society to consumeprecisely reflects the increase of surplus value. The tendency tomaintain this balance is inherent to the capitalistmode of production becausetheaccumulationofcapital ‘adjusts’ todemographicgrowth–this, itybetweenthedepartmentsofproduction: inbranchesof industrywithahighorganic compositionofcapital,investmentsarethehighest.Hence,theexpansionoftheirproduc- tionbaserequires longerperiods.Supplycannotkeepupwithdemand,whichinevitably leadstopricerises(thustohigherprofits)andattractionofcapital.This, inturn,givesrise toexcessivecapital accumulationandoverproduction,whichsurpasses thedemand for commodities fromindustrybrancheswithaloworganiccompositionofcapital. 64 SeealsoMattl 1985,p.94. 65 SeeCunow 1903. Compare Lenin 1972, pp. 155–6. As the economist LevMendelson ac- knowledged, the disproportionality between the development of the first and second departmentsunderconditionsofexpandedreproduction ispermanent, andreflects the contradictionbetweenproductionandconsumption.SeeMendelson1959,p.60.