For Marx in the 1859 Preface “the material productive forces of society come into conflict with the existing relations of production or – this merely expresses the same thing in legal terms – with the property relations within the framework of which they have operated hitherto. From forms of development of the productive forces these relations turn into their fetters. Then begins an era of social revolution.”
At this stage, it is useful to let Marx’s writings themselves set out what he means. Explaining the nature of this conflict in Capital Vol III: “the contradiction in this capitalist mode of production consists precisely in its tendency towards the absolute development of productive forces that come into continuous conflict with the specific conditions of production in which capital moves, and can alone move.”
“On the other hand, too many means of labour and necessities of life are produced at times to permit of their serving as means for the exploitation of labourers at a certain rate of profit. Too many commodities are produced to permit of a realisation and conversion into new capital of the value and surplus-value contained in them under the conditions of distribution and consumption peculiar to capitalist production, i.e., too many to permit of the consummation of this process without constantly recurring explosions.”
“Not too much wealth is produced. But at times too much wealth is produced in its capitalistic, self-contradictory forms.”
“The limitations of the capitalist mode of production come to the surface:
“1) In that the development of the productivity of labour creates out of the falling rate of profit a law which at a certain point comes into antagonistic conflict with this development and must be overcome constantly through crises.”
“2) In that the expansion or contraction of production are determined by the appropriation of unpaid labour and the proportion of this unpaid labour to materialised labour in general, or, to speak the language of the capitalists, by profit and the proportion of this profit to the employed capital, thus by a definite rate of profit, rather than the relation of production to social requirements, i.e., to the requirements of socially developed human beings. It is for this reason that the capitalist mode of production meets with barriers at a certain expanded stage of production which, if viewed from the other premise, would reversely have been altogether inadequate. It comes to a standstill at a point fixed by the production and realisation of profit, and not the satisfaction of requirements.”
The barriers to development of the forces of production that would threaten its continued existence are explained.
“The rate of profit, i.e., the relative increment of capital, is above all important to all new offshoots of capital seeking to find an independent place for themselves. And as soon as formation of capital were to fall into the hands of a few established big capitals, for which the mass of profit compensates for the falling rate of profit, the vital flame of production would be altogether extinguished. It would die out. The rate of profit is the motive power of capitalist production. Things are produced only so long as they can be produced with a profit. . . . Development of the productive forces of social labour is the historical task and justification of capital.”
“At any rate, it is but a requirement of the capitalist mode of production that the number of wage-workers should increase absolutely, in spite of its relative decrease. Labour-power becomes redundant for it as soon as it is no longer necessary to employ it for 12 to 15 hours daily. A development of productive forces which would diminish the absolute number of labourers, i.e., enable the entire nation to accomplish its total production in a shorter time span, would cause a revolution, because it would put the bulk of the population out of the running.”
“This is another manifestation of the specific barrier of capitalist production, showing also that capitalist production is by no means an absolute form for the development of the productive forces and for the creation of wealth, but rather that at a certain point it comes into collision with this development. This collision appears partly in periodical crises, which arise from the circumstance that now this and now that portion of the labouring population becomes redundant under its old mode of employment. The limit of capitalist production is the excess time of the labourers. The absolute spare time gained by society does not concern it. The development of productivity concerns it only in so far as it increases the surplus labour-time of the working-class, not because it decreases the labour-time for material production in general. It moves thus in a contradiction.”
Marx contends “that the bourgeois mode of production contains within itself a barrier to the free development of the productive forces, a barrier which comes to the surface in crisis and, in particular over-production – the basic phenomenon in crisis.” (Theories of Surplus Value Vol !!)
“In world market crises, all the contradictions of bourgeois production erupt collectively; in particular crises (particular in their content and in extent) the eruptions are only sporadical, isolated and one-sided. Over-production is specifically conditioned by the general law of the production of capital: to produce to the limit set by the productive forces, that is to say, to exploit the maximum amount of labour with the given amount of capital, without any consideration for the actual limits of the market or the needs backed by the ability to pay . . . “
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Sráid Marx 
I really must read more Marx.
Reblogged this on seachranaidhe1.
Its interesting to read this quote closely.
“In that the development of the productivity of labour creates out of the falling rate of profit a law which at a certain point comes into antagonistic conflict with this development and must be overcome constantly through crises.”
Note that Marx does not refer here to the Law of the Tendency for the Rate of Profit to Fall, but to the falling rate of profit creating a law that at times results in the outbreak of crises. Read all of the preceding account, where Marx talks about capital having expanded relative to the existing supply of labour, causing wages to rise, and to the inability to realise the actually produced surplus value, because of the inability to expand the market adequately, so that produced commodities can be sold at prices that enable the consumed capital to be reproduced, and its clear that none of these factors have anything to do with the Law of The Tendency for the Rate of Profit to Fall.
In fact, the fall in the rate of profit caused by an accumulation of capital that results in labour shortages, rising wages, and a fall in the rate of surplus value is the explanation for the law of falling profits given in different forms by Smith, Ricardo and Malthus. In Theories of Surplus Value, Marx is at pains to demonstrate that whilst such conditions do arise periodically, and thereby lead to a fall in the rate of profit due to a fall in the rate of surplus value, they are NOT the basis of the long-term tendency for the rate of profit to fall. They can and do lead to crises of overproduction, as Marx notes in Capital III, Chapter 15.
“As soon as capital would, therefore, have grown in such a ratio to the labouring population that neither the absolute working-time supplied by this population, nor the relative surplus working-time, could be expanded any further (this last would not be feasible at any rate in the case when the demand for labour were so strong that there were a tendency for wages to rise); at a point, therefore, when the increased capital produced just as much, or even less, surplus-value than it did before its increase, there would be absolute over-production of capital; i.e., the increased capital C + ΔC would produce no more, or even less, profit than capital C before its expansion by ΔC. In both cases there would be a steep and sudden fall in the general rate of profit, but this time due to a change in the composition of capital not caused by the development of the productive forces, but rather by a rise in the money-value of the variable capital (because of increased wages) and the corresponding reduction in the proportion of surplus-labour to necessary labour.”
But, he is at pains to note that this condition of a falling rate of surplus value is the opposite of the conditions that apply for his theory of the long-run tendency for the rate of profit to fall, which is based upon a RISING rate of surplus value.
The law of falling profits, as Marx describes it, is the means of resolving such crises, not the basis of them. It is precisely in order to deal with a fall in the rate of surplus value, due to labour shortages and rising wages, that capital engages in technological development of labour saving equipment, which increases productivity, and the rate of surplus value, but, which – at least in a predominantly manufacturing economy – then leads to a rise in the proportion of circulating capital in output value, which is the basis for the tendency for the rate of profit to fall.
But, in the preceding sections of Chapter 15, Marx also describes the other aspects by which the development of the productive forces creates the conditions for crises, which again have nothing to do with the LTRPF.
“As soon as all the surplus-labour it was possible to squeeze out has been embodied in commodities, surplus-value has been produced. But this production of surplus-value completes but the first act of the capitalist process of production — the direct production process. Capital has absorbed so and so much unpaid labour. With the development of the process, which expresses itself in a drop in the rate of profit, the mass of surplus-value thus produced swells to immense dimensions. Now comes the second act of the process. The entire mass of commodities, i.e. , the total product, including the portion which replaces the constant and variable capital, and that representing surplus-value, must be sold. If this is not done, or done only in part, or only at prices below the prices of production, the labourer has been indeed exploited, but his exploitation is not realised as such for the capitalist, and this can be bound up with a total or partial failure to realise the surplus-value pressed out of him, indeed even with the partial or total loss of the capital. The conditions of direct exploitation, and those of realising it, are not identical. They diverge not only in place and time, but also logically. The first are only limited by the productive power of society, the latter by the proportional relation of the various branches of production and the consumer power of society. But this last-named is not determined either by the absolute productive power, or by the absolute consumer power, but by the consumer power based on antagonistic conditions of distribution, which reduce the consumption of the bulk of society to a minimum varying within more or less narrow limits. It is furthermore restricted by the tendency to accumulate, the drive to expand capital and produce surplus-value on an extended scale. This is law for capitalist production, imposed by incessant revolutions in the methods of production themselves, by the depreciation of existing capital always bound up with them, by the general competitive struggle and the need to improve production and expand its scale merely as a means of self-preservation and under penalty of ruin. The market must, therefore, be continually extended, so that its interrelations and the conditions regulating them assume more and more the form of a natural law working independently of the producer, and become ever more uncontrollable. This internal contradiction seeks to resolve itself through expansion of the outlying field of production. But the more productiveness develops, the more it finds itself at variance with the narrow basis on which the conditions of consumption rest. It is no contradiction at all on this self-contradictory basis that there should be an excess of capital simultaneously with a growing surplus of population. For while a combination of these two would, indeed, increase the mass of produced surplus-value, it would at the same time intensify the contradiction between the conditions under which this surplus-value is produced and those under which it is realised.”
In other words, Marx is not talking here about any difficulty in producing surplus value, other than that already referred to that capital accumulation periodically results in labour shortages, and rising wages causing the rate of surplus value to fall. He is talking about the difficulty of realising the produced surplus value, i.e. of selling the output at prices that reproduce the consumed capital, and realise the produced surplus value as profit. What creates a problem here? As more workers are employed, and as wages rise, workers are able to consume more, their standard of living rises. But, as it does, their elasticity of demand for all of those wage goods they traditionally consume is altered. As Marx puts it in Theories of Surplus Value,
“The same value can be embodied in very different quantities [of commodities]. But the use-value—consumption—depends not on value, but on the quantity. It is quite unintelligible why I should buy six knives because I can get them for the same price that I previously paid for one.” (TOSV3 p 118-9)
In other words, rather than the Keynesian theory of underconsumption, such a crisis arises when consumption itself has risen, as more workers have higher wages to spend, but when, having satisfied some of their consumption needs, they can only be persuaded to buy more, at increasingly lower prices. So, profits get squeezed because wages rise, and the rate of surplus value falls, and secondarily get squeezed, because higher living standards, mean that existing ranges of commodities can only find additional demand, at lower prices. Only where entirely new markets, new ranges of commodity are developed, can this latter issue be addressed, and it also tends to get addressed, because the technological innovations introduced to create new labour saving capital, also gets used to produce new types of consumer goods.
As Marx says, above,
“But the more productiveness develops, the more it finds itself at variance with the narrow basis on which the conditions of consumption rest. It is no contradiction at all on this self-contradictory basis that there should be an excess of capital simultaneously with a growing surplus of population. For while a combination of these two would, indeed, increase the mass of produced surplus-value, it would at the same time intensify the contradiction between the conditions under which this surplus-value is produced and those under which it is realised.”
In other words, if more workers were employed, it would simply a) cause wages to rise further, and the rate of surplus value to fall more, and b) would mean that whilst more commodities were output, the higher living standards arising from the higher wages, etc. would mean that the greater elasticity of demand would mean that demand would rise by proportionately less than the fall in the price, thereby further undermining the profit margin that could be realised, and consequently increasing the potential for crises of overproduction to arise.