A popular coal-miner’s riddle from the 1930s summarizes one of capitalism’s most visible and absurd contradictions. After a daughter asks her father why their home is so cold, he tells her they don’t have any money to purchase coal. He explains they don’t have money because he lost his job at the coal mine. When the daughter asks why he lost his job, the father answers: “Because we produced too much coal” [1].
For a contemporary example, how many of us have, through a religious institution, school, mutual aid organization, or other community group, participated in a clothing drive, soliciting gently-used clothing to give to those in need? How many of us need to borrow (or bargain-shop for) nice clothes for job interviews or court appearances? One would think the world is short on clothing. The truth is that the majority of the garments we produce go to landfills instead of other workers. In 2018, 60 percent of 100 billion clothing items were trashed [2]. Despite the immense data-tracking technologies, even garment specialists don’t know how many clothes we produce each year, according to a 2024 article in The Guardian. Based on accessible information, however, “between 80bn and 150bn garments are made” annually, and 10 – 40 percent (or up to 60 billion clothing items) aren’t sold [3].
A November 2024 study by United Way NCA provides a more contemporary and data-based illustration of the inhumanity of capitalist overproduction. Analyzing data from the U.S. Census and the Department of Housing & Urban Development, they found “there are currently 28 vacant homes for every one person experiencing homelessness in the U.S.” [4].
There are countless other examples, some more dramatic than others, that show the absurdity of the capitalist system through one of its fundamental contradictions: overproduction. Generally speaking, overproduction occurs when too much is produced compared to how much can be sold at a profit.
We suffer from the capitalist contradiction of overproduction regularly. Their effects are easy to see, but only by identifying their root causes can we not only understand but eliminate them. The contradictions of capital are the system’s weak points that we seize upon in agitation, propaganda, and throughout the course of every struggle. Only socialism can eliminate capital’s contradictions and the misery they cause.
Some root causes of overproduction
There is not “one” fundamental contradiction that gives rise to the others. While we can’t detail the many ways they relate to each other, we can explain how overproduction is built into the system of capitalism in a few ways, beginning with the contradiction we covered in our last entry: between use and exchange value [5].
As workers, we’re interested in use values. Capitalist production, however, is driven by the quest for exchange value. We sell our labor-power so we can (hopefully) buy the commodities needed to sell our labor-power again the next day. The capitalist uses their money (as capital) to purchase our labor-power and the materials we work on and transform and sells that commodity for more money starting the process again. To remain competitive, however, the capitalist must always throw some of their extra money back into production. The capitalist cycle is seemingly endless.
Because capital [6] must infinitely expand in a finite world, its consequences are devastating.
The coercive laws of competition
One way to determine the degree of freedom in a society is by the people’s ability to determine how we utilize our time and what we use it for. Capital/the capitalist system dictates the use of our time, while the capitalists have complete freedom over their own. The reason this is a central feature of the class struggle is because value, which capital must continuously seek to accumulate, is a particular form of time: socially-necessary labor time, which Marx defines as:
“The labour-time socially necessary” … “to produce an article under the normal conditions of production, and with the average degree of skill and intensity prevalent at the time” [7].
For the sake of simplicity, if Factory A and Factory B both produce 60 shirts every hour, then the value of each shirt is one minute. If two factories produce shirts and each makes one shirt an hour, then the value of each shirt is one minute for both factories.
Capitalist production is driven by exchange-value and, more precisely, increased amounts of exchange value. The owners of both factories know a given society only needs so many t-shirts at a certain point in time, and in order to remain capitalists they find (or appropriate) ways to increase production. Marx called this the “coercive laws of capitalist competition.”
If the owner of Factory A finds (or appropriates) a way to produce 120 t-shirts per hour, then the individual production time would be reduced to 30 seconds per t-shirt. If the owner of Factory B continues producing at the same rate of 60 t-shirts per hour, then the individual production time would remain one minute. At this point, the value of t-shirts would equal 45 seconds per t-shirt.
Factory A, which is producing more commodities at a faster rate, could then sell their shirts for half of Factory B. However, A is producing twice as many shirts as before and, given a constant market for shirts, they need to capture as much of it as possible. As a result, they’ll sell the shirts above the individual value but below their social value. This way Factory A can maximize the value they accumulate by both selling more—and at a lower price—than Factory B.
The owner of Factory B has two options. They can simply go out of business or they can find a way to match—and ideally beat—the production time of Factory A. The former is generally a last resort under capitalism because, in our very simple model, they would cease being a capitalist and would go to work for the owner of Factory A! Instead, they will find a way to remain competitive with Factory A.
There is an incessant drive to continually decrease the amount of socially-necessary labor time required to produce any commodity.
If we think about this on a larger scale, at some point whatever mechanisms capitalists employ to increase production by decreasing production time will become generalized throughout the entire industry. Even if we stick to our two factories, we have a contradictory situation in which there are more use-values produced for society on the one hand and, on the other, less value. There is more of what society needs and less of what capital needs. This is only a contradiction under capitalism. In a society guided by use value, a socialist society, this would mean workers would have more control over their time and would spend less on the things we need.
The destructiveness of value expansion
Capitalists compete with each other to produce more and more commodities faster and faster irrespective of the human costs to the working-class and of the environmental destruction that worsens workers’ quality of life. At some point, this race to produce causes a crisis of “overproduction” when the capitalists produce too many commodities, more than they can sell for a profit. In the Grundrisse notebooks, Marx describes overproduction as “production which cannot be transformed into money, into value; production which does not pass the test of circulation” [8]. We see in this formulation that for Marx the root cause of overproduction is production at a particular stage of development, not distribution.
As capitalists ramp up production, they also need to expand their consumer base (i.e. people who have needs and the money to fulfill them through a cycle of purchases). But at some point, capitalist competition results in a glut in the market, where there are more commodities than can be sold at a profit. This is the contradiction of overproduction; it explains why under capitalism houselessness exists not because there aren’t enough homes, but because there are too many.
If you look up the average number of people in your city or area that are without a home and compare it with the number of vacant or abandoned houses, you’ll likely see evidence that houselessness is not the result of faulty distribution, but of a system of production driven by the accumulation of exchange value. In Chester County, PA, for example, there are about 500 homeless people but there are almost 17,000 vacant homes [9]. If the people were in control of the County, they could give every homeless person in the county 30 houses and there would still be a surplus of housing! Socialism eliminates this contradiction because it’s guided by use-value, not exchange value.
Explaining overproduction in the housing market is a highly effective and relevant point of agitation throughout the United States, and a clear way to demonstrate the barbarity of the capitalist system and the humanity of what a socialist system in the United States could accomplish immediately.
The chaos of capitalist production
Capitalist production is almost completely unorganized and unplanned. This structural feature of capitalism contributes to the systemic wastefulness and squandering of what we do and could produce for society. As Marx notes in passing:
The capitalist mode of production, while on the one hand, enforcing economy in each individual business, on the other hand, begets, by its anarchical system of competition, the most outrageous squandering of labour-power and of the social means of production, not to mention the creation of a vast number of employments, at present indispensable, but in themselves superfluous. [10]
The same capitalist that celebrates the hyper-efficiency of capitalist production does so in one of—if not the—least efficient political and economic systems throughout history. This isn’t merely a “gotcha” moment; it is indicative of capital’s inherent flaws and a useful point of agitation, especially in individual workplaces.
Each individual capitalist wants to produce as many commodities as they can in as short of a timespan as they can. All capitalists in a given industry do this. During the “boom” cycle, business is good and they’re able to sell their commodities. At some point, however, capitalist society produces too much of a given commodity, and even with lower prices not all goods can be sold. As a result, workers are thrown out of work because they’ve been too productive and surplus commodities — many of which people desperately need — are hoarded or destroyed.
Such chaotic overproduction takes place within certain branches of industries or other economic sectors on smaller or local scales frequently. Yet when either enough capital is invested in the industries or when multiple industries are involved in the final commodity (like in housing), it creates a general economic recession or depression.
Imperialism: One way capital “solves” the contradiction of overproduction
Even when capitalist production was in its infancy, Marx wrote that “the tendency to create the world market is directly given in the concept of capital itself.” Whatever limitations it encounters, he continues, it “appears as a barrier to be overcome” [11]. Despite appearances, however, there are clear obstacles that capital can only move around, delay through destruction, or raise to a higher level. This is why the analysis of colonialism is a central feature of Marx’s critique of political economy.
Roughly a half century after Marx and Engels’ passing, the monopoly stage of capitalism had developed into the imperialist stage of capitalism, marked by a new phenomenon, when “an enormous ‘surplus of capital’ has arisen in the advanced countries” [12].” Imperialism, or the imperialist stage of capitalism, in certain respects, emerges as a response to capitalism’s tendency toward overproduction and crisis. Commenting further on this development Lenin notes that:
As long as capitalism remains what it is, surplus capital will be utilised not for the purpose of raising the standard of living of the masses in a given country, for this would mean a decline in profits for the capitalists, but for the purpose of increasing profits by exporting capital abroad to the backward countries. In these backward countries profits are usually high, for capital is scarce, the price of land is relatively low, wages are low, raw materials are cheap. The export of capital is made possible by a number of backward countries having already been drawn into world capitalist intercourse. [13]
Pointing to or signaling the emergence of overproduction, crisis, and stagnation in the “advanced countries” as driving the export of capital, Lenin observes that “the need to export capital arises from the fact that in a few countries capitalism has become ‘overripe’ and…capital cannot find a field for ‘profitable’ investment” [14]. The capitalist response to the inability of the large firms to secure profitable investments in the dominating countries is telling:
The export of capital influences and greatly accelerates the development of capitalism in those countries to which it is exported. While, therefore, the export of capital may tend to a certain extent to arrest development in the capital-exporting countries, it can only do so by expanding and deepening the further development of capitalism throughout the world. [15]
What emerges from this capitalist response to overproduction reveals, yet again, the absurdity of capitalism itself, and with this absurdity, the potential of anti-capitalist revolt.
While the laws of competition drive capitalists, within and between countries, to face each other as rivals, since WWII they have settled their differences under the leadership of imperialism’s center of gravity, the U.S., and united around their common interest of protecting capitalism from revolt and revolution. The state provides an avenue for cooperation among capitalists and the management of the class struggle in their favor. Working class movements win reforms under capitalism by shifting the balance of forces in our favor so that we can force capital — through their state — to grant us concessions because they’re afraid of a bigger uprising. truggles for reforms should not be conceived of as ends in and of themselves, but rather, as confidence boosters in the quest to build a socialist system.
Fractures and the material basis for communism
No contradiction of capitalism results in revolution; as a dynamic system, capitalism has for centuries been evolved and changed to work its way out of contradictions, persist through them overall, while individual capitalists or corporations are sacrificed along the way. The class struggle is the only thing that can bring about a revolution and a new society that can turn our potential threat to capital into the elimination of it.
Crises of overproduction are routine in any form of capitalism, including U.S. capitalism. In the Great Depression of the 1930s, while people literally starved to death, edible food was destroyed and trashed because it couldn’t be profitably sold. In the Great Recession of the 2000s, housing units were abandoned for the same reason, while hundreds of thousands remained houseless. During the height of the COVID-19 pandemic, companies destroyed millions of COVID tests when demand plummeted, rather than distributing them or storing them for when demand returned.
Under capitalism, the creation of surplus use-values is a crisis-inducing event. This is because capitalism is organized around exchange-value. Such economic crises can provide openings for mass movements and for the promotion of socialist consciousness. Marx’s insights are decisive in drawing out how overproduction destabilizes working-class’ livelihoods.
Under socialism, surplus use-values do not produce crises. Not only is production planned to meet people’s needs without undermining their quality of life, but any excess commodities can be redistributed to those who need them or stored for future use.
Only under the capitalist system is the existence of surplus goods a bad thing. Only under this rotten system is our productivity limited by the capitalist pursuit of profit. The clear and accessible explanation of this contradiction can serve as highly useful and adaptive for agitational purposes.
References
[1] Richard Becker. The myth of democracy and the rule of the banks. (San Francisco: PSL Publications, 2012), 10.[2] illuminem, “Behind the Seams: Shocking Fast Fashion Statistics You Need to Know,” illuminem, 10 May 2024. Available here.
[3] Lucianne Tonti, “’It’s the Industry’s Dirty Secret’: Why Fashion’s Oversupply Problem is an Environmental Disaster,” The Guardian, 18 January 2024. Available here.
[4] United Way NCA, “How Many Houses Are in the US? Homelessness vs. Housing Availability,” United Way NCA, 20 November 2024, emphasis in original. Available here.
[5] Jeremy Algate, “The Class Struggle in Every Commodity: Use Value and Exchange Value,” Liberation School, 08 June 2024. Available here.
[6] We use the term capital as a stand-in for capitalism following Marx. Referring to the capitalist mode of production as capital is to name the system after its driving force or reason-for-being. Capitalism, that is, is driven by the self-expansion of value/capital through the capitalist relations of production. The relationship between the capitalist and the laborer, in other words, is based upon the exploitation of the latter by the former. Capital is therefore the process of producing new value by exploiting the working-class. Capitalism is capital.
[7] Karl Marx, Capital: A Critique of Political Economy (Vol. 1): The Process of Capitalist Production, trans. S. Moore and E. Aveling (New York: International Publishers, 1867/1967), 47.
[8] Karl Marx. The Grundrisse: Foundations of the Critique of Political Economy (New York: Penguin, 1857/1993), 338.
[9] Penn State Center for Economic Development. “Chester County Profile.” 2019. Available here.
[10] Marx, Capital, 496.
[11] Karl Marx, Grundrisse: Foundations of the Critique of Political Economy (Rough Draft), trans. M. Nicolaus (New York: Penguin Press, 1939/191973), 408.
[12] Vladimir Lenin. Imperialism: The Highest Stage of Capitalism (New York: International Publishers, 1916/1992), 45.
[13] Ibid. 45
[14] Ibid. 45
[15] Ibid. 47
