Criminality and economic conditions

by Willem Adriaan Bonger

Up to this point we have been necessarily supposing that the capitalist succeeds in making a profit. But, as we know, it often happens that he does not attain his end, that his capital produces no added value, that he even loses it entirely or in part. This case being important for the subject in hand we must stop to consider it for a moment. As has been shown above, the capitalist begins by purchasing labor and the means of production in order to set in motion the process of production. For him the difficulty then consists of selling the manufactured product at its value and of thus realizing the added value which is a part of this. At times, aided by circumstances, he succeeds in selling the product above its value, and so makes an extra profit. On the other hand, he runs the risk of having to sell the product below its value, or of not being able to sell it at all.

The causes of the poor success of the process are of different kinds. In the first place, the capitalist may not have the ability necessary for the direction of the process of production. For example, the product made under his management may be inferior to that of his competitor, though the cost of production is the same; the means of production may be purchased at too high a price; he may not have been in touch with the tastes of consumers, etc.; reasons all of which render his product unsalable, or salable at a loss.

In the second place, circumstances independent of his own act may present themselves which have the same result. Let us look at some [[259]]of them. To begin with, the unforeseen cessation of payment on the part of one of his important debtors may oblige him to sell his goods at a sacrifice in order to satisfy his creditors. Again, he may lack the capital necessary to meet competition. For the amount of capital necessary in every branch of industry or commerce becomes greater and greater, and the man who cannot procure this capital is forced little by little to give ground to his competitors and finally to give up business altogether.

In the third place, it very often happens that, as a result of competition, there is an oversupply of commodities, which from this very fact are unsalable, or must be sold for less than their value. In the periods of prosperity this case is not general. But it is the rule in crises. Because of their great importance to the relation between criminality and economic conditions, it is necessary to pause here to examine the cause and origin of these crises.

Economic crises, that is to say periods in which the economic life is greatly disturbed, are due to various circumstances; for example, to a war which puts obstacles in the way of the regular continuance of international commerce. But aside from such causes there are others which are natural to the present economic system itself, and which bring on these crises periodically. It is these causes, which are the more important, of which it is necessary to treat here.

A crisis is the result of overproduction. This does not imply that in every case overproduction will bring about a crisis. If one who is producing for his own consumption happens to produce more than he can consume, the result will be that during a certain period he will proceed to produce less, and the equilibrium will be reëstablished. But when one manufactures not for himself but for the market the situation is entirely different. Each manufacturer of commodities produces separately, that is to say without any understanding with his fellow-manufacturers, articles of which he himself has no need, but which he attempts to exchange for money in order to obtain what he does need. If he does not succeed in selling his commodities he is left without money to buy the commodities that are necessary to him. Overproduction can thus have very harmful results for those who hold commodities.

Now how does it happen that the capitalistic mode of production causes periodically a production greater than the possible consumption? (It goes without saying that this phrase is not to be taken to mean that the consumers are physically incapable of using the product, but merely that there are not enough buyers.) As has been shown [[260]]above, capitalistic production is carried on for the sake of the added value, that is to say, the value of the unpaid labor. In other words, the working class produces more than it consumes. In feudal society the surplus was entirely consumed by the class which appropriated it; at present, on the contrary, the owning class use part of the surplus to form new capital. For this comes a continually increasing accumulation of capital, and consequently a greater and greater quantity of products which in the end find no buyer. For the extension of production increases the number of workmen necessary, and consequently increases the demand also, but these workmen produce in their turn more than they consume. The overproduction is not, then, neutralized by a greater consumption. On the contrary it furnishes the material for an overproduction still greater. Hence capitalism causes crises periodically as the result of an overproduction caused by too small a consumption on the part of the working class.

Since the mass of capital increases without cessation it is indispensable to find new investments, and to broaden the market. From this it results, among other things, that the capitalist class is forced to take up the policy of political expansion and to conquer countries where capitalism has not yet become rooted. If it succeeds in finding a new outlet, then, production increases enormously, existing factories are enlarged, new ones are established, etc., and the new market is inundated with goods. But in the end this market ceases to be able to absorb the continually increasing mass of products, so much the more since the production of the country itself also increases as capitalism gains foothold there. The commodities remain, then, unsold, and a crisis is begun. Production must be stopped or decreased; the stock of commodities being thus made smaller the equilibrium begins little by little to reëstablish itself; after which the movement is repeated. But since the capitalistic method of production little by little spreads itself over the whole earth, it becomes increasingly difficult to find countries where capitalism has not been implanted. Hence overproduction tends to become chronic.

Besides the cause already set forth there is still another circumstance which can produce a crisis or aggravate one already existing; I refer to the lack of order in the present mode of production. Suppose that the demand for iron is great at any given moment. The production will then increase so quickly, and in such a degree (each manufacturer ignoring what his competitors are doing), that the supply will far exceed the demand. As a result manufacturing will be checked. As soon as overproduction occurs in as important a branch of industry [[261]]as the manufacture of iron, there will follow also a stoppage of production in other branches, and a general crisis will ensue.

The consequences of a crisis for the capitalist class are well known. Many are forced to stop producing, are no longer able to pay their creditors, and draw many of their debtors in their train. Because of the complexity of the present system of production the consequences of a crisis are very far reaching. It is naturally the small capitalists who are stricken first, whence it follows that during crises there is a great concentration of capital.