Appendix 2: ‘Underconsumption’ and the Marxist Theory of Crisis¶
Core Argument¶
In Anti-Dühring, Frederick Engels, with the explicit approval and direct contribution of Karl Marx, delivers a definitive rejection of underconsumption as the root cause of capitalist crisis. Engels observes that underconsumption—mass poverty and restricted consumption—has been a universal feature of all class societies for millennia. What is historically unique to capitalism is not poverty, but overproduction. Pre-capitalist societies, organised around use-values, suffered from scarcity; capitalism alone generates crises of "super-abundance," where productive capacity outstrips the market’s ability to absorb output profitably.
The core argument is that capitalism’s fundamental contradiction lies between the boundless drive to expand productive forces and the limited consuming power of the masses. Production is not rationally planned but propelled by profit maximisation and blind market forces. Workers cannot buy back the full value of what they produce, as wages represent only a portion of the value they create. This creates a structural gap: production expands vigorously, while consumption is governed by weaker, restrictive laws. The inevitable collision produces periodic crises of overproduction—production beyond what can be profitably sold.
Marx and Engels do not deny that restricted consumption plays a role, but they insist it cannot alone explain crises. If underconsumption were the primary cause, rising wages during booms would prevent slumps; yet crises are typically preceded by wage increases. Capitalism temporarily postpones its contradictions through the division of the economy into two departments: consumer goods and capital goods. Capitalists reinvest surplus-value into new machinery and infrastructure, creating a market for themselves. But this expanded capacity eventually produces more consumer goods than can be sold, triggering crisis. Slumps destroy capital values, laying the groundwork for a new boom, only to reproduce the contradictions at a higher level.
The polemical thrust is clear: Keynesian remedies—raising wages or state spending—are utopian under capitalism, as they cut into profits, fuel inflation, or reduce consumption. The ultimate cause of crisis is not insufficient demand per se, but the collision between capital’s drive to develop productive forces as if society’s absolute consuming power were the only limit, and the poverty of the masses that capital itself reproduces.