"I don't doubt the soundness of what seems to be the general idea: it is not enough for the money total of current demand to equal the price value of current output; it is also necessary that the direction of the various 'sectors' of demand and supply coincide, so that there can be trouble if the pattern of outlay and patern of production do NOT match even if aggregate money totals are the same. I see that Coontz wants to correct aggregate thinking."
But this kind of disproportionality crisis, on which Professor O'Connor focuses along with underconsumptionism, can be solved simply by the redistribution of surplus value. These sorts of crises are not what Marx meant by world market crises. I have had occasion to quote the following passage from Mattick Jr before on LBO; here it is again:
"By 'crisis Marx means here what elsewhere he calls 'particular crises (*particular* in their content and extent)" in which the 'eruptions are only sporadical, isolated, and one-sided', in contrast with 'world market crises', in which 'all the contradictions of bourgeois production erupt collectively'. In a system in which goods are produced as commodities offered for sale by individual capitals 'too much may be produced in individual spheres and *therefore* too little in others; partial crises can thus arise from disproportionate production (proportionate production is, however, always the result of disproportionate production on the basis of competition.') Interdepartmental disproportionalities, like economic disequilibria generally, are nomral to capitalist reproduction. As Paul Mattick [Sr] explains, because such disproportionalities, like maldistributions of capital among branches of production generally,
'can also in turn be overcome by way of these same crises, the producess of reprocution can be represented [in the schemes] as crisis free, just as equilibrium of supply and demand, which in real life does not exist, can be imagined. Crises of this kind, arising exclusively from the disproportionalities from the system, are only an expression of the anarchy of capitalism and not of the exploitative character of the relations of production that underlie this anarchy; they are resolved, therefore, by the redistribution of surplus value, without the production of additional surplus value.' [quoted from Economic Crisis and Crisis Theory]
[Mattick Jr continues]" To explain world market crises, the system-wide economic convulsions in which the duality of use-value and value becomes visible in the form of a conflict between human needs and the demands of capital accumulation, calls in contrast for an analysis focusing on the conditions of surplus value production (treated in Volume One [of Capital]) and the relations between surplus value produced and the quantity required for accumulation (discussed in Volume Three).
Quoted from Mattick Jr "Economic Form and Social Reproduction" in The Circulaton of Capital, ed. Chris Arthur and Geert Reuten (St Martins, 1988), p. 29
I would argue that what Prof O'Connor fails to understand in his critique of "orthodox Marxism" in his Meaning of Crisis was that, as Mario Cogoy put it, "Marx was not an underconsumption theorist because the overproduction of goods and the decline of consumption are manifestations of the contradiction of capitalism rather than its causes. For Marx, in effect, the result of the process described above is certainly also a fall of consumption, but this effect is produced a path different than that described by Joan Robinson. The starting opoint of the depression proces is not, for Marx, on the side of consumption but on the side of the xpansion of capital, which cannot take place because of the tendential fall in the rate of profit. The declining demand for investment goods, resulting from this triggers the crisis; the decline of consumption is only an effect of this, since the destruction of capital due to the lack of profitable use of it means that capital not only cannot surplus labor to produce surplus value and expand but cannot even utilize necessary labor...It is the absence of accumulation that produces an insufficent effective demand, and not the insufficiency of demand that causes a decline in accumulation. Underconsumption is therefore a consequence not of unbalanced distribution but of a blockage of the process of accumulation; it is the other face of the overproduction of capital."
Or later Cogoy makes the argument already suggested here by Jim H: "Marx shows by means of his reproduction schemes how the contradiction between production and consumption, which always accompanies the fcapitalism form of production, finds its dynamic form. The reproduction schemas show how it is possible for all commodities to find markets, despite the contradiction between production for consumption and production for accumulation. Since totoal demand under capitalism represents accumulation (even the demand for consumption goods representing accumulation--the accumulation of variable capital), the organic composition determines which part of total demand consists of demand for consumption goods and which consists of demand for production goods. Thus a decline of demand must stem from the dynamic of capital, and capital reduces its demand only when the rate of profit falls. Logically therefore we can only deduce the overproduction of commodities from the fall in the rate of profit, and not visa versa."
International Journal of Political Economy, vol 12, no. 2 Summer 1987
Or as Mattick put it pithily in Marx and Keynes: "Because not enough (surplus value) has been produced, capital cannot expand at a rate which would allow for the full realization of what has been produced. The relative scarcity of surplus labor appears as an absolute abundance of commodities in circulation." p. 79
Obviously these orthodox Marxists didn't ignore realization difficulties; they attempted to explain them.
Moreover, Coontz is attempting to refute naive underconsumptionism. That is, it is because entrepreneurial and worker consumption expenditures have lagged in the capital goods industry vis a vis new investments in the consumer goods industry that the growing output of consumption goods cannot find a market. That is, Coontz wants to show that *net investment* in the capital goods industry is first thing to collapse, no? As I said, I don't follow this argument.
best, rakesh