A Marxist Guide to Capitalist Crises
“A Marxist Guide to Capitalist Crises,” an eBook created from the key posts on the Critique of Crisis Theory blog, is currently in production. We’ll be sharing the completed chapters between our regular postings.
Chapter 37: Can the World Market Ever Become Exhausted?
Around the turn of the 20th century, the belief that the world market was headed for eventual exhaustion was widely accepted among the left wing of the Social Democracy, especially in the German-speaking world. But the refutations of Rosa Luxemburg’s “Accumulation of Capital” and her “Anti-Critique,” based on Marx’s Volume II models of capitalist reproduction, pretty much discredited the idea that the world market could ever face a situation of permanent exhaustion.
Cyclical crises were viewed by the “orthodox” Social Democratic theorists as being caused by temporary disproportions among the various branches of production or between the growth in the demand for labor power and the growth of the working population, that is, the supply of labor power. In the long run, the limits of the market were seen as identical to the limits of production.
Yet no less a Marxist than Frederick Engels himself shared the idea that the world market would become exhausted. Engels believed this not only in the days of his youth but at the very end of his life. In Chapter 31, Volume III of “Capital,” Marx used British export data to demonstrate that each successive peak in the industrial cycle exceeded its predecessor.
Engels included in brackets this interesting note, which I will quote in full:
“Of course, this holds true of England only in the time of its actual industrial monopoly; but it applies in general to the whole complex of countries with modern large-scale industries, as long as the world market is still expanding [emphasis added -SW].”
So in 1894 — the year before he died — Engels could still imagine a time when the world market would no longer be expanding. Significantly, Engels’s remarks above appear in Volume III of “Capital,” nine years after Engels brought out Volume II, which includes Marx’s famous models of simple and expanded reproduction.
Therefore, Engels, who was thoroughly versed in Marx’s theories and mathematical models of simple and expanded reproduction, apparently didn’t draw the conclusion that so many other Marxists drew from them. That conclusion was that as long as the correct proportions were maintained between the various branches of production and the growth in the working-class population was adequate to meet the demands of the labor market for more and more labor power, the market would only be limited by the ability of capitalist industries to produce still more commodities.
Do the limits of surplus-value production determine the limits of the market?
Gold functions not as the ultimate constraint on the expansion of monetarily effective demand within capitalist expanded reproduction.
As we saw in the previous chapter, Henryk Grossman saw no limit to the ability of the market to expand as long as enough surplus value was produced. According to Grossman and his follower Paul Mattick, the problem of realizing the value of commodities — including the surplus value they contain — is not a problem as long as a sufficient amount of surplus value can be squeezed out of the working class. Only when the limits of surplus value production are reached — both within each industrial cycle and the final historical limit, set by the maximum size the surplus value-producing working class can ultimately reach — the market will become permanently “overstocked.”
If, according to this view, the surplus value production is not adequate, businesses will cut back on their own spending. Instead of throwing money that passes through their pockets back into circulation, the capitalists will hoard – accumulate – the money. At that point, commodities will start to pile up unsold in warehouses, but this will be a secondary reaction to the real problem, an insufficient production of surplus value. As long as the rate of surplus value is increased sufficiently, the problem of finding markets for all the commodities that are being produced will take care of itself.
But couldn’t the ever-growing exploitation — cyclical fluctuations aside — of the working class that is necessary for capitalism’s survival — as Grossman so brilliantly demonstrated by extending Bauer’s diagram to the 36th year — so limit the ability of the working class to consume that the market would become exhausted? This idea goes back to the Swiss economist Sismondi (see Chapter 1), the contemporary of Ricardo, who can be considered the father of crisis theory. The idea that crises are caused by the inability of the workers to buy back the commodities they produce is called underconsumption.
The problem with the idea of “underconsumption,” whether as a theory of cyclical crises or as forming the ultimate limit to capitalist production, is that besides playing down the “unproductive consumption” of the capitalists and their hangers-on including the state and its dependents, it ignores the productive consumption that the capitalists are obliged to undertake on an increasing scale as capitalism develops. Capitalist production is not production for human needs. It is production for profit.
Indeed, we saw in the previous chapter Bauer’s diagram of expanded reproduction, where he abstracted the rising rate of surplus value, that the entire consumption of the capitalists ends up as productive consumption by the 35th year. The capitalists consume so many means of production and so much labor power — which they use to produce still more surplus value — that they and any of their hangers-on, including the state, have no surplus value left over for personal consumption. The only people who can still engage in personal consumption are the productive (of surplus value) workers. This is truly a situation of getting a job — one where you produce surplus value — or starve.
Since a situation where the personal consumption of the ruling capitalist class has fallen to zero is nonsense, in the real world, the capitalists must increase the rate of surplus value in the course of capitalist development precisely because they must increase their productive consumption of surplus value while leaving something—quite a lot in reality —for their own and their hangers-on’s personal consumption.
Inevitable cyclical crises
So, whether we are dealing with Marxists of the Bauer type or the followers of Grossman and Mattick, we are sliding into Say’s Law. Bauer, Grossman, and Mattick all forget that commodities must be purchased or paid for not with (non-money) commodities but with money. They assume that because the value is created in production, the money to realize it automatically exists.
In examining cyclical crises, we saw how not only can there be a shortage of monetarily effective demand — this becomes theoretically possible as soon as a separate money commodity emerges — but there must be shortages of monetarily effective demand periodically once the process of capitalist expanded reproduction has developed to a certain point.
Capitalist cyclical crises began to appear once the productive forces had developed to the point that periodic, sudden, rapid increases in production became possible. Such sudden increases in production mean that the capitalists are forced by
the pressure of competition to throw their previously idle hoards of money onto the market. This leads to a speedy rise in monetarily effective demand after a more or less extended period of relative stagnation. There is a sudden market expansion as previously hoarded money is thrown into circulation by the capitalists. Demand then rises even faster than production can be increased, causing prices measured in terms of money material to rise above the actual values, and the prices of production of commodities.
Once the prices of commodities have risen above the values of commodities, the production of money material becomes relatively and absolutely less profitable. The longer this situation continues, the more the production of money material will decline as capital is withdrawn from the industry that produces money material and flows into more profitable branches of production.
A crisis does not break out at this point. Idle hoards of money are drawn into circulation, increasing the velocity of circulation. Banks create more and more loans — and more bank-created credit money — on a narrower and narrower cash reserve. Clearing agreements — especially among banks — mean that cash is only necessary to make the payments that don’t offset one another.
The development of the credit system, clearing agreements, and so on makes it possible to expand the market far beyond what would be possible on a cash basis alone. However, the expansion of credit inevitably reaches a limit. At the end of the day, one piece of money cannot pay two debts at the same time.
Interest rates rise well before this ultimate limit is reached, the profit of enterprise, the sole factor motivating continued capitalist production, declines as more and more of the profit takes the form of interest. The credit system cannot free itself from its cash basis. And cash bases ultimately come down to a gold basis. As the credit system expands relative to its cash and ultimately gold bases, the point will be reached where it cannot be stretched any further. Once this point in the industrial cycle is reached, a crisis of the generalized overproduction of commodities breaks out.
What determines the level of production of money material?
Therefore, the growth in the market is governed in the final analysis by the level of production of money material. No development of the credit system can change this fact. If, by chance, the production of money material grew faster than the level of commodity production, this would sooner or later lead to a powerful economic boom. This boom would inevitably raise the prices of commodities. Higher commodity prices result in a rise in the quantity of money needed to circulate them. At some point, the prices of commodities will rise above the values of commodities, rendering the production of money material increasingly unprofitable. The production of money material will then begin to lag behind the production of commodities.
It will then be only a matter of time before the inflation of the credit system reaches the maximum extent possible and, with it, the whole system of “over-trading” that conceals the overproduction of commodities relative to money material. At that point, credit will vanish, and overproduction will come out into the open as unsold commodities piling up in warehouses.
As Marx put it in Capital, the crisis does not break out until the artificial system of settling payments has “fully developed.” (1)
This is why, though the essence of crises is the generalized relative overproduction of commodities, each crisis appears to begin in the sphere of credit — or sometimes before that in the sphere of currency exchange rates, either with other currencies or with gold.
Since the crisis appears to begin in the sphere of currency or credit, bourgeois economists always attempt to find the “cure” for crises through reforms in the currency and credit systems. This continues today, though the bourgeois economists, after more than 170 years of such reforms, are beginning to run out of ideas!
Overproduction is temporary
However, the generalized overproduction of commodities — the exhaustion of the market — in a cyclical crisis is only temporary. Indeed, a cyclical crisis is nothing but a sudden and forcible halt of the (relative) overproduction – boom – and its replacement by a period of underproduction– depression.
With the outbreak of the crisis, prices measured in terms of money material fall, and the purchasing power of the existing mass of money material expands. In addition, the lower prices of commodities, assuming that the values of both money and commodities remain unchanged, make the production of money material both relatively and absolutely increasingly profitable. The production of money material starts to rise once again.
At first, this increasing production of money piles up in the form of idle bank reserves. The banks are awash in cash, interest rates are low, while stagnation in trade and production reigns. It looks as though stagnation will last forever. But in reality, the material basis for the next “sudden expansion of the market” that will initiate a new vigorous cycle of capitalist expanded reproduction is being laid. This potential sudden expansion of the market becomes an actual sudden expansion once the overproduced commodities and the vast surplus means of producing commodities are either sold off, written down, or physically destroyed by their capitalist owners.
Therefore, the growing mass of money material — gold — forms the material basis of the expansion of the market that Marx indicated was a necessary condition if capitalist production is to continue.
Concrete economic history indicates that money material must be produced in ever greater quantities if the market is to expand at a rate sufficient to prevent a long-term rise in unemployment. At least since 1850, when annual statistical estimates of gold production began, whenever the production of money material — gold — has entered into a period of protracted decline, the capitalist economy has invariably fallen into a period of serious crisis of mass unemployment.
We saw this during the late 19th-century Long Depression and up to the time of this writing, most strongly in the years preceding the super-crisis of 1929-33. It happened again during the decline in gold production in the 1970s, followed by the double-digit unemployment of the early 1980s. And we saw it yet again in the years preceding the Great Recession of 2007-09.
On the “supply side,” capitalism must increase the production of the mass of surplus value embodied in an ever-growing — temporary crises of overproduction excepted — mass of commodities. On the “demand side,” it must increase the much smaller but ever-growing mountain of money material — which also must contain surplus value — that serves as money.
It is often said that capitalism’s thirst for surplus value is unquenchable, which is true, but with this qualification: It is capitalism’s thirst for profit — surplus value realized in money form — that is unquenchable. Capitalism has no interest whatsoever in producing surplus value that cannot be realized in money form — profit. Therefore, the “mountains” of commodities and money — though the money mountain is much lower than the (non-money) commodity mountain — must both grow without limit if capitalist production is to continue.
The two main functions of cyclical crises
In the capitalist system, the cyclical crises of overproduction have not one but two basic functions. The first is to periodically replenish the industrial reserve army of the unemployed and underemployed and the broader surplus population. If the reserve industrial army is too small, the industrial capitalists will not be able to achieve the rising rate of surplus value that is necessary for the survival of the system. If there were no crises, the balance of forces would favor the sellers over the buyers of the surplus value-producing commodity labor power – the workers. Grossman and Mattick well understood this aspect of cyclical crises.
The other major purpose of cyclical crises under capitalist production is to periodically depress the prices of commodities below the values of commodities so that the production of money material is, in the long run, sufficient to ensure that the value and surplus value contained in the growing mass of commodities that capitalism must produce can be realized in the form of money.
The need to realize, not simply produce, surplus value was stressed correctly by Rosa Luxemburg. Where Luxemburg went wrong was that she didn’t understand how surplus value is realized under capitalist production. Luxemburg was led down the wrong path of assuming that the commodities produced by non-capitalist third persons were necessary to realize the ever-growing mass of surplus value in the form of monetary profit.
But the mistake made by Henryk Grossman and Paul Mattick was more basic than Luxemburg’s. They completely overlooked the problem of realizing surplus value, assuming wrongly that if the problem of producing surplus value was solved, the problem of realizing surplus value would automatically be solved as well.
It is important to emphasize that the periodic crises of overproduction became inevitable once capitalism developed its ability to increase production suddenly. It was not because the world was/is running out of gold. Even if we assumed that the quantity of gold in the Earth’s crust is infinite — an obvious material impossibility — periodic capitalist crises of the generalized overproduction of commodities would still be inevitable.
Gold production in the early 21st century
The bourgeois publication National Geographic features an article, “The Real Price of Gold,” by Brook Larmer. Larmer refers to “the Spanish, whose lust for gold … spurred the conquest of the New World.” That was, of course, the period Marx called, with his devastating irony, “the rosy dawn of the era of capitalist production.”
That was in the 16th century. But what about the role of gold production in the ultra-modern capitalism of the 21st century? “Gold is not vital to human existence; it has, in fact, relatively few practical uses,” Larmer writes. Except, of course, for its function as money material — a very “practical use” for vampire-like capitalism, which uses dead labor for the sole purpose of extracting an ever-greater mass of unpaid living labor that must then be realized in money — gold — form.
“Humankind’s feverish attachment to gold,” Larmer complains, “shouldn’t have survived the modern world.” Larmer is, of course, correct here. But he does not explain why “humankind’s feverish attachment to gold” has survived. This is what we have to understand.
The survival of the lust for gold is an inevitable result of the survival of the capitalist mode of production, where highly socialized global labor must be treated as a collection of private individual labors because the product of today’s globalized, socialized labor is appropriated privately by a class of capitalist exploiters.
While our modern bourgeois economists, as well as well-meaning observers like Larmer, can deplore the “irrational” lust for gold, only Marxist economic science can explain it, as well as prescribe the medicine that can cure the gold lust disease, the medicine being a world socialist revolution.
“Every country in the world … has done away with the gold standard,” Larmer observes, “which John Maynard Keynes famously derided as a ‘barbarous relic.’
“But,” Larmer laments, “gold’s luster not only endures … it grows stronger.”
Larmer documents that the modern gold industry is an environmental disaster as well as a devourer of human lives, including the lives of children. Not much has changed since the 16th century in this regard.
“For all its allure, gold’s human and environmental toll has never been so steep,” Larmer reports. “Gold mining … generates more waste per ounce than any other metal,” he explains. “These gashes in the Earth, are so massive they can be seen from space.”
The gold mining industry, Larmer shows, is one of the worst abusers of child labor in the world. Like the god Moloch of ancient times, the gold industry is destroying both the natural environment and the lives of children.
Larmer’s observations about gold’s environmental and human costs captured one dimension of the problem. But an even more fundamental constraint has emerged – a geological one.
But how long can capitalism keep on squeezing ever more of the stuff out of the earth to make sure that the capitalists can continue to realize in the form of profit the increasing mass of surplus value that it must squeeze out of the workers of the world? Even Mother Earth has its limits.
These figures do not by themselves establish the arrival of “peak gold,” but they are consistent with a long-term tendency toward rising difficulty in expanding the production of money material.
In 2025, even with gold prices reaching a record $4,500 per ounce, major mining houses reported that production was falling. Mark Bristow, CEO of Barrick, reported a near 16 percent year-over-year output drop, attributing it to the geological necessity of processing lower-grade ore. Newmont similarly reported a 15 percent decline, confirming that the industry has hit a “geological wall” where even historic financial incentives cannot conjure a new supply, with the earth being pushed beyond its limits.
This supply constraint is rooted in a collapse of discovery. S&P Global Market Intelligence analysis revealed that zero major new gold deposits were discovered in the 2023–2024 period, continuing a decade-long drought. As the industry is forced to rely on depleting reserves from decades-old finds, analysts note that “the elephants—the massive, high-grade deposits that drove past cycles—are gone,” leaving miners to squeeze the last, harder-to-reach ounces from existing pits.
Peak gold?
We have all heard of peak oil. Peak gold would imply a situation where no changes in prices — that is, no fall in commodity prices measured in terms of gold — would be able to increase the production of gold. One of the ways that capitalism has, up to now, been able to pull itself out of successive crises — gold production — would break down. Falling commodity prices in terms of gold have, in the past, led to increased gold production — paving the way for sometimes decades-long periods of declining unemployment. After peak gold, this mechanism would no longer operate.
The period that followed the first severe cyclical economic crisis of the new century was not yet peak gold. Gold production peaked in 1912 at 705 metric tons, in 1940 at 1,310, in 1970 at 1,480, in 2001 at 2,600, and finally reached a plateau of roughly 3,650 metric tons in 2018—a level it has failed to exceed through 2025. But what would happen if peak gold arrives one day?
Like oil, gold is a non-renewable resource. The dust and rocks that consolidated to form Earth 4.6 billion years ago contained only so much gold. Most of the gold, like other “heavy metals,” sank to Earth’s core, where no foreseeable technology can reach it. Convective forces gradually cycle gold from Earth’s interior regions to the crust, but this process is prolonged, working over geological eons, much like oil is gradually produced from dead plants over tens of millions of years.
But why should gold be exhausted before other natural resources? There is one factor tied to gold’s role as money material that does work in this direction. Leaving aside money material, primary commodities function as either raw materials or auxiliary materials. In this role, they almost always have substitutes. As a given primary commodity grows scarcer, its value will rise since the same quantity of labor will produce a smaller quantity of that commodity.
This forced the industrial capitalists to shift to other commodities that could be produced with smaller quantities of labor — in plain language, produced more cheaply. However, gold as money material has no substitutes. Its growing scarcity tends to increase its value relative to other commodities, if not indeed absolutely. But unlike the case of commodities that function primarily as raw or auxiliary materials, this only increases its desirability as a means of accumulation — hoarding.
Capitalists look to outer space for profit
The Monthly Review school and many other observers — some Marxist and some not — have increasingly stressed the “planetary limits” of production. They argue that the exhaustion of Earth’s resources imposes an absolute barrier to capitalist accumulation.
However, just as in the 15th century, when stressing the limits to economic growth set by the continents then known to Europeans would have been too narrow given the development of ocean-going ships, the concept of “planetary limits” may prove too narrow in the face of space exploration.
Perhaps the further development of space exploration will also make the concept of “planetary limits” too narrow as well.
Nowadays, the claim is often made that, because of the “planetary limits” to production, a society of abundance — described by Marx and Lenin as the higher stage of communism, where people work according to their abilities and receive according to their needs — is impossible. But perhaps we are thinking too small. The wealth and energy available in the solar system should eventually be at the disposal of our descendants, who may find the idea of planetary limits rather quaint.
However, the current drive into space is not motivated by such lofty goals. It is driven by the laws of capital accumulation. As the quality of ore on Earth declines, the organic composition of capital in the extractive industries rises, putting downward pressure on the rate of profit. Capital is therefore compelled to seek new sources of cheap raw materials to counteract this fall.
The opening years of the 21st century have seen the first attempts by ambitious capitalists to exploit space for profit. For example, the U.S. National Aeronautics and Space Administration, an agency of the federal government, is farming out the task of launching satellites into space to private for-profit companies. More ambitious capitalists are forming companies to mine asteroids that are believed to be rich in raw materials, particularly precious metals, including gold.
The theory is that since asteroids have limited mass and thus gravity, heavy metals do not sink to their centers as they do in larger bodies such as Earth or large planetary satellites such as Earth’s moon.
During the 15th century, the European world suffered an acute shortage of money material — silver and gold — as the old mines that had supplied Europe were exhausted. Governments and private entrepreneurs sponsored expeditions to search for new gold and silver mines. They found them in the — previously unknown to Europeans — continents dubbed by the Europeans the “New World.”
Could the history of the 15th century repeat itself? Could the discovery of gold mines located in asteroids make possible a vast new expansion of the quantity of money material, thus making possible the growth of markets for centuries to come?
Here, we are interested only in the question of money material. However, as we saw above from the viewpoint of the ultimate fate of humanity and its communist future, the question of non-money material is of far greater importance. Indeed, under socialist production, neither gold nor any other product will function as money material. But our current interest is with the far narrower problem of how long specifically capitalist production lasts.
It remains to be seen exactly how much gold is available in asteroids. But the big problem is, of course, transportation costs. The cost of transportation counts as part of the value of a commodity. For the foreseeable future, this means that unless the gold in Earth’s crust becomes almost totally depleted, the individual value of gold mined from asteroids, once the transportation costs are taken into account, will be much greater than the individual value of the gold mined from the traditional source.
While it is always risky to make predictions about the evolution of science and technology, it is a pretty good bet that the profitable mining of asteroids for gold is decades in the future — if it ever becomes possible at all during what is left of the lifetime of the capitalist mode of production.
Asteroid mining, even if it were to become technically feasible, would function only as a long-term counter-tendency, not as a realistic means of resolving capitalism’s growing realization problems.
So what would be the effects of “peak gold,” assuming it one day arrives? We have seen what has happened when gold production has experienced temporary declines. Declining gold production has been accompanied or followed by “long waves” of capitalist economic stagnation — severely impaired expanded reproduction, or in the case of the 1930s Great Depression, the complete suspension of expanded capitalist reproduction for some 15 years — first by the Depression and then by World War II, whose coming was certainly accelerated by the Depression.
For example, Hitler almost certainly would not have come to power in the absence of the super-crisis of 1929-32, which hit Germany with such devastating force. In every case up to now, capitalism has not gotten out of such periods of retarded expanded reproduction and soaring unemployment without a very considerable rise in gold production.
After peak gold, gold production would decline, no matter how much commodity prices measured in terms of gold declined. At most, declining commodity prices measured in terms of gold could only periodically slow the decline in gold production. Just like after “peak oil,” no increase in oil prices could increase oil production.
Peak gold would not mean that there would be a permanent crisis of overproduction. After peak gold, the prices of commodities in terms of gold would fall to a much greater extent than before peak gold. This would increase the purchasing power of the existing global gold hoard. And even with declining gold production, the total supply of gold on the world market would continue to increase, though at a slowing rate. The world market would still be able to expand, but at a much slower rate than before peak gold.
Capitalism, therefore, would not “break down” completely. But we would expect the industrial cycles following “peak gold” to be quite different from those we have experienced. For one thing, we know from economic history that periods of temporarily declining gold production have seen a strong rise in unemployment. After peak gold, the tendency for unemployment to rise would also be permanent. It would only be a matter of time before the unemployment situation would become intolerable.
Even if peak gold never arrives, a situation where the value of gold is rising long-term relative to most other commodities is sufficient to imply worsening crises and a permanent tendency toward higher unemployment. Periods of falling commodity prices measured in gold associated with periods of crises and stagnation would lengthen relative to periods of rising commodity prices (in terms of gold), associated with periods of prosperity.
Deeper and deeper crises with ever greater falls in the prices (in terms of gold) of commodities would be necessary before gold production would rise to record levels again. So, even without peak gold, there would be an increasing gap between the ability of the industrial capitalists to produce and their ability to sell commodities at prices that realize the surplus value contained in their commodities.
The consequences would be much the same, though in the latter case, the outcome would unfold over a somewhat longer period than in an actual “peak gold” scenario.
We have already seen that the ability of capitalism to increase production faster than it can expand the world market inevitably leads to the increasing centralization of capital. It is the centralization of capital — the falling of the mass of social capital into ever fewer hands — that, more than any other purely economic factor, works toward the transition to a higher mode of production — socialism. Therefore, any factor that increases the gap between the ability to produce and the ability to sell will tend to hasten the inevitable demise of capitalist production.
Could gold be replaced as a money commodity?
But aren’t we overlooking something? Can’t any commodity, in principle, serve as the universal equivalent? Why wouldn’t capitalism simply find a new universal equivalent — money commodity —that would allow the expansion of the market to resume?
Things aren’t so simple. Gold didn’t become the money commodity because some international monetary conference — like the one held in Bretton Woods, N.H., in 1944 — decided that gold would make a nice money commodity. Gold emerged as the money commodity through a process of “natural selection” over thousands of years. But aren’t there many commodities that have been used as money commodities that are no longer used as money material? Why couldn’t the same thing happen to gold? In theory, there is nothing to prevent gold from sharing the same fate.
Commodities that have served as money commodities and later lost that role have done so because of a dramatic decline in their value, not a dramatic rise. This destroyed their function as a means of accumulation or hoarding because of their rapid devaluation. The most recent example is silver, which functioned as a money commodity alongside gold for thousands of years. If “peak gold” should occur sometime in the future — gold’s value would not decline. Instead, it would start to rise dramatically, and there would be no way to lower its value — or prevent it from continuing to rise.
The same would be true, though to a lesser extent, if deteriorating natural conditions of production caused the value of gold to rise relative to most other commodities, even if total gold production continues to rise.
As a means of hoarding, gold’s function would not be impaired after “peak gold.” Quite the contrary. The higher its value rose — whether absolutely or relative to most other commodities — the less a drop in its value in the future would seem likely — the greater its use value as a means of hoarding exchange value – a means of accumulation – would become. The capitalists — just as would happen if they ran out of labor power in a “Grossman-type” of breakdown — would increasingly act like the misers of old, seeking to maximize their accumulation of gold rather than like capitalists proper who carry out the circuit M — C…P…C’ — M’.
The tendency for at least a relative exhaustion of gold exists because, as the money commodity — though not in respect to its other use values — gold has no substitutes if it becomes relatively more expensive. But there are also counter tendencies that range from the invention of new mining and refining technologies to the eventual development of asteroid mining. Thus, possible technological advances and new sources make its future supply uncertain.
If gold depletion drives up the absolute or at least the relative (to other commodities) value of gold, the decline of capitalism will accelerate. Crises will worsen more rapidly than otherwise would be the case, unemployment will rise, the inequality of the distribution of income will grow at a faster rate, and the labor union struggle, as long as it remains on a reformist basis, will become more difficult, and the growth in the centralization of capital will accelerate. If gold exhaustion does not occur, capitalism will still be doomed, as we will see in the next chapter, but its demise could — depending on the course of the class struggle between the capitalists and the workers — unfold over a somewhat longer period. Or maybe it wouldn’t.
Gold is actually a chemical element on the periodic table. It is possible to produce gold from mercury by bombarding it with neutrons. This leads to a nuclear reaction that transforms some of the mercury into gold. So far, the costs of producing gold this way far exceed the cost of producing gold from mining and refining it. To put things into more precise language, the individual value of a certain weight of gold bullion produced by transforming mercury into gold greatly exceeds the individual value of the same weight of gold produced through mining it and refining it. With today’s technology, it would be completely impossible to produce gold profitability in this way.
However, in theory, if the gold mines of the solar system were to become sufficiently depleted at some point, the future production of gold from mercury would become profitable. It seems unlikely that capitalism will survive into this distant future. Theoretically, if capitalism survived to the point that the large-scale production of gold bullion from mercury became profitable, the rise in the total quantity of gold bullion available to serve as money capital in the world, measured in terms of some unit of weight, would rise in annual percentage terms very slowly compared with the rate of growth of gold today. In theory, the growth of the market would continue, but at a very slow rate. It seems dubious that capitalism could continue under those conditions because it would support only a very slow rate of growth of the market.
It might seem that another commodity replaces gold as the money commodity. That would happen if gold dropped drastically in value, that is, if it became possible to produce a given quantity of gold with drastically less human labor. If gold began to drop sharply in value relative to other commodities, it could no longer serve as a means of the accumulation of human labor.
However, if gold rose sharply in value relative to other commodities, it would make a better and better means of accumulating wealth. Before the rise of the capitalist mode of production, there were many examples of commerce declining whenever there was a local exhaustion of gold and silver mines. Nowhere did we see gold and silver simply replaced by another commodity.
To sum up, the complete exhaustion of the ability of the market to grow will never occur in practice under capitalism. There seems, however, to be good reasons to believe that the ability of the capitalists to increase production relative to the ability of the market to grow will continue to widen over time.
The problem of overproduction, including the growth of idle real capital –overproduction of the means of production – will continue to become more acute. It will take increasingly devastating crises and long periods of lingering depression and stagnation, accompanied by mass unemployment, to keep the overproduction in check. Historians of the future may well conclude that this was the root cause of the working-class revolutions that finally ended capitalism.
But there is even a more fundamental factor that is working to end the rule of capital over production. That will be the subject of the last chapter.
Notes
(1) Capital, Volume 1, Chapter Three: Money, Or the Circulation of Commodities. https://www.marxists.org/archive/marx/works/1867-c1/ch03.htm (back)
A Critique of Crisis Theory 