Theories of over-production and under-consumption have this in common then: - that both postulate the existence of a “neutral process of production” over which the only antagonism possible is over the “distribution” of the “product” understood as homogeneous “output” either (in the Marxist version) of “socially necessary labour time” or (in the neoclassical version) of the marginal utility of the totality of “endowments” available for exchange on the “free self-regulating market” through the “price mechanism”. We have already considered the “apories” (or practical contra-dictions) involved in these notions and will not reiterate them here.
The important point to understand is that “over-production” and “under-consumption” theories both postulate an “equilibrium level” of profits and wages that (in the neoclassical version) is determined by the original marginal utility of the “endowments” of individual market participants and (in the “Marxist” version – which is partly a distortion of Marx’s position) by the politically-determined “share” of wages and profits over the distribution of the “output”.
One thing to notice immediately here is that this theory does not explain why, given that “output” is a homogeneous set of “pro-ducts” produced with “neutral and exogenously given” technologies, there should be a “class division” between workers and capitalists. Put otherwise, if all that is wrong with capitalism is that capitalists may re-invest too much (overproduction) or that workers may consume too little (underconsumption) –why, then the answer is all too easy! Simply ensure that capitalists and workers work out (mathematically!) the “equilibrium” level of wages to profits so that the economy may operate at maximum efficiency with full employment of resources! The whole of economics would then boil down to a simple “engineering problem”! Because obviously it could never be the case that workers would consume too little unless their wages were too low, or that capitalists would produce too much unless their profits were too high! In other words, in such an economy there would be no distinction, aside from a “technical” one perhaps (the capitalists would be simple engineers or managers “conducting” the production process), between workers and capitalists! Everyone could then aspire to become – as in the company capitalism utopia – a “shareholder” with a share in the economy commensurate with some “labour input” or politically-agreed level of income!
This is precisely the kind of nonsense that comes out of people like Kalcki and Keynes or Minsky and Krugman! All of these “theoreticians” deny that capitalist problems and crises have to do with the antagonism of the wage relation because…. That would amount to placing the blame on workers! (See Krugman link below. Minsky says as much in “Can ‘It’ Happen Again?”) As if, that is, workers should be blamed for an antagonistic relationship in which they are necessarily the “exploited” party that is forced and coerced “to sell” its “living activity” or living labour… in exchange for dead labour in the form of “goods and services” from the capitalist!