This Article Full Text (PDF) References Alert me when this article is cited Alert me if a correction is posted Services Email this article to a friend Similar articles in this journal Alert me to new issues of the journal Add to Saved Citations Download to citation manager Request Permissions Request Reprints Add to My Marked Citations Citing Articles Citing Articles via Google Scholar Citing Articles via Scopus Google Scholar Articles by Devine, J. N. Search for Related Content Social Bookmarking                         What's this?

Underconsumption, Over-Investment and the Origins of the Great Depression

Economics Department, Occidental College, Los Angeles, CA 90041

This paper examines the role of underconsumption tendencies in the laws of motion of capitalism. First, underconsumption theories are examined. My conclusion is that underconsumption forces play a direct role only under restrictive supply and demand conditions, i.e., when labor-power is abundant and investment is depressed. Then, for the capitalist mode of production, I derive a theory of over investment relative to consumer demand that applies when economic expansion does not pull real wages up as fast as productivity grows. Third, I develop the theory of the underconsumption trap as one result of an economic downturn. I argue that theory of over-investment relative to consumer demand is a plausible story of the 1920s and the origins of the Great Depression of the 1930s, while the underconsumption trap was an important reason why the Depression was so deep and long. Finally, I comment on the possible applicability of the theories to the post-World War II era.

Review of Radical Political Economics, Vol. 15, No. 2, 1-27 (1983)
DOI: 10.1177/048661348301500201


CiteULike    Complore    Connotea    Del.icio.us    Digg    Reddit    Technorati    Twitter    What's this?