Overaccumulation is one of the potential causes of the crisis of capital accumulation. In crisis theory, a crisis of capital occurs due to what Karl Marx refers to as the internal contradictions inherent in the capitalist system which result in the reconfiguration of production. The contradiction in this situation is realized because of the condition of capitalism that requires the accumulation of capital through the continual reinvestment of surplus value.
Accumulation can reach a point where the reinvestment of capital no longer produces returns. When a market becomes flooded with capital, a massive devaluation occurs. This overaccumulation is a condition that occurs when surpluses of devalued capital and labor exist side by side with seemingly no way to bring them together. The inability to procure adequate value stems from a lack of demand.
The term "overaccumulation" is also used in a neoclassical context.
Examples
The Great Depression of the 1930s and 40s resulted, in part, due to major devaluation of capital and labor concluding in massive unemployment. The 1980s were also dangerous times for capitalist industrial nations when unemployment rose over 10 percent in 1983 and massive amounts of inventory lay unsold.
Exceptions
In 2024, Elliot Goodell Ugalde posited that housing and other forms of fixed capital occupy a distinct position within the capitalist system, as they are largely insulated from crises of overaccumulation. Unlike conventional commodities, which depreciate over time and compel capitalists to liquidate surpluses to avert stagnation, housing typically appreciates in market value. This upward trajectory incentivizes the accumulation and hoarding of property and land, allowing capital to remain immobilized in these assets without the imminent risk of devaluation. Consequently, housing escapes the cyclical pressures of surplus production and market collapse that characterize other sectors, enabling speculative investment to persist and flourish—often at the expense of societal needs.
However, Goodell Ugalde highlights a different form of crisis tied to the increasing financialization of housing. This phenomenon is characterized by an expanding divergence between the market price of housing and its underlying exchange value, which he identifies as a hallmark of fictitious capital. Unlike productive assets grounded in socially necessary labor, fictitious capital inflates housing values beyond their material basis, fostering speculative markets driven by profit maximization rather than genuine demand. This dynamic exacerbates the commodification of housing, reinforcing structural inequalities and undermining its function as a basic human necessity.
Strategies
Capitalism has adapted to this crisis in two ways. The first solution to the problem is resolved using a "spatial fix." The regionality of overaccumulation allows the crisis to be relieved by moving capital or labor to a different territory and beginning new production. This solution relieves the surplus by moving it into a region that has a higher demand for it.
A second solution to overaccumulation involves the creation of new markets. If demand does not exist for the excess accumulation, then one can be created by opening up non-capitalist markets.
See also
Notes
- Harvey, D. (1990). The Condition of Postmodernity. Malden, MA: Blackwell. p. 180. ISBN 0-631-16294-1.
- Cass, David (1972). "On Capital Overaccumulation in the Aggragative, Neoclassical Model of Economic Growth: A Complete Characterization". Journal of Economic Theory. 4 (2): 200–223. doi:10.1016/0022-0531(72)90149-4.
- Goodell Ugalde, Elliot. “In Defence Of Marx’s Labour Theory Of Value: Vancouver’s Housing ‘Crisis.” Cultural Logic: A Journal of Marxist Theory and Practice, 26 (2024): 69-101. University of British Columbia Press.
References
- Arrighi, G. (2006). Global Social Change: Historical and Comparative Perspectives. Spatial and Other "Fixes" of Historical Capitalism.
- D. Gregory, R. Johnston, G. Pratt, M. Watts, S. Whatmore (2009). The Dictionary of Human Geography. Crisis.
- Harvey, D. (1985). The Geopolitics of Capitalism. Social Relations and Spatial Structures, 128–163.
- Harvey, D. (2001). Globalization and the "Spatial Fix".
- Jessop, B. (2004). Spatial Fixes, Temporal Fixes and Spatio-Temporal Fixes.