That is not all. If it were, the problem would simply be a tendency towards disproportionality between the different parts of the economy.11 But there are further problems. Production will not take place at all unless capitalists think they can sustain themselves in competition with other capitalists, by getting a rate of profit at least equal to the average in the system as a whole. To guarantee this they have repeatedly to reorganise production, using more advanced techniques to increase productivity per worker. But as all the capitalists try to do this, they continually reduce the average amount of labour needed to produce goodsand therefore the value of the goods. The physical quantity of goods produced by the system will tend to rise, but the value of each individual good will tend to fall. The two things necessary for the system to function, the physical organisation of production and the flow of value through the system, both change repeatedly-but without there being any automatic compatibility between the changes taking place.
Firms undertake production by buying physical equipment (machines, buildings, computers and so on) at prices dependent on the average amount of labour needed to produce them at a particular moment in time. But even as production is taking place, increases in productivity elsewhere in the system are reducing the value of that equipment and of the goods the firm is producing with it. The firm's calculations of profitability were based on the amount it had to spend on this equipment in the past, not on what its present value is-but it is on its initial investment that the firm has to make a profit. So the rapid rate of accumulation that characterises the boom has the effect of cutting the prices of each unit of output, and this hits the profits to be made on investments made earlier in the boom.
Not only do the values of goods keep changing, but, Maksakovsky shows, the reaction of capitalists to these changes leads prices to diverge from values. As profits fall, some firms stop new investments for a period. This reduces the demand for the goods of the other firms that previously supplied them. These then try to maintain their sales by cutting their prices below the levels determined by value while they sack workers in order to try to protect their profits on the goods they are selling at reduced prices and at that same time cancel their own investments for fear they will not be profitable. A wave of contraction goes through the economy and with it a general reduction of prices below values.
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Understanding the System: Marx and Beyond