Neoliberalism: No reformist solution to its crisis

02. Neoliberalism: The Temporal Mode of Production

It is in general consensus that ‘neoliberalism’ is a package of economic policies set out globally that proceed and promote free trade, privatization and public disinvestment, tax exemption and special facilities for corporates along with rampant violation of labour laws, abolition of trade union rights, and most importantly, austerity measures by reducing government expenditure in employment generation and social services. In a bit, it can be expressed as a new social order, a rule, by the rich and for the rich [1-5]. Also it is deemed that such policies were adopted by the dominant nations followed by their hegemony implanted on the rest of the countries. However, it will be shown in the current chapter of this series that the so-called ‘neoliberalism’ is not mere special policies; rather, it is a qualitatively new phase of capitalism emerged in the course of history. Politically, the nation states have observed a transition from the so-called ‘welfare’ to the ‘neoliberal’ one on the basis of a fundamental change in the mode of capitalist production; and the very ‘policies’ are not mere choices of the governments but political compulsion of the bourgeois ‘state’ in this new episode. The aim of this chapter is particularly to elaborate the newly emerged mode of production that capitalism is presently exhibiting in the era of ‘neoliberalism’; and we term such new trend of economy as the ‘temporal mode of production’.

The fundamental change in the mode of production

It is almost an axiom that Capitalism is an economic system that produces enormous numbers of commodities but in cheaper cost. However, if we look into the current facts and figures carefully, unlike the previous days, neoliberal capitalism shows a new trend toward producing costly but less-lasting commodities, comparatively in smaller numbers but with newer applicative quality again and again. We will term this new trend as the ‘temporal mode of production’; in contrast, we may refer to the former phase of capitalism as the ‘ensemble mode of production’. This can be understood in the analogy with a most common statistical example of throwing ten dice repetitively for ten times instead of to throw a hundred dice at a time, with an expectation of getting the same result.

Such trend of producing costly commodities in lesser numbers has indeed emerged with the individual enterprises’ aim of restraining overproduction without compromising their profit levels. This may be elaborated by the following hypothetical illustration. Suppose, a total amount of $1000 is distributed in the hands of 10 persons as follows: 8 among them have $50 each and the remaining 2 have $300 each. Now, a company who produces 12 products costing $50 each (net price $600) must have at least 2 overproductions costing $100 in total (since there are maximum 10 purchasers, not 12); however, another company who produces only 2 products costing $300 each (net price same as $600) may have 0 overproduction (since there are 2 persons each having purchasing power of $300).

This apparently seems to obtain a methodology for discharge of an individual capitalist from the ICU of overproduction. However, the irony remains in the fact that to solve the problem of overproduction in this way is possible for some of the individual capitalists only, but not and never for the entire capitalist system. In fact, how such trend has trapped the entire capitalist system into an economic black hole will be shown later in this series of articles.

Further, it is to be noted that along with the subjective motive of reducing overproduction in such way, the objective basis for the transformation of capitalism from its ‘ensemble’ mode to the ‘temporal’ one was developed on the platform of an already existing and growing consumer section for costly commodities. This was an obvious result of the wage/salary hike of working class in the organized trade sector and the middle classes due to the very presence of Socialist camp in the post World War-2 era. On the other hand, such neo-elite classes of consumers are also being created in the neoliberal regime, in addition, by the ‘state machinery’ in a hegemonic way of increasing salary together with reducing jobs. That is why the pre-capitalist philosophy of ‘sacrifice’ which transformed into ‘consumerism’ in the capitalist societies in its previous phases has now been reborn in the form of a global campaign for ‘austerity’.

Although we can distinguishably identify Neoliberalism as this newest phase of capitalism defined by such trend of ‘temporal mode of production’, where capitalism of the previous days that used to produce enormous numbers of replicas of cheaper commodities at-a-time has transformed into a system with a novel trend of producing relatively smaller numbers of costly commodities with continuous updating, it can be observed a country or an economic region to coexist in  a mixed state of ‘ensemble’ and ‘temporal’ modes of production, however, the latter exhibiting expansion and the former dying out.

It is worthy to mention that it is difficult to obtain any direct empirical data to provide an epistemic support to the current ontological model of neoliberalism that analyzes it as the ‘temporal’ mode of production. However, in order to comprehend the current economic situation, we have to extract the essence from the bulk of information provided in the studies of mainstream economy. For this purpose, the relevant data of some major capitalist countries such as the USA, UK, Germany, France and Japan are analyzed in detail. Such data are compared correspondingly with China, which, controversially in the leadership of Communist Party (CPC), has been the largest growing economy within this neoliberal regime. This may help us to study the CPC position in the dialectical route of transitional phase, if so as they claim, from capitalism to socialism; and to find out whether, or if so then to with which degree, the capitalism is dying out and socialism is being built up. The state-of-the-art of India being a developing country with significant global interest toward its gigantic market is also studied in this context of neoliberalism.

A study on conventional overproduction

It is usually considered that capitalist overproduction means an excess of the huge numbers of commodities produced that are not sold since such ‘number’ of the units production is large compared to the ‘numbers of purchasers’. Marx found such ‘overproduction’ to be the fundamental origin of economic crises suffered by capitalism. This, in its empirical form, has actually been observed by world capitalism until the third quarter of 20th century. However, in a seemingly contradictory manner, since 1960’s a continuous decline has been observed in the conventional ‘overproduction’ compared to capital investment in all of the dominant nations such as the USA, UK, Germany, France, Japan and China. This can be seen from Fig.1, where the inventories as a percentage of gross capital formation (GCF) of these countries since past five decades are plotted. The figure evidently shows a sheer trend of the inventories per investment to fall from its value of 4-5% in the 1960’s to 1-2% or less in the 2000’s for all of the advanced capitalist countries like US, UK, Germany, France and Japan. A similar declining trend is also seen in the emerging economy of China however its value (5 times as given in the plot) is much higher (>20% in 1960’s to <5% in 2000’s).  

(Fig.1. Data Source: World Bank)

It is a clear indication of the reduction of conventional capitalist overproduction. Is it that capitalism has overcome its natural trend of overproduction crisis? Or is it something else? Such unorthodox characteristics of inventories to reduce continuously must be read critically.

From the conventional point of view, capitalism is taken for granted to produce huge numbers of low-cost commodities, however, suffers from the fever of overproduction due to even more suppressed purchasing power of a large section of the people. Therefore, the Keynesian prescription was only to create such large numbers of consumers with a minimum level of purchasing power and purchasing condition for such huge numbers of cheaper commodities to be sold (although this led to governments attaining deficit financing). In fact, in such a view the ‘overproduction’ is considered to be a drainage problem of capitalist economy and thus concentrated on the distribution engineering, thereby suppressing the symptoms instead of eradicating the disease.

However, neither the problem is in its drainage system, nor the ‘overproduction’ means solely the excess of the large ‘numbers of commodities’ compared to the ‘numbers of purchasers’, as it is usually thought of. More than half a century back that the Keynesian model emerged, Marx showed that the problem of capitalism fundamentally subsists in its production system, not in its distribution mechanisms. The disease of the former is manifested in the latter as its symptom. In the capitalist economy, the conversion of money to commodity to more money, i.e. M—>C—>M+M/ ( M/ being an increment in the amount of M), is carried out by purchasing the constituent commodities (i.e. means of production + labour power) of smaller exchange value by the capitalist owners and selling the final product of larger exchange value. However, it is apparent that such an increase in the value of outputs compared to the inputs can only be possible during production. Marx discovered that this could be possible due to the fact that only live human labour power can employ an amount of labour in the production more than that much of the labour it has itself been produced of [6]. Metaphorically, it is just like the fact that, one who eats only some vegetables at night can cook a different amount of beef next day. Thus, M—>C—>M+M/ indicates that capitalism produces more at the expense of less, in the ‘economic terms’, and not in the ‘material terms’. For instance, in this case, one can eat a larger amount of cheaper vegetables and can cook smaller amount of costly beef; then he/she is producing less (amount of beef) at the expense of more (amount of vegetables) in ‘material terms’; whereas, at the same time, he/she is producing more (costly beef) at the expense of less (cheaper vegetables) in ‘economic terms’. Thus ‘overproduction’ is inherently defined in ‘economic terms’ and not in its ‘material size content’. It elucidates that once the production is done, in totality, the sellers have ‘economically’ more (M+M/) than the purchasers (M) resulting in overproduction. This indeed is the meaning of ‘overproduction’, not in terms of the comparison between numbers of commodities and their purchasers, but in terms of their exchanging capacities which have already been differentiated during the production. However, such ‘economic overproduction’ appears to the capitalists as mere ‘material overproduction’, since empirically they get burdened with the unsold products in ‘material form’. The inventories, thus, can reduce in proportion to investment in a capitalist economy, if and only if, a larger fraction of the economy constitutes costly commodities in relatively smaller numbers.

A study on the currencies in domestic circulation

In the context of verifying the claim of the current work, the distribution of different denominations of currencies issued by the central banks of these nations into their domestic market is another relevant parameter. Such monetary policy is always set out by the capitalist state so as to carry on the exchanges of commodities unrestrictedly and thus the distribution of denominations must be at par with the weights of cost-distribution of different commodities. This is carried out by the ‘state’, partially due to necessity of the real condition of market and partially by superimposition, to drain out the commodities from producers to consumers in order to run the economy. Thus, the general trend of neoliberal capitalism to produce costly commodities can be examined since the distribution of denomination, in both cases, represents the real distribution of commodity-cost.

We have plotted in Fig.2 the distribution of smaller and higher denominations (in the so-called value terms) of the currency in circulation of the US, UK, euro zone, Japan and India from 2001 to 2015. In accordance with the issued denominations, the higher ones are considered to be those greater than or equal to $100 in the US, £20 in UK, €50 in euro zone, ¥5,000 in Japan and Rs.500 in India on the basis of ‘per capita household expenditure per day’ which is approximately $100, £35, €45, ¥3,000, and Rs.120, respectively.  

(Fig.2. Data Source: FRB, BoE, ECB, BoJ & RBI)

It is evident from the data plotted in the Fig.2 that currently the higher denominations account for approximately 80%, 85%, 70%, 95% and 85% of the money circulation (in value terms) in the domestic market of the USA, UK, euro zone, Japan and India, respectively. The plot depicts that it is has been the trend since one and a half decade in the so-called advanced capitalist countries of the world, whereas, in the developing nation like India, such higher denominations which amounted only 25% in 2001 has increases up to almost 85% in 2015. It is apparent that the amount of smaller denominations has elevated by negligible margin whereas the larger denominations have increased significantly for either of the nations during this period. It is to be mentioned that the data for China’s RMB is not available to us in detail, however, the trend is almost the same, in fact, even more pronounced as can be seen from Table.1 [7]. The 100 RMB was introduced by People’s Bank of China in 1988 and within just a decade it increased to constitute 75% of the M0 money in circulation; it now engrosses a more than 80% of the currency value.   

(Table.1. Source: Smith R. et al, 2010)   

Indeed it is a trend of a continuous decline in the smaller denominations and a corresponding rise of the larger ones as share of the currency values in circulation that almost all the major economies have observed throughout the era of neoliberalism. This may be regarded as a remarkable indicator of the significant rise in the consumable cost as explained above; and such a trend of the temporal mode of production leads to an obvious future of the smaller denominations to die out whereas the larger denominations of currencies toward transforming into much larger ones and further toward plastic money.

About some of the giants

The transition from ‘ensemble’ mode of production to the ‘temporal’ one was initiated by some of the giants of global capitalism. In fact, till date the global giants are leading in the temporal mode based production. For instance, Toyota, which today is the largest automobile company of the world with a market value of almost $240 billion, had produced cars 10 % cheaper than that of Ford or General Motors when it emerged in the market in 1936. However, at the end of 1980’s, it launched a separate branch of luxury cars known as ‘Lexus’. Its advertising slogan, which, even in 70’s, was that “You asked for it ! You got it !”, changed to that “Get the feeling !” in 2001. It is also interesting to note that, during the last 50 years of 20th century, it produced a total of 16 brands, however, only in the first decade of this century it has brought its 44 brands into the market. This clearly shows the trend of producing newer quality in each production season. Further, the less-lasting characteristic of temporal production can be seen if one looks into the fact that it had to go for 16 ‘recalls’ in the past ten years. Another example among the larger ones is the Microsoft, the 5th largest company of the world with a market value of almost $333 billion. It has brought into the market its 21 versions of ‘Windows’ in the last 20 years only. Nothing other is observed for Apple, which now is the top company of the world with a market value $725 billion, who had launched only 10 models in the entire decade of 1970’s, has brought into the market its 17 models only in the financial year of 2016. Even if one considers Walmart, which is best known for its cheaper FMCG products like food, household stuffs etc., it is interesting to note that there are more than 3,500 ‘Supercenters’ of Walmart in 49 of the 50 US states, whereas only about 400 ‘Discount Stores’ in its 41 states. It is also remarkable that among all the 66 newcomers into the top global-500 companies, each of the consumer goods/services producing companies is a producer of luxury personal and leisure goods. It should also be noted that majority of the basic productions like minerals, metals, energy etc are dominantly consumed by these giants and thus all such sectors has got symbiotically aligned to the temporal mode of production.

Global luxury market  

The ‘temporal mode of production’ is fundamentally defined by the repetitive scheme of production, which, due to material reason of its birth in the hands of capitalism at its stage of monopoly (or oligopoly), got inherently associated with the costly commodities. It has already been shown that majority of the giant monopolies or oligopolies are predominantly producing costly commodities and such costs are continuously increasing due to updating over and over again. This is observed to be valid for all kinds of consumables; however, such trend additionally induces a growing demand in the market for the so-called luxury products (goods and services). Therefore it is necessary to study the economic trends of such luxury products in these countries, although, it is again very difficult to obtain precise data on a specific type of commodities that belong to luxurious consumption.  

As can be seen from the data available (, the global personal luxury goods market valued at approximately $235b in 2013 which increased to almost $275b in 2016 and estimated to be $1.3t in 2018. The following figure depicts the overall tendencies of different luxury consumptions.

(Fig.2. Data Source: Bain & Company)

The USA has been the largest market for such luxury products and in 2018 it was estimated to be valued at $80b. On the other hand, currently, Middle East is exhibiting a significant growth in the personal luxury goods industry at almost 20% while India at 6.6% with a revenue of $8.3b in 2019.

Despite the trends shown above, one can spontaneously doubt whether China belongs to the same regime of producing so much of luxury products since they are best known for their export of cheaper commodities. In fact, it will not be an exaggeration to say that China is indeed ill-reputed for its temporal mode of production; it is often said that “the Chinese product will not last”, although as shown by the above examples that it is a global trend emerging from the top. The difference, however, for China is that a significant fraction of their products are still cheaper in general. That is why, being the largest developing economy, China is still observing a transition in this regard (see the plots of inventories, the overproduction trend is decreasing but still very high in value). However, China observes a revenue of almost $42b in Luxury Goods market ranking second after the United States. The following table shows the position of the top-5 countries in this regard.

(Table.2. Data Source:

In the last ten years, the ‘global’ luxury sales have increased by almost 70%, where China alone has observed a hike in luxury sales by 200%. Further, luxury sales within the domestic market of China is almost 7% of its global value; however, interestingly, such luxury sales is nationality-wise highest among the Chinese people around the world (obviously majority from abroad), almost 30% of the global value. This, in turn, indicates how a tremendous pressure of globalized neoliberal capitalism on a claimed to be socialist construction can influence its domestic economy and mode of production, and thus requires serious investigation in this regard.

To be continued …

(Chapter-03: The impact of ‘temporal mode of production’ on the GDP and inflation: Transportation of Inflation)

Chapter-01: Introduction


  1. Harvey D., “A Brief History of Neoliberalism”, Oxford University Press, Oxford (2005).
  2. Dumenil G. and Levy D., “The Crisis of Neoliberalism”, Harvard University Press, Cambridge (2011).
  3. Klein N., “The Shock Doctrine”, Henry Holt Company, New York (2007).
  4. Chomsky N., “Profit Over People, Neoliberalism and Global Order”, Seven Stories Press, New York (1999).
  5. Brown W., “Undoing the Demos: Neoliberalism’s Stealth Revolution”, Zone Books, MIT Press, Massachusetts (2015).
  6. Marx K., “Capital”, vol-1, Progress Publishers, Moscow (1965).
  7. Smith R. et al, “China’s Renminbi Currency Logistics Network: A Brief Introduction”, The IUP Journal of Supply Chain Management, VII, 27-39 (2010).
Basudev Nag Chowdhury,
People’s Brigade
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1 Comment

  1. Good effort to analyse the neoliberal economic model . This study may help the emerging counter movement of the common people , to develop a scientific orientation against the globalisation cum fascism enslavement process.

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