The same is true today in terms of the arguments over austerity. As a result of the huge rise in the rate and mass of profit over the last thirty years, the supply of money-capital has so exceeded the demand that interest rates were reduced to levels not seen in three hundred years. But, when the speculation that resulted from this led to the financial crisis of 2008, in order to protect the banks, and the fictitious capital on which they rest, the authorities in the UK and parts of Europe, instead of allowing the destruction of this fictitious capital, introduced austerity measures that destroyed real capital and real wealth. I have described this, and why it means a new financial crisis is inevitable, in my book, Marx and Engels' Theories of Crisis.
“So long as enlightened economy treats "of capital" ex professo, it looks down upon gold and silver with the greatest disdain, considering them as the most indifferent and useless form of capital. But as soon as it treats of the banking system, everything is reversed, and gold and silver become capital par excellence, for whose preservation every other form of capital and labour is to be sacrificed.” (p 573)
As Engels points out, under developed capitalist production, wealth assumes the form not of the real social wealth, the physical productive-capital, that actually produces things, but the form of the private wealth of individuals, which is, in reality, wholly fictitious; money in paper form is merely paper that offers a claim on future labour-time that may never be provided; share certificates produce nothing, and ultimately have no more real value than the paper they are printed on, if the underlying assets are destroyed; the same is true of bonds and other financial instruments.
Yet, it is this fictitious wealth that the measures of austerity, along with increased money printing, were designed to protect, whilst at the same time, destroying real social wealth and capital.
“This social existence of wealth therefore assumes the aspect of a world beyond, of a thing, matter, commodity, alongside of and external to the real elements of social wealth. So long as production is in a state of flux this is forgotten. Credit, likewise a social form of wealth, crowds out money and usurps its place. It is faith in the social character of production which allows the money-form of products to assume the aspect of something that is only evanescent and ideal, something merely imaginative. But as soon as credit is shaken — and this phase of necessity always appears in the modern industrial cycle — all the real wealth is to be actually and suddenly transformed into money, into gold and silver — a mad demand, which, however, grows necessarily out of the system itself. And all the gold and silver which is supposed to satisfy these enormous demands amounts to but a few millions in the vaults of the Bank.” (p 573-4)
This then illustrates the extent to which, although the production of wealth is a social act, that relies on the co-operative labour of millions of workers, via the division of labour, control over that wealth is not yet social. In order to protect the fictitious wealth of a few, the real wealth of society is destroyed.
“But only in the capitalist system of production does this become apparent in the most striking and grotesque form of absurd contradiction and paradox, because, in the first place, production for direct use-value, for consumption by the producers themselves, is most completely eliminated under the capitalist system, so that wealth exists only as a social process expressed as the intertwining of production and circulation; and secondly, with the development of the credit system, capitalist production continually strives to overcome the metal barrier, which is simultaneously a material and imaginative barrier of wealth and its movement, but again and again it breaks its back on this barrier.
In the crisis, the demand is made that all bills of exchange, securities and commodities shall be simultaneously convertible into bank money, and all this bank money, in turn, into gold.” (p 574)
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