It is not credit which creates a crisis of overproduction, it only affects the form in which the crisis is manifest. The real problem here, which increases the intensity of the crisis, is the duration of the turnover time for capital, and, in particular, the ratio of the circulation time to the production time.
“Thus the general crisis comes into being. This is nothing other than the possibility of crisis described when dealing with money as a means of payment; but here—in capitalist production—we can already see the connection between the mutual claims and obligations, the sales and purchases, through which the possibility can develop into actuality.” (p 511-12)
The fact that transactions are conducted on the basis of credit, whether it is commercial credit or bank credit, can never be the cause of crises of overproduction. Of course, that does not mean that a banking crisis, or a credit crunch, may not itself flow over into the real economy, as Marx described in Capital I, and in Capital III. The 1847 crisis was essentially a financial crisis – combined with a crisis of underproduction due to the crop failure – caused by the ill-conceived 1844 Bank Act, developed on the back of Ricardo's erroneous theory of money, which sought to impose a gold standard on the issue of means of circulation. The crisis of underproduction resulting from the crop failure caused agricultural prices to rise sharply, and led to a surge of agricultural imports. In order to circulate these commodities more currency was required in circulation, but with gold going out of the country to pay for the food imports, the Bank Act enforced a constriction of the currency issuance. It led to a credit crunch, as commercial credit dried up, with firms seeking to hoard cash. As the demand for bank credit rose, to compensate for the drying up of commercial credit, interest rates soared, and the speculative stock market bubble in railway shares, blown up during the previous period of low interest rates, and easy credit, was then burst, by these higher rates.
Businesses that had drained money-capital from their actual business, in order to engage in this financial speculation, also then went bust, or saw their capital seriously depleted, so that this carried into the real economy. According to Marx, economic activity in Britain was thereby curtailed by around 37%.
It's not credit that causes the crisis of overproduction, but the overproduction of capital, and as Marx points out, in opposition to the Ricardians and Malthusians, an overproduction of capital entails an overproduction of commodities, because capital is itself composed of commodities. That overproduction is made possible by the separation of production and consumption, purchase and sale, which itself arises, not as a result of credit, but as a result of the intermediation of money itself. Provided what is produced is consumed, so that what is purchased is sold, then whether these purchases and sales are conducted on the basis of cash transactions or credit transactions, no basis for crisis exists.
“If purchase and sale do not get bogged down, and therefore do not require forcible adjustment—and, on the other hand, money as means of payment functions in such a way that claims are mutually settled, and thus the contradiction inherent in money as a means of payment is not realised—if therefore neither of these two abstract forms of crisis become real, no crisis exists. No crisis can exist unless sale and purchase are separated from one another and come into conflict, or the contradictions contained in money as a means of payment actually come into play; crisis, therefore, cannot exist without manifesting itself at the same time in its simple form, as the contradiction between sale and purchase and the contradiction of money as a means-of payment. But these are merely forms, general possibilities of crisis, and hence also forms, abstract forms, of actual crisis.” (p 512)
In fact, however, both money and credit predate capitalist production by a considerable amount. Despite the existence of money and credit over centuries, no crises of overproduction arose. So, it is clear that such crises cannot be laid at the door of either. Money creates the possibility of crisis by separating purchase and sale, and yet centuries of commodity production and exchange took place prior to capitalism, without such crises of overproduction. Indeed, even after capitalist production begins in the 15th century, no such crises arise, as this production proceeds on the basis of handicraft production and manufacture. Only in 1825, when machine production has taken hold, does the first crisis of overproduction break out.
“Simple circulation of money and even the circulation of money as a means of payment—and both come into being long before capitalist production, while there are no crises—are possible and actually take place without crises. These forms alone, therefore, do not explain why their crucial aspect becomes prominent and why the potential contradiction contained in them becomes a real contradiction.” (p 512)
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