“These are the formal possibilities of crisis. The form mentioned first is possible without the latter—that is to say, crises are possible without credit, without money functioning as a means of payment. But the second form is not possible without the first— that is to say, without the separation between purchase and sale. But in the latter case, the crisis occurs not only because the commodity is unsaleable, but because it is not saleable within a particular period of time, and the crisis arises and derives its character not only from the unsaleability of the commodity, but from the non-fulfilment of a whole series of payments which depend on the sale of this particular commodity within this particular period of time. This is the characteristic form of money crises.” (p 514)
Nothing could be more wrong, therefore, than to locate the cause of crises of overproduction in the role of credit, or the use of credit-money, rather than the semi-mystical belief in the use of gold, or a currency system based upon a gold standard. For long periods, the use of credit, and credit-money, i.e. banknotes, works perfectly fine, and far from leading to crises of overproduction, actually facilitates the velocity of circulation of commodities and capital, as well as reducing the overhead costs of using money only as means of circulation, or the use of metallic money.
It is not credit or credit-money that creates the crisis of overproduction (crisis of the first form), but the crisis of overproduction which leads to the crisis of the second form, a money crisis that breaks out as a cascading failure of payments.
“If the crisis appears, therefore, because purchase and sale become separated, it becomes a money crisis, as ‘soon as money has developed as means of payment, and this second form of crisis follows as a matter of course, when the first occurs. In investigating why the general possibility of crisis turns into a real crisis, in investigating the conditions of crisis, it is therefore quite superfluous to concern oneself with the forms of crisis which arise out of the development of money as means of payment. This is precisely why economists like to suggest that this obvious form is the cause of crises.” (p 514-5)
That is not to say that crises do not arise as a consequence of excess credit, but these crises are not economic crises, or crises of overproduction. They are financial crises such as those which led to bank runs and bank failures in previous centuries, and indeed, led to the bank failures in 2008 and in the Eurozone Debt Crisis of 2010. This excess credit also leads to speculation and the inflation of asset prices, causing bubbles, which inflate and burst. But, such financial crises are separate from economic crises, and whilst they may, in turn, impact the real economy there is no necessity that they should. These financial crises really only amount to a transfer of wealth from one set of hands to another, as some make capital gains whilst others suffer capital losses. And, indeed, as Marx sets out, they can even be beneficial for real capital accumulation, because those into whose hands the wealth falls are generally “more enterprising than their former owners.” (p 496)
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