In the 17th and 18th centuries, there were numerous crises, but these were financial crises. They arose because private banks issued bank notes way in excess of their deposits, so that whenever a bank run started, the bank could not meet its commitments. But, there were other financial crises such as arose with the Tulipmania, the South Sea Bubble, and John Law's Mississippi Scheme. And, of course, such financial crises, as opposed to economic crises continue to occur. The 1987 stock market crash, the 1990 UK property market crash, the 2000 Technology Markets crash, and the 2008 financial meltdown, are more recent examples. These financial crises are different to the economic crises, and crises of overproduction that Marx is discussing. The economic crises always involve what Marx calls a crisis of the second form, that is to say a money crisis, where firms default on payments, which has a cascade effect, but this money crisis is different from that of a purely financial crisis. As Marx puts it in Capital I, Chapter III,
“The monetary crisis referred to in the text, being a phase of every crisis, must be clearly distinguished from that particular form of crisis, which also is called a monetary crisis, but which may be produced by itself as an independent phenomenon in such a way as to react only indirectly on industry and commerce. The pivot of these crises is to be found in moneyed capital, and their sphere of direct action is therefore the sphere of that capital, viz., banking, the stock exchange, and finance.” (Note 49)
Moreover, Ricardo himself did see economic crises (but not crises of overproduction), but he could explain these as more or less isolated events, caused by specific conditions of war, or sharp rises in food prices.
“Ricardo himself did not actually know anything of crises, of general crises of the world market, arising out of the production process itself. He could explain that the crises which occurred between 1800 and 1815, were caused by the rise in the price of corn due to poor harvests, by the devaluation of paper currency, the depreciation of colonial products etc., because, in consequence of the continental blockade, the market was forcibly contracted for political and not economic reasons. He was also able to explain the crises after 1815, partly by a bad year and a shortage of corn, and partly by the fall in corn prices, because those causes which, according to his own theory, had forced up the price of corn during the war when England was cut off from the continent, had ceased to operate; partly by the transition from war to peace which brought about “sudden changes in the channels of trade” [l.c., p. 307). (See Chapter XIX—“On Sudden Changes in the Channels of Trade”—of his Principles.)” (p 497-8)
But, when these economic crises became regular events, no such explanations could suffice. So, Ricardo's followers slipped into the device of separating an overproduction of commodities from an over abundance of capital. In fact, as Marx has demonstrated, the very process of capital accumulation, of expanded reproduction, is based upon the existence of overproduction, and this was also accepted by the better economists of the day, such as Fullarton, and Marx says,
“In all fairness however, it must be said, that other economists, such as Ure, Corbet etc., declare over-production to be the usual condition in large-scale industry, so far as the home country is concerned and that it thus only leads to crises under certain circumstances, in which the foreign market also contracts.” (p 498)
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