[PEN-L:389] Re: period of distress

[Rosser Jr, John Barkley]

     I would agree that Marx sees the problem as more 
fundamental than merely a "money/credit" problem.  But it 
is not clear that he thinks they could happen in the 
absence of a money economy and he certainly sees money as 
playing a central role.  Thus in discussing crisis in 
_Capital, Vol. III_, p. 505 of the 1969 International 
Publishers edition, he says: "the demand for the general 
commodity, money, exchange-value, is greater that the 
demand for particular commodities."  This is in reference 
to the crisis that brings about a macro decline and follows 
a discussion in which Marx explicitly dismisses Say's Law.
Barkley Rosser
On Sun, 04 Oct 1998 16:30:19 -0700 James Devine 
<[EMAIL PROTECTED]> wrote:

> pen-l people might be interested in the following, which I posted to lbo-talk
> 
> Rakesh writes [ in response to Barkley Rosser]: 
> >As Grossmann showed,  Marx attempted to develop and believed it possible
> to develop  a formal crisis theory  without reference to the "excess
> credit" at the basis of the Kindleberger/Minsky tradition. Since means of
> payment crises derived their character from the unsaleability of
> commodities and the non fufillment of a series of payments to which this
> non-saleability gave rise, what needed to be explained first is how
> purchase and sale became separated.  Indeed Marx finds the recourse to
> "excess credit" or "means of payment"  the kind of obvious theory which
> would be very attractive to economists. <
> 
> >Marx writes:
> >"If the crisis appears, therefore,because purchase and sale become
> separated, it becomes a *money* crisis, as soon as money has developed as a
> means of payment, and this second form of crisis [non fufillment of a whole
> series of payments which depend on the sale of particular commodities
> within a particular time] follows as matter of course, when the first
> occurs [commodities are not saleable at their worth in a certain period of
> time].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 a means of payment. This is precisely
> why economists like to suggest that this *obvious* form is the *cause* of
> crises. (In so far as the development of money as a means of payment is
> linked with the development of credit and *excess credit* the  causes of
> the latter have to be examined, but this is not yet the place to do it.)"
> Theories of Surplus Value, Part II, p. 514-515.<
> 
> As I understand Marx's crisis theory (which was never finished and thus
> combines a lot of brilliant insights with some overall incoherence), 
> 
> 1) the separation between purchase and sale -- which is a necessary result
> of the way in which capitalism operates in historical time -- only shows
> the _possibility_ of crisis, in contradiction of the silly "Say's Law"
> tradition that started with Adam Smith (if not before). It helps explain
> the realization crisis (the incomplete realization of previously produced
> surplus-value) that occurs as part of every crisis process, for whatever
> reason. 
> 
> 2) given this possibility of crisis, there are at least three different
> crisis _tendencies_ or at least tendencies that can be interpreted as
> encouraging crises (the excessive rise of the organic composition of
> capital, underconsumptionism, and the high-employment profit squeeze). Each
> of these can be interpreted as being manifested in a falling profit rate. 
> 
> Each of these has its limitations, including some limitations in terms of
> textual endorsement from Marx and Engels. But I interpret them as each
> having something to say about the contradictions of capitalist accumulation
> and as helping determine the _form_ of crisis in conjunction with the
> concrete situation faced by capital. (See my 1994 article in RESEARCH IN
> POLITICAL ECONOMY and other stuff I've written on crisis theory including
> my 1980 dissertation from UC-Berkeley.)
> 
> 3) as Rakesh says, Marx did not blame the extension of credit _per se_ for
> crises. However, crises can be delayed and thus intensified by credit
> extension. 
> 
> The gap between purchase and sale can be smoothed over by lending the
> distressed capitalist money, allowing them to avoid the truth of their
> difficulties. If these difficulties continue or worsen, they have to
> accumulate more debt. When the crisis actually comes -- which becomes more
> likely as imbalances worsen -- the accumulated debt encourages bankruptcies
> and waves of bankruptcies and represents a barrier to continued
> accumulation. (A barrier, I might add, that is eventually purged by the
> recession and stagnation periods.)
> 
> 4) It is also possible to have an autonomous financial crisis (a bubble
> followed by a pop, a panic) -- in addition to one that results from the
> "real sector's" crisis (falling profit rate). That type of crisis might
> hurt the real sector if that sector is sufficiently vulnerble.  
> 
> It is on these autonomous financial crises that we can learn from Keynes,
> Minsky, and Kindleberger. They also help us get a more sophisticated vision
> of those financial crises that result from real-sector crisis tendencies.
> (Among other things, we can avoid a type of Marxian political economy that
> relies only on the books that  Marx and Engels wrote and those claiming to
> be orthodox representatives of M & E.)
> 
> 5) the big difference can be seen in Minsky's phrase "financial fragility,"
> which represents the core of his work. Minskyans basically see financial
> fragility as the only problem with a capitalist economy. Marxians see
> financial fragility as a problem, but also point to the more fundamental
> problem of real-sector fragility. 
> 
> An added clarification: the theory of financial fragility involves
> internally-generated  (endogenous) instability; the Marxian theory of
> real-sector fragility involves internally-generated instability.
>  
> in pen-l solidarity,
> 
> Jim Devine [EMAIL PROTECTED] &
> http://clawww.lmu.edu/Departments/ECON/jdevine.html
> 

-- 
Rosser Jr, John Barkley
[EMAIL PROTECTED]