| This question <1617|1659> overall <1628|1630> Nazgul: <1593|1631>. graded A |
| Question 376: How does Marx define a crisis? |
| [1629] Nazgul: Third time's the charm. The third time's the charm or so I hope so in my case of answering this question. Originally I had defined a crisis as the expression of all of the contradictions of the capitalist mode of production, however, those contradictions are far and wide and do require further clarity. Marx's definition of a crisis is two-fold and therefore embraces two separate aspects. The first which is clearly stated by your [957] is “the forceful (re)unification of things which belong together but which have drifted apart too much.” Marx explains what is meant by the drifting apart of things that belong together on page 208 of Capital, “If this means that the number of actual sales accomplished is equal to the number of purchases, it is a flat tautology.” |
| In layman terms this means that the circulation of money does not always remain in circulation. In the capitalist pursuit of profit, there becomes an overproduction of goods which results in a crisis, too many goods and not enough buyers, a liquidity crisis ensues. The stock market crash of 1929 is an excellent example of this. |
| The second example of the crisis is “two things which should be separate are fused together”. The easiest way to understand this is to think of it like an oxymoron where two contradictory words or phrases are put together which normally do not belong like jumbo shrimp, and so this same principle applies in economics. |
| Hans: There is a difference between a liquidity crisis and an overproduction crisis. The former is just triggered by not enough money being around in certain situations because sellers hold the money instead of buying. This was a problem at Marx's time, but nowadays the Fed, as lender of last resort, can pump liquidity into the economy to fend off such crises. |
| An overproduction crisis happens when the inner unity of production and consumption is violated, as it is in capitalism where production is not done for the sake of consumption but for the sake of profits. |
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