Hard Work and Swindle (more notes on the crisis)
The process of actual economic thrift and abstinence (e.g. by savers, hoarders, stashers, misers), to the extent that it supplies elements of accumulation, is left by the division of labour (which comes with the process of capitalist production) to those who receive the smallest of such elements, and who frequently enough lose even their savings, as do the workers, when banks fail.
On the one hand, contrariwise, the capital of the industrial capitalist is not ‘saved’ by himself, because he has control of the savings of others in proportion to the size of his capital, while on the other hand, the money-capitalist makes the savings of others his own capital, and the credit (which the reproductive capitalist gives to one another and which the public gives to them), he makes a private source of enrichment.
The final illusion of the capitalist system, i.e. that capital is the fruit of one’s own labour and savings is thereby debunked: not only does profit consist in the appropriation of other people’s labour, but the capital with which this labour (of others) is set in motion consists of other people’s property, which the money-capitalist places at the disposal of the industrial capitalist, and which he in turn exploits.
For the lender of loan capital money has been transformed into a paper claim to money, a title of ownership (of a debt). The same mass of actual money can thus represent very different masses of money-capital. With the development of the credit system in capitalism giant concentrated money-markets are created, such as in London and New York, which are at the same time main seats of trade in this paper. The bankers place huge quantities of the public’s money-capital at the disposal of this bunch of dealers, and these gamblers multiply.
In times of crisis the demand for loan capital and therefore the rate of interest reaches its maximum, but the rate of profit, and with it, the demand for industrial capital has to all intents and purposes disappeared. During such times, everyone borrows only for the purpose of paying in order to settle previously contracted obligations.
In our situation, this has even been the case with the big banks, which have been bailed-out by public money, and which have then used the opportunity to purchase other failing banks. In times of renewed productive activity after a crisis, loan capital is again demanded for the purpose of buying and for transforming money-capital into productive or commercial capital. The industrial capitalist invests it in means of production and in labour power.
The notion that the market rate of interest is determined by the supply and demand of loan capital tries to jumble up the credit swindler with the industrial capitalist investing in production, and to make this credit capitalist seem the only capitalist and his capital the only real capital.
In times of stringency, as already implied, the demand for loan capital is a demand for means of payment, and nothing else, it is not a demand for money to purchase. At the same time, the rate of interest may rise very high regardless of whether real productive capital is in abundance or is scarce.
This demand for means of payment is merely a demand for convertibility into money, so far as merchants and producers have good securities to offer. And it is a demand for money-capital whenever there is no collateral, so that an advance of means of payment gives them not only the form of money but also the equivalent they lack (whatever its form) with which to make payment.
This is the point where (according to Marx) ‘both sides of the controversy on the prevalent theory of crises are at the same time right and wrong’ (and they still are at this same stage in ideology!):
1) a) Those who say that there is merely a lack of means of payment either have only the owners of bona fide securities in mind; or b) they are fools who believe it is the dutiful power of banks to transmogrify all bankrupt swindlers into solvent upright capitalists by means of pieces of paper.
2) a) Those who say that there is merely a lack of capital, who are either just quibbling about words, since exactly at such times there is a mass of inconvertible capital as a result of over-imports and over-production, or b) they are referring only to such players with credit who are now in a position where they can no longer get other people’s capital for their own operations and demand that the bank should not only help them to pay for the lost capital, but also enable them to continue their swindles.(!)
Here I have slightly modified and paraphrased some of Marx’s theory (from “Capital III”) that seem to me particularly relevant to the current economic and financial crisis...