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What is the Crisis About? Fictitious Capital or the Destruction of Wealth? michael perelman
[Marxism-Thaxis] What is the Crisis About? Fictitious Capital or the Destruction of Wealth?
Charles Brown Wed, 11 Mar 2009 09:49:42 -0700
What is the Crisis About? Fictitious Capital or the
Destruction of Wealth?
michael perelman
________________________________
This short essay briefly describes the financial side
of my interpretation that the crash reflected a disconnect
between the underlying investment in the economy
and its financial representation -- what Marx called
fictitious capital. The stock market people call this
realignment, "destruction of wealth," even though what
is destroyed is the illusion of wealth. The illusion may
have been capable of purchasing valuable things so
long as other people accept that illusion.
Long ago people accepted the illusion as an illusion
and went on with their business. Here is what a former
governor of Illinois wrote:
Ford, Thomas. 1854. History of Illinois (Chicago: S. C. Griggs and Co.).
227: "Our Whig friends contended that the continual
and violent opposition of the democrats to the banks
destroyed confidence; which, by-the-bye, could only
exist when the bulk of the people were under a delusion.
According to their views, if the banks owed five times
as much as they were able to pay and yet if the whole
people could be persuaded to believe this incredible
falsehood that all were able to pay, this was 'confidence'."
Ordinary people understood what was happening. Here
is an incident from Chicago about the same time.
More at:
http://michaelperelman.wordpress.com/2009/03/11/what-is-the-crisis-about-fictitious-capital-or-the-destruction-of-wealth/
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