Monthly Archives: November, 2022

Theory of the Business Cycle

I can only see Marxist theory as having a coherent explanation as to why capitalism is crisis prone. Yes, there are┬ácapitalists that have partial theories, but nothing that can fit into a general theory because they have the wrong theory of value. That is not to say that Marx had worked out & presented a fully formed explanation of the business cycle, or that Marxists today all have the same explanation. Just that only with Marx’s theory of value can you then go on to have the concept of aggregate market prices being inflated above their value equivalent due to leverage from the credit system. Yes, that is an asset price bubble, but it also applies to everyday commodities. And because you can never fully regulate or abolish the credit system all the time you have capitalism, the business cycle & so recessions can never be smoothed away with ‘stabilisation’ policies. All the central bankers & finance ministers can do is reflate asset prices at any hint of them popping with yet more debt (leverage); yet more distortion of prices from values. And they have done this to an unprecedented level because fiat money has allowed it. They haven’t had to worry about maintaining the value of their currencies. That is until now. They have now seemingly reached the cliff edge. I don’t think that there is a way back for them. The working class need to push them off.

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