> "The function of money as the means of payment implies a contradiction
> without a terminus medius. In so far as the payments balance one
> another, money functions only ideally as money of account, as a
> measure of value. In so far as actual payments have to be made, money
> does not serve as a circulating medium, as a mere transient agent in
> the interchange of products, but as the individual incarnation of
> social labour, as the independent form of existence of exchange-value,
> as the universal commodity. This contradiction comes to a head in
> those phases of industrial and commercial crises which are known as
> monetary crises. Such a crisis occurs only where the ever-lengthening
> chain of payments, and an artificial system of settling them, has been
> fully developed. Whenever there is a general and extensive disturbance
> of this mechanism, no matter what its cause, money becomes suddenly
> and immediately transformed, from its merely ideal shape of money of
> account, into hard cash. Profane commodities can no longer replace it.
> The use-value of commodities becomes valueless, and their value
> vanishes in the presence of its own independent form. On the eve of
> the crisis, the bourgeois, with the self-sufficiency that springs from
> intoxicating prosperity, declares money to be a vain imagination.
> Commodities alone are money. But now the cry is everywhere: money
> alone is a commodity! As the hart pants after fresh water, so pants
> his soul after money, the only wealth."
> <http://www.marxists.org/archive/marx/works/1867-c1/ch03.htm#S3>
>
> As I pointed out, this account of a "monetary crisis" in terms of the
> psychology of the capitalist "passions" has much in common with Keynes's.
Look, you make an excellent case for Marx's insightfulness and powers of perception. But again, this doesn't explain anything. Marx is just *describing*, in philosophical terms, the rise and fall what Keynes called liquidity preference. He's being a critical critic. He's not even making an attempt to *explain* what causes liquidity preference to surge. Talking about the resurgence of the capitalist's "inner man" is beautiful if you're writing a literary essay, but as social science it's a non-explanation. He writes: "Whenever there is a general and extensive disturbance of this mechanism, no matter what its cause, money becomes suddenly and immediately transformed, from its merely ideal shape of money of account, into hard cash." Key words: "whenever...no matter what its cause." In other words, he is not trying to explain the cause - except to say that the cause is the arrival of some sort of economic crisis, which begs the question in circular fashion, obviously. There is good reason for this: Marx was convinced that however much these periodic crises appeared to be caused by monetary forces, that was just a veil concealing the true cause, which was hidden in the abode of production. So as far as the ultimate source of crises was concerned, for Marx money was a mere epiphenomenon and should be analyzed as such. 150 years of subsequent economic theory and evidence has not been kind to this analysis.
SA