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Did Marx fail to account for the Credit System?

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Soviet cogitations: 299
Defected to the U.S.S.R.: 06 Jul 2009, 10:14
Komsomol
Post 06 Mar 2012, 08:47
Did Marx fail to account for the Credit System which developed in Capitalist nations in the 1900s? Credit is a capitalist scam that has prevented the collapse of the system. Without credit, no one would be able to afford a car or many other things produced in a capitalist economy. Did Marx foresee this? If not, does it discredit his analysis of the inevitable collapse of Capitalism? How do modern Marxist incorporate the system of credit in their analysis?
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Soviet cogitations: 4032
Defected to the U.S.S.R.: 27 Oct 2006, 23:10
Politburo
Post 06 Mar 2012, 10:14
I dunno if anyone has figured it out very well. I've tried to do it myself, but failed (obviously).
Credit makes very little sense (to marxists, at least).
I've only ever seen people treat it like just some other method of control or a thing that is happening.
I think it is something just as profound as 'imperialism.'
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Defected to the U.S.S.R.: 10 Sep 2006, 22:05
Ideology: Marxism-Leninism
Philosophized
Post 06 Mar 2012, 10:25
It's not really all that complicated is it? National debt existed in Marx's time although not as it exists today. Really the whole thing is just a gerry-rig of a rapidly crumbling system. But instead of being salvation it has hidden crises and/or expanded them. There is no "fix" to capitalism, there is just the inexorable drive towards socialism.
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Defected to the U.S.S.R.: 24 Jun 2011, 08:37
Party Bureaucrat
Post 06 Mar 2012, 17:55
Additionally, the availability of consumer credit (often in the form of credit cards) helps mask the fact that people (at least in the US) are poorer than ever. So people can buy loads of consumer goods but at incredible prices ultimately
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Defected to the U.S.S.R.: 04 Aug 2004, 20:49
Ideology: Democratic Socialism
Embalmed
Post 12 Mar 2012, 18:54
Marx wrote:
Credit is conceivable in two relationships and under two different conditions. The two relationships are: first, a rich man gives credit to a poor man whom he considers industrious and decent. This kind of credit belongs to the romantic, sentimental part of political economy, to its aberrations, excesses, exceptions, not to the rule. But even assuming this exception and granting this romantic possibility, the life of the poor man and his talents and activity serve the rich man as a guarantee of the repayment of the money lent. That means, therefore, that all the social virtues of the poor man, the content of his vital activity, his existence itself, represent for the rich man the reimbursement of his capital with the customary interest. Hence the death of the poor man is the worst eventuality for the creditor. It is the death of his capital together with the interest. One ought to consider how vile it is to estimate the value of a man in money, as happens in the credit relationship. As a matter of course, the creditor possesses, besides moral guarantees, also the guarantee of legal compulsion and still other more or less real guarantees for his man. If the man to whom credit is given is himself a man of means, credit becomes merely a medium facilitating exchange, that is to say, money itself is raised to a completely ideal form. Credit is the economic judgment on the morality of a man. In credit, the man himself, instead of metal or paper, has become the mediator of exchange, not however as a man, but as the mode of existence of capital and interest. The medium of exchange, therefore, has certainly returned out of its material form and been put back in man, but only because the man himself has been put outside himself and has himself assumed a material form. Within the credit relationship, it is not the case that money is transcended in man, but that man himself is turned into money, or money is incorporated in him. Human individuality, human morality itself, has become both an object of commerce and the material in which money exists. Instead of money, or paper, it is my own personal existence, my flesh and blood, my social virtue and importance, which constitutes the material, corporeal form of the spirit of money. Credit no longer resolves the value of money into money but into human flesh and the human heart. Such is the extent to which all progress and all inconsistencies within a false system are extreme retrogression and the extreme consequence of vileness.

Within the credit system, its nature, estranged from man, under the appearance of an extreme economic appreciation of man, operates in a double way:

1) The antithesis between capitalist and worker, between big and small capitalists, becomes still greater since credit is given only to him who already has, and is a new opportunity of accumulation for the rich man, or since the poor man finds that the arbitrary discretion of the rich man and the latter's judgment over him confirm or deny his entire existence and that his existence is wholly dependent on this contingency.

2) Mutual dissimulation, hypocrisy and sanctimoniousness are carried to extreme lengths, so that on the man without credit is pronounced not only the simple judgment that he is poor, but in addition a pejorative moral judgment that he possesses no trust, no recognition, and therefore is a social pariah, a bad man, and in addition to his privation, the poor man undergoes this humiliation and the humiliating necessity of having to ask the rich man for credit.

3) Since, owing to this completely nominal existence of money, counterfeiting cannot be undertaken by man in any other material than his own person, he has to make himself into counterfeit coin, obtain credit by stealth, by lying, etc., and this credit relationship – both on the part of the man who trusts and of the man who needs trust – becomes an object of commerce, an object of mutual deception and misuse. Here it is also glaringly evident that distrust is the basis of economic trust; distrustful calculation whether credit ought to be given or not; spying into the secrets of the private life, etc., of the one seeking credit; the disclosure of temporary straits in order to overthrow a rival by a sudden shattering of his credit, etc. The whole system of bankruptcy, spurious enterprises, etc.... As regards government loans, the state occupies exactly the same place as the man does in the earlier example.... In the game with government securities it is seen how the state has become the plaything of businessmen, etc.

4) The credit system finally has its completion in the banking system. The creation of bankers, the political domination of the bank, the concentration of wealth in these hands, this economic Areopagus of the nation, is the worthy completion of the money system.

Owing to the fact that in the credit system the moral recognition of a man, as also trust in the state, etc., take the form of credit, the secret contained in the lie of moral recognition, the immoral vileness of this morality, as also the sanctimoniousness and egoism of that trust in the state, become evident and show themselves for what they really are.



No, he didn't overlook it, but it was largely little to do with whole modes of capitalist accumulation back in the day - whereas now shifting credit and this "ideal" form of money from A to B was a viable system for economic growth.
This source is rarely ever read or noted. But it's good, part of his Paris Manuscripts and one that is often ignored for reasons unknown.

Edit: Does that answer your query, Mr Red_Bull?
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"Phil Spector is haunting Europe" -Dr. Karl H. Marx
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Soviet cogitations: 299
Defected to the U.S.S.R.: 06 Jul 2009, 10:14
Komsomol
Post 12 Mar 2012, 21:41
Quote:
Edit: Does that answer your query, Mr Red_Bull?

Yeah this is exactly what I was looking for. I wasn't sure if credit was discussed back then. I assumed it was more of a modern issue.
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Defected to the U.S.S.R.: 12 Jul 2005, 01:11
Party Member
Post 27 Mar 2012, 07:47
According to Marx, credit is "fictitious capital" as illustrated in Das Kapital volume 3.

http://www.marxists.org/archive/marx/wo ... 3/ch25.htm
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Defected to the U.S.S.R.: 04 Aug 2004, 20:49
Ideology: Democratic Socialism
Embalmed
Post 29 Mar 2012, 10:49
That's macro-economic argumentation though, dealing with productive credit (i.e. credit utilised for the expansion/accumulation of capital), which is in a completely different ballpark to personal borrowing to create an illusory effective demand that would otherwise be impossible, credit for consumption if you will. The two examples below should at least give a reasonable picture of what that chapter is about:

Quote:
And in most cases these basic enterprises were already over-burdened. The enticingly high profits had led to far more extensive operations than justified by the available liquid resources. Yet there was credit-easy to obtain and cheap. The bank discount rate stood low: 1¾ to 2¾% in 1844, less than 3% until October 1845, rising to 5% for a while (February 1846), then dropping again to 3¼% in December 1846. The Bank of England had an unheard-of supply of gold in its vaults. All inland quotations were higher than ever before. Why then allow this splendid opportunity to escape? Why not go in for all one was worth? Why not send all one could manufacture to foreign markets which pined for English goods? And why should not the manufacturer himself pocket the double gain arising from selling yarn and fabrics in the Far East, and the return cargo in England?

Thus arose the system of mass consignments to India and China against advance payments, and this soon developed into a system of consignments purely for the sake of getting advances, as described in greater detail in the following notes, which led inevitably to over-flooding the markets and a crash.


Quote:
Mr. A in London instructs a Mr. B to buy from the manufacturer C in Manchester commodities for shipment to a Mr. D in East India. B pays C in six months' drafts to be made out by C on B. B secures himself by six months' drafts on A. As soon as the goods are shipped A makes out six months' drafts on D against the mailed bill of lading.


Thus not what Red_Bull was exactly after.
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"Phil Spector is haunting Europe" -Dr. Karl H. Marx
Soviet cogitations: 124
Defected to the U.S.S.R.: 19 Mar 2012, 00:06
Unperson
Post 31 Mar 2012, 14:40
Just manufacture excess or surplus retain products and machineries available in capitalist countries, put them in storage, and pull them out when somebody wants to buy them. We do not have to avail ourselves of credit to buy thosee things. They're readily available for a price. Uncertainty in credit only compels the capitalist to cut on wages.
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