[Marxism] What is the Crisis About? Fictitious Capital or the Destruction of Wealth?

michael perelman michael at ecst.csuchico.edu
Wed Mar 11 10:05:00 MDT 2009

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:


Michael Perelman
Economics Department
California State University
Chico, CA

530 898 5321
fax 530 898 5901

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