The current crisis is viewed by most analysts as a financial one, generated by malfunctioning financial market rules affecting the real economy through wealth effects, rising uncertainty and credit crunch. This interpretation is certainly consistent with a vision of crises as exogenous shocks, produced from time to time by more or less unforeseeable events, such as natural catastrophes, political disturbances, terrorist attacks, breaches in the international order, wars, and even the fraudulent, opportunistic behaviours of greedy and unscrupulous financial operators. In the nineteenth century most economists believed business crises were periodic. In the twentieth century economic fluctuations were not empirically regular and modern macroeconomics abandoned attempts to interpret them by means of deterministic cycles. Yet the persistent recurrence of economic crises in the economic history of last two centuries may suggest that they are phases of a cyclical pattern ingrained in the development dynamics of capitalist economies. In which case, explanations founded on exogenous and random causes prove hardly very convincing. In economic literature there are many theories on business cycles, some “endogenous”, others “exogenous”. But most endogenous theories of business cycles do not refer to monetary and financial aspects, while exogenous theories refer to them only as random initial causes. Yet in the history of economic thought we find different interpretations of the relationships between economic and financial crises, such as that of Marx, which set out to show a causative relationship proceeding from the real to the financial, even though the latter tends to appear first. In this paper we attempt to contextualize this kind of interpretation, analysing its internal logic and its consistency with empirical experience. We dwell in particular upon the different abstract causes of economic crises that we can identify in Marx’s works, analysing the way they interact with each other in determining the features of concrete crises in the real world. We also endeavour to draw from these causes some useful implications for a better understanding of the present crisis and to forecast its probable future trends. In particular, in the conclusions, we underline the possible role of underconsumption in determining the current crisis and the ways by which this kind of phenomenon was able to assume the form of a highly speculative and extremely instable credit chain, fed by speculative bubbles.
Scarano, G. (2009). Causative Relationships between Economic and Financial Crises. In Financial Crises in the Economists' View.