Marx on Credit and Financial Crises: The Industrial Cycles and the English Experience in the 19th Century

Abstract

This paper presents Marx’s theory of the industrial cycles, creating a synthesis and organizing his approach to this topic, which is fragmented throughout Part 5 of Capital Volume III. Marx’s theory of the industrial cycles explains why and how the credit system periodically drives capitalist production to endogenous business cycles that lead to crises of credit-driven overproduction and financial fragility. The paper presents the basic theoretical elements needed to understand the credit system in Marx’s approach, to later organize Marx’s theory, characterizing each phase of the cycle and indicating the causes of the movements observed for the credit dynamics, which directly affects the capitalist reproduction. It also presents Marx’s historical interpretation of the 1847 crisis in England, analyzing each phase of the cycle and associating it with Marx’s theoretical perspective.