What is the Crisis About? Fictitious Capital or the Destruction of Wealth? michael perelman ________________________________ 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: http://michaelperelman.wordpress.com/2009/03/11/what-is-the-crisis-about-fictitious-capital-or-the-destruction-of-wealth/
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