Economic downturns

[ColonelCossack]

What happens to all the money when these sort of things happen? Is it just floating around serving no real purpose? Or what?

[Stalin Ate My Homework]

The bourgeoisie accumulate too much money and find that there's not enough of them to buy the products they are selling regardless of how much money they actually have. Then its us proletarians left without employment as the bourgeoisie seek to address the crisis of overproduction. So in answer to your question its a case of too much money ending up in too few hands.

[ColonelCossack]

That's what I thought.

[Stalin Ate My Homework]

That's only a rough understanding I'm still too scared to try and read Capital :lol:

[Psy]

The money is still there as economic downturns happen not because a shortage of money but of surplus value meaning commodities are not being turning into enough money to maintain an acceptable rate of profit for capitalists.

So if all the capitalists in the world only have $100 between them all, then getting $5 is good as then they would have $105 and expect $5.25 next cycle thus $110.25 and expect $5.51 and so on. Now at the very low peak of the current crisis the rate of profit was negative 2% so again lets say the wealth of all capitalists is $100 well they lost $2 and end up with $98 for the next cycle as the productive cycle costs more then the market value of the communities they produced on average.

Of course this is only look at the global rate of profit, larger capitalists of course was able to cannibalize weaker capitalists yet this is not a permanent solution and capitalists now this so they start hording capital as they don't see a good return on their capital by putting capital into commodity production.

[ColonelCossack]

I remember now.