Chapter 1: Marx and the monetary business cycle
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In preparing himself for writing his Capital Marx rejected the notion that the capitalist business cycle was a monetary phenomenon that could be regulated by appropriate monetary measures. The ebbs and flows of capitalist production are caused by changes in real production and exchange. However, the capitalists that Marx observed chronically short of financial resources and hence reliant on bank borrowing. Under the gold standard this meant that the banking system was subject to ‘drains’ of reserves, and these therefore played a part in the business cycles that Marx observed.