Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

468 Money, Bank Credit, and Economic CyclesHence we can conclude that an inherent trend in the privilegedexercise of fractional-reserve banking leads to bank consolidationand encourages bankers to develop and maintain closerelations with the central bank as the only institution capable ofguaranteeing banks’ survival in moments of crisis, situationsbanks themselves create regularly. Furthermore the centralbank directs, orchestrates, and organizes credit expansion,making sure that banks expand more or less in unison andthat none stray far from the established pace.16MARX, HAYEK, AND THE VIEW THAT ECONOMICCRISES ARE INTRINSIC TO MARKET ECONOMIESIt is interesting to note that Marx, in his analysis of the capitalisteconomic system, basically concentrates on the study ofthe imbalances and maladjustments which occur in the market.This accounts for the fact that Marxist theory is primarilya theory of market disequilibrium and that occasionally iteven coincides remarkably with the dynamic analysis of marketprocesses which was developed by economists of the AustrianSchool, and particularly by Mises and Hayek themselves.One of the more curious points on which a certainagreement exists relates precisely to the theory of the crisesand recessions which systematically ravage the capitalist system.Thus it is interesting to observe that certain authors of theMarxist tradition, such as the Ukrainian Mikhail IvanovichTugan-Baranovsky (1865–1919), reached the conclusion thateconomic crises originate from a tendency toward a lack of proportionamong the different branches of production, a lackTugan-Baranovsky believed inherent in the capitalist system.71 According to Baranovsky, crises occur becausethe distribution of production ceases to be proportional: themachines, tools, tiles and wood used in construction are71 Tugan-Baranovsky, Industrial Crises in Contemporary Britain. Spanishtranslation included in Lecturas de economía política, Francisco Cabrillo,ed. (Madrid: Minerva Ediciones, 1991), pp. 190–210. See also chapter 7,footnote 87.