Debts

I am unable to take seriously people who complain or talk about crisis and yet neither have nor talk about debts, where by ‘debts’ I mean any obligation whose amount remains fixed or changes little when prices change. As early as June 1930 and again in August 1933 I reduced the substance of the crisis to that concept; otherwise, I observed, the crisis would already have passed (in June 1930!) or would not exist at all.1 If in 1929 and then in 1930 and every successive moment it had been miraculously possible each time to recreate the economic world on the basis of the existing desires, sentiments, ideas and personal and material capital; if all prices had been perfectly mobile and able to adjust instantaneously to the existing productive factors, why ever should there have been a crisis? Each price would have been perfectly suited to the purposes people desired in every successive moment. All prices being continually mobile, they would have continually been in equilibrium among themselves and with the psychological and technical factors of the economic world. A crisis is an impotent effort to restore a broken equilibrium. It is due to some constraint that prevents one or several elements of the economic mechanism from changing while the rest changes, so that the machine jams or jars or breaks down because the parts fail to mesh. Constraints are necessary to the working of the mechanism, since the latter is operated by man, an imperfect creature unsuited to the terrible, continuous nervous tension of a perfectly mobile system.2