The Kinetic Theory of Economic Crises 47 



open-sesame to riches. It is the Aladdin's lamp which needs but 

 a gentle rub in order to realize all imaginable material wealth. 

 What is psychic is indeed mysterious, for it is new to science ; 

 and it is precisely because it has not admitted of tangible explana- 

 tion that the vogue has felt it to be mysterious. The theory 

 alluded to gives some explanation, but not enough to remove the 

 mystery. The explanation runs as follows : In a state of barter 

 every seller is also a purchaser ; there is, in fact, no distinction ; 

 but in the money economy all is changed ; all producers are sell- 

 ers, and are engaged in warlike competition in order to market 

 their wares. General overproduction becomes possible relatively 

 to money, and even a partial overproduction causes a general fall 

 in prices, since it is well known that something like Gregory 

 King's law is of common occurrence — an increase of amount sold 

 is accompanied by a more than proportional fall in the price of 

 the given article. This is tantamount to a slackening of demand 

 for all articles exchanged for it, and hence to a general fall of 

 prices, — only the given article falls more than the rest. This 

 conclusion may be made to accord perhaps with strict quantity 

 theory of money ; a slackened mutual demand means a less rapid- 

 ity of circulation of goods, a rise of prices, a fall in the value of 

 money, followed ultimately, of course, by a diminution of the 

 amount of money in circulation. 



The producers are represented by these theorists as weighed 

 down with the burden of marketing their goods. Those who 

 control the money are the masters ; they are exempt from this 

 competition for a market ; they have only to wish, and imme- 

 diately their wants are gratified. The money economy therefore 

 introduces a new and strange force, and the state must intervene 

 to protect producers from its vagaries and malign influences. 



In answer, it is to be said in the first place that it is better to 

 look on the change from barter to money-use as a continuous 

 development. Thus, it is a commonplace of orthodox economics 

 that purchase and sale are nothing but a differentiating of barter 

 into two acts that really complete the former simple act, but allow 

 goods to be exchanged in more convenient quantities, money 

 being used to preserve or store the value during the time neces- 



47 



