At the same time, Durand observes, its narrative is no simple—or rather in this case, of course, highly complex and intricate—empirical tracking of the crisis and its outcomes. Both judgements appear sound. For Godley, one of the key advantages of the stock-flow consistency approach was that it integrated the financial with the real economy, as alternative models did not.
Or can both be coherent in their own terms? With a reticence that does him honour—all but unheard of in an Anglosphere where even bibliographies so often become mere catalogues of self-promotion—he makes no reference to Le Capital fictif , which appeared in France in its English edition Fictitious Capital in , though its bearing on the concerns of Crashed is plain.
A succinct, luminous study, it displays a combination rare in the literature on the economic landscape of the new century: in a bare pages, a driving conceptual energy joined to a controlling empirical grasp of statistical data across all the major capitalist states.
What are the leading themes of the book? At the root of the instability that has triggered successive crises in the last forty years, first in the periphery and then in the core of the global capitalist economy, lies the peculiarity that distinguishes financial markets from markets in goods and services. Whereas in normal times rising prices weaken demand in the real economy, the opposite is generally true of financial securities: the more prices increase, the more these securities are in demand.
The same applies the other way round: during a crisis, the fall in prices engenders fire sales, which translate into the acceleration of the price collapse. This peculiarity of financial products derives from the fact that their purchase—dissociated from any use-value—corresponds to a purely speculative rationale; the objective is to obtain surplus-value by reselling them at a higher price at some later point.
