What did Marx say

In terms of a Shannon channel.

The mutual entropy between the banking channel and the real goods channel drops, the two networks become incoherent.  Capitalists aggregate ownership and collapse the banking channel, but maintain the longer supply chains for real goods. Since gains from scale are not passed down, the queue sizes at final demand become unstable.  Money loses its utility.

Brad wanted to know.

An example is IBM's attempt to own the bulk of the personal computer industry while maintaining their traditional supply lines.  Microsoft ate their lunch by extending the gains to scale up and down the chain.  IBM had  crisis.

The problem in Marx's time and today is information technology which differentially makes financial manipulation happen faster than real goods can keep up. Likedly cause of the panic of 1907? The telephone switchboard.

Research to follow

From Thoma:

Finite formula found for partition numbers

Economists will look at this new partition formula to model the heteroskedacity they see in household debt problems. If they can verify the model for expanding variances in their measures, then they can get a better handle on channel theory.  Those spreading variances is what separate the Austrians from the Keynesians.  The research will point toward the Young-Fibonacci lattice and supposedly arrives at a limiting function for that lattice which gives a true algebra rather than an incidence algebra.  If economists have this limiting function than they can continue to use minimum variance method, and they will be much closer approximation to channel theory.  For example, watching the housing market as the economy progresses, the DSGE models could give a measure of the sparsity of development o the peripheries of metropolitan areas.

Krugman getting Channel Theory?

But this did mean that no amount of depreciation would be expansionary? No; as I wrote in a little paper at the time, once everyone who could go bankrupt had, any further depreciation would be expansionary. So a sufficiently large depreciation could restore full employment.

If the macro economy reduces rank, lets the yield curve steepen, then we have more stable, but less precise, distribution. Households and firms increase in size and perform more specialization internally.  Overall the channel operates with more noise and less capacity (Shannon), so some default happens as the channel no longer has capacity to support debt service.

We have a name for this, Channel Theory.