In Marxian economics, crisis refers to what is called, even currently and outside Marxian theory in many European countries a "conjucture" or especially sharp bust cycle of the regular boom and bust pattern of what Marxist term "chaotic" capitalist development, which will if no countervailing action is taken, mark the transition to a recession or depression. See for example 1994 economic crisis in Mexico, Argentine economic crisis (1999-2002), South American economic crisis of 2002, Economic crisis of Cameroon, Financial crisis of 2007–2009, Great Depression, etc.
A financial crisis may be a banking crisis or currency crisis. It is used as part of Marxist political economy, usually in the specific formulation of the crisis of capitalism. It refers to a period in which the normal reproduction of an economic process over time suffers from a temporary breakdown. This crisis period encourages intensified class conflict or societal change — or the revival of a more normal accumulation process.
In Marxist terms, all such crises are crises of overproduction and immiseration of the workers who were it not for the distribution of wealth based on the capitalist order would be able to absorb any demand. Indeed it is predicative of a democratic socialist planned economy that production and consumption are, at least within available technical capability, in sync. Marx in his many works (published and unpublished) suggested several different theories, none of them free from controversy to explain how this worked out in particular circumstances. In his mature work his theory of crisis is framed as a Law of Tendency for the Rate of Profit to Fall combined with a discussion of various counter tendencies, which may slow or modify it’s impact. A key characteristic of these theoretical factors is that none of them are natural or accidental in origin but instead arise from systemic elements of capitalism as a mode of production and basic social order. In Marx's words, "The real barrier of capitalist production is capital itself.
These systemic factors include the classical 3:
- The tendency of the rate of profit to fall. The accumulation of capital involves a general tendency for the degree of capital intensity, i.e., the "organic composition of capital" of production to rise. All else constant, this leads to a fall in the rate of profit, which leads to a slow-down of capitalism and perhaps a crisis.
- Underconsumption. If the capitalists win the class struggle to push wages down and labor effort up, raising the rate of surplus value, then a capitalist economy faces regular problems of inadequate consumer demand and thus inadequate aggregate demand.
- Full employment profit squeeze. Capital accumulation can pull up the demand for labor power, raising wages. If wages rise "too high," it hurts the rate of profit, causing a recession.
as well as pragmatic details of the historical development of capitalism such as the globalisation of production, the willingness of financial capital to create bubbles of fictitious capital not tied to actual production, the failure of capitalism to produce workers with skills in demand or to utilize same efficiently, etc.
However, as stated above, all such factors resolve to the synthetic viewpoint that all such crises are crises of over and/or misappropriated production relative to the ability and/or willingness of the workers who generate the bulk of demand to consume.
It is also a tenet of most orthodox Marxists that such crises are increasingly severe until the contradictions inherent in the mismatch between the mode of production and the development of productive forces reach an ultimate final point of failure, largely determined by the development of the consciousness of the working class.
- "". marxists.org
- "Crisis of Capitalism" by MIA Encyclopedia of Marxism