Crisis theory

economic crisiscrisiscrisis of capitalismcrisesCrisis (Marxian)latter stagescapitalist crisisclassical economic Marxist crisesCrises Debatecrises of capitalism
Crisis theory, concerning the causes and consequences of the tendency for the rate of profit to fall in a capitalist system, is now generally associated with Marxist economics.wikipedia
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Marxian economics

MarxianMarxian economistMarxist economics
Crisis theory, concerning the causes and consequences of the tendency for the rate of profit to fall in a capitalist system, is now generally associated with Marxist economics.
Marxian economics concerns itself variously with the analysis of crisis in capitalism, the role and distribution of the surplus product and surplus value in various types of economic systems, the nature and origin of economic value, the impact of class and class struggle on economic and political processes, and the process of economic evolution.

Tendency of the rate of profit to fall

falling rate of profitfalling rates of profitdecline of the average rate of profit
Crisis theory, concerning the causes and consequences of the tendency for the rate of profit to fall in a capitalist system, is now generally associated with Marxist economics.
Other orthodox Marxists or economists inspired by Marx (including Karl Kautsky, Mikhail Tugan-Baranovsky, Nikolai Bukharin, Rudolf Hilferding, Rosa Luxemburg, Vladimir Lenin, Otto Bauer, Fritz Sternberg, Natalia Moszkowska, Oskar Lange, Michał Kalecki, Paul Sweezy, Kei Shibata, Kozo Uno, Nobuo Okishio and Makoto Itoh) provided alternative crisis theories, focusing variously on the anarchy of capitalist production, sectoral disproportions, underconsumption and realization problems, labor-shortage and population pressures, credit insufficiency, excess capital, state policy, productivity and wages squeezing profits.

Karl Marx

MarxMarx, KarlMarxist
John Stuart Mill in his Of the Tendency of Profits to a Minimum which forms Chapter III of Book IV of his Principles of Political Economy and Chapter V, Consequences of the Tendency of Profits to a Minimum, provides a conspectus of the then accepted understanding of a number of the key elements, after David Ricardo, but without Karl Marx's theoretical working out of the theory that Frederick Engels posthumously published in Capital, Volume III.
For Marx, class antagonisms under capitalism, owing in part to its instability and crisis-prone nature, would eventuate the working class' development of class consciousness, leading to their conquest of political power and eventually the establishment of a classless, communist society constituted by a free association of producers.

Henryk Grossman

Grossman, HenrykHenryk Grossman's crisis schemaHenryk Grossmann
Although Henry Hyndman attempted to present, popularise and defend Marx's theory of crisis in lectures delivered in 1893 and 1894 and published in 1896, it was Henryk Grossman in 1929 who later most successfully rescued Marx's theoretical presentation ... 'he was the first Marxist to systematically explore the tendency for the organic composition of capital to rise and hence for the rate of profit to fall as a fundamental feature of Marx's explanation of economic crises in Capital.' Apparently entirely independently Samezō Kuruma was also in 1929 drawing attention to the decisive importance in Marx's writings and made the explicit connection between Crisis theory and the theory of imperialism.
Grossman's key contribution to political-economic theory was his book, The Law of Accumulation and Breakdown of the Capitalist System, a study in Marxian crisis theory.

Rudolf Hilferding

HilferdingRudolph HilferdingDr. Rudolf Hilferding
A relatively small group including Rosa Luxemburg and Lenin attempted to defend the revolutionary implications of the theory, while others, first Eduard Bernstein and then Rudolf Hilferding, argued against its continued applicability, and thereby founded one of the mainstreams of revision of the interpretation of Marx's ideas after Marx.
Hilferding also participated in the "Crises Debate" – disputing Marx's theory of the instability and eventual breakdown of capitalism on the basis that the concentration of capital is actually stabilizing.

Jean Charles Léonard de Sismondi

SismondiJean de SismondiJean Charles Leonard de Sismondi
Earlier analysis by Jean Charles Léonard de Sismondi provided the first suggestions of the systemic roots of Crisis.
and as such is the earliest theorist of systemic Crisis theory.

Capital, Volume III

Capital'', volume 3Capital'', Volume IIIIII (1894)
John Stuart Mill in his Of the Tendency of Profits to a Minimum which forms Chapter III of Book IV of his Principles of Political Economy and Chapter V, Consequences of the Tendency of Profits to a Minimum, provides a conspectus of the then accepted understanding of a number of the key elements, after David Ricardo, but without Karl Marx's theoretical working out of the theory that Frederick Engels posthumously published in Capital, Volume III.
This result which orthodox Marxists believe is a principal contradictory characteristic leading to an inevitable collapse of the capitalist order was held by Marx and Engels to—as a result of various contradictions in the capitalist mode of production—result in crises whose resolution necessitates the emergence of an entirely new mode of production as the culmination of the same historical dialectic that led to the emergence of capitalism from prior forms.

Capitalism

capitalistcapitalistscapitalistic
Crisis theory, concerning the causes and consequences of the tendency for the rate of profit to fall in a capitalist system, is now generally associated with Marxist economics. Keynesian's argue that a "crisis" may refer to an especially sharp bust cycle of the regular boom and bust pattern of "chaotic" capitalist development, which, if no countervailing action is taken, could continue to develop into a recession or depression.
In their critique of capitalism, Marxism and Leninism both emphasise the role of "finance capital" as the determining and ruling-class interest in capitalist society, particularly in the latter stages.

Business cycle

economic boomboomboom and bust
Keynesian's argue that a "crisis" may refer to an especially sharp bust cycle of the regular boom and bust pattern of "chaotic" capitalist development, which, if no countervailing action is taken, could continue to develop into a recession or depression.
Contrarily, in the heterodox tradition of Jean Charles Léonard de Sismondi, Clément Juglar, and Marx the recurrent upturns and downturns of the market system are an endogenous characteristic of it.

Paul Mattick

Mattick, PaulPaul Mattick Sr.
Paul Mattick's Economic Crisis and Crisis Theory published by Merlin Press in 1981 is an accessible introduction and discussion derived from Grossman's work.
From this time, Mattick focused on Marx's theory of capitalist development and its inner logic of contradictions inevitably growing to crisis as the foundation of all political thoughts within the workers' movement.

Underconsumption

underconsumptionistunderconsumptionismbloated retail inventories in the United States
Yaffe noted in 1972 that "... passages in Volume III referring to the underconsumption of the masses in no way can be interpreted as an underconsumptionist theory of crisis. The citation usually given in support of an 'underconsumptionist theory of crisis' is Marx's statement that "The last cause of all real crises always remains the poverty and restricted consumption of the masses as compared to the tendency of capitalist production to develop the productive forces in such a way, that only the absolute power of consumption of the entire society would be their limit" The above passage contains within it no more than a description or a restatement of the capitalist relations of production. Marx called it a tautology to explain the crisis by lack of effective consumption ... "
. ." Marx argued that the primary source of capitalist crisis was not located in the realm of consumption, but rather, in production. In general, as Anwar Shaikh has argued, production creates the basis for consumption, because it puts purchasing power into the hands of workers and fellow capitalists. To produce anything requires the individual capitalist to buy machines (capital goods) and employ workers.

Anwar Shaikh (economist)

Anwar ShaikhShaikh, Anwar
A survey of the competing theories of crisis in the different strands of political economy and economics was provided by Anwar Shaikh in 1978.

Mode of production

modes of productionproductionarticulation
It continues to be argued in terms of historical materialism theory, that such crises will repeat until objective and subjective factors combine to precipitate the transition to the new mode of production either by sudden collapse in a final crisis or gradual erosion of the basing on competition and the emerging dominance of cooperation.

Marxism

MarxistMarxistsMarxist ideology
According to Marxian crisis theory, socialism is not an inevitability, but an economic necessity.

Pavel Maksakovsky

In 1929 the Communist Academy in Moscow published "The Capitalist Cycle: An Essay on the Marxist Theory of the Cycle", a 1927 report by Bolshevik theoretician Pavel Maksakovsky to the seminar on the theory of reproduction at the Institute of Red Professors of the Communist Academy.
A brief description of the book is in Crisis theory.

Organic composition of capital

technical composition of capitalorganic compositionorganic composition of production
The magnitude of the OCC is important in Marxist crisis theory because of its impact on the average rate of profit.

John Stuart Mill

MillJ.S. MillJ. S. Mill
John Stuart Mill in his Of the Tendency of Profits to a Minimum which forms Chapter III of Book IV of his Principles of Political Economy and Chapter V, Consequences of the Tendency of Profits to a Minimum, provides a conspectus of the then accepted understanding of a number of the key elements, after David Ricardo, but without Karl Marx's theoretical working out of the theory that Frederick Engels posthumously published in Capital, Volume III.

Profit (economics)

profitprofitsprofitability
John Stuart Mill in his Of the Tendency of Profits to a Minimum which forms Chapter III of Book IV of his Principles of Political Economy and Chapter V, Consequences of the Tendency of Profits to a Minimum, provides a conspectus of the then accepted understanding of a number of the key elements, after David Ricardo, but without Karl Marx's theoretical working out of the theory that Frederick Engels posthumously published in Capital, Volume III.

Principles of Political Economy

The Principles of Political Economy: with some of their applications to social philosophy
John Stuart Mill in his Of the Tendency of Profits to a Minimum which forms Chapter III of Book IV of his Principles of Political Economy and Chapter V, Consequences of the Tendency of Profits to a Minimum, provides a conspectus of the then accepted understanding of a number of the key elements, after David Ricardo, but without Karl Marx's theoretical working out of the theory that Frederick Engels posthumously published in Capital, Volume III.

David Ricardo

RicardoRicardianDavid Ricardo,MP
John Stuart Mill in his Of the Tendency of Profits to a Minimum which forms Chapter III of Book IV of his Principles of Political Economy and Chapter V, Consequences of the Tendency of Profits to a Minimum, provides a conspectus of the then accepted understanding of a number of the key elements, after David Ricardo, but without Karl Marx's theoretical working out of the theory that Frederick Engels posthumously published in Capital, Volume III.

Friedrich Engels

EngelsFrederick EngelsFrederich Engels
John Stuart Mill in his Of the Tendency of Profits to a Minimum which forms Chapter III of Book IV of his Principles of Political Economy and Chapter V, Consequences of the Tendency of Profits to a Minimum, provides a conspectus of the then accepted understanding of a number of the key elements, after David Ricardo, but without Karl Marx's theoretical working out of the theory that Frederick Engels posthumously published in Capital, Volume III.

Rosa Luxemburg

LuxemburgismLuxemburgLuxemburgist
A relatively small group including Rosa Luxemburg and Lenin attempted to defend the revolutionary implications of the theory, while others, first Eduard Bernstein and then Rudolf Hilferding, argued against its continued applicability, and thereby founded one of the mainstreams of revision of the interpretation of Marx's ideas after Marx.

Eduard Bernstein

Edward BernsteinBernsteinBernsteinism
A relatively small group including Rosa Luxemburg and Lenin attempted to defend the revolutionary implications of the theory, while others, first Eduard Bernstein and then Rudolf Hilferding, argued against its continued applicability, and thereby founded one of the mainstreams of revision of the interpretation of Marx's ideas after Marx.

Henry Hyndman

H. M. HyndmanH.M. HyndmanH. M Hyndman
Although Henry Hyndman attempted to present, popularise and defend Marx's theory of crisis in lectures delivered in 1893 and 1894 and published in 1896, it was Henryk Grossman in 1929 who later most successfully rescued Marx's theoretical presentation ... 'he was the first Marxist to systematically explore the tendency for the organic composition of capital to rise and hence for the rate of profit to fall as a fundamental feature of Marx's explanation of economic crises in Capital.' Apparently entirely independently Samezō Kuruma was also in 1929 drawing attention to the decisive importance in Marx's writings and made the explicit connection between Crisis theory and the theory of imperialism.