In economics, crisis is an old term in business cycle theory, referring to the sharp transition to a recession. It is still used as part of Marxist political economy. It refers to a period in which the normal process of the 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. Buyers bargain for good prices while sellers put forth their best front in Chichicastenango Market, Guatemala. ... An abstract business cycle The business cycle or economic cycle refers to the ups and downs seen somewhat simultaneously in most parts of an economy. ... A recession is usually defined in macroeconomics as a fall of a countrys real Gross Domestic Product in two or more successive quarters of a year. ... Marxian economics refers to a body of economic thought stemming from the work of Karl Marx. ... Political economy was the original term for the study of production, the acts of buying and selling, and their relationships to laws, customs and government. ...

Many or most observers of Karl Marx's theoretical work argue that Marx himself did not come to a final conclusion about the nature of crises under capitalism. Instead, his many works (published and unpublished) suggested several different theories, none of them free from controversy. A key characteristic of these theories is that none of them are natural or accidental in origin but instead arise from the nature of capitalism as a society. In Marx's words, "The real barrier of capitalist production is capital itself."[1] Karl Heinrich Marx (May 5, 1818 Trier, Germany – March 14, 1883 London) was an immensely influential German philosopher, political economist, and revolutionary. ... Capitalism has been defined in various, but similar, ways by different theorists. ...

These theories include:

• 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.

In theory at least, these different views may not contradict each other and may instead be complementary parts of a synthetic crisis theory. Tendency of the rate of profit to fall (TRPF) is a theorem in economics and political economy. ... Most generally, the accumulation of capital refers simply to the gathering or amassment of objects of value; the increase in wealth; or the creation of wealth. ... Capital intensity is the term in economics for the amount of fixed or real capital present in relation to other factors of production, especially labor. ... The organic composition of capital (OCC) is a concept created by Karl Marx in his critique of political economy and used in Marxian economics as a theoretical alternative to neo-classical concepts of factors of production, production functions, capital productivity and capital-output ratios. ... In economics, the profit rate refers to the relative profitability of an investment project or of an capitalist enterprise or for the capitalist economy as a whole. ... In underconsumption theory, recessions and stagnation arise due to inadequate consumer demand relative to the amount produced. ... Surplus value, according to Marxism, is unpaid labour that is extracted from the worker by the capitalist, and serves as the basis for capitalist accumulation. ... In Keynesian economics consumption refers to personal consumption expenditure, i. ... In economics, aggregate demand is the total demand for goods and services in the economy (Y) during a specific time period. ... According to Karl Marx, there is a clear distinction between labor and labor-power in economics. ... In economics, the profit rate refers to the relative profitability of an investment project or of an capitalist enterprise or for the capitalist economy as a whole. ...

See also

• Crisis theory
• International crisis

Crisis theory is a debate within the Marxian theory of political economy. ... An international crisis is a crisis between nations. ...

External links

• "Crisis of Capitalism" by MIA Encyclopedia of Marxism