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Economic Crisis




In Economics , crisis is an old term in Business Cycle theory, referring to the sharp transition to a Recession . See for example 1994 Economic Crisis In Mexico , Argentine Economic Crisis (1999-2002) , South American Economic Crisis Of 2002 , Economic Crisis Of Cameroon . A Financial Crisis may be a Banking Crisis or Currency Crisis .

It is still 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.

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 Instead, his many works (published and unpublished) suggested several different theories, none of them free from controversy.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''." {Link without Title}

These theories include:



  • 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.


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