THEORIES OF CAPITALIST CRISIS

THEORIES OF CAPITALIST CRISIS


Marxist theories of crisis have been elaborated for the industrialized capitalist system of the centre countries. There are crisis associated with the falling tendency of the rate of profit and there are realization crisis. The tendency of the rate of profit to fall as accumulation proceeds under capitalism can cause a crisis and lead to disequilibrium. On the other hand , realization crisis are associated with disequilibrium in which commodities are sell at price less than their values.

Causes of crisis:

The causes of crisis analyzed mainly in three sets of theories associated with the two types of crisis. They are,

1. falling rate of profit

2. disproportionality and

3. underconsumption.

The falling rate of profit:



According to Marx,

“the falling tendency of rate of profit as the prime cause of capitalist crisis”

The endogenous fall in the rate of profit may be due to an increase in the wage rate in the short run. There is an inherent tendency of the rate of profit to fall in the long run in a capitalist economy.

TO BE Cntd.