Crisis Theory According to Marx,

Crisis Theory

According to Marx, it is inevitable that capitalism will lead to economic crisis. The basis of capitalism is that a commodity is created and sold. The creator of the commodity is separated from the product, in that he or she does not directly use the product, but rather the capital generated by the sales process. In this way, a separation occurs between producer and product, while people in such a society are becoming increasingly interdependent. As such, survival no longer depends directly upon produce, but rather upon the process of purchase and sales. The economic crisis referred to by Marx then results when daily fluctuations in capital occur to the extreme. When the purchase and sale process presents trouble, such as that the perceived use-value of a product is not sufficient for sales to generate a profit, or when money gained from labor is not enough to purchase the commodity, a discrepancy is created between commodity and market demand, and the process falls apart. As such, Marx explicates economic crises as firstly in the form of the commodity, in which there is a discrepancy between use-value and purchase price, while the second form of such crises focuses on money as a means of acquiring the commodity - a lack of capital results in less buying power.

According to Marx, the position of the apologetics is based upon a denial of instabilities that could result in crises. The apologetics in this way refuse to accept that crises are even possible. Indeed, the very elements of capitalist production are denied, including the product as commodity, the money used to buy the commodity, the separation of exchange and the relation of both money and commodities to wage and labor.

According to the apologetics, the overproduction of commodities lead to a surplus availability and the lowering of prices. In such a climate, no crisis is possible, as the products are always available for purchase. Marx however argues that this view is based upon a false view of production as either one where there is no distinction between purchase and sale, or one that sees the process as one of social production, where society distributes its productive forces according to social needs. There is no distinction between products that are exchanged to fill actual needs and those created to fulfill desires. This disregard for the true dynamic of capitalism creates the false perception that no crises can result. Marx however holds that the apologetics are vocal only in times of prosperity, while they are conspicuously silent during times when crises do ensue.

The most prominent related debate around globalization today revolves around the benefits (or lack thereof) of free market principles. Many hold that the free market system is beneficial for all participants, while others believe that the system perpetuates the poverty of third-world countries attempting to participate in the world market. At the same time, the richest countries become ever richer as a result.

The type of denial of the possibility of increasing poverty is reminiscent of the apologetic denial of crisis. Poverty is increased in poor countries by denying them the right to compete with foreign markets by heavily subsidizing farmers from rich countries. These subsidies enable farmers from prosperous countries to trade their goods at a lower price than those from developing countries, whose governments are not allowed to provide subsidies.