Main article: Crisis Cycle
According to Karl Marx, while the mass gain increases during economic expansion, the rate of profit tends to decline because it reduces the proportion of value added with respect to the total value of the goods, ie same, due to technological advance reduces the proportion of living labor contract with respect to the capital invested. The low rate of gain and the accelerated accumulation are two different ways of expressing the same process of development of productive capacity. The return on investment is propelled by the spring of capitalist production: the rapid growth to reduce overall profitability of capital, leading to declining investment and conflict of these factors appears periodically in the form of crisis .
Capitalist growth conditions are restored by INMOVILIZACION and even the destruction of capital. The bankruptcy means the economic destruction of capital, which ceases to function as such, while the capitalists who survive can be taken from their markets and competitors buy very cheap plants. The economic destruction of a more acute is referring to the capital invested in securities representing the right to gain a future. In addition, wars destroy physical capital and allows the appropriation of resources and free sale inventory to make war and to rebuild the destroyed areas or countries.
Due to the massive increase in unemployment, the crisis leads to lower wages, while many raw materials and machinery were also obtained at very low prices and thus, the capital that exceeds the crisis can be reversed again with high yields. The crisis ends when the destruction of capital that has caused and the measures taken, including the appropriation of state resources, an investment in countries or regions where the return on capital is high, the war and the looting of the colonies, leading upward from the general rate of profit and the economy is reactivated. The stop of production preparing its further expansion in the same way that growth prepares the crisis and resumed the cycle .
Indeed, since 1825, the year in which the first general crisis erupts, do not spend ten years that followed, without all the industrial and commercial world, production and exchange … will go mad. Trade was paralyzed, the markets are oversaturated goods, products are stuck in crowded stores, without finding out, the cash becomes invisible, the credit vanishes, factories stopped, the working classes have no means of living because have produced in excess, bankruptcies and liquidations succeed each other. The stagnation lasts for whole year, the productive forces and products are wasted and destroyed en masse, until, finally, the masses of accumulated goods, more or less depreciated, find out, and the production and exchange are gradually reviving . Gradually, progress is accelerating the shift from road turns into a trot, trot industrial, gallop and, finally, on race, beating of bells in industry, trade, credit and speculation, to finish Finally, after jumping more risky in the pit of a crash. And so, again and again .
This Thing Called Courage: South Boston Stories by J. G. Hayes (Hardcover – Jun 1, 2002)