Why capitalism goes into crisis: a Marxist analysis
Why does capitalism go into crisis?
To answer this we need to understand how capitalism functions. Capitalism is driven by profit—that much I’m sure we all understand by now—but where does this profit come from?
We’ve all heard the phrase ‘making money’ but that phrase doesn’t make any sense! Money is just piece of paper—or plastic if you're canadian—but in and of itself money has no value. Rather it is a representation of value, a commodity which can be exchanged for other commodities. That value can’t be created, it has to come from somewhere.
So if money is just a representation of value then when a company ‘makes money’ i.e when they profit, where does that profit come from?
It comes from the unpaid labour of the working class.
The workers produce all the wealth in society while the bosses, the bourgeoisie appropriate the vast majority of it. But in this arises a problem: In order to actually profit the commodities produced by the workers must be sold. The capitalist himself has no use for all the commodities the worker produces. His interest is in the money that can be made in selling that commodity. But he has no one to sell it to but the worker, the same worker whose wages account for only a fraction of the value of the commodity being sold!
With the way capitalism functions—by extracting surplus value from the labour of the working class—Workers as a whole cannot afford to buy back the value they produce, if they could then that capitalists would have no profit.
And that's why capitalism goes into crisis.
It is a crisis of overproduction in which the market cannot absorb the value it produces. This is a contradiction which is baked into the capitalist system, it cannot be solved within the capitalist system, and each time this contradiction manifests itself in crisis, sure the market may recover, but in the process it sows the seeds for an even greater crisis, and further weakens capitalism.
The bourgeoisie cannot exist without capitalism, it cannot exist without exploiting the proletariat, this system of exploitation—the capitalist system—is inherently unsustainable, and with each crisis becomes more unstable. This presents both an existential threat to both classes, and an incredible opportunity for the proletariat. Capitalism having weakened itself can do nothing but wait for its coup de grâce, and the proletariat are the ones compelled to deliver it.
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