Crisis Theory - Influence

Influence

Crisis theory is central to Marx's writings; it helps underpin Marxists’ understanding of a need for systemic change. It is controversial; Roman Rosdolsky said “The assertion that Marx did not propose a ‘breakdown theory’ is primarily attributable to the revisionist interpretation of Marx before and after the First World War. Rosa Luxemburg and Henryk Grossman both rendered inestimable theoretical services by insisting, as against the revisionists, on the breakdown theory.” More recently David Yaffe 1972,1978 and Tony Allen et al 1978,1981 in using the theory to explain the conditions of the 1970s and 1980s re-introduced the theory to a new generation and gained new readers for Grossman's presentation of Marx's crisis theory.

An attempt was made to re-present aspects of the working out of the theory in a mathematical form in the work of Henryk Grossman. Central to the argument is the claim that, within a given business cycle, the accumulation of surplus from year to year leads to a kind of top-heaviness, in which a relatively fixed number of workers have to add profit to an ever-larger lump of investment capital. This observation leads to what is known as Marx's law of the tendency of the rate of profit to fall. Unless certain countervailing possibilities are available, the exponential growth of capital out-paces the growth in labor productivity, so the profits of economic activity have to be shared out more thinly among capitals, i.e., at a lower profit rate. When countervailing tendencies are unavailable or exhausted, the system requires the destruction of capital values in order to return to profitability.

Paul Mattick's Economic Crisis and Crisis Theory published by Merlin Press in 1981 is an accessible introduction and discussion derived from Grossman's work. François Chesnais's chapter Marx's Crisis Theory Today in Christopher Freeman ed. Design, Innovation and Long Cycles in Economic Development Frances Pinter, London, discussed the continuing relevance of the theory.