The crisis in the critique of political economy

Image: Nico Becker


The bourgeois system has become too narrow to contain the riches created within it.

“The genius I am who always denies! \ And rightly so; all that comes to be \ Is worthy only to perish" (Mephistopheles in the auspicious by Goethe).

Throughout its history, capitalism has oscillated between successive periods of prosperity and crisis. Its development corresponds to the reproductive dynamics through which periods of expansion and abrupt interruptions alternate cyclically. Karl Marx was the first theorist to deduce these interruptions from the internal logic of capital, demonstrating how the assumptions of the social reproduction process necessarily lead to periodic crises, without the need for exogenous factors for their explanation.

In pre-capitalist modes of production, crises resulted from natural accidents or social catastrophes, always on an exceptional basis, and were expressed in terms of scarcity, given the low productive capacity of such societies. It is only with the advent of the capitalist mode of production that crises begin to be characterized by overproduction and no longer by scarcity, and to integrate the economic dynamic itself as a constitutive element of its structure. It is no longer the outer limits that determine the crisis, it is the explanation of the negativity inherent to capital, it is the means by which it externalizes its fundamental contradictions, veiled and transfigured by the reified forms that express it.

Even though he did not yet have the economic foundation of overproduction, Marx already in 1848 envisioned the crisis as an expression of the contradiction between the development of productive forces and the social relations of production, as well as understanding its periodic recurrence as a cyclical replacement of such contradiction.

As noted in Communist Manifesto: “each crisis regularly destroys not only a large mass of manufactured products, but also a large part of the productive forces already created. (…) Society has too much civilization, too much livelihood, too much industry, too much commerce. The productive forces at its disposal no longer favor the development of bourgeois property relations; on the contrary, they become too powerful for these conditions, they become hampered by them; and, as soon as they free themselves from these obstacles, they throw the whole of society into disarray and threaten the existence of bourgeois property. The bourgeois system became too narrow to contain the riches created within it. And how does the bourgeoisie manage to overcome these crises? On the one hand, by the violent destruction of a large number of productive forces; on the other hand, by the conquest of new markets and by the more intense exploration of the old ones. What does that lead to? To prepare for more extensive and destructive crises and to reduce the means of avoiding them”.[I]

The contradiction between the increasing socialization of economic life and the private appropriation of social wealth was already shown to Marx and Engels as the basis of class antagonism and all the other contradictions that recurrently disturb the social reproduction of capital. The immeasurable drive of capital for self-valorization is indifferent to the conditions of realization, it is limited only by the productive capacity, which pressures for continuous expansion. The conditions of realization, in turn, derive from the relations of production, limited by a conflicting state of distribution. “The mode of production is subject to this form of appropriation despite depriving the assumption on which it rests. In this contradiction, which imbues the new mode of production with its capitalist character, the whole conflict of the present times is contained in germ”.[ii]

The crisis is the way in which contradictions are externalized and, momentarily, resolved, being replaced later on. Since negativity itself is immanent in capital, it cannot be extirpated from it; as a historical totality, it is contradiction in process. In this impossibility lies the historical and limited character of the capitalist mode of production, its inability to incessantly develop the productive forces, under relations of production founded on the exploitation of labor. The concept of crisis acquires central importance in Marx's critique of the capitalist mode of production because, as Jorge Grespan observes, it theoretically reproduces the very critique that capital objectively makes of itself, requiring the dialectical method as a theoretical perspective.

Marx drew up two initial plans for the structure of The capital, one in 1857 and another in 1866. In the first of them, consisting of six books, the last of them would be dedicated to the crisis (approached together with the world market), which may be an indication of the conclusive character that the category would occupy in the logical structure initially Preview. Its background corresponds to the structure known today, in which there is no specific chapter on the subject. Regarding this absence, Roman Rosdolsky states that “a profound analysis of crises” would not be within the scope of Marx’s studies, who would have intentionally left out any systematic investigation in the matter, leaving only scattered formulations throughout his works, without any result. conclusive.[iii]

Even acknowledging that the crisis is a constant concern throughout Marx's theoretical development, Paul Sweezy also claims that it is not possible to find a systematic treatment of the subject. A satisfactory explanation of the crises would require the understanding of concrete economic phenomena, impossible to be apprehended by the level of abstraction operated in The capital, where we would find some constituent elements of a theory of crises, but not a finished theory (which would require a level of realization beyond the work).[iv]

For Osvaldo Coggiola, there would be no incompleteness in Marx's theory of crises, with all its elements present in his works (not only in The capital), but integrated to the theory of accumulation. It would make no sense to have a specific exposition of crises, apart from the general theory of accumulation.[v] Along the same lines, Paul Mattick conceives Marx's theory of accumulation as necessarily a theory of crises, since the downward trend in the rate of profit, the ultimate cause of crises, would permeate the entire process, even if often underlying.[vi]

For Hector Benoit and Ricardo Antunes, there would be in Roman Rosdolsky a confusion between the concepts of crisis and industrial cycles, due to the non-observance of some methodological aspects of the Marxian exposition. According to the authors, it would not be possible to find in Marx a systematized theorization about cyclical movements, which alternate between prosperity and crisis, since the empirical manifestations of crises would not be included in the scope of the approach. There would, however, be a concept of crisis developed throughout the work and assimilated from the reconstruction of its expository method.

He would be present “in every dialectical-expository path of The capital appearing and beginning to develop in the first pages of Book One and ending in the last pages of Book Three. (…) Only by taking this dialectical notion as a presupposition, we consider that it is possible to reach a correct understanding of the exposition method developed in the years that go from 1857 to 1866 and that involves all categories of The capital, from “simple circulation”, passing through “original accumulation” and finally reaching the full notion of “crisis” as and as a result”.[vii] Thus, being the concept of crisis developed passi passu to the concept of capital, it is in its exposition that we must find all its constitutive elements.

According to Jorge Grespan, there is no finished theory of crises in The capital, however, it would be possible to establish a precise content for the crisis, delimiting its theoretical status from the very reconstitution of the concept of capital. As the crisis is an essential constitutive dimension of capital, its own immanent negativity, its determinations can be found, albeit implicitly, throughout the entire work, as an expression of the very movement by which capital denies itself. It cannot be reduced to a specific moment of totality, it is a basic element of capitalist development, which determines the intensity and periodization of accumulation, and acts as a structuring core from which the exposed categories gain meaning.

In Books I and II Marx situates his approach at the level of capital in general, where disruptive negativity has not yet reached the level of its actual occurrence and, therefore, appears only as a potentiality. It is only in Book III, when Marx enters the field of plurality of capitals, that the determinations presented find their saturation point, converting possibilities into necessity. In this sense, understanding the theoretical status of the crisis requires demarcating Marx's methodological bases and reconstructing the entire categorical chain that marks his exposition.

We can divide the method, used by Marx in the critique of political economy, into two phases. The first would refer to the abstraction stage, in which one starts from the concrete, from which the object is isolated in search of higher levels of abstraction, making it possible to obtain its simplest determinations. Here we have the isolation of the essential determinations of the object, from which its secondary aspects are decanted, which puts us before what is essential in a given reality and not a pure type created a priori to guide the investigation. The essence of the categories does not appear in their real existence, apprehensible sensorially, but in the abstracted and mentally represented elements.

The abstracted categories are not for Marx units devoid of content, but organically structured units within a totality. Ilienkov draws attention to the objective existence of abstract forms in Marx, which would not be just ideal reproductions, mental phenomena, but real relations, endowed with objective existence. In this case, the abstract in Marx takes on the meaning of “simple, undeveloped, one-sided, fragmented, “pure” (that is, without the complication of any deforming deficiency). It goes without saying that "the abstract" in this sense can be an objective characteristic of real phenomena, and not just of the phenomena of consciousness.[viii]

The second phase would correspond to the reverse process, returning to the concrete, reinserting the abstracted object in its entirety. While the concrete taken as a starting point refers to the material reality that precedes thought and is its presupposition, as an arrival point it consists of reality “understood or interpreted by thought as an organic totality”. [ix] As a result of the knowledge production process, the concrete thought is the mental reproduction of the real, presented as a synthesis of multiple determinations, obtained through a process of progressive explanation of the categories, where the simplest and most elementary determinations point to the more complex ones.

In this movement, the simplest categories “determine and progressively enrich themselves into more complex and intensive categories, until reaching the total concrete.”[X] Thus, the dynamics of capital is explained as a concept based on a theoretical development that starts from the commodity form, the most elementary category of the capitalist mode of production and, taking value as its guiding thread, goes through its various metamorphoses, in a progressive process of realization , moving towards the more complex forms that travel across the surface of bourgeois society, in order to reproduce the logic of its object as a concrete totality. Thus, the categories are in continuous development throughout The capital, their first appearance is always in their simplest, most abstract form from where, progressively and contradictorily, they develop to greater levels of concreteness.

This imposes on us the need to understand the work in its entirety, since a partial reading would give us a mistaken view when we are faced with only a part of the development of the concept, often in contradiction with its final exposition. The determinations of the categories studied are only made explicit in their dynamic movement, as it is in this that the links and connections between them are woven. This means that all definitions found throughout the work must be apprehended in their provisional nature, the categories presented are always ready to redefine their functions within the logical structure presented and their intelligibility only becomes possible within the framework of totality.

The spatial and temporal separation between purchase and sale, corresponding to the first metamorphosis of the commodity, its conversion into the form of money, inaugurates the possibility of a crisis in its most general form. The commodity is produced in private conditions, only in the market is its social character sanctioned, the social work contained in it is only recognized in terms of its ability to metamorphose into a given sum of money. As an adequate category for the exteriorization of the contradiction between value and use value, enclosed in the commodity form, money presents the crisis in its first determination.

It is important to observe that the crisis is not just the split between the two stages of exchange, it is the evidence that this split runs counter to their essential unity, that the complementarity between them is a requirement for the distribution of labor products. Unity and autonomization here are mutually conditioned poles, one is the means of affirmation of the other. The crisis highlights the impossibility of autonomy between them, or the extent to which this autonomy is apparent, abruptly affirming “the unity of the phases of the production process that have become independent of one another.”[xi] Because it is located in the field of simple circulation, the crisis appears only as a possibility, its realization lacks the establishment of a series of relationships that are not yet given.

It is, at this stage, “the absolute form in which the formal or abstract possibility of capitalist crises is presented is the general formula of capital developed. The general possibility of crises is the formal metamorphosis of capital, the dissociation in time and space of purchase and sale. But this is never the cause of the crisis. It is nothing other than the most general form of the crisis and, therefore, the crisis in its most general expression”.[xii] Being the most general expression, it is the one that is present in all particular manifestations, which means that every crisis has the contradiction between buying and selling as the basis of its conceptual structure.

In the realm of production, individual agents act autonomously, deciding how much and what they will produce, as well as what portion of surplus value they will allocate to capitalization. In the sphere of circulation, given the need to realize the value produced, these agents are linked to each other, their individual decisions are placed under the reproduction requirements of the total social capital, which seeks to ensure that the production of means of production finds complementarity in production of consumer goods. The reproduction schemes, which Marx presents in Book II of The capital, correspond to the conditions in which capital temporarily finds its equilibrium point for the continuity of reproduction.

Given the fragility of this situation, faced with a reality in which private producers need to find the necessary proportionality in the market for exchanges between the two sectors, the possibility of a crisis is present. If there is no correspondence in the exchange between the sectors, each sector loses the production reference in the demand of the other, which would only be restored through a crisis. It is not just a question of two different and autonomous sectors, but of an autonomy that is reciprocally referenced, they are differences that intertwine and determine the total social capital, whose reproduction depends on the complementarity of its parts. It is the impossibility of this autonomy that manifests itself in the crisis, in the form of disproportionality in the exchange between the two sectors. The need for proportionality and the unity restored by the crisis reveals that the two sectors are not indifferent to each other, but are placed in a relation of unity through difference.[xiii]

It should be noted that, even though Marx is considering some differentiation between the sectors, this happens unilaterally, restricted exclusively to the notion of complementarity. Capital still finds itself in the condition of an undifferentiated totality, as an abstract generality. For the crisis to become effective, capital must present itself as a plurality of capitals, as a contradictory unit, that is, the differences between capitals must be put in terms of contradiction and not just complementarity.

In Book III of The capital, by abandoning the field of capital in general and entering the level of capital as a plurality of capitals, mediated by competition, Marx presents the declining tendency of the rate of profit as a characteristic expression of the capitalist system of production. It is through it, a necessary consequence of the dialectical development of the law of value, that the contradictory nature of the accumulation process is expressed in a more concrete way. It is the typically capitalist form through which the growth of the social productivity of labor is expressed, in Belluzzo's terms, it is the “manifestation, par excellence, of the contradictory nature of the accumulation process”.[xiv] Despite its tendential character, the law of the falling rate of profit constitutes, for Marx, an “evident necessity” that is based “in the very essence of the capitalist mode of production, that in the latter’s progress the general average rate of surplus value must necessarily express itself in a general decreasing rate of profit. (...) The progressive tendency of the general rate of profit to fall is therefore only an expression, peculiar to the capitalist mode of production, of the progressive development of the social productive force of labor”.[xv]

The trend status of the fall in the rate of profit derives from the counter-arrest mechanisms that make possible its attenuation and momentary neutralization. If, on the one hand, it is a tendency, in the sense that it can be attenuated or even temporarily neutralized, on the other hand, it has the character of law because, necessarily, over time, it imposes itself on such mechanisms. The predominant character of the trend over the counter-tendencies, as Jorge Grespan observes, lies in the fact that it originates from the essential variables of the general law of accumulation (organic composition and rate of surplus value), while the counter-tendencies derive from secondary or complementary variables.

The negation of living labor by dead labor, expressed in the increase in organic composition, constitutes a constitutive determination of capital, while the counteracting factors stem from the general impulse to increase productivity, “which is only the means for the final realization of the negation of the living labor for the dead. That is, they [mitigating conditions] are linked to this basic purpose [denial of living work by the dead] only through the means of its realization, only indirectly and, therefore, more distant from the essence”.[xvi]

Tendency and counter-tendencies reveal themselves as mutually implicated contradictory forces, resulting from the same development of the social productivity of labor. The same factors that lead to the fall in the rate of profit are also those that “inhibit, delay and, in part, paralyze” it, however, without revoking it. “These diverse influences are felt, sometimes more juxtaposed in space, sometimes more successively in time; conflict between antagonistic forces periodically erupts into crises. These are always only violent momentary solutions to existing contradictions, violent eruptions that restore for a moment the disturbed equilibrium”.[xvii] Marx here presents us with the crisis as a synthesis of determinations that operate in opposite directions, the outcome of a tension that extends over time, until the violent irruption of the conditions for restoring balance becomes necessary.

The increase in the social productivity of work, the means by which the capitalist pursues extraordinary surplus value, reduces the weight of living work, the source of value, in relation to objectified work. By denying its most essential determination, its ultimate foundation, capital denies itself, which brings us back to Jorge Grespan's observation, quoted at the beginning, according to which the concept of crisis would be the reproduction, at the theoretical level, of the objective criticism that capital makes itself. This movement by which capital lowers its essential determination to the condition of a moment of itself, so that it can affirm itself as a totality, subject of its valorization, makes it a split entity. From such a split stems the impossibility of its trends manifesting themselves in an absolute way, which places the tendency law of a fall in the rate of profit in close connection with the phenomenon of cycles. As a synthesis of the tension between the trend and its mitigating factors, a pendular movement emerges, which oscillates between periods of appreciation and depreciation.

When the fall in the rate of profit imposes itself, capitalists are led to curb accumulation, reducing their investments. The ensuing paralysis spreads throughout the economy, ushering in a period in which competition intensifies, unemployment increases, wages are lowered and goods begin to pile up on shelves. As a way of reestablishing the balance, and resuming the conditions for a new period of expansion, it is necessary that a part, or even all of the additional capital, be destroyed (the part of the capital to be destroyed is determined by the competitive dynamics), thus recomposing the bases to previous valuation levels. The destruction of surplus capital, an obstacle to appreciation, is at the same time a result of the crisis and a condition for overcoming it. The contraction in production guarantees the reestablishment of the relationship between surplus and necessary work, at the level required for the resumption of accumulation.

Under the decline in the rate of profit, overproduction is evident in terms of capital devaluation and destruction, making it impossible for industrial capital to fulfill its cycle, dismantling the entire reproductive circuit of capital. The crisis is the point at which accumulation culminates in devaluation, when the capital produced cannot be conserved, much less increased.[xviii]. At that moment, the objective of the capital enters into contradiction with the means to reach it, the destruction of the existing capital, result of the previous valorization process, becomes an imperative for the resumption of the expansive course. Commodity capital can only be metamorphosed into money capital at a price below its original value, which disorganizes the purchase and sale relations between capitalists.

The consequence is the paralysis of capital in its monetary form, through hoarding; the production process is thus interrupted, the necessary proportions between producers of means of production and producers of consumer goods are not achieved. Self-preservation starts to demand the destruction of the value created, inverting the terms of the dynamics of accumulation, since only the interruption of production can create the bases for reversing the declining movement of the rate of profit, the only condition for the resumption of accumulation. In this way, the dynamics triggered by the fall in the rate of profit bring with it the partial forms of crisis previously exposed, now elevated to a more developed level of materialization.

As Marx develops his concept of capital, raising its complexity and saturating it with determinations, the crisis, as its immanent negativity, follows the same trajectory, assuming increasingly complex functions. It is only with the advent of the law of tendency of the rate of profit to fall, by synthesizing and giving a more concrete form of manifestation to the previous forms, that the self-denying determinations of capital are fully externalized and the crisis begins to present itself in terms of procedurality and necessity.

In this movement, every new content that appears, representing a new determination of capital, starts to, necessarily, also refer to the crisis, which also starts to receive the determination of such content. The different determinations of the crisis correspond to the different moments of capital, “as the categorical presentation reconstitutes the concept of capital as a totalizing force, it also reconstitutes the moments of effectiveness of this force and the opposing force that is equally intrinsic to it – the crisis – since the mere possibility to necessity.”[xx]

Even though the decreasing tendency of the rate of profit is essential in understanding crises, it is not lawful for us to establish a direct causal relationship between them. The empirical manifestation of crises contains a multiplicity of determinations, of which the law of tendency is one of the most relevant, but not the only one. It incorporates, at the same time that it expresses and hides, all the more abstract and formal determinations presented above, giving them a greater degree of concreteness.

The importance that Marx attributes to the tendential law rests on the fact that it is the most tangible expression of the contradictions of the capitalist mode of production, underlying, as its foundation, the notion that living labor is the only value-creating source, and that its substitution for objectified work necessarily consists, even if nuanced by a series of elements, in compression of the valorization capacity.

The fact that we understand that the foundations of the crisis are present in the very logical structure of capital does not exempt us from proceeding with the concrete investigation of each specific way in which it manifests itself. Marx does not provide us with a theoretical model capable of mechanically framing any occurrence of crises, but rather reveals the internal legality of capital, expressed in a phenomenal way in the empirically observed reality. “The more we delve into them [in the crises], the more we will have to investigate, on the one hand, new aspects of this contradiction and, on the other hand, manifest its more abstract forms as forms that reappear and are contained in other more concrete ones”.[xx]

Even when dealing with the tendency law of the rate of profit decline, however much it surpasses, in terms of concreteness, all the expressions of the crisis presented above, it does not coincide with the empirically observed reality, but it explains and justifies it, it is the part of capital's internal logical structure, from which such reality becomes intelligible. “If the laws are immanent tendencies that govern phenomena and manifest themselves in them, then they can be acting in reality without men knowing it, without being detected, even when they clearly perceive their phenomenal manifestations.”[xxx] Thus, the tendential law should not be taken as the ultimate cause of crises, but rather the synthesis of all the formal possibilities of crisis previously exposed, which now gather all the necessary determinations to become effective.[xxiii]

*Rafael Robles Godoi Graduated in Social Sciences from USP.


[I] Marx, K; Engels, F. Communist Manifesto. São Paulo: Boitempo, 2007. p. 45.

[ii] Engels, F. From utopian socialism to scientific socialism. Global Editora, 1986. p. 59

[iii] ROSDOLSKY, R. Genesis and structure of Capital by Karl Marx. Rio de Janeiro: Eduerj/Contraponto, 2001.

[iv] “Perhaps we can say that if Marx had lived long enough to complete the analysis of competition and credit he would have given a thorough and systematic treatment of the problem. As it stands, however, the crisis necessarily remains on the list of his unfinished business.” Sweezy, P. Capitalist development theory. Rio de Janeiro: Zahar, 1967. p. 164.

[v] Coggiola, O. Economic crises and Marxist theory. Mackenzie Economics Magazine; Sao Paulo Vol. 7, Ed. 3, 2009.

[vi] MATTICK, P. Crisis and theory of crises. Digital edition by the International Circle of Anti-Bolshevik Communists.

[vii] Benoit, H; Antunes, J. Crisis: the dialectical movement of the concept of crisis in Karl Marx's Capital. São Paulo: Týkhe, 2009. p. 26

[viii] Ilyenkov, E. The Dialectical and Metaphysical Conception of the Concrete.

[ix] Germer, C. The abstract/concrete relationship in the political economy method. In: Corazza, G. (Org.). Methods of economic science. Porto Alegre: Editora da UFRGS, 2003.p. 3

[X] Müller, ML Exposition and Dialectical Method in “O Capital“. In: Marx. SEAF-MG Bulletin, v. 2. Belo Horizonte, 1983, p.17-41.

[xi] Marx. Ricardo's theory of accumulation and its critique. Theory of surplus value. In: Romero, Daniel (org). Marx on the economic crises of capitalism. São Paulo: Sundermann, 2009. p. 44.

[xii] Coggiola, op. cit., p. two.

[xiii] See Grespan, J. The negative of capital. São Paulo: Popular Expression, 2012. p. 165

[xiv] Belluzzo, LGM value and capitalism. São Paulo: Bienal, 1987p. 102

[xv] Marx. Capital: critique of political economy. Book III. São Paulo: Boitempo, 2017p. 251. "In every sense this is the most important law of modern political economy and the most essential for understanding the most complicated relationships." Marx, 2011, p. 626

[xvi] The issue raised by Grespan is that linking trends to the most essential determination of capital does not, by itself, ensure the conditions for its realization. From the status of necessity, attributed by Marx to the decline in the rate of profit, stems from the fact that, over time, it ends up imposing itself on contrary factors, which means, admitting the possibility of the occurrence of its opposite, a relative necessity. Such an imposition does not result from an absolute necessity that ensures its inevitability, but only expresses that the constitutive determinations of capital are structured hierarchically. By identifying a certain ambiguity in the formulations present in The capital on this point, Grespan finds that no definitive final result can be deduced due to the systemic priority of the tendential law over the counter-attenuating conditions.

[xvii] Marx, 2017, p. 288.

[xviii] . “The crisis is precisely the phase of disturbance and interruption of the reproduction process,” Marx, 2009, p. 37.

[xx] Grespan, 2012, p. 35.

[xx] Marx apud Coggiola, 2009, p. 14.

[xxx] Prado, EFS Marx's law: pure logic? Empirical law? Soc Magazine Bras. Political Economy, São Paulo, n. 37, 2014.

[xxiii] Benoi, H; Antunes, J. The problem of the capitalist crisis in Marx's Capital. Jundiaí: Paco Editorial, 2016. p. 38

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