Rate of Profit, Wages, and Crisis A Marxist Perspective of The Theory of Crisis

Abstract

The goal of this paper is two-fold. First, the paper aims to discuss Karl Marx’s theory of the falling rate of profit and the alternate, probably inconsistent, Marxian theory of crisis based on the rise of wages. Second, the paper examines the relevance of these theories in our days by reviewing important literature on both classical and neoclassical analysis of crisis. A thorough review of literature revealed that Marx’s focus was to provide a real science that explains the phenomena of recurrent crisis in the capitalist society, as opposed to explaining specific incidents that triggers a certain crisis. Marx viewed the capitalist crisis as an endogenous function to the capitalist society itself