Economic crises are periodic economic events that interrupt capitalist reproduction. Unlike earlier crises under feudalism or slavery, which resulted from underproduction caused by wars, disease, or natural disasters, capitalist crises result from overproduction. Capitalist crises cause mass unemployment, ruin the petty bourgeoisie, and cause bankruptcy for capitalists. They occur once every eight to 12 years.[1]
History
Crises of overproduction that affected a few industries began in the late 18th century. The first crisis to affect a country's entire economy happened in Britain in 1825. More crises began in 1825, 1836, 1847 (the first global crisis), 1857, 1866, 1873, 1882, 1890, 1900, 1907, 1920, 1929, 1937, and 1948.[1]
Stages
Crisis
A crisis begins when overproduction reaches its peak. Prices drop rapidly and the stock exchange crashes, causing bankruptcy and decreasing production. Wages and employment drop, and a society loses much of its productive forces.[1]
Depression
During a depression, industrial production, prices, and international trade are low. Capitalists either destroy commodities or sell them at low prices. They increase exploitation of the workers to create profitable commodities at low prices.[1]
Recovery
After the depression, businesses recover and increase production. Prices and profits increase.[1]
Boom
The boom is the peak of the economy and occurs just before the next crisis. Merchants buy as much as they can before prices increase more.[1]