Crises and economic cycles

Moustafa Mohamad El Abdallah Al Kafry
2022 / 2 / 16

Running periodic crisis center between the economic crises of the capitalist economy. It is a ---dir---ect result of the general economic imbalances in the broad sense (mismatch between production and consumption, and between the first and second branches of production, between the different branches of the national economy). These crises contribute to ultimate mechanisms help to increase labor productivity and reduce the costs of production. Institutions, in their attempts to get out of the economic difficulties being experienced by ramping up its research on new types of products and techniques used in modern production, the interim solution´-or-root of the institutional basis for renewal of fixed capital and raise labour productivity and expand production. In this same sense are foundational stage of crisis, any stage that determines, to a large degree, the course of the subsequent development and features of the next session, and the nature of renewal of fixed capital.
Economic cycle:
Inherent in economic life changes continuously, is the economic development levels of prosperity and recession, called economic cycles. A phenomenon inherent in economic activity since the old. One example mentioned in surah Yusuf Quran from Egypt s economy in the time of Prophet Yusuf part of seven years of plenty followed by seven years «lean». But the manifestations of economic cycles have become more complicated since the advent of the industrial revolution in Europe and has become a phenomenon inherent in the system of the market in General.
Frederick Engels described the process governing the evolution of the capitalist economy, according to the economic cycle, a process that drives the economy, from crisis to crisis. The stalemate has been haunting the economy for years. It disrupted the productive forces, and squandered large amounts of products due to the recession and falling prices and lack of drainage. Then activate the movement of production and exchange of goods, and is accelerating gradually up a jogging and re-built, and then turn to the industry include jumps, Commerce, credit, speculation, and then starts slowing down and sliding into the abyss of no decision.
And in the capitalist economy is the stage of time begins with the beginning of the crisis and ending with the beginning of another crisis, through four key stages: crisis, recovery and rebirth, stagnation followed by another crisis, and so continue periodic motion to paint by capitalist development. Main stage where the iceberg production, each crisis the previous session completes, the accumulated contradictions in that session prior to the blast, paved the way for the expansion of production in a new ending to the next crisis. The session peak when you start a new session following crisis and the so-called crisis of wealth production.
Stages of the economic cycle and characteristics:
The capitalist economy is subject to periodic renewal Act, is the economic cycle attribute inherent in this economy is moving from recovery to the recession back then, promote stagnation and so on.
Start the periodic crisis in the capitalist economy when show a gap between commodity production and disposal. The commodity circulation process simple and separation of sale purchase as a result of the emergence of money confirmed the possibility of the gap. And the control of capital and social character of production, under the private ownership of the means of production, the possibility of genuine spacing did purchase and did sell was its production, accompanied by iceberg usually large bankruptcies in the industrial and commercial enterprises. The organization when you lose the ability to turn its stockpile of goods to cash, stop paying its debts, and its bankers and traders to panic and start racing frantically behind the criticism, claiming that their debts´-or-creditors. And depositors to withdraw their funds are racing from banks, hedge funds and credit, forced some banks to stop payment and may go bankrupt and shrink lending and capital introduced rising rate of interest.
The more visible the invisible surplus production, there has been a decline in the production of the bankrupt of the capitalists to close their establishments, and some institutions to reduce its production cut, elimination of extra shifts,´-or-reducing weekly working days´-or-hours of work, may close some «» craft workshops, and reduce the types of products they produce.
There is no doubt that the degree of contraction of production vary in different branches, the large landing normally in sections manufactured means of production. And with falling production and lower quantity than transport and business, shrinking foreign trade and the decline in commodity prices and be very serious consequences for small and medium-sized enterprises, it stands powerless before large enterprises that have the potential to better cope with the crisis. The spread of unemployment and underemployment is widespread and rapidly, with the decline in the level of wages below the value of work, increasing the misery and suffering of the working class, while large quantities of goods and experiences to damage and destruction.
And when you start moving from crisis to the next, stopping production on the decline, but it swung around the level of crisis, and accelerates the absorption of commodity reserves, falling prices, at their level at the end of the crisis and no significant new stalls in the markets, but trade remains weak, slow-motion. And reduce production and decline in the meantime to lower stocks of goods market will start to improve slowly and activates the discharge of goods, improve conditions of financial institutions less demand for loans, improve the degree of confidence in the economic situation, resuming savers deposit their money in banks, and lead to lower interest rates in the market. This means that a contraction is the stage adaptation of the national economy with the conditions of the crisis and to economic recovery.
Then begin to gradually move from a recession and stagnation to the next phase of the recovery session, the trade and production line starts to climb and approaching the production volume and the amount of the level it was before the crisis, and then beyond, this means starting to move to the next stage of the cycle is the advancement and prosperity, and this stage is quite adverse attributes of crisis including: increasing production to meet increasing effective demand, high commodity prices to increase demand, and demand for labor force and low unemployment With the rise in wage rates.
The crisis stems from deep-seated processes, but the nature and patterns of movement are also occasional and minor reasons: fear that affects business and wrongs in evaluating market conditions and factors affecting monetary and Government policies. Which may occur a significant change in conditions of employment and production, helping to introduce certain changes to the path, and this is what happened after the second world war. The capitalist economy repeats periodically «production» gap between supply and demand for effective, the great divide, the crisis was more severe, and are outside the control of isolated individuals, but careful consideration of market conditions allow for preventive and precautionary action shut down early production growth based on specific ---dir---ectories, reducing the size of the decline in production during the crisis. It is the curve more smoothly. The falling production control´-or-mitigation and sustainability are not without cost, and reduce the rate of growth in the recovery phase.
The transition from one stage to another stage of the session: each stage of the economic cycle is intrinsically other stages, moving from crisis and recession to recovery, promote upward movement associated with the changing structure of the production economic overview on the crisis, and the reactions of various economic forces. In both phases of the crisis and the recession, declining commodity prices, demand, production, supply and less adapted to the demand, thus absorbing surplus goods on the market, on the other hand, the low rates of core capital elements and work increases motivation when the capitalists to increase investment. It is evolving towards the top, and the demand for goods and tend upward price, increase output and lower prices of production factors, which leads to lower costs, increase their capitalists tend, changed the ---dir---ection of movement downward towards the ascent starts from the crisis and recession to recovery and development.
The transition of the revival and advancement of the crisis and recession, goes completely. In the stage production, economic advancement and flooding the market need, the view becomes greater than demand, and when the difference reaches a certain-limit- downward price moving, less returns, while the demand for factors of production, prices in the market and lead to higher costs and lower effective demand which leads to depressed commodity and venture capitalists scrambling to reduce their production of new national economy enters a new phase of stagnation and crisis. Thus, alternated phases of economic cycles. Differ for each stage depending on the different requirements from one country to another´-or-from time to time. But there is a general feature of the development cycle is the phase of crisis and recession longer than recovery and advancement.
Periodic crises theories:
Not Adam Smith and David Ricardo who reveal the contradictions of the capitalist economy and understand that appear in the form of periodic economic crises. Said Ricardo that capitalist production is estimated on endless expansion, as long as increased production leading to increased consumption and therefore no place for iceberg production year. On the basis of this theory cannot be a non-stop onslaught on disposal of certain goods resulting from the asymmetry in the distribution of social work between branches of production, and to eliminate inconsistencies this imperative by mechanical competition. But Sismondi which came after Ricardo had revealed some contradictions in the capitalist economy, and that has not been able to assess the nature calendar.
Put Sismondi theory about the economic crisis become later the basis of other theories. It is due to weak consumption,´-or-saturation. This was based on some ideas Sismondi Adam Smith, concluded that production should correspond with the consumption and production is determined by income. The crisis as a result of this imbalance of proportionality, i.e. as a result of excessive production that precedes consumption. The basis of the crisis lay outside the production, especially when they gather in the contradiction between production and consumption. The production is determined by Sismondi income, and it is the only objective for the accumulation of production, so the production to fit. The development of capitalism lead to the bankruptcy of small product, worsened the conditions of salaried workers, has also stressed that the expansion of production, hampered by-limit-s could not overcome, because dwindling consumption, reduce production and management can reduce the profits of capitalists.
I have tried this theory seems to give an explanation apparently true to the crisis, but did not examine the reasons for low wages and AVI causes poor income distribution that leads to lack of consumption, which in turn leads to crisis.
Marx explains economic crises of contradictions in the capitalist economy that cause periodic crises. The theory that the reason the President in crisis a contradiction in capitalist production, any contradiction between the social character of production and ownership of the means of production.
And denied the theory of Marxism contradiction between production and consumption in the capitalist economy, but I tried to put this contradiction in the appropriate location in the interpretation of periodic crisis, according to Marxist theory to the analysis of deep contradictions inherent to the essence of the capitalist mode of production shows how to move from crisis can dialectic to reality, to the inevitable crises under capitalism.
Explains Keynes economic crises with insufficient demand, and confirmed that the cause of the crisis lies in the immutable laws including the law on people s propensity to save. Thus, connects the Keynes cause crisis in human nature which properties change, and the chaos of the human spirit, rather than linked to the characteristics of the capitalist economy.
Keynes shows that total consumption society always delayed the growth of total real income, as a result of individual psychological characteristics and demands of the State to intervene to resolve the issue of the use of the largest possible number of labour (the theory of full use). He believes that the economic crisis is not only State intervention in economic life, effective intervention, through the Organization of the amount of consumption and investments, using a number of tools, including tax policy and raise the rate of deduction, etc.
The economic crisis:
Friedrich Engels described the economic crisis described classically. He said: «stop trade, crowded markets, accumulate vast quantities of goods not for resale, and disappearing cash (cash), as well as credit disappears, and then stop the factories, workers lose their livelihood, just that it had produced many of these means, such as bankruptcies cascade of forced selling. This obstruction is severe for years, destroyed the productive forces and production overall, even as the market absorbs surplus merchandise accumulated until the time it ---restore---s their production and Exchange gradually.
The crisis comes after several years of prosperity and good deals, and declare the crisis itself once whispered murmurs here and there in the newspapers and the decanter (ASE), rumors of bankruptcy of some institutions, the percentage of the deduction, thereby lending more difficult. And when the crisis increasingly highlights news of bankruptcies, and the search begins to find out who is responsible for the crisis, whether it is the banks´-or-business,´-or-men,´-or-factory owners. The stock exchange workers trying to hold manufacturers accountable, because they cause the scarcity of the currency in circulation in the country, and so on.
Periodic crisis became the contemporary nature of the vehicle, and a number of global crises since the 1970s such as: the crisis of international monetary system and the crisis of energy and raw materials, and the external debt crisis, the food crisis and the crisis of the environment, and about the structural make up the crisis and complicated, and out of them much harder than before. Structural crises are reflected in particular in the form of structural unemployment, the structural deficit in the public budget, and the tendency of inflation with the recession.
To understand the crisis since the 1970s, but in the light of the ongoing structural changes in the global capitalist economy. The phenomenon highlights the structural complexity of periodic crisis with the structural crises of international capital looking out through the rationalization of production on the basis of the achievements of scientific and technical revolution. And then the holding of periodic phenomena with long-term structural crisis, and with the recession in basal sections of the capitalist economy.
The immediate causes of the crises of the iceberg production
The immediate causes of the crises of the iceberg production are the main contradictions inherent in the capitalist system: the contradiction between increased production and relatively efficient production decline and chaos production, imbalance and asymmetries, and the contradiction between production and consumption, and the contrast between the conditions of production of surplus value and the conditions for its realization.
All these contradictions are emerging about the contradiction between the social character of capitalist production and the form of tenure. The contradiction between productive forces and the relations of production.
Capitalism is commodity production in the higher stage of development, when all work products into commodities, and the labour force itself into a commodity value is determined by supply and demand. Capital is wage labour, any means of production in the hands of capitalists and turning them into vehicles for salaried workers, investment occur between the restricted means of production in the hands of a few capitalists and between immediate producers deprived everything except work force that had to sell to owners of means of production.
As a result, the output becomes the whole society in the hands of a few owners of the means of production and whose only aim is profit. The chasing profit increased exploitation of workers, producers, reduced their share of national income, and this leads to reduction of actual demand, reduced discharge of goods and products as long as capitalism exists, there must be a few crises.
The most important variables in the manifestations of the periodic crisis, are summarized as follows:
• The crisis has become shallower, shorter budget crises that occurred before the second world war.
• Not accompanied by periodic crises of recent significant decline in global production in all capitalist countries.
• Notes the considerable lack of synchronization of economic cycles in different countries.
• Economic cycles are often associated with crises.
• Became a common phenomenon and the economic downturn are not rare.
• Change traditional business rhythm.
• The changing nature of price movement.
• The monetary crisis has shrunk (Interior).
• Changing the role of crises.
Note that modern manifestations of crisis is less severe and shorter, and this is due to the continued attempts by contemporary capitalism to adapt to the new historical conditions and the requirements of the technical and scientific revolution. One of the most important modern manifestations of global crisis:
Low economic growth rates, low export growth, low employment and high unemployment, and the phenomenon of inflation, high interest rates and the ---dir---ection of the profit curve downward, capitalist countries and the international monetary crisis, and rising gold prices.
And gathered them all in the overall economic crisis in capitalist countries in the 1970s, nearly every capital economy facing high unemployment rates. At the same time mostly followed the policies of inflation and are contractionary in nature, increase of unemployment.
Capital still unable to overcome the crisis, and still suffers from profound crises (crises and structural), and the related crisis economic crisis and extended its growth is slow and unemployment. Developed countries are still practicing third world exploitation and looting in an effort to transfer the burden of the crisis to the peoples of those States.
With all the crises of the capitalist states that its economic system is still able to adapt and survive, and still able to continue the exploitation.
Prof. Dr Moustafa El-Abdallah Al Kafry
Faculty of Economics – Damascus University







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