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The Great Recession and Marx's Crisis Theory

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  • Andrew Kliman

Abstract

To help understand why the Great Recession occurred, this article focuses on its underlying causes and employs Karl Marx's theory of capitalist economic crisis. It shows that U.S. corporations' rate of return on fixed asset investment fell throughout the half-century preceding the recession, and that this fall accounts for the entire decline in their rate of capital accumulation (productive investment). The investment slowdown led to a decline in the rate of economic growth, which was a main cause of rising debt burdens, as were stimulative fiscal and monetary policies that delayed but exacerbated the effects of the underlying economic problems. The article also refutes the claim that the rate of profit could not really have fallen because massive redistribution of income from wages to profits took place, and it argues that it is unlikely that major crises of capitalism can be eliminated.

Suggested Citation

  • Andrew Kliman, 2015. "The Great Recession and Marx's Crisis Theory," American Journal of Economics and Sociology, Wiley Blackwell, vol. 74(2), pages 236-277, March.
    • Handle: RePEc:bla:ajecsc:v:74:y:2015:i:2:p:236-277
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    File URL: http://hdl.handle.net/10.1111/ajes.12094
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    References listed on IDEAS

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    1. Philip Armour & Richard V. Burkhauser & Jeff Larrimore, 2013. "Levels and Trends in United States Income and Its Distribution A Crosswalk from Market Income Towards a Comprehensive Haig-Simons Income Approach," NBER Working Papers 19110, National Bureau of Economic Research, Inc.
    2. Congressional Budget Office, 2012. "The Distribution of Household Income and Federal Taxes, 2008 and 2009," Reports 43373, Congressional Budget Office.
    3. Engelbert Stockhammer, 2009. "The finance-dominated accumulation regime, income distribution and the present crisis," Papeles de Europa, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Estudios Internacionales (ICEI), vol. 19, pages 58-81.
    4. Congressional Budget Office, 2011. "Trends in the Distribution of Household Income Between 1979 and 2007," Reports 42729, Congressional Budget Office.
    5. Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality in the United States, 1913–1998," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 1-41.
    6. Congressional Budget Office, 2011. "Trends in the Distribution of Household Income Between 1979 and 2007," Reports 42729, Congressional Budget Office.
    7. Congressional Budget Office, 2012. "The Distribution of Household Income and Federal Taxes, 2008 and 2009," Reports 43373, Congressional Budget Office.
    8. Congressional Budget Office, 2012. "The Distribution of Household Income and Federal Taxes, 2008 and 2009," Reports 43373, Congressional Budget Office.
    9. Congressional Budget Office, 2011. "Trends in the Distribution of Household Income Between 1979 and 2007," Reports 42729, Congressional Budget Office.
    10. Congressional Budget Office, 2012. "The Distribution of Household Income and Federal Taxes, 2008 and 2009," Reports 43373, Congressional Budget Office.
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    Cited by:

    1. Juan Pablo Mateo, 2017. "Theory and Practice of Crisis in Political Economy: the Case of the Great Recession in Spain," Working Papers 1715, New School for Social Research, Department of Economics.
    2. Hasan BAKIR & Görkem BAHTİYAR, 2017. "Great Recession, Financialization and Marxian Political Economy," Sosyoekonomi Journal, Sosyoekonomi Society, issue 25(33).

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