Relating Marxist Theory with the Business Cycle in Economics Essay

Marx wonder essay How does an over-abundance of goods produce an apparent famine (depression)? Is it possible to produce alike much as Marx contends and if so, how can much(prenominal) over business be prevented? When Marx says over production causes famine he is referring to the stinting/ business motorbike. This is a possibleness which had been confirmed by the the panic of 1825a stock market take apart that started in the Bank of England arising in part out of speculative investments in Latin America, including the imaginary coun analyze of Poyais.This is how it works The growth trend refers to say-so Gross house servant Product (GDP) or simply the level of frugal growth, which is desiredi. e. in which the level of unemployment neither below nor above the optimal level. The plication arrows represent the actual level of economic growth achieved or RealGross domestic Product (RGDP). This is alsoc altogethered real output aslabeled on in the diagram.Aggregate hold is the total amount of goods and services that all buyers in an economy requirement to buy at different prices, Aggregate supply is the total measurement of goods and services produced in an economy at different price levels) This incurs in perpetual cycles that cannot usually be accurately predicteduntil it is too late. Governments and the market try to ease the forcefulnesss of these cycles.When Marx says a great part not merely of the existing products, but also of the previously created productive forces, are periodically destroyed he is referring to the topple of markets, the closure of business and the loss of jobs that happen during recessions. And when he saysfamine and a state of momentary barbarism he is talking of the personal effects of these collapses such as widespread unemployment, shortages of food, protests and riots and a prevalent reduction in standards of living. Despite the unpredictability of the economic cycle what is indisputable is that a recession follows a dilate.In a boomas more is produced nation earn more and spend more, as a result prices plow higher, and when prices become too high people are in effect earning less and they spend less therefore wherefore the economy goes into recession, last the process repeats itself. This is why it can be contended that overproduction causes this famine. In Marxs eyes the destructive effects of the cycle become worsened and worse each time it occurs and this will eventually lead to the total collapse of the system itself. The only remedy to this problem would be a round out upheaval of this system.This is because of the way it its intrinsically structured. Marx says isConstant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois date from all earlier geniuss. What this means is that the system is built in such a way that production call for to keep changing and expanding as old markets clos e new ones open up and this continues on in this way. This causes the fluctuations in aggregate demand and supply and consequently the cycle of boom and recession.So while society may try to ease the effects of the fluctuations the fluctuations themselves cannot be stopped. Thus another way of providing for the inquires of people needs to be developed, the bourgeoisie needs to be uprooted and a system of socialism put in place. If material wealth is distributed on the basis of need there should never be over-production, there will be no need for continual exploitation of new markets and thus the economic cycle should no longer occur. Marxs thinking makes a lot of palpate especially when observing the effects of economic downturns since the panic of 1825.Their effects deem gotten increasingly worse. In latest downturns we see record high evaluate of unemployment and record lowstandards of living globally. yet the claim that this directly arises from over-production can be dispute d because of the basic principle of supply and demand. Production in a Capitalist economy is driven by demand. If people are voluntary to purchase goods at certain prices they will be produced by make seeking (1) http//en. wikipedia. org/wiki/Business_cycleMarxist_economics suppliers. If demand falls, production falls and vice versa.Therefore one can argue that production is dependent on societies needs and wants so any overproduction will be an impossibility, as nothing that is not demandedwill be produced. This has the implication that the fluctuations in the economy are caused by societies demands. However if society were to bearranged in such a way that the means of production were commonly owned and wealth was distributed by basis of need then the fluctuations would affect everyone equally and would effectively cause no real problem.In this situation a communist system would be essential overall one would say that Marxs idea seems to hold water. This is especially because of the historic evidence we have of economic crises even long after his death. til now there are some inconsistencies in what he contends and those need to be addressed for his system to work. As I stated in shape there should have been more distinction between Marxist economic theory.