The Marxist theory of crisis
The works of Karl Marx are growing in popularity. That's hardly surprising. Unlike competing theories of economics and society, he offers a convincing, consistent and coherent theory of capitalist crisis.
Where other economists recognize class struggle they frequently demonise the working class. We ask too much in wages or too many are employed in public services or we don't consume enough.
According to Marx, crisis is built into capitalism as a function of the fundamental way in which wealth is produced. Value is created by the intersection of capital and labour. During the production process part of the workers labouring time is abstracted as surplus value and transformed into profit for the capitalist.
It should be evident that in a closed system workers will never earn enough in wages to buy everything that is produced. Every so often there will be a crisis of overproduction and the economy will slow down until the surplus is used up. This is the boom and bust business cycle, as natural to capitalism as breathing.
That's not the end of the story. Capitalists are in competition with each other, constantly struggling to cut costs so that one firm survives while the other goes under. The means of production are constantly being revolutionised and the amount spent on machinery increases as the number of workers decreases. As a result there is a long-term tendency for the amount of profit that can be gained from each dollar invested to fall.
All crises are not equal. Because capitalism is constantly revolutionizing and expanding production, there is a tendency for the forces of production to come into conflict with the social and economic processes that gave them birth and to unleash a systematic crisis that calls into crisis capitalism itself.
Marx was very fond of the word "organic". He believed that capitalism should not be understood as a predictable machine, but rather as a living organism, able to react and adapt to threats to its existence. It can drive down wages, treat environmental destruction as having zero cost, expand across the globe to establish imperialist dominion and preserve itself in wars that wipe our humans by the tens of millions but also burn up production to allow the whole process to begin again.
Marxists do not predict any inevitable transition to socialism. It may simply grind to a halt in barbarism - a society in which capital abounds but where people starve because of a lack of profitable investment.
Central to a transition to socialism is the working class. They exist at the crux of society where goods are produced. They can act to dispossess the capitalists and organize production around human need, but only if acts as a class conscious of its own interests and its own power.