Karl Marx recognized the problems with capitalism that led to these cycles of crises. He evaluated the contradiction between production and consumption in causing crises. He theorized that all crises resulted from an overproduction of commodities and capital. When there is a decline...
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...he study, “the top 10% of earners in 1928 received 49.29% of total income. In 2007, the top 10% earned a strikingly similar percentage: 49.74 percent.” This data may serve as an indication of the role of inequality in leading to financial crises. When the wealthiest individuals in society are in control of the money, they act irresponsibly, which leads to financial collapses, as experienced during the Great Depression and the recession in 2008.
Overall, Marx’s theories identify several aspects of capitalism that inherently cause oscillations between crises and periods of economic expansion. During times of crisis, unemployment remains high and wages remain low. Regardless of the setting or the time period, capitalism inevitably leads to crises as illustrated by the similarities between the Great Depression in the 20th century and the recession that began in 2008.
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