What are the Marxist explanations for the current global economic crises - Essay Example

Marx argues that the relations of production are initially progressive but deteriorate over time to a point where capitalists are in control of the application of productive forces. The capitalists lack interest in promoting socially beneficial reforms. In a capitalist society, the capitalists benefit most as they are in control of the means of production. As such, they receive a disproportionate share of wealth, power, status and privileges. Marx insists that only labor should earn money and that money should not be used to make more money.

As such, capitalists should not receive an income as interest on their savings or investments as they are going to earn income without working (Elster, 1986, P.259). Marxists argue that due capitalism’s insistence on production for profit; a huge gulf exists between production for profit and production to meet needs. Profits are maximized by producing to satisfy the needs of richer people; and as a result, urgent needs of poorer people are neglected (Elster, 1986, P.297). Capitalists engage in savage competition, and there is pressure to develop more efficient production and better technology.

Over time, capitalists tend to increase the percentage of capital investment that goes into the machinery and to decrease the percentage put into buying labor. As a result, workers earn less while capitalists increasingly accumulate wealth. Consequently, the workers have less purchasing power and cannot afford the goods produced by capitalists leading to a fall in capitalists’ profits on the long-run (Elster, 1986, P.230). The aggressive competition and accumulation of wealth by capitalists gives rise to a chronic problem of finding profitable outlets for the accumulated capital.

The search for outlets has led to important phenomena such as takeover mania, speculation, stock market crashes and financial crisis. More importantly, it has inspired