We often hear the phrase “business cycle,” or “economic cycle” being thrown around as a buzzword by mainstream economists, but what does this mean? More importantly, are the commercial economists on television correctly using and understanding the word? The fact of the matter is that the theories of business cycle, while fundamentally correct, are often utilized wrongly by bourgeois, capitalist apologists. It is crucial to understand this theory in the Marxist sense, if not solely for awareness.
The theory of the business cycle arose as a means of understanding why the market goes through phases of great wealth, and then suddenly collapses. It also came about to try and understand general economic processes, and how to better control them through regulation. After events such as the Great Depression, even some of the most hardliner capitalists acknowledged there were flaws with the system, and that it did in fact go through cycles. However, many of these types attempted to whitewash the cycles as purely accidental, claiming they are not truly innate to capitalism. For example, some have wrongfully stated that economic crisis’s were linked to things such as poor consumption rates, bank policy, credit and monetary issues, etc.
Of all the apologetic theories, Keynes held the most favored. He saw economic failure as a product of savings and in the parts of profits not consumed, leading to low demand for consumer products. Meanwhile, investment in capital becomes less stable, and therefore less profitable. So the capitalists horde their capital out of fear to spend, in turn leading to declining demand for producer goods. Keynes then claimed that crises such as these can be avoided if the state adopts a policy where the state itself influences demand by influencing investment. Many times Keynesian policies are detrimental to the workers, as they make the economy more inherently militarized, in an attempt to preserve a collapsing system.
Keynesianism has since then developed into numerous forms, which aside from neo-Keynesianism, also include more left or right leaning variants The leftist faction of Keynesian economists are more favorable than the right, by all means, but their ideas fall short in the long run, and are merely petty-bourgeois and reformist. They think that capitalist crisis can be eradicated by capitalism itself. Such theories are foolish, contradictory, and useless, especially given the fact Keynesianism has already been proven inconsistent during the mid 1970s when faced with a global economic disaster. The business cycles continued no matter how desperately Keynesian economists intervened.
As Marx stated, capitalism is always liable to crisis. When profit falls, businesses fail, and massive unemployment tears apart the workforce, any logical soul would understand that capitalism is indeed a doomed system. And yet bourgeois economists cling to it, and attempt to force others into believing its future is bright and economically stable. Marxism understands that only through the abolition of capitalism can crises be avoided, at least in such a cyclical nature. Establishing socialist ownership of the means of production creates expanded reproduction, continuous in nature. The only good to come out of business cycles is perhaps that they helped end the ridiculous ideas of laissez-faire among political economists. Other than that, they are just further evidence to stand against capitalism.