Marx's crisis theory


 * The basis of Marx's cycle is the fluctuation in the rate of investment. The boom is characterised by a high rate of investment, and a rising demand for labour. As a consequence of this, wages rise, and the rate of surplus value falls. After a certain time the fall in profits has its effect on the rate of investment, which declines precipitately. With the decline competition between the workers starts to make itself felt once again, and the rate of surplus value rises once more. The conditions are created for a new spurt in investment.