Karl Marx’s ideas about economic crises addressed the circumstances of 19th century capitalist development. In his critique, he identified an inherent contradiction in capitalism: a situation in which exploited and underpaid workers are unable to consume everything that is being produced. Marx foresaw that this state of affairs would lead to insufficient profits for business and insufficient revenue for the state, and, thus, a terminal crisis of overproduction. In this way, from a Marxist perspective, capitalism carries the seeds of its own destruction.
An economic crisis of this nature is highly unlikely to occur in a world of easy consumer credit and globalised trade, and in circumstances where many liberal states intervene (to a greater or lesser extent) in employer-employee relations and in financial markets. Furthermore, capitalism has been infinitely creative in restructuring itself in order to alleviate or sidestep all sorts of potential crises. Such innovations extend from technological revolutions such as IT, to strategic corporate alliances. These adaptations have allowed economic growth to be broadly maintained since the early 1950s.
Another problem with Marx’s crisis theory is that it also overlooks the reality that many of the most pressing socio-economic problems we face today have environmental origins. Interestingly, and perhaps surprisingly, in the past 20 years or so some Marxist writers have incorporated the ecological dimension into their thinking. And if we do give Marxist crisis theory an ecological twist, we come up with some fresh and very useful insights.