Laura A. Epstein & Associates

In this article we are going to talk about economic crisis. What is it in general meaning? The crisis is a solution, a turning point, a difficult transitional state.

Economic crisis is the phase of the economic cycle, during which there is a sharp restoration of disturbed reproductive proportions through a decline in production, under-capacity of production capacities, an increase in unemployment, etc.

This phenomenon is periodically repeated and manifested in overproduction of capital and goods. In this case, overproduction is not absolute, but relative, which involves a greater quantity of manufactured goods than that which society can absorb. The crisis means relative overproduction as a result of the limited solvent demand of the population, which is explained by the impoverishment of the working masses. Crises are deeply affecting and destroying the entire national economy. They testify to the power of a spontaneous self-regulating mechanism of a market economy. The crisis is a measure of forcible establishment of the balance between production and consumption, which is a factor in the social transformation of all structures of the national economy, the formation of new rules and principles of behavior of market players, the priority development of consumer interests.

Economic crises cover all sectors and activities, so they are multifaceted and specific, depending on the scope, duration and operating environment. Crises are divided into certain types that reflect the different aspects of the same crisis process. The crisis of overproduction is characterized by the fact that it covers all spheres of the economy, it has a great depth and duration, it reflects the whole set of contradictions and disproportions; Overproduction is a social phenomenon rather than a quantitative ratio of material wealth produced.

The industrial crisis is manifested in the discrepancy between the mass of industrial forces invested in the industry and the possibility of their profitable use. The impact of the crisis means for industrialists the beginning of a period of low profits and large losses, depression. When crisis starts, it turns out that the number of enterprises not only exceeds the need for them when demand is reduced, but that they would be too much for normal consumption development. Development of means of production is a characteristic feature of industrial crises and the reason for their protracted nature. The industrial crisis is accompanied by a crisis of labor: the number and duration of working days is reduced, the wages of workers are reduced, and the number of workers and employees' dismissals increases.

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