The recovery following a depression is based on replacement of labor-intensive techniques that have become uneconomic at the low prices and profit margins following the crash. This new investment in less labor-intensive technology takes market share from competitors by producing at lower cost while also lowering the average rate of profit and thus explains the actual mechanism for both economic growth with improved technology and a long run tendency for the rate of profit to fall. The recovery eventually leads to another boom because the lag for gestation of fixed capital investment results in prices that continue such investment until eventually the completed projects deliver overproduction and a crash.

An Overview of Marx’s Theory of Crisis

[–] yogthos@lemmy.ml 1 points 3 months ago

Indeed, and one thing worth adding to this is that the system does not recover to the same state as before after each crash. These events always result in further wealth concentration at the top as majority of the population is forced to let go off assets to make it through the crash, while those at the top are able to scoop them up on the cheap. Thus, the working class ends up in ever more precarious situation and less able to withstand the next inevitable crash. Eventually the whole scheme collapses under its own weight, often in a violent fashion.