Editing Overproduction (section)

== Inevitability ==
[[Karl Marx]] outlined the inherent tendency of [[capitalism]] towards overproduction in his seminal work {{lang|de|[[Das Kapital]]}}.

According to Marx, in [[capitalism]], improvements in technology and rising levels of productivity increase the amount of [[Wealth|material wealth]] (or [[use value]]s) in society while simultaneously diminishing the [[Value (economics)|economic value]] of this wealth, thereby [[Tendency of the rate of profit to fall|lowering the rate of profit]]—a tendency that leads to the paradox, characteristic of crises in capitalism, of "[[reserve army of labour]]" and of “poverty in the midst of plenty”, or more precisely, crises of overproduction in the midst of underconsumption.

[[John Maynard Keynes]] formulated a theory of overproduction, which led him to propose government intervention to ensure [[effective demand]]. Effective demand are levels of consumption that corresponds to the level of production. If effective demand is achieved then there is no overproduction because all inventories are sold. Importantly, Keynes acknowledged that such measures could only delay and ''not'' solve overproduction.