Overproduction crisis eventually emerges when the volume of goods produced exceeds the market demand; prices begin to fall to a level that profits cannot be generated. The production industry is the one that is immediately hit, but the after-effects eventually spread the crisis. For instance, investment in production will decline and directly hits the companies that manufacture machinery. Workers are then laid off, or their salaries reduced, further reducing consumer demand. The vicious circles created leads to bankruptcies, closures, and increased unemployment. Eventually, mass unemployment creates a social crisis.
As a result, investors will lose their businesses, and people will experience suffering out of unemployment. However, capitalism does not end there. In fact, Marx asserts that the crisis itself fuels capitalism (Fulcher). The crisis removes the pressure to overproduce, forces the less efficient entrepreneurs out of business and eventually production parries with the level of consumer demand. In that sense, low cost of labor (lower wages and salaries) increases profitability. Consumer demand will increase when commodities were sold at a cheaper price. Investment would increase because of lower interest rates on loans. Eventually, production will increase again; more people will get jobs and make more money to spend on produced goods.
The good thing about the capitalist cycle is the fact that periods of economic slumps never got rid of the economic value that had been gained during the boom. In fact, after a slump, the economy would continue its growth from a better level than at the beginning of the previous cycle. The reality is that people witnessed continuing progress and creation of more wealth even though it was unequally distributed between the capitalist class and the working class (Gamble). However, this calls for the analysis of the effects that capitalism has on the contemporary society.