Capital accumulation

One of the main reasons for the accumulation of capital is excess production. With immense investment and too rapid development of production, when production capacities are growing at a galloping pace, more and more products are being produced, which leads to an over-accumulation of productive capital and an excess of supply over demand. ^[2]

Another reason for the accumulation of capital may be investors' reluctance to take risks. In the current economic environment, innovation is a fundamental factor in the development of the economy. However, investing in a fundamentally new technology carries high risks. Therefore, investors prefer to invest in mature technologies. Thus, an excess of capital is formed in one area of ​​production, while the other, coupled with innovation, does not receive adequate funding. ^[3]

The accumulation of capital is associated with the imbalance between supply and demand. In conditions of excess supply and insufficient demand, surplus production is formed. Firms in order to stimulate sales artificially reduce the price of goods, deflation occurs. In addition, it is necessary to reduce production volumes, which leads to an increase in unemployment. All of these factors prepare the market system for crisis.

Equity is also equipment used in production. Each production tool has as its goal the transfer of the cost of the manufactured product to its own, that is, any equipment must pay for itself. With the accumulation of such capital, it is not able to pay off, so the economy begins to stagnate, because manufacturers cannot introduce new technologies into production due to the fact that the previous equipment has not yet paid for its value, in which case firms will bear losses. Such a situation, when old equipment is idle in production in excess, not allowing the introduction of new technologies, leads to a drop in demand for products manufactured by it, because it no longer meets the needs of the consumer. In addition, outdated equipment also cannot cope with the required production capacity, the volume of production in this case is no longer being reduced artificially by the company itself, but quite naturally. Thus, the economy is entering a crisis of overproduction . ^[4] With an excess of capital of various kinds, over-accumulation is followed by an economic crisis. In addition, the over-accumulation of capital as a factor of production also hinders the subsequent exit of the economy from the crisis, and stalls its cyclical development .