Until the industrial age was moderately advanced, overproduction wasn't particularly much a problem -- most societies alternated between sufficiency and (fairly often, if not more often) insufficiency, especially in food, but also other goods and products.

But we're not talking about the early industrial age. We're talking about today.

I thought the article was actually lacking in that it didn't mention overproduction. This is the classic bane of industrialized economies: unsold inventory, rising unemployment, falling or negative inflation, falling asset yields, etc. The article describes China gaining the symptoms of overproduction.

And, as many writers both pro- and anti-capitalist have noted, it tends to require a solution extrinsic to the market (think of Paul Krugman's "babysitting co-op parable"). To make things profitable again, someone or something has to purchase the excess inventory at some market-clearing price. Nominal private debts also need to be cleared from the market, allowing general price levels to adjust.

Now here's the tough bit: overproduction is not the same as recession. Recession comes from malinvestment, and once capital is reallocated to genuinely productive uses it goes away. Some stimulus, especially infrastructure investment, also helps, but recessions are a natural part of the business cycle that end more or less on their own. Society just has to withstand the economic "bad weather".

Overproduction crises, however, also known as depressions, don't go away on their own. Apparent malinvestment in an overproduction crisis is only a symptom, not a cause.

If I could put forth a hypothesis, the actual cause is that one of the two big pillars of production has gotten way out of price-balance with the other. Those are labor and capital. In a healthy economy, labor is costly and productive, encouraging capital investment to get the most out of limited human labor-power. Capital, in turn, is well-priced for wide distribution and developed, increasing general productivity.

Knock out either of these, and you've got problems. If labor is too cheap compared to capital (ie: right now and the Great Depression), then you'll get overproduction: aggregate demand from labor wages won't exist to purchase the products of capital, and they rot. You also get low productivity growth, because it's that much cheaper to just employ humans at menial tasks (see: the service industry) rather than to automate.

(As an aside, computing is currently one of the few healthy fields: labor is expensive and capital (ie: FLOPs as well as investment dollars) is cheap, encouraging massive capital investments and productivity growth.)

If you knock out capital by making it too expensive or unavailable when labor is strong, you get stagflation. The capital-owning class and the working class bounce between themselves the price shock in the cost of investment or technological capital. So unemployment gets high (because where's the capital to employ people?) while price levels rise in general (because labor and consumers refuse to "take one for the team").

So to get rid of an overproduction crisis, what we actually need to do is increase the cost of labor, which feeds into aggregate demand to purchase down inventory and increase the marginal profitability of capital investments. I'd say the best way to do this is usually by either direct strengthening of workers (ie: allow labor to organize, shorten the work-week, other stuff like that), or by infrastructure investment (which employs laborers as well as yielding positive capital externalities).