If there is one thing that the developments of the last week in
Washington and Wall St. show, it is this: Capitalism is a system of mass
destruction. It cannot be reformed—it must be replaced through the
revolutionary reconstitution of society on a socialist basis.
The
fraud propagated by capitalist politicians and pundits—that the “Great
Recession” ended two years ago—has been exposed. Now the depression is
deepening.
Tens
of millions of workers in the United States and hundreds of millions
around the world have been deprived of the right to work as a
consequence of the ruthless drive to maximize corporate profits. But the
dictatorship of capital is not going unchallenged.
The
rebellions spreading through London, Birmingham and other cities in
England today follow on the heels of the upheavals in Tunisia, Egypt,
Greece and elsewhere. Workers and youth are rebelling not only against police brutality and government repression, but also against the theft
of their future for the sake of austerity and neo-liberalism. There can
be no doubt that the deepening of the global economic crisis will bring
more resistance, including here in the heartland of world capitalism.
The
anti-working class deal struck a week ago between the White House and
Congress to resolve the contrived debt ceiling crisis was acclaimed in
capitalist circles as averting a global financial crisis. Instead, it
helped turn a slide in the stock market into a crash.
A
crisis over the debt ceiling—which had been routinely raised 72 times
since 1962—was manufactured as a pretext for slashing social programs.
In this, the President and Congressional leaders of both corporate
parties were partners. The final arrangement called for not one penny in
tax increases for the super-rich or any closing of the hundreds of
billions in corporate tax loopholes.
Late
on Friday, August 5, Standard and Poor’s, a credit rating agency,
lowered the U.S. rating for the first time in history. U.S. and world
stock markets, already slipping, took a nose dive when they re-opened on
Aug. 8.
Today,
the Dow Jones Industrial Average, considered the benchmark stock index
in the world, lost more than 634 points, over 5.5 percent of its worth.
Other U.S. and global stock markets fell even further. On August 8
alone, the cumulative loss for U.S. stocks exceeded a trillion dollars.
Unfortunately,
it was not just the capitalists who are suffering huge losses. A
reported 41 percent of U.S. families own stocks, many through 401(k) and
other retirement plans. Cumulative stock losses in the last 11 days
amount to more than $2.9 trillion. Many big investors are suffering
losses, but have huge reserves. But millions of workers, who have no
such reserves, have seen their retirement funds decimated in less than
two weeks.
The
latest crash illustrates once again the extreme danger inherent in
proposals to privatize Social Security by creating “private investment
accounts,” another scheme to further enrich Wall Street.
Why has the debt doubled?
In the last ten years, the U.S. national debt has more than doubled, to $14.3 trillion. There were several factors that contributed to this, none of them having anything to do with Social Security, Medicare, Medicaid or other social programs:
- Three rounds of huge tax cuts and the creation of new tax loopholes that
primarily benefited the big banks, corporations and already wealthy
individuals. Many of the biggest corporations, like General Electric
which took in $16 billion in profits last year pay no income taxes—in
fact, they receive billions of dollars in taxpayers subsidies. - In place of the lost tax revenue, the government has borrowed trillions
of dollars in the same period. Many of the banks and investors who have
had their taxes cut or eliminated, are double winners: they lend their
tax savings back to the government and collect interest on the loans. - A military budget larger than all of the other countries in the world
combined: now over $1 trillion per year. It is estimated that Iraq and
Afghanistan/Pakistan wars alone will end up costing $4.4 trillion. - The fundamental cause of budget crisis is the capitalist system itself.
The economic crisis that began in 2007-08, was a crisis of capitalist
over-production. Capitalist over-production has a particular meaning:
too much was produced—not in relation to people’s needs, but too much
that could be sold at a profit. This was particularly so with the huge
boom in housing construction, which caused the market to become
over-saturated. Housing and construction collapsed, and millions of
workers lost their jobs, homes and benefits. As a result, not only the
federal government, but nearly every state and municipality saw sharp
declines in tax revenues and budget crisis.
Many
banks large and small went under, and the entire banking system would
have collapsed except for a massive bailout involving trillions of
dollars, engineered by the Treasury Department and Federal Reserve
Banks.
The
bail-out saved the biggest banks—Citigroup, Chase, BofA, Wells Fargo,
Goldman Sachs and biggest corporations—GM, Chrysler, AIG and
others from bankruptcy. Many of the same corporate executives and their
bought politicians, who had for years been repeating the mantra of, “get
government off our backs,” in panic turned to the government begging to
be saved. And they were saved, while millions of working people enjoyed
no such assistance. It showed that we live under a government of, by
and for the rich.
No double-dip—the ‘Great Recession’ never ended
To
justify turning over trillions to the banks and corporations, a public
relations campaign was created around the idea that if they were
rescued, the banks would begin lending again, the corporations would
resume hiring, and workers would go back to work. But this version of
the “trickle down” theory had no more relation to reality than earlier
ones.
The
problem was that the “job creators”—as the whole bourgeois political
spectrum from Tea Party to Obama and Pelosi like to call the corporate
executives and investors—did the opposite. Instead of more hiring, there
were more layoffs. This was not because they were strapped for cash.
The recession supposedly “ended” during this period because their
profits returned, and in 2010 reached an all-time record high. Today
the banks and big corporations are sitting atop mountains of cash, more
than $2 trillion.
The
official unemployment rate is 9.1 percent or 14 million workers. In
reality, it is more like 20 percent or about 30 million people, if those
who have stopped looking or can only find part-time work are counted.
Unemployment rates for African Americans, Latinos, Native Americans and
youth are even higher.
Mass
unemployment is a social disaster for tens of millions of people, who
have lost jobs, homes, health care, pensions and other benefits.
Long-term unemployment is a major cause of family break-ups and other
social problems.
It
is a great disaster for society as well. There are tremendous
needs–affordable housing, new schools stocked with school supplies and
more teachers, a real health care system, the rebuilding of roads,
bridges and other infrastructure, sustainable energy projects, etc.
Why
aren’t these projects being undertaken, projects that could provide
everyone able to work with a good job? The need is there, the workers
who can do the work are there. But what could be done and needs to be
done is not being done. Why? Because the great wealth of society is
owned and controlled by a tiny handful of the population–the capitalist
class.
How
did they acquire this wealth? Was it because the executives were so
smart, the entrepreneurs so bold, as we are constantly told? No, it was
exploitation of labor—not paying the workers for the full value of what
they produce.
Corporate capitalism is highly efficient theft, but it’s all legal in the system under which we live.
An absurd and criminal system
The
contradictions this has created in society are mind-boggling. On August
4, it was announced that a record 45.8 million people are now receiving
food stamps. The same day, the New York Times carried an article
headlined: “Even Marked Up, Luxury Goods Fly Off the Shelves.” It
reported that Nordstrom’s has a waiting list for Chanel sequined tweed
coats, priced at $9,010, and Mercedes Benz had the strongest July sales
for its high-priced cars in five years.
The
percentage of adults who are working has fallen from 64 percent in 2007
to 58 percent now. But in the last year, the average compensation for
CEOs in the largest 200 corporations rose 23 percent to $10.8 million. During the same period, the average pay for workers rose .5 percent, meaning that in
reality it fell about 3 percent due to inflation.
Why
don’t the banks and corporations use the piles of cash they are sitting
on to hire workers and produce more goods, in other words, get the
economy going as the politicians like to say? It is because the crisis
of over-production that began more than four years ago never ended.
What
we have witnessed in recent days has reaffirmed the reality that
capitalism and a just society are a contradiction in terms. Capitalism
must be replaced through revolution by a system based on meeting the
needs of the people of the world in a long-term sustainable way. That
system is socialism and that is what the Party for Socialism and
Liberation is fighting for.
Join the Party for Socialism and Liberation in the struggle for a new system.
