Deeper than greed: a capitalist crisis

The United States is in the worst
economic crisis since the Great Depression. Record numbers of working
families have been kicked out of their homes, laid off from their
jobs and seen vital social services slashed.

It does not take a professional
economist to explain what caused this. It is actually a very simple
concept: the crisis of overproduction.

Production under capitalism is not
driven by trying to meet human needs but by what will make the most
profits for the capitalist owners. Capitalists are in competition
with each other, so production is unorganized, and subject to the
whims and predictions of the richest of the rich.

When the economy is in a “boom,”
the capitalists rush to cash in.

The current economic crisis started in
the housing industry. For years, building homes, condominiums and
apartments was profitable.

Then the boom turned into a bust.
Because the capitalists scrambled to reap super profits, they
saturated the market with homes. The glut of houses caused the
housing bubble to “burst”—the value of homes plummeted, layoffs
ensued and the pool of potential home buyers dried up.

The crisis sent shockwaves through
other sectors of industry—those directly connected to housing, and
others affected because workers cut back on buying consumer goods
after times got tough.

The economy tanked rapidly. And with
it, banks began to foreclose and evict a record number of families.

Many of these same banks started to go
under due to the bad loans they took on and repackaged to try to
sell. Banks stopped lending to each other and credit started to dry
up. The government intervened to bail out the banks and insurance
companies.

‘Too much’ for capitalists, not
workers

Consider the absurdity of this crisis
and who it really affected the most. The crisis was caused by “too
many” homes. This is capitalism: homes are built not for people to
live in, but to be bought and sold for a profit.

The Coal Miner’s Riddle In the 1920s, coal miners used this riddle to explain overproduction, an absurd crisis that only occurs under capitalism. Daughter: Daddy, why is it so cold in our house this winter? Father: Because we don’t have any money to buy coal. Daughter: Why don’t we have any money? Father: Because I was laid off from my job at the coal mine. Daughter: Why did the coal mine lay you off? Father: Because the mine owner said we produced too much coal for him to make a profit.

When “too much” food is produced,
the price of food drops, crisis ensues, and the capitalists burn
entire crop fields to the ground to keep the price high—all while
people starve. When “too much” medicine is produced by
pharmaceutical giants, the capitalists hoard it in warehouses where
it expires in order to maintain profits while people die from
treatable diseases.

The system puts profits over people

Under a system set up in the interests
of the 99%, commodities—especially ones like housing, food,
medicine and other essentials—would be produced based on what
people need. But under a system in the interests of the 1%, things
are produced to make the rich even richer, which inevitably leads
them into crisis, at which point the lives of working people are
thrown under the bus while the capitalists still live in a protected
bubble of luxury. That is the true cycle of capitalism. Only under a
different system can these crises be averted.

As long as there is capitalism, these
crises are unavoidable. Unemployment is unavoidable. Foreclosures,
evictions and homelessness are unavoidable. Hunger and malnutrition
are unavoidable. Those who propose mere reforms to the capitalist
system can only alter the degree of suffering felt by the 99%
temporarily, until the next, worse crisis comes along.

We believe that production should be
dictated not by a tiny, parasitic group of billionaires. We should
work and produce things to meet the needs of society, not for the
private profits of Wall Street—that’s socialism.