Monday, September 20, 2010

The Capitalist Crisis and How To Fight It

By Fred Goldstein
Published Sep 17, 2010 11:25 PM

The “experts” on Wall Street and in the big business media force themselves to rave over the fact that the private sector created 67,000 jobs in August. Never mind that this represents a decline from the monthly average of 90,000 private sector jobs created over the last year. And never mind that 141,000 government census workers were laid off last month.

Above all, never mind that around 30 million workers are either unemployed, underemployed or have dropped out of the workforce — about one in five.

On another note, the auto industry, which has been showing profits, is boasting that it added 55,000 jobs this year. But they laid off 324,000 workers in the year before the auto bankruptcy. Washington gave General Motors and Chrysler $85 billion to shrink the industry, lay off workers and shut down factories.

By now it has become commonplace to say that this is the worst downturn since the Great Depression. Now more and more capitalist economists are saying it is a “structural” crisis.

But merely repeating what most workers know full well does not shed any light on this crisis. The working class needs to know the nature of the crisis in order to understand how to get out of it.

The most important questions yet to be explained by official “experts” are: What’s behind this worst jobless recovery in the past 70 years? And why can’t the system start itself up again?

And how can it be that after $10 trillion in government bank bailouts, a $787-billion stimulus package and a 12-month upturn in business activity, 30 million workers still need work?

The essence of capitalism: class exploitation

It’s important to clarify what capitalism is.

Even the most diehard advocates of capitalism can see that the system is failing. The capitalists themselves and the big business media, politicians and pundits are all talking about capitalism.

They put forward various notions about capitalism. Some say capitalism is characterized by “market forces,” buying and selling; some emphasize the earning of profits and the profit motive; others emphasize private property as the essence of capitalism.

All these things are true. But they don’t get to the bottom of it. The essence of capitalism is never talked about by the establishment pundits.

The essence of capitalism is that it is a system of class exploitation. It is the domination of society by a tiny minority of rich exploiters and oppressors who do not work. They live off a very large class of workers who have no way to live other than to work — unless they are laid off or part of the army of permanently poor and unemployed, which is overwhelmingly African Americans, Latinos/as, Asians and the Indigenous, especially youth.

What is the basis of this domination? The capitalist class owns everything that the working class needs to live and survive — the factories, the mines, the farms and fields, the offices, the stores, the hospitals, transportation and the banks — which sit at the summit of society because they control the money.

This class of capitalist owners is collectively the ruling class and thrives off the labor of the working class.

The working class, on the other hand, needs access to the means of survival but cannot get it unless they sell their labor power to some boss. Labor power is the ability to work, the ability to create useful things or services, the ability to create new value. Our class, the working class, must sell its labor power every day, every week, every month, year after year, over and over again, to obtain from the bosses what we need to live, in the form of wages or salaries. The bosses, on the other hand, get richer and richer from appropriating the products of our labor and selling them for profit.

This is the system of wage slavery.

Crisis of overproduction

In return for our labor power we get a wage or a salary. A wage is the amount of money we need to survive. Wages, whether they are high, medium or low — as is the case for most African Americans, Latinos/as, Asians, Indigenous people and women — stay within the very narrow range of subsistence.

Because the capitalists want to make as much profit as possible, production soars and eventually outstrips the collective ability of the workers to buy all the products of their labor at a price high enough to give the bosses profits. When profits go down, production stops. Workers get laid off and the economy goes down.

That is called a crisis of overproduction and is behind the present crisis. Of course, there is no overproduction in relation to human need. The latest reports indicate that record numbers of families are living in homeless shelters. There is also a record number of empty houses because of foreclosures and evictions.

The homeless cannot afford to buy the houses at a price that would give the developers a profit. This is capitalist overproduction. The same is true for autos, shopping malls, large appliances and so on.

Profit is the goal of all production under capitalism. The capitalist class constantly strives to increase its profits at the expense of the workers. Since the beginnings of capitalism, the most effective way to do this has been to put in new technology that either reduces the need for workers, reduces the skills of workers or speeds up workers.

In the past 30 years, the capitalist class worldwide, led by the U.S. capitalist class, has invested in more and more technology. This has made workers produce more and more goods and services in less and less time and for lower and lower wages. This process has led to greater and greater crises of overproduction.

That is what is behind the jobless recovery today. The bosses have used technology to create a worldwide competition among workers. They have used robots, satellites, computers, the Internet and business software to speed workers up and force them to produce more and more.

When the present crisis began there was a glut of housing, a glut of automobiles, a glut of computer chips and so on. Workers had produced so much that they could not buy back what they produced at prices that would give the bosses a profit. So the system began to shut down.

That is why eight million workers were laid off within a year and a half. And for the same reason the capitalist system cannot get started up again.

The capitalist experts know that the various bailouts and the stimulus package are the only things that kept the system from totally collapsing. Now the stimulus package is scheduled to run out in the coming months.

So the Obama administration has come up with a measly $50 billion, so-called “jobs bill.” Whether or not it will be passed is a big question. But even if it is, it will not make a dent in rehiring the 30 million workers in need.

It takes the creation of 150,000 jobs a month just to keep up with population growth. Furthermore, poverty is spreading along with unemployment. Thus the capitalists, by throwing workers out of work, lowering wages and speeding up production, are contracting the capitalist market. Only an enormously expanding market, one that would create half a million or more jobs every month for years to come, could provide the working class with enough jobs on the basis of capitalist hiring.

The capitalist class and its system are doing nothing but aggravating unemployment and increasing foreclosures, poverty and homelessness in a thoroughly racist manner. African-American, Latino/a and Asian unemployment levels are up to double that of white workers. But an increasing number of white workers are also being swept into the ranks of the unemployed.

In other words, the present crisis is more than just a cyclical crisis. It is more than just a structural crisis. There is nothing left to restructure. It is a crisis of the profit system itself.

The system has reached an impasse. It cannot provide jobs at living wages. Capitalism is no longer able to move society forward. The system of class exploitation has run into the same kind of dead end that it arrived at in 1929 and the Great Depression. The profit system is dragging society down and the working class with it, as well as threatening the ecology of the planet.

Fight for massive gov’t jobs program

The only way to alleviate the present crisis of mass unemployment is to force the government in Washington to give jobs to all the workers who need them — jobs at living wages with benefits.

During the Great Depression, the Roosevelt administration was forced to create a real jobs program where workers were hired directly by the government. The Works Progress Administration was set up, under which every worker who qualified was entitled to get a job. Some workers got training. There was also a National Youth Administration that gave jobs to youth. Before the WPA, the short-lived Civil Works Administration created jobs for 4 million workers, beginning November 1933.

In the late 1930s the WPA was the largest employer in the country. From 1935 to 1943 8.3 million workers got jobs. They built roads, dams, public buildings, schools, hospitals, planted trees, created art and were responsible for thousands of projects that are still in existence today.

This was not a trickle-down program where the money goes to the bosses who then, after taking their cut of profits, administrative salaries and subcontracting, etc., hire some workers. But the $50-billion program coming out of Washington now is of this kind.

The workers and communities need to be mobilized to fight for a massive government jobs program. We must fight to redirect the trillions now being given to the banks and the hundreds of billions that go to the Pentagon and use them to alleviate the dire suffering of the workers during this unemployment crisis.

The ultimate goal should be to go beyond just alleviating this crisis under the system of class exploitation and eliminate the system altogether. That means taking control of the economy and the means of survival, the means of production and distribution, for the working class and the oppressed and using these resources for human need, not for profit. In a word, to fight for socialism.

And finally, it must be emphatically stated that the struggle for socialism and to abolish capitalism requires the building of a revolutionary working-class party, steeped in the theory of Marxism and imbued with its revolutionary spirit.

Goldstein is author of the book, “Low-Wage Capitalism,” a Marxist analysis of globalization and its effects on the U.S. working class. This article reflects the gist of a talk he gave at a public meeting in Detroit on Sept. 11. A leading member of Workers World Party, he has also written numerous articles and spoken on the present economic crisis. For further information visit

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