Monday, July 18, 2011

Global Crisis Shows Capitalism Won't Recover

Global crisis shows capitalism won’t recover

Fight for jobs, Social Security!

Published Jul 14, 2011 10:57 PM
By Fred Goldstein

The latest economic reports show a dismal outlook for workers, students, youth and communities. The numbers show that there is not now, nor will there be, a genuine recovery from the capitalist crisis that began in 2007. The only way out for workers is mass struggle.

In June, the second anniversary of the so-called “recovery,” only 18,000 more jobs were created than were lost. It takes 125,000 to 150,000 new jobs each month just to keep up with new workers entering the workforce. The official unemployed rate went from 9.1 percent to 9.2 percent. Thus the official unemployment rate has been 8.8 percent or higher during the entire “recovery.”

Oppressed people fare much worse. According to a July 8 report from the Economic Policy Institute by Heidi Shierholz, unemployment in June for African-American workers was 16.2 percent and for Latino/a workers 11.6 percent. For workers age 16 to 24 as a whole, unemployment was 17.3 percent.

When those who have given up looking — so-called discouraged workers — and those forced to work part-time are added to the general statistics, the picture is even bleaker. The official number of those underemployed as well as unemployed now comes to 25.3 million, rising in June from 15.8 percent to 16.2 percent of the entire workforce.

In addition, wages fell in all age groups; hours worked declined; average weekly earnings dropped 3.9 percent; and more than a quarter-million workers dropped out of the workforce. The long-term unemployed — jobless for more than 26 weeks — hit a record at 6.3 million.

‘Debt-ceiling’ frenzy used to attack ‘entitlements’

President Barak Obama dropped a bombshell just days before these job numbers were released. In a secret meeting with Republican Speaker of the House John Boehner on July 6, Obama made an agreement to exchange new tax revenues for “substantial spending cuts, including such social programs as Medicare, Medicaid and Social Security — programs that had been off the table.” (New York Times, July 7)

The compromise/capitulation by Obama on cuts to Medicaid, Medicare and Social Security was made in the atmosphere of a “debt-ceiling” frenzy created by both parties, as well as the capitalist media and economists of the ruling class.

As a result of massive bank and corporate bailouts; trillions in military spending on weapons and wars in Afghanistan, Iraq and now Libya; and interest payment to the banks on government loans, the federal government has had to borrow vast sums of money to pay its bills. The limits on that borrowing are set by law. The current debt ceiling is $14.3 trillion. That debt limit, passed by Congress earlier this year, will have to be increased by Aug. 2 in order for the government to pay its bills.

Washington needs to borrow more money to continue to pay off the banks and bondholders and to fund operations, including social services, in the coming period. Thus the administration needs Congress to raise the debt ceiling so it can continue functioning.

Don’t take one cent from the people!

From a working-class point of view, there should be no crisis over raising the debt ceiling. Not one penny should be withheld from payments for Social Security, Medicare, Medicaid, SSI, food stamps, Temporary Assistance for Needy Families, government pensions, veterans’ benefits or any other funds legally due to sustain the masses, especially in a time of high unemployment. To keep expenses below the ceiling, the government should simply suspend or cancel debt payments to the corporate rich.

Workers should have no obligation to assume responsibility for the debt to billionaire bankers and bondholders, the military-industrial complex — nothing but merchants of death and destruction — or the oil companies and other corporate vultures. These parasites all feed off the public treasury and devour the funds that rightfully belong to the working class. The funds in the treasury come from taxes paid by workers and the middle class, or taxes paid by corporations, which are simply taken from the profits they stole from workers in the first place.

Social Security is a right won by workers through struggle in the 1930s. It is paid for out of their wages, and the bosses are required by law to contribute matching funds. These funds are supposed to be held in trust by the government for workers. This money should be inviolable and not part of the government budget in the first place.

Now, in mid-2011, there is $2.6 trillion in the Social Security trust fund, enough to fund the system for decades. If the fund really needs more money, the government need only lift the cap on the highest-paid people and make all their salaries subject to Social Security deductions, instead of them paying only on the first $107,000 earned each year. Finally, in order to really replenish the fund, reduce the retirement age and increase benefits, the bosses and/or the government should put the millions of unemployed back to work and raise wages. That would instantly solve any hypothetical financial problems of Social Security.

The fact is that the rich, both the financiers and the industrialists, have wanted to destroy Social Security since it was created. And now they are using the so-called “debt-ceiling” frenzy as a battering ram against this program, which has benefitted hundreds of millions of workers and seniors for three-quarters of a century.

If the threats materialize to cut Medicare for seniors and Medicaid for the poorest people, which are vital programs to help fund health care also won through long struggle, that would only further impoverish the population and add to deteriorating health conditions for the multinational working class.

Behind austerity program: capitalism is stalled

Behind the entire political and economic establishment’s full-court press against Social Security, Medicare and Medicaid is a deeper reason. Mass unemployment and austerity are intimately connected. The ruling class is completely overwhelmed by the utter failure of the capitalist economy to show any real signs of recovery.

The politicians and the rich know that the only way back to solvency of any of the social funds, not to speak of the well-being of their profit system as a whole, is through economic expansion. Not just the kind of miniscule growth that they refer to pathetically as a “recovery.” They need the robust growth of a previous era, an energetic capitalist expansion that puts the millions of unemployed workers back to work. They need the type of expansion that generates massive quantities of surplus value, which is unpaid labor from workers. The bosses and their system need the creation of real wealth, real value, not just the paper value of speculation.

Surplus value is the lifeblood of the system. But as millions remain jobless for protracted periods and mass unemployment stubbornly grows, despite the stimulus programs and the bailouts, the prospects for growth are fading. All the predictions of the bourgeois economists about growth have failed.

The experts projected that the economy would grow at 3 percent or more last quarter. Instead it grew at 1.8 percent. The pundits predicted the creation of 150,000 jobs or more in June. Instead there were 18,000 net jobs, with thousands of government workers laid off.

Crisis of capitalism is global

And the crisis is global. Behind the Greek debt crisis is a decline in the Greek economy. The Greek economy is contracting at an annual rate of 3 percent. European and U.S. bankers are demanding that Greece deal with its crisis by cutting workers’ pensions, raising the retirement age, and selling off state industries and facilities to private capitalists. The European bankers are demanding the layoff of 120,000 Greek workers.

Now the debt crisis is spreading from Greece, Portugal and Ireland to Italy. Italy’s economy is twice as large as the other three combined. Investors are moving to dump Italian bonds. German Chancellor Angela Merkel telephoned Italian Prime Minister Silvio Berlusconi to tell him to cut 40 billion euros from the Italian budget. In the last quarter, the Italian economy had its first decline in two years.

This is a formula for making the economic and financial crisis of the Greek and Italian capitalist governments worse. It can spread to all of Europe and the U.S. It will bring suffering and hardship so the bankers get paid interest on their bonds. The profit motive is so strong a force that billionaire financiers are willing to accelerate a financial and economic crisis because none of them is willing to give up their loot.

V.I. Lenin, the leader of the Russian Revolution of 1917, said that a capitalist will sell you the rope you use to hang him. This describes not only the European bankers, but the U.S. bankers and capitalists as well.

In Washington, both parties are negotiating over how much to cut from the working class. The Democrats want to cut a lot, but make the rich pay a contribution, while the Republicans want workers to pay more and the rich little to nothing.

But seen objectively, both parties are negotiating over how much to deepen the crisis of capitalism. Capitalism cannot function without markets, without selling for profit. But it cannot sell if the masses have little money. By cutting government spending for workers, by cutting the benefits to which they are entitled, the bosses are slashing away at their own markets.

The entire capitalist world is in a state of slow growth to no growth to economic contraction, despite the trillions of dollars poured in to bolster the system over the last three-and-a-half years.

What is becoming clear is that the capitalist system, because of economic crisis and continual war, is having the historic difficulty of reproducing itself. It cannot grow, and it is moving toward absolute decline.

After the Middle Ages, the capitalist class in Europe rose from the status of an “oppressed minority” under the domination of the feudal aristocracy to become the global, imperialist monster it is today through a process that Karl Marx called “expanded reproduction.” The capitalists steadily revolutionized the means of production. Each business cycle of boom and bust was followed by an expansion greater than the previous cycle.

The Great Depression of the 1930s brought this process to a devastating and catastrophic end. After the market crash of 1929, the capitalist system was unable for years to reproduce itself. It only resumed significant growth on the basis of military preparations for World War II, increased production during the war itself, and then replacement of the factories and infrastructure destroyed by the war. The normal means of capitalist expansion had run out of steam. The system was strangled by capitalist overproduction and could not recover.

The working class must recognize that a similar crisis point has been reached again. As in the 1930s, workers will have to organize, mobilize and fight to put an end to the capitalist offensive and gain concessions that push the crisis back onto the ruling class. Workers need a massive government program that provides decent jobs for all. They need housing and an end to foreclosures and evictions. They need an end to the assault on education, health care and pensions. And they need an end to oppression and imperialist war.
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