Members of the Moratorium Now! Coalition to Stop Foreclosures and Evictions. The group marched through Detroit's financial district protesting the proposed trillion dollar Congressional bailout of Wall Street on Sept. 25, 2008.
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Does present crisis compare to Great Depression
Published Aug 30, 2009 11:48 PM
Here is our fourth installment of excerpts from a new introduction to the ground-breaking work “High Tech, Low Pay.” The book, written by Sam Marcy during the early stages of capitalist restructuring and first published in 1986, has long been out of print and will soon be reissued. Fred Goldstein, who wrote this introduction, is author of “Low-Wage Capitalism: Colossus with Feet of Clay.”
Many comparisons are made between the present crisis and the Great Depression. But while the depression of the 1930s is fully known, the present crisis is in its early stages and has yet to be played out. Many specifics cannot be known at this point. It is best from a Marxist point of view, i.e., from a materialist standpoint, to focus on what can be studied right now.
What can be compared are the historic periods leading up to the depression of the 1930s and later to the present crisis, which began with the collapse of the housing bubble in 2007. These periods can be effectively compared.
From Civil War to Great Depression
In the first crisis, the economic forces that drove U.S. capitalism forward in the 70 years from the U.S. Civil War to the world depression of the 1930s had exhausted themselves. They were no longer able to stimulate any significant capitalist revival during the entire decade from 1929 to 1939. No economic means could bring back capitalist prosperity.
What were those forces? The Indigenous nations had finally been driven from all their lands. The so-called “frontier” had been occupied, including the half of Mexico that was annexed to become the Southwest of the United States. After the Civil War the African-American population of the South had again been subjugated, this time into a state of semi-slavery through the sharecropping system. The railroad boom had run its course. Imperialist expansion in the so-called Spanish-American War of 1898 had brought Cuba, Puerto Rico and the Philippines into the U.S. empire, along with Samoa and Hawaii. U.S. businesses had pushed deeper into China and Latin America.
Profits rolled in from World War I and helped sustain the system for a period. There was rapid expansion of the auto industry, the electrification of the country and mass production of appliances. But by the late 1920s the expansion had led to overproduction. Massive credit and land speculation led to a crash in real estate and the stock market crash in 1929.
These were the forces that drove capitalism for 70 years after the Civil War. Once they were exhausted, the system went into a state of absolute decline and could only be revived by war preparations and, finally, World War II itself.
It took 15 million U.S. soldiers under arms and an emergency regime of total war production to alleviate mass unemployment in the U.S. It took the deaths of 50 million people or more and the destruction of factories, mines, ports, railroads, bridges and residential buildings throughout Europe and Asia to overcome the pre-war economic crisis and put capitalism back on its feet.
From World War II to 2007
A review of the situation leading up to the present crisis bears an ominous resemblance to that which preceded the Great Depression. Namely, the forces that have propelled U.S. capitalism and the development of the means of production to higher and higher levels throughout the last 70 years, since the beginning of World War II, have exhausted themselves. Artificial means employed to keep the system going are no longer sufficient to revive it in any significant way. This has led to a period of profound stagnation and perhaps to absolute decline.
In the period since World War II, U.S. capitalism has relied on various artificial methods to keep the system from collapsing. War and war preparation were a basic stimulant for decades during the post-war period. The Korean War, the Vietnam War, the military buildup during the Cold War—all served to generate capitalist production and profits, as the system could not rely on the civilian economy to automatically keep it going.
But by the end of the 1980s, even the $2 trillion Reagan military buildup in a “full-court press” to undermine the Soviet Union and the socialist camp was insufficient to sustain capitalist prosperity. The monstrous growth of the military-industrial complex has it limits as an economic stimulant.
Marcy dealt with the role of the military in bolstering the capitalist economy in Chapter 2. He showed how it fostered the scientific-technological revolution and shaped crucial sectors of the corporate economic structure to aid its design for world empire. At the same time, he showed how dependent even the largest corporations had become on the military.
The continuous development of the scientific-technological revolution, the restructuring of capitalist industry, the relentless anti-labor campaign of union-busting, the extraction of concessions, the destruction of benefits, the driving down of manufacturing wages and the steady expansion of the low-wage service economy—all enormously increased inequality in the national income in favor of capital and at the expense of the workers. All this served to bolster the profitability of the bosses and bankers. It gave the bosses a great infusion of surplus value, stolen from the workers, to ease the crisis of capital.
The collapse of the USSR and Eastern Europe in the 1990s and the opening up of China to capitalist investment gave imperialism a brief period of unprecedented global expansion. The monopolies seized this opportunity to create global networks of exploitation and vast super-profits as they engineered a worldwide wage competition among the international working class and promoted the vicious race to the bottom previously referred to. Driving down the value of labor is the time-tested method of capital for combating the declining rate of profit brought about by the growing cost allocated to constant capital (plant, equipment and raw materials) and the reduction in variable capital (wages).
Globalized production has now brought a worldwide epidemic of layoffs and mass unemployment.
Militarism, technological development and anti-labor attacks were not enough to save the banks and corporations. Huge injections of credit were required. The ruling class resorted to speculation, credit bubbles, mortgage schemes, exotic financial instruments and all manner of fraud to make profits based on trading in fictitious capital. To overcome the limitations on the profitability of industry, unlimited paper profits were conjured up.
To be continued.
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