As the bourgeois media gave its gory accounts of the terrorist attacks in the attempt to rally the American working class behind its rulers’ war cry about the ‘necessity to unite behind the nation in its fight against terrorism’, it also subtly started to prepare the working class to accept sacrifices and belt-tightening of all sorts in the name of patriotism and the defense of the nation. For example early media reports following the NYC and Washington, DC carnage, conveyed the news that President Bush would have to put domestic policies on the back burner, and divert billions of dollars from Social Security and other social programs into the military effort. Numbed by the nationalist, patriotic propaganda blitz, this news was received without the least hint of opposition. The bourgeoisie wants to blame the accelerating economic difficulties on the terrorists, and to use patriotism to get the working class to accept the escalating crisis and its attacks on wages and the standard of living without a whimper. But this propaganda line just won’t wash.
True, the economy took a further nosedive after September 11th, as over 100,000 layoffs were announced in the airlines industry and at Boeing aircraft, and much economic activity ground to a halt for several days. But even before September 11, the economy was in dire straits. The economic situation was so grim that high ranking business leaders affiliated with the Republican party were clamoring for the president to ‘do something,” complaining that he was not showing a strong leadership style in the face of adverse economic developments.
What was the state of the economy before September 11th? Unemployment had risen to 4.9%. The number of layoffs announced up to September 11th totaled 1.1 million, a record pace. For three months in a row, private sector employment shrank in an increasing number of industrial sectors, and, in addition, workers with jobs were putting in fewer hours a week. Consumer confidence had taken a nose dive, as workers and other strata braced themselves to weather out the impending recession. A survey by the University of Michigan reported that nearly half of American households were using the Bush administration’s highly touted tax refund checks to pay day the burdensome debt that had accumulated before the bubble burst, rather than spend on new purchases to jump start the economy, as the government had hoped. There were a record number of bankruptcy filings in the second quarter –400,000 in all, a 25% increase. According to the American Bankruptcy Institute, ‘the figures for the first half of this year are alarming, if not shocking. (Washington Post Sept. 9). And the corporate sector was even in worse shape, the Standard and Poor 500 companies’ profits were down 39 percent in the second quarter, in what some bourgeois financial observers termed “one of the most severe profit recessions in 30 years.” Particularly hard hit was the high tech industry, which had been the darlings of the 1990s boom years, as corporations across the board cutback on spending on computer software by an annualized rate of 15%. This left many of the computer industry giants tinkering on the edge of disaster, as they choked “on billions of dollars in debt that they took on during the boom years to expand capacity and keep up with what then looked like never-ending demand” (Washington Post). The default rate on junk bonds will likely reach nearly 10%, similar to the rate in the 1991 downturn. Hopes that the seven interest rate cuts would stimulate economic revival had proved groundless.
The economic difficulties of the US economy reflect the global crisis of world crisis, characterized by an ever shrinking, saturated world market, one that is more and more involvent. For years the economic boom in the US, was largely a mirage, fueled by exploding debt levels and speculation on the stock markets, since there were no outlets for productive capital investments. Finally the economic bubble had burst, and the chickens were coming home to roost. The terrorists may present the bourgeoisie with a handy scapegoat for the recession, but in terms of economics, it’s nonsense.
The bourgeoisie is responding to this situation by resorting to the old ’anti-recession’ policies that have already proven a further poisonous ’remedy.’ On Thursday, September 13, the Fed bought $38.25 billion worth of government bonds from investment houses, when on a normal day it buys and sells no more than a few billion dollars worth of bonds. The Fed also cut interest rates to spur borrowing for investment. These ’remedies’ have proved in the past to be effective ways to create an artificial market and a speculative bubble which was inevitably bound to burst. Meanwhile $20 billion are being used for the military effort, just for starters, and the ’fight’ over whether or not to use the Social Security surplus is over, with Congress dipping deeper and deeper in it.
Revolutionary marxists have always insisted that the economic crisis is the best ally of the working class, because it’s the misery and threat to its own existence that can help the working class develop its struggles and consciousness of the necessity to destroy capitalism. But today the bourgeoisie will do its utmost to cloud any understanding by the working class of the real causes of its increased misery and the present danger to its own survival. In this sense, the attacks are a boon for the ruling class. The unions will gladly give the ruling class a hand. Already, in Minnesota, two unions representing 60% of that state’s government employees have agreed to postpone a threatened strike, saying the time is not right, after the terrorist attacks In New York City, teachers, who have worked for a year without a contract, can forget about any new agreement. The working class confronts increasing layoffs, greater economic uncertainty, and the growing threat their lives and the lives of their families, as the US unleashes its new aggressive militarism. But it is the working class alone which can put an end to humanity’s suffering at the hands of decomposing capitalism, by rejecting the capitalist flim-flam and returning to the class struggle to defend itself.