As the American bourgeoisie began its lavish preparations to inaugurate President Bush’s second term in the White House there didn’t seem to be much open worry in the administration about the state of the American economy. In fact, economic growth of 4.7 % in 2004 and a predicted 3.5 % growth rate for the coming year would appear to mean that everything is groovy in the present phase of expansion of the so-called business cycle, and therefore with the bourgeoisie’s capitalist system. Yet nothing could be further from the truth. The reality is that, even considering the bourgeoisie’s own data on several key economic indicators, the U.S. is as stuck in the chronic economic crisis of capitalism as everybody else in today’s world.
The end of a decade of economic delusions
The 1990’s were years of economic delusions for the American bourgeoisie. In the wake of the euphoria about the collapse of Stalinism and the campaign about the virtues of democratic capitalism, after the recession of 1991, for the rest of the decade the American bourgeoisie never ceased to show off its supposed economic success. The things that were said then about the “health,” “vitality”, etc. of capitalism say tons about the stupidity of the talking heads of the bourgeoisie. The starting of the new millennium four years ago brought a good reality-check to American capitalism. The “longest running economic recovery in American, history” –according to bourgeois mythology – suddenly ground to a halt. The catastrophic collapse in 2001 of the “casino economy,” symbolized by sky-high stock market indicators and the once celebrated “new economy” of dot.com and high technology “virtual” companies, brought an end to the much-repeated bourgeois fairy tale of a vigorous capitalism that has just demonstrated its superiority over the busted Russian “communism.”
Thus the Bush administration during most of its first term in office presided over the worst recession of the US economy since the onset of the present open crisis of capitalism in the late 1960’s. The pompous “new economy” created by the “internet revolution” came tumbling down like a castle of sand. The paper “wealth” created by years of frantic stock market speculation suddenly went up in smoke. The great economic miracles of the 90’s became the great busts of the new millennium with many of their “hot-shot” so-called “entrepreneurs” showing what they really were: ruthless bloodsuckers, gamblers and crooks. But these spectacular events were just the tip of the iceberg. At the root of the Enron and Martha Stewart “scandals,” among many others, what really is in play is a sick capitalism running out of options to handle its economic crisis.
According to the official version of the bourgeoisie the recession that officially started in March of 2001 supposedly ended in December of the same year. However, beneath even the enthusiasm of the official cheerleaders of capitalism, there is a certain level of consciousness that there is not much to brag about in the current ongoing “recovery.”.
An anemic “recovery” looking very much like its true self: a deepening economic crisis
The bourgeoisie can talk all it wants about the importance of present and future economic growth projections, but it cannot hide the fact that capitalism, whether in recession or recovery, can no longer bring about any improvements to the general economic and social conditions of the working class. On the contrary, every new cycle of recession-recovery, brings about a new level of deterioration in the proletariat’s living and working conditions, as the bourgeoisie tries to make workers bear the brunt of each new fall into the abyss of the chronic crisis of its system,.
The recession of 2001 put millions of workers on the street, as companies went bust or simply tried to squeeze more profits from fewer employees. Now in the phase of recovery, at the same time that the media was recently celebrating a supposed record-setting 2.2 million jobs created during last year, two remarkable facts around the issue of employment-unemployment have come to dampen the euphoria. First, the gains in job creation in the last year are not even enough to make up for all the jobs lost earlier in President Bush’s’ first term in office. In fact there has not been any growth in the total of workers with a job in the last four years –132.4 million when Bush took office in 2001 and 132.3 last December. Taking into account the population growth since 2001 –around 10 million – this means that total unemployment has surely increased, and only god knows what statistical tricks the Labor Department has had to pull to establish the rate of unemployment at 5.4%, significantly lower than the 6.3 % that existed at the height of the “recession.” Second, manufacturing companies, which shed more than two million jobs from 2000 to the end of 2003, added back only 96,000 jobs in 2004, which is said to be the weakest rebound in factory employment of any economic recovery on record in the United States. In truth, service industries have accounted for almost all the celebrated new jobs created in 2004, which speaks volumes about the depths reached by the economic crisis. More particularly this fact reflects the tendency of the most powerful economy of world capitalism to become a service economy, with more than 4/5 of the labor force employed in services (110.2 million in services; 22.0 million in manufacturing; and 2.2 million in agriculture).
In a recent television interview the Treasury Secretary John Snow predicted a steady economic expansion and “good job numbers for the foreseeable future.” The question is: what kind of jobs? According to a recent study in the New York region, which reflects what is going on in the rest of the country, the anemic new job creation was accompanied by an even more anemic development in salaries: the jobs created in the last four year paid 43% less than those created from 1996 to 2000! Besides, these new jobs are in many cases part-time, contract work or what they now call “seasonal work,” lacking benefits like pensions, paid vacation or health care. Moreover despite the record number of new jobs being created, for the unemployed worker it is becoming more and more difficult to find a new job. As of November, about 1.8 million, or one in five, unemployed workers were jobless for more than six months, compared with 1.1 million when the recession officially ended in November 2001. By other accounts since the start of the recession in March 2001, the average length of unemployment has risen from 13 weeks to 20 weeks.
A cancerous economic growth
According to last year’s growth figures the American economy is doing much better than any of its major competitors –except China. The countries of the Euro zone grew an average of 1.6%, Japan and Great Britain 3%, compared with a 4.7% for the U.S. However rather than being the expression of a healthy economy, American economic growth is very much like the growth of a cancerous tumor in a dying body. This positive growth figure is basically based on a frantic resort to the mechanism of credit which is filled with dangerous consequences both for the U.S. and world capitalism as a whole. For the U.S., this policy is the primary cause of the new record setting deficit in its current account and, in great measure, for the astronomical growth in the government budget deficit. In other words, the American bourgeoisie has fashioned its economic “recovery” on a mountain of public and private debt that is not being paid and will not be repaid.
There is among the dominant class a consciousness that this cheap money policy is unsustainable. It has re-ignited inflation – 3.3% last year. Thus the Federal Reserve has reversed its policy of near zero interest rates and has begun to move them upwards.
At the international level, the gigantic American debt is a very heavy negative weight for the world economy and a very dangerous time bomb. For one, it is world capitalism that has to cover for the deficits of the American bourgeoisie, and its aggressive policy of cheap dollar intended to jump-start its exports. This policy in particular is affecting in the first place the countries of the euro zone –against which the dollar value is at record lows – making more difficult their own economic woes.
As the capitalism’s chronic crisis more and more affects the most powerful economies of the world, what dominates the relations between national states is a ruthless competition and a tendency of each sate to look after number one, regardless of the consequences for the world economy. —Eduardo Smith