Workers Against the War (WAW) has posed an important question, "What can workers do about the war?" and offers a quick, ready answer. On their web site WAW says workers can stop the war in Iraq in a single day by refusing to move war materials: "If workers across the US decided to stop working until the war ended, it would only be a matter of days, if not hours, before the first soldiers were on the planes heading home." In itself this is debateable, since even at the height of the Russian revolution when workers were striking in many dockyards to stop arms being shipped to the white armies this did not stop the counter-revolutionary intervention. More to the point today, we need to ask concretely what it would mean for "workers across the US to decide to stop working"? In the abstract, it is true that a mass workers' movement could stop the war by paralyzing the economy, but for this to happen would mean that the American working class, or at least a substantial mass of the working class, was politically conscious of the meaning of the war, and had the organizational means (mass meetings, general assemblies, delegations, political organisation) to put its political consciousness into action. For the working class, as a class, specifically to aim to stop a capitalist war, is immediately to call into question the ruling class' right and ability to rule. We have seen this before: it happened between February and October 1917 and it was called "dual power".
Clearly, we are not in such a situation today. Whatever the disgust American workers feel for the war, the class as a whole is a long way from a political understanding that the war is the result of capitalism, that war can only be ended by doing away with capitalism, and that they, the workers, are the only ones who will be able to do away with it and put something else in its place. What is the alternative?
WAW proposes as a first step towards grinding the American war machine to a standstill, that workers should participate in a national sick-out, a "Sick of War Day" in which all workers opposed to the war should call in sick on Oct. 26, stay home from work, and use the time to prepare to participate in the national anti-war protests organized by United for Peace and Justice the following day, Saturday, Oct. 27. The goal of this proposal is to constitute a strong workers contingent in the anti-war movement. But is this really the best way forward - for the working class to dilute itself in an interclassist mass of pacifists, greens, religious groups, and leftists, and turn themselves into cannon fodder for the fraction of the US bourgeoisie which is using the population's disgust for war as its own weapon to win the upcoming presidential elections?
The workers' strength comes from collective, mass action. "Unity is strength": every worker knows that. But this strength in unity goes much further than merely a matter of numbers: when workers act together as a collective, the strength, the reflection of each one reinforces that of the others, the collective result is greater than the sum of the parts - and this is true for a truly mass revolutionary movement and for a demonstration in one town or even a small discussion circle. Anybody who has been involved in collective action knows the sense of exhilaration and increased strength and self-confidence that it brings.
The essence of the proposed "sick-out" is completely different: it is something individual. It is merely an individual substitute for the lack of mass action, it does nothing to bring workers together in such a way that they can develop their own collective strength; their sense of themselves as a class.
"What can workers do about the war?" is indeed a question that many workers are asking themselves, and to which revolutionaries have a responsibility to give answers that provide an orientation for our class. It's not really just a question of the war in Iraq. In fact, war has become a permanent characteristic of capitalist society since the beginning of the 20th century. In her "Speech to the Founding Congress of the KPD," Rosa Luxembourg said, "Matters have reached such a pitch that today mankind is faced with two alternatives: it may perish in barbarism, or it may find salvation in socialism." This assessment, made nearly ninety years ago, of the directions society may take has been dramatically confirmed by decades of ever more barbaric and horrific world wars and countless localized conflicts where the major imperialist powers confronted each other through proxies, civil wars, and imperialist clashes between secondary and even tertiary powers who confront each other in an increasingly chaotic international situation. The result is that utter destruction and desolation are a fact of life.
Today, the bourgeoisie's lies and ideological campaigns pressure us to accept the idea that war is inevitable because it's part of ‘human nature'. It paints a horrific picture of the ‘rogue state' of the day, the better to make us appreciate the brand of dictatorship it imposes on us locally. It fuels xenophobic feelings in the population, in the hope we get convinced of the necessity of war. Yet, despite clearly getting the ideological upper hand after the 9/11 attacks which the ruling class used to stir up war fever and chauvinism, the working class has shown clear signs that it is fed up and disgusted with the war in Iraq. These signs are evident in the number of active duty GI's speaking out against the war, the difficulty the bourgeoisie has to recruit for the war, and the growing opposition by working class parents to allowing military recruiters on high school grounds to manipulate and recruit their sons and daughters for the slaughter.
In this context it's important to assess the level of understanding of the situation by the class, its present strengths and weaknesses, and the balance of forces between the classes, so as to allow our class to push forward all the potential that is contained in the current situation, to assure the deepening and extension of class consciousness and clarification of what is at stake. In making this assessment we need to avoid any sense of triumphalism, or false optimism.
Although doubtlessly the workers are not defeated ideologically by the idea of the ‘necessity' for war, and their disgust for war is quite a step forward compared to what we saw at the start of the war in Iraq, we do not think it is accurate to suggest, as WAW seems to do, that the class is ready to ‘stop the war' and ‘create a system that serves our needs instead of the greed of a few.' In order to redefine itself as a class, understand the stakes and its own historic role, the class needs first and foremost to discuss collectively what is going on in the world, what the perspectives are, and what the class can do. The isolated ‘sick day' cannot accomplish any of this because it is an individual act that cannot substitute for the mass action and discussion, which the class needs.
So, what can workers do about war under the present conditions? Is there really nothing to be done? Yes, there is, but it needs to start from a clear appreciation of reality, not ‘taking our dreams for reality'.
In our view, the real question is, is there any chance of getting workers together to talk? To discuss about the war, what it means, to gain a broader view of the world and the workers' place in it, of their own political perspectives. This perhaps is something that can be organized, depending on local circumstances. It will not look spectacular, but if it is undertaken with perseverance and courage, it may bring more long-lasting results. Workers could hold meetings at work, or after work, and adopt resolutions or statements denouncing the war. Why not if that is possible? As long as it is the workers themselves that do it and not just a way of fueling the trades unions' pro-Democrat electoral bandwagon.
The unbearable weight of war is becoming a factor in the deepening of the class reflections on the future and how the class itself is positioned in its face, what its responsibilities are, who it is vis-à-vis capital, posing the real possibility for deepening the understanding in the working class that capitalism means war and offers humanity a bleak perspective of barbarism. This process of deep reflection can be aided through collective discussions, so that workers can finally see the link between capitalism and war, and organize for the ‘assault on the heavens.' Revolutionaries have the utmost responsibility to aid and facilitate the class' process of coming to consciousness and infuse in the class a sense of confidence.
Ana, 30 September 2007.
The summer has not been a good season for American capitalism. The instability of the financial markets, the credit crunch, the roller-coaster of the stock market, the housing bust, the record fall of the dollar's value, all show that the American economy continues sinking deeper into trouble. The speeches reassuring the population about the "good fundamentals of the economy" coming out from the White House are sounding more hollow than ever. In fact by mid-September the deterioration of the economic situation was so obvious that the Federal Reserve's wizards abandoned their wait and see attitude and came to the rescue with their traditional medicine in hopes of avoiding a catastrophic descent into the economic crisis. However, despite the Fed's sharp reduction of its interest rate bench mark, the deterioration of the economy has not shown signs of change. On the contrary the trend seems to indicate that the worst of the present developing recession is still to come.
The American housing collapse that started in 2006 has continued to deepen. The housing industry, this engine of the American economy so central to its economic growth after the last recession in 2001, is totally broken. Every day there is more bad news coming out from this industry. The construction of new houses has slowed to a trickle. Nonetheless by last September the stock of houses offered for sale nation-wide rose to a ten-month, the highest on record. New home prices have fallen in 20 of the biggest cities throughout the country, while sales of existing homes have stalled despite a nation-wide decline in their nominal value. In other words, despite a decline in prices of new and existing houses there is not much of a solvent demand to revive the embattled housing market.
Moreover as the housing bubble continues to lose air, the number of homes in foreclosures has soared to new record levels --by 36 percent between July and August. Nationally foreclosures have more than doubled in the past 12 months. The states where the housing boom was at strongest are now leading the bust: between July and August, foreclosure filings jumped by 48 percent in California and 77 percent in Florida. Nevada has the highest foreclosure rate in the country - one of every 165 households. Yet there is no end in sight. According to most economic predictions in the next few months foreclosures are bound to skyrocket, as the housing industry absorbs the shocks of the actions that created the exuberance of the housing boom --rampant speculative investments, shoddy lending practices that allowed people to borrow beyond their ability to repay, and adjustable rates that are now going to reset to higher levels. In fact the bourgeoisie is so worried about the social and economic consequences of a massive default of mortgage debt that is rushing to put forward some kind of plan that will alleviate the situation.
The housing bust has also generated much finger pointing within the bourgeoisie. There is much "soul searching" about who is responsible for the housing industry's unsustainable "exuberance" and awful bust. The favorite villains that are blamed to a greater or lesser degree by the right and the left wings of the bourgeoisie are:
All these allegations do nothing but hide the real stakes that are contained for society by this phenomenon of boom and collapse of the capitalist economy.
From a Marxist revolutionary perspective, the fact is that the housing boom and bust are in the last instance not that much different. Both are expressions of the crisis of capitalism. Since the end of the sixties capitalism has been mired by its own contradictions in an open economic crisis that has gotten ever more catastrophic. Every few years we witness a sudden collapse of the economy after a moment of respite, a "boom and bust" cycle like the one we just saw in the housing industry, or before it the ascent and collapse of the stock market and the internet economy. The dominant class likes to portray these ups and downs as normal moments of an otherwise healthy system - the so-called business cycle. Nothing is further from the truth. At best this is a self-delusional understanding of the system determined by the bourgeoisie's own survival instincts, if not a simple mystification to hide the bankruptcy of capitalism.
The reality is that for over thirty years in the US and throughout the world, faced with a crisis that can't be overcome, state capitalism has been trying to keep afloat an ever sicker economy using means that at the end of the day are themselves a factor in the aggravation of the crisis. In the absence of a sufficient solvent demand that can absorb the ever growing production and realize a decent profit, the bourgeoisie has, on the one hand, escaped head on into the terrain of speculation. More and more capital finds its place not in the real production of goods and services, but in the "casino" economy of the stock markets. On the other hand, to alleviate the saturation of the world market, the bourgeoisie has manipulated everywhere the mechanism of credit. This has left the whole world economy sitting on a mountain of public and private debt that can't be repaid.
This manipulation of the economy through state capitalist interventions has allowed the bourgeoisie to more or less successfully have its economy running throughout the world, but at the same time preparing ever more catastrophic economic situations.
This is the real history behind the housing boom and collapse in the US and some other European countries: The "exuberance" was created by an aggressive state capitalist intervention aimed to get out the economy from the morass brought on by the collapse of the stock market and the internet economic revolution. In the US it was fed in particular by a policy of cheap money to stimulate consumption that went at one point as far as setting interest rates below the rate of inflation. This cheap credit created in the real estate industry an artificial demand that pushed up prices and stimulated construction and production in other related industries. However, as the saying goes, all good things must come to an end. And the rest is the story of the housing bust of which millions of words have been written in the bourgeoisie press.
There is at present much debate among bourgeois economists about the state of the American economy and its immediate future. There is in fact not much to brag about. Beyond the housing bust the monstrous federal deficit driven up by the war effort and the feeble state of the manufacturing industry are also clear signs of an economy in big trouble. The mood is gloomy and the bets are overwhelmingly on the side of a coming recession. Mr. Bush has recently expressed his hopes for a "soft landing". It seems that the surest bet to make is that it won't be a soft landing for the working class. In fact since the worst of the presently developing recession is still to come, we will be seeing in the immediate future a proportionate increase on the attacks on working and living conditions as the bosses try to make workers bear the brunt of the crisis.
Workers must respond to these attacks on their own terrain, on the terrain on the class struggle. Eduardo Smith, 10/13/07.
There's plenty of evidence that capitalism kills...in the imperialist wars that are the hallmark of capitalist decadence for over 90 years, in the grinding poverty that shortens the life span of millions of people, in the diseases and inadequate medical care that afflict society, and in the inhuman living conditions that people are forced to exist in. The month of August included several stark reminders that capitalism also kills at the workplace, that even in the simple act of showing at work everyday, in the daily exploitation of their labor power, workers risk their lives. For a mode of production characterized by a relentless drive for profit, the safety of workers is only a minor, peripheral concern that cannot be allowed to get in the way of making money. Within a period of three weeks, we saw the release of two reports on gross safety violations that led to the deaths of two subway workers in two different incidents in New York City last spring, and the heartbreaking mining disasters in Utah and across the world in China.
On August 2, authorities released reports that detailed the poor safety procedures and an "organizational culture" that flouted basic safety rules that led directly to the needless deaths of two track workers just days apart in April. On April 24, Daniel Boggs, a 41 year old transit worker was struck on the express tracks at Columbus Circle (near 59th Street) in Manhattan, where he was working at 11:20pm. The express track had been scheduled to close to train traffic at 11:00 pm, so Boggs went to his work location on the tracks confident that it was safe to do so. But he didn't know that after a train became stalled at the nearby 66th Street station, train dispatchers decided to keep the express track open a little longer to enable other trains to bypass the stalled train. Incredibly, in the 21st century, in the era of a communications revolution, in an epoch of telephones, radio communication, and cell phones, there was no communication between the train dispatchers and the supervisors of the track workers to inform them that traffic would still be continuing on the express tracks, and that it was not safe to work on the tracks. There's been talk from time to time about acquiring two-way radios for work crews in the New York subway tunnels but the MTA always decides it's too expensive. Even more incredibly, the supervisor of the track workers was ignorant of a requirement that he had to inform the dispatchers that he was sending workers onto the tracks. Boggs went to his death thinking it was safe to go onto the tracks.
Four days later, on April 29, 55-year-old Marvin Franklin, another track worker with 20 years experience on the job was killed and another was seriously injured when they were struck on the tracks between the Hoyt -Schermerhorn and Jay Street stations in Brooklyn around 3pm. The two workers were carrying a ninety pound equipment dolly across live tracks to the out-of-service tracks where they were assigned to clear scrap metal debris. Transferring the dolly across live tracks was a safety rule violation, but a supervisor told the workers that he would watch for and signal on-coming trains with a flashlight (called "flagging"). The supervisor, Lloyd London, positioned himself in an appropriate location, but soon abandoned his post to help another worker, unbeknownst to the two workers on the live tracks, who still thought he was warning oncoming trains that they were on the tracks. Moments later, the two workers were struck by an approaching train.
Following these tragic deaths, transit authority supervisors held safety meetings with workers throughout the 40,000 employee system. The transit system claims that worker safety is a priority. Over the years they've developed a safety rules and regulations books, adding new procedures and rules drafted after every accident and fatality to show how much they care. The book is swollen with rules that are so contorted in their language that you need a lawyer to figure out what they say. The whole thing is more to protect the system from legal liability in lawsuits than to provide guidelines on how to work safely.
To illustrate this point perfectly, at one meeting workers were warned that they'd better abide by all safety regulations because otherwise if something happened to them on the job, their families would be denied full death benefits. One angry worker, angry at this effort to blame the victims, retorted, "How come every time a fireman or a cop gets killed on the job they call him a hero. But when a transit worker gets killed, you try to say it's his fault and threaten to penalize his family." After the reports were released, supervisor London was made the fall guy and demoted to subway car cleaner, and that was that. The failing of the entire city administration and its public transportation authority were absolved of any responsibility. Nothing has been done to make sure that the safety of the workers is the top priority. After all the transit system has a railroad to run and schedules to keep.
A few days later in August national media attention was riveted on the Crandall Canyon mine in Huntington, Utah where six miners were trapped in a collapsed coal mine on Aug 6th. Repeated efforts to drill shafts for ventilation and to send down food to the miners ended in failure. Ten days later, on August 16, three rescue workers were killed and six others injured as crews worked around the clock to dig through the collapsed debris to reach the miners. Rescue operations ceased and the 6 trapped miners will be entombed forever in the sealed mine.
Robert E. Murray, the chief executive of Murray Energy Corporation, co-operator of the mine, held repeated press conferences and briefings during the doomed rescue operations that seemed more designed to build up his personal image and shift blame for the tragedy from the company to mother nature than to facilitate the rescue. Contrary to all scientific evidence, Murray claimed that the disaster was caused by a 3.9 magnitude earthquake. However, scientists at the University of Utah and elsewhere said that the opposite had occurred-the spike in seismographic readings was caused by the mine collapse, which was caused by a particularly risky technique, called "retreat mining," that the Murray Corporation was using to extract the last vestiges of coal in the largely depleted mine. The previous owner of the mine, Andalex Resources, thought it was too dangerous to use the "retreat mining" technique to extract coal from so-called "coal barriers," the pillars of coal that are left to hold up the mine ceiling and the rest of the mountain above it. While commonly used in shallow mines, at Crandall Canyon with a depth of 1800 feet, with tremendous pressure from the millions of pounds of mountain above it, the technique is extremely dangerous. When Murray took over control of the mine in 2006, they applied for and were granted permission from the Mine Safety and Health Administration, to employ the controversial technique, so it's not just that they're an evil corporation-their dangerous techniques were endorsed by the state apparatus itself.
The coal mining industry is particularly dangerous, in the US and around the world. In the past three years, the industry has opened 50 new mines per year in the US, increasing the number of coal miners by 20%, yet safety inspections have declined to their lowest level in 10 years. In 2006, 47 American coal miners were killed, double the number in 2005.
To drive home the fact that the loss of human life is just a collateral cost of production for the industry, Murray callously announced that the trapped miners were hopelessly lost, that it was too dangerous to try to retrieve their bodies, that the area they were in would be permanently sealed and that coal mining operations would be resumed in other parts of the mine. There was simply too much money to be made to permanently shut down the unstable mine. The fact that the mine was too unsafe to even reclaim the bodies for appropriate burial was not going to stand in the way of profits. Under pressure from the public outcry triggered by this ruthless, profiteering, inhuman and unsafe decision, the Murray Corporation retreated, saying that the Crandall Canyon mine would be closed forever and permanently sealed in honor of the missing men, and that mining would resume several miles away in a new mine, with a different name-of course they'll be tunneling into the same mountain from a different angle and give this so-called "new" mine a different name..
While Robert Murray tried to portray himself as a champion of everyday coal miners, he and his company are no strangers to safety and other legal problems. The company was cited by the National Labor Relations Board for violating federal labor laws by penalizing workers in a labor dispute in 2001. In 2001 a worker in one of Murray's mines in Ohio bled to death after a conveyor belt cut off his arm. An investigator attributed the death to a lack of adequate first aid in the mine. In 2003, one of its subsidiaries and four executives were convicted of conspiracy, lying and violating safety laws regulating dust levels in a Kentucky coal. The Crandall Canyon mine, the scene of the recent cave in and deaths, was cited for 33 health and safety violations in 2007 alone. A company mine in Illinois accumulated more than 850 federal health and safety violations in 2007.
Mine safety problems are not just limited to the US of course. Half way around the world in China, at the same time as Crandall Canyon was in the news, 180 coal miners were lost in flooded coal mines in Shandong Province. This brought the death toll in China's coal mines to 2,163 for the first seven months of 2007.
In the United States, the most advanced, capitalist power in the world, with all manner of government regulations and oversight in place last year 5,703 workers died in job-related fatalities, 1226 of them in the construction industry.[1] In other words nearly double the number of people died on the homefront in work-related accidents last year than the number of US soldiers who have died in four years of combat in Iraq.
Clearly, in a mode of production where the
quest for profits drives the system, safety is an after-thought, an add on, an
extra cost - unless of course if accidents disrupt production so much as to
endanger profit margins. As long as capitalism exists, people will die
needlessly and horrendously. In a system controlled by the working class, where
production is designed to satisfy human need, then safety would be a high
priority. Accidents and illnesses will never be eliminated, but there is no
rational reason for them to be so prevalent. The deplorable safety conditions
that prevail today are still more proof that capitalism has outlived its
usefulness and has forfeited its right to continue. Capitalism needs to be
destroyed and replaced by a society controlled by the working class. - J.Grevin, 10/13/07.
[1] US fatality and accident data based on Bureau of Labor Statistics Press Release/Report, Aug. 9, 2007
[2] Global fatality, accident and illness data based on UN News press release, Apr. 28, 2005
After a 48-hour strike in September, General Motors and the United Auto Workers sealed a deal that will undoubtedly serve as a pattern setter for the rest of the industry, that will cut costs and sacrifice worker and retiree medical benefits forever. The UAW once again revealed itself as a full fledged partner in implementing austerity and cutting the workers' standard of living, and serving the interests of the national capital by helping keep the struggling auto industry afloat on the backs of the workers. The same scenario quickly followed at Chrysler in early October, following a 6-hour strike.
The big breakthrough feature in the GM contract was the creation of a VEBA-a voluntary employee benefit association - or a health care trust that will take over the GM's medical benefits program and be administered by the union. The deal frees GM from an estimated debt of $55 billion over the next 80 years to cover the health care benefits for employees and retirees. The trust will be funded with a payment of 70 percent of the $55 billion (or $38.5 billion) in cash, stock and other assets. According to the New York Times, the balance of the $55 billion will supposedly come from "gains on investments." In other words the deal lets GM unload its costly medical benefit program, to be run by the union, and the whole future of the program will rest on the profitability of the company. If the company should falter, the medical plan would collapse. The union will clearly have a long term commitment to bolstering GM's profits at the expense of workers for years to come.
The union announced that it had won a guarantee that medical benefits wouldn't be cut for two years-exactly how long it will take for federal authorities to review the details and approve establishment of the VEBA, and then it will be the union that will preside over cuts in medical benefits in order to assure viability of the program's future. The union also made a big deal that it won a GM guarantee that the company would maintain the workforce at the current 73,000 employee level, which was initially interpreted as meaning a job guarantee for all workers. But it soon came to light that the company was merely promising to maintain a workforce "equivalent" to the current 73,000 level. It does not guarantee that all current workers will continue in the job; the company can and will close down plants - the number and location of which has yet to be announced - and hire temporary workers who will be required to become UAW members. So, the union is guaranteed 73,000 dues paying members no matter how many current workers are laid off or forced to take early retirements. The four-year contract runs through 2011and provides that workers will get a $3,000 lump sum payment when the contract is approved and signed by union officials, and additional lump sum payments in the last 3 years, but there will be no increases in hourly wage rates whatsoever.
To add insult to injury, the contract also imposes a two-tier wage system, dooming younger workers and new hires who perform the same work as workers who have been on the job for a number of years. This gives the company even more incentive to drive older workers out of their jobs. This divides the workers against each other on generational grounds, pitting young against old, turning on its head the courageous stand taken in December 2005 by transit workers in New York City who fought against imposition of a new tier system.
Yet again the trade unions reveal themselves as a weapon for capitalism against the workers. - JG, 10/13/07.
The recent stock exchanges convulsions (see article on front page) pose the following question: whether the approaching open recession, which everyone agrees is likely, is part of the inevitable up and down pattern of the capitalist economy which is fundamentally sound, or whether it is a sign of a process of inner disintegration and breakdown, integral to capitalism, that will be punctuated by more and more violent convulsions.
To answer this question it is first necessary to deal with the idea that the development of speculation and the resulting credit crisis is in some way an aberration or a departure from the healthy functioning of the system, which could be corrected by state control or better regulation. In other words is the present crisis a result of financiers holding the economy hostage?
The development of the banking system, the stock market and other credit mechanisms have been integral to the development of capitalism since the 18th century. They have been necessary for the amassing and centralising of money capital in order to permit the levels of investment required for vast industrial expansion that was outside the scope of the richest individual capitalist. The idea of the industrial entrepreneur acquiring his capital by saving or by risking his own money is a pure fiction. The bourgeoisie requires access to the sort of sums of capital that have already been concentrated in the credit markets. In the stock markets the ruling class is not betting with their own individual fortunes but with monetised social wealth.
Credit, and lots of it, has thus played an important part in immensely accelerating the growth of the productive forces in comparison with previous epochs and in the constitution of the world market.
On the other hand given the inherent tendencies of capitalist production, credit has also been a tremendous accelerator of overproduction, of overvaluing the capacity of the market to absorb products and has thus been a catalyst of speculative bubbles with the consequent crises and drying up of credit. Side by side with facilitating these social catastrophes the stock markets and the banking system have encouraged all the individual vices of greed and duplicity that are typical of an exploiting class living off the labour of others; vices that we see flourishing today in insider trading, fictitious payments, outrageous ‘bonuses' that amount to huge fortunes, ‘golden parachutes', accountancy fraud, and plain theft.
The speculation, the risky loans, the swindles, the subsequent crashes and the disappearance of huge quantities of surplus value are therefore an intrinsic feature of the anarchy of capitalist production.
Speculation is, in the last analysis, a consequence, not the cause of capitalist crises. And if today it seems that speculative activity in the financial sector dominates the whole economy, it is because over the past 40 years capitalist overproduction has increasingly lapsed into a continuing crisis, where world markets are saturated with goods, investment in production is less profitable and money capital's inevitable recourse is to gamble in what has become a ‘casino economy'.
Therefore there is no possibility of a capitalism without its financial excesses, which are an intrinsic part of capitalism's tendency to produce as if the market had no limits.
The recent slump in the housing market in the US and in other countries is an illustration of the real relationship between overproduction and the credit squeeze.
The characteristics of the crisis in the housing market are reminiscent of descriptions of the capitalist crises that Karl Marx described in the Communist Manifesto in 1848:
"In these crises there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity - the epidemic of over production. ...there is too much civilisation, too much means of subsistence, too much industry, too much commerce".
So today we don't see homelessness as a result of a shortage of homes but paradoxically because there are too many of them; there is a veritable glut of empty houses. The construction industry has been working flat out over the past five years. But at the same time the purchasing power of American workers has fallen, as American capitalism attempts to increase its profitability. A gap opened up between the new homes being thrown onto the market and the ability to pay by those who needed them. Hence the risky - ie sub-prime - loans to seduce new buyers who could hardly afford them, and square the circle. Eventually the market crashed. Now, as more and more homeowners are evicted as a result of foreclosure on the crippling interest rates on these loans, the housing market will be further flooded - in the US some 3 million people are expected to lose their roofs as a result of defaulting on sub-prime mortgages. This human misery is anticipated in other countries where the housing bubble has either burst, or is about to. The surge in the construction industry and in mortgage lending over the past decade, then, far from reducing homelessness has put decent housing effectively out of reach for the mass of the population, or put homeowners in a precarious state[1].
Evidently what concerns the leaders of the capitalist system - its hedge-fund managers, its treasury ministers, its central bankers, etc - in the current crisis are not the human tragedies created by the sub-prime debacle, the dashed aspirations to a better life (except insofar as they might lead to questioning the insanity of this mode of production) but their inability as consumers to pay the inflated prices of houses and usurious rates of interest on the loans.
The sub-prime fiasco epitomises therefore the crisis of capitalism, its chronic tendency in the drive for profit to overproduce in relation to the solvent demand, its inability, despite the phenomenal material, technological and labour resources at its command to satisfy the most basic human needs[2].
However absurdly wasteful and anachronistic the capitalist system appears in the light of the recent crisis, the bourgeoisie still tries to reassure itself and the rest of the population that at least it won't be as bad as 1929.
The 1929 Wall Street Crash and the Great Depression continues to haunt the bourgeoisie, as the media coverage of the recent crisis testifies. Editorials, in-depth articles, historical analogies, have tried to convince us that the present financial crisis won't lead to the same catastrophe, that 1929 was a unique event that turned into a disaster by wrong decision making.
The bourgeoisie's ‘experts' foster the illusion that the present financial crisis is rather a repeat of the relatively limited - in time and place - financial crashes of the 19th century. In reality today's situation has more in common with 1929 than this earlier period of capitalism's ascendancy, sharing many of the common characteristics of the catastrophic financial and economic crises of the decadence of capitalism, of the period opened up by the First World War; of the inner disintegration of the capitalist mode of production, of a period of wars and revolutions.
The economic crises of capitalist ascendancy, and the speculative activity that often accompanied them and preceded them, were the heartbeats of a healthy system and gave way to new capitalist expansion throughout the world, through the construction of railways over entire continents, massive technological breakthroughs, the conquest of colonial markets, the conversion of artisans and peasants into armies of proletarian labour, etc.
The 1929 New York stock market crash, which announced the first major crisis of capitalism's decay, put all the speculative crises of the 19th century in the shade. During the ‘roaring twenties' the value of shares in the New York Stock Exchange, the biggest in the world, had increased five fold. World capitalism had failed to recover from the catastrophe of the First World War, and in the now richest capitalist country the bourgeoisie sought an outlet in stock market speculation.
But on Black Thursday 24 October 1929, a precipitous decline took place. Panic selling continued on Black Tuesday of the following week. And the stock market kept on crashing until 1932, by which time stocks had lost 89% of their peak value in 1929. They returned to levels not seen since the 19th century. The 1929 peak in share value was not reached again until 1954!
Meanwhile the US banking system which had lent money to buy the stocks itself collapsed. This catastrophe heralded the great depression of the thirties, the deepest crisis capitalism has ever experienced. American GDP was effectively halved. 13 million workers became unemployed with no relief to speak of. A third of the population sank into abject poverty. The effects were echoed around the world.
But there was no economic rebound as there had been after the crises of the 19th century. Production only began to resume when it had been harnessed to arms production in preparation for a new re-division of the world market in the imperialist bloodbath of World War II. In other words when the unemployed had been transformed into cannon fodder.
The thirties depression appeared to be the result of 1929, but in reality the Wall Street Crash only precipitated the crisis, a crisis of the chronic overproduction of capitalism in its decadent phase. Here lies the essential identity of the thirties with today's crisis, which began in the late 60s.
The bourgeoisie in the 1950s and 60s smugly claimed to have solved the problem of crises and consigned them to a historical curiosity through such palliatives as state intervention in the economy both at the national and international level, through deficit financing and progressive taxation. To its consternation the world wide crisis of overproduction reappeared in 1968.
Over the past 40 years this crisis has lurched from low point to another, from one open recession to one more damaging, from one false Eldorado to another. The form of the crisis since 1967 hasn't taken the abrupt nature as the crash of 1929. In 1929 the financial experts of the bourgeoisie took measures that only allowed the financial crisis to take its course. The measures were not errors but methods that had worked in previous crashes of the system, like in the panic of 1907, but weren't sufficient in the new period. The state initially refused to intervene. Interest rates were increased, the money supply was allowed to shrink, tightening the credit squeeze and further shattering confidence in the banking and credit system. The Smoot-Hawley Tariff bill imposed import barriers that accelerated the downturn in world trade and consequently worsened the depression.
In the last 40 years the bourgeoisie has understood the need to use state mechanisms to reduce interest rates and inject liquidity into the banking system in the face of financial crises. It has been able to phase in the crisis, but at the price of overloading the capitalist system with mountains of debt. A more gradual decline has been achieved than in the thirties, but nevertheless the palliatives are wearing out, and the financial system is increasingly fragile.
The phenomenal growth of debt in the world economy during the recent decade is exemplified in the extraordinary growth, within the credit markets of the now famous ‘hedge-funds'. The estimated assets of these funds have risen from $491bn in 2000 to $1,745bn in 2007[3]. Their complicated financial transactions, mostly secret and unregulated, use debt as a tradable security in the search for short term gain. The hedge-funds are judged to have spread bad debt throughout the financial system, accelerating and rapidly extending the present financial crisis.
The economic history of the last 40 years has been the history of the failure of one magical remedy after another. Keynesianism - deficit financing by the state to maintain full employment - evaporated in the galloping inflation of the 1970s and the recessions of 1975 and 1981. Reaganomics and Thatcherism - restoring profits by cutting the social wage, cutting taxes and allowing unprofitable industries to collapse with mass unemployment - expired in the stock market crash of 1987, the Savings and Loans scandal, and the recession of 1991. The Asian Dragons, saddled with huge debts, ran out of puff in 1997. The dot com revolution, the ‘new' economy, turned out to have no visible means of support, and the boom in its shares bust in 1999. The housing booms and credit card debt explosion of the past five years, and the use of the gigantic US foreign debt to provide demand for the world economy and the ‘miracle' expansion of the Chinese economy - this too has now been put in question.
We can't predict exactly how the world economy will continue to decline but increasing convulsions and even greater austerity is inevitable.
Karl Marx, in the third volume of Capital, argued that the credit system developed by capitalism revealed in embryo a new mode of production within the old. By enlarging and socialising wealth, taking it out of the hands of individual members of the bourgeoisie, capitalism had paved the way for a society where production could be centralised and controlled by the producers themselves and bourgeois ownership could be done away with as a historical anachronism:
"The credit system hence accelerates the material development of the productive forces and the creation of the world market which it is the historical task of the capitalist mode of production to bring to a certain level of development, as material foundations for the new form of production. At the same time, credit accelerates the violent outbreaks of this contradiction, crises, and with these the elements of dissolution of the old mode of production"[4].
For a century now conditions have been ripe for the abolition of capitalist exploitation. In the absence of a radical proletarian response, the contradictions of this moribund system, the economic crisis in particular, have only become more acute. While today credit continues to play a role in the evolution of these contradictions, it's not that of conquering the world market, since capitalism has long established its social relations throughout the planet. The massive indebtedness of all states has allowed the system to avoid brutal collapse despite the virtual impossibility of further expansion of the world market. But there is a price. After functioning for decades as a means of attenuating the conflict between the development of the productive forces and the obsolete social relations of capitalism, the headlong flight into debt is beginning to "accelerate the violent outbreaks of this contradiction" and to shake the social edifice as never before. Como
[1] Benjamin Bernanke, Chairman of the US Fed, referred to mortgage arrears as "delinquencies": in other words crimes or misdemeanours against Mammon. Accordingly the ‘criminals' have been punished... by still higher interest rates!
[2] We can't here go into the state of homelessness in the world as a whole. According to the United Nations Commission on Human Rights, 1 billion people on the planet are considered to be without adequate housing, while 100 million have no home at all.
[4] Part 5, Chapter 27: ‘The Role of Credit in Capitalist Production'
Lou Dobbs, Bill O'Reilly and an army of rightwing talk show hosts are busy flooding the air waves with propaganda messages blaming immigrant workers, legal and illegal, for the social problems that beset American society, particularly the working class. According to this rightwing propaganda line, the deterioration of our neighborhoods, increasing crime, unemployment, what they call "cultural and linguistic pollution," are all caused by immigrant workers. They want to put up an impenetrable fence along the US border with Mexico, they want border guards to shoot to kill, they want to deport 12 million illegal immigrants, and so on. In doing this, they prey on mistrust of and discomfort that some workers feel towards newcomers, foreigners, those perceived as outsiders, and whip up irrational fears of xenophobia and racism.
For the working class, this ideological claptrap is absolute poison. Anything that stresses, exaggerates, aggravates, and manipulates differences within the working class, real or imagined contributes to the disunity of the working class and is nothing but an expression of bourgeois ideology against which we must $fight. Sure, ethnic and racial hatreds exist in the working class and are real, and workers who fall for this can always point to empirical facts that justify their views, but they are not legitimate, they are not "rational" because they are contrary to the historic interests of the working class and serve to divide the working class against itself and render it less capable to confront its class enemy.
Capitalist decadence and decomposition are causing greater chaos and crisis in the world and contribute to massive population displacements as growing numbers of workers and other strata become refugees from war, starvation, unemployment, disease, and pestilence. But the problem is not mass migration; it is not that working people flee to some place better to live and support their families. Workers have done this throughout the history of capitalism. The problem is not that workers flee from the disastrous life that capitalism offers them. The problem is capitalism itself, which has become an historically anachronistic social system, that offers humanity a future of barbarism and suffering, and must be overthrown.
Workers have no country, no national loyalties, no national flag, or national culture to protect. The working class is a worldwide class that lives in many countries and where many languages may be spoken, but in which the same class struggle against capitalist exploitation exists. We seek a new world free of exploitation and oppression - a genuine human community, where there will be no nations, no immigration services, no immigration police. The working class will run the world so that social needs are met and scarcity is not a dominant factor, where cooperation, not competition, is the organizing principle in social life. Anyone who gets mad at immigrant workers, legal or illegal, is giving in to the ideology of our capitalist enemies who rejoice when they succeed in dividing us against each other and reduce us to fighting over the crumbs. The capitalists rejoice when we think that we are each others' enemies, that we are citizens of some "country" or "nation" and not a world class of workers who have the historic responsibility to destroy the capitalist's rotten system.
To the rightwing loudmouths who demonize our immigrant class brothers and sisters as scapegoats and fall guys, we have to tell them we're not the idiots they want us to be. We know that it is not immigrant workers who exploit us at work, who cut our health benefits and our pensions, who despoil the environment and unleash the dangers of global warming, who permit the deterioration of our cities and living conditions, who are responsible for imperialist war that destroys and kills, who perfect the means of oppression and repression under the guise of guaranteeing "freedom," who are completely incapable of offering hope for a better future for humanity. We know it is capitalism we must fight, not our class brothers. - Internationalism Oct. 2007
Links
[1] https://en.internationalism.org/tag/4/135/internationalism
[2] https://en.internationalism.org/tag/recent-and-ongoing/war-iraq
[3] https://en.internationalism.org/tag/general-and-theoretical-questions/economic-crisis
[4] https://en.internationalism.org/tag/5/50/united-states
[5] https://en.internationalism.org/tag/recent-and-ongoing/class-struggle
[6] https://www.mcclatchydc.com/
[7] https://en.internationalism.org/tag/recent-and-ongoing/economic-crisis