Capitalism in Crisis
Gary Sudborough - 29.11.2008 02:11
Some thoughts about the current economic crisis and its relationship to capitalism
If one watches the business channel on cable television, they seem to have a multitude of different explanations for the recent financial crisis from letting Lehman Brothers go under to misspending the government bailout money to not giving the capitalists even more money, etc., etc. They say the consumer has stopped spending, but this seems to mystify most of these commentators, who evidently believe consumers are sitting on a pile of cash and just being stubborn and petulant about spending it. If anyone mentions unions, let alone socialism, and this person suggests a wage considerably above the abysmal bare minimum wage might just enable workers to save enough to say buy a new car, the majority on the business channel seem to go into some sort of apoplectic fit, contending that it is the business men who need the money in the form of capital gains tax reductions. They do this in the face of statistics that show that world wide wealth is rapidly being siphoned from the poor to the rich. In the United States 1% of the population controls 90% of the wealth. The reason the crisis goes on and on is not just because of bad mortgages or a credit crunch, it is because of overproduction. Workers are not being paid nearly enough to buy back all the goods and services they produce. Hence, the inventories of cars and practically everything else are at record levels. Every individual capitalist looks at only his own profit margin, trying to maximize it by breaking unions or holding down labor costs. They never look at the purchasing power of the economy as a whole and hence overproduction of goods and services builds to such an extent that not even the credit card can alleviate it. To compensate for declining sales and profits, the individual capitalist lays off workers, which further exacerbates the problem because of another decline in purchasing power. It is like a snowball rolling down hill. Each round of layoffs decreases purchasing power further, resulting in more layoffs and an ever worsening economy.
In the depression of 1893 there was no such thing as a safety net. Little children and indeed often whole families had to work to make ends meet. Capitalists liked employing children because they had nimble and agile fingers, would work for less, and rarely caused the labor problems that adults did. When the depression came and layoffs occurred, there was no unemployment compensation, Social Security, disability insurance or any other measures like those enacted by Franklin Delano Roosevelt during the Great Depression that might have softened the blow. In 1893, unless one had generous relatives in a better condition, one could starve to death, die of disease or freeze to death in the streets. It was a harsh world for all but the capitalists, who, no matter how many millions they lost in the stock market, had plenty more to live a very lavish life style, while something like Dante's Inferno went on around them. Can one imagine if in the current crisis in capitalism, a safety net did not exist, agencies like the Federal Reserve, the IMF and federal governments couldn't pump money into the system, what a catastrophe would already be at hand? There would probably be World-Wide revolution. This is the system conservatives call "free enterprise" and claim works best when left completely alone. Yes, indeed, it works wonderfully for capitalist thieves when left to itself. Franklin Delano Roosevelt saved capitalism and for thanks he got a plot against his life by some of the largest capitalists in the country.
The Savings and Loan heist, the accounting firm crimes of Arthur Andersen and others, the robbery of energy consumers by Enron and the other energy companies, the packaging of mortgages by banks into a kind of stock, which they could sell and make considerable profits, and the continual taxpayer bailouts of corporations are just the most blatant forms of robbery of working people by the capitalist class. There is a constant and less conspicuous form of robbery. According to the labor theory of value, all wealth results from labor exerting its influence over the natural world. Profit is a part of that value which is expropriated by the capitalist and rightly belongs to the worker. The more workers a capitalist employs in good times the more of this profit can be siphoned off from each worker and the richer each capitalist becomes. The more machinery, which increases the output of each worker, the capitalist owns the larger the profit margin. Naturally, the longer this machinery can be kept running in each individual day, the more profit. Hence, there arose in the early days of capitalism, many workers putting in 12, 14 or 16 hour days. The only hindrance for capitalists was that these natural machines called human beings needed rest, food and shelter. Otherwise, they had a tendency to break down. Of course, in countries like China where labor was virtually limitless, workers could be actually worked to death and were, including children.
One might reasonably ask where the capitalists came by all the wealth they used to buy the land, buildings, machinery and labor they employed. The common myth employed by capitalists is that very prudent workers took their meager earnings, saved and gradually step by step became capitalists. The flaw is that workers were paid so little they actually went into debt, rather than being able to save anything. There is a very accurate song sung about coal miners called 16 Tons. It goes something like this: "You load sixteen tons and what do you get- another day older and deeper in debt. St. Peter don't you call me cause I can't go. I owe my soul to the company store." The actual way the early capitalists got their control of wealth was by heredity, thievery and sometimes violence. The nobility in Europe already had vast sums of capital, but the incredible amounts of gold and silver stolen from Mexico and South America increased the capital existent in Europe greatly. Spain and Portugal owed much of the expropriations of this wealth to English and French banks. This and other factors resulted in the industrial revolution occurring in France and England first.
The other ingredient that capitalists needed besides capital was a great deal of labor and the population of most European countries at that time was rural. Not only that, but most peasants would rather farm than be tied to some machine, performing the same repetitive task over and over again all day. The peasants had something to fall back on, even though they gave much of their produce to the nobles. It was called the commons. As the name suggests, it consisted of large tracts of forests, arable land, lakes and streams where peasants could farm for themselves or fish and hunt. To deprive the peasants of this resource for survival, the capitalists bought up this land and fenced it in. This forced many peasants into the cities where they were a ready labor supply for the capitalist's factories. Much of this information is in a book called Das Kapital by Karl Marx and is even more relevant today than it ever was. Due to relentless corporate propaganda over decades and decades the very name Karl Marx scares most people away from reading his work, which is a terrible shame because without an informed working class, fascism can easily result due to a crisis in capitalism. Germany in the 1930s is an example. Das Kapital like The Origin of Species by Charles Darwin will always be relevant because it is scientific and tells the truth.
Whenever, I write an article like this, I am always told that socialism has failed and that there is no alternative to capitalism. Well, I say, a certain kind of socialism has never been tried on a large scale and on a smaller scale was destroyed by force. Noam Chomsky tells about the mill girls in Massachusetts in the 19th century who were adamant in the belief that they ought to own and run the factories themselves. The IWW always taught that the workers should own and run their enterprises. Remember the Hollywood movie called 9 to 5, where three women workers kidnapped their tyrannical boss, imprisoned him and then proceeded to make all sorts of improvements to their company, like day care for employee's children, flexible hours and a multitude of other beneficial things. In the movie the tyrannical boss was eventually freed, the big boss came by and approved of the improvements and the three girls were given promotions. Why not just take the next step and get rid of the big boss and put ownership and operations of the company in the hands of the employees, since they proved they could do the job? I guess Hollywood was afraid of being too radical. Socialism is the answer to the current misery caused by capitalism, but don't expect to hear any discussion of it on television or any media owned by the super rich. They would rather see the world go up in smoke than lose any of their colossal wealth.
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