AFL-CIO Jobs Program Needs Mass Demonstration to Back It Up. Democrats Must Be Forced to Pass Jobs Program Right Now!
While this was a step forward, they left out the most important ingredient of any real campaign to achieve this or any other jobs program – a mass mobilization of the millions of union members, community groups, progressives, unemployed workers to march in the streets of the cities and in Washington, D.C. to fight for the program.
AFL-CIO president Richard Trumka announced a 5-point plan to create jobs It is a welcome sign that the official labor movement is finally addressing the catastrophic crisis of unemployment with a legislative initiative.
Even though it took over a year and 8 million lost jobs for AFL-CIO officialdom to speak out, the widely publicized announcement should help put the unemployment crisis up front politically in the labor movement and give encouragement to all those groups and organizations that want to carry the fight for jobs forward.
Trumka was joined by NAACP President Benjamin Jealous; National Council of La Raza (NCLR) President Janet Murguia; Leadership Conference on Civil Rights President (LCCR) Wade Henderson; and Deepak Bhargava, executive director of the Center for Community Change. EPI President Larry Mishel moderated the conversation, which Jealous called the beginning of a national human rights movement for economic opportunity.
The AFL-CIO figures show that it would take the creation of 533,000 jobs per month for two years just to get the employment level back to where it was before the downturn. These figures assume no more job loss, a dubious assumption. The numbers do not account for the millions of workers who have either dropped out of the work force because they are discouraged or who are being force to work part-time even though they need full time work. The real number of unemployed, under-employed and discouraged workers is well above 25 million.
Any legislative program that does not have a massive campaign of militant, forceful demonstrations – a campaign of struggle – will inevitably be mired down in the Democratic Party caucus. The Democratic Party leadership has already sold out 95 percent of the health care program; has let the Employee Free Choice Act sit on the back burner; helped turn over trillions of dollars to the banks and to GM and Chrysler; and is getting ready to vote for more troops to Afghanistan.
The AFL-CIO said that if Congress does not pass jobs legislation, then they will target the enemies of that legislation in the elections. It is worth while recalling what Senator Dick Durban blurted out in frustration about the power of the banks in Congress after he was defeated in a Senate subcommittee fight over bankruptcy reform where the Democrats were the majority: “Frankly, they own the place” he said.
Unemployed workers and their families cannot wait for the corrupt legislature to deliberate and compromise and water down a jobs program, if they ever really take it up.
There is nothing wrong with lobbying these sell outs and vacillators. But the only effective form of lobbying is to disrupt the daily routines of these lawmakers in the halls of Congress and confront them with the organized wrath of the people.
Nov 18, 2009
Following is an excerpt from Fred Goldstein’s book “Low-Wage Capitalism,” which analyzes the effects of globalization and the high-tech revolution on the U.S. working class. This excerpt includes part of an historic address by Karl Marx to the First International in 1866.
In the crisis now unfolding, a revitalized workers’ movement, in order to be effective, will have to draw in all the sectors that have either been left out or marginalized. All workers’ movements and working-class communities must have a place in the struggle that takes into account their particular needs, without being subordinated or subjected to bureaucratic leadership. This includes the fight for jobs, for income, for the right to a home and food. Occupations, mass demonstrations, strikes, and every form of struggle will be required. This is the road to a renewed workers’ movement encompassing the unions and the far broader sections of the working class whose fighting spirit must be mobilized on the basis of addressing their needs.
Marx on unions as organizing centers for the whole class
Karl Marx delivered an address to the General Council of the International Workingmen’s Association (the First International) in 1866. Included was a section on “The Future of the Unions.” This passage, along with many others, is as relevant today for the labor movement as it was back in 1866 when it was first delivered:
“Apart from their original purpose, they [the unions] must now learn to act deliberately as organizing centers of the working class in the broad interest of its complete emancipation. They must aid every social and political movement tending in that direction. Considering themselves as acting as the champions of the whole working class, they cannot fail to enlist the non-society men [the unorganized—ed.] into their ranks. They must look carefully after the interests of the worst paid trades, such as agricultural laborers, rendered powerless by exceptional circumstances. They must convince the world at large that their efforts, far from being narrow and selfish, aim at the emancipation of the downtrodden millions.”
Karl Marx from “Instructions for the Delegates of the Provisional General Council” delivered at the Geneva Congress of the First International September 1866.*
Marx declared that the future task of the trade unions was to reach out to the poor and the oppressed, the lowest paid, the unorganized, and push forward political and social movements that would aid in the emancipation of the working class as a whole.
*Karl Marx, “The First International and After: Political Writings: Volume 3.” Ed. David Fernbach. (London: Penguin Books in association with New Left Review, 1974), p. 92.
Nov 13, 2009
Nov 9, 2009
Published Oct 24, 2009 12:03 AM
When the workers at Republic Windows and Doors in Chicago seized the factory last winter, their heroism in defying both their boss and the Bank of America electrified workers and progressive people all over the country and even around the world.
When they walked out of the factory in victory—with their demands for severance pay, wages and other benefits agreed to by BOA—they had accomplished what seemed impossible. Some 250 or more workers, mostly immigrants, had forced a giant financial behemoth, which controls hundreds of billions of dollars through its banking empire, to back up and meet their demands.
Revealed in that struggle was an important relationship that all class-conscious workers should take to heart. The capitalist boss of Republic Windows and Doors, the exploiter of the workers in his factory, was just a dependent of his giant creditor.
He needed the money from Bank of America to continue to carry out the exploitation of the workers. The boss lived off the profits sweated out of the labor of the workers. But without the money to keep going, he was unable to continue the cycle of exploitation. Thus, the workers were out of a job.
In a microcosm, that struggle revealed a basic truth. It is a class relationship that is concealed for the most part.
In capitalist society, exploitation and all economic activity begin with money. This explains the power of the banks. In order to live in the profit system, workers must sell their labor power. In order to thrive in the profit system, the boss must buy that labor power and the means of production. But that takes money.
Because of the special circumstances of their struggle, the small contingent of workers at Republic Windows and Doors was actually in combat with the real economic rulers of capitalist society.
Lenin on the special role of the banks
The dominance of the bankers was dramatically revealed on a larger scale when the financial crisis first broke out in September 2008 after the failure of Lehman Brothers. Bailout money poured into the coffers of the banks in return for the government taking shares in them. There was talk about the “nationalization” of the banks—a government takeover.
When the smoke cleared, there had been no government takeover of the banks. What really emerged was that the biggest, most powerful banks had made great inroads in taking over the financial reins of the government.
This is a confirmation of the Marxist analysis of imperialist society which V.I. Lenin, the architect of the Bolshevik revolution, elaborated in his book “Imperialism, the Highest Stage of Capitalism,” written in 1916 during World War I.
Lenin described the evolution of capitalism from its competitive stage in the 19th century to its monopoly stage in the 20th century. He showed how the means of production grew to gigantic proportions and how the imperialist powers divided up the globe among themselves into colonies and spheres of influence. He described the growth of giant monopolistic corporate cartels and syndicates that dominated the resources and markets of the globe. He pointed to the growing export of capital abroad and the super-exploitation of the colonial peoples.
Looking at the power behind it all, he singled out the role of the banks and how they came to dominate industry and created finance capital. In a famous section entitled “The Banks and Their New Role,” he wrote:
“The principal and primary function of banks is to serve as middlemen in the making of payments. In so doing they transform inactive money capital into active, that is, into capital yielding a profit; they collect all kinds of money revenues and place them at the disposal of the capitalist class.
“As banking develops and becomes concentrated in a small number of establishments, the banks grow from modest middlemen into powerful monopolies having at their command almost the whole of the money capital of all the capitalists and small businessmen and also the larger part of the means of production and sources of raw materials in any one country and in a number of countries. This transformation of numerous modest middlemen into a handful of monopolists is one of the fundamental processes in the growth of capitalism into capitalist imperialism.” (Lenin's works can be found on www.marxists.org.)
Later in the same work, Lenin described the parasitic nature of the financiers, which is so prominent in the present crisis:
“It is characteristic of capitalism in general that the ownership of capital is separated from the application of capital to production, that money capital is separated from industrial or productive capital, and that the rentier who lives entirely on income obtained from money capital is separated from the entrepreneur and from all who are directly concerned in the management of capital. Imperialism, or the domination of finance capital, is that highest stage of capitalism in which this separation reaches vast proportions. The supremacy of finance capital over all other forms of capital means the predominance of the rentier and of the financial oligarchy.”
Much has been written of late about the so-called “financialization of capital,” as if it were a new discovery. The wealth of the banks and the magnitude of their speculation have grown immensely with the growth of capitalist imperialism. But Lenin described its evolution and fundamental features almost a century ago. Wall Street’s insatiable lust for profit cannot be treated in isolation from the analysis of imperialism as a form of society.
Lenin showed that the dominance of finance capital is an inevitable and irreversible stage of the capitalist system. Competitive capitalism grows into monopoly capitalism—the stage in which finance capital and the financial oligarchy have risen to the pinnacle of the system of exploitation and wage slavery, at home and abroad.
Banks suck profits from everywhere
The banks are tied to big oil, big industry, the insurance companies, all the hedge funds, the private equity funds, the mortgage brokers, the stock exchange and every other institution in society that thrives off the stolen labor of the workers.
The banks profit from every war and every intervention because wars are economic enterprises that take financing and involve fees and interest. The banks get profit from the government, which borrows from them at high interest rates to pay for wars. They also get profit from the military-industrial complex itself, which they finance. Plus they profit from the spoils when the Pentagon conquers territory.
The banks profit from every layoff, every plant closing, every speed-up, because every business, large and small, is in debt to the banks and pays interest out of the surplus value it has wrung from the workers.
They profit from the debt of the workers. After workers are exploited on the job, their wages are converted into profit for the banks in the form of fees and exorbitant interest payments. Banks will make loans to corporations to break strikes but will deny loans to companies to pay workers’ benefits, as in the Republic Windows and Doors case.
Banks profit from the high cost of education, both from the interest they get from student loans and the fees from college and university trust funds that they manage. They profit from the health care crisis because they are completely intertwined with the insurance companies, the pharmaceutical companies and the medical-industrial complex.
And they make money from racism, which brings extra profits because of the lower wages paid to Black, Latino/a, Asian, Middle Eastern and Native peoples and because divisions within the working class keep all wages down and profits up.
The banks profit from sexism because women get paid less than men, to say nothing of women's unpaid labor in the home—which, among other things, provides the next generation of workers for the bosses free of charge.
They profit from lesbian, gay, bi and trans oppression, not only because it is divisive but because LGBT people are deprived of countless economic and social benefits available to straight people—benefits that would have to come out of the coffers of the government or the bosses.
There is no aspect of capitalist society in the imperialist epoch that is untouched by the bankers.
Banks get rich while workers sink
So it should be no surprise that Timothy Geithner, Larry Summers and other lackeys of the bankers—who are high-paid government officials but are lackeys nevertheless—scurry about trying to save their masters while the entire ship of the working class is sinking.
When the government orchestrated the bankruptcy of General Motors, tens of thousands of workers' jobs were destroyed through plant closings. But the biggest banks—including JPMorgan Chase, Citigroup and Credit Suisse, all of whom were getting money from the government—made sure that the bankruptcy settlement guaranteed them every penny of the $6 billion in loans they were owed. Other syndicates of bondholders also got paid off.
When the financial meltdown came in the fall of 2008 and the banks were in trouble, within days they had Henry Paulson write a three-page piece of legislation granting them $750 billion. Paulson, a former co-chair of Goldman Sachs and secretary of the Treasury under George W. Bush, made sure the legislation specified that neither Congress nor the courts could review or alter this colossal grant.
When Congress rebelled and voted down this outrageous giveaway over fear of mass anger, the bankers simply turned up the heat and got the vote reversed over the space of a weekend.
After a struggle among the banks, a small number of them emerged stronger than before the crisis. Banks that were bailed out because they were “too big to fail” have gotten bigger, richer and financially and politically more powerful.
What was revealed in microcosm in the Republic Windows and Doors strike is now being revealed on a society-wide scale. Financial vultures are using their power to swallow up more and more of the wealth of society while the working class is plunged into economic and social disaster.
Goldman Sachs announced that it made a record $3.1 billion in profits in the last quarter. It is scheduled to fork out $5.3 billion in bonuses to its team of bankers. (New York Times, Oct. 16) JPMorgan Chase had third-quarter profits of $3.6 billion, seven times higher than a year ago. (AFP, Oct. 14)
Meanwhile, home foreclosures went up 23 percent in the month of September. Workers are living out of their cars and being pushed into homeless shelters.
This is the perfect capitalist symmetry of wealth and exploitation. Bankers get rich while the masses are plunged deeper into crisis. The stock market goes up to 10,000 while unemployment edges up to 10 percent. (Real unemployment is nearer 18 percent.)
The latest numbers on the government stimulus plan reveal that $16 billion has been spent to create 30,000 jobs—a paltry result. About 8 million jobs have been lost and the number is climbing. But the bankers’ stimulus plan has yielded billions in profits and stock market riches.
Workers’ rebellion inevitable
This situation can only be temporary. It is all based on the fact that the workers have not yet begun to fight back on a wide scale. The relationship of class forces is temporarily on the side of the bankers and the bosses.
They are pushing everyone around now, including the Obama administration, which has catered to them. The banks have spent $220 million lobbying against even a minimal financial reform bill designed to restrain them from wild speculation and gambling—which touched off the present crisis in the first place.
The banks are the central nervous system and the organizers of capitalist imperialism. They dominate capitalist politics. Their representatives are always high up in every administration, Republican or Democrat. They break through every attempt to hold them back from plundering the workers because, as Lenin said, they gather all the financial resources of society into their hands. Money capital is the beginning point of the exploitation of labor, because capitalist industry must have funds. But the banks also use this financial power to promote speculation, gambling and financial extortion.
They think that they can go on like this forever. But they will soon see that there is a force mightier than capital, mightier than bankers. It is the force of tens of millions of workers and oppressed people, who will get to the point where they can’t take it any more. All the capitalists' money will not be able to stop the class struggle and a class war against capitalism itself.
Oct 24, 2009
High-Tech Globalization and Low-Wage Capitalism: System in Crisis & Prospects for Workers’ Fightback
Come hear Fred Goldstein, author of Low-Wage Capitalism, lead a workshop on:
High-Tech Globalization and Low-Wage Capitalism:
System in Crisis & Prospects for Workers’ Fightback
Time: 11:40 – 12:40
Place: St. Francis College, Brooklyn, NY - Room 4404
Directions: Take number 2 or 3 train to Clark St.
Fred Goldstein will be conducting the workshop at:
URPE CONFERENCE IN BROOKLYN, NY
Radical Analysis and Radical Responses
Morning Segment: RADICAL ANALYSIS
Keynote Speaker: Dr. David Harvey (CUNY)
Workshops on causes, mechanisms, and effects of the capitalist crisis
Afternoon Segment: RADICAL RESPONSES
Keynote Speaker: Hon. Charles Barron (New York City Council)
Workshops on popular responses to the crisis
Oct 23, 2009
Published Oct 7, 2009 6:21 PM
The grim numbers are in. In September, 263,000 more jobs were lost. Official unemployment edged closer to 10 percent, going from 9.7 to 9.8. This was larger than predicted by capitalist economists and is the result of 21 consecutive months of economic downturn, the longest streak in 70 years.
In addition, the percentage of jobs lost, compared to the total work force, is 5.8 percent, the largest since 1946, when military contractors laid off workers en masse after World War II.
But there is more. The official unemployment rate would have been higher than 10 percent—except that 571,000 workers dropped out of the work force and therefore were not counted among the unemployed. In fact, so many workers have stopped looking, after repeatedly finding no jobs, that today 615,000 fewer workers are counted as part of the work force, compared to a year ago.
(The statistics cited in this article come from the Economic Policy Institute’s Jobs Picture report of Oct. 2, 2009.)
The only way the work force can shrink while the population grows is if massive numbers of workers give up looking for work. In fact, more than one-third of the 15.1 million officially unemployed—some 5.4 million—have been out of work for more than six months. In September alone 450,000 jobless workers reached this category.
Since the downturn started in December 2007, 7.2 million jobs have been officially lost. But the Department of Labor will be revising this figure upward, to 8 million, due to a so-called “benchmark revision.” Apparently, the model used to calculate job losses during the 12 months ending in March missed 824,000 layoffs!
The government estimates that, because of population growth, 127,000 new jobs are needed each month just to keep up with the growth of the work force. So in reality this downturn, which is now 21 months old, has resulted in a deficit of 10.7 million jobs.
To get back to pre-recession levels, it would take the creation of an average of 573,000 jobs every month for the next two years. That’s the equivalent of opening 200 to 250 brand-new auto plants each month for two years, just to absorb the unemployed.
These figures do not take into account the 9.2 million workers on forced part-time or the 2.2 million officially classified as discouraged workers. Including them would bring the total official unemployment rate to 17 percent—or more than one-sixth of the entire work force.
These numbers are grim for the workers. But for the bosses, the numbers are cheery. Profits are up, especially bank profits, and according to testimony by former Federal Reserve System chair Alan Greenspan, the capitalist economy is on a path to grow 3 percent this quarter. (Interview on This Week with George Stephanopoulos, ABC-TV, Oct. 5)
Greenspan: ‘This is what a recovery looks like’
Greenspan, architect of the financial bubble and the ensuing housing bubble, declared in the same interview, “The job report was pretty awful, no matter how you looked at it. Indeed, not only did unemployment go up, but I was particularly concerned about the number of Americans who have been unemployed for six months or longer.
“My own suspicion is that we’re going to penetrate the 10-percent barrier and stay there for a while before we start down,” he said.
Greenspan then hastened to look on the bright side, with typical understated heartlessness. “It is true, the last couple of weeks, some of the numbers coming in have been a little bit soft,” he said. “But,” he added, “this is what a recovery looks like.”
Of course, Greenspan did not clarify that the “we” who are going to “penetrate the 10-percent barrier” are the proletariat, the wage slaves of capital. It is capital that is going to make more and more profit by forcing the workers to “penetrate” the barrier through laying them off.
Nor did Greenspan specify what he meant by the workers staying in a state of mass unemployment “for a while,” or when the “start down” will be.
This mealy-mouthed acknowledgment of the contradictions of the present capitalist crisis that Greenspan was forced to admit in front of a Sunday morning television audience actually tells a lot that the workers need to take to heart.
‘Horrendous amounts’ of productivity
The truth is that close to 30 million workers are unemployed and underemployed. They cannot be put back to work because capitalism has no jobs for them and will not be able to create anywhere near enough jobs.
The bosses have done everything in their power to find ways to intensify the exploitation of labor—that is, to increase productivity. Their goal is to get workers to produce more and more in less and less time for lower and lower wages.
In other words, each capitalist tries to get along with fewer and fewer workers by laying them off. Those workers who remain are speeded up through technology, or just plain driven harder. According to MarketWatch, reporting on the Stephanopoulos interview:
“Pointing to the fact that businesses laid off ‘a very substantial number of people’ when the financial markets collapsed last year, Greenspan said the country got productivity gains ‘of horrendous amounts,’ which cannot continue.”
Technology in the hands of the bosses spells long-term mass unemployment for millions and millions of workers.
The capitalist economy, even while growing at 3 percent, still shed 263,000 jobs in the month of September. And, more importantly, the bosses are not hiring.
That means the fortunes of the exploiting classes are looking up while the fortunes of the exploited sink further into the depths of unemployment, poverty, foreclosures and homelessness.
Mobilize for a real jobs program
The only way out in the short run is for the workers, the unemployed and employed alike, to demand a real jobs program. The workers’ movement as a whole, and especially the trade union movement, must demand that the trillions handed over to the banks be taken and used to make real jobs. These jobs must be given directly to workers—not to some capitalist who might hand out a few jobs, but only after taking the profits off the top and after all the government officials and politicians get their cut.
No “market mechanism,” no automatic process of capitalism, and no government gift to the bosses and bankers is going to turn the situation around. This is rooted in the nature of the capitalist profit system itself.
No one should be plunged into poverty because the breadwinner or breadwinners are unemployed. Every worker must be guaranteed an income on which to live a decent life—including affordable, quality health care through a single payer or by whatever means.
Jobs, income, housing and health care must become political demands of the working class. But those demands must be backed up by mass mobilization and militant struggle. This is the only language the bosses understand.
The reason Greenspan is “particularly concerned” with growing long-term unemployment, and the reason he came out for extending unemployment benefits in the midst of this crisis, is not out of any sympathy for the workers. He has spent his entire life trying to help the bosses and bankers fleece the workers.
He is worried about a rebellion of the workers and the oppressed against capitalism itself.
While an immediate struggle for jobs is the priority of the moment, in the long run workers need to fight to overturn capitalism altogether and its system of exploitation, which puts profits above the lives of the masses of people. The workers need to take back what they have built and develop a planned economic system—socialism—that does away with the profit motive and restructures the economy to satisfy human needs.
Fred Goldstein is author of “Low-Wage Capitalism,” a book that analyzes the effect of globalization on the working class.
Oct 7, 2009
Published Oct 1, 2009 10:15 PM
The leaders of the big imperialist powers met in Pittsburgh in September to argue over how to protect capital. They didn’t put forward one credible proposal to solve the crisis of the hundreds of millions of unemployed and underemployed workers around the world.
At the G-20, countries like China, Brazil, India and South Africa, among others, fought to increase the influence of the underdeveloped world—that is, the majority of the world that has been artificially kept from developing because of the oppressive influence of colonialism and neocolonialism.
But for the imperialist core countries, represented by the heads of state of the U.S., Germany, France, Britain, Japan and Italy, among others, the hot-button issues were such matters as bank capital requirements, capping executive pay, regulating financial markets, derivatives and so forth. They even pledged to let governments review each other’s policies.
All these issues pertain to putting limits on the degree to which the capitalist banks and other financial institutions can defraud each other in the future, the way they did leading up to this past financial crisis. Banks, corporations and investors of all types are still trying to recover from the massive hyperspeculation and fraudulent mortgage schemes by which they swindled each other into a financial crisis. All their regulatory agencies were complicit in allowing the speculative bubbles.
The leaders of finance capital are basically breathing a sigh of relief that the capitalist system has escaped a global depression. The G-20 had met in April of this year and pledged trillion of dollars in government subsidies to the rich as a mechanism to deal with their crisis.
They are now congratulating themselves for having averted the crisis by injecting massive amounts of money into banks and corporations to hold them up from sinking under the crisis that they themselves had created.
But while they have averted their crisis, the working class and the oppressed have plunged deeper and deeper into unemployment—with no end in sight.
Job seekers outnumber jobs six to one
Official unemployment in the European Union is at its highest in 10 years—9.5 percent—and is expected to continue rising. It has been held down to even this high number by government stimulus money, which is due to run out before the year is over.
Unemployment in Germany has been held at 8.3 percent because of the “cash for clunkers” program and because of government subsidies to keep corporations from laying off workers, putting them on short hours instead. Similar programs exist in other European countries.
As the G-20 leaders were on their way home, the U.S. Labor Department released statistics showing that the official number of job seekers here was six times the number of existing job openings—the worst ratio since the government began tracking it in 2000.
This shows that the crisis of the capitalist system is deepening in this period. During the last downturn in 2001, the number of jobless people was slightly more than double the number of full-time job openings. By the beginning of this year, the number of job seekers had risen to four times the number of jobs. Now it is six to one.
In a front-page story on Sept. 27, the New York Times commented on the unwillingness of companies to hire even as the business downturn seems to be temporarily slowing. “Even after companies regain an inclination to expand, they will probably not hire aggressively anytime soon. Experts say that so many businesses have pared back working hours for people on their payrolls, while eliminating temporary workers, that many can increase output simply by increasing the workload on existing employees.”
The Times quoted Heidi Shierholz of the Economic Policy Institute as saying: “They have tons of room to increase work without hiring a single person. For people who are out of work, we do not see signs of light at the end of the tunnel.” Job openings have drastically diminished across the board, from manufacturing to construction, retail, government jobs and even education and health care.
The Times cites the case of a worker in Chicago, Vicki Redican, who has been unemployed for two years since she lost a $75,000-a-year job as a sales and marketing manager in a plastics company. “College educated, Ms. Redican first sought another management job. More recently, she has tried and failed to land a cashier’s position at a local grocery store, and a barista slot at a Starbucks coffee shop.”
There are officially about 15 million unemployed. Some 5 million of them have been out of work for more than 26 weeks, a record. Furthermore, there are close to another 15 million workers who are working forced part-time hours or who have dropped out of the labor market and are no longer seeking work. This does not count the untold numbers who are surviving through small, miscellaneous jobs.
Given the hiring picture, it is clear that the capitalist system has nothing but massive, long-term unemployment in store for the working class—unless and until the workers mobilize to fight for jobs, as was seen in embryo in Pittsburgh with the recent March for Jobs.
Fundamentals, not irregularities, behind capitalist crisis
The very premise of the G-20—that the world crisis was caused by financial irregularities—is false to the core. The crisis began with a financial collapse, but its underlying cause is capitalism itself—the profit system.
When the economic experts of the bourgeoisie talk among themselves about the so-called “recovery,” they all say they will not be convinced until they see consumer spending start to grow enough to lead the bosses to begin investing on a massive scale. Not one of them will confidently affirm that capitalism is really on the road to recovery.
The argument that consumer spending will pull capitalism out of the fire by leading to a surge of investment and the rehiring of tens of millions of workers has no basis in reality. Workers aren’t buying because they are broke. The creation of a regime of low-wage capitalism has deepened over the last 30 years and is the background to the current downturn. Now workers are continuing to be laid off or are having their wages pushed even lower as the bosses strive to regain their profitability.
Factories, stores and government agencies are shutting down or downsizing all over the capitalist world because the bosses cannot make a profit selling the products and services created by the workers. These products and services belong to capital, not to the workers who created them. If the bosses cannot dispose of them at a profit, then the workers get laid off. Thus, the capitalists are destroying the market they need to revive production. This is a growing contradiction that flows from production for profit.
It is a contradiction that the bosses cannot overcome. It can only be overcome by getting rid of capitalism altogether. What can replace it? A system where workers are not dependant on some boss making a profit before they can get work; a system based on planning production to satisfy human need, not private greed. That system is socialism.
Goldstein is author of the recently published book, “Low-Wage Capitalism.”
Oct 1, 2009
Published Sep 23, 2009 7:43 PM
The recent mass mobilization of racists and right-wingers of all stripes in Washington, D.C., and in cities around the country requires the attention of the working class, white workers especially. In the face of mounting racism and efforts to divide the workers during an economic crisis, the struggle for class unity is more pressing than ever.
While these right-wing demonstrations are numerically small, and may eventually die down, they are politically significant because they represent a de facto bloc between important sections of big business and the racist ultra-right, based upon an immediate common objective: to push back the program of the Obama administration.
Whether this is just a bloc convenient for a particular conjuncture that will dissolve depends upon the fate of President Barack Obama’s program, the course of the economic crisis and the development of the class struggle.
The social and political soil for further inflaming racism is fertile. There are short-term, specific economic interests that the health care industry and Big Oil (ExxonMobil, Chevron, etc.) have in fomenting anti-Obama sentiment, and there are long-term strategic interests that the ruling class as a whole has in stirring up racism.
As far as the right and the ultra-right are concerned, as long as there is an African-American president in the White House and an increase in unemployment, bankruptcies and economic hardship, the basis for racist mobilization will continue to exist.
At the same time, the economic crisis, which is striking relentlessly at the entire multinational working class, provides a profound and powerful basis for a united working-class fightback. Preparations must begin now to mount a strong, anti-racist, pro-working-class counterattack against both the economic crisis and racist division.
Concerning ruling-class politics, it is important to trace the evolution of recent developments.
Throughout August the capitalist media depicted the right-wing and racist intervention at the town hall meetings on health care as an expression of grassroots anger against the prospect of government intervention, excessive government spending, and fear of losing health care, among other things.
It was clear to anyone paying attention that the outrageous attacks on Obama, the racist signs and slogans, including ugly pictures and drawings of all types, had nothing to do with health care or government spending. Actual mentions of health care were a thin veneer covering racist attacks on the first African-American president. They actually popped up in a forest of other slogans about Obama being like Hitler and attacks on socialism, abortion and undocumented workers.
The so-called “tea party” in Washington, D.C., on Sept. 12 has also been depicted as a manifestation of grassroots protest against upcoming legislation on health care reform and environmental protection, including limits on industrial pollution. Tens of thousands attended this event, many with right-wing and racist slogans directed at Obama.
These orchestrated events have been on the increase since the right wing first initiated them in February against the Troubled Asset Relief Program bailout of the banks. When directed against the banks, they were quite small and not very widespread. Fox News did its best to make these pathetic showings of a handful of ultra-right stragglers look like a grassroots groundswell.
The Republican Party at first made a gesture toward the ultra-right and tried to strike a blow against Obama by voting against TARP. But Wall Street cracked the whip and forced a re-vote, and the TARP $750 billion bank bailout passed. One by one a majority of the right-wing legislators took the floor to explain why they were changing their votes. None gave the real explanation. Their Wall Street masters gave them unequivocal orders.
Because the demonstrations were against the banks, they were small and scattered. They continued to be small on tax day, April 15, when the issue used to attack Obama was still the bailout of the banks and the stimulus package, both programs that the ruling class as a whole favored.
Health insurance companies and Big Oil move in
But once the health care legislation came on the political agenda, the ultra-right, with their racist poison, took a step forward–especially in the so-called “town hall” meetings. In these meetings the ultra-right were joined by the health care industry.
UnitedHealthcare and WellPoint, two of the largest health insurance companies in the country, sent memos to their employees to take part in the town hall meetings and do lobbying. They also sent talking points along with the memos. They are both under government investigation in California for these activities. (Los Angeles Times, Sept. 3)
UnitedHealthcare and WellPoint were caught because their e-mails were leaked to the media. But other such companies undoubtedly participated in the so-called “grassroots” upsurge.
Around the time of the right-wing town hall offensive, Big Oil, which had been lobbying behind the scenes to kill Obama’s environmental legislation, decided to follow in the footsteps of the health care monopolies.
The cap-and-trade program to put limits on allowable pollution by corporations and require them to purchase pollution permits was regarded as an unwarranted restriction on profits. Furthermore, in the fall, environmental legislation is coming before Congress. After that, the international follow-up to the Kyoto Accords is scheduled for negotiation in Copenhagen. The polluters want to tie Obama’s hands in Congress so that he cannot even negotiate on significant reductions of carbon gas emissions.
A memo leaked from the American Petroleum Institute, the central organization of Big Oil, and published by Greenpeace revealed the API plan to establish “Energy Citizens” rallies across the country. The memo called upon member oil companies to recruit employees, retirees and contractors to participate in anti-climate control rallies in 22 cities.
The coal industry, railroads, utilities, the National Association of Manufacturers, and other big-business polluters have joined Big Oil in its campaign to create an anti-environmental “grassroots” campaign. The oil companies planned to field over 200,000 so-called volunteers and provide buses, rally financing and other support.
Big firms work with ultra-right
Who did the health care industry and the polluters work with? The two principal organizations operating both campaigns are called Freedomworks and Americans for Prosperity.
Freedomworks is headed by right-wing politician/ideologue/organizer Dick Armey, the former House majority leader from Texas. Other right-wing racists helped form its leadership, including billionaire Steve Forbes, the late Jack Kemp, and C. Boyden Grey. Freedomworks collaborates with Newt Gingrich, among others.
Because of all the recent publicity, Armey recently resigned from his position with DLA Piper, a high-powered global lobbying firm. DLA Piper’s clients include the DuPont Corp., BP America, Edison Electric and Alliant Energy, among other energy-related polluters.
The firm also represents military contractor Raytheon, pharmaceuticals Sanovi-Aventis and Medicines Co., Qualcomm, the Royal Bank of Scotland, and various other giant companies.
Armey and Freedomworks constitute a convenient nexus between big business and the ultra-right. Up until the Obama administration took office, Freedomworks was mainly a networking organization that carried out occasional, limited campaigns. These included a campaign to privatize Social Security in 2006, a campaign against Obama’s program of aid to people facing foreclosure, and several right-wing electoral campaigns.
Another nexus is Americans for Prosperity. According to Kert Davies, research director for Greenpeace, this group “is doing both attacks on cap-and-trade and attacks on health care, funded by Koch Industries ... a big oil company. So this is a coordinated attack. And as you know, it’s ... bigger than these issues. It is an attack on Obama’s power base.” (Democracy Now, Aug. 21)
Since the health care industry, Big Oil and other big-business industries began artificially manufacturing “grassroots” political opposition to the Obama program, Freedomworks and Americans for Prosperity have been catapulted into the national spotlight. They have gone from behind-the-scenes networking and sporadic public activities to mobilizing demonstrations on a national scale.
Such organizations can easily be dissolved or supplanted by others, and are not a threat in and of themselves. But they are a transmission belt of funds and resources, both from the big bourgeoisie and the petty bourgeoisie, that are used to create an arena for organizing by right-wing groups.
Right-wing strength exaggerated
The right wing appears much stronger than its actual representation in the population. Millions of white workers voted for Obama. It is doubtful at this point that they are being swept into a racist backlash.
The strength of the right is exaggerated both because the ruling class, including their media, want it that way and because the working class has not yet moved onto the arena of struggle to challenge the economic crisis.
Obama’s candidacy was predicated on getting the troops out of Iraq and achieving a domestic program of reforming the health care system, reversing the destruction of the environment, and reviving the educational system, among other things. The reforms proposed were mild at best.
But big business has been on the gravy train since the end of the Jimmy Carter administration in the late 1970s, when deregulation began in many areas of capitalism. Then, under Reagan, Clinton and the Bushes, the corporations have had a veritable free hand to expand their profits and exploitation–facilitated by the destruction of anti-trust laws, NAFTA and the repeal of depression-era banking restrictions.
The bosses want nothing to interfere with this system. They are determined to push back any reforms that diminish their profits–including even the mildest health care reform or restrictions on pollution. Hundreds of billions of dollars in corporate wealth are ultimately at stake. There is nothing that the oil and coal companies, the health insurance and pharmaceutical industries, and all the rest of the profiteers won’t do to get their way.
That is their immediate cause for fanning the flames of racism and getting behind right-wing propaganda about “big government” and “socialism.” The right-wing ideologues and the corporations have a common interest in promoting such poison.
But all this seems far weightier than it actually is regarding the general population. And that is because the working class has not yet entered the arena of struggle.
The situation is still at the point where it takes former President Carter to acknowledge the hostility to Obama is racism. As New York Times columnist Bob Herbert wrote: “Did we really need Jimmy Carter to tell us that racism is one of the driving forces behind the relentless and often scurrilous attacks on President Obama? We didn’t know that? As John McEnroe might say, ‘You can’t be serious.’” (Sept. 19)
While it was progressive for Carter to call out the racism behind the anti-Obama campaign of the Republicans and the ultra-right, the African-American population and the working class should not have to rely on a representative of U.S. imperialism to fight their battles.
After all, as Herbert pointed out, Carter once defended neighborhood “ethnic purity” during his presidential campaign. In addition, Carter turned his back on millions of poor women, disproportionately Black and Latina, when he refused to override legislation banning the use of federal funds for abortion. At the time Carter was asked at a press conference if this was fair. His infamous and callous response was: “Life is not fair.” (National Black Network, July 18, 1977)
Obama and Carter
The media have pitted Carter against Obama on the question of race. Obama has denied that race has motivated the hostility to him and attributed it to fear of government. It is easy for Carter to come off smelling like a rose because now that he has no authority, he can say what he likes. When he was president and had the authority to act on behalf of the poor and the oppressed, he declined to do so.
Obama, on the other hand, is caught in a vise-like dilemma. As president, he is supposed to represent the overall interests of the ruling class. Were he to open up a struggle against racism, he would be abandoning his role as representative of the collective interests of the ruling class and would become an advocate for the oppressed.
Precisely because he is African American and is president, even the slightest tilt in an openly anti-racist direction could be a great stimulus to the anti-racist struggle and lead to destabilizing the racist status quo. The ruling class, however, would regard such a development as a gross violation of his office. Jimmy Carter, on the other hand, is not endangering the status quo.
This became evident during the Professor Henry Louis Gates affair when Obama said the Cambridge cops “acted stupidly” and was then forced to take it back. The fact that the establishment allowed a local cop and a local police department to defy the president of the U.S. and to refuse to apologize for an egregious case of racial profiling shows how sensitive the ruling class is to Obama’s tilting even slightly toward criticizing racism or the racist police.
In the Gates case, Obama could not even defend one of the most prestigious members of academia against the police thug who illegally arrested him. Now, in the case of the so-called anti-health care reform demonstrations, Obama cannot even defend himself against racism. He is in the utterly contradictory position of being the first African American to head the capitalist state—which is, among other things, a racist state, the same racist state that Carter loyally served when he was president.
In any case, the arguments put forward by both Obama and Carter obscure the class truth of the present situation. It is the racist ruling class that is ultimately behind the town halls, the “tea parties,” and the arch-racists like Rep. Joe Wilson.
It is the working class that must lead the real struggle on the ground to beat back the racist attack. The unions and the community organizations should take over the town hall meetings and the streets with demands for jobs, health care, housing and an end to racism.
Out of the population of 300 million people in the United States, 100 million are now people of color. That proportion is rising. The working class is becoming more and more multinational, and the long-term strategy of the ruling class is to keep the workers from uniting.
Racism has been a prop for U.S. capitalism since the days of slavery. It has been used economically to extract super-profits from the African-American, Latino/a, Indigenous and Asian populations. And it has been used to politically poison white workers and keep them from uniting against the class enemy.
But the needs of the class struggle can turn this around. It should be remembered that the Ku Klux Klan reached its height during the 1920s. In 1924 tens of thousands of KKK members held a march in Washington, D.C. The Klan spread its influence far beyond the South. It included governors, mayors, state legislators and judges.
But then came the upsurge of the working class in the 1930s. The Klan showed its anti-union colors as workers all over gravitated toward the Congress of Industrial Organizations and industrial unionism. Union organizers promoted Black-white unity, a necessity in the struggle to organize. The Klan, always an instrument of capital and the big plantation owners in the South, turned its fire against the unions.
The KKK opposed the Unemployed Councils; it opposed the Textile Workers Organizing Committee, the Steel Workers Organizing Committee, the sit-down strike movement, and the class struggle in general. It carried out floggings and murders of labor organizers. But in the long run, it lost out to the industrial union movement. While it retained strength in the South, it was pushed back for decades by the rise of the class struggle.
The road to beating back the racists today is the same as the road to beating back the effects of the capitalist crisis–the united class struggle and mass mobilization of a labor-community alliance.
White workers must recognize that racism is the tool of the class enemy. As Karl Marx wrote 150 years ago in the first volume of “Capital”: “In the United States of North America, every independent movement of the workers was paralyzed so long as slavery disfigured a part of the Republic. Labor cannot emancipate itself in the white skin where in the Black it is branded.”
An injury to one is an injury to all.
Fred Goldstein is the author of the recently published book “Low-Wage Capitalism.”
Sep 23, 2009
The Tattered Cover Bookstore in Denver hosted author Fred Goldstein on Sept. 3 for a reading and discussion of his book, “Low Wage Capitalism.” More than 40 people attended, not only to hear Goldstein talk about the book, but also to listen to him give an analysis on the capitalist crisis. Many comments and questions were raised, especially about the prospect for a working class struggle and the need for internationalism.
Sep 18, 2009
- Part 1: How changes in capitalist cycle have impacted workers
- Part 2: How changes in capitalist cycle have impacted workers
- Part 3: Today’s capitalist crisis in light of Marxist theory
- Part 4: Does present crisis compare to Great Depression
- Part 5: Artificial forces of capitalist revival are exhausted
- Part 6: Capitalist impasse and socialist future
Following is the fifth part of an excerpt from the introduction by Fred Goldstein to an upcoming reprint of the groundbreaking work “High Tech, Low Pay,” written by Sam Marcy in 1986 during the early stages of capitalist restructuring. Goldstein is the author of “Low-Wage Capitalism: Colossus with Feet of Clay.” Read parts one through four in the Aug. 13, Aug. 20, Aug. 27 and Sept. 3 issues, the last referring to various schemes like credit bubbles to stimulate the economy.
In the present crisis, none of these measures is available to restart the system in any significant way.
The two wars now underway in Iraq and Afghanistan are draining the coffers of U.S. imperialism. Overall militarization has largely been accomplished. New rounds of military development are technology intensive, such as laser-guided bombs, satellite-guided missiles, Predator drones, high-tech missile ships and fighter planes. Current imperialist wars are limited and heavily dependent on air power. The hundreds of billions of dollars spent annually on militarism are essential to the system, but, at best, military spending can only help to slow down the economic crisis. It cannot restart the capitalist economy and generate prosperity.
The long period of creating a regime of low-wage capitalism, with a working class in debt and living closer and closer to the poverty level, has intensified. As this trend deepens it only aggravates the crisis of overproduction by further reducing the buying power of the masses. Driving down wages any more will only intensify the contradictions of the system.
Further use of credit on a major scale is a vanishing option. Credit has been stretched to its limit as a mechanism for reviving capitalist accumulation. The government’s handout of trillions of dollars in financial bailouts to the banks and other financial institutions has stretched the credit option even beyond the limit.
Capitalism has reached a point where, even if the trillions of dollars that the ruling class is spending in an attempt to mitigate the crisis were to result in a revival, it would be weak and short-lived, leaving many millions unemployed as jobs continue to be lost even as capital accumulation expands. Capitalism is entering a period of permanent and deepening crisis for the masses.
In the present crisis the historic methods of reviving the profitability of capitalism, of restoring capitalist accumulation and prosperity, appear to have run their course, as they did leading up to the Great Depression. This is what has the ruling class running scared.
Marx’s proposition about the inevitability of social revolution, already quoted, bears repeating here. It was phrased in the most general way:
“At a certain stage of their development, the material productive forces of society come in conflict with existing relations of production or—what is but a legal expression for the same thing—with the property relations within which they have been at work hitherto. From forms of development of the productive forces these relations turn into their fetters. Then begins an epoch of social revolution.”
This is a summary of the broad contours of history. The specifics can only be filled in by analyzing the concrete development of the productive forces of capitalism at each stage.
Sam Marcy in his foreword to this book gave an economic characterization of the period that pointed clearly in the direction of the present profound crisis of capitalism.
“The justification for each new social system as against its predecessor is that it raises society to a higher level. It has done so in each succeeding social order by raising the productivity of labor. The great achievement of capitalism was that it not only promoted a tempestuous development of the productive forces, of science and invention on an unheard of scale, but it raised the productivity of labor. Over a period of centuries it laid the basis for raising the material standards of society and the wage levels of the working class as a whole.
“The distinctive feature of this particular phase of capitalist development, the scientific-technological phase, is that while it enormously raises the productivity of labor, it for the first time simultaneously lowers the general wage patterns and demolishes the more high-skilled, high-paid workers. It enhances the general pauperization of the population.”
But Marcy looked beyond the crisis to the future of the struggle. He discussed the changing character of the working class from a revolutionary, optimistic point of view that was firmly rooted in a materialist analysis.
He spoke at that time of the fundamental trend arising out of the objective changes in the capitalist economy: the vast expansion of lower-paid workers and the decline of the higher-paid, which he regarded as one of the most significant and profound developments to emerge in the history of capitalism.
Its significance is ultimately political. It means that the lower-paid workers, the downtrodden and oppressed who can ill afford to be held down by a conservative labor leadership, will ultimately become the predominant voice in the labor movement and provide it with the militant and ultimately revolutionary energy to challenge capital. He showed that this transformation of the working class must ultimately have a political expression.
The consciousness of the workers is forced to catch up to their condition. A delay in this process is inevitable, but overcoming this lag is equally inevitable. Being ultimately determines consciousness. Historical circumstances have delayed this radical development among the workers. But Marcy’s projection of the pauperization of the working class has developed more fully since he wrote.
To be continued.
Sep 2, 2009
Students, labor and community activists gathered to hear Fred Goldstein, author of “Low-Wage Capitalism: Colossus with Feet of Clay,” when he spoke on a recent three-city tour in California.
In San Francisco, San Diego and Los Angeles Goldstein put the theses of his recently published book in the context of the current global economic crisis, the prospects for working-class fightback and the need to challenge capitalism.
On April 14, Goldstein was joined by well-known Marxist author and activist Michael Parenti, whose newest book is “Contrary Notions.” They spoke to a standing-room-only audience at the Modern Times Bookstore in San Francisco. When Parenti introduced Goldstein, he explained that while some people think that Marxists are spouting theories, “The truth is that a Marxist analysis reflects reality.” After his presentation and discussion, Goldstein signed a number of books purchased by audience members.
The historically prominent Malcolm X Library in San Diego was the site of the second meeting and book-signing event, which was held on April 18. Gloria Verdieu, a leading organizer of the San Diego chapter of the International Action Center, chaired the event. Bob McCubbin, author of “The Roots of Lesbian and Gay Oppression: A Marxist View” and a copyeditor for Workers World newspaper, introduced Goldstein. Goldstein’s talk was followed by a lively and timely discussion on the capitalist crisis. Among the questions discussed were how to strategize on labor’s fightback and the need to overcome the negative images of socialism engendered by the mass media and school system.
On April 23, Rosie Martinez, executive board member of the Service Employees International Union Local 721, opened up the meeting and book-signing event in Los Angeles, which was held at her local’s hall. She stressed that it was critically necessary for workers that the Employee Free Choice Act be passed by Congress.
John Parker, West Coast coordinator of the International Action Center, chaired the event and stressed the importance of building the Labor and Community Coalition housed at the SEIU Local 721 hall. He also urged those present to participate in the important upcoming May Day events in Los Angeles.
Berta Joubert-Ceci, a leading organizer of the Philadelphia chapter of the International Action Center, and Goldstein spoke there to a multinational grouping of labor activists and students. Joubert-Ceci addressed in particular the struggles in Latin America and the need for worldwide solidarity with workers, especially immigrants here in the U.S.
Goldstein wound up his California trip by attending the Los Angeles Book Fair, where he met activists, signed books and got a number of requests to return to speak at future events on the West Coast.
Naomi Cohen, Judy Greenspan, Joan Marquardt, Bob McCubbin, and John Parker contributed to this article.
May 3, 2009
- Bertell Olman, Professor of Politics, NYU
Apr 30, 2009
Job Loss/Homelessness Up -
CAPITALISM'S LATEST CRISIS
Come hear about the nuts and bolts of this economic crisis - where it came from and how union members, activists and social justice organizations can unite and fight.
Fred Goldstein, author of Low-Wage Capitalism, is on tour and will be speaking at SEIU Local 721 here in Los Angeles to talk about his groundbreaking new book and present a Marxist view of the capitalist crisis.
more information here
Apr 23, 2009
A debate is heating up in the ruling class over whether or not an economic recovery is coming. Workers should be aware of two important points: first, the global picture of the capitalist crisis points in very drastic directions; and second, whatever recovery the bosses are talking about is a recovery for the profit makers and not the workers.
Those grasping at hope are basing themselves on Wells Fargo’s new profit reports, U.S. trade figures, housing sales, industrial production and other indicators that have mildly improved over the past several weeks.
However, a new study entitled “A Tale of Two Depressions” undermines the various optimistic scenarios put forward and points in the opposite direction. It compares the current decline in industrial production, the fall in world trade and the collapse of the stock markets with what occurred during the Great Depression. The comparison is on a global basis, not just for the United States. While the Depression of the 1930s was also a global crisis, the world capitalist economy has become much larger and far more interdependent in the age of globalization.
The study was prepared by Barry Eichengreen, professor of economics and political science at the University of California, Berkeley, and Kevin H. O’Rourke, professor of economics at Trinity College, Dublin. Both work with the Center for Economic and Policy Research, and the study was written in answer to New York Times columnist Paul Krugman, who is characterizing the present crisis as a recession.
1930s and today
The study tracks the measures of world industrial output, world trade and global stock markets for nine months beginning in June 1929. It takes June 1929 as the starting point because that is when world capitalist production reached its peak and started to decline.
The study then tracks the same three indicators for nine months in the present period, beginning in April 2008 when world industrial production also peaked.
It shows that industrial production is declining at least as rapidly as it did during the earlier depression, world trade is falling even more rapidly, and global stock markets are showing the same rate of decline.
The stock markets are much less reliable indicators because they can fluctuate over the short term based on speculation. But the fundamentals of capitalist production and world trade are the basis of the capitalist global economy and the profit system.
Production is the key
A decline in industrial production means a decline in capitalist exploitation of the workers and the production of profits, on which the entire system runs. Exporting by the big imperialist countries—like the U.S., Germany, Japan and France—is an attempt on the part of each country to overcome its own internal crisis of overproduction. When world trade falls, it is a sign that overproduction has become global.
The authors hold out hope that all the money the government is pouring into the economy and the banks will keep the crisis from reaching Great Depression levels. They do not, however, chart the fall in employment or discuss the conditions of the working class.
Louis Uchitelle, writing in the April 7 New York Times, cites figures from the Bureau of Labor Statistics to show that “More than 24 million men and women, or 15.6 percent of the labor force, are either hunting for work or working fewer hours than they would like to work, or are too discouraged to seek work.”
Actually, because the Clinton administration ruled that any worker “discouraged” from looking for work for more than a year should no longer be counted, this figure is really closer to 30 million.
While it is hard to compare today’s statistics with those from the Great Depression era, Uchitelle showed that the number of unemployed or underemployed workers has grown by 10 million in the past year. In 1930, official unemployment was 8.9 percent. It rose sharply to 25 percent by 1933.
This is clearly the result of capitalist overproduction. Manufacturers are using only 68 percent of U.S. industrial capacity, the lowest level since records were first kept in 1948. So far, according to Uchitelle, there is a shortfall of $1 trillion in sales that would be required to get production back to capacity.
To do that would take years, “even if the nation’s employers stopped shedding more than 600,000 jobs a month, as they have done since December, and began hiring robustly,” writes Uchitelle. Instead, all projections are for unemployment to continue rising in the future.
Meanwhile, states are cutting budgets for vital services across the country. Tent cities are springing up from Olympia, Wash., to Sacramento and Fresno, Calif., to Nashville, Tenn., to St. Petersburg, Fla. The rate of home foreclosures is increasing. Millions of workers are lining up at job fairs to learn how to fill out resumes and take interviews, but there are no jobs.
In short, while some investors may be profiting, there has been no recovery for the masses, and none is in sight.
In a sign of the deep decline of U.S. capitalism, the Treasury Department is demanding that General Motors and Chrysler shrink their industrial base. GM has been told to go from 17 assembly plants down to 12 or even fewer—a decline of 33 percent. It means more lost jobs, but not only at GM. It means shrinkage and unemployment in steel, rubber, glass, plastic, computer chips, fabric, small businesses that survive on orders from the assembly plants, closing of dealerships and so forth.
This kind of contraction is also going on in the housing industry, where millions of units sit unsold, and in the retail industry, where chain stores are closing. Layoffs are continuing in the high-tech sector and other industries central to U.S. capitalism.
At best, the capitalist economists may find some daylight of profitability for the bosses and bankers, but none can find a way out of mass unemployment, even with a recovery.
Uchitelle showed that overproduction lingered until the end of the Depression years, citing Robert Gordon, an economist at Northwestern University. “The Roosevelt economy also languished well below full capacity, Mr. Gordon said, until the summer of 1940 when France fell to Hitler’s armies. From then until the attack on Pearl Harbor, 18 months later, a galvanized administration more than doubled federal outlays—soon accounting for $1 of every $4 spent in the country—and the United States entered the war with its economy operating at almost full capacity.”
In other words, U.S. capitalism, after 10 years of depression, could only restore production and employment by preparing for and eventually going to war. The profit system had hit a wall. It was dragging society and the workers and the oppressed down to an existence of permanent mass unemployment and poverty.
This is what present-day capitalism has to offer the working class as the current global crisis deepens. Waiting for the system to recover and put an end to the suffering of the people is a pipedream.
The only way out of this crisis is through creating broad unity of the workers and the communities that are being hammered by the bosses and bankers in order to mobilize a class-wide fightback.
Apr 16, 2009
- He will be introduced at the Modern Times Bookstore in San Francisco on Tuesday, April 14 by well-known author and activist Michael Parenti. The event will be at 7:30 PM, 888 Valencia Street. For more information contact (415) 738-4739.
- Goldstein will be speaking and signing books at the Malcolm X Library in San Diego on Saturday, April 18, 3 PM, 5148 Market Street. Contact (619) 527-3405, the library for details.
- Among other events in Los Angeles, the Workers World LA chapter will host a forum for Goldstein on Friday, April 24, 7 PM at 5274 W. Pico Blvd. (between Fairfax and LaBrea), 2nd Floor. He will give a Marxist analysis of the current economic crisis, the fight back and the need for a socialist perspective. For details contact (310) 677-8647.
Apr 13, 2009
7:30 PM - 9:00 PM
Modern Times Bookstore - 888 Valencia St (@ 20th)
Michael Parenti in discussion with Fred Goldstein, author of Low-Wage Capitalism: Colossus with feet of clay
Critically acclaimed by Howard Zinn, Goldstein provides a sorely-needed and accessible analysis of the roots of the current global economic crisis, its implications for workers and oppressed peoples, and the strategy needed for future struggle. Known as a “tough, hilarious, right-on mix of scholar and street,” Michael Parenti is a leading critical voice around issues of imperialism and U.S. interventionism. (World View Forum)
Apr 12, 2009
Three quarters of a million workers lost their jobs during those four weeks, but the financiers and speculators were driving up the markets based upon reports of increased profitability among the banks and a rise in activity in the bond market.
On April 3, the day the Labor Department announced that 663,000 workers had lost their jobs in the month of March, the Dow Jones Industrial Average of stocks went up 49 points, capping a four-week rise. Then the market started going down again, based on reports of a decline in corporate profitability.
This clearly shows differences in what a recovery means to Wall Street and what it means to workers. Bosses want higher profits to roll in, while workers want their jobs back, their homes back and their futures back. That is why the big business media can talk about signs of recovery while unemployment is growing.
True unemployment is 19.8 percent
In fact, real unemployment is completely underplayed in the big business media in order to hide the extent of the crisis among the workers. According to the headlines, unemployment has risen to an official 8.5 percent. Much less publicity is given to the number 15.6 percent—the other official number—which includes discouraged workers and those forced to work part time although they need a full-time job.
Taking these percentages, the unemployed and underemployed amount to 24 million, not 13.2 million. But even this figure is a gross underestimation of the true unemployment crisis.
A release by Martin Weiss, a financial consultant, reveals that the figures for “discouraged workers” are a complete underestimate. (moneyandmarkets.com, April 6) Weiss quotes a finding by John Williams of ShadowStats.com: “During the Clinton administration, ‘discouraged workers’—those who had given up looking for a job because there were no jobs to be had—were redefined so as to be counted only if they had been ‘discouraged’ for less than a year. This ... defined away the bulk of the discouraged workers.”
In short, a worker who has been discouraged for more than a year disappears from the unemployment statistics altogether. Based on this fact, Williams estimates that actual unemployment is 19.8 percent, or close to 30 million.
The prospect for a capitalist recovery any time soon is highly unlikely, given that manufacturing is plunging downward, not just in the U.S. but worldwide. Even optimistic bourgeois experts expect economic decline and an increase in the number of unemployed by at least half a million a month for the foreseeable future. In fact, there is no economist who can point to a path out of the present crisis.
At best, the hope is that the massive injection of government funds into the banks, plus another stimulus package over and above the $787 billion package already enacted, will be able to slow down the crisis and stabilize the system within the next two years.
But an important point for the working class, the oppressed, and all progressive and revolutionary forces to hold on to is the fact that even a mild, artificially forced capitalist recovery based on government spending would still leave the workers in crisis.
‘Mother of all jobless recoveries’
The working class is trapped in a capitalist system that is in a permanent crisis. For example, a Wall Street Journal article on March 28 talked about tentative signs that the bottom had been reached in the recession. The article discussed various statements by bankers and indicators from government statistics that could mark a turn toward “positive growth”—meaning a capitalist business upturn with rising profits. It went on to say:
“But a turn toward positive growth is not the same as a recovery, particularly with the current 8.1 percent unemployment rate at a quarter-century high and marching higher by the month. Nariman Behravesh, chief economist at HIS Global Insight ... says unemployment could hit 10.5 percent by late next year, even if the economy is growing at a 3 percent rate by that point.
“‘What comes next, I’m afraid, will be the mother of all jobless recoveries,’ said Bernard Baumohl, chief global economist at the Economic Outlook Group in Princeton, N.J. ‘While we may emerge from recession from a statistical standpoint later this year, most Americans will be hard pressed to tell the difference between a recession and recovery the next 12 months.’”
Of course, capitalist experts cannot predict, and have never been able to predict with any degree of certainty, the way their economy will perform over the long run. Marxists, knowing the contradictions of capitalism, knowing that consumption cannot keep up with production for profit under capitalism, understand that overproduction and crisis is inevitable. This is the type of crisis that is ravaging workers all over the world on the largest scale since the Great Depression. So all talk of a recovery is highly premature.
For example, in the U.S. today the crucial automobile industry, which is central to the economy, can sell at a profit only half the number of cars it was built to produce. No sales mean no profits. No profits mean shut down production. That means layoffs, destruction of factories, more poverty, less sales and the crisis deepens.
The same is true of the housing industry. Millions of houses cannot be sold for a profit even as tent cities of the homeless are multiplying around the country. The housing industry, like the auto industry, ripples out into all areas of the economy. The foreclosure crisis, in which millions are losing their homes, means not only a rise in homelessness but a rise in unemployment among all the workers affected by the collapse in housing construction.
Because capitalism has created a widespread, interconnected process of producing everything, a truly global network of production, every layoff in a central industry brings layoffs throughout the global network that those industries depend on. Thus U.S. and world unemployment are both rising. The World Bank estimates that up to 50 million workers could lose their jobs this year.
Workers can only recover by fighting back
None of this is a recipe for capitalist recovery—quite the opposite. The working class cannot wait for the automatic processes of capitalism to revive, save the situation, and wipe out unemployment, poverty and hunger.
Right now workers in Enfield, Britain, and Belfast, Ireland, have occupied Visteon auto parts plants to demand severance pay and other rights. This follows a similar occupation by the Waterford Crystal workers in Ireland, who themselves were following the example of the Republic Windows and Doors workers who seized their plant in Chicago in December.
The self-action of the working class, organizing from below to resist this vast wave of layoffs, shift cuts, shortening of hours, as well as foreclosures and evictions, is the only way forward.
The battle cry of “A Job Is a Right” must be raised everywhere and the bosses must be stopped.
There must be mass mobilization and coordinated struggle by an alliance between the oppressed and impoverished communities and the workers to stop the bosses from shutting down, from picking up and leaving and destroying lives and communities.
Every penny of the trillions of dollars for the banks should be turned over to relieve the economic suffering of the people by creating real government jobs programs with living wages and benefits—not just crumbs handed down after the capitalists divide up the money from the stimulus package among themselves and take their profits.
This is the only way to push the crisis back where it belongs, onto the backs of the rich profiteers and off the backs of the working class and the oppressed.
They created this crisis. They must pay. Bail out the people, not the banks!
Goldstein is author of “Low-Wage Capitalism.” Information about the book can be found at the Web site www.lowwagecapitalism.com.
Apr 9, 2009
Black Workers For Justice holds regular Sunday “activist brunches” for its members and allies in Raleigh, N.C. to discuss broader political developments and issues relevant to local anti-racist and pro-worker campaigns.
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On April 5, Fred Goldstein, author of the new book, “Low-Wage Capitalism,” and a leader of Workers World Party, co-led a discussion on the current global economic crisis and the inevitable workers’ fightback against it. Saladin Muhammad, a leader of BWFJ, chaired and also co-led the discussion.
Some of the issues discussed during the three-hour meeting were the role of U.S. capital, the impact of bailouts of the banks and big corporations on the struggle for jobs, housing, education, racism, wars and democratic rights for workers and oppressed people inside the U.S. and internationally, and key struggles showing the resistance of workers and oppressed people in this period. Examples included the Moncure strike and the Republic Windows and Doors workers’ factory takeover this past December and more.
The well-attended discussion included representatives from BWFJ, Black Workers League, UE Locals 150 and 160, Virginia People’s Assembly, Black Workers Rank and File Network, Raleigh FIST, Bail Out the People Movement and the Environmental Justice Coalition.
Apr 5, 2009
The so-called Public-Private Investment Plan, crafted and presented by Secretary of the Treasury Timothy Geithner, intends to make a trillion dollars available to the biggest banks, hedge funds, private equity funds and other investors, supposedly to get the banks to lend money to businesses and consumers again.
The essence of the plan has two sides to it. First, bribe hedge funds, private equity funds and others in the shadow banking system who have been sitting on the sidelines with trillions of dollars—by offering them government money and loan guarantees to purchase bad bank assets. Second, bribe the banks to sell investors these bad loans by offering to pay far more than they are worth.
So the rich get a deal from the Treasury both ways.
The banks are holding onto $2 trillion in bad loans resulting from their speculation on the great housing and real estate bubble. They don’t want to sell these bad loans at anywhere near their vastly reduced worth because they would have to declare them as big losses. Up to now they have been refusing to sell and have been holding out for more.
Meanwhile, hedge funds, private equity funds and other investors are holding onto trillions of dollars, which they keep in government bonds and other secure investments. They don’t want to lend this money to help workers or businesses or anybody. These moneybags are sitting on the sidelines, looking for mergers or buyouts, while clipping the interest coupons.
Geithner, Lawrence Summers—Obama’s chief economic adviser—and company came up with a brilliant modification of the plan to buy so-called “toxic assets” crafted by former Treasury Secretary Henry Paulson during the Bush administration.
Here is an illustration of one part of Geithner’s plan. “It works like this, according to the Treasury Department fact sheet: Imagine that a bank wants to sell mortgage loans with a $100 million face value. The FDIC [Federal Deposit Insurance Corporation] would auction the loans to private bidders. Suppose the winning bidder offered $84 million. The private investor would put up $6 million, Treasury would put up $6 million, and the FDIC would guarantee $72 million worth of loans.” (Washington Post, March 23)
No matter if things go well or bad—in other words, whether the assets can be sold at close to $84 million or if they completely fail and not a penny can be collected—the bank still gets its $84 million. If things go well, the investors make a killing on a $6 million investment. If things go bad, the government gets stuck with the loan to pay off, while the investors walk away with a minimum loss (which they will write off their taxes). In addition, the private fund managers get to retain control over the investment.
There is another type of deal in the plan in which the government matches the private investors dollar-for-dollar and also provides loans to go with it. This is for the bad mortgage-backed securities.
Make a trillion dollars subject to these giveaway terms and it is guaranteed to send the stock market through the roof—at least for a moment.
Giveaway vs. ‘nationalize’
There are so many problematical issues involved with this plan that its prospect for success, even on the terms projected by Geithner and his allies, seems highly doubtful to more cautious sections of the ruling class.
The giveaway plan represents a victory of the Geithner/Larry Summers faction over the “nationalization” current in the ruling class establishment. In this sense it represents a victory of the faction closest to the big banks on Wall Street that are in the deepest trouble.
The nationalization current, more properly described as those for receivership, is not so closely tied to the direct interests of these banks and has a broader view of the needs of their class and the financial system in this present crisis. Their views are sharply opposed to the Geithner/Summers adventure.
This current wants to stop pouring money indiscriminately into banks that are already insolvent, change the management, force them to declare losses, restructure them, take a stake in the banks and then hand them back to private owners and collect dividends. This view was recently propounded by Thomas M. Hoenig, president of the Federal Reserve Bank of Kansas City, in a paper entitled “Too Big Has Failed.” It is easy to see how unpalatable such a view would be to Citigroup and other large banks.
It is the normal function of the capitalist state and the bourgeois political parties to protect the interests of the capitalist class as a whole and their system. This is the way the state has conducted itself, by and large, during previous lesser crises: the Latin American debt crisis, which endangered the U.S. banking system during the Reagan administration; the savings and loan crisis of the late 1980s and early 1990s; and the 1995 Mexican bailout crisis, when U.S. investors were threatened by the collapse of the Mexican peso.
A ruling class consensus was arrived at on each occasion and the Treasury Department and Federal Reserve System took the necessary measures to deal with the situation and avert a collapse.
Crisis has deep roots
But the magnitude of this global crisis is so vast, and the power of the banks involved, the extraordinary deterioration of their financial conditions, and their desperation to save themselves at all costs is so great, that the Obama administration has been dragged into a most questionable scheme.
The administration has become entrapped by the narrow interests of Goldman Sachs, Citigroup, AIG, Merrill Lynch and their ilk to the point of throwing trillions of dollars at them to keep these specific banks afloat, at the expense of using these funds to bolster the system as a whole.
This could have dire political consequences in the long run for President Barack Obama himself.
Not that any amount of funding could significantly turn this capitalist crisis around in the long run. It is fundamentally caused by a global crisis of capitalist overproduction, which has been aggravated and intensified by the financial crisis.
The present crisis is profound. It represents the end of a 70-year era of upward development of the productive forces by U.S. and world capitalism that was propelled by military spending, imperialist globalization, destruction of the standard of living of the workers of the world, technological attacks on jobs, devastation of the environment, plus massive credit and indebtedness. These forces have run their course and no bailout or stimulus package can change these fundamentals.
But a trillion dollars is a lot of money. It could fund measures to ameliorate the crisis to some extent if strategically placed—particularly if it were given directly to the masses, either as wages for a jobs program or as direct assistance or to cancel the mortgages of the millions facing foreclosure and to restore the foreclosed families to their homes.
What workers won in the 1930s
One need go back to the administration of Franklin D. Roosevelt to get a sense of the kind of temporary relief for the workers that could be administered—even though Roosevelt was never able to solve the crisis of capitalist overproduction, except through war.
Economist James Galbraith in a Washington Monthly article of March 9, “No Return to Normal,” cites one study showing that the Roosevelt government “hired about 60 percent of the unemployed in public works and conservation projects that planted a billion trees, saved the whooping crane, modernized rural America, and built such diverse projects as the Cathedral of Learning in Pittsburgh, the Montana state capitol, much of the Chicago lakefront, New York’s Lincoln Tunnel and Triborough Bridge complex, the Tennessee Valley Authority and the aircraft carriers Enterprise and Yorktown. It also built or renovated 2,500 hospitals, 45,000 schools, 13,000 parks and playgrounds, 7,800 bridges, 700,000 miles of roads, and a thousand airfields. And it employed 50,000 teachers, rebuilt the country’s entire rural school system, and hired 3,000 writers, musicians, sculptors and painters, including Willem de Kooning and Jackson Pollock.”
No faction of any significance in the ruling class is debating this question for now because the class struggle is dormant and the masses have not yet risen up against their conditions as they did during the Great Depression. But that is because the crisis is only in its early stages. Roosevelt is known for his concessions to the workers because the workers won those concessions by mass struggle. Obama has no such situation right now and is hewing to a generally conservative line of approach. This could change.
In addition, the issue of the AIG bonuses has sharpened the political situation. Fearing the masses and because their own connections to the big banks are coming out, the Democratic Party politicians in the House of Representatives became hysterical in their denunciations of the bonuses to AIG executives, as did a significant number of Republicans. They all engaged in a public attack on corporate bosses and, by implication, on their own paymasters.
The situation may be quieted somewhat now that some of the executives are returning the bonuses. But this political outburst showed that the right-wing forces are straining at the bit to become champions of the “little people” and supposed adversaries of the “greedy bankers” as a way of getting at the Obama administration. They hope crisis will create an opening for a right-wing, racist revival. The working class must be on the alert for this and not be sucked in by any of this demagogy.
‘A dangerous year’
The entire government plan is predicated on a revival of the capitalist economy and the housing market. This is what will presumably make the bad assets go up in value, when people start buying houses again and bidding up the prices. In fact, an announcement that first-time housing sales went up helped fuel a buying frenzy on Wall Street.
But the Wall Street Journal of March 23 wrote about the rise in home sales that “nearly half of the sales occurred in the foreclosure/vulture market. So, home sales are up, but it’s heavily dominated by bottom fishing.”
More important was a statement by the head of the World Bank, Robert Zoellick, that 2009 would be a “dangerous year.” He said on March 21 that the global economy would shrink by 1 to 2 percent during the year: “We haven’t seen a figure like that globally since the end of World War II, which really means the Great Depression.” In addition the World Bank was projecting that global trade was set to slide the most in 80 years, a decline in exports of 2.1 percent, not seen since 1982. The European economy will shrink by 3.2 percent (raised from an earlier forecast of 2 percent). Japan’s economy is projected to shrink by 5.8 percent and the U.S. economy by 2.6 percent.
Of course these projections are always subject to correction, but they have been consistently revised in a negative direction. They are confirmed by a report about global manufacturing. In Europe industrial production is down 12 percent from a year ago. In Brazil it is down 15 percent, in Taiwan a staggering 43 percent. Manufacturing fell in India for the first time in years. China’s manufacturing is down by 25 percent.
The three largest imperialist economic blocs—Europe, Japan and the U.S.—are all predicted to shrink their economies. And three of the most populous countries in the world, representing two-fifths of the world’s population, are showing a decline in industrial output.
It is clear that, despite the momentary euphoria of the profiteers on Wall Street, this crisis is not about to be solved. Even if the banks were to start lending again, the population is in ruins. No one is credit worthy because they are in debt, losing their jobs, paying medical bills, paying student loans, paying their credit card loans and/or are behind in their mortgages.
The idea that it is necessary to give these banks trillions in order to solve the crisis is either a grand illusion or outright fraud. The bailout is calculated first and foremost to save the banks while the masses sink deeper into the real crisis—the crisis of unemployment, homelessness and poverty.
The only solution is a mass mobilization to fight back against the capitalist system that is robbing people of their incomes, their homes and their very lives. The sanctity of capitalist profits is what is at the bottom of bailouts, layoffs and foreclosures. It is time to say no to capitalism.
Mar 30, 2009