By Fred Goldstein
Published Nov 20, 2008 10:38 PM

When Barack Obama first began his campaign back in 2006, he and his advisors and backers in the establishment had as a priority trying to deal with long-neglected aspects of U.S. capitalist society that were in decay and were endangering the world position of U.S. imperialism.

The festering issues of health care, global warming and energy, declining education, antiquated infrastructure, the global isolation of U.S. imperialism and many others were on the agenda for a future Obama administration, which was supposed to “reach across the aisle” and work out bipartisan solutions. But these were all policy issues, issues of capitalist decay arising during a period when bourgeois politics has been in a factional logjam, unable to resolve anything other than to hand the corporations whatever they asked for and attack the workers and the oppressed—during the Clinton as well as the Bush administrations.

Now, as Obama gets ready to take office, the policy issues he wanted to address all have to be subordinated to an acute systemic crisis that is global in scope and historical in proportion.

Some 1.2 million workers have lost their jobs so far this year. Unemployment has jumped from 6.1 percent to 6.5 percent and is projected to soon rise to over 7 percent. Consumer spending dropped a record 3 percent in October. Retailers are girding for the worst shopping season on record.

Citibank has just announced 10,000 new layoffs [two days after this speech, the number rose to 53,000—ed.]; Sun Microsystems has announced 6,000 new layoffs; Circuit City, the second-largest electronics retailer in the country, closed down 155 stores and is filing for bankruptcy; and the second-largest mall operator in the country, General Growth Properties, which operates 200 malls in 44 states, is on the verge of bankruptcy.

Intel, the largest microchip maker in the world, has suffered a major decline in revenue. Caterpillar, the largest construction equipment maker in the capitalist world, is planning for a downturn. GE, a giant multinational conglomerate, is planning to cut back investment and workers.

The auto industry is in crisis, with sales dropping and losses and layoffs rising. General Motors is hinting at bankruptcy in a public relations campaign to get a bailout from the Treasury—also a dangerous game of psychological warfare against the United Auto Workers, as the company is trying to set the stage to reopen contracts and get major concessions. GM recently announced it will end health care coverage for 100,000 white-collar retirees by the end of the year.

As the G-20 meet in Washington, the capitalist economies of Europe and Japan are in recession. This is the first time since World War II that the three major centers of imperialism—the U.S., Europe and Japan—have gone into recession within the same year. Japan, with the second-largest economy in the capitalist world, has had six consecutive months of contraction; Germany, the fourth-largest economy, has had six.

China, Brazil, Russia and India, the world’s most populous countries, have also had major declines in growth in the last quarter.

It is evident that there is a crisis of production and employment in the entire economic system.

The cause of the crisis can be reduced to two words: capitalist exploitation.

Why are all the toxic mortgages and other debt-backed securities going bad? Because they were based on collecting the future wages of the workers. Mortgage debt, credit card debt, school loan debt, auto loan debt, debt to pay medical bills, and all the other debts were bundled up and sold around the world. After 30 years of falling wages and a growing consumer credit system, the working class has become deeply indebted. African-American, Latin@, Asian and Native workers have suffered the most, especially single women.

Interest and fees on working-class debt have become a major source of profit for finance capital. The capitalist class, in its various forms as lenders, mortgage brokers, credit card companies, banks, auto finance companies and so on were taking advantage of the dire needs of workers in order to promote credit. These money grubbers turned around and resold the workers’ IOUs in bundles to make a quick profit.

Meanwhile, other sections of the capitalist class were intensifying the exploitation of workers on the job by busting unions, cutting wages and benefits, shortening hours, laying off and outsourcing to contract labor. The medical insurance industry, pharmaceuticals, hospitals, all raised costs to boost profits. Agribusiness and the oil barons raised the price of food and fuels, fueling inflation in the things workers need to live.

Sooner or later the whole debt structure had to collapse—and the cause was capitalist exploitation, i.e., the profit system.

The capitalist class has become more and more reliant upon debt as an artificial means of counteracting the growing problem of capitalist overproduction. As technology improves, the increased rate of exploitation and the worldwide wage competition drive wages down everywhere, making it harder for the capitalist system to generate a strong boom that can create jobs. This has become a long-term trend and signifies a new phase in the general crisis of capitalism.

Historically a capitalist recovery begins slowly as inventories are liquidated and then surges until there is another bust. Engels described the process of the classical capital bust-boom-bust cycle in his great work, “Socialism: Utopian and Scientific.”

His description still holds today, but with this modification. In the past several decades, the boom part of the cycle has become weaker and weaker. And it is this phase that creates a labor shortage, providing workers with jobs and putting them in a stronger position to bargain for higher wages.

The debt-fueled housing boom is an example of how U.S. capitalism has reached a stage of dependence upon debt to artificially stimulate the economy. The recovery from the last recession was a jobless recovery. From 2001 to 2004, after the dot-com collapse, profits were slowly recovering but jobs were still being lost. To pump up the economy and avoid a “double dip,” a lapse into a second recession, the Federal Reserve pumped billions of dollars of credit into the system by lowering borrowing costs for the banks. Much of the cheap money was used to finance the housing boom.

A housing boom is one of those areas, similar to auto, that ripples through the economy and multiplies jobs. It can help temporarily to push back a downturn. But the housing boom was all based on easy credit and speculation. It was bound to end. The price of housing went up. The supply went up. Soon there were more houses on the market than could be sold. A crisis of overproduction in housing ensued and the collapse followed, precipitating the credit crisis and the banking crisis that followed.

Without the housing boom, the economic crisis of overproduction might have come sooner.

If the present crisis were caused by financial manipulation alone, it could be cured by financial measures. But the Treasury under Secretary Henry Paulson and the Federal Reserve under Ben Bernanke have poured hundreds of billions into U.S. banks and are promising hundreds of billions more.

The German central bank has poured billions into their economy. The Bank of London has nationalized banks and also poured in hundreds of billions in bailout money. None of this has stopped the growing momentum of layoffs and short hours.

Why? Because this crisis is a crisis of overproduction. Bernanke can lower the interest rate to zero—Japan may do just that shortly. But even zero interest rates cannot produce lending if the workers are broke and there are no profits to be made in the marketplace. As they say on Wall Street, you can’t push a string.

Why would banks lend in an environment of economic crisis? It is not lack of funds or a matter of distrust that is keeping them from lending. Layoffs lead to lower spending which leads to lower profits and more layoffs. That is the classical capitalist cycle, but now it is gripping the entire capitalist world at once. There are no markets that are not shrinking. There is no haven in the world capitalist economy for investment and sales sufficient to pull them out of the crisis.

This is what globalization looks like in a period of contraction.

No one knows where this crisis is going. The Obama administration and the new regime of financial advisors may take measures to ease the foreclosure crisis and put some money into workers’ pockets. They may even try to create jobs building infrastructure. Of course, as a party, we support measures that will ease the suffering of the workers and the oppressed. But we also know that band-aids cannot overcome the contradictions of capitalism.

The beginning of a capitalist downturn hits the workers hard. The early phase of the struggle is defensive, to ward off the onslaught of layoffs and keep people in their homes. This was the course that the struggle took during the depression of the 1930s with the formation of the unemployed councils, and the move by working-class organizations to put hundreds of thousands of families back in their homes when they were evicted.

Our comrades in Detroit, Los Angeles, Boston and around the country are taking the initiative to begin those defensive struggles.

Later in the thirties came an offensive struggle with general strikes in San Francisco, Toledo and Minneapolis in 1934 and finally the great sit-down strikes of 1936 and 1937, which turned the tide in favor of the working class as a whole. We must be clear about what phase we are in, while retaining our revolutionary socialist perspective.

When the USSR and Eastern Europe collapsed, WWP chair Sam Marcy initiated a process of ideological rearmament—a study of Marxist and Leninist theory—in the anticipation that there would be a wholesale retreat from the revolutionary communist perspective.

From that period up until the onset of the present crisis, we have had to wage theoretical arguments to defend our position that the system of private property, in which a tiny group of millionaires and billionaires controls the means of life for billions of people around the globe, contains the seeds of crisis and disaster for the worldwide working class and the oppressed. With this current crisis, the question is no longer theoretical. The world capitalist crisis opens the door to struggle and to promoting socialism as the answer.

The workers need to own this vast, global system of production that they operate 24 hours a day and run society for human need and not for profit. This is the only way to abolish exploitation, racism, national oppression, sexism and patriarchy, oppression of LGBT people, imperialist war and intervention, and to tear down the walls of the prisons and their death houses.

Labels: bailout, capitalism, Caterpillar, Circuit City, Citibank, Citigroup, economic crisis, federal reserve, GE, Generlal Motors, layoffs, socialism, United Auto Workers, wall street

This is a must read book for those seeking answers to the current crisis in world capitalism. With the economic meltdown of 2008, the very future of the system of international finance capital has been thrown into question....

Goldstein, utilizing marxist economic analysis, has approached this crisis from the standpoint of those who are most seriously affected: the working class, the nationally oppressed and women. The author makes the case in very simple and straight forward language that the crisis is one of capitalist overproduction.

According to Goldstein: "This cycle dictates that, during periods of capitalist expansion, the powers of production increase ever more rapidly while the powers of consumption of society expand only gradually. Sooner or later production outstrips consumption. Profit does not arrive in corporate bank accounts until sales take place. If commodities cannot be sold at a profit, inventories pile up, production stops, workers are laid off, and a crisis ensues. That is the crude dynamic of the capitalist crisis of overproduction." (pp. xi-xii)....

Not only does Goldstein analyze the character of the modern-day capitalist crisis but he is bold enough to put forward a set of possible demands that can serve as a rallying point for a national and international fightback movement. Looking at the recent struggles that have taken place over the last three decades during the decline, he firmly believes that the present crisis can be reversed through a proactive approach by the working class and the oppressed. read the full review

Labels: Abayomi Azikiwe, capitalism, economic crisis, financial crisis, fred goldstein, low wage capitalism, socialism, wall street

Por Fred Goldstein

Tres cuartos de millón de trabajador@s ya han sido despedid@s este año, incrementando la cifra oficial de desempleo a más de 9 millones. Billones (millones de millones) de dolares en fondos de retiro han desaparecido en la bolsa de valores en los últimos meses. Más de 10.000 hogares están siendo embargados al día y los desahucios no cesan. El dinero para préstamos estudiantiles se ha agotado. La deuda de tarjetas de crédito está a un nivel sin precedente. El desempleo está subiendo al igual que los precios de los alimentos, las utilidades (gas, electricidad, agua) y la gasolina. La producción y las ventas disminuyen incesantemente. El pronóstico es que las cosas van a empeorar muchísimo más.

Todos los oficiales financieros más poderosos y l@s líderes políticos de los países capitalistas más ricos del mundo han tratado de detener el devastador avance de esta tormenta económica. Han fracasado. La crisis se siente como una fuerza de la naturaleza. Barre billones de dólares en rescate para los bancos y sigue hacia adelante. Se lleva todo lo que encuentra en su camino—hogares, empleos y la vida de l@s trabajador@s.

Pero esta crisis no es una fuerza de la naturaleza. Es la fuerza del sistema capitalista en crisis.

Esta crisis comenzó cuando la burbuja de las viviendas explotó. Los bancos capitalistas prestaban dinero a los promotores inmobiliarios que buscaban obtener ganancias construyendo casas. Los mismos bancos le prestaban dinero a las compañías hipotecarias para que estas hicieran todos los préstamos posibles. La meta era la de aumentar las ganancias.

De pronto había más casas que las que l@s trabajador@s y la clase media podían comprar. El precio de las viviendas bajó. Las hipotecas no podían ser refinanciadas. L@s trabajador@s no podían pagar los agudos incrementos en intereses de los préstamos. Los bancos dejaron de dar préstamos. Millones de viviendas fueron embargadas.

En otras palabras, ¡la gente se quedó sin hogar porque había demasiadas casas! No que demasiadas casas fueran necesitadas o que ya estuvieran construidas, sino muchas casas que pudieran ser vendidas obteniendo ganancias.

Además, l@s trabajador@s que construyen estas casas y tod@s l@s trabajador@s que fabrican las cosas necesarias para éstas, están perdiendo sus empleos porque estas casas ya no se pueden vender por lucro.

Esta es la esencia de todas las crisis capitalistas que han ocurrido desde la primera crisis en 1825. Es la crisis de sobreproducción.

El desastre financiero global fue iniciado por las malas deudas hipotecarias vendidas por todo el mundo. Pero lo que las convirtió en malas deudas, en un análisis final, fue la sobreproducción de viviendas.

Ahora la crisis de sobreproducción está afectando a la industria automovilística. De la industria inmobiliaria y la automovilística se está extendiendo a toda la economía. Los mercados de valores se están desplomando debido a que los rescates financieros, los billones de dólares inyectados a los bancos, no pueden detener la crisis económica capitalista.

Capitalismo refuerza explotación y desigualdad

¿Por qué esto es inevitable? Bajo el sistema capitalista todos los medios globales de producción son propiedad privada de un grupo minúsculo de millonarios y multimillonarios. Las metas de producción son establecidas en secreto dentro de cada imperio corporativo por los ejecutivos que son los agentes de las corporaciones. La meta es la de amasar el máximo de ganancias. Pero ninguna compañía sabe cuánto se puede vender obteniendo ganancias.

A nivel corporativo la producción está planificada. A nivel de la sociedad, la producción está socializada globalmente pero sin ninguna planificación. Esto se llama la anarquía en la producción. Esto es lo que inevitablemente conduce a la sobreproducción.

La crisis es también inevitable bajo el capitalismo porque l@s trabajador@s son una clase explotada. Mientras más bajos sus salarios, más grandes son las ganancias de los patronos. Las ganancias consisten del trabajo no remunerado. Los patronos toman los productos, los servicios y la infraestructura creada por l@s trabajador@s, los venden en el mercado, pagan a l@s trabajador@s lo más poco posible y se quedan con el resto. Tod@s l@s capitalistas intentan bajar los salarios para obtener más ganancias.

La acción colectiva de la clase capitalista, ayudada por el estado, ha forzado la disminución de los salarios y las condiciones de vida de la clase trabajadora multinacional de los EEUU durante los últimos 30 años. Bajo el sistema de explotación capitalista las riquezas fluyen hacia la cumbre, y el nivel de desigualdad es obsceno.

El uno por ciento de la población de los EEUU, los súper ricos que tienen todas las llaves del poder en la sociedad, era dueño del 34,3 por ciento de las riquezas en el 2004. El 90 por ciento más pobre era dueño de un 28,7 por ciento. Las 400 personas más ricas eran propietarias de $1260 mil millones en 2006, más que los $470 mil millones en 1995.

El racismo y la opresión nacional juegan un papel importante en la distribución de las riquezas bajo el sistema capitalista. Comenzando con que los pueblos africano-americano, latino, asiático, e indígena poseían menos, ahora sufrirán más los golpes de esta crisis. Por ejemplo, la riqueza promedio (el ingreso, los ahorros y otros bienes) de los hogares según la raza en 2004 era de $140.700 para los blancos, $20.600 para los africano-americanos, y $18.600 para los latinos. Esto significa que durante la crisis económica actual, los pueblos oprimidos no tienen casi nada para amortiguar el impacto de los bajos salarios, los despidos y los desahucios.

La opresión y la discriminación económica bajo el capitalismo también afectan a las mujeres y a la gente lesbiana, gay, bisexual y transgénera. Al igual que con el racismo, los patronos utilizan el sexo y el prejuicio de género como herramienta para dividir y vencer. La creciente caza de brujas contra l@s trabajador@s indocumentad@s tiene la misma meta venenosa de dividir a l@s trabajador@s. ¿De qué otra forma puede el uno por ciento de la población dominar a l@s trabajador@s y oprimid@s fuera de sembrar división y desunión?

La unidad de clase es la pesadilla de la clase dominante. Mientras la crisis actual devora sectores más amplios de l@s trabajador@s, el potencial de alcanzar esa unidad se vuelve más fuerte.

La sed de ganancias y de explotación nacionalmente es la misma que impulsa la guerra, la ocupación y las intervenciones en el exterior. Billones de dólares han sido repartidos a las Fuerzas Armadas para proteger los intereses corporativos en el Medio Oriente, Asia, África, y Latinoamérica. El Pentágono no es nada más que el guardián del capitalismo de los EEUU alrededor del mundo –desde el Golfo Pérsico hasta África del Sur, el Pacifico y el Caribe. Y mientras el capitalismo se expande lleva en su estela la destrucción ambiental.

Cada día se ve más claro que el capitalismo como sistema económico tiene que terminar. Un sistema en el cual hay gente sin vivienda porque hay demasiadas casas, tiene que terminar. Un sistema en el que l@s trabajador@s pierden su empleo y se hunden en la pobreza porque han producido demasiada riqueza, es un sistema que debe ser destruido. Un sistema que no puede proveer ni empleo ni educación sino encarcelación a 2.4 millones de personas, la mayoría de ellas afro-americanas y latinas, es un sistema fracasado y no merece seguir un día más.

Si Cuba lo puede hacer, ¿por qué no los Estados Unidos?

Este sistema debe ser remplazado por un sistema en el cual la producción exista para cumplir con las necesidades humanas, no para obtener ganancias. La clase que produce la riqueza, la clase trabajadora multinacional, debe ser la dueña y distribuidora de esa riqueza.

Billones de dólares están siendo utilizados para rescatar los bancos y financiar al Pentágono bajo el capitalismo. Bajo el socialismo, ese dinero garantizaría que cada persona tuviera empleo e ingresos adecuados, cuidado de salud gratis, vivienda a bajo costo, educación gratis, alimentos saludables a costo razonable, y mucho más. El bienestar de la clase trabajadora multinacional sería el objetivo de la sociedad, en vez de su explotación como es bajo el capitalismo.

Si eso suena utópico, el hecho es que Cuba socialista, aunque pobre, con todas sus dificultades, ha hecho mucho por establecer estos derechos para el pueblo cubano. ¿Cómo es posible que un país que quedó empobrecido por siglos de colonialismo español y luego estadounidense, y que ha vivido 50 años bajo un bloqueo de los EEUU, pueda garantizar más derechos económicos a su pueblo que el imperialismo estadounidense con su economía de $11 billones?

¿Por qué es que el pueblo cubano tiene una expectativa de vida más larga y una tasa de mortalidad infantil más baja que le gente oprimida que vive en Harlem, en el South Side de Chicago, en Los Ángeles o en los barrios pobres de este país? La respuesta es que Cuba abolió el capitalismo, destruyó el estado capitalista en una lucha revolucionaria y tomó el camino hacia el socialismo.

La actual crisis económica está trayendo un aumento en el sufrimiento de l@s trabajador@s estadounidenses y está esparciéndose por todo el mundo capitalista. Muestra claramente la necesidad de una lucha militante por la clase trabajadora.

La clase dominante quiere poner la crisis de su sistema en las espaldas de l@s trabajador@s y oprimid@s. Pero el objetivo fundamental de la clase trabajadora debe ser hacer de su lucha una lucha para abolir la pertenencia privada capitalista de la tremenda riqueza que l@s trabajador@s han creado.

El fin de la apropiación privada de los modos de producción equivaldría a un enorme incremento en la propiedad personal y social de l@s trabajador@s. Actualmente la propiedad privada está estrangulando a la humanidad y destruyendo el planeta.

El objetivo final debe ser el de eliminar las crisis económicas, la explotación, la opresión y las guerras de una vez por todas. Y la única forma de hacer esto es establecer una sociedad socialista aquí y en todo el mundo, libre de patronos codiciosos y de desigualdad.

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Labels: capitalism, Capitalismo, capitalistas, racismo, socialism, workers

Three-quarters of a million workers have already been laid off this year, bringing the official total of unemployed to over 9 million. Trillions of dollars in retirement funds have been wiped out in the stock market in the last few months. Over 10,000 households a day are being foreclosed, and evictions are rampant. Money for student loans has dried up. Credit card debt is at a record high. Unemployment is rising along with food, utility and gas prices. Production and sales are falling relentlessly. The forecast is for things to get worse—a lot worse.

All the most powerful financial officials and political leaders of the richest capitalist countries in the world have tried to stop the devastating advance of this economic storm. They have failed. The crisis feels like a force of nature. It brushes aside trillions of dollars in bailouts for the banks and keeps going. It is taking down everything in its path–homes, jobs and workers’ lives.

But this crisis is not a force of nature. It is the force of the capitalist system in crisis.

This crisis began when the housing bubble burst. Capitalist banks were lending money to profit-seeking real estate developers to build houses. The same banks were lending money to mortgage companies to make as many loans as they could. The goal was to boost profits.

Soon there were more houses than the workers and the middle class could buy. The prices of homes fell. Mortgages could not be refinanced. Workers could not pay the steep increases in interest rates built into their loans. Banks stopped lending. Millions of households went into foreclosure.

Put simply, people became homeless because there were too many houses! Not too many houses that were needed or already here, but too many houses that can be sold at a profit. Furthermore, the workers who build homes and all the workers who make the things that go into homes are losing their jobs because these homes can no longer be sold at a profit.

That is the essence of all the capitalist crises that have occurred since the first crisis in 1825. It is the crisis of overproduction.

The global financial meltdown was triggered by the bad mortgage debts sold around the world. But what turned those debts into bad debts, in the final analysis, was the overproduction of housing.

Now the crisis of overproduction is sweeping the auto industry. From the auto industry and the housing industry it is spreading throughout the economy. The stock markets are plummeting because the financial bailouts, the pumping of trillions of dollars into the banks, cannot stop the capitalist economic crisis.

Capitalism reinforces exploitation, inequality

Why is this inevitable? Under the capitalist system there is private ownership of the entire global means of production by a tiny group of millionaires and billionaires. Production goals are set inside each corporate empire in secret by the executives, who are their corporate agents. The goal is to amass maximum profits. But no company knows how much can really be sold at a profit.

On a corporate level production, is planned. On a society-wide level, production is socialized globally but completely unplanned. This is called the anarchy of production. This is what inevitably leads to overproduction.

The crisis is also inevitable under capitalism because the workers are an exploited class. The lower their wages are, the higher the bosses’ profits. Profits consist of unpaid labor. The bosses take the products, services and infrastructure created by the workers, sell them on the market, pay the workers as little as possible and keep the rest. Every capitalist tries to lower wages to gain higher profits.

The collective action of the capitalist class, aided by the state, has driven down the wages and living standards of the multinational working class in the last thirty years. Under the system of capitalist exploitation wealth flows to the top, and the level of inequality is obscene.

The top 1 percent of the U.S. population, the super-rich who have all the levers of power in society, owned 34.3 percent of the wealth in 2004. The bottom 90 percent owned 28.7 percent. The top 400 individuals owned $1.26 trillion in 2006, up from $470 billion in 1995.

Racism and national oppression play a major role in the distribution of wealth under capitalism. The African-American, Latin@, Asian and Native peoples had the least to begin with and will suffer the most under the blows of this crisis. For example, the median wealth (that is, savings and other assets) of households by race in 2004 was $140,700 for whites, $20,600 for African Americans and $18,600 for Latin@s. (See graphs.) This means that in this developing capitalist economic crisis the oppressed have almost nothing to fall back on to cushion the low wages, the layoffs and the foreclosures.

Oppression and economic discrimination also fall on women and lesbian, gay, bi and trans people under capitalism. Like racism, the bosses use sex and gender bias as a way to divide and conquer. The growing witch-hunt against undocumented workers has the same poisonous, divisive goal. How else could 1 percent of the population dominate the workers and oppressed other than by sowing division and disunity?

Class unity is the nightmare of the ruling class. As the present crisis engulfs wider and wider sections of the workers, the potential for bringing about that unity is growing stronger.

The drive for profit and exploitation here at home is the same drive behind war, occupation and intervention abroad. Trillions of dollars have been given to the military to protect corporate interests in the Middle East, Asia, Africa and Latin America. The Pentagon is nothing more than an enforcer for U.S. capitalism around the world–from the Persian Gulf to Southern Africa to the Pacific and the Caribbean. And as capitalism expands, it brings environmental destruction in its wake.

It is becoming clearer every day that capitalism as a system has got to go. A system in which people are homeless because there are too many homes must go. A system in which workers are losing their jobs and being plunged into poverty because they have produced too much wealth is a system that must be destroyed. A system which cannot provide jobs and education but imprisons 2.4 million people, the majority of them Black and Latin@, is bankrupt and does not deserve to continue another day.

If Cuba can do it, why not the U.S.

It must be replaced by a system where production takes place for human need, not for profit. The class that produces the wealth, the multinational working class, should own and distribute that wealth.

Trillions of dollars are now being used to bail out the banks and fund the Pentagon under capitalism. Under socialism, that money would guarantee that everyone would have a decent job and income, free health care, affordable housing, free education, low-cost transportation, healthy, reasonably priced food and much more. The well-being of the multinational working class would be the goal of society, not their exploitation as it is under capitalism.

If this sounds utopian, the fact is that socialist Cuba, poor as it is, with all its difficulties, has gone a long distance toward establishing these rights for the Cuban people. How is it possible that a country that was impoverished by centuries of Spanish and then U.S. colonial rule and that has lived for 50 years under a U.S. blockade, could guarantee more economic rights to its people than U.S. imperialism with its $11 trillion economy?

Why is it that the Cuban people have a longer life expectancy and lower infant mortality rate than oppressed people living in Harlem, Chicago’s South Side, Los Angeles or the barrios of this country? The answer is that Cuba abolished capitalism, destroyed the capitalist state in a revolutionary struggle and took the road toward socialism.

The present economic crisis is bringing increased suffering to the workers in the U.S. and is spreading around the capitalist world. It demonstrates clearly the need for a mobilized, militant, mass working-class fightback.

The bosses want to push the crisis of their system onto the backs of the workers and the oppressed. But the ultimate goal of the working class must be to turn their fight into a struggle to abolish capitalist private ownership of the tremendous wealth that the workers have created.

The end of private ownership of the means of production would mean a vast increase in the personal property and social property of the workers. Right now, private ownership is strangling humanity and destroying the planet.

The final goal must be to eliminate economic crises, exploitation, oppression and war once and for all. The only way to do that is to establish a socialist society—free from greedy bosses and inequality—here and worldwide.

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Labels: bailout, capitalism, socialism, wall street, workers

Following is an excerpt from the introduction to the forthcoming book “Low-Wage Capitalism” by Fred Goldstein to be published by World View Forum.

The Crisis within the Crisis

As the crisis mounts there will be finger pointing by politicians and pundits alike, meant to assuage the anger of the masses. Official opinion is blaming the situation on greed and on a failure of regulation. To be sure, the bankers on Wall Street are voracious and greedy. And it is obvious that the destruction of regulatory restraint on finance capital opened the door wide to an escalation of gambling and speculation—to the “casino” economy.

This deregulation began with the Reagan administration, passed a milestone in the Clinton administration with the repeal of the Depression-era Glass-Steagall Act, and continued in the current Bush administration. Alan Greenspan, former head of the Federal Reserve System, presided over much of this deregulation during his reign of 19 years, from 1987 to 2006.

But to say that deregulation is the cause of capitalist excesses is to put the cart before the horse. It is the irrepressible capitalist lust for profit itself that leads to excesses. These excesses, such as the wild speculation in stocks and land deals that led up to the market crash of 1929, led to New Deal-era regulations restricting the financiers—but only after the speculative horse was out of the barn and millions had been ruined.

The gradually accumulating need of capital to engage in speculation inevitably results in the destruction of regulatory restraint. The system itself creates excess money capital and drives it more and more toward financial speculation and investment in paper wealth that has no relationship to underlying value.

The fact is that the bankers and the rich in general have vastly increased their fortunes in the last three decades. Income inequality in the U.S. has become notorious around the world. For example, in 1976 the top 1 percent of households received 8.9 percent of total income. In 2005 the top 1 percent received 21.8 percent—the highest percentage of total household income since 1928, the year before the stock market crashed. (Inequality.org)

From 2000 to 2007 the wealthiest 400 individuals in the U.S. got a $670-billion increase in their wealth and owned $1.5 trillion. While the top 1 percent of households earn more than the bottom 50 percent, they own more than 90 percent of the wealth. (Figures from Sen. Bernie Sanders’ speech against the bailout.) These are truly staggering numbers and have profound implications for the profit system.

The working class produces all wealth, all value in society. The class struggle is really a struggle over which class will get a larger or smaller share in the social surplus created by labor. If the bosses get more, the workers get less, and vice versa. This is what makes class antagonisms irreconcilable.

Saying that there is growing income inequality in the U.S. is really a masked way of saying that there has been a broad redivision of the social surplus in favor of the capitalist class and to the detriment of the working class. The bosses and bankers have taken a larger and larger relative share and the working class has received a correspondingly smaller share.

However, the rate at which the owners of capital have accumulated this wealth exceeds the rate at which it can be reinvested profitably in productive capital. The scientific-technological revolution has made business more and more productive. The workers turn out more goods and services in less time with each new advance in technology.

Furthermore, the anarchy of production—that is, the unplanned and competitive nature of capitalist production—sends each capitalist grouping in search of greater and greater market share in pursuit of profit, to the point that they collectively produce a glut of commodities on the market and can no longer sell them at a profit. This is a fundamental feature of capitalism and cannot be eliminated.

And after the rich spend billions on yachts, jets, mansions, servants and every form of obscene luxury, they still have hundreds of billions in money capital left over. And, as Karl Marx showed, capital cannot rest, cannot remain idle. It seeks profit, and it seeks to maximize profit.

For example, the two largest industrial corporations in the U.S.—General Electric and General Motors—both have huge financial subdivisions. GE plows billions in profits into GE Capital, which invests tens of billions in loans all over the globe. GM’s financial arm is GMAC. (In 2008, to raise capital, it sold 51 percent of GMAC to Cerberus, a private equity firm.) While GM has downsized its production and forced a large part of its workforce to take buyouts, the company has expanded its lending. The same goes for Ford, Chrysler and other industrial giants. Instead of investing surplus capital in their own companies, they use it to make loans.

The collapse of the housing boom in August 2007, followed by turmoil in the capital markets, was only the latest in a series of capitalist crises.

During the Reagan administration, a severe recession in 1982 and 1983 sent unemployment above 11 percent. The capitalist class used the opportunity to begin the technological restructuring of industry, leading to millions of workers losing high-paying jobs. Reagan then stimulated the economy with $2 trillion in military spending, using Cold War propaganda to justify this huge handout to the military-industrial complex.

The economy expanded and the stock market boomed again—until it collapsed in October 1987 with record losses. Several trillion dollars of paper wealth were wiped out. An economic collapse was prevented only when Alan Greenspan, who was appointed head of the Federal Reserve in August 1987, poured tens of billions of dollars into the financial system to support the banks and the stock market on an emergency basis. This emergency rescue of the economy lasted only until 1991, when there was another recession.

However, the collapse of the USSR, also in 1991, stimulated a decade of capitalist expansion. Capital flooded into the former Soviet Union, Eastern Europe, India and other places. The upturn in economic output accelerated in the mid-1990s with the development of the Internet and related technologies. From 1995 to 2000, venture capitalists, who are really fronts for the big banks, poured billions of dollars in speculative capital into technology companies. New companies were being created on a daily basis. The stock market boomed, creating the so-called “dot-com” bubble—until the overproduction of technology led to another collapse, beginning in March 2000. From that time until October 2002, $5 trillion in paper wealth was wiped out and an economic downturn developed simultaneously.

In the 110 years since the Spanish-American war of conquest, imperialist capitalism has brought an endless cycle of wars, recessions, depressions and more wars. After each economic downturn, the system has had to resort to military expansion and financial manipulation to revive itself.

During the depression of the 1930s, Franklin D. Roosevelt tried to get the economy going with the Works Project Administration and by allowing workers’ wages to rise. But by 1937-1938, after a brief uptick, there was a second depression. Only preparations for World War II and conquest in the Pacific and Europe revived the U.S. economy.

Throughout the entire Cold War period, U.S. capitalism was dependent on military spending to keep its economy going. The growth of the military-industrial complex, with its web of prime contractors and tens of thousands of subcontractors thriving on Pentagon appropriations for war and for arms exports, was the principal means of keeping the capitalist economy from sinking into stagnation and depression.

This history illustrates that since the turn of the twentieth century, capitalism, in order to sustain itself, has had to resort to artificial measures that bring disaster in their wake, in the form of war, depression or both.

Oct. 3, 2008

Labels: bailout, capitalism, fred goldstein, racismo, stimulus program, wall street, war

Sept. 30—The political and financial establishment of U.S. capitalism has been stunned by the failure of its initial attempt to get Congress to pass a $700-billion handout to the banks.

Against a background of bank failures in the U.S. and Europe and appeals from the White House and the Treasury secretary, the House of Representatives on Sept. 29 defeated the bailout bill, 228 to 205. Following the vote, all three U.S. stock markets had historic drops, global stock markets initially plunged, and credit markets tightened up as fear struck Wall Street.

The vote was a defeat for a triple alliance: the bankers, represented by Secretary of the Treasury Henry Paulson and Federal Reserve Chair Ben Bernanke; the Bush administration; and the Democratic Party leadership. They all had labored mightily to sell the bailout.

It is highly likely that another round of political pressure from above will lead to the banks getting their way in the long run. Already the new line coming from the corporate media is to threaten workers that there will be no paychecks unless some version of the bill is passed. But with e-mails and phone calls to politicians running against the bill by 100 and 200 to 1 before the vote, the political pressure from below has for the moment overcome Paulson, Bernanke and company.

Bailout of capitalism

In truth, the bailout of the banks is really a bailout of capitalism. The banks are the heart and soul of capitalism. They have engaged in an orgy of speculation for a decade. They inflated values in the stock market and flooded the world markets with worthless mortgage-backed securities. They created a mountain of fictitious capital that far outstripped the underlying real value, all of which must be created by workers working. Now that false value is beginning to collapse.

This is not capitalism “gone wrong.”

It is the fullest expression of what capitalism really is. Panics and crashes have happened throughout the history of capitalism, but now, in the age of globalization and high technology, they have reached new heights.

This system is based on profit. Profit is the be-all and end-all of capitalism. The engine of the entire system is production for profit. Getting the most profits is the aim of every capitalist, from the sweatshop owner to the largest transnational corporation.

Speculation and gambling for instant profits grows naturally out of the system. It is not an aberration or an abnormality.

The bankers who swindled the workers with subprime, deceptive, lying mortgages and then sold these mortgages off to other capitalists, gaining fees and high profits along the way, were doing what the ruling class does all the time, at every opportunity.

The starting point of capitalist exploitation and profit is money. Without money, no capitalist can hire workers or buy raw materials or inventory to set the process of exploitation and profit making into motion.

The bankers are in control of all the money in society. They sit on the boards of the corporations. They advise them and finance their loans. They sell corporate stocks and bonds on the market. The owners of productive capital and the parasitic financiers are completely intertwined with one another.

Human need is not part of their calculation. The fact that people need housing, food, jobs, education and health care means nothing to them if they cannot profit from it.

The bankers who are throwing people out of their homes are interlinked with the corporations that are laying workers off. They are tied to the utilities that are shutting people’s heat off in the winter, to the supermarket chains and agribusiness corporations that are raising food prices, and to the oil companies behind the invasion of Iraq and the high cost of gasoline.

Behind the problem of bankers’ bailouts, foreclosures and layoffs is the capitalist profit system itself.

Labels: bernanke, bush, capitalism, democrats, Federal Reserve System, foreclosures, Goldman Sachs, jobs, layoffs, Paulson, socialism, stimulus program