According to the Bureau of Labor Statistics, 8.6 million jobs have been lost since the present economic crisis broke in to the open with the collapse of the subprime housing market in 2007. As we have explained many times on this blog, the near collapse of the system, dragged from the edge of the abyss by public funds, has ushered in a new period of austerity, volatility and increased class polarization.
Mortimer Zuckerman, editor of US News and World Report writes in the Wall Street Journal that the December unemployment rate “held steady” at 10% because 661,000 people gave up looking for jobs. Unemployment has gone from being a “difficulty” he writes, to a “catastrophe”. One of the chief engines of unemployment growth, the public sector, is under attack as never before which is also adding to the concern some sectors of the capitalist class are voicing about the future. The budget shortfall for state, county and school districts is expected to hit $200 billion in 2010. The result of this, “..will be reduced services layoffs and tax hikes.” This is could not be clearer; this is the future straight from the horse’s mouth. With things as they are, the future does not look good especially when we throw in the budget deficits that have to be brought down and the bailout of capitalism paid for.
Cheap money and the massive indebtedness of all sectors of US society gave fuel to the housing boom that sustained consumption and helped the capitalist engine chug along despite being a very sickly beast. The US personal savings rate has skyrocketed but much of this statistic reflects workers paying off loans, or paring down debt as they say, rather than money in the bank.
The depth and longevity of the crisis has had dramatic consequences for US capitalism both domestically and throughout the world. No longer is US imperialism the dominant force it once was. It can blow up the whole planet but it can’t get the Chinese, the Brazilians, the Indians or the Russians to a meeting if they don’t feel like it. And domestically the consciousness of the US working class will not return to where it was pre-crisis. Workers in the US “…understand that increased consumption will have to come from income and not borrowing, and income will have to come from employment.” Writes Zuckerman. The situation is a serious one as he explains, “Today, mainstream Americans (that’s us, folks) are going on a financial diet amid deteriorating family finances. They now know that they cannot spend what they don’t have, spending levels that were artificially pumped up by too much debt have hit home.”
This poses a major problem for the capitalist class of course as wealth in a capitalist society is created through the Labor process, the purchasing of human beings and setting them to work over a period of time. The realization of this wealth and its accumulation occurs through the sale of the product of this Labor process that the capitalist rightfully owns.
But they don’t invest in this process for the good of society. They invest in it, in order to profit from it. They have to end up with more money at the end of the process than they forked out at the beginning. The present state of affairs is not good. A permanent army of unemployed is good for the capitalist as it gives them a weapon to bludgeon us with when we threaten to strike for higher wages or better conditions. But the present levels and the likelihood of more to come, is a problem, as unemployed people can’t buy much. The capitalists are also reluctant to hire if they think the economy is not going to grow, if they can’t make sufficient profit. This reluctance adds further fuel to the unemployment fire and this in turn means workers can buy less and less and production could come to a halt.
It’s a bummer, man.
We’re all Keynsians now
Zuckerman wants to put money in people’s pockets, in other words, create jobs, through a massive government infrastructure program. There’s no “snap answer” for generating what he calls “Labor income” But “this is no argument for inertia.” He adds.
Zuckerman wants to create a National Infrastructure Bank that can pump money in to “long-term, major infrastructure projects.” This is familiar stuff, and reflects the seriousness with which the more sober representatives of capital view the situation.
It is not an accident that Zuckerman’s comments come in the midst of the struggle in Washington over health care, and financial regulation. “The specter of new profit-crimping regulation battered bank stocks…” says the Wall Street Journal, and the war between the various sections of the capitalist class is heating up. Some recognize more fully the anger and hatred that exists in society; they are more far sighted and feel the need to rein in some of the more aggressive members of their class for fear of this anger taking organizational form and spilling in to the streets. The events in California and on campuses throughout the US are being closely watched.
The more far-sighted strategists of capital see the dangers that exist and feel the urgency to increase confidence in the ability of the US economy to create jobs and, as Zuckerman puts it, “that America can be rebuilt.”
This scenario hits home the fact that it is not simply the ownership of the means of production that is necessary if we are to provide a decent future for all, including the environment. It is not simply the process that creates capital, or allows it to multiply, that must come under workers control and management. Capital in all its forms must be collectivized and its allocation determined collectively. There would then be no investors reluctant to invest because the return is inadequate. It will simply be a matter of where to invest most efficiently for the public good.
As Marx points out, it is then that capital ceases to be capital. Dead Labor does not dominate living Labor, is not used to exploit living Labor for the extraction of surplus value and profit. It is a better form of economic organization and the path to true freedom.
Negotiations are a euphemism for capitulation if the shadow of power is not cast across the bargaining table.
George Schultz
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