by Richard Mellor
As the British economist Michael Roberts pointed out in a recent post, Oliver Blanchard, the IMF's top economist warned his colleagues before the upcoming World Bank meeting in Tokyo that “It’s not yet a lost decade. But it will surely take at least a decade from the beginning of the crisis for the world economy to get back to decent shape.”The bankers and their system that has brought us this far is in a funk. It's not a question of a lack capital either. Excluding banks and utilities, corporations in Standard and Poor's 500 stock index are "rolling in cash" writes Bloomberg Business Week, stashing away $1.2 trillion in the first quarter alone, almost a record.
This cash would certainly go a long way to building up the country's dilapidated infrastructure, what BW once described as the "Third Deficit", putting people to work in the process. Unemployment is still high which is good for bosses in the sense that it places downward pressure on wages as the employed are more cautious about fighting back when there's 20 to 30 million of us waiting outside the gates. The US economy has a long way to go having recovcered only 4.1 million of the 8.8 million jobs lost in this recession of theirs.
Consumers are still paying down debt they were encouraged to accumulate in order to keep the market economy from collapsing earlier, debt allows capitalism to go beyond its limits, but at some point, like a stretched elastic band, it has to snap back to within those limits as happened in 2007. Jobs, plant, and production has to be destroyed in order to prepare the ground for further growth which will lead to profits, further capital accumulation and another slump.
The serious journals of capitalism are most revealing in their coverage of events in the system they govern. Joseph Stiglitz points out in Business Week this week that real estate investment is "still half of what it was" and as we know, the three trillion or so that was pumped in to the economy in the first decade of this century found a home in real estate. Agents in Las Vegas, one of the worst communities for foreclosures as overbuilding was rampant, were earning $500,000 a year "filling out forms" one commentator explained. The bubble burst and she sharkfest is over at terrible costs to society except for a few lucky ones and the super rich. As for home building, "The only good news..." Stiglitz tells Charlie Rose, "....is that the houses were shoddily constructed and in maybe 5 or 10 years we'll have to reconstruct them.". This is par for the course for free markets. No doubt the free market apologists will blame the carpenter, the plumber, the electrician or state and federal regulations for such shoddy workmanship, "If only the market were allowed to work its magic."
Well, the market worked its magic, that's why were here; that's why the BP spill occurred, Fukushima happened and bridges collapsed in Milwaukee.
So the 1%, or more accurately the .01% sit on their $1 trillion or more they raked in in the first quarter. They will add much of that to the more than $21 trillion they have in offshore tax havens. Capitalists will not invest in society if there is no profit in it. This is not a moral question, it is a political and economic one.
So capitalism produces too much. When they talk of a lack of demand, they mean lack of profit. It does not mean that people are satisfied with their existence in the sense that their most important needs are met by society, shelter, food security, health care, a productive work life etc. For coupon clippers, the lack of demand means that the commodity can't be purchased, the sale can't be made and the surplus value contained within it realized.
What anarchy capitalist production is. Perhaps more than any other country we are bombarded with sales ads in the US. The advertising of prescription drugs, banned in many countries is relentless here. A doctor friend of mine told me she was getting calls from people who claimed they had diseases she'd never heard of; they had seen them on TV, "call your doctor and ask them if "blank" is right for you" the ads say. And why should a home be an investment, it is human shelter?
In order to keep pace with the need to sell the product US consumers had a very low savings rate prior to the crash, close to zero of disposable income. This has risen to close to 5% as workers and the middle class have been shaken by the severity of the crisis and are too cautious or busy paying down debts they were encouraged to accumulate to purchase commodities. They might just have no money. What an insane system; they need us to buy so they encourage us to borrow money from them as social Labor produces more in value than it is paid in wages, now they are encouraging saving in order to provide a pool of capital their banks can use to invest in production so the economy can get on its feet and repeat this process all over again.
Meanwhile, more US job cuts are on the way in the effort to return to equilibrium and a more profitable environment. BofA is looking to eliminate 30,000 jobs, Hewlett Packard is also in the process of eliminating 30,000 worldwide, Staples is shutting 15 stores throughout the US. Meredith Whitney, the renowned capital adviser estimates that another 50,000 to 100,000 layoffs need to occur in the securities industry for things to improve and Federal Express is moving to offer buyouts to improve profitability. Sweet commerce.
US capitalism is bogged down in wars it cannot win. Its domestic infrastructure is in dire straits. Inequality is at its highest level in decades as tax rates at the top were lowered and deregulation, begun under Carter and continued under Reagan allowed the market free rein that lead to tragic events like the BP disaster. In that case, government regulators allowed the energy industry to design its own deep sea regulations. The two big business parties, Democrats and Republicans, are responsible for this state of affairs that led to financial capital enjoying what Larry Summers referred to as a "Sumptuous feast", at the expense of the rest of us and our environment that is. With the onset of the Great Recession, Martin Wolf pointed out in the FT that, the ratio of global financial assets to annual world output rose from 109 per cent in 1980 to 316 per cent in 2005 when the global stock of core financial assets reached $140,000bn. (Financial Times 6-18-08). Some 40% of all corporate profits went to the financial sector as they gambled away.
We have stated many times on this blog that the US capitalist class has to drive US workers and our living standards back to conditions that prevailed prior to the great uprisings and workplace occupations of the 1930's. The rise of the Occupy Movement with all its weaknesses and mistakes is a glimpse of what is to come as the US working class will be forced to fight to defend its interests with mass action, open defiance of their laws and the building of an independent political party of workers the poor and small community businesses that are crushed by the weight of big capital. The Occupy Movement was a reaction to the inequality in US society as thousands upon thousands of highly educated young people find themselves in massive debt and without the chance of work. There are those that condemn it in total which is wrong---no mass movement comes ready made and with no established force that can lead, the confusions and obstacles to success can be greater. Whether the Occupy Movement is though we can't say. What we can say is its just the beginning.
So there is still a long way to go and as this election approaches all establishment candidates at the federal and local level will be doing their best to dodge the bullet and get you to vote for them, but you will also hear their words aimed at the moneyed interests that they will be "fiscally responsible" "realistic" etc. But the material conditions that gave rise to the "American Dream" are gone, never to return. US capitalism is in decline and we will see rising tensions globally as countries like China continue to threaten US dominance on the world stage. Oh for the good old cold war and the Bi-Polar world. This doesn't mean that we can't turn things around. But it does mean that we cannot simply vote for a candidate in these elections and things will change; It does mean that we have to involve ourselves and realize that no one can "do it for us". Electoral politics for socialists can be used to build a mass direct action movement, we cannot vote the system out of office. The emancipation of the working class can only be realized by the working class itself Marx argued.
I think it was in the New Yorker that I was reading a column that said that during the debate there was one question the moderators would never ask. That was which of the two candidates were prepared to say that "There will be no austerity on my watch". We all know the answer to that one.
I leave you with this, a handy piece of advice:
“Use values must therefore never be looked upon as the real aim of the capitalist; neither must the profit on any single transaction. The restless never-ending process of profit-making alone is what he aims at. This boundless greed after riches, this passionate chase after exchange value, is common to the capitalist and the miser; but while the miser is merely a capitalist gone mad, the capitalist is a rational miser. The never ending augmentation of exchange value, which the miser strives after, by seeking to save his money from circulation, is attained by the more acute capitalist, by constantly throwing it afresh in to circulation." Marx: The Transformation of Money in to Capital
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