Workers' struggles will grow as capitalism fails to find a way out

Source: Financial Times. Why is Marx there?

By Richard Mellor

Afscme Local 444, retired

Every ruling class believes that the system they govern is the end of civilization.  How can they believe otherwise?  To concede that there is a more efficient and productive system of production would be class suicide.  As the dominant ideas in society are the ideas of the ruling class, many workers also hold this view.  Many peasants held it as well under the rule of the feudal aristocracy. If there is one thing history teaches us it is that the only constant is change

The world today is in turmoil.  I know it is because Bloomberg Businessweek’s editor Peter Coy says it is so.  Of course, what is turmoil for the ruling class is revolutionary progress for the masses, for workers in our case. Coy and other theoreticians of the 1% are debating the depth of the turmoil and what it means for the global economy.  Will it destabilize global capitalism further?

The emerging market economies that only yesterday were the saviors of global capitalism are now threatening it. ”Most at risk are poorly governed countries such as Argentina and Ukraine….” Coy writes in this week’s issue of BW.  Surely though, if we’re going to talk about poorly governed countries, isn’t the US in that category? Obviously it’s not just about poor governance.

It’s the countries that became “addicted to hot money” that are rocking the boat writes Coy.  In their rapacious quest for profits, the owners of capital were plowing cash in to emerging economies whose economies were growing like crazy, and the US Federal Reserve and other central banks gave them cheap credit.  Remember the BRICS?  Much of this growth was due to China which has been eating up the world’s raw materials. At one time China was consuming over 40% of the global production of concrete.  China is plagued by overproduction and rising real estate prices and 2014 opened with Chinese factory output contracting.  We have all read of new towns empty of residents and the town with the replica of the Eiffel Tower with no people in it, not the tower, the town.  This has driven down the price of raw materials which are major exports for emerging market economies.  Australia’s mining boom which was the only bright spot when I was there a couple years ago was due to China’s growth.

Before this, the 1% plowed some $3 trillion in to the US housing market and we all know what happened there.

The owners of capital are doing what they have to do as the “emerging” economies, (they don’t “emerge” for long) don’t provide adequate returns; they are finding more lucrative places for their investments like the US.  Apparently, “the lucky few countries that have trade surpluses, fat reserves of foreign exchange, and stable governments” are the beneficiaries of these capital flows. The “emerging” countries are in a bind as one way to entice the investors back is to raise interest rates on their bonds but this could slow growth further.  What a mess.

In the aftermath of the Great Recession there were a whole series of articles in the major capitalist journals aimed at boosting the morale of the 1%, especially the young coupon clippers who had never experienced a recession or slump and were convinced that what Lawrence Summers referred to as a “sumptuous feast” would last indefinitely.  “The rise of the internet was perceived to have altered the business cycle” the Financial Times’ Gillian Tett wrote back then. But as the system tottered on the edge of the abyss, pulled back through the lifeline of public funds and the destruction of excess production, the 1% searched for answers and we read more about Marx’s economic views in journals like the Financial Times than we ever had in the past. “ Read the Big Four to know Capital’s Fate”, one FT article was headed accompanied by the cartoon above. The "Big Four” are the economists Adam Smith, Joseph Schumpeter, John Maynard Keynes and Karl Marx.

Many are now reaching for the history books with a new found enthusiasm—or desperation---to assess how the crisis will play out.” Ms Tett wrote back in 2007. “Indeed, as recently as this spring…” she wrote with the confidence of the bourgeois intelligentsia, “… it was rare to find any financial trader who spent much time pondering events more than a decade old---or beyond the data points typically found on a trading terminal.” (Doomed To Repeat it?: FT 8-27-07)

There should be no reason for surprise.  Marx wrote of capitalist crisis almost 200 years ago,  “It is enough to mention the commercial crisis that by their periodical return put on its trial, each time more threateningly, the existence of the entire bourgeois society.”  The more astute theoreticians of capital know this. Lehman Brothers, a major capitalist firm,  that fell in the crash, pointed out  that there have been 60 market crashes since 1622. “This neo-modern credit market is not very dissimilar after all from its classical predecessors” a Leheman Brothers analyst wrote, quoted by Ms Tett.

Suddenly, 1% ers were reading the Communist Manifesto and sales of Das Kapital skyrocketed.

As for being addicted to money. Capital, or money as an expression of value, is a necessary part of production.  What the population of these countries are addicted to in reality is shelter, education, water, health care and all the other basic needs of human society. Capitalists don’t invest capital in order to provide these needs; they invest it to make profit.  If the profit is not there, these needs go unmet; it’s as simple as that.

But the “turmoil” that BusinessWeek refers to is troublesome. The world is undoubtedly afire as workers respond to the increased attacks on living standards, especially for those already in abject poverty. The gathering of the 1% in Davos were (Bono was there along with Goldie Hawn and Matt Damon, what a bunch.) forced to address this question of inequality as the hatred of the rich and their obscene billions is widespread.  We now have a situation where 85 people have as much wealth as $3.5 billion.  It’s hard to conceive of such a thing and it certainly isn’t civilization. Here in the US there is no escaping that there will be an explosion at some point. Infant mortality and the death rate of children in Detroit is staggering we read recently and the environment is being poisoned by agri-business and the energy industry and the environmental movement is perhaps as active and with direct action struggles more than it has been for years.

And despite their seemingly collective concerns, the capitalists from the various nation states are finding all sorts of ways to retreat in to protectionism as capitalist globalization stalls and the ground is paved for another crisis.  All sorts of gadgetry is being used to skirt trade laws and undercut rivals forcing rivals to retaliate. The lessons of Smoot Hawley loom here and the capitalist class tries to avoid this like the plague but their actions are driven, as are their wars by the laws of the market.

I am not an economist, but I don’t need to be to recognize the madness of all this.  It is madness not because individuals are mad, or because of a struggle between two imaginary supernatural forces, but because the system of production, the capitalist mode of production, cannot advance society.  The capitalist mode of production cannot feed clothe or house most of the people of this world. It cannot provide water and food or basic health care yet it has the resources to provide all these things and the science to protect the environment.

We starve amid abundance.

But capitalism is a system of production based on profit and the never-ending accumulation of capital in to the hands of fewer and fewer people.  We are looking at another crisis within the next couple of years it seems, an economic crisis as well as continued regional wars and destruction as US capitalism, the predominant source of terrorism and its rivals jockey for control of the world’s resources.

The only solution to this boom and slump and the abject misery that accompanies it is that capital itself, and the labor process, be a collective process.  It would be nice if warren Buffet could see this.

But sadly, no ruling class commits class suicide.