Dark Days Ahead From the Horse's Mouth

Richard Mellor

Afscme Local 444, retired

So in about a month, the US treasury will run out of money. US public debt stands at about $20 trillion or so right now, more than $60,000 per person. In the weekly conference calls that this blog has we have discussed this issue. Marx explained that debt cannot be maintained, that it allows capitalism to go beyond its limits, but at some point, like an elastic band, it has to snap back. When a debt level is unsustainable, cannot be repaid, in a family or a nation state, it will be extracted in some way. You lose your home, your car etc. And we all know what happens in an economy, a mass destruction of value in the form of the productive forces takes place, homes are taken back by their “rightful owners” the moneylenders, and people are thrown out as a recession or slump occurs. Political, and at times severe social crisis can follow. (some 5 million lost their homes in the Great recession. It was estimated to be the greatest loss of African American wealth in US history, excepting unpaid labor)..

We are nine years on since the Great Recession and despite a booming stock market we only need pay attention to the economic theorists of capitalism, the best and the brightest of the US ruling class, to get an idea how much closer to the abyss they are. “Everyone’s worried about not being worried.”. says one asset manager of his colleagues.

James Mackintosh in his Wall Street Journal column last week aptly titled: The Global Economy Is Doing Great. Be Afraid, quotes one capital manager reminding his class colleagues, “…over the long term the laws of gravity will come back.”  It reminds me of that statement by the former Citibank head, Chuck Prince, who said of the abundance of easy money and the dangers it warranted just before the 2008 crash hit, “But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.” The capitalists as the owners of capital are driven to do what they do by the laws of the system.

It’s interesting that in both the examples above from the horse’s mouth, the nags agree with Marx. The law of gravity (debt) returns and they have to do what they do regardless of the consequences:

“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 into circulation.”*

The Financial Times warns today of the dangers of the US economy heading in to the biggest budget deficits in the nation’s history outside of wars and recessions despite Trump, during his campaign run, claiming he would pay off the national debt in his eight years. The US is borrowing more than $1 trillion a year and the billionaires’ legislators in their two parties are heading toward lifting caps on defense and non-defense spending. It should be noted that the Democrats, the other war party, are quite willing to lift the caps on defense (actually offense) spending as long as the caps on non-defense discretionary spending can be raised.  That sounds like the Democrats are more favorable to the working class but we know who will be paying in one way or another and that’s workers, the middle class and the poor. The Democratic Party is pathetic and both parties are in unprecedented crisis.

Here’s what some of the1%’s economic experts think of the situation:

“Having such large deficits during peaceful, strong econo0mic times is reckless fiscal policy. We saw in 2008 how the economy can turn on a dime.”, says Shai Akabas of the Bipartisan Policy Center.

“To have an economy that is healthy or even in a boom and a trillion dollar deficit is unheard of.” Mark Goldwein, Committee for a Responsible Federal Budget. (CRFB)

It has been argued that high debt levels of all types is OK by mainstream economists but that is because money has been so cheap. But potentially higher interest rates will add fuel to this fire and keeping borrowing down, never mind eradicating the national debt will be highly unlikely. Then we have those workers that retire and those workers that lose their jobs along with wage depression and it’s all a recipe for disaster.

The deficit was 77% of GDP when Trump took office and according to the CRFB is likely to hit 100% in the next decade. Workers must take note, there's no individual way out of this.

“It’s a pretty scary thing to look at the forecast,” says Mark Zandi, a well know economist at Moody’s, “We are on a dark trajectory.”

Of course, when these people are talking about “us” and “we” they are not specifically talking of themselves. Yes, they are concerned and genuinely worried about the economy, but it is not them that suffer. Workers, youth, the unemployed, women and children and the aged will be the victims. Communities of color as usual will bear a huge brunt of the consequences of the so-called free market. Life expectancy for whites in the US has declined and if any white workers thought that the ruling class in this country that look like them meant they were due special treatment will be joining the ranks of the fallen as capitalism goes in to deeper crisis. The conditions for white workers are not going to improve and that will make it harder for the 1% to win many of them to that argument.

We have talked in our weekly Think Tank conference calls that it will not be so easy for the US 1% to bail themselves and their system out with our money next time. There have been some major struggles since 2008 albeit all pretty much isolated from one another, but we are closer to market failure once again.

In the absence of a political party that workers can turn to and the disgraceful failure of the trade union leadership to use the resources that they control to build one-------or help build a direct action movement of our own linking together the numerous struggles that have emerged against police brutality, for housing rights, against environmental catastrophe (Standing Rock) the poisoning of our drinking water etc.--------the movement as it arises will be unnecessarily violent, confused  and with periods of reaction and revolutionary moments.

It is important for socialists and all anti-capitalist to prepare for these developments in order to intervene in the coming struggles.  Much of the great tradition of struggle in the US has been driven from working class consciousness so it will not be easy. But it is through struggle we learn. Everything workers, the poor, all oppressed sections of US society have won, we won ourselves, no one can do it for us.

But take it from the horse’s mouth. It is not time for us to be carefree. We must act.

Note: as I write this I see the Dow fell 650 today and has posted its worst weekly decline in years, One of the fears? Inflation.

*Karl Marx, Capital,  The General Formula For Capital Chapter Four