2011-08-09 "Stock market plummets—what the mass media isn't telling you about capitalism; Resistance and rebellion are spreading worldwide" by Richard Becker
If there is one thing that the developments of the last week in Washington and Wall St. show, it is this: Capitalism is a system of mass destruction. It cannot be reformed—it must be replaced through the revolutionary reconstitution of society on a socialist basis.
The fraud propagated by capitalist politicians and pundits—that the “Great Recession” ended two years ago—has been exposed. Now the depression is deepening.
Tens of millions of workers in the United States and hundreds of millions around the world have been deprived of the right to work as a consequence of the ruthless drive to maximize corporate profits. But the dictatorship of capital is not going unchallenged.
The rebellions spreading through London, Birmingham and other cities in England today follow on the heels of the upheavals in Tunisia, Egypt, Greece and elsewhere. Workers and youth are rebelling not only against police brutality and government repression, but also against the theft of their future for the sake of austerity and neo-liberalism. There can be no doubt that the deepening of the global economic crisis will bring more resistance, including here in the heartland of world capitalism.
The anti-working class deal struck a week ago between the White House and Congress to resolve the contrived debt ceiling crisis was acclaimed in capitalist circles as averting a global financial crisis. Instead, it helped turn a slide in the stock market into a crash.
A crisis over the debt ceiling—which had been routinely raised 72 times since 1962—was manufactured as a pretext for slashing social programs. In this, the President and Congressional leaders of both corporate parties were partners. The final arrangement called for not one penny in tax increases for the super-rich or any closing of the hundreds of billions in corporate tax loopholes.
Late on Friday, August 5, Standard and Poor’s, a credit rating agency, lowered the U.S. rating for the first time in history. U.S. and world stock markets, already slipping, took a nose dive when they re-opened on Aug. 8.
Today, the Dow Jones Industrial Average, considered the benchmark stock index in the world, lost more than 634 points, over 5.5 percent of its worth. Other U.S. and global stock markets fell even further. On August 8 alone, the cumulative loss for U.S. stocks exceeded a trillion dollars.
Unfortunately, it was not just the capitalists who are suffering huge losses. A reported 41 percent of U.S. families own stocks, many through 401(k) and other retirement plans. Cumulative stock losses in the last 11 days amount to more than $2.9 trillion. Many big investors are suffering losses, but have huge reserves. But millions of workers, who have no such reserves, have seen their retirement funds decimated in less than two weeks.
The latest crash illustrates once again the extreme danger inherent in proposals to privatize Social Security by creating “private investment accounts,” another scheme to further enrich Wall Street.
Why has the debt doubled?
In the last ten years, the U.S. national debt has more than doubled, to $14.3 trillion. There were several factors that contributed to this, none of them having anything to do with Social Security, Medicare, Medicaid or other social programs:
* Three rounds of huge tax cuts and the creation of new tax loopholes that primarily benefited the big banks, corporations and already wealthy individuals. Many of the biggest corporations, like General Electric which took in $16 billion in profits last year pay no income taxes—in fact, they receive billions of dollars in taxpayers subsidies.
* In place of the lost tax revenue, the government has borrowed trillions of dollars in the same period. Many of the banks and investors who have had their taxes cut or eliminated, are double winners: they lend their tax savings back to the government and collect interest on the loans.
* A military budget larger than all of the other countries in the world combined: now over $1 trillion per year. It is estimated that Iraq and Afghanistan/Pakistan wars alone will end up costing $4.4 trillion.
* The fundamental cause of budget crisis is the capitalist system itself. The economic crisis that began in 2007-08, was a crisis of capitalist over-production. Capitalist over-production has a particular meaning: too much was produced—not in relation to people’s needs, but too much that could be sold at a profit. This was particularly so with the huge boom in housing construction, which caused the market to become over-saturated. Housing and construction collapsed, and millions of workers lost their jobs, homes and benefits. As a result, not only the federal government, but nearly every state and municipality saw sharp declines in tax revenues and budget crisis.
Many banks large and small went under, and the entire banking system would have collapsed except for a massive bailout involving trillions of dollars, engineered by the Treasury Department and Federal Reserve Banks.
The bail-out saved the biggest banks—Citigroup, Chase, BofA, Wells Fargo, Goldman Sachs and biggest corporations—GM, Chrysler, AIG and others from bankruptcy. Many of the same corporate executives and their bought politicians, who had for years been repeating the mantra of, “get government off our backs,” in panic turned to the government begging to be saved. And they were saved, while millions of working people enjoyed no such assistance. It showed that we live under a government of, by and for the rich.
No double-dip—the 'Great Recession' never ended -
To justify turning over trillions to the banks and corporations, a public relations campaign was created around the idea that if they were rescued, the banks would begin lending again, the corporations would resume hiring, and workers would go back to work. But this version of the “trickle down” theory had no more relation to reality than earlier ones.
The problem was that the “job creators”—as the whole bourgeois political spectrum from Tea Party to Obama and Pelosi like to call the corporate executives and investors—did the opposite. Instead of more hiring, there were more layoffs. This was not because they were strapped for cash. The recession supposedly "ended" during this period because their profits returned, and in 2010 reached an all-time record high. Today the banks and big corporations are sitting atop mountains of cash, more than $2 trillion.
The official unemployment rate is 9.1 percent or 14 million workers. In reality, it is more like 20 percent or about 30 million people, if those who have stopped looking or can only find part-time work are counted. Unemployment rates for African Americans, Latinos, Native Americans and youth are even higher.
Mass unemployment is a social disaster for tens of millions of people, who have lost jobs, homes, health care, pensions and other benefits. Long-term unemployment is a major cause of family break-ups and other social problems.
It is a great disaster for society as well. There are tremendous needs–affordable housing, new schools stocked with school supplies and more teachers, a real health care system, the rebuilding of roads, bridges and other infrastructure, sustainable energy projects, etc.
Why aren’t these projects being undertaken, projects that could provide everyone able to work with a good job? The need is there, the workers who can do the work are there. But what could be done and needs to be done is not being done. Why? Because the great wealth of society is owned and controlled by a tiny handful of the population–the capitalist class.
How did they acquire this wealth? Was it because the executives were so smart, the entrepreneurs so bold, as we are constantly told? No, it was exploitation of labor—not paying the workers for the full value of what they produce.
Corporate capitalism is highly efficient theft, but it’s all legal in the system under which we live.
An absurd and criminal system -
The contradictions this has created in society are mind-boggling. On August 4, it was announced that a record 45.8 million people are now receiving food stamps. The same day, the New York Times carried an article headlined: “Even Marked Up, Luxury Goods Fly Off the Shelves.” It reported that Nordstrom’s has a waiting list for Chanel sequined tweed coats, priced at $9,010, and Mercedes Benz had the strongest July sales for its high-priced cars in five years.
The percentage of adults who are working has fallen from 64 percent in 2007 to 58 percent now. But in the last year, the average compensation for CEOs in the largest 200 corporations rose 23 percent to $10.8 million. During the same period, the average pay for workers rose .5 percent, meaning that in reality it fell about 3 percent due to inflation.
Why don’t the banks and corporations use the piles of cash they are sitting on to hire workers and produce more goods, in other words, get the economy going as the politicians like to say? It is because the crisis of over-production that began more than four years ago never ended.
What we have witnessed in recent days has reaffirmed the reality that capitalism and a just society are a contradiction in terms. Capitalism must be replaced through revolution by a system based on meeting the needs of the people of the world in a long-term sustainable way. That system is socialism and that is what the Party for Socialism and Liberation is fighting for.