Today capital is on strike even as it wages a two-pronged war against workers: automation and forcing cuts in living standards. In the U.S., 500 of the largest non-financial firms are sitting on a cash hoard of over a trillion dollars, yet capitalists have refused to invest in the real economy ever since the finance crisis revealed an insufficient rate of profit.
Prevailing economic theorists failed totally to anticipate the financial collapse that triggered the present fiasco two years ago. A year ago they predicted a turnaround and a steady economic recovery. Now as capitalists are investing their cash hoard in government bonds, yielding record lows, no one can ignore the threat of a deflationary spiral, economic stagnation and continued retraction.
Only speculative finance capitalists, a small minority who dominate social production and threaten to punish any “real economy” capitalist who hires more workers, are making out like bandits in this environment of almost free money from the Federal Reserve Bank. The bailed-out finance capitalists are again making record profits after governments bought their bad assets, adding trillions of dollars to an exploding public debt, already driven up by the costs of two wars and tax cuts mainly going to the wealthy.
“99ers”–A NEW AND GROWING CATEGORY
Their present drumbeat, repeated by the politicians they own, is that the debt now demands big cuts in public spending–including cuts to food stamps, which go to over 40.8 million Americans, and unemployment benefits.
There are 1.4 million “99ers” who have gone without work for over 99 weeks and are cut off from unemployment compensation. Today the total number of employed is down 8 million from its peak and is at the level of November 1999.
The U.S. economy lost another 131,000 jobs in July. Fewer Americans are working now than when the Great Recession was officially declared over last October. The official unemployment rate is 9.5%, the real rate is 22%. Fear of pauperization stalks many who are working.
Companies are again making big profits but this economic growth is uncoupled from job growth, and coupled with an unabashed class war against those still working. Thriving companies making record profits demand takebacks because they can. Since May 300 workers have been on strike at Mott’s, where conglomerate Dr Pepper Snapple is demanding a $3,000 a year wage cut, and cuts to pension and healthcare benefits.
GM and Chrysler are again making big profits. Ford is even matching its record profits of 1999. It is doing so, however, with half as many workers, who are working harder under labor-replacing technology.
The deep structural crisis of unemployment re-ignited interest in the economic policies of John Maynard Keynes, who taught capitalists in the Great Depression of the 1930s that capitalism would fail unless government stepped in to put people back to work through temporary stimulus spending. Today’s Keynesians did recognize that President Obama’s $800 billion stimulus package was woefully inadequate.
They have been outflanked by finance capitalists who are ruling the roost, demanding retraction and debt reduction. The Republican Right agenda in the mid-term elections, aside from attacks on Muslims and immigrants, is to cut Social Security and Medicare.
Immediately after the crisis, world leaders agreed to massive stimulus to keep the world economy going. The surface comity at the June G-20 summit in Toronto hid tremendous tensions. President Obama had hoped that all would not retreat from deficit stimulus spending and countries with surpluses like Germany and China would accept policies that would rebalance trade and boost demand. The Chinese rulers did not back down from their mercantilist policies, nor did the German government, whose fiscal retrenchment is tremendously expanding the misery of workers in countries like Greece, with whom they have a huge trade surplus.
Martin Wolf of the Financial Times (June 16, 2010) called Germany’s attempt to reshape the eurozone through its premature retrenchment “an act of mercantilist warfare upon the U.S.” Keynesians, issuing fighting words like that, have no answer to the inter-capitalist tension brewing between states except to join the fray. They forget that what really brought the world out of the Great Depression of the 1930s was massive destruction of capital in the total devastation of World War II.
The totality of the present crisis calls for a return to Marx’s philosophy of liberation. Marx predicted today’s total contradictions of growing permanent unemployment and a falling rate of profit engulfing capitalism. However, what was essential to him was not proving those economic outcomes but rather working out its opposite in the struggle of laborers, employed and unemployed, against being alienated from their own labor and social lives in this inhuman system.