Capitalist economy is failing

From the new March-April 2014 issue of News & Letters:

Editorial

Capitalist economy is failing

Ongoing national strikes and demonstrations by fast food workers demanding a $15 an hour living wage show that workers’ reality is not the media-touted economic “recovery” enjoyed by the super-wealthy finance capitalists. In real life the 2008 depression drags on. In his State of the Union address, President Obama criticized today’s gross inequality and urged Congress to raise the federal minimum wage to $10.10 an hour, which he has since decreed for new workers employed under new federal contracts beginning in 2015.

In a punitive move, Congressional Republicans wouldn’t even allow a vote for long-term unemployment benefits to continue, in spite of the record 1.7 million, or 37% of the officially unemployed, who have been out of work for six months or longer. Previously, a rate anywhere near this was called an emergency, compelling an automatic extension of benefits.

FURTHER SHREDDING OF THE SAFETY NET

Republicans forced an additional yearly cut of $1 billion to the food stamp program. Since 2007 food stamps have been a lifeline for a growing number. An unprecedented $100 million a year in food stamps, a 300% increase since 2007, even supports military families whose breadwinners mistakenly thought joining the military provided a path out of poverty.

This deprivation comes during the weakest recovery ever, with an official unemployment rate of 6.6%, which is really nearly 12% if one includes those who have given up searching for work. Today’s extreme and growing inequality is a major topic among economists, who were greeted at the January World Economic Forum in Davos with an Oxfam International report that the top 1% now own nearly half the world’s assets and 85 of the richest multi-billionaires have as much as the 3.5 billion poorest people in the world.

Though many economists declared the beginning of a full recovery from anemic growth, an impending slowdown in the heretofore constant growth in emerging markets like China forced them to question their deluded projections. Some call today’s dismal economy “secular stagnation”–low growth due to too much saving. This “saving” does not apply to workers, but rather a tiny minority of capitalists.

AND THE RICH GET RICHER…

Less and less of the national income goes to workers’ wages, and more to profits. Economists cite the problem as a lack of consumer demand. But the only expanding consumer market today is for obscenely expensive consumer goods while the moderately priced service sector, where there had been employment growth, is growing slower and more middle-income earners join the ranks of the poor. By 2012 in the U.S. the top 1% was getting 22% of all income–more than double what they received in the 1980s. Yet those who personify capital are demanding even more of the national income. Why?

The answer is that “secular stagnation” means capitalists are sitting on a huge hoard of cash because there is a lack of opportunities to make the level of profit necessary to keep accumulation going. Rather than a temporary “liquidity trap” many economists speak of, this is the trap of capital accumulation that can no longer reproduce its value-producing source–the worker. The fear is that millions more middle-income jobs, 47% of all U.S. jobs, will disappear. At the same time “the replacement of workers by robots could shift income from the middle-class worker to the robots’ owners” (“Enslave the robots and free the poor,” Martin Wolf, Financial Times, Feb. 12, 2014).

…THE POOR GET POORER AND ALIENATED

More fundamental than accelerating income inequality is the alienated character of labor that produces value and drives automation. At one moment, the capitalist sees labor as merely a cost of production. In production, the obsession is to suck more value out of living labor even as living labor is reduced to a minimum. Sweated labor in the textile factories of Bangladesh and electronics factories of China is still the foundation of global capitalist accumulation even as it also creates new centers of revolt. Growing inequality is a function of capital, dead labor in machines, dominating living labor in production. Only new, freely associated relations between producers can overcome this inversion.

Ideologues want us to think there is no alternative to the commodity form even as movements reaching for new human relations are brutally suppressed. A new generation of workers, women and youth will not forget experiencing the world in a freer way through their own self-activity and self-organization in the struggle for a living wage, be that in the U.S., Bangladesh or China, or in the strikes that have been integral to the Arab Spring struggles, or wherever workers are oppressed. That self-activity is the beginning of a new society that can abolish commodity production.

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