As the year lurches to an end, crises are shaking the capitalist system.
Perhaps the major crisis is the end of America’s economic expansion. The
growth of the U.S. economy, driven in big part by private debt during the
1990s, allowed American consumers and corporations to buy products from
around the world. Such lending and spending required a profitable return
for investors, who aren’t in the business of losing money. What is there to
learn from the U.S. boom turning to gloom?
Here’s a key point. The system’s fatal flaw is its drive to accumulate too
much money (capital) in too few hands—the super rich and corporations that
own society’s productive forces. One result is that industry after industry
has produced more products than can be sold at a profit to workers and their
Profitable investments in the things that people make and buy is souring.
Unsold inventories are growing. There are too many products on the market,
representing excess capital. Workers are getting layoffs and pay cuts.
Some official sources suggest that this is what a recession looks like.
Then again, maybe not.
Two unofficial sources had a different view. Karl Marx and his friend
Frederick Engels called a recession a crisis of overproduction. They wrote,
“In these crises, there breaks out an epidemic that, in all earlier epochs,
would have seemed an absurdity—the epidemic of over-production.” Then and
now, overproduction is unique to capitalism.
Marx showed how overproduction caused workers’ buying power to fall relative
to the prices of the goods and services their labor produced. That’s the
outcome of a system that structures society so that the wealth created by
labor-power flows away from workers to owners. This brings profits for the
ownership class that buys labor-power and controls society’s banks,
factories and property generally. In the U.S., a formal education can
encourage people not to question these relations.
Currently, American industry is experiencing overproduction. Consider U.S.
car makers. Some are offering zero-interest financing to sell new cars. As
the car market contracts, job losses grow, weakening the buying power of
workers. The October jump in joblessness was America’s biggest in 21 years.
The official unemployment rate doesn’t include those held in jails and
prisons, disproportionately nonwhite people in America. Skin-color
profiling is built into the system to contain unneeded workers.
Concentrated wealth is also causing U.S. workers to be in debt distress.
For second-quarter 2001, there were over 400,000 bankruptcy filings in
America, an all-time high and nearly 25 percent higher than second-quarter
2000. Meanwhile, the Bush administration is busy bailing out big business
to protect its profitability. Where is the bailout for the rest of society?
Meanwhile, overproduction extends to industrial agriculture. Take
California’s Central Valley. There, unsold fruits and vegetables have either
rotted in or been torn from the fields due to imbalances between production
and consumption. Comparisons to the Great Depression are hard to miss.
Crucially, the class that owns and runs U.S. society has learned a thing or
two from that period. Namely, that the American taxpayer should pay the
bill for preventing recessions from becoming depressions. “The weight of
government in the economy is the main difference between post-World War II
capitalism and the prewar version,” noted the late economist Hyman Minsky.
Today, U.S. taxpayers/workers are paying a terrible cost for maintaining the
system of capitalist production. Under it, wealth doesn’t “trickle down.”
This term takes on the force of a vulgarity for the vast majority of
Americans whose lives have become more precarious under Democratic and
Throughout the 1980s, the minimum wage stayed the same, while the cost of
living rose. This and Clinton’s “welfare reform” helped paved the way for
the increased number of U.S. families turning to food banks for help in the
1990s. The current downturn is worsening this very painful situation of
material deprivation. Yet being hungry isn’t a natural condition of human
beings. And there’s nothing natural about overproduction or the current
form of economic organization. Is it time for a change?
Seth Sandronsky is an editor with Because People Matter, Sacramentos progressive newspaper. E-mail: firstname.lastname@example.org