WALL STREET
A crashing success
By
Gary Wilson
More
than a trillion dollars were lost in the stock market crash on April 14,
bringing the week's losses on Wall Street to $2.1
trillion.
The
economic news has shifted about as wildly as the markets themselves, going from
doom and gloom to mindless
exuberance.
The
question, as it is posed in the pro-capitalist media, is usually something like:
How long can the dot-com bubble on Wall Street be
sustained?
This
doesn't get to the root of what is happening in the economy. And it completely
avoids the critical questions for the working
class.
The
speculative gyrations on Wall Street show economic instability. But looking at
the gyrations alone doesn't reveal the root source of the
instability.
Karl
Marx once noted, "All nations with a capitalist mode of production are seized
periodically by a feverish attempt to make money without the mediation of the
process of production." The dot-com stock frenzy fits this description
precisely.
Some
news accounts have likened the dot-com market frenzy to the 17th-century tulip
mania in Holland. Speculators drove the prices of tulip bulbs up to the point
where a single bulb of high quality would cost several hundred dollars. That
price would be fantastic now, and it was even more fantastic back
then.
The
reports all make it seem as though speculation and the speculators were the
cause of the tulip bulb crisis that put Holland into a long-term
depression.
There's
an excellent account of the tulip mania and its meaning in "The Anatomy of an
Economic Crisis," a book written by Sam Marcy in the
1980s.
What
Marcy shows is that the tulip crisis wasn't caused by speculation. Rather, it
was caused by one of history's first capitalist crises of overproduction.
The
speculation was really only a surface manifestation of what was behind the
crisis. The variations in price, no matter how extreme, only show the
fluctuations. They do not explain the
causes.
The
collapse of the tulip market was caused by capitalist overproduction. It was the
result of commodity production for exchange, which developed into production for
a capitalist market. It was production for profit and not for immediate
consumption.
It
is too early to tell if the Wall Street crash of April 14 will burst the
speculative bubble.
But
it's not enough to look at the technological revolution to understand why Wall
Street has risen so far. There is at least one other significant factor, one
that is almost never
mentioned.
Price
of labor
declining
While
the news commentaries have primarily focused on the new dot-com economy in
driving up corporate profits and Wall Street stocks, one important aspect left
out is the declining price of
labor.
The
general reduction in workers' earnings has been a significant source of Wall
Street's profits. Usually during an economic boom, workers are able to win
corresponding wage increases. This has not happened in the current boom. This is
a factor that the bourgeoisie makes every attempt to
conceal.
Here
are some of the facts that are often ignored or covered
up:
*
Real wages have only kept up with inflation over the last decade, and are lower
if they are measured against labor's productivity
gains.
*
The minimum wage continues to decline in real terms. It would be $8 per hour had
it kept pace with inflation and $11 had it kept pace with
productivity.
*
The unemployment figures show a false low since they leave out significant
sectors of the population, including the huge prison population--1.8 million
people--and several million undocumented
immigrants.
*
The emergence of the prison-industrial complex, with prison labor paid
sub-minimum wages. Giant prison factories now dot the country. If prison pay
were included when calculating all workers' average pay, it would show a
significant decline in workers' real wages in the United
States.
*
Immigrant workers make up almost 10 percent of the U.S. work force. Immigrant
workers are all lower paid. As many as three-quarters are undocumented and paid
sub-minimum wages. This sub-minimum pay is not included in the official figures
showing workers'wages in the United
States.
What
emerges is a clear picture that the economic boom for the rich is built in part
on an overall decline in wages and living standards for U.S.
workers.
The
dramatic expansion of the sub-minimum work force has pulled down wages and
living standards for the entire work force, while at the same time it has
increased profits for the
rich.
The
most dramatic source of this sub-minimum work force of super-exploited workers
is in the U.S.
prisons.
A
November 1999 report by Workers World's Monica Moorehead, headlined
"Prisons-for-profits are a crime" (WW, Nov. 18, 1999), detailed the close
connection between Wall Street and the rise of the prison-industrial complex.
The list of financial institutions heavily invested in this sector of the
economy includes American Express, General Electric, Goldman Sachs and Co.,
Merrill Lynch and Smith
Barney.
Moorehead
reported that prison labor has become a multi-billion-dollar industry.
"'Competitive prison labor' means Trans World Airlines can pay prisoners $5 an
hour to book reservations by phone, which is one-third what it pays to its own
workers. A Corrections Corporation of America prison in Tennessee can pay
prisoners a maximum 'wage' of 50 cents an
hour.
"Starbucks,
Microsoft, Victoria's Secret, Best Western and Boeing are examples of corporate
America's super-exploitation of prison labor. This multi-billion-dollar industry
has now expanded to include clothes, car parts, computer components, shoes, golf
balls, soap, telemarketing, data entry, print shop operations and
furniture."
The
other major source of colonial-like superprofits is the millions of immigrant
workers. Almost all agricultural labor is done by immigrants, who can find work
for only part of the year and who are most often paid below minimum
wage.
Of
course, big business and the Wall Street bankers are also making superprofits
from their neocolonial operations around the world, as was so clearly exposed at
the protests against the IMF and the World Bank in Washington the weekend after
the market crash.
This article is copyright under a Creative Commons License.
Workers World, 55 W. 17 St., NY, NY 10011
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