The ups & downs of the stock market

The following excerpt is taken from a March 6, 2007, article, “The unnatural crisis of the global stock markets,” written by Workers World managing editor Gary Wilson.

The source for capitalist crises, as [Karl] Marx the scientist revealed, comes from the way that capitalist production is organized. The source of value—workers’ labor power—is hidden. Because the source of value is hidden, it is difficult to see that this is the key to capitalism’s rises and falls.

Products seem to have a value on their own, when in fact it is the labor power put into production of the commodities that gives them their value. The magic of money is that it represents labor power and labor power is the source of wealth.

All values exchanged on the market are created by labor. The Wall Street stock market is like a gambling house where traders speculate on future values produced by labor. The stock market anticipates in an imprecise way how much surplus value—that is, how much profit—the capitalists will be able to get out of the workers.

A “bubble” in the stock market comes when the cost of stocks far exceeds the actual profits that a company is able to get from the labor of the workers.

There is no way to predict what will happen on Wall Street, whether there will be a sudden fall or rise. But the fact is that capitalism is an inherently unstable system and there will be crises and recessions and increasing poverty as well as booms and soaring profits for a small few.

The important thing to know is that it doesn’t have to be that way. The source of the problem is capitalism and not some force of nature. And capitalism can be replaced.

By understanding the economic forces behind capitalism, it is possible to overturn them through struggle and replace them with economic laws that put people’s needs before profits and eliminate the source of economic crises.