New phase of capitalist crisis
FIGHT FOR JOBS
Greedy bosses profit, unemployment expands, wages sink
Published Feb 3, 2010 5:34 PM
The news that while the economy grew at an annual rate of 5.7 percent in the
last quarter, there was simultaneously a net loss of 208,000 jobs, indicates
that U.S. capitalism has entered a new phase — the phase of the
“jobless recovery” with increasingly intractable and growing
long-term mass unemployment.
Features of this new phase of capitalism include the intensified exploitation
of those who still have jobs, characterized by the lowering of wages and
reduction in hours worked, a massive shift to temporary and part-time workers
who can be hired and freely fired while being treated as
“disposable” labor, and withholding the wages of low-wage workers.
This is accompanied by a crisis in youth unemployment, continued layoffs and
the shrinking of the economy by corporations as they seek to restore profits
and end secure employment.
According to government reports, the last two quarters have seen economic
expansion, but in those six months there has been a net loss of 735,000 jobs.
At the same time that the Bureau of Labor Statistics loudly announced a 5.7
percent annual economic growth rate, it quietly reported that 470,000 workers
filed new claims for unemployment insurance in the week ending Jan. 23.
In fact, the actual growth of the economy was much lower than the numbers
indicate. During a downturn, businesses stop manufacturing new items and fill
new orders from the inventory of products that have already been manufactured.
This is called a drawdown of inventory.
The way the government deals with inventory in calculating economic growth is
to call it “growth” when businesses don’t draw as much on
inventory as they did in the previous period. In other words, the government
adds numbers to the growth figures that do not represent an increase in
production but only a slowing down of the dipping into inventory to fill new
orders. If the inventory factor is removed from the 5.7 percent growth number,
it is really 2.3 percent.
A thimble to bail out an ocean
President Barack Obama in his State of the Union speech changed his message
from health care to jobs. Before and after the speech he stumped the country
talking about creating jobs. His program consists primarily of throwing $5,000
tax breaks to small businesses for hiring new workers and additional tax breaks
on Social Security if the bosses raise wages.
The idea that bribing businesses with tax breaks can revive the capitalist
economy enough to absorb the 15 million unemployed, draw the millions of
“discouraged workers” back into the workforce, and raise the hours
of the millions of part-time workers is ludicrous. It would take the creation
of 550,000 jobs each month for two years just to regain the 8 million jobs lost
plus absorb the 2 million new workers coming into the workforce.
That would be like opening up dozens of auto plants, steel mills, computer
factories, hospitals and department stores every month. But the present stage
of capitalism is a stage of shrinking the economy, not growing it. Every
significant industry is downsizing, whether auto, airlines, housing, department
Throwing tax breaks to small business as a solution to the jobs crisis is a
very thin smokescreen to conceal the lack of any real government jobs program.
It is like trying to bail out the ocean with a thimble.
As bad as things are now, capitalist economists are waiting with trepidation
for the day when the original government stimulus package of $787 billion runs
out and the credit for first-time home buyers ends in the spring. Much of the
stimulus money was in the form of tax breaks to business — and that has
hardly put a dent in unemployment.
Growing dependence on capitalist state
As limited as it is, whatever upturn in the capitalist economy that has
occurred is a result of government spending. This has revealed another
fundamental feature of the new phase of U.S. capitalism: The economy has
reached a new level of almost complete dependence on the intervention of the
capitalist state. This is a sign that capitalism as an economic system is
approaching a dead end.
According to a study by the Economic Policy Institute: “[P]rivate sector
sources of spending have not produced positive growth in gross domestic product
on their own since 2007.
“The recession that began in 2008 saw the longest consecutive stretch of
negative quarterly growth rates (four) since such data began being kept in
1947. The figure shows that without the public spending made under the Recovery
Act last year and the Economic Stimulus Act of 2008, the U.S economy would have
actually seen six straight quarters of contraction followed by another quarter
of zero growth.” (“Private sources of spending cannot sustain job
growth,” Josh Bivens, EPI)
In other words, the capitalists can no longer keep the system going on their
own — even with the hundreds of billions of dollars that are annually
pumped into the economy through funding the military machine and all the normal
subsidies and supports given to business.
The bosses are becoming more and more superfluous as a force for economic
growth and employment. At the present stage their direction is to shrink the
economy — and thus destroy more and more jobs permanently — so that
they can rake in greater profits.
Rather than make profits through the normal cycles of boom and bust, the
bankers and bosses need the capitalist government to supply them with easy
money in the form of guaranteeing them cheap credit or outright bailouts.
Furthermore, they need the government to give car buyers and home buyers money
to help buy cars and homes. The capitalists need the government to give them
funds to bankroll construction projects, i.e., to guarantee them profits as a
bribe to create jobs. The state has to extend unemployment insurance and food
stamps to keep the victims of layoffs and low wages from starving. This is the
condition that the capitalists have brought about over time in their lust for
‘We’re all temps now’
It is a law of their system that the capitalists must increase the productivity
of labor, i.e., the rate of exploitation of labor. But now they have arrived at
a point where they have increased the productivity of labor in
“outrageous amounts” which are unsustainable, according to the
former chair of the Federal Reserve System, Alan Greenspan. (Marketwatch, Oct.
4) The growth in productivity was 8.1 percent in the third quarter of last year
and it is likely to have increased significantly since then.
Workers are forced to work harder, faster and more intensely, turning out more
goods and services in less time, in order for there to be economic growth. But
this increase in productivity brings growing unemployment at the same time. The
capitalists boost their profits by sweating more out of the workers. This is
what is behind the jobless recovery.
The bosses use growing job insecurity to sweat more profits out of a
diminishing workforce. One key to this phenomenon is the growth of temporary
and part-time work.
In 2005 more than a quarter of the workforce were temporary, part-time or
freelance workers who could be hired and fired at will and lived in a permanent
state of insecurity. Most of these workers received no health care insurance,
no vacation, no retirement benefits, etc.
In a Jan. 7 cover story, Business Week magazine called them “disposable
workers.” Their numbers have undoubtedly grown during the current crisis.
“‘When I hear people talk about temp vs. permanent jobs, I
laugh,’ says Barry Asin, chief analyst at the Los Altos (Calif.)
labor-analysis firm Staffing Industry Analysts. ‘The idea that any job is
permanent has been well proven not to be true.’ As Kelly Services (KELYA)
CEO Carl Camden puts it: ‘We’re all temps now.’”
The capitalists have used the crisis and all the insecurity it creates to bring
down the living standards of the workers in every way possible. Yet these are
the very workers who must buy their products.
“[T]his recession’s unusual ferocity,” wrote Business Week,
“has accelerated trends — including offshoring, automation, the
decline of labor unions’ influence, new management techniques, and
regulatory changes — that already had been eroding workers’
economic standing. The forecast for the next five to 10 years: more of the
same, with paltry pay gains, worsening working conditions, and little job
The time to fight back is now
Business Week is a mouthpiece for big business. It behooves the advanced
workers to be aware of this grim projection for the future of the working class
and the oppressed from the mouths of the bosses themselves.
The underlying assumption of all these grim predictions is that the working
class is going to sit back and take it on the chin without end. The workers and
their communities, the students and youth, and all those who are exploited and
oppressed by this vulture class must begin to organize for the fightback.
It is clear that the capitalists are just parasites on society. They cannot
even keep their system going without the tax money of the workers being
recycled from our wages into their pockets. The process of capitalist
exploitation, with all its crises and all the boom-and-bust cycles that the
workers have suffered through, had been able to recover up until now and put
workers back to work. But those days have come to an end.
A capitalist recovery is only a recovery for the capitalists and not the
workers. That is becoming clearer every day. A working class recovery will
depend on the struggle of the working class — employed and unemployed,
organized and unorganized, documented and undocumented immigrants, of every
race and nationality. There is no other road to turn this crisis around.
It is time for the workers to open up a struggle against the capitalist state.
It is time to demand an end to the subsidies to business, the bailout of the
banks, the handing over of hundreds of billions of dollars to the military.
Instead of funding capital, Washington must fund a massive jobs program.
Everyone who needs a job at livable wages must have one. Those who are unable
to work must be guaranteed income. Youth must have jobs and education, not
jails. Universal health care must be a right. There must be an end to
foreclosures and evictions, to the persecution of immigrant workers, and an end
to war and racism.
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