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Capitalism at an impasse

The era of jobless recovery & crisis of the profit system

Published May 1, 2011 9:35 PM

The capitalist system in the U.S. and worldwide is deeply mired in a new phase: the era of the jobless recovery and long-term mass unemployment. This phase is the inevitable result of the profit system.

The capitalists are recovering from the crisis of 2007-2009, but the working class is not. Mass unemployment remains high, despite the increase in profits for the bosses and the growth of capitalist production and services.

Right now in the U.S. more than 17 percent of the workforce, or 24.5 million workers, are officially unemployed or underemployed — that is, they either have no jobs or are forced to work part time when they need full-time jobs. The real number is probably closer to 30 million because of the undercount of those who have dropped out of the workforce altogether.

The $10 trillion in government bailouts to the banks and auto companies plus the stimulus package kept the system from total collapse. But the recovery of economic growth is going at a snail’s pace, and millions of unemployed have little hope of being rehired. Every week hundreds of thousands of workers file new claims for unemployment.

Furthermore, while the few new jobs created are mostly in the lowest-paying service industries, the bosses are also hiring workers on a temporary basis. Workers are becoming “disposable” under a new system of “just-in-time” hiring.

The era of the jobless recovery began in 1991. Workers continued to be laid off for almost two years after the capitalist economy recovered. In the next jobless recovery of 2001-2004, it took four years for unemployment to come down to pre-recession levels. During the recent crisis 8.5 million workers lost their jobs in less than two years. The so-called recovery has been touted for two years now, but it has not made a dent in mass unemployment.

What is behind this growing crisis for the workers and the system?

Marx on technology & unemployment

In the struggle to maximize profits, the capitalist class has relied on new technology that drives workers to produce more and more in less and less time at lower and lower wages. Every capitalist is compelled to use this technology as a matter of survival. It is a law of capitalism. This creates a huge contradiction which gets worse and worse as capital grows.

In the book “Low-Wage Capitalism” published in 2008, this author wrote:

“Under the capitalist system, no matter how wide the scope of its operation, production is driven forward by leaps and bounds under the impact of competition for profits. The bosses look for new, more productive technology and economies of scale to cut their labor costs, and this leads to ever-expanding production, which outpaces the slow development of the consumer power of society.”

This trend leads to fewer and larger monopolies bringing in more and more technology. This in turn leads to growing mass unemployment or, as Karl Marx put it, an inevitably increasing “reserve army of the unemployed.” Explaining this process in Vol. I of “Capital,” Marx called it “the law of capitalist accumulation.” He showed how the capitalists used unemployment to depress wages. He also showed how technology destroys skilled, high-paying jobs and creates more and more low-skilled, low-paying jobs.

This law makes it harder and harder for capitalism to grow at a rate fast enough to keep mass unemployment from steadily rising.

But Marx also showed that this law would lead to a rebellion against and organization and resistance to exploitation. The working class will eventually be the “grave diggers of capitalism.”

The U.S. is surely a long way from revolution at the present moment. But there is a new current of resistance bubbling beneath the surface. Thousands of workers and students seized the state Capitol in Wisconsin and held it for two weeks, seeking to block a union-busting law directed against public workers.

Union solidarity is getting stronger. Labor-student-community unity is growing. The new current of activism and resistance is pushing back against ruling-class reaction. These two trends are on a collision course. These are the ingredients for a rise in and a widening of the class struggle against capitalism.

Goldstein is author of the book “Low-Wage Capitalism: A Marxist Analysis of Globalization and Its Effects on the U.S. Working Class.” He has also written numerous articles and spoken on the present economic crisis. For further information visit www.lowwagecapitalism.com.