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Capitalists can’t fix deepening crisis

Published Dec 7, 2011 9:01 PM

It is more than four years since the housing bubble burst and the world capitalist economic crisis came down upon the heads of the working class and the oppressed in August 2007. Despite all the talk of economic recovery, the plague of unemployment, underemployment, rising poverty, lower wages and general insecurity is still growing.

Suffering in the U.S. is on the rise while the world’s bankers are struggling to save trillions of dollars for investors and bankers who have stakes in Europe. In the U.S., the statistical wizards in Washington have used mathematical tricks to declare that the unemployment rate is down from 9 percent to 8.6 percent. This is supposed to be good news, “positive signs” according to the spin masters. But to the 30 million workers who are unemployed or underemployed, this false news is a bitter pill.

The government’s own numbers give the lie to its claims of a significant drop in unemployment. The statistics say that 120,000 net new jobs were created in November. But the government also says it takes at least 125,000 to 150,000 new jobs each month just to absorb the new working-age population entering the work force.

The trick of getting the official unemployment rate down is to shrink the official size of the total work force — even though the living workers and their families who have disappeared from the official count have not gone anywhere. They are still very much alive and struggling to survive.

At the same time that it boasts about unemployment dropping, the government has declared that the official work force, which includes both those working and those officially jobless, shrank by almost half a million — 487,000, an abnormally high number. If those unemployed workers said to have dropped out of the labor force were included as part of the labor force, the official unemployment rate would still be 9 percent. Nevertheless, the Obama administration and capitalist pundits in the media use manipulated numbers to claim that progress is being made.

Little mention is made of the fact that wages declined and hours worked remained flat. The result is that average take-home pay shrank in November. But beyond this feat of creative math, the big picture can be seen in a new study by Wider Opportunities for Women, an advocacy group well known for debunking official poverty statistics. It released a survey on Nov. 22 showing that 45 percent of the population of the U.S. now lives in a state of economic insecurity. (wowonline.org/livingbelowtheline.asp)

Summarizing the report, Donna Addkison, head of WOW, said, “Nearly half the nation’s families cannot cover the costs of basic expenses even when they do have a job.” WOW calculates economic status by studying the actual costs of living, city by city.

Among the findings, 75 percent of adult workers with full-time jobs still live in economic insecurity because of the slide in wages over the last decade. This is in line with recent findings based on Census Bureau statistics that 100 million people in the U.S. are poor or near-poor. Additionally, the Department of Agriculture recently revealed that the number of children qualifying for free or subsidized school lunches has risen from 18 million in 2007 to 21 million last year. The cause is unemployment and lower wages among millions of families.

European bosses push crisis onto workers

Meanwhile, in Europe, the bankers and bosses are seeking to solve their financial crises on the backs of the workers with enforced austerity programs.

During this week, the heads of governments and financial officials in Europe, with U.S. Treasury Secretary Timothy Geithner breathing down their necks, are struggling to find a formula to “save the euro.” What they are really trying to save is the continued flow of payments of hundreds of billions in interest and principal from indebted governments. These governments have made deals over the years with the financial usurers and loan sharks, politely called the “financial community,” who have bled these governments dry.

With the economic crisis, the decline of production and the rise of unemployment, tax revenues decline drastically. The bankers don’t care one bit. They want their money. And the only way left to get it is to impose austerity on the working class.

Right now, there is a complicated struggle among the various capitalist governments in Europe, even as the U.S. government is trying to secure the interests of the bankers here. German Prime Minister Angela Merkel and French President Nicholas Sarkozy are at the center of it all as leaders of the most powerful capitalist countries on the continent.

As the capitalist crisis has continued to take its toll on the treasuries of the European countries, the poorer ones, like Greece, Portugal and Ireland, have fallen further and further into debt to private investors and bankers in order to meet their expenses. When they were in danger of defaulting on their debts, the European Central Bank and the International Monetary Fund stepped in to give them bailouts. In return, each of these governments had to draw up an austerity plan to cut workers’ wages, pensions and public spending, as well as raise taxes.

Now, Spain and Italy are unable to pay even the interest on their huge debts, endangering the entire financial structure. The fear is that bailouts for these economies will be huge. Financiers are demanding higher and higher rates of interest from Spain and Italy to make loans. This further impoverishes the treasuries.

The U.S. ruling class and the rest of Europe have been looking to the German bankers to get behind a bailout. German capitalism is by far the strongest economy in Europe and the fourth largest in the world. But Angela Merkel and the Bundesbank have been holding out. They are demanding enforced austerity before they will consent to give any aid.

German capitalism dominates Europe. It has colonized Eastern Europe and profited from the poorer countries in southern Europe. The position of the German bankers is: It doesn’t matter that we have exploited these countries. Now they are in debt and they have to pay. We, the German ruling class, are not going to pay.

U.S. finance capital, which has trillions of dollars directly or indirectly tied up in European finance and trade, is pressing hard for the German capitalists to pay for the bailout. Geithner went to a European finance ministers’ meeting in Poland in September and told them as much. President Barack Obama has reiterated this ultimatum. But the German imperialist bankers have held out against the financial overlords on Wall Street. As the dispute continued, the debt crisis became even more severe two weeks ago.

Bankers and investors, fearing that government bonds they were holding might go bad, began to sell off the bonds and collect cash to cushion them from a crisis. Lending began to dry up. The U.S. bankers and the Federal Reserve, fearing a major crisis, blinked. After 10 days of secret negotiations orchestrated by the British government, the Federal Reserve bank, the central banks of Britain, Canada, Japan and Switzerland, and the European Central Bank agreed to pour dollars into Europe at a reduced rate in order to get lending going on a temporary basis until a settlement can be reached on how to save the euro.

German capital demands more austerity

On Dec. 9, there will be a meeting of all the governments to try to settle on a way to save the situation. The struggle over how to rescue the bankers rotates around a German proposal, partially supported by the French, to dictate budgetary guidelines to all debtor countries. This means that the European Union would examine budgets of countries before they were submitted to parliaments. The budgets could be vetoed and violators could be punished by the European Justice Council.

At this point, there is no agreement on this proposal, which would reinforce the domination of German capital in Europe.

Austerity programs for the masses have been shown to aggravate the capitalist crisis. Last fall, Britain instituted the harshest austerity program in its history, with a 20 percent across-the-board cut in spending. It began layoffs of workers with a goal of terminating up to 400,000 government jobs. Social services were to be cut across the board. The result has been a drastic decline in the British economy. Now Prime Minister David Cameron is proposing even deeper cuts.

While all the bankers of Europe are anxious for austerity, the German imperialists are using the crisis to strengthen their stranglehold over Europe at the risk of precipitating a deepening of the economic crisis globally. In this connection it is worthwhile to note that, like the U.S. ruling class, the German ruling class is adventurist. Like the U.S., which has plunged into wars and occupations all over the world, defied international law and broken through all norms of international behavior, the German ruling class has initiated two world wars. Not to be outdone, the U.S. rulers threatened the whole world with thermonuclear war during the Cold War era.

The German imperialists are pursuing the economic version of “blood and iron” in their struggle against the U.S. and British imperialists. Despite their powerful industrial economy and banks, which make Germany the fourth largest economy in the world, they are still subordinate to U.S. and British imperialism. And the interimperialist struggle has taken a sharp economic form in the midst of the economic crisis.

Whatever happens at the European summit on “saving the eurozone” — which really means saving the profits of the eurozone bankers, Wall Street and Tokyo — there is no way around the fact that capitalism has reached a dead end on a world scale.

The capitalist system has not been able to grow its way out of the economic crisis. Four years plus into the crisis, the capitalist state still has to prop up the system with bailouts in the trillions of dollars. The system on its own cannot even stay afloat, let alone expand. Tens of millions of workers are unemployed or underemployed, and the world capitalists are struggling to avoid a renewed crisis — one that would be on top of the crisis that already exists for workers everywhere.

In this light the only path out of this crisis for the working class is resistance, mobilization and struggle. Millions of workers in Europe have gone on strike against austerity over the past year. So far the ruling classes have not retreated in the face of general strikes and demonstrations of a short duration. More sustained, more widespread struggle is on the order of the day.

In the U.S., the Occupy Wall Street movement has signaled an end to a long retreat in the struggle. It has lit a fire under sections of the labor movement and stimulated renewed resistance here. Hopefully, it is the beginning of a deepening and widening struggle which must eventually be directed against U.S. capitalism and the profit system, and turned into a struggle against the private property owners who comprise the core of the fabulously wealthy 1 percent.

Goldstein is the author of “Low-Wage Capitalism” and “Capitalism at a Dead End,” both of which can be viewed at lowwagecapitalism.com. He can be contacted at [email protected]