Even as the stock markets continue their turbulence, other symptoms of the growing capitalist crisis abound.
The annual conclave of zillionaires and their hangers-on at the lavish Swiss resort of Davos is usually the occasion for a celebration of capitalism, even though the participants will admit to it having a few flaws. The presumption is that the exploitation of labor by a few, and all the ills that result from that, can be patched over with a few social programs.
But this year, the assembled fortunate few at Davos were shaken by a letter from U.S. billionaire investor Seth Klarman. (You never heard of Klarman? Lots of the super-rich these days avoid putting their names on things, unlike the Rockefellers and Fords of an earlier time.)
Klarman’s letter came in the middle of the Yellow Vest protests in France. It came when Oxfam had just reported that the combined fortunes of only 26 of the world’s richest people were equal to the combined wealth of the 3.8 billion poorest people in the world.
Billionaire mourns loss of ‘social cohesion’
Klarman warned his friends at Davos that “social cohesion is essential for those who have capital to invest.” His message to his billionaire buddies was that things will fall apart if they continue to subordinate everything to their pursuit of quick profits. He reminded them that anger is rising everywhere as poverty grows alongside obscene wealth, and that this is already manifesting itself in spontaneous uprisings, like the one in France.
Last August, Pew Research reported that U.S. real wages, taking into account inflation, were now at the level they had been back in 1974. Prices, however, especially rents, have soared. Most people don’t need to read the figures to know that it is becoming more and more impossible to make ends meet. The result is growing mass anger — tearing apart the “social cohesion” that allowed the rich to rule without fear of a social explosion.
For decades mass anger has boiled over into outright rebellion in those countries super-oppressed by U.S. and European imperialism. But now the potential for rebellion exists within the imperialist countries themselves. That is what has the billionaires so worried.
Back in 2016, a poll taken by the Harvard Institute of Politics found that only 42 percent of millennials supported capitalism. That figure is even lower now.
Which is why Klarman cautioned his peers at Davos: “People will say the words ‘Wall Street’ with a derogatory tone. They’re talking about an immoral place, where there’s just disgusting amounts of greed and nothing good happens — which isn’t fair and isn’t true.”
Ah, yes, the poor misunderstood capitalists.
But, to be fair, the capitalist class is not just a collection of greedy individuals. It is not their personal traits that are the problem. It is the very nature of the system itself.
Klarman denies this, insisting: “It’s a choice to do things that ‘maximize profits,’ to pay people as little as you can, or work them as hard as you can. It’s a choice to maintain pleasant working conditions or, alternatively, particularly harsh ones, to offer good benefits or paltry ones.”
Klarman is an investor, a money man making profits off the stock markets.
But the capitalists who actually run the industries that create the profits the money men gamble with — they know what the real deal is.
The capitalist owners know they have to beat out the competition if they are to survive. And that means just one thing: It is greater exploitation of the workers that makes them succeed, not greater intelligence or a greater appetite for risk.
Harsh exploitation is where their profits come from — and the ones that can’t or won’t do that are pushed aside.
Socialism and economic development
The question now on the minds of many is: What can replace capitalism? And, despite all the difficulties endured by countries that have had socialist revolutions, socialism keeps coming up as the only answer.
The advanced development of the means of production in capitalist countries like the U.S., Europe and Japan makes them ready-made for socialism. In fact, it is the tremendous surge in productivity and its subsequent shedding of labor, brought about by high technology in recent decades, that is making capitalism so unstable today.
But the chain of world capitalism broke first in the underdeveloped, poorer countries, precisely because the capitalist class was weakest there and the masses were most revolutionary.
So it took a great struggle in places like the Soviet Union, war-torn Eastern Europe and China to try and develop socialism while building up the means of production and at the same time defending themselves from imperialist aggression. The Soviet Union in the end was defeated, along with the countries of Eastern Europe.
The People’s Republic of China, however, has survived, even as it has compromised with capitalist forces internally and externally to do so. The basic infrastructure in China remains state-owned and the Communist Party — not the billionaires — controls the state.
So it is instructive to see how China has fared in recent years, even as growing inequality plagues the U.S. and Europe.
According to statista.com, average annual wages in urban China tripled in the decade from 2007 to 2017. Yes, you read that right. Tripled.
If you look up the chart, you will see that this was not an up-and-down, erratic movement. Instead, wages steadily went up by about the same amount year after year. (https://tinyurl.com/ycq4pbdx)
In that period, unemployment remained at a constant 4 percent. All this points to the strength of a planned economy — even one that allows capitalist production at the same time.
There is much talk in the bourgeois media about the Chinese economy slowing down. As the number one exporter in the world today, China has to be affected by what is happening in the capitalist countries. But this is having little effect on the overall economic health of the people.
The International Monetary Fund forecast is that the rate of growth of China’s gross domestic product will slow down this year — to 6.3 percent!
By comparison, the IMF and World Bank forecast that U.S. GDP growth will hover around 2 percent — and this is without a big Wall Street crash, which seems increasingly likely.
Conscious, revolutionary movement
While socialism is the logical and inevitable next step for human social development, it won’t just happen “on its own.”
Socialism will be the result of an enormous class struggle. Capitalism will itself destroy the “social cohesion” that has held it together.
But it will take a conscious, revolutionary movement to make sure the working class takes political power away from the decaying institutions of capitalism in order to rebuild society on a socialist basis.