ABC’s of the capitalist crisis, Part 2

WW reprints here Part 2 of an article, slightly abridged, by Sam Marcy, the late chairperson of Workers World Party, that appeared in the April 12, 1992, Workers World. Despite the years that have passed since then, his analysis is remarkably relevant to understanding the relationship between workers and capitalists today. Part 1 can be found online at

The Philadelphia Inquirer published a very well-documented series of nine articles on Oct. 20-28 of last year [1991] showing the ravages of the capitalist economic crisis with facts and figures. But this series, “The Dismantling of America,” took a fundamentally erroneous approach.

The writers, Donald L. Bartlett and James B. Steele, showed that the increases in the salaries of people earning more than $1 million have risen 2,184 percent in the last decade; people earning $200,000 to $1 million saw an increase of 697 percent; for people earning $20,000 to $50,000, it was only 44 percent.

They conclude that the total amount of dollars in salaries funneled to the rich soared in the 1980s, as did the number of rich themselves. Meanwhile, the total dollars in wages that went to the middle class increased an average of just 4 percent a year, or 44 percent over the decade.

Their statistics, meticulously gathered from a variety of government sources, cannot be impeached. But it is not the salaries of the rich, the very rich, the super-rich or what they call the middle class that are the determining factor in the development of a capitalist crisis.

What they leave out is who owns the means of production, who owns the big plants, the big establishments, the military-industrial complex. Suppose an inflationary trend happens that is so violent the currency becomes no more than a piece of paper. What happens then? Those who own the plants, equipment, means of transportation, etc., will still be the owners. But the salaried people and wage earners will get ripped off completely.

An inflationary trend that affects wages or salaries on all levels still leaves the capitalist system intact. What is fundamental is which class owns the means of production versus who works as a wage slave.

Instead of proceeding from the viewpoint of ownership and possession of the material wealth of society, these writers deal only with a superficial aspect, the income from salaries and wages. That hides the oppressive, exploitative character of capitalist society.

It is a typical bourgeois approach to judge society purely on the distribution of income. This is not decisive. Targeting the great spread in incomes of course shows the gross and monstrous social inequalities in capitalist society. Nevertheless, this doesn’t point out the source of the inequality, which lies in ownership of the basic means of production.

Unfortunately, the writers of this series make another error. One of the articles is entitled, “How the Game Was Rigged Against the Middle Class.” At the present time, all capitalist politicians speak in the name of the middle class. They almost never mention capitalist class or working class–just rich and poor.

It is true, of course, that there is a struggle between the rich and the poor. But this does not adequately describe who the rich are, what makes them rich, the basis for their wealth and the basis for the poverty that many millions in this country suffer. The report really obscures the actual relationships that exist in present-day society, characterized by a struggle between the capitalist class and the working class.

To define the middle class merely on the basis of income is to include many workers, thus masking the function of the working class as the producer of all material values. It lumps the workers together with a vast section of the middle class proper. This includes millions who work for themselves, or employ a few workers whom they exploit, and are a buffer between the working class and the capitalist class. The fact that at the end of the process some may earn even less than a skilled worker doesn’t necessarily qualify them as producers of material values.

In fact, capitalist society has middle layers in it that serve a reactionary purpose–police, prison guards, military officers and pen-pushers, hundreds of thousands of others who work in the capitalist state apparatus and are a parasitic element–not to speak of the actual big-time bureaucrats. In any capitalist government these constitute a formidable element of the population that neither produce anything nor serve a useful function.

This social layer of the population is needed to protect and defend the capitalist class’s interests. It is pitted against the working class when necessary.

Huge fees not all that’s wrong

In their second article, “The Very Lucrative Business of Bankruptcy,” the authors also fall into error. In the course of examining the rising tide of bankruptcies, they say the winners are high-priced consultants hired to close companies, while the losers are workers thrown out of their jobs. They go on to show that the lawyers and consultants get huge fees–$787.50 for three hours of sorting files, over $1,000 for five hours spent on a plane, $562.50 for two and a half hours of telephone calls, $900 for four hours of filling out forms.

There’s no question that these bankruptcy attorneys, advisers and consultants get enormous fees. This should be exposed. But to make them out as the super-devils in bankruptcy is just plain nonsense. They must have their fees approved by the bankruptcy judge, which the authors neglect to mention. Together with the bankruptcy judge and the federal district courts, they are part of a trinity that serves big business and the banks, particularly the biggest creditors. They are the ones primarily responsible for the restructuring of capitalist industry over the last decade.

These writers, by pointing the finger only at the big fees of the high-priced attorneys and consultants, avoid the fundamental causes of the crisis. They absolve the capitalist class as a whole from responsibility for the ravages and destruction of human life and material.

So while their research is valuable and impressive, at the same time it obscures what most needs to be clarified.

One of the most glaring omissions in these articles is the international character of the capitalist crisis. They do well when they point out the huge indebtedness created during the Reagan administration and the havoc it caused later. But it is dealt with as exclusively a national phenomenon. Britain, France and above all Germany and Japan, which contributed so much to U.S. indebtedness by buying U.S. bonds and stocks and investing in U.S. industry, are not mentioned at all.

For a long period the capitalist press incited workers into Japan-bashing because they said Japan was “taking over America.” Now Japan has its own economic crisis, so it is withdrawing its funds from the U.S., thereby aggravating the capitalist crisis. First the capitalist press and politicians bashed Japan for investing in the U.S. Now that it’s withdrawing, they’re bashing it even harder.

It’s part and parcel of the ruinous imperialist competition which, if it goes much further, can end up in warfare.

The international character of the capitalist crisis was first brought out in Workers World newspaper when the Bank of Commerce and Credit International collapsed, demonstrating that the U.S., Britain, France, Germany and more than a dozen Third World countries were involved. The fact that corruption was also involved was purely incidental. The main thing is that it demonstrated the international character of the capitalist crisis.

Lest that seem like yesterday’s wisdom, it’s important to note that just as the March 30 issue of Business Week trumpeted the emergence of a capitalist recovery, Olympia and York, the world’s biggest real estate property developer, announced it was seeking guidance from financial consultants and advisers because of its inability to deal with a $20-billion debt. The company owns dozens of the choicest real estate properties in New York City and abroad.

But the most interesting aspect of this giant financial and industrial complex is the banks that have supported it with loans and are now seeking to dismantle it. These banks are Citicorp, the biggest U.S. bank, and a half dozen Canadian banks including the Canadian Imperial Bank of Commerce, the Royal Bank of Canada, the Bank of Montreal, and the Bank of Nova Scotia. Other lenders include Chemical Bank, the Dai-Ichi Kangyo Bank, the Sumitomo Bank, Barclay’s P.L.C., Credit Suisse, Credit Lyonnais, and the Hong Kong and Shanghai Bank.

The capitalist press dins into the ears of the workers day in and day out, whenever the workers complain about jobs being shifted abroad, that we are living in an integrated world economy. But they never bring up the most quintessential and characteristic feature of contemporary world relationships–that is, domination by the giant banks.

A scientific solution

Today there is scarcely any question that doesn’t lend itself to scientific solution, although it might take many years. So with all the economic tools available, not to speak of the new technology, why isn’t there even one bourgeois economist who will say, “Let us solve the economic crisis scientifically and eliminate crisis”? It’s because capitalist crisis can only be eliminated by abolishing the profit system itself and laying the foundation for a socialist society. To ask the capitalists to solve the capitalist crisis is asking them to sign their own death warrant.

Only the working class can solve the capitalist economic crisis, and then only by taking the wealth of society, the basic means of production, into their own hands and establishing a true workers’ socialist society.

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