The Worker, Vol. 39, Number 3
Note from the editor:
Members, friends and supporters of the Workers Party are invited to take part in our campaign by reciting the slogan "If you are illegal, then I am Illegal!" with others in any language while shaking hands and looking into each other's eyes. Do it with love in your heart. We'd be happy to learn more from you about all your experiences with it. WorkerspartyUSAChicagoBranch@gmail.com
The Inevitable Dance of Boom and Bust: Global Manifestations of Capitalism's Permanent Crisis
The capitalist system, by its very nature, is characterized by cyclical periods of economic expansion, or booms, followed by contractions, or busts. These fluctuations are not isolated incidents, but rather intrinsic manifestations of a deeper, permanent economic crisis rooted in the fundamental contradictions of capitalism itself. Understanding the connection between these specific booms and busts and the overarching crisis is crucial to grasping the inherent instability of the system and the solutions proposed by those who seek to transcend it. Conscious awareness of the fundamental contradictions of an economic system is a crucial step in creating the solutions to overcome them.
Early on in the history of the working class struggle Karl Marx observed that under free trade, which he considered the "normal condition of modern capitalist production," the immense productive powers unleashed by technological advancements inevitably lead to a recurring cycle of prosperity, glut, crisis, panic, chronic depression, and gradual revival (1888: On the Question of Free Trade). This cycle arises because production, driven by the pursuit of profit, tends to outstrip the ability of the market to absorb the ever-growing mass of commodities, leading to overproduction crises. Specific booms, fueled by technological innovation, increased investment, or expanding markets sow the seeds of their own destruction by creating the conditions for eventual gluts and subsequent busts.
It is important to highlight the global dimension of these cycles. Major economic crises are rarely confined to a single country; they tend to spread through the interconnectedness of foreign trade, capital movements, and currency transactions. A boom in one major economy, like the USA, can stimulate growth in others through increased demand for imports. However, imbalances in trade and payments, coupled with the speculative nature of capital flows driven by private profit lead to financial crises and the subsequent transmission of economic downturns across borders. The inherent anarchy of production in capitalist economy as a whole, where individual capitalists make production decisions based on their own profit motives rather than a coordinated plan, exacerbates these global cyclical movements.
These recurring booms and busts are not mere temporary setbacks but symptomatic of the permanent crisis of capitalism. This crisis stems from the fundamental contradiction between the socialized, collective means of production and the private capitalist ownership of these forces. During a boom, the socialized nature of production becomes evident as industries expand and production processes become increasingly interconnected. However, the fruits of this collective labor are privately appropriated by the capitalist class. This inherent contradiction eventually reaches a bursting point, leading to crises of overproduction, where society has the capacity to produce vast quantities of goods, but these goods cannot be profitably sold due to the limitations of the capitalist market and wealth inequality. The stark difference in the standard of living between a large, relatively wealthless group without ownership of the mass socialized tools of production and a small, extremely wealthy elite has profound consequences for all the human beings who make up the society. The wealthless, lacking ownership, are reliant only on the use of their own muscles and mind for survival, selling their labor power day in and day out to the private capitalist owners of the means of production. These owners freely move production across borders where a large pool of individuals compete for a limited number of jobs.
The ensuing bust is a painful adjustment where production is curtailed, workers are laid off, and the price of labor power is devalued, further exposing the inability of the capitalist system to manage its own productive forces in a way that benefits human life and society as a whole.
These days, during an economic crisis capitalist politicians in the United States take an offensive against the political economy of the working class by implementing policies that further burden workers while protecting and enriching the capitalist class. These offensives aim to shift the weight of the crisis onto the majority and undermine past gains centered on the workers' struggle to assert their economic rights and ensure that the economy serves the needs of the people.
Some of the primary ways the capitalist politicians use the spoils of political office to punish the workers and make the crisis worse include:
- Wage cuts and attacks on benefits: Capitalist politicians support or enable employers to slash wages, eliminating benefits like health insurance and pensions. They commonly participate in planning and creating conditions that weaken collective bargaining and make it easier for capitalists to drive down labor costs. Real wages have declined significantly over the years, even while the cost of living increases. Through privatization and handouts to the rich the governments also facilitate "modernization" and "rationalization" schemes that speed up work, combine jobs, and maximize the exploitation of employed workers, even as millions face unemployment or part-time work. This intensifies the downward pressure on the wages of those still employed.
- Slashing social programs and the "social wage": Capitalist governments gut and eliminate social programs such as welfare, Social Security, Medicare, Medicaid, unemployment insurance, and public housing, which were often won through decades of workers' struggle. This strips away the few standards gained by the workers over generations and undermines the minimal ‘social wage’ which helps create a floor protecting the price of labor-power and raising the general standard of living. By reducing income support, the government increases competition among workers, allowing capitalists to further drive down wages.
- Increasing taxes on the working class: While cutting social programs, capitalist governments often raise taxes. This further strains the economic situation of working families.
- Bailing out capitalists and enriching the elite: Instead of using public funds to support the needs of the people, capitalist governments prioritize bailing out banks, arms merchants, car manufacturers and other capitalist entities. This enriches the capitalists while leaving fewer resources to invest in the people.
- Repression of worker struggles: The state apparatus, including the police, military, and courts, is used to suppress strikes, protests, and other forms of resistance from the working class and other vulnerable sections of the society. Anti-worker laws are enacted and enforced. The government protects capitalist private property rights, often at the expense of workers' rights to organize and fight for better conditions.
- Promoting anti-social ideology: Capitalist politicians engage in propaganda campaigns to denigrate the victories of the working class and promote the idea that there is no alternative to capitalism. They typically blame the poor and unemployed for their situation, deflecting blame from the capitalist system itself. This aims to create an atmosphere of resignation and discourage workers from fighting for their rights.
- Undermining worker organization: The capitalist apologists foster the labor aristocracy and support revisionist and opportunist trends within the working class movement in an attempt to split and divide workers and undermine their independent class role. When able they also enact laws that weaken unions and make it harder for workers to organize.
So, what is to be done about this permanent crisis manifested in the inevitable dance of boom and bust? The solution lies in a revolutionary transformation to socialism. Only by abolishing private ownership of the means of production and establishing social ownership and democratic control can the fundamental contradiction at the heart of the capitalist crisis be resolved. Under socialism, production can be planned to meet the needs of the people rather than dominated by the pursuit of private profit, thus overcoming the absurdity of crises of overproduction and eliminating the cyclical crises inherent to capitalism. The role of a strong, independent Marxist-Leninist Workers Party is crucial in uniting the working class, exposing the failings of capitalism, and leading the struggle for this revolutionary change.
Of course, the workers are resisting the effects of the crises all along the line. In order to strengthen and unify the spontaneous upsurges of resistance the Workers Party USA offers a program of Economic Rights as a response to the situation. Organizing in defense of Economic Rights means putting forward the demands for fundamental economic rights, such as the right to food, clothing, shelter, a secure job or livelihood, free comprehensive healthcare, and the best possible education. This is necessary in order to challenge the ideology which denies society's responsibility for the well-being of its members and blames individuals for low wages.
The politics of Economic Rights recognizes that it is the minimum function of an economy and government to provide ironclad guarantees for the rights of the people. This is not merely about winning partial concessions to alleviate the pain of the crisis, but is intrinsically linked to the necessity for a socialist revolution. By starting from our own class aims and agenda we bring the workers and people to the social front and pose the fundamental questions about how society is organized and for whom the economy exists.
Through various campaigns against the effects of the capitalist crisis and participation in building the party and mass organizations of the working class, the workers gain consciousness and organization. They gain confidence and learn to base themselves on their own experience that the capitalist system of private ownership of the means of production is the fundamental obstacle to solving the problem of meeting the needs of all the human beings that make up the society.
In conclusion, specific economic booms and busts are not isolated events but rather regularly recurring symptoms of the permanent economic crisis inherent within the capitalist system. Rooted in the contradiction between socialized production and private ownership, these cycles are amplified by the international interconnectedness of the global economy and the anarchic nature of capitalist production. Attempts to manage these crises by means of concessions within the capitalist framework offer limited and often temporary relief. Guaranteeing the economic rights of the people must be the first priority of government. The only fundamental solution lies in a revolutionary overthrow of capitalism and the establishment of a socialist system in order to resolve the inherent contradictions of capitalism and plan production for the benefit of all.
Early on in the history of the working class struggle Karl Marx observed that under free trade, which he considered the "normal condition of modern capitalist production," the immense productive powers unleashed by technological advancements inevitably lead to a recurring cycle of prosperity, glut, crisis, panic, chronic depression, and gradual revival (1888: On the Question of Free Trade). This cycle arises because production, driven by the pursuit of profit, tends to outstrip the ability of the market to absorb the ever-growing mass of commodities, leading to overproduction crises. Specific booms, fueled by technological innovation, increased investment, or expanding markets sow the seeds of their own destruction by creating the conditions for eventual gluts and subsequent busts.
It is important to highlight the global dimension of these cycles. Major economic crises are rarely confined to a single country; they tend to spread through the interconnectedness of foreign trade, capital movements, and currency transactions. A boom in one major economy, like the USA, can stimulate growth in others through increased demand for imports. However, imbalances in trade and payments, coupled with the speculative nature of capital flows driven by private profit lead to financial crises and the subsequent transmission of economic downturns across borders. The inherent anarchy of production in capitalist economy as a whole, where individual capitalists make production decisions based on their own profit motives rather than a coordinated plan, exacerbates these global cyclical movements.
These recurring booms and busts are not mere temporary setbacks but symptomatic of the permanent crisis of capitalism. This crisis stems from the fundamental contradiction between the socialized, collective means of production and the private capitalist ownership of these forces. During a boom, the socialized nature of production becomes evident as industries expand and production processes become increasingly interconnected. However, the fruits of this collective labor are privately appropriated by the capitalist class. This inherent contradiction eventually reaches a bursting point, leading to crises of overproduction, where society has the capacity to produce vast quantities of goods, but these goods cannot be profitably sold due to the limitations of the capitalist market and wealth inequality. The stark difference in the standard of living between a large, relatively wealthless group without ownership of the mass socialized tools of production and a small, extremely wealthy elite has profound consequences for all the human beings who make up the society. The wealthless, lacking ownership, are reliant only on the use of their own muscles and mind for survival, selling their labor power day in and day out to the private capitalist owners of the means of production. These owners freely move production across borders where a large pool of individuals compete for a limited number of jobs.
The ensuing bust is a painful adjustment where production is curtailed, workers are laid off, and the price of labor power is devalued, further exposing the inability of the capitalist system to manage its own productive forces in a way that benefits human life and society as a whole.
These days, during an economic crisis capitalist politicians in the United States take an offensive against the political economy of the working class by implementing policies that further burden workers while protecting and enriching the capitalist class. These offensives aim to shift the weight of the crisis onto the majority and undermine past gains centered on the workers' struggle to assert their economic rights and ensure that the economy serves the needs of the people.
Some of the primary ways the capitalist politicians use the spoils of political office to punish the workers and make the crisis worse include:
- Wage cuts and attacks on benefits: Capitalist politicians support or enable employers to slash wages, eliminating benefits like health insurance and pensions. They commonly participate in planning and creating conditions that weaken collective bargaining and make it easier for capitalists to drive down labor costs. Real wages have declined significantly over the years, even while the cost of living increases. Through privatization and handouts to the rich the governments also facilitate "modernization" and "rationalization" schemes that speed up work, combine jobs, and maximize the exploitation of employed workers, even as millions face unemployment or part-time work. This intensifies the downward pressure on the wages of those still employed.
- Slashing social programs and the "social wage": Capitalist governments gut and eliminate social programs such as welfare, Social Security, Medicare, Medicaid, unemployment insurance, and public housing, which were often won through decades of workers' struggle. This strips away the few standards gained by the workers over generations and undermines the minimal ‘social wage’ which helps create a floor protecting the price of labor-power and raising the general standard of living. By reducing income support, the government increases competition among workers, allowing capitalists to further drive down wages.
- Increasing taxes on the working class: While cutting social programs, capitalist governments often raise taxes. This further strains the economic situation of working families.
- Bailing out capitalists and enriching the elite: Instead of using public funds to support the needs of the people, capitalist governments prioritize bailing out banks, arms merchants, car manufacturers and other capitalist entities. This enriches the capitalists while leaving fewer resources to invest in the people.
- Repression of worker struggles: The state apparatus, including the police, military, and courts, is used to suppress strikes, protests, and other forms of resistance from the working class and other vulnerable sections of the society. Anti-worker laws are enacted and enforced. The government protects capitalist private property rights, often at the expense of workers' rights to organize and fight for better conditions.
- Promoting anti-social ideology: Capitalist politicians engage in propaganda campaigns to denigrate the victories of the working class and promote the idea that there is no alternative to capitalism. They typically blame the poor and unemployed for their situation, deflecting blame from the capitalist system itself. This aims to create an atmosphere of resignation and discourage workers from fighting for their rights.
- Undermining worker organization: The capitalist apologists foster the labor aristocracy and support revisionist and opportunist trends within the working class movement in an attempt to split and divide workers and undermine their independent class role. When able they also enact laws that weaken unions and make it harder for workers to organize.
So, what is to be done about this permanent crisis manifested in the inevitable dance of boom and bust? The solution lies in a revolutionary transformation to socialism. Only by abolishing private ownership of the means of production and establishing social ownership and democratic control can the fundamental contradiction at the heart of the capitalist crisis be resolved. Under socialism, production can be planned to meet the needs of the people rather than dominated by the pursuit of private profit, thus overcoming the absurdity of crises of overproduction and eliminating the cyclical crises inherent to capitalism. The role of a strong, independent Marxist-Leninist Workers Party is crucial in uniting the working class, exposing the failings of capitalism, and leading the struggle for this revolutionary change.
Of course, the workers are resisting the effects of the crises all along the line. In order to strengthen and unify the spontaneous upsurges of resistance the Workers Party USA offers a program of Economic Rights as a response to the situation. Organizing in defense of Economic Rights means putting forward the demands for fundamental economic rights, such as the right to food, clothing, shelter, a secure job or livelihood, free comprehensive healthcare, and the best possible education. This is necessary in order to challenge the ideology which denies society's responsibility for the well-being of its members and blames individuals for low wages.
The politics of Economic Rights recognizes that it is the minimum function of an economy and government to provide ironclad guarantees for the rights of the people. This is not merely about winning partial concessions to alleviate the pain of the crisis, but is intrinsically linked to the necessity for a socialist revolution. By starting from our own class aims and agenda we bring the workers and people to the social front and pose the fundamental questions about how society is organized and for whom the economy exists.
Through various campaigns against the effects of the capitalist crisis and participation in building the party and mass organizations of the working class, the workers gain consciousness and organization. They gain confidence and learn to base themselves on their own experience that the capitalist system of private ownership of the means of production is the fundamental obstacle to solving the problem of meeting the needs of all the human beings that make up the society.
In conclusion, specific economic booms and busts are not isolated events but rather regularly recurring symptoms of the permanent economic crisis inherent within the capitalist system. Rooted in the contradiction between socialized production and private ownership, these cycles are amplified by the international interconnectedness of the global economy and the anarchic nature of capitalist production. Attempts to manage these crises by means of concessions within the capitalist framework offer limited and often temporary relief. Guaranteeing the economic rights of the people must be the first priority of government. The only fundamental solution lies in a revolutionary overthrow of capitalism and the establishment of a socialist system in order to resolve the inherent contradictions of capitalism and plan production for the benefit of all.