The Deepening Crises of Capital: Economic Collapse: Tyranny Through the Terror of the Market

A Rouge Forum Broadside

The Deepening Crises of Capital: Economic Collapse

“They have gotten a little vulgar, haven’t they?” (Lady Astor, October, 2001)

Tyranny Through the Terror of the Market

(second in a series)

"Everyone became obsessed with money and went higgledy_piggledy scampering after their fortunes," she said. "People with money used to often care about the people who had no money. Not always, but often. Now, it is rare to find people with money who care at all about people with no money." (Lady Astor)

Lady Astor, through inheritance and serial marriages, accumulated more than $100 million. Before her 100 birthday she complained about the outlook of the younger members of her class. They cared nothing about others, and nothing about production, nothing about the plants and the people working in them. The corporate leaders looted the place, then fled. She foresaw the bubble bursting, at least in terms of reaping the result of bad manners. She did not see the equal inevitability of war.

From January to July 2002, the stock market dropped 30%, plunging down to 8,000. The NASDAQ virtually evaporated. The US dollar began to collapse against foreign currency, chilling key foreign investors. Unemployment boomed. Terror in September 2001 threw a steady decline into hyper-speed. The patriotic presidential call to shop, travel, and buy stocks as forms of resistance met a nation raised on sheer selfishness, and fell flat. At the same time, the US military began to invade the world.

In 1999, a Rouge Forum Broadside said, “If you are teaching ninth grade, you are looking at the troops in the next oil war.” It was easy to see this coming, but it was not easy to see this coming. The dual crisis of war and economic collapse was foreshadowed by booming inequality forged in six ways: through sharpened exploitation at the work place, massive international unemployment, over-production caused by the impoverishment of the work force, bitter international competition for even cheaper labor, raw materials, and markets, deepening segregation—all elements of a capitalist system that manufactures war–and international misery. The UN predicts that 15 million people will starve in Africa in 2002.

Inequality in the US is common knowledge. In 1900, the richest 1% of the people controlled 60% of the wealth. Following two World Wars came two revolutions (USSR and China), a series of worker uprisings including the communist-inspired labor movement in the US. The tax system in the US shifted some burden onto wealth, the ratio became the top 17% controlling about 25% of the wealth in the late 1960s. While government had never stopped being an executive committee for the rich, the Warbucks class decided to tighten the reins. By 1999, the top 1% controlled 45% of the US wealth.

The 1990s bubble was their bubble. Sheer greed dominated management ranks. CEO’s inflatedsalaries from 1960, when they averaged pay 11 times that of their workforce, to 1999, when their pay rocketed to 592 times the average worker. While bosses of all industries demanded concessions from the workforce, in order to “save our industry in the national interest,” rather than reinvest in US productive capacity the owners shifted work to cheap labor sites, ran shell games of mergers for a cloak of profitability, and gave themselves golden parachutes to protect against the crisis ahead.

Labor creates all wealth. Despite plunging capital reinvestment, slight increases in US industrial productivity were won by speed up campaigns and technology used not to make work more creative or interesting, but to lay people off.In 2002 Ford announced a multi-billion profit, and21,000 layoffs, the closure of 5 North American plants, promising more profits still. Daimler-Chrysler, born of a government bailout, then sold to Germans, reported profitability, achieved by laying off 26,000 people. Evidence of the downward spiral: 250,000 were laid off in Mexico’s maquiladoras from 2000-2002.

With the government in the hands of the rich, actual production subordinated to fake profits,corporations inflated profit figures for stockholders and deflated those figures for the IRS. In 1960 companies paid25% of all US taxes. By 2000, the corporate share was less than 8%.

And they lied. To set up a spectacle of results, CEO’s borrowed money from cooperative banks, counting the loans as corporate profits. They built multiple tiers into their own corporations, divisions, which borrowed from one another, staying one move ahead of the few interested investigators. Some companies, like Enron, which never produced anything of value but merely moved energy sources (often fictitious) from one state to the next, had more than 2000 divisions, most of them off-shore; this in comparison to 7 divisions at General Motors. Accountants and the press served as cheerleaders.

Non-financial industrial companies borrowed$1.22 trillion between 1994 and 1999. Of that, the owners reinvested just 15.3 per cent for capital expenditures. They used 57 per cent of it, $697.4 billion, to buy back stock and thus enrich themselves.(Robert Brenner, “The Boom and Bubble,” 2002).

With real national production decaying, but international over-production rising, good manners lost in the desperate fight to get one more dollar, Warbucks looked to profiting from the public domain; energy consortiums, water, social services, education, prisons, pensions, and social security. Entrepreneurialism became a fetish—masqueraded as the common good. “De-regulation,” flourished. Deregulation is actually the more powerful market imperative: Big fish eat little fish.

For-profit companies took over the prisons, which filled with 2 million people, inordinately black. Marketeers flooded the schools. Children became commodities.

Worker debt at 1.5 times the average annual family income saved banks with credit card fees.

Enron and other energy companies smashed and grabbed the California budget, the world’s sixth largest economy which held, in 2000, at $25 billion surplus. By June 2002, budget analysts predicted a shortfall of, at minimum, $35 billion, foreshadowing a profound crisis of higher taxes, slashed services.

None of this could have been made possible without the liberals, mostly Democrats, in high office. Jimmy Carter made possible the profitability of mental institutions. Bill Clinton shattered the welfare system, throwing recipients into forced-work projects.Liberal California legislator Steve Peace fashioned the deregulation profits that Democrat Gray Davis gave to Enron, for campaign contributions.

Inequality Talibanized the world. Superstition born of ignorance and poverty became a petri-dish for fascist movements, each nurtured by the processes of finance capital mothered in the US.

Left alone as a superpower, the US has found that to rule the world, its military must invade and occupy it, a strategy that has overwhelmed everyone who ever tried it. The perpetual war offered to US citizens, not a war about terror, but a continuation of the international war of the rich on the poor, is a bipartisan war, as is the economic debacle and harsh attack on workers, ahead. Republicans and Democrats will unite against the people who, by voting, try to choose oppress them least.

Capital is a revolutionary system, out of human control, giving not a whit about who rides it. Capital is not defeated by crises. Capital thrives on war, destruction. Its pillars, fear, greed and opportunism, cause it to collapse of its own weight, only to be reborn more ruthless, somewhere else. Not inert oil, but cheap human labor to give oil value, is the fuel of capital’s fire.

Capitalism did overthrow feudalism. Capital has united the world through systems of production, exchange, communication, transportation, and technology. We have abundance, where all could live fairly well, if we shared. At the same time, the Warbucks profit from the divisions they have created among people, by nation, race, sex, disability, etc., while they fervently deny the primary division that was obvious to Lady Astor: Class. In the current period, there is no gentle form of capitalism possible, no way that capital can serve most people. Capital’s time is more than passed.

It is no longer reasonable to suggest the reform of capital. The evidence is that the government is a weapon of the Warbucks. In the face of crisis, working people need to consider going beyond all of the forms of capital, overcoming it, to create a society where love, work, and rational knowledge can combine to offer people reasonably free and creative lives connected in friendly ways, the source of all human advances. At issue is a popular change of mind, new ideas and organizations, and action.