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CAPITALISM
IN DISARRAY
by Daphne Liddle
SOCIOLOGISTS designated last Monday as “Blue Monday” because
this date is supposed to be the most depressing in the year but the
next day newspapers were referring to it as “Black Monday” because the
long expected drop in share prices around the world had begun.
It started in the Far East with the Nikkei – always volatile –
starting to plunge, losing four per cent of its total value. The panic
spread to Europe and by the end of the day most European stock
exchanges had lost between four and seven per cent. London’s FTSE lost
5.5 per cent, closing 323.50 points down.
The American Dow Jones was spared the first day of the crash
because the day is a public holiday – dedicated to civil rights
campaigner Martin Luther King – in the United States.
The American Federal Reserve, fearing that the Dow Jones would
plummet when it did open, cut interest rates by 0.75 per cent to 3.5
per cent in an effort to try to restore confidence – by encouraging
more consumer borrowing and spending.
The measure had a small, temporary effect in London and on
Tuesday the FTSE recovered about half of what it had lost the day
before – only to plummet again on Wednesday by two per cent.
And the Dow Jones fell by two per cent, showing the Federal
Reserve’s panic measure has had little effect.
Monday marked a dramatic tipping point but shares had already
begun to fall and the FTSE has lost a total of 13 per cent since the
beginning of the year. Expectations of a global slow-down had been
flying around the markets since the US sub-prime crash last autumn, in
which banks around the world lost a lot of money.
The real losers in that crash were the two million working class
American families who lost their homes after being sold mortgages on
terms they could not repay by capitalist sharks who thought they could
not lose. If the mortgage payers defaulted they would win by
repossessing the property.
But a deluge of foreclosures knocked the bottom out of the US
housing market and the banks lost heavily.
not
the root
Even this is not the root cause of the coming crisis; the sub-prime
crash is just an extreme example of the economic policy prevailing in
Britain, the US, Australia and Canada of pressuring working class
people to keep the demand side of global markets in business by
borrowing heavily against future earnings.
This has forced workers in debt to work longer hours, spend less
time with their families and suffer exhaustion and mental health
problems as a result.
But they’ve already spent their future earnings, they cannot
spend them again and fiddling with interest rates can no longer raise
consumer spending.
Rising food and fuel costs will further reduce workers’ spending
power all around the globe.
One American capitalist admitted: “Cutting interest rates cannot
solve this; at best it can only move the problem on a few months.”
Some capitalists are under the delusion that the problem is
simply one of lack of confidence and if they “talk up” their prospects
they can avoid the impending disaster.
They cannot, boom and slump are inherent factors of the
capitalist mode of production. Deficit spending – whether by
governments or consumers – can only postpone the inevitable and make it
worse.
Others declare that America is already in recession and that
Britain is not far away.
Ironically some of these capitalists are relying on their trade
links with the expanding economy of China to save them from the crash.
These worshippers of the free market and leaving workers to sink or
swim are now looking for rescue to a highly regulated economy under a
communist government.
Capitalism is a failed, unstable and dangerous system that can
only bring more misery to those who live under it, especially the
working class.
Socialism – an economy controlled by the workers and planned to
meet people’s needs – is the only system that can bring peace and
prosperity.
*************
Editorial
Hush! don’t mention
‘slump’!
THIS WEEK’S money market flap
that spread panic selling across the globe at the beginning of the week
may not be the herald of the final crisis of capitalism but it
certainly looks like the start of a slump. That shouldn’t surprise us
because slump is as much a part of the capitalist system as the booms
they tell us can last forever.
Of course “slump” and “depression” are taboo words amongst
bourgeois economists these days. They prefer to call what is a natural
part of the capitalist phenomena “blips”, “downturns” or “recessions”
largely because those words suggest that they will be immediately
followed by an “upturn” – though this is invariably called a “boom” in
the bourgeois media.
Slumps are caused by over-production when the markets are sated with
more goods than people can buy – which, as Marx pointed
out, would have seemed an absurdity in earlier epochs. In feudal days a
bumper harvest would have meant more food for everyone. In the 1930s it
meant starvation for workers thrown out of employment because the food
could not be sold.
In those days importers would dump food into the sea to keep the
price up. The European Union used more sophisticated methods like
intervention buying to keep French and German agribusiness sweet at the
expense of working people who paid extortionate prices for food.
Meanwhile mountains of butter and lakes of wine would be stored and
eventually destroyed or used as pig-swill to keep the price up. Now we
have the final absurdity of paying farmers not to produce anything at
all.
This method, however, cannot work for the industries that the
capitalist world revolves round. Manufacturers squeeze their workers to
compete in the drive for profit in the cut-throat global economy while
encouraging their governments to urge working people to borrow more and
more against their future earnings to buy homes they will rarely own
outright and mop up the surplus in consumer goods. When they’re finally
bled dry the bubble bursts and the downturn begins.
When the markets dip we’re told to tighten our belts to ensure that the
exploiters don’t go without. When its over they say it’s all part of
the normal economic cycle, much like the seasons, and we should be
content with the crumbs from the rich man’s table which they call with
unconscious irony the “trickle-down” effect because it is indeed a
miserable pittance.
The system exists solely to ensure that capitalists and landowners can
live like Roman Emperors by exploiting the overwhelming majority of the
people who work in the factories and fields of the world and who
produce the entire wealth of the world yet get only a fraction of it
back in return.
Capitalism cannot solve the crisis of its own making. It is entirely
based on extortion, oppression and war and so it will continue as long
as we let the exploiters get away with it.
In 1917 the Bolsheviks lit a torch whose flames still burn throughout
Asia and Latin America.
The ruling class fear the future. We welcome it for we have seen it
work in the former Soviet Union and we see it today in the socialist
countries of Asia and Latin America.
The Chinese, Korean, Vietnamese and Cuban people are building a
new life for themselves while the great anti-war movements in the
imperialist heartlands like Britain are joining forces with the
liberation movements throughout the Third World to unite the class and
march together towards a new tomorrow – a socialist society where there
are no slums, poverty or racism; no exploiters, no bigotry and no war.
This is the world we work for. This is the world Marx and Engels
predicted and a world that will surely come to pass.
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