Socialism is the answer to

Why capitalism can’t meet human needs

By Fred Goldstein

Three-quarters of a million workers have already been laid off this year, bringing the official total of unemployed to over 9 million. Trillions of dollars in retirement funds have been wiped out in the stock market in the last few months. Over 10,000 households a day are being foreclosed, and evictions are rampant. Money for student loans has dried up. Credit card debt is at a record high. Unemployment is rising along with food, utility and gas prices. Production and sales are falling relentlessly. The forecast is for things to get worse—a lot worse.

All the most powerful financial officials and political leaders of the richest capitalist countries in the world have tried to stop the devastating advance of this economic storm. They have failed. The crisis feels like a force of nature. It brushes aside trillions of dollars in bailouts for the banks and keeps going. It is taking down everything in its path–homes, jobs and workers’ lives.

But this crisis is not a force of nature. It is the force of the capitalist system in crisis.

This crisis began when the housing bubble burst. Capitalist banks were lending money to profit-seeking real estate developers to build houses. The same banks were lending money to mortgage companies to make as many loans as they could. The goal was to boost profits.

Soon there were more houses than the workers and the middle class could buy. The prices of homes fell. Mortgages could not be refinanced. Workers could not pay the steep increases in interest rates built into their loans. Banks stopped lending. Millions of households went into foreclosure.

Put simply, people became homeless because there were too many houses! Not too many houses that were needed or already here, but too many houses that can be sold at a profit. Furthermore, the workers who build homes and all the workers who make the things that go into homes are losing their jobs because these homes can no longer be sold at a profit.

That is the essence of all the capitalist crises that have occurred since the first crisis in 1825. It is the crisis of overproduction.

The global financial meltdown was triggered by the bad mortgage debts sold around the world. But what turned those debts into bad debts, in the final analysis, was the overproduction of housing.

Now the crisis of overproduction is sweeping the auto industry. From the auto industry and the housing industry it is spreading throughout the economy. The stock markets are plummeting because the financial bailouts, the pumping of trillions of dollars into the banks, cannot stop the capitalist economic crisis.

Capitalism reinforces exploitation, inequality

Why is this inevitable? Under the capitalist system there is private ownership of the entire global means of production by a tiny group of millionaires and billionaires. Production goals are set inside each corporate empire in secret by the executives, who are their corporate agents. The goal is to amass maximum profits. But no company knows how much can really be sold at a profit.

On a corporate level production, is planned. On a society-wide level, production is socialized globally but completely unplanned. This is called the anarchy of production. This is what inevitably leads to overproduction.

The crisis is also inevitable under capitalism because the workers are an exploited class. The lower their wages are, the higher the bosses’ profits. Profits consist of unpaid labor. The bosses take the products, services and infrastructure created by the workers, sell them on the market, pay the workers as little as possible and keep the rest. Every capitalist tries to lower wages to gain higher profits.

The collective action of the capitalist class, aided by the state, has driven down the wages and living standards of the multinational working class in the last thirty years. Under the system of capitalist exploitation wealth flows to the top, and the level of inequality is obscene.

The top 1 percent of the U.S. population, the super-rich who have all the levers of power in society, owned 34.3 percent of the wealth in 2004. The bottom 90 percent owned 28.7 percent. The top 400 individuals owned $1.26 trillion in 2006, up from $470 billion in 1995.

Racism and national oppression play a major role in the distribution of wealth under capitalism. The African-American, Latin@, Asian and Native peoples had the least to begin with and will suffer the most under the blows of this crisis. For example, the median wealth (that is, savings and other assets) of households by race in 2004 was $140,700 for whites, $20,600 for African Americans and $18,600 for Latin@s. (See graphs.) This means that in this developing capitalist economic crisis the oppressed have almost nothing to fall back on to cushion the low wages, the layoffs and the foreclosures.

Oppression and economic discrimination also fall on women and lesbian, gay, bi and trans people under capitalism. Like racism, the bosses use sex and gender bias as a way to divide and conquer. The growing witch-hunt against undocumented workers has the same poisonous, divisive goal. How else could 1 percent of the population dominate the workers and oppressed other than by sowing division and disunity?

Class unity is the nightmare of the ruling class. As the present crisis engulfs wider and wider sections of the workers, the potential for bringing about that unity is growing stronger.

The drive for profit and exploitation here at home is the same drive behind war, occupation and intervention abroad. Trillions of dollars have been given to the military to protect corporate interests in the Middle East, Asia, Africa and Latin America. The Pentagon is nothing more than an enforcer for U.S. capitalism around the world–from the Persian Gulf to Southern Africa to the Pacific and the Caribbean. And as capitalism expands, it brings environmental destruction in its wake.

It is becoming clearer every day that capitalism as a system has got to go. A system in which people are homeless because there are too many homes must go. A system in which workers are losing their jobs and being plunged into poverty because they have produced too much wealth is a system that must be destroyed. A system which cannot provide jobs and education but imprisons 2.4 million people, the majority of them Black and Latin@, is bankrupt and does not deserve to continue another day.

If Cuba can do it, why not the U.S.

It must be replaced by a system where production takes place for human need, not for profit. The class that produces the wealth, the multinational working class, should own and distribute that wealth.

Trillions of dollars are now being used to bail out the banks and fund the Pentagon under capitalism. Under socialism, that money would guarantee that everyone would have a decent job and income, free health care, affordable housing, free education, low-cost transportation, healthy, reasonably priced food and much more. The well-being of the multinational working class would be the goal of society, not their exploitation as it is under capitalism.

If this sounds utopian, the fact is that socialist Cuba, poor as it is, with all its difficulties, has gone a long distance toward establishing these rights for the Cuban people. How is it possible that a country that was impoverished by centuries of Spanish and then U.S. colonial rule and that has lived for 50 years under a U.S. blockade, could guarantee more economic rights to its people than U.S. imperialism with its $11 trillion economy?

Why is it that the Cuban people have a longer life expectancy and lower infant mortality rate than oppressed people living in Harlem, Chicago’s South Side, Los Angeles or the barrios of this country? The answer is that Cuba abolished capitalism, destroyed the capitalist state in a revolutionary struggle and took the road toward socialism.

The present economic crisis is bringing increased suffering to the workers in the U.S. and is spreading around the capitalist world. It demonstrates clearly the need for a mobilized, militant, mass working-class fightback.

The bosses want to push the crisis of their system onto the backs of the workers and the oppressed. But the ultimate goal of the working class must be to turn their fight into a struggle to abolish capitalist private ownership of the tremendous wealth that the workers have created.

The end of private ownership of the means of production would mean a vast increase in the personal property and social property of the workers. Right now, private ownership is strangling humanity and destroying the planet.

The final goal must be to eliminate economic crises, exploitation, oppression and war once and for all. The only way to do that is to establish a socialist society—free from greedy bosses and inequality—here and worldwide.

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