Why are things so bad and what is the way out?

Following are excerpts from Part 1 of the document “Capitalism in Crisis,” prepared by Fred Goldstein for discussion at the upcoming National Conference of Workers World Party, to take place Nov. 13-14 in New York. Go to www.workersworld.net to read the entire document and get more information about the conference.

We are entering a rare period in history, a period in which a world historic social system — the capitalist system — is showing all the signs and symptoms of being in a profound crisis from which it cannot extricate itself by economic means alone.

We do not have a crystal ball. Marxism is a science and its revolutionary practice is an art. It is not a school of prophecy. Marxism can unearth the tendencies at work in the capitalist system based upon knowledge of its laws and careful observance of the course of events.

However, the capitalist system is unplanned and anarchic. The giant monopolies that span the globe engage in cutthroat competition carried out in secrecy, both from their corporate competitors and from the capitalist governments. There is no way to get an accurate preview of economic developments. This will only be possible once there is a consciously, collectively planned, cooperative world economy.

Everyone repeats that this is the greatest economic crisis since the Great Depression. This is true enough. But this statement does not clarify major questions. It tells the workers and the vanguard nothing about the nature of this specific crisis other than how bad it is (which they already know). Merely reiterating the severity of the crisis does not tell why it is so bad, how it got to be this way, what is in store for the masses and, above all, what is the way out of the crisis. If this is a crisis of the bourgeois system, then the only way out for the workers and the oppressed, once they get galvanized for struggle, is the complete overturn of capitalism.

There is a profound difference between a particular capitalist crisis and a historic crisis of capitalism as a system. The Great Depression began as a cyclical crisis, the collapse of a stock market bubble, with an underlying crisis of overproduction. But it soon revealed itself to be a crisis of the system. The present crisis is showing similar signs. What began in December 2007 had the basic elements of a classic capitalist crisis, in the sense that it was caused by capitalist overproduction, even though it was precipitated by a financial crisis with the bursting of the housing bubble. Overproduction and bursting of bubbles are characteristic of every capitalist crisis. But this crisis is obviously far more than a cyclical crisis.

This crisis has important features that indicate a qualitative difference from previous post-WWII recessions, including the 1980-1982 crisis. It is growing clearer every day that the capitalist class has no answer to the growing mass unemployment.

If capitalism cannot reduce the reserve army of the unemployed during an upturn, then it means that the economic mechanism of capitalism is irrevocably broken. The system, just as in the 1930s, cannot solve the unemployment crisis by economic means alone. Its normal functioning as a system of boom-and-bust exploitation has run aground. It had a gigantic bust but there is not, and will not be, a following boom. At best, the bust will be followed by stagnation with enduring and growing mass unemployment; at worst, an even greater bust is yet to come.

This jobless recovery is by far the worst in a series of three jobless recoveries over the last two decades. The jobless recovery is a new phenomenon in U.S. capitalism. It first arose after the 1991 downturn and caused concern among bourgeois economists. This concern was dissipated by the collapse of the USSR and the boom in technology that followed at the end of the decade. But the phenomenon returned with a vengeance — a far worse jobless recovery — after the 2000-2001 downturn. The present jobless recovery is a disastrous continuation of this trend and far exceeds that of 2001-2004.

The significance of a jobless recovery is that capitalism recovers but the working class does not, even on the most minimal level. Business expands but employment does not. The failure of the capitalists to rehire the workers raises a barrier to the revival of the capitalist business cycle. The bosses won’t rehire because business is bad. And business is bad because the bosses won’t rehire.

The anemic growth of the economy during the “recovery” is being accompanied not by massive hiring but by continued layoffs. But hiring is the only way that workers can get money in their pockets again and buy the commodities they produce in order to fuel an upturn. The capitalist press refers to this as the “problem of the consumer.” But it is really a problem of capitalist overproduction, which reaches crisis points as soon as the recovery begins and chokes off any further boom.

In the last two decades, the effect of the boom part of the cycle on the working class has turned into its opposite. Capitalist recoveries have been increasingly accompanied, not by a relative labor shortage, but by continued high unemployment for a longer and longer time after each recovery and continued shedding of workers, especially from high-paying and moderate-paying jobs through the boom period.  

The problem has been created by the continuing restructuring of capitalism, nationally and globally, for the past three decades. Capitalism has been profoundly technologically restructured, creating a high-productivity, low-wage global structure. There is virtually no room left for further significant restructuring along any foreseeable lines.

It is becoming a crisis in which the system of exploitation, the bourgeois relations of class exploitation and private property upon which it is based, are coming into irreconcilable conflict with the further development of society. If this is so, then no bailouts, no stimulus packages, no financial manipulation and no restructuring can revive the system in the long run.