System of exploitation reaches an impasse

Fred Goldstein WW photo: G. Dunkel

Following are excerpts from the Nov. 13 talk at the Workers World Party national conference by Fred Goldstein based upon a pre-conference document entitled “The Capitalist Crisis.” Excerpts of the document were published in the last two issues of Workers World; the entire document is available at www.workersworld.net. Goldstein is a member of the Secretariat of Workers World Party and the author of the book “Low-Wage Capitalism.”

We study the capitalist crisis not as an academic matter, but as a way of sharpening our revolutionary perspective in the struggle to overthrow capitalism and fight for a socialist future. From that point of view we see that this is a rare moment in history, a moment at which a world historic social system, the capitalist system, has reached an impasse and cannot go forward. It is moving in the direction of dragging humanity down.

One of the most important features of the present crisis is the fact that the capitalist state has become the principal prop of the system. It is an admission that the so-called “free market” system can no longer work on its own.

This was demonstrated dramatically the day after the elections when the Federal Reserve Board announced to the world that it was going to pump $600 billion more into the banks and to financiers in the hope that it would create wealth and more jobs. This is on top of $10.6 trillion already put into the system. Ben Bernanke, the head of the Federal Reserve, openly stated that economic growth was anemic and could not deal with the unemployment crisis. Bernanke also said that if $600 billion were not enough, the Federal Reserve would put in more.

It is important to know, in order to understand the crisis at the G-20 meeting in Seoul, South Korea, this week, that this money was entirely printed money. The Fed created this money out of nothing. It is not putting in money that it has. It is putting in money that it is creating. The Federal Reserve “buys” a five- or 10-year bond from some banker by creating an account in a Federal Reserve Bank for the rich to draw on when they want and for what they want. This will inevitably debase the dollar as a world currency.

But, most importantly, the financial authorities do not have even the slightest evidence that this new infusion of money will work. In fact, the deep reluctance of the capitalists to borrow for investment purposes and job creation indicates that it will not work.

Instead of pouring $600 billion into a federal jobs program for workers, who desperately need jobs and who can actually create real wealth and value, not fictional paper value, the Federal Reserve is pouring it into the accounts of bankers and other billionaire investors. This is the capitalists’ approach to the crisis — that is, to enrich themselves.

And the greatest sign that U.S. capitalism is moving backwards, and dragging the workers and oppressed with it, is the new deficit commission. It should be called the “capitalist commission to soak the masses and save the rich.”

Its mission completely verifies our analysis that capitalism is at an impasse and headed toward deeper crisis. The document put forward the other day by the two commission co-chairs will probably change drastically in its details over time. But what it signifies is that the ruling class is reacting to the crisis by getting ready to impose an austerity program on the workers and the oppressed.

The original proposal seeks to cut the deficit by $4 trillion through cutbacks to Social Security benefits, raising the retirement age to 69, cutting back on Medicaid, cutting social spending, changing the tax structure to lower corporate taxes and income taxes on the rich, and many other methods. Their crisis is so severe that they have even proposed cuts in the military.

The deficit commission is the result of the bailouts. The financial crisis is not because of Social Security or Medicaid. It is because of all the money that has been spent to support the banks, to buy toxic mortgages, to bail out the auto industry, to bail out AIG and other financial parasites. It is because the bosses have laid off millions of workers across the country and the government tax revenue is decreasing as the economy goes down.

The deficit is the result of the capitalist state absorbing the crisis of the bankers and the bosses into itself. It is a capitalist crisis commission that seeks to unload the crisis upon the masses by drastic cutbacks of gains won over the last hundred years.

Consider that the U.S. is the richest, most powerful country in the world, with the largest economy, the highest technology, the biggest businesses. Yet the ruling class, by ordering an austerity program, is admitting that it is facing a dire future and cannot grow out of this crisis on its own.

During and after World War II, the U.S. government had a deficit far greater than the present U.S. deficit — well over 100 percent of the gross domestic product. But U.S. capitalism was expanding as a world imperialist power, and it paid down its debt in a few years after the war. Today, the opposite is the case. The future is grim for the industrialists and the financiers on Wall Street.

I would like to touch on the G-20 disaster suffered by the Obama administration and U.S. capitalism in Seoul. The U.S. delegation came to tell the Chinese to devalue their currency; they came to tell the Chinese and the German, Japanese, Brazilian and other capitalists to cut down on the exports and let U.S. commodities flood their markets. And they came to force south Korea to sign a trade pact that would open up south Korea to U.S. auto companies. Washington was rebuffed on all issues.

The most important thing for the workers to take away from this crisis at the G-20 is that all the capitalist ruling classes are in a desperate state to increase their exports. Why is that? It’s because they cannot sell their commodities at home. They are all suffering from capitalist overproduction and seek to export their way out of their own economic crises. This is a deep symptom of the global nature of the present capitalist crisis.

It is bound to open revolutionary possibilities just the way it did during the 1930s, when the working class fought under the slogan, “Don’t starve, fight!” But it is going to require a revolutionary Marxist party to assist the workers on the only path that can lead out of this crisis — the socialist revolution.