As much as things have changed since Karl Marx’s time, his fundamental insights about the nexus of labor, exploitation, and profit remain the best guide to understanding capitalism and capitalist crisis. Theorist have come and gone, spinning elaborate revisions or alternatives based upon concepts of under consumption, over production, imbalance, disequilibrium, etc. Many have found in changing features of capitalism - like monopolization, automation, vertical integration, de-centralization, chip and robot innovation, globalization, financialization, etc - the altering of the logic of capitalist production and its inclination to dysfunction. Still others have seen changes in ownership and management relations as changing the dynamics of capitalist accumulation. While all of these reflect truths and useful perspectives, they miss or obscure the engine that drives all capitalist processes: the pursuit of profits through the exploitation of labor by the capitalist enterprise.
For Marx, the expression of this engine and its propensity to misfire lies in the struggle to maintain profits against its intrinsic tendency to decline. Call me a fundamentalist, but I believe this was, and remains, the best, if not only, road to understanding capitalist crisis, including the current deep downturn.
Exploitation, Profits, and Wages
I have written often and emphatically of the rise in the US rate of exploitation in the aftermath of the severe economic decline. I have pointed to the explosion of labor productivity driven by mass unemployment, weak organized resistance, and government complicity. The official numbers are staggering and beyond any recent precedent (see Exploitation Soars, Unemployment Jumps! and The Class War: Where Things Stand). And the reports of this radical restructuring of the relations between labor and capital continue to mount, though of little notice in the labor and left press.
The Commerce Department reports that fourth quarter 2009 pretax corporate profits rose nearly 30% over the prior year and 8% over the prior quarter (the third quarter increase was 10.8% over the second quarter). The US economy has not seen such an annual increase in pretax corporate profits since 1984 during the Reagan administration. Clearly labor productivity and the rate of profit are moving in lockstep. This is further evidence that profits are growing from an intensification of the labor process – on the backs of workers.
Should further data be necessary, the Commerce Department also reports that personal income dropped in 42 of 50 states last year at a cumulative rate of 1.7%, unadjusted for inflation. It must be noted that this report lumps together wages, dividends, rent, retirement income, and government benefits, underestimating the impact upon the working class.
Of course not all profits were generated directly through exploitation at the point of production. Half of the explosion of profits was generated through the financial sector. With the financial sector, workers were, however, exploited indirectly through the massive bailout, the assumption of cancerous assets, and the extension of essentially risk and interest free loans. Some estimate this burden - to be collected on future taxes and the slashing of common, public assets and social programs – to total $14 trillion. Some estimate even more.
I would concede that US organized labor is showing some gumption in the electoral arena, prodding the Administration and Democrats to show a bit of backbone on behalf of programs benefiting working people. Nonetheless, the legacy of complicity in the destruction of class- struggle unionism in the early stages of the Cold War saddles current labor leaders with a timid, class collaborationist approach that fails to mount even a modest resistance to this brutal class offensive.
Growth, the Safety Net, and the Class Struggle
Thanks to stronger, more militant labor movements, oppositional formations, and genuine left political parties, there has been much resistance in the European Union to any US-style surrender to a solely capitalist recovery constructed on the backs and from the pockets of working people. In a rare departure from past practices of reserving ideological rants to the back pages, The Wall Street Journal offered a front-page lecture to the EU: “Europe’s Choice: Growth or Safety Net” (3-25-10). The WSJ writers take up the cause of high unemployment among young people in Europe, but oddly fail to see any connection with the failings of capitalism. Instead they fault pensions, benefits, job protection, and the other elements of Europe’s historic social democratic safety net. Odd, indeed. They note that “…many economists say: chip away at the cherished ‘social model.’ That means limiting pensions and benefits to those who really need them, ensuring the able-bodied are working rather than living off the state, and eliminating business and labor laws that deter entrepreneurship and job creation.” This prescription might have counted as an enticement for the US-model when the US economy was perking along, but it invites contempt in the face of massive US unemployment, under funded and non-existent pensions and benefits, criminally inadequate health care, home foreclosures, increased hunger, etc. It is no wonder that the writers comment “Even in the best of times, Europeans are loath to move toward a US-style model.” And well they should be.
The trenches of this battle for the future of the European working class are in the traditionally poorer countries – Greece, Portugal, Spain, and Ireland – that borrowed extensively to maintain an economic pace and standard of living on a par with their richer neighbors: keeping up with the Joneses on a national scale. Now the stronger EU members want to punish them for their debt – debt on a scale not far from that of the US or UK. The more powerful states are insisting on budget cuts that will drastically slash incomes, pensions, and benefits while also stifling any potential for growth. This is simply imposing the US model by fiat.
In Greece, in particular, the working classes are vigorously and determinedly resisting these draconian changes, led by a fighting labor movement and the Greek Communists. They deserve our solidarity and serve as an example to our own labor movement.
Debt and the Class Struggle
Debt is a two-headed monster. At the depth of the crisis, the debt-burden incurred by irresponsible financial institutions was readily and undemocratically shifted from the private to the public sector through massive bailouts. Their debt problem is now our problem. Zhu Min, deputy governor of the People’s Bank of China put it well: “The governments tried to put every burden from the financial sector unto their own children.” But now with those burdens on the shoulders of working people, these same governments alarmingly call for debt reduction. Not surprisingly, they closely follow the EU strategy by demanding reductions in social programs. In the case of the US, the debt diet prescribes trimming the “waste” from social programs like Medicaid, Medicare, and Social Security. Of course there is no talk of reducing the immensely costly military budget or raising taxes on corporations and the wealthy. The debt issue is calculated to be another weapon in the assault on the living standards of working people.
Lessons must be drawn from this intense offensive against workers. In the US, the Democratic Administration and its Congressional troops have done little or nothing to side with working people in the class struggle. Rather, they have urged measures that have intensified exploitation, heaped debt on the working class, and threatened its safety net. The leaders of the labor movement have achieved little by lobbying, cajoling, and coddling; they have failed to take the struggle to the workplace and the streets.
The capitalist crisis is far from over. The financial monstrosities that sparked the crisis are once again fat, unregulated, and in hot pursuit of new risky ventures that will accelerate their rate of profit. There is every reason to believe that they will run aground again. We had an opportunity to stop this mad cycle with nationalization, but our economic leaders chose to reward the banks and encourage them to press on with their madness. Non-financial firms are swelling with profit from intensified exploitation, but lacking markets or consumption growth that would justify investment, expansion, or further employment, a situation that promises further pressure on their rate of profit. Of course they can further put the screws to workers, but hopefully we will take a lesson from our Greek comrades and join them in the streets.