The strike at Boeing Aircraft and other recent industrial actions show both the power of the working class, and the real value of our labor to the bosses. A four-week strike in 2005 probably cost Boeing at least $700 million in profit (Seattle Times, 9/29/08). An eight-week strike in 2008 ran Boeing over $2 billion in losses. Our ability to shut down production there gives us a small taste of the potential of the working class to lead society. However, strikes alone can never fulfill a vision of liberation from rule by a tiny minority of bankers, bosses, and investors.
Only through communist revolution can workers achieve an alternative to capitalism. The greatest limitations workers all over the world face today are political, the belief that we have no alternative to living under the bosses rule. However, more workers are looking for answers to the cause of the current economic crisis. Analyzing the political economy of capitalism, and connecting those ideas to specific events at the point of the class struggle, can move our class forward.
Productive labor creates all wealth in capitalist society. The bosses’ media and schools constantly prattle that advances in workers’ standard of living emanate from the “free market.” In reality, the free market today means bosses are gambling with riches they have stolen from us. During the last two “booms,” popular culture taught us to idolize and imitate speculators (Who Wants to Be a Millionaire; Deal or No Deal).
The current financial crisis is a product of basic laws of capitalist economics. Since the 1970s, instead of investing in more factories, U.S. banks have led the vastly increased speculation in stock and bond markets. Karl Marx discovered long ago that, as capitalism matures, the rate of profit, i.e. the amount of profit per dollar invested, tends to fall.
Because capitalism is a competitive system, each boss must try to produce things more cheaply than the next one. Individual capitalists save money by introducing more machinery into production, thereby reducing the number of workers. Other bosses in the same industry are then forced to automate in order to keep up. The result for all bosses and the investors who back them is a much higher amount of money sunk into technology, resulting in a lower rate of profit.
According to economist Robert Brenner, profit rates at U.S. non-financial corporations in 2000-2006 were one-third lower than in the 1950s and 1960s. On a global scale, there were large drops in the rate of profit in industrial economies after the late 1960s through the early 1980s. The basic trend, with some minor upturns, has continued through the present. This has come as rivalries between major industrial powers have grown.
Capitalists typically use several methods to try to avoid the tendency of the rate of profit to fall: 1) In a crisis, more and more factories are closed; the weaker firms are taken over by the stronger ones, temporarily giving the bigger fish more of a global edge (e.g. GM taking over Chrysler); 2) increased exploitation of the whole working class (the decline in real wages in the U.S. since 1973 and increased cutbacks in benefits); and 3) greater use of racism, to super-exploit a section of the working class (e.g. increased use of immigrant labor in basic industry).
The bosses also try to counteract the falling rate of profit by investing in the “developing” world. They are able to do this because of uneven development under capitalism, i.e. the vast levels of inequality that exist. This allows them, for a time, to extract larger amounts of value from these more exploited workers. However, this only gets them so far. Class struggle is a given under capitalism-; workers always fight back, putting upward pressure on labor costs. Also, local bosses resist imperialist attempts to take over labor markets in “their” countries. For example, China recently required all foreign companies to allow Chinese“Communist” Party-led union organizing.
The main thing driving events in the world today is the fight between rival imperialist powers. For example, competition in the banking industry has been fierce. In 1999, Clinton signed the repeal of the Glass-Steagall Act, the Depression-era law that had separated investment banking, commercial banking and insurance business. U.S. banks saw this law as the last barrier to them expanding into areas of speculative investment that were wholly unregulated. Europe had already removed that separation for many of their banks. To maintain their competitive edge, U.S. bankers decided their government also had to get rid of it (Obama economic adviser Robert Rubin and McCain economic adviser Phil Gramm were key players calling for the repeal).
In the end, billionaire bankers and investors were forced to turn into players at a gigantic gambling casino. They turned to more and more exotic investments in order to try to maximize their rate of return. In the late ‘90s it was the “dot-com boom” and now it is “collateralized debt obligations” and “credit default swaps.” These latest attempts to profit off of an increase in paper wealth are far-removed from the value created (and stolen) through the production process. They are ultimately doomed to fail.
When that happens, the capitalists turn to their “final solution” to the falling rate of profit- -— war and world war. Wars destroy large amounts of productive capacity, allowing the capitalists to start the cycle of development all over again. They also settle, temporarily, the imperialist fight over markets, labor, and resources that led to the wars. However, new rivalries will always arise.
The U.S. bosses’ government, including McCain and Obama, claimed that if we didn’t bail out the speculators to the tune of $700 billion, “ the system will collapse.” Would that were true. Nothing short of a communist revolution can end the horrors of capitalism. After the revolution, we must do everything possible to ensure that the capitalists will never be able to reassert their control.
We say down with their system of rewarding those who create no value, serve no useful purpose, and hedge their bets with value stolen from our labor. Communist revolution will put these profiteers and their political henchmen under the ground, and lay the groundwork for a society where useful labor will serve the collective good.J
Collateralized debt obligations are home mortgages bundled together in large groups and sold by mortgage companies and banks to investment banks or other institutions, who in turn usually sell packages of these mortgages to hedge funds, pension funds, and overseas banks.
A credit default swap is an insurance contract between two parties. The first party “buys” the swap in order to protect against the possibility of default in payment on a bond or other promise of payment, and the second party “sells” the swap by taking payment in return for a guarantee of the bond or other promise of payment should the institution issuing the bond fail to make good on it.
Grand Theft Capitalism
Capitalism is based on production of commodities. Each commodity “satisfies human wants of some sort or another” (Marx, Capital Vol.1) Each commodity has a “use value.” “Use-value” is the measure of the utility of any particular commodity in satisfying those wants. For example, a loaf of bread has value as a life-sustaining source of food.
Like other commodities, labor power has a use value. This is because labor power is uniquely capable of adding value to raw materials in production. From this new value, the capitalist who buys the labor power pays the lesser part to the worker in wages, and keeps the greater part as surplus value. Surplus value is the source of all capitalist profits.