An interesting analysis from the "old left".
M
-----Original Message-----
From: [email protected] [mailto:[email protected]] On Behalf Of
Sid Shniad
Sent: Saturday, August 14, 2010 10:37 AM
Subject: Crisis. What Crisis? Profits Soar!
Crisis. What Crisis? Profits Soar!
James Petras
While progressives and leftists write about the "crises of
capitalism", manufacturers, petroleum companies, bankers and most other
major corporations on both sides of the Atlantic and Pacific coast are
chuckling all the way to the bank.
From the first quarter of this year, corporate profits have shot up
between twenty to over a hundred percent, (Financial Times August 10, 2010,
p. 7). In fact, corporate profits have risen higher than they were before
the onset of the recession in 2008 (Money Morning March 31, 2010). Contrary
to progressive bloggers the rates of profits are rising not falling,
particularly among the biggest corporations (Consensus Economics, August 12,
2010). The buoyancy of corporate profits is directly a result of the
deepening crises of the working class, public and private employees and
small and medium size enterprises.
With the onset of the recession, big capital shed millions of jobs
(one out of four Americans has been unemployed in 2010), secured give backs
from the trade union bosses, received tax exemptions, subsidies and
virtually interest free loans from local, state and federal governments.
As the recession temporarily bottomed out, big business doubled up
production on the remaining labor force, intensifying exploitation (more
output per worker) and lowered costs by passing onto the working class a
much larger share of health insurance and pension benefits with the
compliance of the millionaire trade union officials. The result is that
while revenues declined, profits rose and balance sheets improved (Financial
Times August 10, 2010). Paradoxically, the CEO's used the pretext and
rhetoric of "crises" coming from progressive journalists to keep workers
from demanding a larger share of the burgeoning profits, aided by the ever
growing pool of unemployed and underemployed workers as possible
"replacements" (scabs) in the event of industrial action.
The current boom of profits has not benefited all sectors of
capitalism: the windfall has accrued overwhelmingly with the biggest
corporations. In contrast many middle and small enterprises have suffered
high rates of bankruptcy and losses, which has made them cheap and easy prey
for buyouts for the 'big fellows' (Financial Times August 1, 2010). The
crises of middle capital has led to the concentration and centralization of
capital and has contributed to the rising rate of profits for the largest
corporations.
The failed diagnosis of capitalist crises by the left and progressives
has been a perennial problem since the end of World War II, when we were
told capitalism was 'stagnant" and heading for a final collapse. Recent
prophets of the apocalypse saw in the 2008-2009 recession the definitive and
total crash of the world capitalist system. Blinded by Euro-American
ethnocentrism, they failed to note that Asian capital never entered the
"final crises" and Latin America had a mild and transient version (Financial
Times June 9, 2010, p. 9). The false prophets failed to recognize that
different kinds of capitalism are more or less susceptible to crises . and
that some variants tend to experience rapid recoveries (Asia-Latin America-
Germany) while others (US, England, Southern and Eastern Europe) are more
susceptible to anemic and precarious recoveries.
While Exxon-Mobile reaped over 100% growth of profits in 2010 and the
auto corporations recorded their biggest profits in recent years, the
workers' wages and living standards declined and state-sector employees
suffered harsh cutbacks and massive layoffs. It is clear that the recovery
of corporate profit is based on the harshest exploitation of labor and the
biggest transfers of public resources to the large private corporations.
The capitalist state, with Democratic President Obama in the lead, has
transferred billions to big capital via direct bailouts, virtual interest
free loans, tax cuts and by pressuring labor to accept lower wages and
health and pension givebacks. The White House plan for 'recovery' has
worked beyond expectations - corporate profits have recovered; "only" the
vast majority of workers have fallen deeper into crises.
The progressives' failed predictions of capitalism's demise are a
result of their underestimation of the extent to which the White House and
Congress would plunder the public treasury to resuscitate capital. They
underestimated the degree to which capital had been freed to shift the
entire burden of profit recovery onto the backs of labor. In that regard,
progressive rhetoric about "labor resistance" and the "trade union movement"
reflected a lack of understanding that there has been virtually no
resistance to the roll back of social and money wages because there is no
labor organization. What passes for it is totally ossified and at the
service of the Democratic Party's Wall Street advocates in the White House.
What the current unequal and uneven impact of the capitalist system
tells us is that capitalists can overcome crises only by heightening
exploitation and rolling back decades of "social gains". The current
process of profit recovery, however, is highly precarious because it is
based on exploiting current inventories, low interest rates and cutting
labor costs (Financial Times August 10, 2010, p 7). It is not based on
dynamic new private investments and increased productive capacity. In other
words, these are "windfall gains" - not profits derived from increased sales
revenues and expanding consumer markets. How could they be - if wages are
declining and unemployment/underemployment/and lost labor is over 22%?
Clearly, this short-term profit boom, based on political and social
advantages and privileged power, is not sustainable. There are limits to the
massive layoffs of public employees and production gains from the
intensified exploitation of labor . something has to give. One thing is
certain: The capitalist system will not fall or be replaced because of its
internal rot or "contradictions".
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