------------------------- Via Workers World News Service Reprinted from the Aug. 05, 2004 issue of Workers World newspaper -------------------------
CAPITALISM RIDDLED WITH CONTRADICTION AND CRISIS: STORMY DAYS LIE AHEAD FOR LABOR
By Milt Neidenberg
Will the reassuring remarks of Alan Greenspan, chairperson of the Federal Reserve Board (FRB), calm the jumpy nerves of Wall Street, Washington and Corporate America following the board's decision to raise interest rates to 1.25 percent?
Greenspan's recent semi-annual testimony to Congress described how expansion of the economy is "self-sustaining" and has become "broad- based," while "the recent softness in consumer spending ... should be short-lived." (Wall Street Journal, July 21)
Nevertheless, the stock markets are jumpy. Recently the Dow Jones Industrial Average dropped below the 10,000 level. Standard and Poor's 500 and the NASDAQ lost ground. They are all perilously close to lows for the year, a sign that the markets are on a bumpy ride.
During a go-round at the Senate Banking Committee session, Greenspan was asked to comment on a remark he had made about a "neutral" interest rate that neither provokes inflation nor slows down the economy. Greenspan responded, "You can tell whether you're below or above, but until you're there, you're not quite sure you are there. ... When we arrive at neutral, we will know it."
Greenspan needs a course in Marxism 101. In reality there is no such phenomenon as a "neutral" interest rate that neither provokes inflation nor slows down the economy. A "neutral" interest rate implies stability, balance and the ability of the Federal Reserve Bank to fine-tune the economy. Nothing could be further from the truth.
There is not even a way to measure the trillions and trillions worth of paper money in different forms--cash, bonds, promissory notes, etc.-- that is utilized in the global daily exchange of commodities.
CAPITALISM: ANYTHING BUT STABLE
Interest rates are a form of loan capital endemic to a debt-fueled capitalist system. These interest rates set the price for borrowing money, and they fluctuate constantly.
Capitalists need to borrow in the chaotic, brutal competitive global war to find buyers for their products at home and abroad. Anarchy of production reigns supreme.
Under monopoly capitalism, price inflation is a symptom of instability. And currency manipulation--what the FRB is doing in raising interest rates--is a symptom of the inherent instability in the capitalist system as a whole.
When the cost of borrowing money goes up, the prices of commodities follow, creating profits for the giant banks and corporate monopolies. The general inflation grows directly out of the unchecked price hikes of the monopolies and military spending.
This is exactly what is going on now, as U.S. trade deficits grow to historic levels.
The FRB speaks for the biggest banks and for Corporate America. It is the central bank and the key functionary of monetary policy that manipulates interest rates to serve its capitalist masters. Vagueness and gobbledygook are not what they want to hear from the FRB chairperson. Neither do the millions of investors who trade trillions of dollars in the various markets--stock, bond, currency and commodity.
It can only make them more nervous that the FRB doesn't know how to respond to this inflationary period. According to a headline in the July 21 New York Times, "Greenspan Says Rates Could Rise Quickly." How high they will go, no one knows.
This is bad news for the workers and in particular the oppressed--Black, Latin@, the unorganized and undocumented.
The lead front-page article in the July 18 New York Times spelled this out in its headline: "Hourly Pay in U.S. Not Keeping Pace With Price Rises." The article explained that "hourly earnings of production workers--non-management workers ranging from nurses and teachers to hamburger flippers and assembly line workers--fell 1.1 percent in June after accounting for inflation. ... Coming on top of a 13-minute drop in the average work week, the decline in the hourly rate last month cut deeply into workers' pay."
With prices rising on milk, rent, transportation, medicine and other necessities, and credit card debt increasing, the conditions of workers and the oppressed are reaching crisis proportions.
ROBBER BARONS HOARD PROFITS
Even Greenspan noted in his testimony before Congress that "corporate profits have been so high that businesses have ample room to offer higher wages without raising prices to consumers."
The non-financial companies listed in the Standard and Poors 500 stock index are sitting on $550 billion in cash and short-term securities. "U.S. companies have more cash on hand today than they have had since World War II," wrote one financial analyst. (New York Times, July 22)
General Motors reported second-quarter earnings of $1.3 billion, up 49 percent from a year earlier. The corporation made a payout of $7 a share to its top shareholders.
General Electric confirmed that it had $138.3 billion in cash and marketable securities like Treasury bills, as well as stocks that could easily be turned into cash.
Microsoft's decision to pay out $32 billion in bonuses and dividends to its high-income shareholders is a bonanza that is by far the largest payout in corporate history, abetted by Bush's tax relief on dividends.
The CEOs and board members of these corporations have become bankers, hoarding immeasurable cash flows in hedge funds and other forms of speculation that are totally unregulated. They are in competition with banks like Citigroup, J.P. Morgan Chase and other financial institutions that invest and speculate in the markets.
In the last year, GM, Ford and GE have made most of their profits from the financial arms of their industrial empires.
Overproduction, due to the unprecedented increase in productivity, speedup and technology, has glutted world markets. Twenty-five percent of U.S. industrial capacity lies idle. The industrial tycoons are being forced to merge their corporations or pull back on investing in plants and other means of production.
These corporations are at great risk. Marxism calls this concentrated form of buying and selling securities, shares of stock and other instruments of money capital "fictitious capital." During crises and other upheavals like imperialist wars and recessions, fictitious capital depreciates with catastrophic speed.
The parasites of high finance are ignoring these dangers. They are sucking the equity from the corporations through obscene executive salaries, bloated bonuses and stock options while they downsize the workforce and wages, pensions and health care.
They have no intention of rehiring laid-off workers or adding workers to the payrolls.
CAPITALIST EXPLOITATION INTENSIFIES
Technological innovation, restructuring, sub-contracting, prison labor and outsourcing to non-union sweatshops here and abroad have forced workers out of higher-paying manufacturing jobs and into lower-paying jobs or onto the streets. Particularly affected are members of oppressed nationalities, the unorganized and the undocumented. They can no longer buy back the necessities and pleasures of life that they produce, especially in an inflationary period.
In a July 22 New York Times Op-Ed article, Stephen S. Roach, chief economist for the Wall Street behemoth Morgan Stanley, confirms with facts and figures that jobs have moved toward the lower end of the spectrum. "By industry, the sources of hiring turn out to be restaurants, temporary hiring agencies, and building services ... . Hiring has also accelerated at clothing stores, courier services, hotels, grocery stores, trucking businesses, hospitals, social work agencies and providers of personal and laundry services ... [there are] sharp declines in the number of production workers who mainly toil in manufacturing plants."
The composition of the workforce has fundamentally shifted to the lower- paid, service-oriented workers who represent many nationalities and are overwhelmingly immigrants. Many are women.
THE CRITICAL ISSUE OF THE DAY
This will require a dramatic restructuring of the 13-million-member AFL- CIO and a fight-back strategy.
Changes are beginning to take place.
The recent merger of the 180,000 members of UNITE--the Union of Needletrades, Industrial and Technical Employees--with the 260,000 members of the Hotel Employees and Restaurant Employees to form UNITE HERE points in the right direction.
Working in concert with the Service Employees International Union (SEIU), the largest union in the AFL-CIO with over 1,600,000 members, they have formed an alliance called the New Unity Partnership (NUP). That alliance also includes the Laborers International Union of North America and the United Brotherhood of Carpenters, which is no longer a member of the AFL-CIO.
Andy Stern, SEIU president, is the most outspoken leader of NUP. Stern has called for a broad-based organizing drive to take on Wal-Mart.
At the same time, the call for a Million Worker March on Washington, set for Oct. 17, is spreading and drawing in sections of the workers, the communities and the anti-war movement.
Can the changes percolating in the AFL-CIO and the MWM find common cause? This is the critical issue of the day.
Will the shrill demagogy of the capitalist parties and their presidential candidates, George W. Bush and John Kerry, deafen the dialogue among these progressive currents?
An interview with Andy Stern in the July 26 Washington Post indicates differences are arising within the organized union movement over John Kerry's economic program. Stern raised substantial criticism of Kerry and the Democratic Party.
Of course, Stern is in a contradictory position. On the one hand, "The SEIU has put about $65 million in union resources into efforts to elect Kerry," the article notes.
On the other hand, the timing of Stern's criticism--during the Democratic National Convention, when the Demo cratic Party is exerting tremendous pressure along with the AFL-CIO leadership for unity behind Kerry's campaign--shows that he may be moving in the direction of independent action. The Post wrote, "He said he is convinced from his experience in the civil rights movement that 'pressure is needed' to bring about real change."
Stern says Kerry and the Democratic Party have declined to address what he calls "the Wal-Mart economy."
Stern is correct in this assessment of the Democratic presidential candidate. Kerry has taken the labor movement for granted and made his campaign pitch to the upper-middle class.
And Kerry has regrouped with the Clinton forces. During the years of the Clinton administration, the implementation of NAFTA, the abolition of welfare and the gutting of other social programs hurt labor. Unions lost many organizing drives as employers grew more aggressive and hostile during that Democratic administration.
Kerry's economic program is to subsidize employers to get them to give concessions on health care and outsourcing. It's the same old trickle- down theory that has failed the labor movement time and again.
But now a movement is beginning from below, among the workers and oppressed nationalities, to build independent class-wide resistance to capitalist exploitation at home and endless wars abroad.
This development widens the opening for new and creative struggles to surface.
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