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ECONOMICS -
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Capitalism Requires a Great Depression

Posted in the database on Sunday, June 18th, 2006 @ 19:25:12 MST (2142 views)
by Jozef Hand-Boniakowsk    Metaphoria  

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Getting Ready for World War III.

I was born in 1949 which makes me a Baby Boomer. The people born after World War II between the years of 1946 through 1964 in the United States lived during a time of expanding economic growth unmatched anywhere else in the world. In his book Boomer Nation, Gillion divides these people into two groups. Gillion calls those born between 1945 and 1957, Boomers. He uses the term Shadow Boomers to describe those born between 1958 and 1964. My wife JeanneE, born in 1958, is a Shadow Boomer. Early Boomers grew up with the civil rights struggle, anti-Vietnam war protests, the draft, the Beatles, Crosby, Stills, Nash and Young, the Rolling Stones, Woodstock, the invasion of Cambodia, first man on the moon, etc. Their younger children may be in the Shadow Boomer group. The Boomers grew up in a period within the United States when the expectation was that every year the personal and family economic situation would improve along with the improved fiscal condition of the nation. Every year better than the previous year. The Boomers who worked hard all their lives are now beginning to retire and the fiscal house of the United States is not in order to provide for them in their senior years as was promised.

Harold Myerson, in "A Gentler Capitalism" (Washington Post Jan 4, 2006) writes,

For the pervasive insecurity that is inextricably part of today's capitalism has become the dominant fact of modern life...The new workplace...is a brave new world of short-term employment and relationships, where experience is not necessarily a virtue and institutional memory is sketchy at best...the employer-provided benefits of the past 60 years are going the way of the dodo.

It is now common for corporations to renege on paying out promised pensions and benefits. Corporations file for bankruptcy and the courts expunge them from having to pay workers their long anticipated pensions. Corporations receive court protection from having to make pension payments. The State picks up the tab by making pension payments through the US Pension Benefit Guaranty Corporation. In other words, the people make up the shortfall by paying themselves. It is not surprising that corporations prefer the federal government picking up the pension tab. There are a huge number of baby Boomers with pensions, IRAs, TSAs ready to start collecting on their investments, annuities and Social Security. What great rewards corporations would accrue if these payouts were to simply disappear? On June 16, 2006, the Houston Chronicle in an article entitled, "Delta to Request End to Pilots' Pensions " stated,

In a letter to U.S. Sen. Johnny Isakson, that also was sent to other members of Congress, Delta CEO Gerald Grinstein said Delta will ask that the pilots' pension be terminated effective Sept. 2. UAL Corp.'s United Airlines, the nation's No. 2 carrier, did the same thing when it was in bankruptcy protection.

The US Pension Benefit Guaranty Corporation has in the past exhausted its entire multi-billion dollar surplus as a result of big corporate bankruptcies.

Neo-liberalism requires that money be changed into commodities so that commodities can be transformed into money with surplus value, i.e., profit. This exchange produces capital for the owning class. Giving money to Boomers does nothing for the production of surplus value. The capitalist prefers that pension and Social Security funds be put to use anywhere other than in the retirees hands. To the capitalist all that money is just sitting there waiting to be invested, and re-invested. To neo-liberalism, a worker who is not creating surplus value is unproductive. A worker who extracts funds from a pension is thus a burden. So then, how to do away with pensions and Social Security?

Both the Chicago Tribune and the New York times in their May 11, 2005 editions reported that a bankruptcy judge in Chicago ruled that United Airlines may turn over its pension plans to the federal government. The court determined that such a transfer was permissible in order to help the corporation exit from bankruptcy protection. At the time this was the largest pension default in United States history. United Airlines employees lost $3 billion in retirement benefits affecting more than 134,000 workers. With the loss of pensions, Social Security becomes even more important for the working class. It is no accident that Bush regime tried to destroy Social Security. The capitalist mindset demands that all capital must be continuously in flux making more capital. Should the process fail, the working class is always called upon to make up for it through the sweat of their labor. Those who create all the wealth always bail out those who exploit them. Guaranteed security for the working class is anathema to the owning class. Exploitation cannot take place where a social safety net exists. Manipulation of the working class is more difficult when workers have options. Eliminate the social safety net; what better way to avoid having to make the payouts than to bankrupt the entire economic system? A profound depressing of the economy facilitates the probability that pension payouts will not have to take place at all. In other words, let the big meltdown happen so all obligations to the working class can be expunged. Let the markets crash and let the cycle start over. This is the "boom and bust" that is the signature of capitalism. The bust, as Marx predicted, must take place as a result of capitalist contradictions. The system reverts to salvage operations as the working class is destroyed. Anton Pannekoek writes in "The theory of the collapse of capitalism" (1934) that the,

The workers’ movement has not to expect a final catastrophe, but many catastrophes, political — like wars, and economic — like the crises which repeatedly break out, sometimes regularly, sometimes irregularly, but which on the whole, with the growing size of capitalism, become more and more devastating.

In 2006, we see the continued devastation that capitalism brings. War is clearly a necessary component of capitalist growth. 20th century wars have been imperialist wars, mostly of choice. And the choices are constrained by the nature of surplus value, i.e., profit. Capitalists seldom invest in war without capital gain in mind. The military industrial complex and its corporate takeover of the State must always make a profit. War does that. In the never-ending search for surplus value, capitalist enterprise manufactures new markets that require new things, and war is a huge market. Commodification continues until the ability to manufacture most goods is exported, i.e., outsourced to the cheapest labor pool. What are the unemployed and under-employed working class of then supposed to do? The capitalist has the answer: manufacture wars that require billions, and even trillions of dollars to execute and hire through an economic draft the cannon fodder to execute it. What does it matter to the capitalist how much devastation and collateral damage is created? The twentieth century offers many examples of how insignificant the working class is to the ruling elite.

David Smith in "Markets are like 1987 crash" in the May 21, 2006 issue of Times Online writes,

We are very uncomfortable about predicting financial crises, but we cannot help but see a certain similarity between the current economic and market conditions and the environment that led to the stock-market crash of October 1987, said David Woo, head of global foreign-exchange strategy at Barclays Capital.

The U.S. public just keeps on borrowing money. It is easy to blame the consumer for borrowing beyond their means. However, most consumers go into debt to buy the stuff they do need. A high rate of consumer debt ad personal bankruptcy is for medical expenses and college expenses. Most alarmingly, the United States government continues handing out tax cuts to the rich while borrowing billions overseas to finance its illegal war in Iraq and other attempts at imperialist expansion.

When George W. Bush says he is exporting democracy, he means he is imposing neo-liberalism by brute force on countries rich in natural resources that neo-liberalism needs to survive. This cowboy "let's just take it" mentality is failing in Iraq. Michael Schwartz in "Neo-liberalism on crack: cities under siege in Iraq" (Stony Brook University, June 1, 2006) writes,

Neo-liberal economic reforms have created the 21st Century slum city, with its extensive shanty-towns, degraded public services, and hyper unemployment. Small pockets of the privileged maintain a life style that resembles the ideal of capitalist prosperity, but an increasing proportion are deprived of the accoutrements of modern life: reliable electricity, clean water for drinking and for bathing, a livable diet, a habitable dwelling, and a viable connection to the economic life of the nation. In Iraq, even during the hellish combination of Saddamist rule and UN sanctions, most Iraqis kept this connection, albeit in constantly degrading circumstances. With the arrival of the Americans, conditions in the cities turned more steeply downward. And with the rise of the post-invasion war, they went into free fall.

And just who is going to pay the bill for the United States' cowboy diplomacy? The working people of course. According to the doctrine of neo-liberalism, working people who cannot cut it, who cannot come out on top in the economic survival of the fittest deserve no assistance. The capitalist State, vis-à-vis neo-liberalism, has no obligation to compensate for their failure. Working class people are mere commodities in the capitalist process who can be tossed aside when no longer capable of valorisation, that is, of making capital. Karl Marx used the concept of valorisation in his work, Das Kapital. Marx describes it as process where a worker creates more than the equivalent of his own labor value, i.e., value added beyond the cost of labor.

John Bellamy Foster speaking on the new American view on empire as published on the Guerilla Network News in an article entitled, "Naked Imperialism" describes it thusly,

The causes are the waning of U.S. economic strength, coupled with the disappearance of the Soviet Union, which left the United States unrivaled militarily. U.S. military spending is more than twice its share of world output. Putting this “comparative advantage” to work is the centerpiece in a grand strategy of forging a “New American Century.” It means enhancing U.S. control of strategic assets while depriving potential global and regional competitors from controlling the same assets, thereby guaranteeing a long period of U.S. global supremacy. But to do this the U.S. empire has to be more aggressive and expansive, taking “preemptive” actions against so-called “rogue states.” It also means that the United States increasingly finds it necessary to brandish its nuclear might.

War in perpetuity is neo-liberalism gasping for survival. It is a gasping that necessitates paying for such folly forever. Get ready as neo-liberalism leads the world to a neo Great Depression followed by the next "great" restructuring of global capitalism by way of World War III.

Jozef Hand-Boniakowski is co-editor and co-publisher of Metaphoria along with his life partner and wife, JeanneE. He is 30-year veteran retired teacher and a member of Veterans For Peace. His writings have appeared in Metaphoria, After Downing Street, Buzzflash, Counterpunch, Thomas Paine's Corner, Rense.com, Omni Center, Rutland Herald, Times Argus, and others.

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