Capitalism = crisis

As 2001 began, economic crises rocked American society. The result of California’s deregulation of electricity came first. Deregulation was supposed to bring us better “choice” and lower prices. It brought neither—just electricity blackouts, utility defaults and public bailouts. Another crisis was the swoon of the stock market. Its climb had been a sign of the “New Economy,” featuring digital technology and high worker productivity. But Wall Street’s rise was a triumph of myth over reality, of share prices out of ratio to corporate earnings. In the meantime, the mainstream misses the story when it comes to the force driving economic crises.The force is the accumulation of too much money in too few hands—those of the super rich and corporations. In a word: capitalism. One result is that industry after industry has produced more than can be profitably sold to workers. Business inventories rise and retail sales fall. U.S. exports and imports decline. Workers get pay cuts and layoffs. Consumer demand “softens.” President Bush has suggested that the U.S. economy may be facing a recession.

But over 150 years ago, Karl Marx and his friend Friedrich Engels called a recession a crisis of overproduction. They wrote: “In these crises, there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity—the epidemic of over-production.” They showed how overproduction caused workers’ buying power to fall relative to the prices of the goods and services their labor produced.

This crisis drives the gap between the richest and poorest U.S. households. “The wealthiest 1% of households control about 38% of national wealth, while the bottom 80% control only 17%,” Lawrence Mishel, Jared Bernstein and John Schmitt write in The State of Working America 2000–2001.

Overproduction is unique to the capitalist economy. At its heart is the automotive industry. “There are too many carmakers in both Europe and the U.S. and too many factories for a shrinking market,” the Financial Times reported to the business elite. The paper ignored why the car market is decreasing and how joblessness weakens workers’ buying power.

Meanwhile, the U.S. Conference of Mayors has reported that 83 percent of 25 cities surveyed had increased requests for emergency food assistance in 2000 versus 1999. Most of those requesting the emergency food had low-wage jobs. In a recent Children’s Defense Fund study, every third child lives in a family that can’t buy food after being forced off welfare. However, hunger isn’t a natural condition of human beings. Likewise, there’s nothing natural about overproduction or the capitalist economy. Time for a change?