Reflections on the Current Economic Crisis
Brenda la Guerre
Reflections Without Borders, February 2009
What do we believe is the cause of the current economic crisis? The housing meltdown, the soaring gas prices we saw in the fall, and the sky-rocketing food prices we saw over the summer all have the same cause: speculation. Speculation in real estate securities, petroleum futures, and commodities caused all of these problems, because the ruling class's search for profits has become untethered from an economy of production for human needs.
The migration of capital around the world known as "globalization" seeks the lowest possible wages, resulting in a de-industrialization of the economy of North America and ever sinking real wages for workers here. With the rate of profit falling, American capitalists turned to raiding pension funds until they disappeared; engaging in military adventures, one after the other, to create a market for high-priced armaments; and constantly slashing corporate taxes that once paid for such waste. The loss of the higher wages that once were used to buy peace from US workers, led the ruling class to encourage workers to draw out any reserves they had accumulated in their homes to maintain a lifestyle their income no longer supported; then encouraged them to go into debt to maintain that lifestyle, when there was nothing else left. The result of all this was ever mounting debt, among working people, the government, and in the form of a vast foreign exchange imbalance—and still the capitalists sought higher profits through manipulation of the financial markets, until the entire economy had become a game of smoke and mirrors.
These problems were magnified by de-regulation, which allowed wealth to be increasingly concentrated in the hands of a few massive corporations. Further de-regulation allowed huge amounts of capital to be wielded by `hedge funds', whose involvement in markets that were designed for human needs (real estate, petroleum, and commodities) caused the wild swings we've recently witnessed.
Capitalism is an unstable system that has no interest in producing the necessities and luxuries that improve people's lives. It is only concerned with the pursuit of profit and the rate of profit falls as the involvement of human workers drops relative to capital in production, in the form of automation. Rather than investing profits back into production, where the profit rate is lower, modern capitalism manipulates the prices of stocks, commodity futures, and real estate in order to reap higher rates of profit; but in doing so it turns from a system for the creation of products to a system that is little more than fraud, theft, and extortion. These are signs that capitalism has lived beyond its time and now must be replaced by socialism, where the driving concern is the quality of life of the vast majority of the populace, who are the working class.
Reflections Without Borders, February 2009
What do we believe is the cause of the current economic crisis? The housing meltdown, the soaring gas prices we saw in the fall, and the sky-rocketing food prices we saw over the summer all have the same cause: speculation. Speculation in real estate securities, petroleum futures, and commodities caused all of these problems, because the ruling class's search for profits has become untethered from an economy of production for human needs.
The migration of capital around the world known as "globalization" seeks the lowest possible wages, resulting in a de-industrialization of the economy of North America and ever sinking real wages for workers here. With the rate of profit falling, American capitalists turned to raiding pension funds until they disappeared; engaging in military adventures, one after the other, to create a market for high-priced armaments; and constantly slashing corporate taxes that once paid for such waste. The loss of the higher wages that once were used to buy peace from US workers, led the ruling class to encourage workers to draw out any reserves they had accumulated in their homes to maintain a lifestyle their income no longer supported; then encouraged them to go into debt to maintain that lifestyle, when there was nothing else left. The result of all this was ever mounting debt, among working people, the government, and in the form of a vast foreign exchange imbalance—and still the capitalists sought higher profits through manipulation of the financial markets, until the entire economy had become a game of smoke and mirrors.
These problems were magnified by de-regulation, which allowed wealth to be increasingly concentrated in the hands of a few massive corporations. Further de-regulation allowed huge amounts of capital to be wielded by `hedge funds', whose involvement in markets that were designed for human needs (real estate, petroleum, and commodities) caused the wild swings we've recently witnessed.
Capitalism is an unstable system that has no interest in producing the necessities and luxuries that improve people's lives. It is only concerned with the pursuit of profit and the rate of profit falls as the involvement of human workers drops relative to capital in production, in the form of automation. Rather than investing profits back into production, where the profit rate is lower, modern capitalism manipulates the prices of stocks, commodity futures, and real estate in order to reap higher rates of profit; but in doing so it turns from a system for the creation of products to a system that is little more than fraud, theft, and extortion. These are signs that capitalism has lived beyond its time and now must be replaced by socialism, where the driving concern is the quality of life of the vast majority of the populace, who are the working class.