Turning the (non-existent) economic corner

Posted on November 24, 2010


(First published March 2010)

We have turned the corner economically.  That is the ongoing claim from politicians, pundits and mainstream media commentators.  It is based on statistics that reveal a minor surge in assessed economic growth.  But, as Federation of Unions of SA general secretary, Dennis George has noted:  “Growth without job creation is meaningless.”

It certainly is for the overwhelming majority of the population, and this is a situation that applies across the world, although not in any uniform manner.  For all the optimistic pronouncements, the global economic crisis continues and there is no sign that it is ending.

There is also no shortage of suggestions as to how the situation may be improved:  everything from shorter working hours to raiding pension funds for developmental investment.  At the root of these suggestions is the acceptance of a system based on competition and the need to accumulate profits in order better to compete.

The modern mantra seems to that greedy, grasping, immoral capitalism has failed and is failing humanity.  It comes from both dedicated supporters and from opponents of the system and tends to be followed by a variety piecemeal “solutions” to immediate crises, all within the existing framework.

But it is the framework — the system itself — that is at fault;  it is a mad, mercenary merry-go-round in which the world is currently trapped. It is a system that has produced surpluses of every basic commodity required by the population of the earth — and the capacity to produce even more massive surpluses and serious crises.  In the process, this competitive frenzy often severely damages the physical and biological environment that sustains life itself.

Marine resources are a classic example.  Vast drift nets, many kilometres long, that are an easier way of snaring huge quantities of fish and other marine life, are loosed on the oceans, killing everything that comes into contact with them.  Some of these nets are never recovered and drift their deadly ways through the seas bearing an ever increasing load of rotting cargo.

There are many other examples, ranging from the destruction of rain forests to the pollution of the Arctic tundra and the poisoning of rivers, lakes and ground water in the name of profit.  Then there is the dumping by industrialised countries of subsidised agricultural and other surpluses onto the world market, a process that kills productive capacity in the developing world.

Over recent years, this situation was exacerbated by massive credit extension that resulted in vast national, corporate and household debt and by the ongoing destructive gambles on currencies, futures and derivatives.  But the underlying problem remains surplus capacity and production; production using ever fewer workers and, therefore, creating fewer paying consumers.

We should learn from history:  the economic crisis the world is now enduring is only the latest — and most severe — in a series extending from 1825.  In 1877, the radical philosopher Frederick Engels wrote:  “Since 1825, when the first general crisis broke out, the whole industrial and commercial world, production and exchange, are thrown out of joint about once every 10 years. Commerce is at a stand-still, the markets are glutted, products accumulate… hard cash disappears, credit vanishes, factories are closed, the mass of the workers are in want…because they have produced too much; bankruptcy follows upon bankruptcy…stagnation lasts for years…”

At that time, this crisis-prone system was salvaged and continued to grow because of the extension into colonies for both raw materials and new markets.  This too, was a fact noted in 1848 by Karl Marx and Engels when they assessed the impact of the new industrial age on the planet and its human inhabitants.  At that time they wrote that the capitalist system of competition and accumulation needed  “a constantly expanding market” and, as a result, “must nestle everywhere, settle everywhere, establish connections everywhere…over the entire surface of the globe”.

That is precisely what happened.  But Marx and Engels were writing at a time when automation was in its infancy;  when the vast extension of credit to bosses, let alone workers, was unthinkable;  when money was largely a means of exchange and not a commodity whose value fluctuated according to gambles placed by currency dealers;  it was a time when steam power was the latest development.  As a result, they never foresaw the impact of that extraordinary invention in terms of productive capacity, the advanced integrated circuit or microchip.

These tiny slivers of silicon affect the lives of almost everyone.  The chip is everywhere, making for more efficient, faster and cheaper communication, retailing and stock control and facilitating more consistent and lower cost production of almost everything we need — or are persuaded to think we need.  Above all, it has radically transformed much of industry, no more so than in motor vehicle manufacturing, where robots now do the work once carried out by hundreds — even thousands — of assembly line workers.

Much more can now be made with much less labour, creating greater surpluses in a diminishing market of buyers.  This makes competition even more intense, causes the crisis to deepen and the suffering of the planet and of billions of people to increase.  However, the flip side of this situation is the potential such productivity offers if properly ordered and organised;  it makes possible, for the first time in history, an egalitarian society;  a truly democratic dispensation that so many people have fought — and died — for over centuries.

From the time of the slave revolt led by Spartacus in Rome to the rebellion by the African slaves of Basra in the 10th Century, the English peasant uprising of 1381 and the Haitian slave rebellion of 1791, the motor force was a demand for equal treatment, for an egalitarian society.  This was well summed up by the English priest and rebel leader, John Ball, who noted in 1381:  “When Adam delved, and Eve span, who was then a gentleman?”

Such fights for liberty and equality of treatment across the centuries and continents are among the many examples that show how false is the argument that people are inherently competitive and avaricious.   However, in every case, these rebellions in the name of a truly equal — democratic — society merely gave rise to more of the same — and sometimes much worse.

Once again, it was Marx and Engels who pinpointed the reason:  scarcity.  They maintained that only when there was sufficient material wealth for all to share could the prospect of a truly democratic — an egalitarian — society be realised;  that only then could the control of the minority — the rulers and bureaucracies who benefit from the system — be rendered impotent and overthrown by the confident assertion of power by the majority.

The material resources for a society free from want and where human potential could be be liberated to the benefit of the planet as a whole have existed for many decades, and still exist today.  More than 100 years ago, the world was already developing, in an imperial-colonial way, into the village it is today.  So it seems patently absurd that more than half the world should go hungry while food is stored or destroyed in order to maintain prices and profitability for the few.

At the same time, because of the pressures of cutthroat competition, productive resources are wasted and destroyed.  Shortages, be it of rice or other food grains or fish are not, with few exceptions, the consequence of “acts of God” or of over-population;  they are the result of people functioning within the present system, a system that has clearly gone beyond its sell-by date.

This is an analysis — an explanation of the ongoing crises the world suffers — and it is essential that we understand fully the problem before leaping onto one or other policy bandwagon.  Given the capacity for over-production and and the brutal competition between companies, regions and countries that underlies the system, we appear to have only two choices:  radically change the system or suffer the barbarity and bloodshed of social unrest and mini-wars, along with a legion of “failed states”.