The dominant media narrative on the American economy is one of a slow but steady recovery from the economic crisis. This narrative became pronounced after September’s jobs report showed the unemployment rate had fallen below 8 percent. Corporations are back to raking in billions in profits, and many of the factories and much of the productive capacity that sat idle in 2009 have been gradually put back into use. The media and the White House insist that the recovery has “taken hold” even if “we have a long way to go.”
While the “Great Recession” officially ended three years ago, as corporate profits rebounded to record highs, there has been little recovery for working people. The economy has remained in a prolonged period of high unemployment, stagnant or declining wages and benefits, and high economic insecurity.
Why have workers here not experienced recovery? The capitalist class has used its record profits to give themselves record bonuses and dish out dividends to their shareholders. They are unsatisfied with profit rates in U.S. production and have invested in production overseas where wages and regulations are even lower. Or they have deliberately withheld investment in order to hold government policymaking hostage, lower taxes and strip the social safety net. (See Page 7 “Capitalists go on strike”)
This shows what sort of recovery they have in mind—one that will not alter the long-term deterioration of living standards for poor and working people. The meager “recovery” so far has already shown this.
High-tech, low pay
This recession has expelled millions of workers—those who have simply given up looking for work—from the labor force altogether. This phenomenon largely explains the decline in the rate of unemployment. The average duration of unemployment remains over 40 weeks. Even with modest job growth, it has not been enough to keep pace with population growth.
Those who are returning to the job market are finding lower overall rates of wages and benefits. Employers are utilizing the large “reserve army of the unemployed” to squeeze workers from every direction. Those with jobs find their hours continually reduced or must do far more work in the same amount of time.
This reality affects even the celebrated manufacturing comeback in traditionally high- wage industries like auto. The growth has been largely in low-wage and anti-union states like South Carolina, which has attracted $4.4 billion in auto-related investment since January 2011. Mississippi likewise throws “incentive” packages in the hundreds of millions at auto manufacturers to open non-union plants with lower wages and meager retirement plans.
The labor market continues to be organized along racist lines, and investment around a geography that omits inner cities. Thus, while economic expansion could be on the way, it would hardly be a solution to the long-term problems of the economy, and would leave far higher rates of unemployment in Black working-class communities in particular.
New technologies continue to eliminate jobs. For example, new steel-making techniques, such as the use of the electric arc furnace, have resulted in “minimills” that use on average 70 percent less labor than the giant blast furnace mills that used to populate the Rust Belt. Similar trends exist in industries from auto to aerospace to shipping.
The big banks and energy corporations are advertising energy as a field where major investment and growth could take place. Indeed, the recent growth in manufacturing has been underpinned by the new “fracking” phenomenon and further exploitation of oil reserves in states like Oklahoma. A Dow Chemical executive recently told the Washington Post that they expect $80 billion in manufacturing-related investment, all on the back of natural gas production. The United States could become the world’s largest oil producer by 2020, yielding a major boost to manufacturing as well.
But the environmental consequences of this “dirty energy” are immense, both for the immediate surrounding areas and for climate change. This is what “development” looks like under capitalism, with the major banks and corporations asking us to sacrifice the long-term existence of our communities and natural environment in exchange for basic employment to survive. Government has not shown the desire or ability to plan and facilitate real investment in “green energy.”
So our current setup means that, in order to create millions more jobs, capitalists must be allowed to further degrade the environment and living standards of workers—truly a deal with the devil.
Boom, bust and revolution
The capitalist economy is characterized by cyclical booms and busts. Each phase of the cycle creates the conditions for the next phase. A booming period of capitalism possesses internal contradictions (typically overproduction) that lead to recession. Likewise, in each recession, the conditions are created for a new period of capitalist prosperity. This is often described like a car engine: A recession “cools down” an “overheated” economy so that, once sufficiently cool, conditions are right for it to start to run smoothly again.
All this might sound fairly painless, but in fact this process reveals the perverse reality of capitalism, that working people must periodically experience the destruction of their livelihood—with all the attendant suffering—so that the super-rich, who create these crises, can figure out how best to make a profit. It is also an absurdity: People want to work, the resources and workplaces exist to employ them, there is lots of work that needs to be done, but they remain unemployed because the capitalists cannot make profits from them at the rate that they require.
The current economic crisis is clearly not a normal business cycle. It was deepened by a major financial crisis, in which the most powerful banks nearly collapsed, along with the country’s entire credit system. Only the intervention of the government in the bank bailout—with taxpayers’ money—stopped this doomsday scenario from playing out.
No crisis in itself and on its own can end capitalism. Only a revolution, which represents another class power—the working class—and reorganizes the economy around a plan to meet human needs, can do that. The capitalist class is working day and night to engineer a “recovery” that strips workers of their remaining social and economic rights, and consolidates their power over society.
There is an urgent need for a different sort of recovery, one in which poor and working people recover from decades of exploitation and declining living standards. That is an altogether different vision of society, one that the Party for Socialism and Liberation is also working day and night to achieve.