by Alan Weinerman
The most critical issue raised by the current world capitalist meltdown has been almost totally ignored by the liberal/left media. Is the systemic crisis simply due to Republican greed and recklessness, or are we entering the final breakdown of the system of private ownership of the means of production and finance? Marx long ago predicted a terminal crisis would be inevitable due to the basic contradictions of capitalism. The crisis has of course been exacerbated by the Republicans, who represent the most divorced-from-reality sector of the “ruling class.” But their policies have often been abetted by Banker Democrats like Summers and Geithner, who are hard at work bending Obama’s ear.
In this article I’ll try to clarify what Marx meant by the basic economic contradiction of capitalism. Marx did not predict that capitalism is doomed because it is an evil system; he made no such value judgment. Rather, he proved that there are contradictory mechanisms inherent in the capitalist economic structure which cannot help but lead to insoluble crises.
Just take a look out the window. Everyone seems to agree that the recovery of the system depends on consumers spending giant gobs of money at the same time that millions are becoming jobless, homeless, and altogether lousy credit risks. This contradiction is not just an unhappy coincidence; it is the inevitable result of the first contradiction of capitalism, generally known as the Private Expropriation of Socially Produced Wealth. People work collectively in vast economic enterprises to produce what society needs to survive, but the proceeds of that labor are privately expropriated. The owners of the major means of production make their decisions in order to maximize their profit. This is fine with the stockholders, but in the long run it contradicts the aggregate interests of the population. The owners cannot pay the workers the full value of what they produce, or there would be no profit. Since the workers, taken as a whole, cannot buy back all they produce, the capitalists need to continually expand, to capture foreign markets, resources, and labor power.
Liberals would like to think that capitalists can be convinced to be nice and not exploit underdeveloped nations, but according to Dialectical Materialist (Marxist) theory, the capitalists can’t help themselves. Those who didn’t exploit went broke long ago. We’re all aware of the many ways capitalists, aided by government collusion, have ingeniously exploited labor through outsourcing, busting unions, deregulation, privatization, tax breaks for moving overseas, turning workers into part-time “contractors” with no benefits or protection, and so forth. Modern corporate charters even conveniently make it illegal to take into account anything but maximizing profits, or their shareholders can sue them.
Everything is done by Capital to lower the buying power of working people in order to increase short-term profits, but these are the very same workers the system depends on to consume. For those whose wages are too low, we have credit cards. Can’t afford a house, we’ll give you a sub-prime mortgage, then bundle it and speculate upon it in the market.
In a system where labor is systematically undermined, speculation becomes a mainstay of the economy. Vast sectors of the economy become a giant Ponzi scheme. Madoff was a pioneer. How the basic economic contradiction is directly related to all the problems of budget deficits, trade deficits, deflation, inflation, housing bubbles, stock bubbles, and banking bubbles should be at the center of all the discussions of the current crisis.
Read Part 2 here
Alan Weinerman is a political psychologist living in San Francisco and an original member of the CCDS.
Comments