“We believe in a future,” Kamala Harris’s campaign has announced,
where every person has the opportunity not just to get by, but to get ahead. … But Donald Trump wants to take our country backward. We are not going back.
Leave aside for now that Harris belongs to an administration that continues Donald Trump’s policies on immigration, China, tariffs, and Israel, and that has codified a portion of the Trump-era tax-break giveaways to the rulers. Harris is presenting herself as an alternative to Trump. Like Biden, whose legacy she represents, she’s offering herself as a lesser evil. It’s a pitch built on the promise of a new era for the U.S. economy: opportunity, equality, progress. The left wing of the party, like Bernie, AOC, Omar Ilhan, Summer Lee, and Ayanna Pressley, are offering their support. Trump, for his part, says America is on a precipice that only he can save us from: “Our economy is going to hell.” He’ll stop inflation and reverse the flight of production to other countries that’s been the norm since the 1970s.
Both campaigns are pitched to win support, and money, from the ruling class. They are offering competing visions of how to return the economy to “normal” after the emergency of the pandemic crisis.
But “normal” is a crisis. The campaigns are funded by a ruling class trapped inside a global economy that’s struggled to grow and return profits for decades. That class’s hunt for profits, amid deep, decades-old contradictions of capitalism, keeps on fueling the danger of financial crisis — the recent market plunge is a sign of that danger — and ever-sharper imperialist conflicts. All this is happening on a planet whose burning is speeding up. That’s the “order” Trump and Harris want to preserve.
The economic situation shows there is no lesser evil. Both candidates are funded by and serve the ruling rich. Neither of their promises can solve the violent crises facing capitalism, because those crises are baked into the system they’re trying to save. We don’t just need an alternative to these candidates. We need to overthrow capitalism — and for that, we’ll need a party of our class, for our class, to rid ourselves of the planet-killing “order” and the people who get rich from it.
Capital Emerges from the Pandemic Crash
The U.S. economy is exiting the pandemic emergency.
The pandemic crisis was the most serious since the financial crash of 2008. In response, both parties scrambled to roll out emergency “big government” spending measures to keep the economy afloat. Trump started a policy of sending stimulus checks, a program that Biden continued and expanded, adding up to a whopping $814 billion. Biden followed these up with spending programs to address infrastructure, among other things. The goal wasn’t just to reopen and rebuild the U.S.economy; it was, centrally, an imperialist play to increase U.S.capacity to compete with China’s global production powerhouse. Otherwise, warned Biden, China will “eat our lunch.” (In a minute, we’ll have to talk a lot more about China and the imperialist jostling for position.)
These emergency measures, though, brought with them a whole host of problems. When the U.S.economy came roaring back, supply chains started to buckle and break. For decades the economy had been transitioning to a “just in time” model of production, reducing the stores of commodities in warehouses or at factories to make delivery more “flexible,” or less wasteful and faster. But this also meant more fragile supply lines, which snarled across the globe, leading to huge delays, disruptions, and lost profits as goods sat in warehouses or on ships. That helped supercharge inflation, driving up prices. At the same time, corporations drove up their prices in order to price gouge, likewise helping drive inflation to a 40-year high.
But the working class also began to remember its power and to flex its muscles. With bosses needing more workers, unemployment low, and bank accounts flush with stimulus checks and expanded unemployment benefits, workers could be more picky about what jobs they chose, and which they’d quit. They began to organize and strike more. A new generation of young people, organizing in historic campaigns like at Amazon and Starbucks, forged a “Generation U” — for union. Some of the most spectacular signs of power in the labor movement came from the UAW “stand-up strike” and the big gains it won. This meant a shift in the balance of class power in favor of workers. The capitalist class was forced to raise wages, and politicians like Biden were forced to appeal more to unions and workers.
The Federal Reserve increasingly stepped in to attack inflation through monetary policy: raising interest rates to make it more expensive for people and corporations to borrow money, so as to “cool” the economy. The aim was explicitly class war: the Fed said a key source of inflation was higher wages — despite all the evidence that inflation was being driven by supply-line problems and price gouging in the crisis economy. Higher interest rates, the Fed pronounced, would tamp down borrowing from corporations and banks and drive up unemployment, and that would mean bosses could lower wages or attack unions more easily. So they drove up interest rates to historic highs, and with them, mortgage rates and borrowing costs, not just for businesses but for the masses too.
For a long time, it was not at all clear that inflation would come under control; indeed, it seemed that the Fed’s monetary policy was not working very well. Still, in June 2022, the Consumer Price Index — tracking the increase in prices on basic consumer goods — was as high as 9.1 percent; today, it’s fallen to about 3 percent.
(But we’re seeing now how poorly the Fed has grappled with the problems it has faced. Interest rates have risen while inflation, even though it’s declining, remains “sticky” or still stubbornly high, and well beyond the Fed’s goal of 2 percent. Just a few days ago a sudden drop in job numbers has caught the Fed unawares, sparking panic among the ruling class and their spokespeople that the Fed has misplayed its hand entirely.)
The ruling class’s main spokespeople — Biden, The Wall Street Journal, Financial Times, The New York Times — had been celebrating for months that inflation seems to be slowing, and that the economy would achieve a “soft landing,” that is, avoid a recession. The recent market upheaval is a sign that this is still far from certain. But the World Bank is declaring a new “stability.”
And yet with all this came bewilderment from the ruling class’s pundits. The mass of people in the U.S. are still deeply critical of the economy. But why, when it’s so clearly excellent?
What’s eluded the pundits is the economic reality of working-class and poor people. Inflation might be declining, but prices are up 19.5 percent from 2019. Wages have increased, but they’re being cut away by inflation, and are now lower than they were four years ago. Wage growth appears to have stalled overall, while the cost of childcare and healthcare stay sky high. We’ve seen a sharp ramp-up of inequality, especially in the gap between the richest white people and communities of color. Buying a house is now impossible for many in the working class: median house prices are up 28 percent since 2020. And Michael Roberts points out that the new jobs being created now are overwhelmingly part-time. More and more, “getting by” means multiple jobs. Meanwhile, profits spiked, from around 12 percent in 2020 to 19 percent in 2021 alone; the wealth of the richest of the bourgeoisie soared during the pandemic years.
But fears are growing that it’s far too early to declare success, even for the rich. The U.S.economy continues to flash key recession signals. The economy, writes the Financial Times,
does not slow in a linear manner. The loss of economic momentum, which has been happening for longer, and is deeper, than many seem to appreciate can become a self-reinforcing spiral. Joblessness, delinquencies and bankruptcies can suddenly spike, and a market priced for a soft-landing could quickly unwind.
The recent stock-market plunge is fueling fears that a “soft landing” hasn’t happened at all — we’re still careening through the air.
The Ruling Class Demands a Return to “Normal,” and Harris and Trump Are Competing to Help Them
With Wall Street’s anticipation about the Fed cutting interest rates —which filled the pages of The Wall Street Journal — we glimpse a ruling class that’s anticipating a “return to normal”: cheap borrowing, low inflation, a weaker working class.
The post-pandemic economic surge is beginning to “run out of steam”; unemployment is starting to tick up; in July we saw reports of greatly slowed job growth. That means workers are beginning to lose some of the conditions — like a tight labor market and low unemployment — that gave them more leverage over bosses and helped spark the new surge in strike and union activity. All this, then, gives the ruling class more room to maneuver with unions and organizing workers. And as inflation decreases, the Federal Reserve appears on the brink of lowering interest rates once again. Doing that makes it cheaper to borrow money, and so helps finance and corporate capital expand.
Those are the conditions — and the ruling-class demands — being inherited by both Harris and Trump. Indeed, their campaigns are funded by the millions and millions of dollars given to them by the ruling rich during the most expensive election cycle in history.
But Harris and Trump represent (though there’s some overlap) competing “wings” of the ruling class.
Harris inherits Biden’s mantle, but so far seems more appealing to Silicon Valley capitalists than Biden, probably because of her connection to them as a California politician (and perhaps promises to be less aggressive with regulation than Biden; she’s anticipated to be more business friendly). Wall Street, too, largely sees Harris as its darling; the Financial Times reports that Wall Street donors played a crucial role in forcing Biden from the race and ensuring the anointment of Harris as heir. Trump, for his part, has found a footing in some Silicon Valley dissidents like Elon Musk, from segments of finance capital, and from the real estate, energy, and entertainment industries, as well as from domestic production firms like U.S. Steel.
And they offer different strategies for how to return the economy to a stable, secure footing for profit making.
Harris is inheriting Biden’s version of economic populism, which had promised to “build back better” (with limited results). “Something quite radical will have to shift,” writes the Financial Times, “if … Bidenomics fails to survive the departure of Biden.” She’ll doubtless continue Biden’s targeted tariffs on China — a legacy of Trump — as well as subsidies for green energy, especially to help car manufacturers compete with China in the EV market. She’s calling for paid family leave, and says she’ll tackle gendered wage differences — continuing the approach of concessions from Biden to try to tamp down class struggle and its disruptions, like strikes. Those kinds of concessions seem to be a key part of Harris’s strategy to protect and preserve profit making.
But the Biden heritage carries huge dangers. His championing of big spending helped drive inflation; his populist messaging about increasing taxes on Wall Street alienated exactly the big capitalists who helped force him out and anointed Harris. She’s balancing, in other words, between appeasing her donors and the ruling class’s interests while keeping a lid on the struggles of workers and the oppressed, which could be radically disruptive to a still-fragile economy.
The same is true of Trump’s economic promises. He’s calling for the kind of sweeping tariffs — against China especially — that marked his first term (and which Biden inherited and tweaked), a protectionist policy that’s a pitch to domestic corporations and a populist play for a sector of the working class. And he’s hinting at a potentially aggressive stance toward the Federal Reserve and its interest rate policy, perhaps even pushing for stronger executive control of it. But all these moves spell out huge dangers, too. Tampering with the Fed could very well threaten market stability for the ruling class, but so could instituting big tariffs, which could supercharge inflation by opening up the sluices of spending — dangers, no doubt, that are helping drive sectors of Wall Street to Harris.
The strategies differ, but the goal is the same: the return to a “normal” economy that safely secures the profits of the ruling class.
This is exactly the problem.
“Normal” Is Nothing Short of a Crisis
The capitalists are right: the world economy is being returned to “normal.” But the normal is a crisis.
Or, more accurately, the “normal” economy exists at the intersection of two intertwining, inseparable crises, combining as a catastrophe for the working class and the planet.
The U.S. “real GDP,” or “gross domestic product,” is a key measure that capitalist economists use to gauge the overall economic activity and “health” of a country. Right now it’s growing at about 2.8 percent. (By comparison, in the late 1960s, GDP growth was in the 6 percent zone.)
But the International Monetary Fund (IMF) — one of the major international economic bodies of the globe, dominated by the imperialists — predicts a sobering slowdown.
Put aside for now that we’re far from clear of the danger of a recession. Even if the “soft landing” works, in just one year, 2025, the IMF predicts a real GDP growth rate of about 1.9 percent, and it seems to see a similar growth pattern for the medium term. Average real GDP growth in the U.S. in the 1980s was 3.36 percent; in the 1990s, it ticked up to 3.45 percent; in the first decade of the 2000s (which included a major financial crisis), 1.78 percent, ticking back up to 2.36 percent from 2011 to 2019. In other words, the IMF is predicting U.S. capital will sputter backwards to the kind of slow growth of the early 2000s. For the ruling class — for them, constant growth is always the goal (regardless of the ecological or human costs) — this is alarming.
It’s not just the U.S.; the slowdown is global. The IMF writes in its recent report:
The global economy, while demonstrating remarkable resilience to recent shocks, faces a sobering reality: its medium-term growth prospects have consistently been revised downward since the 2008–09 global financial crisis. This reflects a downward trend in actual global growth, with the slowdown starting in the early 2000s in advanced economies and after the crisis in emerging markets and developing economies.
But country to country the problem is deeply unevenly distributed; the biggest economy in the Eurozone, Germany, is experiencing an outright recession; Japan as well is experiencing something close to a “crash landing.”
And economists are predicting widening gaps between them and the “developing” world from which they extract great amounts of wealth. “This year,” reports the World Bank, “one in four developing economies is expected to remain poorer than it was on the eve of the pandemic in 2019. This proportion is twice as high for countries in fragile- and conflict-affected situations.”
In important part, this is because of the flow of wealth from those countries into the imperialist core, and because the capitalist of that core lends money to the “developing” world while forces major structural changes on those countries to ensure they pay off their debt, like pushing for austerity in public services, the crushing of unions, and so on — punishing the poor and working class most of all. Indermit Gill, chief economist of the World Bank, another of the globe’s major imperialist financial institutions, notes this punishing reality even as he pushes for the kind of austerity that the World Bank and IMF specialize in:
Four years after the upheavals caused by the pandemic, conflicts, inflation, and monetary tightening, it appears that global economic growth is steadying. … However, growth is at lower levels than before 2020. Prospects for the world’s poorest economies are even more worrisome. They face punishing levels of debt service, constricting trade possibilities, and costly climate events. Developing economies will have to find ways to encourage private investment, reduce public debt, and improve education, health, and basic infrastructure.
This slowing capitalist growth is not an anomaly. It’s the result of the twin, grinding, and long-term crises of the capitalist economy, faced by every U.S.president for decades — in which the surge in post-pandemic profits figures as only a blip.
The first is the decline in profitability.
Marx writes in Capital that in capitalism, the rate of profit — the rate of return on capitalist investment — tends to fall. That’s because profit only comes from human labor. Capitalists, though — in their endless competition with each other — try to ramp up the productivity of labor. That makes it cheaper to produce a commodity, and can temporarily ramp up profits too, while also reducing the amount of labor needed for production. That’s the problem: capitalism tends to rely more and more on labor-saving techniques and technology, but relatively less on human labor. But as competition drives other firms to adopt that same approach, the rate of profit tends to take a hit; the amount of profit-producing human labor relatively decreases.
(For Marx, we have to remember, this is not a doomsday prediction, and not a “law of nature.” The ruling class and the state combat this fall in the rate of profit however they can; the tendency and its results are determined, ultimately, by the class struggle and the balance of class forces. Capitalism doesn’t have an “expiration date,” and will not die a natural death — it’ll have to be killed.)
We’re seeing this struggling profit rate operating deep within the world economy now, as Michael Roberts (with Carchedi and others) has been arguing (see, for example, this, this, and this).
This crisis of profitability can’t be separated from the crisis of productivity. The rate of productivity growth has been tepid at best, and at times has completely stalled. In other words, the emergence of truly effective labor-saving technologies has slowed to a near halt, as I’ve written about at some length. There is simply less investment in producing such technologies, a feedback loop between the crisis of productivity and that of profitability.
The rate of productivity growth in the U.S. slowed profoundly after the 1970s; by 2000 or so, it all but stopped. Even the apparently huge advances in technology in the last 30 years have failed to reverse the trend. The rise of personal computers and the internet in the 1990s briefly buoyed the rate of profit and productivity growth, but only for a short time.
Even the new, much-lauded surge in AI investment seems not to have made a significant dent on productivity growth — in part, perhaps, because of how capital-intensive, or time- and cost-intensive, such technology is to create and run, and where and how it can be applied. On the one hand, this seems odd; the most profitable stocks right now are those in the “Magnificent Seven,” stocks that traffic in the new technologies. Nvidia, a pioneer of the hardware needed for AI, is now the most valuable company in the world. On the other hand, this seems not to be translating to new leaps in productivity that could overcome capitalism’s dual crises. Investment in new infrastructure — “capital expenditures,” or capex — have hardly ticked up recently (it’s an imperfect, indirect measurement, to be sure, but a helpful initial indication). From 2022 to 2024 there was a surge in capex investment, with rates as high as those of the 1960s. And yet from 2023 to 2024 — as the AI technologies have become more entrenched — that expenditure collapsed again, in a return to the anemia of the 1980s and 2010s.
Actually solving these twin crises of capitalism usually means massive orgies of destruction. Take, for example, the last huge leap in productivity and in profitability in global capitalism — the “golden age” of the 1940s–1950s in the U.S.
These came after a period of sustained destruction: a world war, a Great Depression, another world war. After huge portions of infrastructure like cities and factories were destroyed (and huge portions of human life exterminated), and after large chunks of the economy went under, surviving monopoly firms could buy up defunct firms and infrastructure on the cheap. They could concentrate and centralize capital more efficiently, and invest in new technologies to rebuild the world. Add to this that the U.S. government replaced huge amounts of machinery in factories — installing the newest, most productive models at no cost to companies like Ford — to build its death machines, models that the capitalists then kept and converted to civilian production when the war was over. Capitalism’s history is written in letters of blood and fire; its future is surrounded with smoke and gore.
Harris and Trump have no real answers to the fundamental crises of capital which are fundamental to the global economy. Harris’s promises, echoed by the left wing of the Democratic Party, don’t change that reality. But those crises carry with them huge dangers.
In a Reality of Crisis, Only We Can Save Us
These twin, long crises of capitalism — Scylla and Charybdis — are driving the dynamic, shifting reality that Harris and Trump find themselves in. They both face, in other words, the fundamental contradictions of the global economy.
Those crises intensify the threat of much more acute crises. The first is the danger of the U.S. economy slowing into recession while inflation is still high. If this happens, either new president will be faced with unstable prospects. Large public spending to address unemployment or sluggish spending would be extremely dangerous since it could spike inflation. Austerity, like cutting public spending to reduce taxes, could embolden workers and oppressed people to fight back — we’ve been becoming bolder and more confident over the last few years of struggle in the streets and at work.
Another danger looming: a sudden financial crisis. With few very profitable outlets for investment, firms turn to the stock market and “fictitious capital,” to try to ramp up their earnings, and this leads to investment bubbles. The surge in the cost of tech stocks — as a result of a frenzy to invest in AI — may be one such bubble, or lead to one, though it’s too soon to tell; already we’re seeing a partial collapse of their value after a glut of money poured into them recently. There are also major weaknesses in the banking system, coming from emerging forms of private equity. Increasingly, private equity firms are implicating the regional bank system in a network of debt that threatens a full-blown financial crisis; we’ve seen rumblings of instability in the midsize banking system already in the last year or so. Such a crisis could cause the collapse of the kind of “zombie” companies that have long been limping along under huge burdens of debt.
And the long-term crises of capitalism lead the world’s ruling classes into other fierce contradictions.
With low growth on the horizon, the IMF is calling on the rulers to enact more social austerity, the cutting of funding to public programs to reduce debt for “fiscal health.” They’re suggesting this due to the danger of the large amounts of debt-funded public spending in countries like the U.S.: with another crisis of inflation, for instance, and with rising interest rates, the repayment of such debts becomes far more expensive and problematic for a country. In other words, the economic situation makes the big spending programs of “Bidenomics” far less tenable — while putting more aggressive class war on the working class on the horizon.
And we’re seeing again and again the confirmation that we’re living in a time of war. The unresolved, global economic crises are fuel to that fire: with low profitability, the ruling rich of the imperialist countries cast worried looks around the globe. Where will new zones of investment be opened? And who is threatening our already thin growth? The jostling for position, the “war of maneuver,” between NATO and Russia has already sparked a hot war on Europe’s doorstep, the biggest since World War II.
The U.S. is constantly maneuvering to outflank and contain China. Meanwhile, China’s explosive entry into the electric vehicle market has terrified the U.S. capitalists and politicians. The constant maneuvering of the imperial war machine is part of a struggle between two countries that are preparing for what is seen, increasingly, as inevitable war.
Israel’s genocide in Gaza showcases how acute, and horrifying, these tensions become. The U.S. ruling class and its politicians are driven to support Israel for its imperialist interests in the region — to secure what it sees as stability in a Middle East key for the extraction and distribution of oil and various key elements. But Israel’s violent occupation of Palestine has led not only to its current genocidal campaign there, but also the very real prospect of unleashing a regional war, which would throw the Middle East into even more chaos, snarl global supply chains of goods like oil, and so on. In other words, the very crises of capitalism fuel ever new, ever more violent ruptures in its rule.
And amid all this: the growing reality of climate catastrophe, the result of a system built on the push for endless growth and profit extraction.
The Democratic Party has long proclaimed a capitalist solution for climate change: a “green capitalism.” This dream is floundering. The reason: it just isn’t very profitable, so it can’t amass sufficient amounts of investment. Indeed, even if Harris, in some alternate world, championed a big spending program like the Green New Deal, embraced by the left wing of her party — this is, to put it mildly, a long shot — the danger would be enormous of ramping up inflation once again!
The imperialist drive to secure profits across the globe, to ramp up and secure profits and consumption, is only accelerating the climate catastrophe. Indeed, the biggest polluter in the history of the world is the U.S. military machine, which must expend more and more energy — and pollution — to secure the rulers’ interests. Imperialism is the highest stage of capitalism, and climate catastrophe is the highest stage of imperialism.
Even as the economy stabilizes, more acute class war stalks behind the scenery, waiting for its chance to reenter the play. The dynamics of the economic situation promise to fuel the Far Right. That is, the more that the Democratic Party champions ideas that can’t fix the basic contradictions of capitalism, the more the Far Right can appeal to the squeezed small business owners and sectors of the white working class, to marshall them behind the interests of big business for its own racist, nationalist, transphobic “solutions.” But at the same time, workers and youth see unions and socialism more favorably than at any time in generations, and the slaughter of Palestinians has been driving young people and workers into the streets and even on strike. They are exiting the pandemic economic crisis more aware of their power over the economy.
Can we stop the churning machine of capitalism? The answer depends entirely on us, not on the millionaires running for office: it depends on how well we organize and prepare ourselves for the task.
Trump and Harris want to secure profit making, each in their own way. But there is no lesser evil on a burning planet. We need to end the system they both want to protect. No capitalist party, running on the money of the rich, can do that.
The Democratic Party in particular — through Harris, and with the help of Bernie Sanders and the Squad — want to marshal us into line behind the rich. We’ll need to slash at the chains dragging us behind the ruling class’s chariot. That means building our own party, for and of the working class, fighting for ourselves and for socialism. It’s time to rid ourselves of our taskmasters once and for all.
Originally Published: 2024-08-08 13:04:58
Source link