Is Capitalism in Crisis, or Are We?
By Zaher Baher
October 2015
Capitalism and its media have always tried to confuse and deceive us by presenting reactionary movements, events, and experiments as if they were revolutionary, when in fact they benefit the system rather than us.
For almost a century media outlets tried to sell state capitalism to us as socialism, calling Russian bourgeois society a socialist society. For about forty years they tried to tell us that what happened in Iran was a revolution. And recently they tried hard to convince us that what happened in some of the Arab countries was the “Arab Spring” or “Arab Revolution”. The same applies with regard to economic crises. For more than 150 years the media outlets have told us that economic crises were crises of capitalism, as if capitalists were the ones who had to pay the price for them. Just so, we are to think today’s economic crisis has nothing to do with us and is merely business is as usual.
Many of us cannot analyse things independently or think freely. The media influence us and shape much of our thinking on economic, political, and social issues, as do the celebrities and academics who comment on them.
What is an economic crisis?
Many economists believe the current economic crisis is the worst the world has seen since the Great Depression of 1930s.
The Oxford English Dictionary defines economic crisis as “a situation in which the economy of a country experiences a sudden downturn brought on by a financial crisis. An economy facing an economic crisis will most likely experience a falling GDP, a drying up of liquidity and rising/falling prices due to inflation/deflation. An economic crisis can take the form of a recession or a depression.” Google defines it as “a downturn in part of the economic cycle (sometimes referred to as trade cycle or business cycle). The UK definition of a recession is – negative economic growth for two consecutive quarters..”
In the nineteenth century Karl Marx considered capitalism to be “an economic system that is inherently crisis-prone. It is driven by forces which cause it to be unstable, anarchic, and self-destructive.” He predicted that in the future the intervals between crises would get shorter and the duration of crises would get longer.
But economic crises, whether they persist for a short or a long time, have never been crises of the capitalist system. They have always been our crises. It was we who paid the price for them. We lost our jobs and our homes. We lost many hard-won achievements, then became ever weaker. But the capitalist system escaped more or less unscathed and indeed emerged even stronger by reorganising itself into new forms and attacking us.
In the Communist Manifesto Marx and Engels said capitalism “has conjured up such gigantic means of production and of exchange, [that] is like the sorcerer, who is no longer able to control the powers of the nether world whom he has called up by his spells.” But has that really happened? Does the sorcerer no longer control the power? When and where in 170 to 180 years have we seen that?
Elsewhere Marx argued that crises “carry the most frightful devastation in their train, and, like an earthquake, cause bourgeois society to shake to its very foundations.” But have we seen bourgeois society shake to its very foundations?
For Marx the causes of the crises are over-production, under-consumption, lack of purchasing power, and disproportion. And the only solution he and Engels offered was democratic economic planning, or socialism: “If the producers as such knew how much the consumers required, if they were to organize production, if they were to share it out amongst themselves, then the fluctuations of competition and its tendency to crisis would be impossible. Carry on production consciously as human beings—not as dispersed atoms without consciousness of your species—and you have overcome all these artificial and untenable antitheses. But as long as you continue to produce in the present unconscious, thoughtless manner, at the mercy of chance…crises will remain; and each successive crisis is bound to become more universal and therefore worse than the preceding one; is bound to impoverish a larger body of small capitalists, and to augment…the numbers of the class who live by labour alone.”
The capitalist system’s chaotic form of production and private ownership undoubtedly contradict the producing workforce. This brings a crisis, which in the end brings disaster to the vast majority of us and concentrates a huge amount of capital in the hands of a tiny minority. But the idea that the crisis is caused by overproduction, resulting in economic stagnation, is questionable for me. Today new technologies can resolve this problem to certain extent. Nowadays any major company can find a huge amount of information within seconds, for any place in the world where they have a branch. With one click, they can work out how many goods that branch has sold, how much profit and loss it sustained, when its boom period was, the number of customers it has, the number of workers it has, the nature of their working conditions, their job performance, and much more. Things have changed greatly since Marx’s day. Companies can gather all such information in a matter of moments. For this reason the crisis is financial rather than involving business and trade, although a financial crisis will always end up an economic crisis.
Marx should not be blamed for the problems in his economic theory. In his time the capitalist system was far weaker than it is today, but the working class movement was more united and stronger. Nor should we look to Marx as a God or a fortune teller to provide us with a doctrine that will be a medicine for our present sickness. Anyone who thinks about Marx this way is not only unfair to him but is merely a parrot, using the brain of somebody who died a long time ago rather than thinking him- or herself.
Our crisis
Whatever the definitions, this economic crisis happened and continues, although the apologetic capitalists repeatedly say there will be no more “bust and slum”.
I am not attempting here to identify the causes of the current crisis but rather to determine the impact of the crisis on the vast majority of us. It is true that here and there a few capitalists, a few companies and banks, were bankrupted or even collapsed, but the system in general has remained intact and safe. Like an earthquake, it came and went, damaging some areas but leaving the rest undamaged.
I am relying only on evidence, on statistics, and on the current economic, political, and social situation. After all,
it was we, not the capitalists, who built this system; it is we who created money, wealth, capital, and everything else. We could live without money or the capitalist system, in a society free of private ownership and power of authority. But we manage and maintain every cell in society while capitalists never without using our power, our workforce alone can even make one simple thing, and carry on their normal life and manage maintaining this system even for a minute. It is we who produce everything, but it is they who benefit. In short, we always hold this system and not the capitalists and elites, so whenever and wherever the system becomes faulty and problematic, we are the ones who will be at a disadvantage and pay the price.
The austerity policy
What has been presented to us as capitalism’s crisis is, in fact, a crisis neither of capitalists nor of the capitalist system. Corporations competed, and some of them collapsed or went bankrupt. The nation-state’s political representatives, the parliamentary system, then imposed austerity on the nation and the citizens. To justify this action, they said the economy was very bad, and that unless serious measures were taken, the entire economy in UK, even on the Continent, would collapse, and then we would lose everything.
Using this justification, they viciously attacked: they privatised, sold off state-owned assets, reduced wages and pensions, sacked workers, slashed benefits, increased working hours, and worsened work conditions; they raised the price of everything, increased the rent, closed down the public services, and forced workers to accept shit jobs while millions went unemployed.
Austerity, as we all know, has brought even more problems: it weakened the unions and working-class movement, it has decreased the corporation tax, increasedcrime, heightened racism and fascism, extended the hospital waiting list, and increased homelessness; evictions and repossessions have soared.
Most of us did not know much about the crisis or did not feel it until the governments imposed the austerity policy. But once it did, the crisis situation that austerity has imposed brings us terrible consequences, and we are the only losers. It stays with us, and it will remain our crisis until we become aware of the situation and understand fully its causes. Unless we organise ourselves and work collectively and rise up and reject the parliamentary system, using direct action to bring the power from the corporations and their political representatives, the government, to a direct democracy, our crisis will continue and worsen.
Unless we become aware, organize, and take action, this system will remain in place, and the economic crisis will persist as well. History has shown us that after every economic crisis the capitalist system became stronger by better organising itself and becoming more efficient. The Great Depression ended not with a revolution but with World War II, from which the capitalist system emerged stronger. Once the war was over, it created wars–small, big, short, and long, civil wars, religious wars, nationalist wars—in so many countries. These wars made the popular movements weaker and the system much stronger.
On 19 January 2015, Oxfam reported that almost half of all global wealth is held by only 1% of the population, having risen from 44% in 2009 to 48% in 2014. Meanwhile the bottom 80% currently own just 5.5%. If current trends continue, the richest 1% will own more than 50% of the world’s wealth by 2016. In 2014 the 85 richest people on the planet have the same wealth as the poorest 50% (3.5 billion people).
The Equality Trust, which campaigns to reduce inequality in the UK, reported that the richest 100 families in Britain in 2008 saw their combined wealth increase by at least £15bn.
In Europe the wealthy, the bankers, and the corporations are getting richer and making ever more profits even as the crisis worsens and makes us poorer. Internationally, the rate of unemployment has increased: in Italy it hit 12.4%, in Portugal 13%, in France 10.5%, in Greece 25.6%, In Ireland 9.7%, in Germany 4.8%, in Spain 22.7%, in the UK 5.4%, and in the US 10.3%. The unemployment rate among young people is much higher: in Greece it is 56%, in Spain 53.5%, in Italy 43.9%, and in Croatia 45.5%. According to Joseph Stieglitz, former chief economist of the World Bank, the unemployment rate among young African Americans between 17 and 20 years old who have graduated from high school but not enrolled in college is over 50%.
A few banks and big companies have been bankrupted or collapsed, but the vast majority have benefited from the current crisis. Their profits have gone up compared to previous years. Walmart’s profit in 2014 was $16.4Bn—an increase of 2% over the previous year. On July 14, 2015, JP Morgan reported that its profits for the first quarter went up by 5.2%. Electronic Arts predicts that its share price will go up by $2.85, twice the profit of last year. Amazon online retailers Luxemburg Unit took £5.3bn sale just from British Internet shoppers that rose by 14%. Apple’s profits for last year increased by 6% to $39.1bn over 2013. Costco’s profit was $20.6bn, IBM’s was $12bn, Microsoft’s was $22.1bn (a 1% increase),Google’s was $14.4bn (an 11% increase in profit), Coca-Cola’s $7.1bn, and Nike’s $2.7bn (up 8%). These are only a few examples among the world’s top corporations, which have seen their profits go up at our expense.
According to a report by the Sunday Times in April 2015, the one thousand wealthiest people in the UK are now worth £547bn, not counting what’s in their bank account. The report says, “The figure has more than doubled since a total of just under £250bn was recorded in 2005, despite the world economy being gripped by a punishing recession over much of the last decade”. The list includes 117 billionaires—up from 104 last year.
None of this should shock or surprise us. When Winston Churchill was in power, the corporation tax rate was 97%. When Margaret Thatcher came to power, it was reduced to 60%, and Labour and then the Conservatives gradually reduced it to 20%. Just recently we learned that UK taxpayers are handing over £93bn a year to businesses in subsidies and tax breaks, a transfer of more than £3,500 from each household. Meanwhile since 2008 the income of ordinary families has gone down by 10%. More than 900,000 people live on food banks, an increase of 38% over last year. The gender pay gap has not closed even after 70 years.
We can see the actual consequences in day-to-day life. More than 1.7 million workers are on zero-hour contracts. Benefits have been reduced or cut. State properties have been sold, along with assets including social housing. The gap between rich and poor has widened. Living standards are lower now than 5 years ago. The home ownership rate has fallen from 70% to 64%, and the number of evictions per day day has climbed to more than 1000. Between July and September 2014 the number of evicted rent payers reached 11,000, and during the same quarter 2,805 mortgage borrowers lost their homes. If life goes on like this, the average UK household will be in debt to the tune of £10,000 by end of 2016. The number of Housing Benefit claimants has gone up by 500,000, and the number of working families claiming Housing Benefits more than doubled between 2009–10 and 2014–15; it now stands at more than 1.1 million. The rate of youth unemployment among ethnic minorities has gone up by 50%. The cost of raising a child, compare to previous years, has increased by £2,000. One in five UK workers earn less than a living wage. It goes on and on. How can anyone say that this is capitalism’s crisis not ours? Or that the crisis is “like an earthquake, cause bourgeois society to shake to its very foundations”?
We do not have to accept this anymore. We need to develop a spirit of defiance and challenge. We can resist orders from elites and their states, and we can fight back, in the belief that we can make changes. To do the job, we need to have the desire to rebel, we need to become conscious of being used and exploited, and we need the mentality of resistance. Then we can freely and loudly say that capitalism is in crisis—but we are not!