The Crisis of Capitalism

The present economic crisis is not only a periodic crisis in the economy but also a crisis of capitalism itself. For the past few weeks and months, we have been told that it is a credit crisis – which it is – but it is also a crisis in other sectors of the economy, as seen by the huge losses in auto, airline, construction and other industries. In the past, the financial industry represented only about 2% of the US economy; today it is around 40%. Given this situation, the collapse of the financial industry has a much greater impact than it has in the past.

The only solutions we are being presented with are solutions that fall within the framework of the capitalist system. The politicians talk about bailouts and rescue plans that ask working people to assume the bad debt while bailing out the wealthiest layer of society. This allows the wealthy to make additional fortunes using the same methods that got us into this crisis in the first place. Repeating the same actions and expecting different results is a well-accepted definition of insanity.

Europe is doing the bailouts differently, because it has always had a stronger worker’s movement than does the US which has fought for a bigger portion of the pie for the European working class. They are nationalizing many of the financial institutions or requiring that the public get a return as shares of the companies. That means that if the financial institutions ever return to profitability, the profit will go to the government, not to just the capitalist classes in those countries.

As the crisis deepens, the US, too, is thinking that it may need to nationalize all or part of some banks and financial institutions. But isn’t nationalization of industry equivalent to Socialism? Well, not really. Nationalization under a capitalist government would be used to support the capitalists, the same people who rail against socialism, even as they clamor for it for themselves. For nationalization to work for the majority, it needs to be administered by a worker’s government that will use the profits for the good of the working people.

The US is the wealthiest and most powerful country in the world and the one with the biggest disparity between the rich and the poor. In the US, the wealthiest 400 people are wealthier than the bottom 150 million people. During the past 8 years, these top 400 have increased their wealth by about $700 billion, the exact amount of the bailout. Maybe they should bailout their ailing financial industry instead of us; they will still have more money than they can count in several lifetimes. But instead, it is our tax dollars that are being used. They don’t even pay much in taxes themselves and have been the recipient of the bulk of the tax givebacks. As New York Times tax columnist David Cay Johnston explained in his book, “Perfectly Legal,” taxes from corporate profits used to account for 45% of the countries tax revenue; today it accounts for only 7.5%. Yet the corporations take advantage of the services provided by our taxes, such as roads to transport their goods, education to obtain qualified workers, and the military to defend their interests overseas. We have a government of the rich, by the rich, and for the rich. We need a government of, by, and for the working people.

For the past twenty years or so, under both Democratic and Republican administrations, there has been an orgy of deregulation that allowed the corporations and financial institution to play loose and gamble away our money and security. There has been deregulation of the financial industry, the media, the utilities and of other necessary services and industries. We were told it would bring prices down due to competition. Instead, prices went up, safety and service went down, and competition decreased as companies took over their competitors. Thanks to deregulation, our food, prescription drugs, and workplaces are no longer safe.

It is time we turned this situation around. Even the corporate media is now musing that a socialist solution is being used to bailout capitalism. We should start talking about how socialism can and should be used to make a better life for the vast majority--the working class. We already have many socialized institutions, such as public schools, the fire department, social security, and other government sponsored programs. Why not socialize healthcare, as do most other advanced industrial countries? Why not socialize public education through college, as is the case in most other advanced countries? Instead, both Democratic and Republican administrations have pushed for privatization of almost everything from jails to the military to social security. These are plans to make the rich richer and put working people at the mercy of the same type of capitalist schemes that created the present financial crisis.

It is time for the left to start talking about socialism as the solution to the present crisis. Let’s build a society that puts human needs before profit.

One aspect of people’s lives in the US in recent times is the fact that we are under increasing stress. People go bankrupt when they get very sick, even with “good” medical insurance. Social programs and safety nets have been cut. People’s homes are being foreclosed. Retirement has moved from company sponsored guaranteed programs to Individual Retirement Accounts and 401K plans, which increase people’s financial insecurity. Perhaps these are the reasons that the U.S. has the highest rate of mental illness of 26 countries recently studied.

Given this situation, perhaps one way to talk about socialism is to talk about relationships between people and between ourselves and the earth. I strongly believe that what some people consider human nature is actually social conditioning. Today we live in our own isolated houses, travel in our isolated cars, and are responsible for our own problems, even when they are not of our own making such as with the present economic crisis. Despite the fact that pre-class societies were technologically backward, human relationships were more functional then they are today. In pre-class societies, no person was considered superior to others; each one was valued for what they could contribute to the community. In such societies, crime was rare and seen as a mental illness. The family was defined much more broadly, and the idea of the whole community raising a child was accepted. In fact, in some of these societies, the name for an adult male and for a father were the same, as was the name for an adult female and a mother.

As we point out what is wrong with capitalism, we should also project the image of what could be. We could build a world where the resources of society were used not for the profits of a few but for the needs of the many. There would be universal healthcare, a secure retirement, adequate housing, food, and other necessities for all. In such a society, humans could reach their full potential. There would be no need for us to be divided by race, gender, or sexual orientation. Instead of fearing each other, we could enjoy the diversity of humankind. There would be no need for war. A good education would be available to all, not just the rich, allowing us a better chance to solve pressing problems like global warming and peak oil.

Today, capitalism not only threatens the world with economic disaster, nuclear weapons and war but also stands in the way of seriously addressing the problems that threaten our very existence. There are only two paths forward: socialism or barbarism. It’s time to engage in the fight for socialism.

In Solidarity,
Joe Lombardo