The capitalist system may well be suffering the worst crisis in its history. According to George Soros, billionaire investor and frank analyst of the system he defends, the world financial system has in effect disintegrated and there is no possibility of a near-term resolution to the crisis. He believes that the turbulence is in fact worse than during the Great Depression and that the current crisis is equivalent to the collapse of the Soviet Union. As he recently told an audience at Columbia University: “[Capitalism] was placed on life support, and it’s still on life support. There’s no sign that we are anywhere near a bottom.”
Obama called it a “day of reckoning.” Paul Volcker, former Federal Reserve chairman and top adviser to President Barack Obama, told the same audience: “I don’t remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world.”
In 2007 there were a total of three bank failures. Last year there were 25. As of this writing, 13 have failed in the first few weeks of 2009. Massive “too-big-to-fail” banks such as Citigroup and Bank of America may well have to be nationalized after trillions in public funds have failed to shore up the banking sector. The national debt is now over $10 trillion, with interest payments now 19 percent of the debt. The stock market has fallen to 1997 levels.
The U.S. National Home Price Index collapsed 18.2 percent during the final three months of 2008 from the same period a year earlier, the largest drop in its 21-year history. Prices are now at levels not seen since the third quarter of 2003. Hundreds of thousands have lost their homes, and hundreds of thousands more are sure to follow. Of the 52 million American homeowners with mortgages, 13.8 million, or nearly 27 percent, owe more on their loans than their homes are worth. It is as if the information technology and housing booms (bubbles) didn’t even happen – except for the trillions in savings and investments lost by ordinary workers while the billionaires got even richer.
And as if losing 2.3 million jobs in 2008 wasn’t enough – the most since 1945 – nearly 600,000 jobs were cut in January, 68,000 of them a single. “Bloody Monday” ran the headlines, as jobs continue to hemorrhage from the U.S. economy with no end in sight. The list of companies laying off workers is a “who’s who” of corporate America: Caterpillar, Boeing, Pfizer, Sprint Nextel, Home Depot, Starbucks, Intel, Microsoft, Schlumberger, General Motors, Ford, United Airlines, AOL, Target, Brooks Automation, and on and on. Since “Bloody Monday,” hundreds of thousands more have been thrown out of work.
The official unemployment rate is at a recent high of 7.6 percent and is expected to reach 10 percent or higher over the next 12 months. The number of laid-off workers receiving unemployment benefits has reached an all-time high of nearly 5 million, the most since records began in 1967. Last year at this time it was 2.77 million. 11 million U.S. workers are now officially counted as unemployed, a 48 percent jump from a year ago, even before this latest wave of cuts. Some two million jobs are expected to be lost in the coming year, even if Obama’s nearly $800 billion economic stimulus plan manages to create or even merely hold off the tide of losses.
Those losing their jobs are finding it more difficult than ever to find employment. Todd Wilson, an Overland Park, Kansas computer salesman, put it this way: “Anybody who is looking for a job now is feeling an economic tsunami. It feels like all of a sudden, it has just fallen apart.” According to Heidi Shierholz, an economist at the Economic Policy Institute, there are four unemployed workers competing for every available job. “There are literally millions of workers unemployed with no hope of finding a new job. The queue is just too long.” And according to Mid-America Regional Council chief economist Frank Lenk, for every corporate job lost, an average of two other jobs will be lost.
From a “job-loss” boom, during which some 2 million manufacturing jobs were lost, to even more massive layoffs during the current recession, this is the best capitalism has to offer. And all of this when human knowledge, technology, science, and productivity are higher than ever in human history. The effects have been devastating. One city, Elkhart, Indiana, has lost jobs faster than anywhere else in the country, rocketing from an unemployment rate of 4.7 percent just a year ago to over 15 percent today.
No wonder Americans are more worried than ever. Nearly half of those surveyed in a recent poll worry they will lose their job. 80 percent think the country is going in the “wrong direction.” Consumer confidence has plunged in a single year from 76.4 to 25. But behind the statistics are individual workers with families, friends, homes, dreams and hopes for the future. With job openings vanishing, mortgage payments looming, savings evaporating, and credit cards maxed out, the future looks increasingly bleak for millions of American workers. The harsh realities of life under capitalism – the crushing of the “American Dream” beneath an avalanche of debt – has led many to despair.
It therefore comes as no surprise that anger and disgust at the bankers, CEOs and the rich in general is rising. On the same day the 68,000 job losses were announced, it was reported that Citigroup, a major recipient of bailout cash, was going forward with the purchase of a $45 million private jet for its CEOs. Corporate excess has always ruffled the class instincts of working people, but $45 million in public money for a private jet when millions of workers are losing their jobs is going too far.
At the moment, there is a feeling of shock, disbelief, anxiety, fear and depression. But that will not last forever. There is a profound questioning of the very system taking place, and eventually, fear and frustration will be transformed into anger and a desire to take action. Already we see a rise in unionization rates, as workers start to band together to collectively fight the attacks of the bosses. And like a lightning bolt from the clear blue sky, a U.S. factory was occupied for the first time since the 1930s, a time of tremendous turmoil and open battles between the classes.
Even Newsweek declared “We’re All Socialists Now.” And although their understanding of socialism has nothing to do with genuine socialism, that the very idea of socialism is so prominently discussed is indeed a sign of the times – and the dangers facing the capitalist system.
And this is where Barack Obama enters the picture. The capitalist class, represented in government by the Democrats and Republicans, has also had its confidence shaken. They are unsure how best to proceed. Some argue that the market should be allowed to “adjust itself,” while others advocate Keynesian state intervention and a new “New Deal.” But while they may be divided on how best to get the economy moving again, they are unanimous in their defense of the capitalist system as a whole.
Not once will you hear Obama, Bush, Biden, Cheney, the Clintons or the rest raise any doubts about the system itself. They are also well aware that the social consequences of the crisis could spiral out of their control. They have therefore chosen the best man they could find for the job: Barack Obama. He has in turn put together a galaxy of pro-capitalist and imperialist talent to assist him in carrying out his policies. The 44th president’s historic task is clear: to preserve the United States of America as we know it today. That is to say, his role is to defend the U.S. capitalist system in its epoch of imperialist decay.
Obama comes to power at a time of capitalist decline. His task is to preserve a rotting system whose historic task has been exhausted. Capitalism has ceased to play any progressive role for the vast bulk of humanity. It has already served its historical purpose: to lay down the material foundations for socialism. We will build on the technology and productivity of labor achieved by humanity under capitalism in order to build a new society, free of exploitation and based on the common interests of the working class majority. However, the capitalist class will not give up their power and privileges without a fight. This handful of individuals is determined to continue their domination and exploitation of billions of humans around the world. Their system is increasingly incompatible with the continued existence of humanity itself. We can either replace it with socialism on a world scale, or the entire “experiment” of human civilization could be thrown into a very violent and horrific reverse.
Many have sincere illusions in Obama. But ironically, things are set to get even worse under Obama than they were under Bush. Because it is not about this or that individual, but the system he or she defends. On all major policy issues, Obama is not much different than Bush. His foreign policy is a continuation of Bill Clinton’s; a more subtle approach that attempts more diplomacy before bringing out the “big stick.” It is no accident that Hillary Clinton was chosen as Secretary of State.
Obama has continued Bush’s aggressive stance toward the Venezuelan Revolution, accusing Hugo Chavez of having “impeded progress in the region” and of “exporting terrorist activities.” He is not in favor of an immediate end to the war in Iraq, and is in fact escalating the war in Afghanistan and increasing attacks in neighboring Pakistan. His desire to draw down troops in Iraq is not because he is against imperialist war in general, but because the U.S. military is overstretched and must be given a chance to regroup in preparation for the next, inevitable war.
His stimulus package, while shoring up some key social services, is mostly aimed at shoring up the banks and corporations, the same culprits defending the same system that led to this mess in the first place. On the key question of immigration, far from supporting the amnesty that millions of immigrants and their supporters marched for two years ago, he is for further increased security at the border and continued raids and deportations. He is not in favor of a singe-payer, socialized national health care system that covers everyone for free. He is not in favor of a moratorium on home foreclosures. He is not in favor of nationalizing the banks and key industries so they can be used in the interests of the working class majority. In short, he is not in favor of taking any serious measures against the capitalist system. He may want to curb this or that excess, but as far as he is concerned, the system itself should remain intact.
U.S. workers are beginning to “connect the dots.” They instinctively understand that it is just a handful of people at the top who make the decisions that affect the rest of us. On the bus, in the grocery store checkout line, at the Post Office, during the football game, at church, at the bar, and around the dinner table, Americans are discussing politics and economics on a scale not seen in decades. After all, the millions of out-of-work Americans are not “lazy” or “looking for a handout.” The reality is that capitalism can’t even provide millions of willing and capable workers with a job – any job – let alone a job with decent wages, conditions and benefits. Not to mention decent housing, education and health care in the richest country on earth. This is a damning condemnation of the system.
This is just the beginning of the beginning of a profound shift in how U.S. workers – yes, the same workers who in the past voted for GW Bush and supported the Iraq War – understand and relate to the society they live in. The revolutionary implications for the future are clear.
- "Bloody Monday" and the Changing Consciousness in America by John Peterson (January 30, 2009)
- Obama's Inaugural Call for "National Unity" by John Peterson (January 26, 2009)
- Obama and the Economic Crisis by US Socialist Appeal Editorial Board (January 12, 2009)
- [Video] The election of Obama and the perspectives for class struggle in the USA by John Peterson (January 22, 2009)
- Obama’s Ag Policy: Corporate Business as Usual by Josh Lucker (January 15, 2009)
- Obama and the “Chicago School” of Economics by Graeme Anfinson (January 14, 2009)
- Martin Luther King Jr., Obama and the Struggle Against Racism by Workers International League (January 19, 2009)
- Does Obama’s Victory Mean the End of Racism in America? by Josh Lucker (December 5, 2008)
- [Audio] US elections - Obama for change? by Mick Brooks
- US elections: Welcome to the “School of the Democrats” by John Peterson (November 5, 2008)