For the past few years we have been carefully following the development of the US and world economies. Yet almost overnight, instead of "the boom will last forever", the press now has stories about "how to survive the recession", and openly discusses the economic slowdown. They don't even blush at the fact that mere months ago they were encouraging everyone to get into the stock market or miss out on fabulous wealth and early retirement! We explained long ago that the so-called "New Economic Paradigm" was nothing new at all &endash; that it was an investment boom propelled by the super-exploitation of the working class and ex-colonial world. Only a year ago, the bourgeois press was full of excitement and bravado about how the boom would never end, that "this time it's different", etc. We pointed out repeatedly that the capitalist system has the boom-slump cycle built in. Simply put, what goes up, must come down - that much was certain. The only unknown factor was when it would collapse, and how hard and how quickly it would fall.
It is impossible for capitalism to overcome the fundamental contradiction that the working class is not paid as much wealth as it produces. The surplus wealth the workers create over and above the wages they receive from the capitalist form the private profit of the capitalist. The workers can therefore never buy back all the products they create. After a period of boom, increased productivity, investment, and growth, the economy inevitably begins to freeze up - a crisis of "overproduction" sets in, and the economy spirals into recession or worse. Layoffs increase, perfectly good factories are shut down, new investment stops. The bourgeois are so worried about the coming slump (and the inevitable social discontent which will accompany it) that they hurried to blame Clinton before he left office, are rushing Bush's tax-cut for the rich through Congress, and are of course praying that Alan Greenspan of the Federal Reserve Board can work some of his "magic".
So while the contradictions of the system will never result in a "final crisis" until the workers of the world overthrow it once and for all, the capitalist world was dealt a harsh blow today which will make millions of people question its right to continue dominating their lives. The Dow Jones Industrials (DJIA) and NASDAQ suffered overwhelming losses today in a broad-based sell-off that handed the Dow Industrials its worst percentage loss in 11 months and took the NASDAQ below the 2,000 mark for the first since December 1998. Billions of dollars of personal wealth were wiped out. With the bursting of the economic tech bubble, the NASDAQ now is down more than 60 percent from its March 2000 record high as profit warnings mount in the deteriorating economy. That drop surpasses its hammering of 59.9 percent during the 1973-74 prolonged bear market. This means that if you invested $10,000 a year ago in the NASDAQ, you would now have only $4,000!
This was DJIA's fifth largest point drop ever, with a 436.37-point tumble, or 4.10 percent, at 10,208.25. It was the lowest close for the blue-chip average since late October 2000.
Wall Street's broadest economic measure, the Standard & Poor's 500, plunged 53.26 to 1,180.16 for a loss of 4.3 percent. The S&P has lost nearly a quarter of its value since its closing high of 1,527.46 reached March 24 of last year. Many stock market analysts are expecting things to get much worse before it gets any better. The NASDAQ, DOW, and S&P 500 are, in large part, measures of business expectations and with the Dow and S&P 500 which are faltering and the NASDAQ below 2,000 have many owners of capital shaking in their boots.
The US economy, which is being held up by waning consumer confidence (now at its lowest level in years), is the main engine of the world economy. When it peters out, the rest of the world will be hit as well. So it is no surprise that foreign stock markets were not immune from the paranoid selling spree on Wall Street today as European markets felt the blast from the NASDAQ and DJIA bomb blast as well. Japan, whose market also fell to below 12,000 today is teetering on a total collapse of its economy with interest rates hovering around .01% and unemployment rates rising to their highest levels ever. All of this economic doom and gloom highlights the contradictions within the chaotic capitalist system.
This does not bode well for the working class. It is invariably the working class who feel the brunt of a market going bad. In fact, they feel the strains of a waning market before even the so-called experts know about it. For months now there have been huge layoffs in the manufacturing and tech sectors. Just last week one of the tech industries mainstays, Cisco Systems Inc., which hit its all-time high of 82 dollars last March and is now trading at 18 3Ú4, announced it was laying-off thousands of workers. Subsequently their stock plummeted.
Under capitalism the workers are nothing more than a commodity and the owners of capital use this to their advantage. When demand for a product subsides the workers of that industry are laid off in an effort to decrease expenditures. Of course this knee jerk reaction by the capitalists has the effect of further depressing the capitalist economy as workers who were once consumers are now only able to scratch by, purchasing much less than before. Moreover, the workers have not been privy to the "boom" of the last decade here in the States, with real wages stagnating and individual debt ballooning, they sure as hell will be privy to the bust! It is not the bosses who suffer; it is the workers! And things can only get worse from here!
The only way to curb this roller coaster ride of capitalist economics, which tosses its unsuspecting passengers, the workers, to and fro, is a democratically planned socialist economy. Surely recent events are enough to convince one that the current unplanned economy and the mysterious ghostly hand of the marketplace are not good enough for the workers in this day and age. Capitalism is a dying system there is no need to feed off its carcass or suffer under its decrepit rule. Jump ship now and join the revolution!