The Boom in America - Compliments of the Working Class

The boom in the American economy is in its 106th month – the longest expansion ever in U.S. history. Has capitalism entered a new phase of development unforeseen by Marx? Is this really a "new paradigm" as is heralded by so many apologists of capital? Or can the theories of Marxism explain this unprecedented upswing?

We have been predicting the inevitable collapse of the boom for months now, yet it has not come yet. Were our predictions wrong? We do not think so. As has been explained many times, economic forecasts are extremely difficult to make. Just as in weather forecasting, we can predict that a storm is coming, though we cannot tell exactly when, where, and with what intensity it will strike. Yet there can be no doubt about it – a storm is coming. And another thing we can say for certain is this: what goes up must come down – and the US economy has gone up farther than ever before!

So why has the economy continued to grow beyond the expectations of even the most optimistic defenders of capitalism? As has been explained in great detail elsewhere (see On a Knife's Edge: Perspectives for the World Economy by Alan Woods and Ted Grant), there are many reasons for the unparalleled boom. The expansion of world trade in the recent period, investment in new information technology, cheaper production costs due in part to the lowest raw material prices in 150 years, the fact that wages have been held down in real terms, and low interest rates all contributed to the economic growth. These are all ways by which the capitalist class has put off the inevitable bursting of their bubble, and they are all reasons which were explained by the Marxists. But there is one factor that is of particular significance for the working class and the youth in our fight for socialism: the merciless squeezing of every ounce of surplus value from the working class of the world.

When a person works, he or she adds value to the material being worked upon. But the capitalist does not pay the worker the full amount which he or she produces – he only pays them their wages or salary – the extra value which the worker creates while at work goes into the capitalist’s pocket as profit and is called surplus value. Marx discovered that over time, there is a tendency for the rate of this profit to fall. This is largely due to the capitalists’ increased reliance on machinery and technology which constantly replaces human labor power. Since human labor power is the only source of surplus value (and the source of all profit), the less human labor that is incorporated into the final product, the lower the rate of profit. This is one of the insoluble contradictions of the capitalist system. But there are ways in which the capitalist can get around this contradiction for a certain period of time.

Two of capitalism’s favorite ways to counteract this tendency of the rate of profit to fall are to extract what are known as relative and absolute surplus value. The capitalist gains relative surplus value when the workers’ productivity increases. If they are more productive, it means they do more work in the same amount of time, thus creating more wealth in that space of time. Absolute surplus value is gained when the worker puts in longer hours. Since the worker is working longer in absolute terms (more hours in a given day), the amount of wealth created is likewise increased. In both cases, the increased surplus value created goes into the pockets of the capitalists as profit, thus counteracting partially the tendency for the rate of profit to fall. But this can only go on for so long. There are definite physical and mental limits to the strain and demands that can be made on the human body. If we take a look at the latest figures, we can see that these limits are quickly being reached.

The boom is due largely to the workers’ sweat, tears, mental illness, broken families, alcoholism, insomnia, and all the other ills of this diseased system. I can remember a decade ago when we used to cringe at the excessively long hours the Japanese workers had to put in. Sure, they were an economic powerhouse threatening to buy up Disneyland and the rest of America, but at least we had more time off to spend with our families and friends! And just look at what this sacrifice on behalf of the Japanese working class got them – ten years of recession and the worst unemployment levels in recorded history! Yet now, incredibly enough, the American working class works more than the Japanese. It is astonishing to find that between 1977 and 1997, among those working 20 hours or more, the working day was lengthened from an average of 43 hours to 47 hours a week! We also work an unbelievable eight weeks longer each year than the average Western European. Not only that, but the percentage of those working 50 hours or more per week rose from 24% to 37% over the same period.

The enormous wealth created by the boom has been in part the result of "working smarter" (higher productivity - relative surplus value). But the longer hours, the increase in absolute surplus extracted from the workers, has also gone a long way to keep the economy going. So the question is, how big a piece of the pie is the American working class getting for its longer hours and increased productivity? According to the Economic Policy Institute, between 1989 and 1996, the average annual gain in income was only $300. Only $300 a year! But at what price? These increased hours away from home have a minimal impact on the overall economic well-being of the workers ($300 is not even enough to pay one month’s rent!), but have a devastating effect on the family. The crisis in society and the family as evidenced by the ever more common shootings among school children is but a symptom of a much deeper problem. There is an increasing, unconscious feeling among the workers and youth that there is no hope for future. Suffice it to say that a majority of Americans polled feel that their only chance at a decent retirement pension is if they win the lottery! And the young people involved in the school shootings feel that they’re more likely to be remembered if they die in a "blaze of glory" than by educating themselves and contributing to society.

The new millennium promises a continuation of the new American "Golden Age", but history shows that all such epochs inevitably come to a crashing end. The recent events in Seattle during the anti-WTO protests confirm our view that the mood is definitely changing in America. People are willing to slave away for others only as long as they think things are getting better. So while all the defenders of capitalism hail the booming economy, the average working class family quite justifiably wonders what all the fuss is about. They are certainly not getting $250,000 Christmas bonuses or more as the top CEOs do! Even the somewhat elite Information Technology sector has become proletarianized. Young, well educated workers sleep under their desks and resolve to sacrifice the best years of their lives working 120 hour weeks for Internet start-up companies which will likely never make a dime! Their hope is to retire at age 30 as millionaires, but when the new technology boom goes the way of the railroad boom, they will be left with little to show but their prematurely gray hair and dark circles under their eyes.

The American working class and youth are already beginning to realize that their long years of sacrifice are not paying off as well as they might have hoped (not to mention the sacrifices of the people of the developing world). With the unavoidable economic crash, their dreams will be shattered. They will inevitably begin to look for alternatives. The basic ideas of scientific socialism are really quite simple. Humanity has developed the means of production to the point where we can easily provide food, housing, education, healthcare, transportation, and much more to the entire world. Yet the form of social organization we have created and are living under (private ownership and benefit from the means of production, the market economy, the national boundaries) is simply no longer compatible with the massively developed productive powers. There is only one solution to this contradiction, and that is for humans to create a new social form which is in harmony with the productive forces and creative potential of humanity. That new social form is democratic socialism, plain and simple. The ideas of Marx, Engels, Lenin, and Trotsky provide the framework for achieving this new society, based not on the exploitation of billions for the benefit of a handful, but rather on the cooperation and mutual understanding of all of humanity. If the overworked workers and youth of today can understand how to communicate with machines through the use of computer languages, then they should have no problem understanding the ideas of genuine Marxism.

Peter Johnson
January, 2000

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