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The Global Economy in the Epoch of Electronics

There persists among the people a great sense of unease, of anxiety and even anger, as if we all know deep down that we are a house built on shifting sands, and our times are characterized by instability, polarization, unrest and destruction. Everything is changing all around us, but these are really only the quantitative features or consequences of a fundamental, qualitative shift underway that puts humanity on an entirely different footing.

In 1965 Gordon E. Moore, a founder of Intel Corporation put forth a projection that the numbers of transistors per logic chip, manufactured for electronic microprocessors, will double every two years. Fifty years later Moore’s Law continues to prove itself to be correct, while the collective pursuit of Moore’s Law drives the exponential growth in actual transistor production. Between 1988 and 2003 the effectiveness of computers increased 43 million-fold. In 2014, semiconductor production facilities made some 250 billion-billion transistors more than in all of the years prior to 2011. The pace of the quantitative development of this qualitatively new technology is accelerating, and it has profound implications for human society.

Computers and electronic technology are not just other tools, not just other machines. It is qualitatively new kinds of instruments that are unlike anything human history has ever seen, because inevitably it means automation, it means robotics, that is production without the use of human labor. This is why it seems as if the ground itself is giving way and we are being forced to leap for our very lives. The only kind of production system we have ever known, capitalist commodity production, is being destroyed and we have no choice but to begin to think of what kind of new society we must build.

It is estimated that 47 per cent of employment in America is at risk of being automated away in a decade or two. Even low-wage China will use robots to slash labor costs by 18 percent. In South Korea it will be 33 percent, Japan 25 per cent and in Canada 24 per cent, according to the Boston Consulting Group. China is already building a “lights-out,” fully automated factory in Cheng Du that requires no human labor at all. In Dubai a 3-D printer has produced a 2000 square foot office building, complete with the furniture inside, slashing labor costs by 50 percent.

Devaluation of the Worker

Labor replacing production of electronics and digital technology is fundamentally antagonistic to the capitalist system. It is incompatible with a wage-labor system, where the value of commodities produced for exchange is determined by the labor-time of the working class. Automated production drives labor-produced commodities off the market. In this process, wages are dragged down to the cost of automated production. All production by labor, including the production of the workers themselves, becomes superfluous. The ongoing process of this destruction is but the quantitative expression of the process of the destruction of capital that is objectively underway.  Unprecedented production and unprecedented want describe our time.

As the pace of automation accelerates, the pace of job loss and the devaluation of the worker follow in its wake.  No longer needed for production, these workers find themselves to be part of a growing global new class of permanently unemployed, underemployed, destitute and impoverished workers who have no choice but to fight for the distribution of the necessaries of life to be distributed according to need.

An October 2014 jobs report shows that more than 92 million Americans, or 37 per cent of the workers, are “no longer in the labor force.”  Globally, 200 million are unemployed, up by 27 million since 2008. Half of the world’s population, some 3.25 billion people, lives on less than $2.50 a day. One-third of the Russian people live on $1 a day. Unemployment rates in Greece are at 27 per cent, and in Spain the percentage of unemployed workers under 25 is 43.8 per cent. The richest 1 per cent, represented by the world’s 1594 billionaires in 2014, possesses more wealth than the bottom 50 per cent. The accelerated pace of electronics exacerbates the polarization of wealth and poverty world-wide.

Globalization: Open Borders for Capital

A characteristic feature of globalization is the flow of capital across borders, quite unlike the movement of capital in the previous period of empire and colonization. For example, China, long a low-wage haven, has seen its position in terms of GDP rise to number one in the world, a position until now held by the United States. Along with this has come a rise in wages, which itself acts as a spur to China to both automate and to invest globally. China is now also the world’s leading trading partner, yet it is also shifting production to Bangladesh, India, Vietnam, and to the U.S., particularly to the South. Chinese investment abroad is expected to expand to $2 trillion by 2020.

Capital now flows both ways across national borders in an increasingly integrated world-wide process. European corporations are investing in the U.S. and vice versa. The same holds with Japan and Brazil. The BRICS (Brazil, Russia, India, China and South Africa) regional economic blocs trade and export capital not only within their regions but across the globe.

China already has 30 establishments in South Carolina and another 47 in Georgia, including a $500 million Volvo plant. China is now able to set up manufacturing plants in the U.S. South primarily because production there is now “competitive” with China. For every dollar now required to manufacture in the U.S. it is 96 cents in China.

A case in point is the Chinese-owned Kerr Group, a cotton mill now operating in South Carolina. Residents are desperate for work even at depressed wages, cheap land and energy and heavily subsidized cotton. What is more, the work is highly automated. When Kerr Group opens a second plant soon, their combined workforce of 500 will be but a fraction of the thousands of textile mill workers across the South in the 19th and 20th centuries.

Speculative Capital

The advancing rate of automated production, the ongoing destruction of value, and along with it the decline of value of the worker and the polarization of wealth and poverty, all lead as an inevitable consequence to the rise of and domination of speculative capital. If money is not to be made in the production of commodities for exchange, then capital will seek to move money around, making money from money.

Laborless production means valueless production. Speculative capital does not create value but makes money largely from amassing vast sums based in debt.

Trillions of dollars have been poured into the economy by a federal government in the U.S. that has been taken over by speculative capital, resulting in a doubling of the stock market since 2008, yet the economy has grown only at a tepid two per cent rate during that time. Almost none of those trillions have gone to expand production or to employ more workers. 90 per cent of the earnings of the largest corporations have been used to manipulate stock prices and to play the Wall Street casino. The debt bubble continues to grow.

The hegemony of speculative capital today has to be seen as a worldwide phenomenon. It is an integral dimension of globalization in the epoch of electronics and the outbreak of crises both in Europe and Asia are but a continuation of the crisis of capital that was first precipitated by the Great Recession in the U. S.

The dictatorship of speculative capital is perhaps most graphically illustrated in Europe, particularly in how it has dealt with the collapse of Greece. The European Central Bank, the European Commission and the International Monetary Fund combine as a sort of “troika” to force extreme austerity measures upon the nation of Greece time and time again. With unemployment already over 25 per cent, the response to the terms of the latest “bailout” has been to slash more wages and jobs, raid more pensions and other benefits, and command a sell-off of state assets. Austerity and privatization are the twin aspects of the dictatorship of speculative capital as it seeks to appropriate every shrinking morsel of value still left to it. The outcome is not only the polarization of wealth and poverty, but expresses the objective antagonism between a ruling class bent on defending private property at all costs, and a working class increasingly left with nothing.

Global Immigration

Globalization means the movement of capital and finance across borders. It also means the movement of masses of workers across borders in a desperate search for jobs and survival. Immigration from Latin America to the U.S. is a major political issue, as anti-immigrant propaganda pits worker against worker and seeks to build a mass social base of support for fascist solutions to the economic crisis. Thousands die at sea in the Mediterranean, attempting the dangerous crossing to Europe. Many thousands more are fleeing both economic and social unrest from the Middle East as well as North Africa. Nearly 800,000 are expected to take this path of migration this year. No walls can stop the rising tide of immigration.

Our time is a qualitatively new time in which the world as we have known it is falling away. It is a time of an actual revolution in the economic base of society, and it is experienced as crisis, instability, turmoil and destruction. It is a time of transition, and there is no going back to earlier times. We can only go forward, and that is why these are revolutionary times.

To go forward we have to remake the world on terms that are compatible with the new technology, and which are in the basic interests of a new class created by this new historical epoch. Here we see the world-historical significance of this rising global new class. It is their historic task to remake the world in their own interests. In the end it is in the interest of all humanity.

January/February 2016. Vol26.Ed1
This article originated in Rally, Comrades!
P.O. Box 477113 Chicago, IL 60647 rally@lrna.org
Free to reproduce unless otherwise marked.
Please include this message with any reproduction.

Photo of Protest

30,000 March in Support of
Chicago Teachers Union Strike
Photo by Ryan L Williams
used with permission

The age-old vision of a world without scarcity, without exploitation, class domination, organized violence, and stultifying labor has been the dream of millenia. The new completely socialized labor-eliminating means of production ... sets the basis for its realization. Now human history can begin, the light of the individual shining in the full brightness of liberated life, that can only be realized within true equality and cooperation: communism, a cooperative society.

'Without Vision, the People Perish'
Rally, Comrades ! May/June 2011

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Rally, Comrades! is the political paper of the League of Revolutionaries for a New America. If you are one of the thousands of revolutionaries around the country looking for a perspective on the problems we face today, and for a political strategy to achieve the goal of a world free from exploitation and poverty, then Rally, Comrades! is for you.

Rally, Comrades! examines and analyzes the real problems of the revolutionary movement, and draws political conclusions for the tasks of revolutionaries at each stage of the revolutionary process. We reach out to revolutionaries wherever they may be to engage in debate and discussion, and to provide a forum for these discussions. Rally, Comrades! provides a strategic outlook for revolutionaries by indicating and illuminating the line of march of the revolutionary process.

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