The Coming Crash
In his 2019 State of the Union message, President Donald J. Trump boasted, “We have the hottest economy in the world.” Careful what you wish for. This was exactly the same outlook in 2007, on the precipice of what came to be known as the Great Recession.
There is a stark disconnect between the class that rules society today and the great masses that find themselves in conditions of deprivation and even destitution. Great wealth is becoming even more concentrated in the hands of a few. This is a reality that cannot be sustained, yet nothing seems to have been learned from the financial crash of 2008, and nothing has really been done to alter the conditions which led to the crisis. We are being set up for a crash of even greater proportions.
How We Got Here
What is behind all of this? Why are we in this situation? We are living in a time that is marked by instability, disruption, and crisis. Every day we are becoming more aware of the way electronics is impacting human society. It is actually a qualitatively new technology that has world-historical significance and is at the root of the developing revolutionary transition period that we are currently experiencing. We are in the middle of an epochal shift, in which the old is being destroyed, and something altogether new is being born.
Science “discovered” electronics and introduced it into capitalist production. Capitalism is based upon the exploitation and expropriation of human labor- power, but electronics does not enhance human labor-power, as have all previous tools of production. Robotic, computerized, digital electronics replaces human labor. This means the end of wage-labor; it means the end of capitalism. Thus begins a new epoch of social revolution. The destruction of the old is underway. The sequence of one financial crisis after another is how the destruction of the old and the leap to something new is expressing itself.
There is another crisis looming. What are its signposts? While we are not doomsayers, and while we cannot predict exactly how or when it will break out, history teaches us that it is an inevitability. Capitalist production creates commodities that must be circulated for their value to be realized. They must be sold in the marketplace for profits to be pocketed or reinvested for more value to be created. The expulsion of millions upon millions of workers from the system of commodity production by laborless technology constitutes a severe disruption of the process of circulation. When you lose your job, you don’t have the money to buy and consume.
When You Can’t Circulate, Speculate
A ruling class, which has relied upon capitalist production for its wealth and dominance, is seeing that system destroyed, and they are prepared to give it up so long as they can preserve their ownership of private property. In their defense of private property at all costs, they are prepared to transition to some new form of private property without capital, while maintaining their status as a ruling class.
When the ruling class cannot make money from the production of commodities by wage-labor, and from the circulation of those commodities, it resorts to making money from moving money around. Since sufficient returns cannot be made from electronics-based production, increasing amounts of capital seek returns from speculative adventures. The attempt to maintain the circulation of goods through the extension of credit is itself a speculative exercise, a maneuver done in the hope that consumers or debtor countries will eventually be able to pay off their mounting debt.
Speculative capital has now risen to dominate financial capital, and therefore the entire globalized process of production and exchange. The rising stock market does not reflect earnings from production, but rather from the circulation of money to make money. In 2015, 23 percent of all corporate profits were made from the financial sector. Most of the windfall that the corporations received from the Trump tax cuts were not invested in production but were used to buy back their own stock to drive up stock prices. Mergers and acquisitions are also being made, not to increase production but to sell off assets, close facilities lay off workers, and boost stock prices. The stock market itself is now highly automated, where billions of dollars are traded based on split-second fluctuations in stock prices.
The financial crisis of 2008, triggered by the bursting of a massive housing bubble, was, in reality, a gigantic speculative bubble. Millions of people lost their homes as the financial system waged bets on debt-financed securities. The Transnational Institute reports that “few to no measures have been taken to prevent a recurrence” of the crash of 2007-2008. The big banks have become even more “too big to fail.” They have accumulated triple the cash while doubling the risks. And the financial instruments that triggered that crisis are still being traded – there are $6.7 trillion in Mortgage Backed Securities, while U.S. banks hold $157 trillion in derivatives, twice the global GDP.
The federal U.S. debt has now risen to $22 trillion. U.S. household debt is $13.3 trillion, including auto loans at $1.25 trillion. Students are saddled with debt they may never pay off, and housing costs are rising beyond the reach of more and more workers.
Central banks around the globe now hold $325 trillion in debt. Countries like Brazil and Mexico have seen their borrowing double, triple in South Africa and quadruple in Chile and Argentina. Italy’s debt is 130% of GDP. China’s debt has skyrocketed to 300% of GDP. In fact, many economists now say the next global financial crash could be precipitated not in the U.S., but
The level of speculative debt today is a disaster waiting to happen. It takes the form of a cyclical crisis; there have always been cyclical crises of overproduction within capitalism, but the underlying cause of the crises we are experiencing today is the electronic revolution that is generating laborless production, resulting in financial crisis.
What Else is Coming: The New Class
With each ensuing crisis, millions more workers are thrown out of the system, many having to obtain low-wage, part-time and contingent employment, while others end up homeless and destitute. They compose a new class of workers, created by the laborless technology of the electronic revolution, and their numbers increase exponentially with each crisis.
As electronic, laborless production expels more and more of these new class workers from the economy, they are drawn into a fight for their very survival. They constitute a powerful force capable of putting humanity on course to construct that something new that is coming – a new society that is compatible with the new tools of production, and that is capable of creating an abundance that can be distributed to all those in need.
This is what the ruling class fears most – unrest, uprisings, and revolution. They are prepared to increase fascist measures, to prevent the advance of this revolutionary process and prevent the unity of this new class that is capable of leading that process to its completion. We are seeing how a massive propaganda war is being waged to win people over as a social base for fascism, to prepare them to accept fascism as a way out of the crisis, to proceed with the full transformation of the State along fascist lines. That war is focusing on winning the hearts and minds of this growing new class of workers, a class that grows exponentially with each developing crisis.
History can go either way. It can move in the direction of fascist solutions, or it can move toward the reconstruction of society as a cooperative communist solution, which operates according to the principle, “From each according to their ability, to each according to need.” None of this is automatic. It requires human agency to move the whole process forward. The future is up to us. A class conscious of itself, who understands how we got here and where we have to go, can begin to think strategically about the line of march forward.
A war for the future of humanity requires strategic thinking and a strategic orientation. Revolutionaries, and organizations of revolutionaries, have to guarantee the subjective development of the class – the consciousness to think strategically, and to develop the unity of the class that can be the most powerful revolutionary force in history.
What is coming? Instability, disruption, crisis. Yes, but the future also brings the growth and development of the force that is the solution to the crises that mark our times. More crisis is what is coming, but it also sets the stage for a great leap forward for all of humanity. We must be prepared for what is coming.
May/June 2019. vol.29. Ed3
This article originated in Rally, Comrades!
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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