Capitalists Get a Debt Injection

Since the Great Depression there have been eleven small to medium recessions, the most severe one lasting roughly from 1979 to 1982. Unlike these relatively small cyclical recessions the current foundations of the US economy are far less stable. Mortgage debt now exceeds home equity for the first time since 1945. Housing prices dropped 10 percent nationwide over the last year. So while the real economy is staggering, Wall Street finance houses are now pleased with Washington's intervention through the Federal Reserve.

Correspondingly the US dollar denominated share of world currency reserves has shrunk from 80 percent in the 1970s to its present level at 65 percent. The economic growth figures have for years been fuelled by debt paid for in credit or the sale of assets. As the dollar fell in value following the housing market collapse and subsequent credit crunch in finance, the focus of capitalist speculation shifted its ravenous attentions to those commodities seen as a safe risk - gambling on food because they know that whatever happens to the economy people will still need to eat. With the shift of capital from dollars into oil and other basic commodities, agricultural commodity prices in turn are also affected by high oil prices, impacted by increased transport costs and increased costs for fertilizer derived from natural gas. The rising prices for fuel then in turn force feed demand for bio-fuels which then increases prices for agricultural commodities. The social class responsible for this has no answer to this problem. In fact the crisis itself represents an enormous transfer of value that layers of the capitalist class benefit from at the expense of the losers in what for a capitalist is simply a competitive re-evaluation and an opportunity.

With the Bank of America announcing on April 17, that it would no longer offer private student loans, this further signified that this turmoil had also hit auction rate securities markets where capitalists gamble on student loan debt, hospital debt and municipal debt. (1)

The Federal Reserve Bank announcing its treasury securities swap of $200 billion in 28-day loans to banks and financial houses, let it be known that it would be the lender of last resort by allowing JP Morgan to purchase Bear Stearns for two dollars a share with the backing of US Treasury securities provided by the Federal Reserve Bank of New York. Two days after the Fed's announcement, the Carlyle Group announced the collapse of its Carlyle Capital Corporation LTD's investment fund. (2) Huge layers of workers now find themselves faced with financial ruin, homelessness and hunger while the capitalist state intervenes so that it may perpetuate the social suicide that is capitalism.

...and Workers' Respond to the Attack

Correspondingly workers have shown continued willingness to fight back in the face of deals cut between unions and capitalists alike. In a refreshing and creative response to the casualization of labor, and "flexibility" Viacom "freelance" employees won victory in their struggle to retain health and retirement benefits. These permanent freelancers, self-dubbed as permalancers, responded to company plans to cut costs on the backs of their healthcare and 401k pension plans with two spontaneous walkouts, on December 11, 2007 and January 3, 2008. In order for these workers to gain the representation of a union they would have to prove first that they were misclassified as freelance employees, and thus had to resort to a more immediate and more organized movement characterized by a high degree of creativity. The Viacom freelancers went so far as to delegate representatives to go speak to then striking film and television writers.

As the wave of wage and benefits cuts continue to spread throughout the auto industry, workers at American Axle continued their strike in spite of the UAW's active negotiation of the worst contracts in fifty years. A union for those whom workers' reticence to support their own wages being cut in half is an obstacle to union control of their pensions and health benefits. Here again, the elementary response of workers to an attack on their wages and benefits, especially among young workers, finds no outlet in a politically castrated "progressive" left that is only animated in its support for the Democratic Party.

In Canada auto manufacturers have long exploited the advantage of an already reduced wage rate and reduced labor costs to employers, due to Canadian national health insurance. Despite this the attack on workers wages and benefits will still be no less severe. With CAW negotiating huge contract concessions with Ford Canada, the attack on workers continues.

It can be easy to assign too much importance to the first signs of struggle in a process that can too easily be crushed or derailed, but there appears a dynamic towards the resumption of class struggle. Opposed to this are the unions, the two ruling parties and their leftist "progressive" followers - in short the entire political smorgasbord of the American bourgeoisie. It is a response that is slow in coming and represents a small start and a hopeful sign for future struggles.


(1) Healy, Beth. Bank of America cuts back on loans. The Boston Globe. April 18, 2008

(2) Evan-Pritchard, Ambrose. Fed's rescue halted a derivatives Chernobyl. The Telegraph March 23, 2008