Socialist Worker

Will capitalism simply collapse?

KEVIN OVENDEN on why socialists don't leap for joy at capitalist crisis

Issue No. 1809

SOCIALISTS hope capitalism will collapse, paving the way for socialism. That was the gist of what Lord Meghnad Desai, a former economics adviser to chancellor Gordon Brown, had to say in a debate last week. The truth is that socialists don't believe socialism will automatically rise from the wreckage of capitalism. Nor do we leap for joy at recession, slump or capitalist crisis.

The people who are hit hardest in a capitalist crisis are not the capitalists themselves, but workers, the poor and even sections of the middle classes.

Look at Argentina today. Big capitalists and their immediate hangers-on largely managed to get their money out of the country before the economic collapse at the end of last year. The rest of society has been devastated.

Unemployment is rocketing. The fall in the value of the currency means that even those in work cannot afford to buy basic goods. Unemployed workers who were used to eating beef daily are now reduced to meagre amounts of bread without butter or cheese.

The number of child deaths is increasing. Middle class people with savings find the banks refuse to let them withdraw money. Private property is supposed to be sacred under capitalism. Every day in Argentina there are queues of middle class people outside banks demanding their money back.

The crisis in the US and Europe is not as deep as in Argentina, but stockmarkets have fallen and some big companies have collapsed over the last few months. Many big investors managed to sell their shares before the slide. Those who have really lost out have been smaller investors who have been conned into gambling on the stock exchange.

Workers suffer too. Bankrupt companies such as WorldCom are slashing jobs. Tens of millions of people face misery in retirement as pension funds lose billions of pounds on the financial markets. In the poorest countries economic crisis has pushed hundreds of millions of people in the poorest parts into starvation. So socialists don't relish economic crisis. But nor do we fall for the idea that the crisis can be eased if workers make sacrifices in order to shore up capitalism, for two reasons.

First, it means greater suffering for the majority of the population, who are in no way responsible for the crisis. Economics commentators are warning that an explosion of credit could destabilise the economy.

That's not the fault of 'greedy workers'. Employers have forced people to turn to credit by curbing pay rises. Secondly, job losses, pay cuts, higher repayments on loans and other sacrifices by working people make a recession deeper.

Capitalism depends on there being a market for the goods it produces. If, for example, steel workers are sacked they cannot afford to buy cars and goods containing steel. That reduces the demand for steel, so deepening the crisis in the steel industry. Wage cuts and pay freezes have the same effect in industries across the whole of the economy.

Of course the capitalists could make up the gap by investing. Increased investment in railways, factories, new technology and the like would soak up output.

But in a recession goods go unsold and prices fall. That hits profits. And capitalists will not invest unless they are guaranteed a profit. The huge accounting frauds in the US have revealed that the actual profits of large companies are far lower than they have claimed over the last few years. Lower profits are leading capitalists to cut investments. It's this that is driving the economy towards recession, not supposedly 'uncompetitive' workers.

Demands from our rulers for belt-tightening by workers are only one side of what happens in an economic crisis. The other is huge numbers of people who had previously had some faith in capitalism suddenly become immensely bitter with the whole system. People who had hoped for nothing more than a stable income, secure housing and a modest pension find all of that is under threat.

Those who felt they had a small stake in the system can become the bitterest of all. A crisis also produces deep rifts among our rulers. Capitalists try to shift part of the burden onto one another and fall out over how to force workers to pay for the bulk of it.

Bitterness among the majority of the population and divisions at the top can go in many directions. One of them is towards mass struggles which are against the effects of the crisis and which begin to challenge capitalism itself. Building and organising those struggles are socialists' answer to capitalist crisis.

Recurring crisis is built into the capitalist system. Overthrowing capitalism depends on how its victims organise against it.

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Sat 20 Jul 2002, 00:00 BST
Issue No. 1809
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