What the economic conversation needs to be about


The economic crisis is nearly two years old. I like to call it the Second Great Contraction, borrowing a term from a mainstream economist, to distinguish it from other economic downturns of the last few decades.

This crisis is different in its origins, magnitude and resistance to quick fixes, compared to earlier crises.

Despite the optimistic rumblings on upticks in production, employment and personal consumption, there is plenty of reason to be uneasy.

Investment is sluggish, and trillions of dollars in real and fictitious capital have disappeared.

Wages are falling and exploitation is increasing.

The housing crisis has eased a bit, but the foreclosure rate and the number of houses underwater (people owing more than the house is worth) are still enormous.

Consumer spending remains low as households are still up to their necks in debt.

State and local government spending is declining, even though it should be increasing to counter downward economic pressures.

Income inequality is worsening.

Poverty is ratcheting up, particularly in the racially oppressed communities and among single mothers.

Export growth is weak. And no one should expect China to become a buyer of last resort in global markets.

The one indicator that shows some rebound is corporate profits, especially in the financial sector.

With no shame, management committees at the biggest financial institutions are awarding themselves huge payouts in salaries and bonuses. Just when you thought the criminals on Wall Street might act a little sheepish, they flaunt their new wealth with mind-blowing arrogance.

From a working class perspective, the recovery falls somewhere between modest and stalled.

To say the economy is getting back on its feet is to look at the economic indicators selectively.

If history is any guide, the return to normality following a crisis of this kind will be slow here in the U.S. and elsewhere. And still within the realm of possibility is a new downturn - a double dip, as it is called.

Furthermore, no one should rule out a financial crisis breaking out in one or a few countries and then spreading worldwide. The hyper-connectivity of global financial markets, the irrational behavior of major financial investors (while seemingly rational on an individual level, it can be catastrophic on a system-wide level), and the buildup of external and internal debt in most countries prior to and after the crisis - all these factors create a world economy vulnerable to a generalized financial crisis.

Capitalism, says Marxist David Harvey, doesn't resolve crises so much as it moves them around.

So far the crisis has been contained in the U.S., but no one should sleep soundly. The notion that it "can't happen here" has been pulverized by recent events.

Even if it is contained, the mushrooming of debt is becoming the new instrument to bludgeon working people worldwide, as is evident in Greece. "Tighten your belt and rein in your expectations" is the new clarion call of deficit hawks around the world. Never satisfied, the investor/finance class wants to further redistribute income to their advantage.

Here in the U.S. there is talk of Social Security and Medicare "reform." And the current federal budget gives the green light to discretionary spending cuts. What is missing is any talk of a deep-going change in the tax structure, reductions in the bloated military budget, and a debt moratorium for ordinary Americans and state and local governments.

As long as this is out of the conversation, the burden of paying off deficits will fall on working people and the poorest among us.

To make matters worse, the focus on fiscal responsibility conceals the underlying causes of the crisis: income inequality, the rise of finance capital and financial deregulation, the hollowing-out of the manufacturing sector, the undermining of working-class power, the entry of new competitors in the global economy, and chronic overproduction in world commodity markets.

Measures that don't address these fundamental causes do not stand a snowball's chance in hell of lifting the economy and millions of working people of all races and nationalities out of the quicksand.



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  • We need a deeper discussion of the nearly one trillion dollar military budget and the organizational forms needed to combat it. Support for the military budget has for decades been bipartisan. This was shamelessly exposed during the health care debate when only a handful of congress people and no one in the administration even brought up our backward priorities.

    Revitalize the U. S. Peace Council! Strengthen the World Peace Council!

    Posted by David Bell, 06/08/2010 11:36pm (5 years ago)

  • Interesting the Middle Class worker is getting the big shaft on his/her pay check not the Government employees or the Political Caste.
    Is it fair to redistribute wealth through taxation to a caste of individuals who feel entitled to money and benefits they never paid a dime to receive ?
    From my readings of Marx I do not think he meant to tax the TRUE WORKERS to the point those who will not work take the fruits of a WORKERS Labor and the Worker becomes a SERF.
    As best I recall Marx was big on not letting those eat who would not work.
    I have worked hard for what I have earned and I do not feel obligated to give it to people too worthless to work nor to support the excesses of the Political Caste.
    The conversation needs to be investing in America,creating real jobs,stopping the wasting of our resources,FEDERAL MISMANAGEMENT of our financial resources and Stopping the out flow of Manufacturing Jobs to other countries. The WORKER needs to look at the reality of what the POLITICAL CASTE is doing to them and stop being their willing idiots.

    Posted by SwampFox2U, 06/07/2010 1:19pm (5 years ago)

  • Brother Bruce Bostick you make an excellent point and all constructive working class leaders(this is not to exclude brother Sam Webb)are not only describing problems,but prescribing solutions.
    And these,not only long terms ones but immediate ones,like,where do we eat and sleep next?
    Let's not stop here,so where do we eat and sleep in the immediate future?
    We should all know the address and name of the local homeless shelter,where emergency clothes and food are given-but also,we should know the name and address of our councilperson,mayor and local officials and how to connect them with community organizations and vice-versa. We should know the Congress and schedules-and not just our leadership,but all.
    We should know how the working people will eat and sleep the next five years,and what the conversation should be to contribute to happy and healthy eating and sleeping in this time period. But we do not expect to eat and sleep happily without working.
    We know from a massive body of writing what we say-let's make the Congress guarantee work and clean work with trade union conditions,security and pay.
    The Brown Jobs bill,that Bruce mentions will help,for starters. But what needs to be discussed is how we can help put together a massive protests commensurate with the devastation of the working people by unregulated,unmitigated,polluting,racist,capitalism, which offers no work,left on its own,for tens and tens of millions of people.
    At the same time,it's squandering trillions of working peoples' hard earned work and money for war and its preparation,which capitalism does,killing nation-state and international purchasing power of the working class in each and every country,even forcing socialist and socialist leaning economies to spend woefully and wastefully for war.
    In this,we move toward the needed"economic conversation".
    Let's do this.

    Posted by E.E.W. Clay, 06/06/2010 7:50pm (5 years ago)

  • Good summary of the economic situation. The point about debt as an instrument to bludgeon working people is very important. It is true on an individual basis as well as on a collective basis worldwide. IE, the income of working class families is increasingly committed -- before the worker sees any spending money -- to debt payments. The bankruptcy "reform" passed in the Bush administration turns the government into an enforcer for this legalized robbery. And the handful of giant banks are trying to turn government into nothing but a collection agency, through taxes on the working class, to repay the public debt that has accumulated because of three decades of tax dodging by corporations and wealthy individuals.

    Posted by Art Perlo, 06/06/2010 12:23pm (5 years ago)

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