Is American Capitalism Headed for a Crisis?
An article in the Christian Science Monitor discusses the effects that recent layoffs in the US auto industry have had on its victims and on the economy in general. The article asks the following pertinent question:
In other words, despite the rosy picture of the economy that the some economists and government spokespeople have been painting, workers know that the story is a bit different--they know that the wages of workers have been going down over recent years. This is the reality of our current economic system.
The Monitor article also summarizes the argument that apologists for American capitalism often use, namely that "the nation's prosperity hinges on its extraordinary flexibility in deploying labor and investment." Of course, one problem with this argument is that the nation's economic system does not live in a vacuum. In this era of neoliberal globalism, the result of this "flexibility" is to respond to the pressure of global market forces by cutting back on higher paying jobs in the US. As the article points out,
As workers' wages decline in real terms (adjusted for inflation), while the incomes of the ruling capitalist class continue to increase, what this means is that there is a growing gulf in the incomes between the two classes in American society. Whether this bodes a crisis in the short run is difficult to say. But it is clear that for ordinary Americans, the empty promises of the capitalist system are proving to be tragic lies.
What traditionally was seen as protecting workers from the worst excesses of capitalism were the social and government programs of American liberalism. Capitalism could be tamed, so the argument went. But the political collapse of liberalism in the US, combined with the powerful pressures that global market capitalism have placed on the US economic system, which is no longer insular enough to resist these pressures, have shown that traditional post-New Deal liberalism offers no way out of this conundrum. The solution instead lies with a new paradigm in which the people democratically manage social resources for human need rather than profit. Only by overturning the capitalist system at a global level can these problems be solved.
This is a valid question that needs to be asked. As global capitalism continues to exert powerful market pressures on the American economy, what is happening to American jobs? Many might point to the fact that the US unemployment rate has dropped since the end of the recession, as a sign that the economy is doing better. But the unemployment rate, in and of itself, doesn't tell us anything about the downward or upward economic mobility of a nation's working class. If certain kinds of jobs go away, and are replaced by lower paying jobs, the unemployment rate in and of itself will not reflect this. As the Monitor article points out:
What's playing out here in America's automotive alley may be the last gasp of the assumption that good factory jobs will last a lifetime. And workers here see it as something more: a warning that the American dream itself is at risk.
The outlines of the challenge go beyond the auto industry, they say - global competition, shrinking union bargaining power, an eroding industrial base. If middle-class paychecks continue to be clipped, they wonder, what will drive the economy forward? What tax revenue will the government have?
Nationwide, unemployment remains low by historical standards, but sectors of the labor market, especially manufacturing, have been losing in recent years. And despite a growing economy, wages for nonsupervisory workers haven't been keeping pace with inflation
In other words, despite the rosy picture of the economy that the some economists and government spokespeople have been painting, workers know that the story is a bit different--they know that the wages of workers have been going down over recent years. This is the reality of our current economic system.
The Monitor article also summarizes the argument that apologists for American capitalism often use, namely that "the nation's prosperity hinges on its extraordinary flexibility in deploying labor and investment." Of course, one problem with this argument is that the nation's economic system does not live in a vacuum. In this era of neoliberal globalism, the result of this "flexibility" is to respond to the pressure of global market forces by cutting back on higher paying jobs in the US. As the article points out,
In many cases, the economy's vaunted flexibility has helped displaced workers find new jobs, but typically at lower pay than before. That's what has happened with legions of US steel workers since the 1970s, when that industry declined.
Jared Bernstein, an analyst at the Economic Policy Institute in Washington, says that the typical layoff results in a 10 to 20 percent pay cut for the workers involved. And US manufacturing, long a foothold of working-class prosperity, has been hit particularly hard. "We are losing that foothold at a very rapid pace," he says.
As workers' wages decline in real terms (adjusted for inflation), while the incomes of the ruling capitalist class continue to increase, what this means is that there is a growing gulf in the incomes between the two classes in American society. Whether this bodes a crisis in the short run is difficult to say. But it is clear that for ordinary Americans, the empty promises of the capitalist system are proving to be tragic lies.
What traditionally was seen as protecting workers from the worst excesses of capitalism were the social and government programs of American liberalism. Capitalism could be tamed, so the argument went. But the political collapse of liberalism in the US, combined with the powerful pressures that global market capitalism have placed on the US economic system, which is no longer insular enough to resist these pressures, have shown that traditional post-New Deal liberalism offers no way out of this conundrum. The solution instead lies with a new paradigm in which the people democratically manage social resources for human need rather than profit. Only by overturning the capitalist system at a global level can these problems be solved.
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