The recent shutdown of some government services in the USA are a symptom of the current crisis of the capitalist mode of production. This articles considers the underlying causes and the implications of of these for other parts of the world.
The closing of some US government facilities during early October 2013 and the sending home of government workers reveals a number of things about bourgeois democracy and the capitalist mode of production. The most obvious thing is that the elite members of the political class cannot even agree on how to save the economic and political system from its own internal contradictions. Their self-interested posturing and bickering – as they jostle to keep their places at the states luxurious feeding trough – make them appear ridiculous. And indeed, their disagreements are something of a phoney war, for the real war is against the US working people (white-collar and blue) and the poor. It is not the first time this shut-down spectacle has happened in the USA – and it will not be the last.
Despite the much publicised delegate tomfoolery in the media and the organs of government, the underlying problem at the moment is not to be found in the White House, Congress or Senate, but in the profound crisis of the capitalist mode of production. This political ‘theatre of the absurd’ in the US is only one aspect of the developing crisis and is likely to be repeated elsewhere. The 21st century capitalist system world-wide faces a structural crisis covering at least the following five broad areas – economic, financial, moral, ecological and fiscal. In the US, it is disagreement over the growing fiscal crisis and the ‘Affordable Care Act’ (Obama-care) which is currently energising the tempers of the political elite, but these aspects of the crisis are themselves only symptoms of something more profound.
a) The neo-liberal fiscal crisis.
The fact that state expenditure in the US (as elsewhere) exceeds state income – an issue soon to be debated by the political elite in all advanced capitalist countries – is merely a fundamental symptom of the latest neo-liberal crisis phase of capitalism. In all capitalist countries, a shrinking tax base and increasing state expenditure has long been causing a discrepancy in the accounting books of nation states. This discrepancy has now reached astronomical crisis levels, particularly in the US and Europe. The export of production away from these previously high waged economies, has reduced government tax receipts from employment and profits. Late 20th and early 21st century tax reductions for the wealthy has also added to the negative side of this sovereign accounting imbalance.
At the same time as this reduction in income, governments in the west have continued to incrementally increase their expenditures on arms production and their delivery systems. Technological sophistication in warfare has developed at a rapid pace and this has certainly been taken to the most extreme forms by the military industrial complex in the USA. Modern armies, navies and air forces – required to ensure capitalist control of markets and essential raw materials – now come at an enormous cost. This burden, together with the costs of supporting those citizens made redundant, retired or unable to find employment, has been met by years of excessive government borrowing. The US alone now needs to borrow almost $17 trillion to continue to ‘balance’ the federal books.
The interest payments alone on such enormous debts are an unnecessary and suffocating burden upon the citizens of the country, but more than that, these and the actual loan repayments are unsustainable. Western governments are for all intents and purposes – bankrupt, but for the moment still allowed to continue functioning because there is no other outside power to close them down. The rest of the finance sector is being kept afloat by the $85 billion per month bond-buying activity in the US and similar measures in Europe. So once again it is the case that one part of the capitalist mode of production – the financial sector – has the rest of society in a complete strangle-hold. The financial elite in this sector currently have a firm grip upon the finances of private individuals, most of industry and national governments.
b) The domination of Finance-capital.
In addition the representatives of finance and big-business now dominate much of government and determine, if not actually dictate, what should happen to the rest of us. What they have decided to do is use their positions and influence to extract their accumulated pounds of flesh – interest and loan repayments – from the bodies of most of the rest of us. Particularly vulnerable in this respect are those who are least able to avoid their vampire-like attentions. The draining of the life-blood of communities has already begun by the current austerity measures, increased prices, lower wages and pensions and far fewer benefits. Their mantra includes an appeal for smaller and less expensive government, but the reductions in state expenditure will be predominantly targeted at those state institutions which benefit the low-paid and poor.
They and their political representatives, ’left’ and ‘right’ wing will still force the rest of us to fund world-class armies, navies and air-forces, which they need for their world dominance of markets and materials, and which the rest of us do not. They will continue to demand that we fund their bloated salaries and expenses, even while they shut-down and furlough the lower paid government workers and posture and prattle about the welfare of the ‘country’. They will still wield the publicly-funded armed bodies of men to prevent opposition and protest against their vampire coven. They will still try to hood-wink us into dreaming about some future ‘pie in the sky’ delivered by further stimulated economic growth, when it is clear that unprecedented 20th and 21st century economic growth has caused the still unresolved economic crisis in the first place.
c) An uncontrollable fetish for growth.
Not only that, but these unprecedented levels of economic production and growth are already causing disastrous climatic changes, dangerous levels of pollution, irreparable ecological destruction and large-scale resource depletion. Further economic growth under the present unequal and profit-driven mode of production is a recipe for future wholesale disasters ‘cooked-up’ by those are prepared to turn a blind-eye. In contrast, the planet and the bulk of its inhabitants would benefit from scaled-back and equalised economic activity along with a drastically reduced – or better still – totally eliminated arms production. Of course none of this can happen as long as the present system continues, for those who produce for profit have an insatiable appetite for the monetary form of wealth.
And of course monetary wealth can only be accumulated by the incessant creation and sale of commodities which contain more value than they cost to produce. However, the very motivation for production and circulation under the capitalist mode which is to create profits for those who own capital, stands in the way of further production. When there is more production than can be profitably sold there is a crisis of relative overproduction. That is to say more commodities and services are created than can be sold at a profit. When this occurs, production is scaled back, workers are put on short time or are made redundant and this represents even less demand for the existing goods and services.
That is the fundamental economic basis of the current crisis in all spheres of the capitalist system. The recent flooding of the financial markets by government printed money has created some wishful-thinking optimism amongst many pundits and economic ‘experts’. As this money makes its way around the various money-making merry-go-rounds and registers its activity on various statistical tables, it appears that there is increased economic activity, when it is only increased financial activity. Also given the size of the world economy there will always be some level of continuing economic activity, particularly for basic essentials. There will also be some new start-up economic activity as well as some collapses. Yet crunch all these numbers together (as some are doing) and it is easy to fool oneself that things are generally improving – when in fact they are not.
d) Barriers to further growth.
1. Steadily reducing purchasing power.
Unemployment, part-time working, money inflation during crises of relative overproduction, all operate to further reduce the amount of commodities and services which the bulk of the population can consume. Simply looking at the employment figures as do many politicians and economists is insufficient. Job figures may be rising but if the new jobs are low paid, zero-hour and part time then they do not make up for the purchasing power of full-time well-paid jobs which are generally being destroyed in the private and public sectors.
2. Lower workforce participation.
Another current factor is the growing numbers of citizens who have now absented themselves from the job market but are not classified among the unemployed figures, because they are retired, early retired, students, domestic and black economy workers. All of these citizens are victims of the overproduction downturn and resulting credit-derived financial collapse. Their purchasing power has been further reduced and so there is less available for other than necessary purchases.
3. Deleveraging.
The banking and finance sectors are the ones who utilise ‘leveraging’ (borrowing against assets) to the greatest degree, in order to increase their profitable investments, however, they are not the only ones. The finance sector stimulation of credit has meant that ordinary people as well as small and medium businesses have been able to borrow to an unprecedented degree over many years. The level of personal and business debt has increased by many times since the post-2nd World War period and over far a wider range of people.
The financial collapse of 2008 has meant that many ordinary people have fell victim to essentially the same problem – taking on more debt than they could continue to service particularly under the new conditions. This has meant that vast numbers of people are no longer taking on new loans to purchase goods and some of their current purchasing power is being used to pay down previous debt levels. The combined effects of this personal and business de-leveraging means a reduction in the amounts of cash which can be used for purchasing non-essential existing production in general and new production in particular.
e) The ‘wisdom’ of bourgeois pundits.
The recent scaling down of expected (estimated) growth figures by the US Federal Reserve is a recognition of this complex problem and it is why they have also continued with the above noted $85 billion per month bond-buying programme in the USA and a similar ECB programme in Europe. However, what these vested interests have in common is that they all – as elite beneficiaries of the existing system – cannot envisage any fundamental alteration to the current situation. Whether the economy shrinks or grows their positions in the elite and relative wealth advantages are protected, so why should they?
Only a few of the bourgeois elite have realised that the current programmes for printing money and releasing it into the finance sector is simply fuelling another set of asset bubbles which sooner or later will collapse as the housing market did in 2008. Fewer still recognise that the complex economic circuits of production and consumption under the capitalist mode are so contradictory and connected to the social, environmental and financial sectors that they are manifesting themselves in numerous secondary symptoms, such as the banking crises, sovereign debt crisis, permanent and precarious unemployment, social poverty, environmental catastrophes and political atrophy.
When the next collapse occurs there will be even more bankruptcies and shut-downs of local businesses and local government services as well as more national government collapses, this time prior to or in the wake of social and political unrest. Meanwhile the current elite will continue to prey upon our communities with economic and military means as long as the majority of us allow them to do so. This is because the current systemic crisis cannot be corrected without either a savage war against the standards of living of the majority of people – on the one hand, or a revolutionary change in the mode of production – on the other.
[See also; ‘The five-fold crisis of Capitalism’ , ‘Austerity: Its another word for War.’ or ‘Workers and others in the 21st century’. at www.critical-mass.net
Despite the much publicised delegate tomfoolery in the media and the organs of government, the underlying problem at the moment is not to be found in the White House, Congress or Senate, but in the profound crisis of the capitalist mode of production. This political ‘theatre of the absurd’ in the US is only one aspect of the developing crisis and is likely to be repeated elsewhere. The 21st century capitalist system world-wide faces a structural crisis covering at least the following five broad areas – economic, financial, moral, ecological and fiscal. In the US, it is disagreement over the growing fiscal crisis and the ‘Affordable Care Act’ (Obama-care) which is currently energising the tempers of the political elite, but these aspects of the crisis are themselves only symptoms of something more profound.
a) The neo-liberal fiscal crisis.
The fact that state expenditure in the US (as elsewhere) exceeds state income – an issue soon to be debated by the political elite in all advanced capitalist countries – is merely a fundamental symptom of the latest neo-liberal crisis phase of capitalism. In all capitalist countries, a shrinking tax base and increasing state expenditure has long been causing a discrepancy in the accounting books of nation states. This discrepancy has now reached astronomical crisis levels, particularly in the US and Europe. The export of production away from these previously high waged economies, has reduced government tax receipts from employment and profits. Late 20th and early 21st century tax reductions for the wealthy has also added to the negative side of this sovereign accounting imbalance.
At the same time as this reduction in income, governments in the west have continued to incrementally increase their expenditures on arms production and their delivery systems. Technological sophistication in warfare has developed at a rapid pace and this has certainly been taken to the most extreme forms by the military industrial complex in the USA. Modern armies, navies and air forces – required to ensure capitalist control of markets and essential raw materials – now come at an enormous cost. This burden, together with the costs of supporting those citizens made redundant, retired or unable to find employment, has been met by years of excessive government borrowing. The US alone now needs to borrow almost $17 trillion to continue to ‘balance’ the federal books.
The interest payments alone on such enormous debts are an unnecessary and suffocating burden upon the citizens of the country, but more than that, these and the actual loan repayments are unsustainable. Western governments are for all intents and purposes – bankrupt, but for the moment still allowed to continue functioning because there is no other outside power to close them down. The rest of the finance sector is being kept afloat by the $85 billion per month bond-buying activity in the US and similar measures in Europe. So once again it is the case that one part of the capitalist mode of production – the financial sector – has the rest of society in a complete strangle-hold. The financial elite in this sector currently have a firm grip upon the finances of private individuals, most of industry and national governments.
b) The domination of Finance-capital.
In addition the representatives of finance and big-business now dominate much of government and determine, if not actually dictate, what should happen to the rest of us. What they have decided to do is use their positions and influence to extract their accumulated pounds of flesh – interest and loan repayments – from the bodies of most of the rest of us. Particularly vulnerable in this respect are those who are least able to avoid their vampire-like attentions. The draining of the life-blood of communities has already begun by the current austerity measures, increased prices, lower wages and pensions and far fewer benefits. Their mantra includes an appeal for smaller and less expensive government, but the reductions in state expenditure will be predominantly targeted at those state institutions which benefit the low-paid and poor.
They and their political representatives, ’left’ and ‘right’ wing will still force the rest of us to fund world-class armies, navies and air-forces, which they need for their world dominance of markets and materials, and which the rest of us do not. They will continue to demand that we fund their bloated salaries and expenses, even while they shut-down and furlough the lower paid government workers and posture and prattle about the welfare of the ‘country’. They will still wield the publicly-funded armed bodies of men to prevent opposition and protest against their vampire coven. They will still try to hood-wink us into dreaming about some future ‘pie in the sky’ delivered by further stimulated economic growth, when it is clear that unprecedented 20th and 21st century economic growth has caused the still unresolved economic crisis in the first place.
c) An uncontrollable fetish for growth.
Not only that, but these unprecedented levels of economic production and growth are already causing disastrous climatic changes, dangerous levels of pollution, irreparable ecological destruction and large-scale resource depletion. Further economic growth under the present unequal and profit-driven mode of production is a recipe for future wholesale disasters ‘cooked-up’ by those are prepared to turn a blind-eye. In contrast, the planet and the bulk of its inhabitants would benefit from scaled-back and equalised economic activity along with a drastically reduced – or better still – totally eliminated arms production. Of course none of this can happen as long as the present system continues, for those who produce for profit have an insatiable appetite for the monetary form of wealth.
And of course monetary wealth can only be accumulated by the incessant creation and sale of commodities which contain more value than they cost to produce. However, the very motivation for production and circulation under the capitalist mode which is to create profits for those who own capital, stands in the way of further production. When there is more production than can be profitably sold there is a crisis of relative overproduction. That is to say more commodities and services are created than can be sold at a profit. When this occurs, production is scaled back, workers are put on short time or are made redundant and this represents even less demand for the existing goods and services.
That is the fundamental economic basis of the current crisis in all spheres of the capitalist system. The recent flooding of the financial markets by government printed money has created some wishful-thinking optimism amongst many pundits and economic ‘experts’. As this money makes its way around the various money-making merry-go-rounds and registers its activity on various statistical tables, it appears that there is increased economic activity, when it is only increased financial activity. Also given the size of the world economy there will always be some level of continuing economic activity, particularly for basic essentials. There will also be some new start-up economic activity as well as some collapses. Yet crunch all these numbers together (as some are doing) and it is easy to fool oneself that things are generally improving – when in fact they are not.
d) Barriers to further growth.
1. Steadily reducing purchasing power.
Unemployment, part-time working, money inflation during crises of relative overproduction, all operate to further reduce the amount of commodities and services which the bulk of the population can consume. Simply looking at the employment figures as do many politicians and economists is insufficient. Job figures may be rising but if the new jobs are low paid, zero-hour and part time then they do not make up for the purchasing power of full-time well-paid jobs which are generally being destroyed in the private and public sectors.
2. Lower workforce participation.
Another current factor is the growing numbers of citizens who have now absented themselves from the job market but are not classified among the unemployed figures, because they are retired, early retired, students, domestic and black economy workers. All of these citizens are victims of the overproduction downturn and resulting credit-derived financial collapse. Their purchasing power has been further reduced and so there is less available for other than necessary purchases.
3. Deleveraging.
The banking and finance sectors are the ones who utilise ‘leveraging’ (borrowing against assets) to the greatest degree, in order to increase their profitable investments, however, they are not the only ones. The finance sector stimulation of credit has meant that ordinary people as well as small and medium businesses have been able to borrow to an unprecedented degree over many years. The level of personal and business debt has increased by many times since the post-2nd World War period and over far a wider range of people.
The financial collapse of 2008 has meant that many ordinary people have fell victim to essentially the same problem – taking on more debt than they could continue to service particularly under the new conditions. This has meant that vast numbers of people are no longer taking on new loans to purchase goods and some of their current purchasing power is being used to pay down previous debt levels. The combined effects of this personal and business de-leveraging means a reduction in the amounts of cash which can be used for purchasing non-essential existing production in general and new production in particular.
e) The ‘wisdom’ of bourgeois pundits.
The recent scaling down of expected (estimated) growth figures by the US Federal Reserve is a recognition of this complex problem and it is why they have also continued with the above noted $85 billion per month bond-buying programme in the USA and a similar ECB programme in Europe. However, what these vested interests have in common is that they all – as elite beneficiaries of the existing system – cannot envisage any fundamental alteration to the current situation. Whether the economy shrinks or grows their positions in the elite and relative wealth advantages are protected, so why should they?
Only a few of the bourgeois elite have realised that the current programmes for printing money and releasing it into the finance sector is simply fuelling another set of asset bubbles which sooner or later will collapse as the housing market did in 2008. Fewer still recognise that the complex economic circuits of production and consumption under the capitalist mode are so contradictory and connected to the social, environmental and financial sectors that they are manifesting themselves in numerous secondary symptoms, such as the banking crises, sovereign debt crisis, permanent and precarious unemployment, social poverty, environmental catastrophes and political atrophy.
When the next collapse occurs there will be even more bankruptcies and shut-downs of local businesses and local government services as well as more national government collapses, this time prior to or in the wake of social and political unrest. Meanwhile the current elite will continue to prey upon our communities with economic and military means as long as the majority of us allow them to do so. This is because the current systemic crisis cannot be corrected without either a savage war against the standards of living of the majority of people – on the one hand, or a revolutionary change in the mode of production – on the other.
[See also; ‘The five-fold crisis of Capitalism’ , ‘Austerity: Its another word for War.’ or ‘Workers and others in the 21st century’. at www.critical-mass.net
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Not exactly
06.10.2013 19:24
It reveals that a form of democracy organized in this fashion (representatives elected by district and more than one representative body, electoral districts not the same) can get into deadlock. NOT because capitalist. And while this form was chosen by proponents of bourgeois democracy that's NOT why the form was chosen; they simply had few models to pick between. You have NO reason to suppose that the socialists of the early 19th Century would have had any different models.
What I am saying is that the US could in theory vote in socialism without any change in the form/structure of its democratic system. Going socialist would not REQUIRE them to change the form. And sorry, while your ideology might hold that without capitalism there would be NOTHING that might deeply divide us, that is totally without evidence. Yes of course, wouldn't be divided for CAPITALIST reasons but on what basis are you assuming that they could not sharply divide on what form of socialism would be best and on aspects of society having nothing to do with economics.
You want us to believe that leftists couldn't be deeply divided into contesting factions each claiming to know the true way? >
At the moment the US government is in shutdown because THE PEOPLE of enough electoral districts want their representatives to fight their differences out to the finish regardless of cost. If the representatives making the price of keeping the government open the repeal of that p*ss poor substitute for universal health care did not do that they would lose their seats. And rightly so, because they are REPRESENTATIVES. If their counterparts form the somewhat more liberal parts of the country gave in to that demand they would lose their seat, again rightly so.
USUALLY democratic systems work more smoothly, are able to reach compromises when necessary because none of the sides has an absolute majority. BUT THERE ARE NO GUARANTEES OF THAT. Sometimes "the people" want otherwise. If you know our history, there was a time in the past where inability to reach a compromise led to a civil war.
MDN
@ mdn
06.10.2013 22:17
mf
Stop deluding yourself
07.10.2013 13:07
Look, I happen to live in one of the most left Congressional districts in the US and the Representative we people here send to Congress represents OUR views on what is good. But even here there is a substantial number of people on the other side of these issues. Unlike you I realize that there are parts of the country where folks believe very differently from the way most of my neighbors believe.
You have gotten lost trying to find reasons for WHY those folks believe the way that they do, trying to place blame for that. IRRELEVANT in terms of what is happening. The point is that enough people in enough districts believe so differently from enough other districts that we are in political deadlock.
Can't you understand? Just as YOU think there must be REASONS (some conspiracy control theory) why people in those very conservative districts believe the way that they do THEY (the people out there) think there must be reasons (some conspiracy control theory) why we here in the more progressive districts believe the way we do. This isn't just about economics even though your ideology might make you believe that there is nothing else we humans might fight over. It's an overall SOCIAL WAR that people see themselves engaged in.
Don't bother asking WHY those people imagine that a moderate Democrat like Obama is a flaming socialist and we out here are commies. But recognize that they really do believe that.
MDN