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The following article contains excerpts from a speech by Michael Thorburn, which appeared in the November 15, 1999 edition of "The Worker", newspaper of the Workers Party, USA. Mr. Thorburn is the editor of the newspaper.
For some time now, governmental leaders have been advertising "globalization"- based on the "free flow" of international capital - as a "new economic era" which will insure world prosperity. This process of globalization is generally characterized as a "technological revolution" arising from such things as advanced communications systems, an international division of labor, etc.
But such advertisements for "globalization" and the "free flow of capital" cover over the main thing. Today, capital is a social relation in which the means of production - the very tools needed by human beings to secure their material existence - are owned by a few while the vast majority of people are reduced to the status of wage-slaves for these capitalist owners of the means of production.
"Globalization" arises from the struggle of the biggest monopolies and capitalist states to extend these social relations of exploitation and domination - their ownership of the means of production - over the entire world. "Globalization" means that countries and continents are put up for barter and domination. The demand for the "free flow of capital" is a demand for the surrender of economic and political sovereignty, is the program of international finance capital for gobbling up the resources, the economic infrastructure and the very lives of the peoples of other countries. Today, in the conditions of deepening economic crisis, the "free flow of international capital" is part of the program of the big monopolies to come out on top - to continue their ferocious struggle for the economic domination of other countries as well as to defeat their competitors. In fact, as history shows and present reality confirms, capitalism can only "resolve" the struggle of competing capitalists for domination through war.
Workers in the U.S. must keep in mind that this entire struggle for world-wide domination rests, in the first place, on the most thorough exploitation of the American workers. . . .
The capacity of capital to expand and to "create wealth" rests on one and only one thing. the exploitation of the workers. Capital expands by soaking up the surplus labor of the workers. And the workers go into the factories owned by the capitalists, not through their own free will or choice, but because, under capitalism, they have been separated - by force of arms - from the tools necessary to create their own subsistence. They cannot secure their livelihoods without selling their labor-power as a commodity to those who have monopolized society's means of production.
Human beings are often characterized as "tool-creating animals" and indeed this capacity is one of the most important and distinguishing characteristics of the specie. By using science to create and use tools, humans are able to transform, to humanize, nature not merely adapt to it. By creating tools humans are able to provide themselves with food, shelter and other means of subsistence and advance more and more from the real of necessity to the realm of freedom. Tools - the means of production with which humans create their material conditions of existence - are a fundamental part of the foundation of human civilization.
Over thousands, in fact hundreds of thousands of years, humans have mastered the laws of the natural world and created a vast machinery of production which, when set in motion by human labor, is capable of producing an abundance for all. But capitalism has forcibly separated the great mass of humanity from these tools. As a result, we can only subsist by selling our ability to work to the capitalist exploiters.
Private ownership of the means of production is the condition upon which the exploitation, poverty and enslavement of the people rests. . . . Bourgeois political economy does everything to mystify this basic condition which forms the foundation of capitalism, because once it is brought out, no one can defend it. No one can defend - on the basis of any modern, humane or democratic notion - private property in the means of production - the right of a few to rule and to accumulate untold riches on the labor of others, by the enslavement of the great mass of humanity. . . .
Over the last several years, we have already seen just what the struggle to "increase the international competitiveness of U.S. capital means for the workers of our country. It means new and more intense forms of exploitation. It means downsizing and restructuring, the wiping out of millions of jobs. It means downward pressure on wages to the point where today the rate of exploitation is 500%. In other words, on average, a worker produces the value of his/her wages in one and half hours, while the value created during the other 6 and a half hours goes to the capitalists as profit. It means the slashing of such vital benefits as health care and pensions. It means the widespread substitution of part-time and temporary work for full time employees.
New Forms of Exploitation
The entire attack on social legislation - the so-called welfare reform, the privatization of health care and social services as well as the dismantling of labor legislation such as workers' compensation, unemployment insurance, laws restricting child labor and overtime, etc. - is a program for reducing the price of labor power. These laws, a product of countless struggles of the working people, not only created a minimum floor which increased the general level of wages but also forced society to recognize that workers had at least some measure of rights as human beings. This recognition gave the workers certain economic claims on society, claims on production which are guaranteed through the creation of a social sector of the economy, which to a certain limited extent restricted the political economy of capitalism and commodity production. In denying these rights and privatizing the social sectors of the economy, the capitalists are not only forcing down wages but denying that the workers have any existence, any reason to live, other than to be exploited by the capitalists if and when needed. . . .
The bankruptcy of the capitalist system is seen in the fact that in country after country economic life is grinding to a halt and the productive forces at the disposal of society are actually being destroyed.
Look at what is happening in Asia or in Russia or on the Southside of Chicago. Factories are closing down and millions of workers are being thrown into the unemployment lines. Yet, all the material conditions needed to carry on production exist. There is an abundance of raw materials. There are modern factories equipped with the necessary machines and other implements of production. There are plenty of workers who need jobs to maintain their livelihoods. And in every country, large numbers of people are going without the basic necessities of life. Yet, the productive forces stand idle. Why? Because the capitalist system is unable to set these productive forces in motion.
And this is not all. Capitalism today not only fails to utilize the productive forces at its disposal but it is actively destroying these productive forces on a wide scale. For example, over the last 10 years, the opening up of Eastern Europe and Russia to international capital has led to the massive shutdown of factories and the destruction of productive capacity. Today, the so-called Asian economic tigers are collapsing as a result of the world-wide crisis of overproduction and the big international monopolies aim at consolidating their domination by wiping out production in these countries. So too, in the U.S. the capitalists are restructuring and downsizing, consolidating the most efficient factories while closing others in order to eliminate "excess capacity."
Monopoly capital is literally devouring society. This is the source of the anti-social agenda which is slashing social investments, privatizing public services, and stripping away any humane feature of society. It is often said these days that Russian capitalism is "mafia capitalism" because that country's resources and economic infrastructure are simply being pillaged by the ruling circles. But is not this "mafia capitalism" typical of capitalism all over the world in this era of decay and crisis. In every country, the big international monopolies are looting the public treasuries, privatizing the public infrastructure and demanding that everything be put at their disposal. For example, in Mexico and Latin America, international finance capital is demanding that even the ports and roads be sold to them at fire auction prices. In the U.S., finance capital wants to rob the Social Security Trust fund, privatize the public schools, etc. Today, when capitalism is in permanent crisis, it is resorting to the methods of primitive accumulation - that is, monopoly capital is using its state power to simply rob the wealth of society.
What could more thoroughly condemn the capitalist system than the fact that it is destroying the productive forces built up by humankind over generations and generations, that capitalism is destroying the very means through which human beings create their material existence?
The root of the problem is that the vast means of production created by humanity and set in motion by humanity are social in character and they cannot be set in motion by the narrow aims of capitalism. Despite all the capitalist propaganda, the fact remains that the modern factories, communications systems, and so forth are not private property. There is really nothing private about them. They are all social in character. The means of production are social because they are the product of generations of labor - of thousands of years of human efforts - and they can be set in motion only through the cooperative division of labor amongst tens of millions of people. When workers go into a factory, they are told that they are on private property. The capitalist owner not only sets all the rules but owns the product. Yet it is only the social labor of the workers which enables that factory to produce anything. It is the social character of the modern productive forces which give them the capacity to produce an abundance.
One manifestation of this contradiction between the social character of the productive forces and capitalist private ownership is that the vast productive capacity of society far outstrips the limited consuming power of the workers (and society as a whole). The result is that today, as in the past, capitalism is undergoing a "crisis of overproduction." This crisis has been precipitated by the fact that on a world scale there is an excess of capacity - that the auto industry, the steel industry, the computer industry, the garment industry, etc., can produce two to three times as many products as the limited world market can absorb. Thus even while capitalism is failing to provide the minimum of food, shelter and clothing for hundreds of millions of people, it is, at the same time, actively destroying productive capacity in country after country.
Thus what the world-wide economic crisis again brings to the fore is the necessity for humankind to recognize the social character of the productive forces.
Last week, I participated in a very interesting discussion with some health care workers. In discussing the almost universal support for the programmatic demand that "Health Care Is A Right," we recognized that in order for this right to be guaranteed, health care must not be produced with the aim of maximizing profit but rather on the basis of meeting the needs of the people. And does not the same thing hold true for food, for housing, for education and all the basic needs of humanity?
For the last several years, the U.S. government and the capitalist economists have been boasting about "unprecedented economic growth." But during these years millions of Americans lost their health care coverage. During these years, homelessness increased and today tens of millions of people live in seriously substandard housing. During these years, our public schools continued to crumble. Again, even according to the government, 1/3 of our country's children lack sufficient food and are seriously undernourished. In sum, even with all the vast, modern means of production at its disposal, capitalism cannot satisfy the elementary needs of the people. Yes, in this so- called "commodity society," every kind of luxury item is available for those with money, but the basic needs of the people and society as a whole remain unmet.
The working class must rally the whole people around the political economy which places working and oppressed humanity, not the capitalist exploiters, at the center.
Thus the economic crisis is bringing to the fore a number of fundamental questions. "Will economic life be organized to guarantee the livelihoods of the people or will our very lives remain dependent on the "blind hand" of the "free market" and capitalist profit-making?" "Will people be guaranteed wages commensurate with society's high level of development or will our standard of living be forced down in order to increase the competitiveness and the bottom line of the big monopoly corporations?. "Will government make the vital social investments needed to guarantee the rights of the people or will the entire economy be put at disposal of big business?. "Will the means of production created by humanity be put at the disposal of humanity and utilized to create conditions for the all-around emancipation of people or will these means of production remain monopolized by a few and used to enslave the majority?"
Michael Thorburn concluded his discussion by emphasizing. It is easy to see the bankruptcy of an economic and political system which is leading us to economic disaster and admits to having no way out. But when we reflect on this, we must recognize that the responsibility falls to us, to the working class, to lead the way out. It is the working class which must provide answers and create the new socialist society which eliminates the exploitation of human beings, which recognizes the social character of economic life, and overcomes the anarchy of capitalist production through the planned development of economic life on the basis of the aim of guarantying the well-being of the people. It is the working class which through its political leadership and struggle must rally the whole people around a political economy which places working and oppressed humanity, not the capitalist exploiters, at the center.
For Your Information
Today, the developing countries are more than $2 trillion in debt to the big bankers in the U.S., Europe and Japan. Of course, over the years these countries have already paid hundreds of billions to the bankers in interest payments alone. But the debt keeps mounting and the bankers keep bleeding the peoples dry.
The following article provides some background information on the debt crisis and the program of "neo-liberalism" which international finance capital is imposing on countries throughout the world.
Roots of the Crisis
By the 1980's, the developing countries were $700 billion in debt to U.S., European and Japanese bankers. This mountain of debt, combined with economic recession and a dramatic drop in prices for raw materials (the main export of many developing countries), presented the big international bankers with the danger that countries could no longer make their exuberant interest payments and would default on their debt.
In this situation, the Reagan administration - with the help of the International Monetary Fund (IMF) and the World Bank - came forward with a "rescue program." Although widely advertised as a way to "unleash the free market" and increase economic growth in the developing countries, the real aim and effects of the Reaganite "rescue" were to 1) dramatically increase the transfer of wealth from the developing countries to the big U.S. and international bankers through massive interest payments and ever increasing debt and 2) increase the direct imperialist take-over of the economic infrastructure of the dependent countries through "debt-for-equity" swamps, privatization of state-owned enterprises and removal of restrictions on both foreign investment and foreign trade.
This intensified plunder and domination of the dependent countries was implemented through "Structural Adjustment Loans" (SALs). To receive new loans, the debtor countries were required to put their budgets and economies under the supervision of the IMF and the World Bank. The following conditions were generally imposed:
- austerity budgets which drastically cut back government expenditures for health, education and welfare in order to insure that the maximum amount of government funds went to servicing its debt to foreign bankers.
- privatization of the state sector and the removal of restrictions on foreign ownership.
- gutting of social and labor legislation in order to increase the rate of exploitation of the workers.
- removal of restrictions on foreign imports;
- currency devaluations.
During the 1980's, more than 70 debtor countries (including Brazil, Mexico, Argentina, Chile, Peru, Philippines, India, Bangladesh, Indonesia, South Korea, Egypt, Morocco, Senegal, Ghana, etc.) were forced to accept Structural Adjustment Loans. The sovereignty of these countries was thoroughly undermined and their economies brought under the direct control of the IMF and World Bank.
Rather than eliminating the crises and accelerating economic growth, as the public relations men for the "free market" had advertised, this structural adjustment further devastated the economies of the dependent countries and imposed untold hardship on the peoples. In Latin America, for example, GNP per capita decreased by 10% during the 1980's while the number of people living below the official poverty line increased from 130 million to 180 million; in sub-Sahara Africa (one of the main regions subjected to IMF structural adjustment programs), the number of people living in poverty has jumped to 300 million, nearly 50% of the population.
But while economic growth stagnated and poverty increased, the international bankers reaped unprecedented profits. In the words of Morris Miller, a former director of the World Bank. "Not since the conquistadores plundered Latin America has the world experienced a [financial] flow in the direction we see today.. From 1984-1990, for example, the developing countries paid $178 billion in interest and amortization on debt to U.S. and European commercial banks. By 1997 (before the Asian financial crisis), the total accumulated debt of the dependent countries reached $2 trillion dollars. In 31 of these countries, the foreign debt exceeded the country's yearly gross domestic output, in many cases by a scale of 200-400%. Many of these countries devote 1/3 to 2/3 of their governmental budgets to interest payments on the debt. Every year, the governments in sub-Sahara Africa pay four times more in servicing their foreign debt than they spend on health care and education combined. In addition, the neo-liberal structural adjustment programs have all-but-destroyed the state sectors of the economy in many developing countries and led to the massive take-over by the foreign monopolies.
In Mexico, for example, 886 state enterprises (out of a total of 1,155) were privatized between 1982 and the early 1990's. Foreign, especially U.S., monopolies gained control of such vital sectors as telecommunications, airlines, banking, mining, steel and even parts of the oil industry. This privatization was also a means to step up the exploitation of the Mexican workers by firing state employees, breaking unions and tearing up union contracts, changing work rules, etc. It is estimated that at least 200,000 jobs were wiped out through privatization. Neo-liberalism in Mexico has led to a 60% fall in average real wages over the last 15 years.
Similarly in Chile between 1975 and 1989, the Pinochet government privatized 160 corporations, 16 banks and 3,600 agro-industrial plants, mines and real estate. The vast majority of these enterprises went to foreign monopolies and/or a handful of the biggest Chilean capitalists, closely allied with the international banks and monopolies. In nearly every case, the government enterprises were sold for a fraction of their book value, immediately producing windfall profits for the capitalists. For example, Chile's national steel industry, valued at $700 million was sold for $72 million; government-owned sugar refineries worth $81 million went for $34 million, etc., etc.
In short, a mountain of debt has been forced onto the backs of the working people throughout the world. Every year, the U.S. and other international bankers extract tens of billions in tribute through interest payments alone. A handful of the international financiers and capitalist monopolies are literally strangulating the entire globe.
In country after country, people are rising against this international robbery and the program of neo-liberalism. In general strikes and other movements, hundreds of millions of people are already in motion resisting the IMF-imposed austerity budgets and raising demands for a moratorium on interest payments and cancellation of the foreign debt. In these struggles, the workers and people are organizing themselves politically and taking the field against international imperialism and the capitalist system. They are raising positive demands for a pro-social agenda which recognizes and guarantees the economic and human rights of the people and which returns economic and political sovereignty to the oppressed nations. Through these struggles the workers and people are advancing towards the goals of national liberation and social emancipation.