The Financial Times on 20 August quoted the Boston-based asset manager, James Montier (whose job it is to know these things) that, “The US stock market looks increasingly like the hapless Wile E. Coyote, running off the edge of a cliff in pursuit of the pesky Roadrunner but not yet realising the ground beneath his feet had run out some time ago.”
This anecdote cannot hide the fear and chill that the capitalist class has for the future. The coronavirus pandemic has increased the descent into to chaos of the world economy. What Marx foresaw everyone can see. Capitalism just lurches from one crisis to another. They are provoking both wars and revolutions. Wars take place when capitalist states try to shift the burden of a crisis to their rivals and upon the shoulders of their working class, as happened in the First and Second World Wars. Revolutions occur when it is the masses that say they will not pay and set about throwing out the old ruling class, as in Russia in 1917.
Furloughed workers face 80% pay cuts
If we look at Britain, we see a recession coming thick and fast. With the governments’ “furlough” scheme ending in October, many workers are fearful of what lies ahead. While the UK stops furlough in October Germany has just announced they will extend their plan a full two years. This reveals the contrast between the two economies.
In Britain, with its industry hollowed out after years of right-wing policies, the working class has been left with jobs such as working in call centres, retail and fast food which can just disappear. While in Germany an industrial base remains their capitalist class attacks the German working class with the steady erosion of their living standards, and conducts foreign interference in oppressed countries as in South Africa[i].
The end of furlough will mean employers trying to slash wages. The Financial Times on 25 August reported a strategist from JPMorgan Asset Management as saying furloughed workers will be told: “you can come back on 80 per cent of your pay, or we let you go”.
While the crisis intensifies, we hear the mouthpiece of the Tory Party, The Daily Telegraph calling for the return of Grammar schools as if a return to the class ridden 1950s is what the country needs.
From crisis to crisis
The bleak truth is that wages are now falling and job security is at an all time low (seven people chasing every job!) and a severe recession facing Britain.
Marx in Capital identified that the working class only creates value, but as by magic, the capitalist class claimed that it was all theirs. Marx went on to explain that capitalism tends to produce too much and therefore enters a regular pattern of booms and busts as it chases profit. We are now in the eye of the “bust”.
To illustrate the depth of the panic within financial circles, no one is sure what will happen next. The release of vast amounts of money by governments should in theory stoke up inflation, but the precarious state of the global capitalist system means that there could easily be a slump and instead of inflation we will see deflation.
No room for faith in capitalism
The Roadrunner observation points to the fact that despite capitalism being in extreme crisis, the stock markets, especially the US stock market indicator, the S&P 500, are at record highs. In explaining the reasons, it is pointed out that the highs are due to the tech stocks like Apple, which has just become the first $2 trillion company. But these values also reflect the dire alternatives that investors have to face. In addition to keeping the capitalist economies breathing governments like the US and Britain have created money by quantitative easing. This merely inflates the bubbles, which busts with even greater force. As we reported previously, many investors are looking at risker and riskier investments, which add to the certainty that, like Roadrunner, it will not end well.
The immediate result of all the money the US has pumped into the financial system is that the $ is at a two year low, but gold has risen to over $2,000 an ounce. Everything is now in the air. The price of gold along with other commodities could as quickly collapse as could the bond markets and stock exchanges.
The depth of the crisis means that workers and youth must organise to make their future just as in Lebanon and Belarus. This has to be by the independent struggle of workers, youth and all oppressed fighting all the backsliding that is going on in the unions.
Many unions are not matching the need to fight the employers and government. Their money keeps on rolling in while they save considerable sums by keeping offices closed. The forthcoming TUC congress will be decided by General Secretaries alone, but any union member can watch the show!
Union leaderships are using COVID-19 to close down democracy, where they can. Some unions are meeting at all levels, as always it is the rank and file that are setting the struggle against job losses and other attacks.
The deepening economic crisis means that we have to make a great class alliance of all workers sectors of unions, neighbourhoods, oppressed and draw sections of the middle class to support this struggle (their only way out) against the increasing attacks and build leaderships that will fight to the end. Only the united mass struggle for socialism and revolution by workers to end capitalism can face the international crises.