A Contribution to “A People’s Guide to Capitalism”, the Socialist Action webcast on Dec. 17, 2020

by Barry Weisleder

It is a pleasure to participate in this discussion tonight with author Hadas Thier.  I am a political organizer, a history teacher, and a writer — not an economist. Still, I hope to contribute something useful.  I recall a story about Che Guevara in the early days of the Cuban Revolution. Fidel Castro called a meeting of the top leaders of the victorious July 26 Movement.  He asked them to take on various cabinet posts, including Finance Minister.  He said “I need a good economist.”  After a long silence, Che Guevara volunteered.  A week later, the cabinet met again.  Fidel asked Che for a report on the economic situation.  Che said he had no report.  Fidel said “But you promised to be our economist.”  Che responded, “Economist?  I thought you said you wanted a good communist.”

Che went on to be an excellent Finance Minister, the National Bank President, and he headed Cuba’s sweeping agrarian land reform.  So, there may be some hope for non-specialists like me.  Hadas has performed a great service by explaining the nature and development of capitalism.  The popularity of her book shows a growing appetite for efforts, as Marx wrote in 1845, ‘not just to interpret the world, but to change it.’

The current triple crisis of capitalism – health pandemic, economic depression and environmental catastrophe – demonstrates that the need for revolutionary change is more urgent and indispensable than ever.  At the same time, it is crucial to know how humanity got into this situation, and what we can do about it.  It is essential for working people to recognize our allies in the struggle, and to identify those who are not – to know which side we are on.

To that end, an important indicator is growing global inequality. According to the Credit Suisse Global Wealth Report, the world’s richest 1 percent, those with more than $1 million, own 44 percent of the world’s wealth. Their data also shows that adults with less than $10,000 in wealth make up 56.6 percent of the world’s population but hold less than 2 percent of global wealth. Individuals owning over $100,000 in assets make up less than 11 percent of the global population but own 82.8 percent of global wealth. Credit Suisse defines “wealth” as the value of a household’s financial assets plus real assets (principally housing), minus their debts.

Those with extreme wealth have often accumulated their fortunes on the backs of people around the world who work for poor wages and under dangerous conditions. According to Oxfam, the wealth divide between the global billionaires and the bottom half of humanity is steadily growing. Between 2009 and 2018, the number of billionaires it took to equal the wealth of the world’s poorest 50 percent fell from 380 to 26 individuals.

Although the United States offers an extreme example, the situation in Canada is not dissimilar.  David Thomson, Joseph Tsai, Galen Weston, James Irving and Jim Pattison are multi-billionaire, anti-union bosses.  The Irving and McCain empires run the province of New Brunswick much like a feudal fiefdom.  Many of the biggest corporations have prospered during the current pandemic, particularly in the retail, food, telecommunications, banking and energy sectors.

It is no exaggeration to say that giant pharmaceutical firms are making a killing, continuing the ugly legacy of unequal exchange between the Global North and the Global South.  According to the head of global health at the World Economic Forum, of the 12 billion doses of anti-COVID vaccine big Pharma will produce next year, about nine billion shots have already been reserved by rich countries whose governments pay top premium prices.

At the heart of this gross spectacle is a heartless system.  It is anarchistic, irrational, undemocratic, toxic to nature, alienating to workers, and very violent.  Capitalism persists in tormenting all who are touched by it.  How does Capital dominate?  The capitalist class rules by consent when possible, and by force when necessary.  It promotes its values through bourgeois political parties, mass media, schools, religious, cultural and other institutions – all reinforced by the power of the state.  The state plays a more visible and more repressive role when things appear to escape capitalist control – until the time comes when the 0.1% are no longer able to impose their control.

The capitalist/imperialist system is characterized by cycles of economic boom and bust.  Each downturn displaces millions of workers, fueling racism, sexism, misery and war around the world.  The business cycles are actuated by the chaotic nature of production under private ownership, which is anything but a ‘free enterprise’ for the vast majority of humankind.  Over-production results in a glut of often useless and utterly wasteful things – to say nothing of how the externalization of the toxic outflows capitalist industry has a devastating impact on nature. 

Over-accumulation, the amassing of super-profits with no profitable outlet in commodity production, leads instead to investment in cash and derivative instruments, speculation in real estate, currencies, stocks, bonds, commodity futures, interest rates, and market indexes.  This is called financialization of the economy.  It starves the working class of the things that we need, like good housing, schools, healthcare and sustainable energy, while inflating the wealth of the mega-rich.  To encourage consumers to spend money they do not possess, retailers provide easy credit.  So, there is phenomenal debt, a huge mountain of debt – until the debt bubble bursts, revealing another Great Recession.  It would be called a Great Depression if not for a permanent and massive war production industry.

One of the great contradictions of late capitalism concerns the growing reliance of the capitalist on machines.  Machines can raise productivity and liberate workers from the drudgery of arduous and dangerous work.  But in a mode of production where profit is derived from the exploitation of labour, a growing reliance on machines, including robots, spells doom for Capital.  It is possible to squeeze a worker to produce more and faster, up to a point.  But a machine has a fixed limit and a constant cost.  It is not negotiable, and it is costly to replace.  The great Marxist economist Ernest Mandel wrote in his Introduction to Marxist Economic Theory:

“Do all capitalists progressively add machines, increase their constant capital and the organic composition of their capital? No, the increase in the organic composition of capital takes place antagonistically, by way of a competitive struggle governed by that law which the great Flemish painter, Peter Breughel, portrayed in an engraving: the big fish eat the little.”

This raises a question:  In terms of the rise in the organic composition of Capital, do the fixed costs of machinery make a decline in the average rate of profit unavoidable, leading to ever deeper crises?

In a rational, democratically planned economy, new technology would be deployed at the service of the working class, and hence, of humanity as a whole.  It would be possible to radically shorten the work week.  It would be possible to massively improve health and safety, and raise the quality of life for everyone.

Mandel wrote:  “The factor of periodic economic crises is inherent in the capitalist system and remains insurmountable…. This remains equally true … even if current crises are now called “recessions.” Crises are the clearest manifestation of the fundamental contradiction in the system and a periodic reminder that it is condemned to die sooner or later. But it will never die automatically. It will always be necessary to give it a conscious little push to effect its demise, and it is our job, the job of the working-class movement, to do the pushing.”

Of course, to achieve the goals associated with a rational, democratically planned economy it will be necessary for the working class to make a socialist revolution in every country — at least in the biggest nations on Earth.  But how?

Marx taught that the working class is destined to be not only a class in-itself, but a class for-itself.  Marx insisted that for workers’ interests to advance, it requires political self-organization, independent of the capitalist class, and independent of its parties, its institutions, and its state.

Socialist Action sees the need to build a mass revolutionary working class party.  A transitional step in that direction is the effort to build a labour party in the USA, and to wage the fight for socialist policies in the labour-based New Democratic Party in Canada, as well as in the unions and other workers’ organizations.  That excludes any support, even indirect support, for capitalist parties like the Liberal Party in Canada and the Democratic Party in the USA.  The working class must build its own party and fight for socialist transformation of society.  Moreover, as socialism in one country alone is impossible, we see the need to build an International Revolutionary Workers’ Party now.  We warmly welcome everyone who agrees with this idea to join Socialist Action.