Preparing for class struggle in the capitalist crises ahead

The following is adapted from a talk given at a public meeting of the Party for Socialism and Liberation in New York City on Nov. 3, 2006. It first appeared as an article in the December 2006 issue of Socialism and Liberation magazine.

Many of us have experienced crises in our daily lives. We can’t pay the bills. There’s not enough to eat. You get harassed by the cops. You lose your job.

Socialists understand that these daily crises are a normal and natural part of living under capitalism. Our whole





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Photo: Bill Hackwell

program is based on the fact that there is no way to have capitalism without them.

But built into the capitalist economic system is a deeper form of crisis. Every few years, there is a sharp break in the business-as-usual exploitation of the capitalist system.

It is what is usually called recessions or depressions. Factories shut down. Workers are laid off. Unemployment grows—along with evictions and poverty. All the contradictions of daily life under capitalism are made more severe and affect tens of millions of people.

Newspapers and television commentators constantly worry about whether there is a recession ahead. The U.S. central bank—the Federal Reserve—is constantly tinkering with the money supply in order to try to prevent this kind of crisis.

These efforts never succeed in the end. That is because recessions and depressions do not come from how many dollars are in circulation, or what interest rate the big banks charge. They are caused by that uniquely capitalist phenomenon of overproduction.

Under capitalism, producers of goods and services produce for a blind market, driven by the quest for profits. Different corporations and interests compete over profit, and too many goods are produced—not too many to meet people’s needs, but too many to be sold for a profit.

The mad rush to produce comes to a screeching halt. Factories are shut down. Workers are thrown out of work. Lower incomes mean less ability to buy, creating more shutdowns. The system crashes.

The owning class tries desperately to avoid these crises. Their normal pattern of producing greater and greater profits is threatened.

These crises have always shaped the working class struggle. Even though class struggle is a constant feature of life under capitalism, during times of “normal” capitalist exploitation, struggles are isolated and sporadic.

Of course, for millions of workers, especially in the most oppressed communities, there are always depression-like conditions of economic decay. For example, a 2003 study called “A Crisis in Black Male Employment” by the Community Service Society of New York revealed that 48.2 percent of African American men in New York City were unemployed—and that was in a period of capitalist economic growth.

But during depressions like the one that lasted throughout the 1930s, tens of millions of workers are affected, including traditionally more privileged workers. The possibilities for mass working class struggle grow.

So for those fighting for revolutionary social change, understanding when a capitalist economic crisis is on the horizon is essential for shaping a program for the working class.

A number of factors indicate that such a crisis may be on the horizon.

According to the Sept. 25 Wall Street Journal, the National Association of Realtors reported two important facts. Prices for new homes had dropped for the first time since 1995. And the number of unsold new homes grew—the highest number since 1993.

Those two facts alone are sure signs of overproduction. When more homes are built than can be sold for a profit, unsold houses stand empty and prices begin to drop. For the big real estate owners, the 3 million people who experience homelessness every year do not matter.

The Oct. 28 Montreal Gazette quoted Merrill Lynch economist David Rosenberg saying, “Housing is in a full-blown recession.”

Construction of new homes is not just one isolated sector of the capitalist economy. There are at least three reasons why the recession in housing has a direct effect on the capitalist economy as a whole.

First, the housing sector is a major sector of the capitalist economy. The Sept. 26 Los Angeles Times quotes analysts saying that as many as one in every 10 workers is directly tied to the real estate economy—construction, hardware, etc.

Second, developments in such a large sector of the economy have a “multiplying effect” on other sectors. The lumber industry, the production of dump trucks and fork lifts, home goods outlets like Ikea and other major outlets, all depend on the housing sector for their own growth and profits.

Third, for many workers, a home is the only real property that they own. Many borrow against the value of their homes—in effect, handing back whatever ownership they had to the banks. When home prices drop, banks register a minus in their assets column. Foreclosures multiply.

But it is not just housing. The U.S. auto industry is also facing the issue of overproduction in the U.S. market. Ford and General Motors have announced combined job cuts of 70,000 workers, according to the Nov. 1 Associated Press. And the auto industry is another one where there is a multiplier effect, in steel, glass and rubber production, for example.

An additional sign of an impending economic crisis is the surging price of oil. While the price of oil has fallen from its summer high near $80 a barrel, the price in early November was still near $60 a barrel—up from just $25 a barrel in 2003.

High oil prices have a special meaning for understanding the capitalist market. The world manufacturing industry



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Crisis in housing sector has left ‘for sale’ signs on increasing numbers of front yards.

Photo: Paul J. Richards/AFP/Getty Image
accounts for a huge share of oil demand. When manufacturing is expanding—in other words, when production is increasing—demand for oil surges and prices rise.

The biggest single cause for the surge in oil prices is China’s economic growth, which has been at least 10 percent annually compared to 2 or 3 percent in the United States and European capitalist economies.

China’s development is closely tied to the world market. While a large amount of China’s new production is going toward modernizing China, large amounts are also produced for export. Goods produced in China are flooding the same markets that U.S. and other imperialist corporations are competing for.

In other words, the boom in energy prices shows that the capitalist economic cycle is nearing a peak—and is bound to crash.

If an economic downturn is approaching, whether in months or in the next several years, how do revolutionaries prepare for the struggles ahead?

Hundreds of thousands of people have taken to the streets in the past few years against the criminal U.S. war in Iraq. Building the anti-war movement will not become less important. On the contrary, the capitalist class historically resorts to more and more dangerous adventures and confrontations as it faces economic crises.

But building the anti-war movement during an economic crisis opens new opportunities. It opens up the possibility for the working class to amplify that movement with its own class demands—not with a pacifistic message ultimately tied to this or that ruling class political party, but one infused with the spirit of class struggle and internationalism.

The economic struggles—for jobs, against evictions, for food relief—will take on greater importance, especially in the Black and Latino communities where the effects of racism and exploitation are already daily realities. The new Democratic congressional leaders will try to channel those struggles into safe, electoral paths. They fear most a militant, multinational movement that challenges the ruling class’ right to rule.

Normally, the organized labor movement is able to take advantage of upturns in the capitalist cycle to win gains. For most sectors of the union movement, that has not happened. In fact, the last years of economic growth have seen no real gains for the working class. Real wages have in fact dropped since 2003, according to the Aug. 28 New York Times.

So the labor movement, especially the sector representing manufacturing workers, is entering a period of downturn in a defensive posture. That means special responsibilities for activists in the unions to work hard to instill militancy and combativeness in the unions, whether in contract struggles or in day-to-day grievances. A militant labor movement can breathe life into the anti-war and other struggles facing the working class; a demoralized union movement tied to the Democratic Party can only be a drag.

The ruling class will attempt to divide us. But we are building the Party for Socialism and Liberation precisely for these struggles. This is what we exist for. Because without revolutionary leadership, our class will face the upcoming crisis as victims rather than as a class able to seize political power and reorganize society in its own interests.

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