Recently we had a forum on political economy and the current crisis.  At this forum there seemed to be some confusion about three concepts: how the bosses realize their profits, the crisis of overproduction and the tendency for the rate of profit to fall.  These three important ideas deserve to be understood individually and in their dialectical connections.

The realization question is an important basic concept in Marxist political economy.  Marx posited that while economic value is created in the production process by human labor, this does not put money in the hands of the boss.  That is, the boss has to actually sell products in the market to translate into the money form the surplus value (profits) produced by workers being paid less than the value their labor adds in the production process. 

A major problem is that workers are not paid enough to purchase everything that they make.  This is the realization question.  There are numerous ways that the bosses deal with this issue.  The bosses can buy up a lot of goods themselves. They can extend credit to the working class, which forces the workers to work off their debt in a kind of credit-card-slavery.  Most important, though, the bosses answer the realization question through competition and expansion.  The bosses look to find new “markets” by trying to undercut their competitors or by selling their goods to new people who have never had access to them before.  This is part of the initial drive toward imperial expansion.

Crises of Overproduction

Crises of overproduction are a periodic but consistent part of the capitalist system.  They are seemingly easy to understand: the bosses produce too much stuff, can’t sell it all and then many go out of business.  In order to survive, bosses compete to maximize their profits by expanding production to steal market share from their competitors.  All capitalists are doing the same thing — making more than their “fair share” of goods — leading to way too many goods being produced. 

These goods are now devalued as they sit unsold.  Companies collapse, workers are laid off and factories are shuttered.  These types of crises can begin industry specific, but they often (as now) expand into nationwide recessions and sometimes (as in the 1930s) to worldwide depression.

The tendency for the rate of profit to fall is a much more difficult concept to understand.  As argued above, the capitalists’ profit comes only from paying workers less than the value that their labor power produces in value.  The capitalists’ rate of profit is the amount of that “surplus value” they pocket as a percentage of their total investment (in machinery, raw materials and labor). If the amount of the total investment increases and the number and degree of exploitation of workers remains constant, the rate of profit falls.

The dog-eat-dog nature of capitalist competition makes increased investment in machinery as against labor inevitable.  Bosses must make their production more efficient and less costly or their competitors will be able to undersell them.  Mechanization and automation can give one boss at least a temporary edge and allow him to sell more of his products and increase his own profits.  Others will soon imitate the more “efficient” boss, though, and soon the playing field will be leveled. However, now all the capitalists’ total investment has increased and their profit percentage has decreased.  This process goes on over and over again as long as capitalism exists.

If the capitalists’ rate of profit must fall and fall, it is fair to ask why (in the face of this “self strangulation”) capitalism doesn’t just collapse of it own weight.  The answer lies partly in the actions bosses take to increase the level of exploitation of the working class and partly in the periodic destruction of capital (in depressions and war). But in reality, capitalism can never end unless a revolutionary party exists to lead the working class to overthrow it.

If workers can be paid a smaller percentage of the value they produce, then that extra surplus (profit) can offset increased investment in machinery.  Moving auto workers $30+/hour jobs from Detroit to the $8 wage levels in the South and Southwest is one capitalist answer to their falling profits. Attacks on government workers and cutbacks in education, health care and pensions also allow capitalists to increase how much they can profit off the working class by reducing how much they have to pay in the taxes and fringe benefits that keep their rotten system running.  All this has increased the level of racist and sexist exploitation — yet another bosses’ strategy to prop up profits (and keep workers divided).   

An even more important strategy of the bosses is to transfer and expand production in imperialist ventures around the world. Wages race to the bottom of a few-dollars-a-day-starvation level, making workers misery the price to be paid for the capitalists’ drive to survive.  Overthrowing this system with communist revolution is indeed the only answer.

The capitalists find, though, that even these desperate measures to squeeze every dollar possible out of the world’s working class isn’t enough to keep the profit levels high enough for their system to function.  Even fascist measures can force wages down only so much until workers can no longer survive and reproduce.  Eventually imperialism has expanded into all corners of the world and there are no more new workers to be exploited at lower and lower wage levels (a situation, for the most part, that capitalists increasingly face today).

Imperialists Resort to War

When this happens, rival imperialist powers resort to the deadly destruction of world war to expand their areas of potential workers to be exploited and reverse their falling profit rates.  A secondary result of these wars is the destruction of vast amounts of machinery and capital investment (and millions of workers’ lives). The surviving bosses are then able to re-establish high enough rates of profit to again jump-start capitalist production. Capitalism can only survive by destroying worker-soldier lives so that other workers can be forced into a dead end system of exploitation.

As Marxists we strive to understand the world.  When we reach a better understanding of economics we can explain why the problem for workers is not a bad boss or a rotten politician. The competitive nature of capitalist competition forces all bosses to sharpen the oppression of the working class.  Gaining a greater understanding of the real political economy of capitalism can put the working class one step closer to realizing that reforming capitalism into a “fair” system just isn’t possible.  Only an egalitarian communist world can put an end to the poverty, wars, racism and sexism of the bosses’ rule. 

On March 11, a massive 9.0-magnitude quake hit Northeast Japan on the east coast of Honshu, the country’s largest island, which, combined with the 33-foot waves of the tsunami it created, killed 4,100 people and ignited hundreds of fires. In the disaster’s wake, entire villages, ports and even schools vanished. Some were evacuation sites for local residents situated on the coasts.

The tsunami hit Miyagi and Iwate prefectures the hardest, obliterating everything in its path, causing the highest death tolls, which could exceed 10,000. The quake’s magnitude has led to frequent aftershocks, including a 6.0 quake on March 15 that hit Shizuoka, extending over the entire Kantou (Eastern) region.

Additionally, the quake disabled the cooling mechanisms of Japan’s oldest nuclear power plant, sparking a meltdown that has forced the evacuation of hundreds of thousands in the surrounding area and causing widespread fear that is being spread by the mainstream media on a 24-hour basis.

While there has been some criticism of the warning systems that gave residents little time to evacuate, most mainstream media sources in the U.S. and elsewhere emphasized Japan’s preparedness for such disasters and have praised the rapidity of rescues, evacuations and recovery efforts. As the world’s third largest economy, Japan has taken significant steps to safeguard its vulnerability against such disasters through fortification in infrastructure and the training, beginning in kindergarten, on how to react to earthquakes and other disasters. Workers in all areas hold weekly practice drills.

Workers Most Vulnerable, Suffer the Most

The protection and preparedness against such disasters, however, is more evident in the capitalist centers like Tokyo or Sendai (the largest city in the Northeastern region, which suffered significant damage), but become lax moving toward the outer regions where the damage and loss of life was the most substantial.  This is because most of the residents of these areas — like the small village of Saito in Miyagi prefecture which was totally wiped out — are predominantly working-class families: factory workers, farmers and fishermen/women, and the elderly who built homes there which are the most vulnerable to such catastrophic events. Moreover, tens of thousands of jobs will disappear, further intensifying the exploitation of the working class.

This factor connects the loss of life here to the earthquake in Haiti, or to the 2004 tsunami, which killed hundreds of thousands of local residents on the coastal regions of Indonesia, Malaysia, and Sri Lanka, among other areas, where they are forced to live in conditions unprotected by disasters.

The responsibility and culpability of the national governments in such catastrophes cannot be overlooked, their responsibility is inherently part of the overall picture of capitalism’s failure to plan for social need globally, which in this case works on a number of levels.

Firstly, while loss of life in Japan’s catastrophe is horrific, it is minimal when compared to Haiti’s quake, where the death toll exceeded 200,000, or in the 2004 tsunami, with over 300,000 deaths. Thus, under capitalism some populations are “worth” more than others, according to the hierarchy of profit: as the world’s third largest economy, Japan has a vested interest in protecting itself and its workers from such events, albeit minimally, while in “unprofitable” places like Haiti, Sri Lanka, or even the 9th Ward of New Orleans, there is no room for such planning.

This also reveals the inherent racist dimension of capitalist planning: as a “developed” capitalist country, there is much less racism directed at Japan, emphasized on CNN and other mainstream outlets in their current coverage. Furthermore, most of the discussion on NHK (Nippon Housou Koukai), the largest Japanese news broadcasting system, and on international news is the threat of a nuclear disaster, which is unfolding by the minute.

NHK has been broadcasting the levels of radiations that may leak, with some emphasis on directing the blame both at Prime Minister Naoto Kan’s administration and at Tokyo Electric Power Company (TEPCO) which owns the Fukushima plant. The latter has been cited continuously for violations and is outdated in terms of equipment and meltdown-controlling mechanisms.

Corporate Profits vs. Communist Planning

The meltdown is symbolic of how corporate interests are the priority under capitalism (TEPCO being one of the most profitable corporations, according to the Nikkei stock index), and how planning and the running of such facilities is done poorly. Under communism such events could be minimized or eliminated, since workers would have a social and critical awareness of how to operate nuclear plants properly, for the benefit of the social need, rather than according to the drive for maximum profits.

Finally, the disaster is already being played out through the lens of inter-imperialist rivalry.  Obama reacted to the crisis by pledging “support” for Japan, including a significant aid package that most likely will entail the re-evaluation of Japanese-U.S. political and economic relations. U.S. rulers want to use Japan as a buffer against the rise of China. This means increasing the pre-existing tensions between Japan and China over control of the undeveloped gas fields in the South China Sea, as well as the power to exploit the mineral-rich islands that have sparked recent disputes. This provoked pro-nationalist protests in both countries.

Additionally, with Japan’s ongoing economic woes deepening as a result of the current crisis, there has been discussion of the “disaster capitalism” model, which would allow multi-national corporations to privatize the disaster areas and rebuild according to the priority of profit, as is occurring in New Orleans, Argentina and elsewhere.

Capitalism, Liberal Reformists, Phony ‘Communists’ No Saviors

Capitalism always works to the detriment of workers everywhere.  Workers in Japan, who have been brainwashed by anti-communism, need to recognize that capitalism will not save them from such disasters, nor will the false hopes of the reformist parties like the Democratic Party of Japan, or fake leftists like the Japanese “Communist” Party, which are the most vocally critical of the recent catastrophe.

All workers need to recognize that a system based on profit will ultimately fail to provide the necessary means to rebuild the world, and in fact has been the systemic cause of the devastation and after-effects of environmental disasters. We must unite to build the internationalism and solidarity of communism, creating a global community of workers who can run the world without capitalist bosses!J

Nuke Plant Built on World’s Hottest Quake Spot

Japan’s heavy reliance on nuclear power is the by-product of decisions made by Japan’s ruling class over the past four decades. Its 54 nuclear plants account for 30% of current power generation, projected to rise to 50% by 2030 as more plants are built.

In 1973, when an oil embargo hit the OPEC countries, staggering the world economy and particularly Japan, nuclear power made up only a small fraction of Japan’s energy supply.

As the World Nuclear Alliance notes on its website, “Japan was dependent on fossil fuel imports, particularly oil from the Middle East (oil fuelled 66 percent of the electricity in 1974). This geographical and commodity vulnerability became critical due to the oil shock in 1973. Re-evaluation of domestic energy policy resulted in diversification and, in particular, a major nuclear construction program. A high priority was given to reducing the country’s dependence on oil imports.”

The placement of dozens of nuclear power plants above the planet’s most active geological fault zone (called “the ring of fire,” the site of 90% of the world’s earthquakes) — and in one of the world’s most densely populated regions — could be considered insane. But amid the capitalist world’s imperialist rivalry, it was imperative for the Japanese bourgeoisie to secure an adequate domestic energy supply, since the country has little oil and gas and insufficient coal.

Moreover, the Japanese ruling class had previous experiences with energy crises well before 1973. As far back as World War II, one of the major driving forces behind Japanese imperialism’s decision to launch preemptive war against the U.S. was the Roosevelt administration’s embargo of U.S. supplies of fuel and scrap metal in retaliation for  the Japanese invasion ofChina.

Despite the admitted technological prowess of Japan — the world leader in adapting construction methods to earthquake-proofing its buildings, as well as its high degree of preparedness of the population — this natural disaster has laid bare not only tectonic fault lines, but social ones.

The profit system is incapable of ensuring the safety, health and well-being of workers, even in a country as “advanced” as Japan. Only the abolition of capitalism and the establishment of a world based on workers’ rule can guarantee a misery-free future for the working class. 

No matter what course of action U.S. rulers may take in Libya, their main focus is on energy’s grand prize, Saudi Arabia and the greater Persian Gulf region. As important as Libya’s 46-billion-barrel reserves are, threats to far richer sources preoccupy Obama and the oil-fueled imperialists he serves.

As of March 11, dictator Qaddafi was brutally retaking key oil towns from the rebels, indiscriminately slaughtering civilians and his opponents. Leading senators — Democrat Kerry, Independent Lieberman, and Republican McCain — have called for a “no-fly zone” entailing U.S. bombardment of Libyan planes, air defenses, and runways. But, on that very day, March 11, Obama sent war boss Robert Gates to embattled Bahrain, on the Persian Gulf — not to Libya’s U.S.-backed neighbors Tunisia or Egypt.

Bahrain houses the U.S. Navy’s Fifth Fleet, which polices the globally-crucial oil exports of U.S. protectorates Saudi Arabia and Kuwait, U.S.-occupied Iraq and U.S. enemy Iran.

Kenneth Pollack, a Gulf expert having worked at the CIA, the National Security Council, the Council on Foreign Relations, and the Brookings Institution, wrote a book in 2002, “The Case for Invading Iraq.” Now he has written: “It is not clear that... Libya is enough of a national interest to justify...long-term military and diplomatic commitment. Just within the Middle East, there are countries of far greater importance to the United States that may well need us to invest those resources there to make sure they turn out right.” (Brookings website, 3/09/11)

Iraq, following two U.S. invasions and sanctions that killed over two million, has, for now, “turned out right” for Exxon Mobil. Consequently, the latter now enjoys access to Iraq’s West Qurna oil field, one of the world’s biggest.

U.S. Rulers, Exxon-Mobil, Won Big in Iraq War, But Could Lose All in Saudi Destabilization

Stratfor, an outfit that provides geostrategic analysis to U.S. corporations, explained Gates’s travel plans on its website (3/9): “Unlike Libya, where the effects are primarily internal, the events in Bahrain clearly involve Saudi, Iranian and U.S. interests....Bahrain is the focal point of a struggle between Saudi Arabia and Iran for control of the western littoral [shoreline regions] of the Persian Gulf ....[Saudi] destabilization would change the regional balance of power and the way the world works.”

In other words, upheavals in Saudi Arabia — home to more oil than any other country in the world — could end the biggest racket in the history of imperialism. Exxon Mobil, Saudi Arabia’s biggest customer and investor, today controls the lion’s share of the kingdom’s production. Through Exxon and its U.S. and British allies — Chevron, BP and Shell — entire nations are beholden to U.S. rulers’ terms for the supply of capitalism’s lifeblood.

Obama, Pentagon Boss Gates Oppose Only Those Wars Not in the Rulers’ ‘National Interest’

Obama’s “Defense” Secretary Gates opposes a “no-fly zone” in Libya only because it detracts from his imperialist masters’ larger need to secure the Middle East. Note his February 25 warning to West Point that any future war secretary advising a U.S. president to send a large land army into Asia, the Middle East or Africa, “should have his head examined.” Colonel Gian Gentile, an active-duty military fellow at the ultra-imperialist, Rockefeller-led Council on Foreign Relations (CFR), translated:

“The secretary is suggesting that, if a future secretary of defense advises an American president to send a significant land force into a foreign country to do nation building, the analysis has to show that that kind of effort... is worth the costs.... because it will be a costly and long-term endeavor.” (CFR website, 3/2/11)  Gates, hardly a pacifist, rewords Gen. Colin Powell’s “Doctrine” which clearly specified that indispensable, imperialist goals (like securing Saudi Arabia) require overwhelming U.S. military force.

The workers and youth rebelling against fascist dictators in North Africa and the Mideast have put their lives on the line in battling the police and the armies. They have struck in demanding jobs and freedom from poverty. They deserve the support of workers worldwide.

But for the working class, two deadly misunderstandings are woven into this upsurge. First is thinking that it represents “liberation.” Without militant, class-based, communist revolution, one gang of exploiters will replace another in every country involved. Secondly is the assumption that any temporary reluctance of U.S. rulers to deploy deadly force shows “peaceful” intentions. In reality, U.S. imperialism’s continuing existence depends on control of Mideast oil. Obama & Co. and their successors will fight for it to their last bullet and to the last drop of workers’ blood.

It is up to the working class, and especially to communists, to mobilize our forces wherever we are — in shops, unions, schools, within the military, in churches and community organizations — to turn the class struggle against the ruling capitalists into a fight that goes beyond the immediate one for reforms. The rulers hold state power and always can, and do, take back these reforms. Their goal of maximum profits — and their system’s inevitable crises which produce mass unemployment, racist exploitation and imperialist war — drives them to demand these give-backs from the working class.

Only a communist revolution that smashes the bosses’ state power and their racist system altogether, creating a society run by and for our class — which produces all value — can free us from the misery of the profit system. 

MADISON, WI., March 12 — Today over 100,000 workers descended on the capitol here to protest the bill introduced by Republican Governor Scott Walker and passed by the State Legislature, removing collective bargaining rights for public employees, including teachers.

Fourteen Democratic Party Senators hiding out in Illinois to forestall the bill’s passage failed miserably because Walker maneuvered to pass the bill without them.  However, flanked by bagpipe-playing musicians, flags and Jessie Jackson, they returned today to Madison welcomed as heroes: “Thank you Fabulous 14, thank you!” 

Our PLP contingent was there to bring our message of communist revolution and working-class solidarity. We distributed 500 CHALLENGES and 1,500 leaflets.

Our first speaker announced on our bullhorn that we’d come from Indiana and Chicago and this received a huge “Yeah!” He thanked all the workers for their courageous stance against these latest anti-working-class attacks. He also noted that they are occurring in Indiana and Chicago as well and that we need to strike against this assault.

Then, referring to one of the popular chants of the day — “recall Walker, recall Walker!” he declared, “Recalling Walker will not work but smashing capitalism will.”

The next speaker encouraged workers to read CHALLENGE and the Party’s leaflet “Middle-Class Dream??? Or Working Class Power!!!” It reported that while the Madison-area Central Labor Council had voted for a General Strike, the AFL-CIO and its top dog Trumka had turned workers’ militant mass anger into a passive recall petition limited to the voting booth. The union leaders have sold out our class and will continue to do so.

The “middle-class dream” that union leaders and politicians want us to buy into has been a nightmare for most black and Latino workers due to the racist nature of capitalism. The former auto capitals of Detroit, Flint and Milwaukee have unemployment rates exceeding 50%! Among young black males it’s around 75%. “It’s not Walker it’s capitalism!” said the speaker. “These attacks have been coming fast and steady under the Democrats too.” Obama’s bailout of the auto industry put many more workers on the unemployment lines while the auto bosses are now reaping huge profits.

‘Thanks for keeping it real…’

Several workers stopped and took our literature. One AFSCME member told us he was looking for a job because he was about to be laid off. He said that when he told his union leader we needed to prepare for a strike the union “leader” replied, “No, that’s not what we need to do.” Another worker listened to our speeches for several minutes, took literature and gave one of our comrades a hug, saying, “Thank you all for coming and keeping it real.”

There was much opposition to our line, too. The push for recall had definitely replaced the call for a general strike. Reliance on Democratic Party politicians has replaced the power of the workers and students who early on had occupied the State Capitol and shut down the schools. In essence, today’s rally became a dangerous “get-out-the-vote-for-the-Democratic-Party” event.

However, we should have brought many more comrades and friends with us. One Party friend contacted us because she knew if anyone was going to Madison we would be. But, self critically, we should have called her. We marched and hung out the whole day together, talking about communism and why only in a communist society could we share the fruits of our labors, without racism, poverty or imperialist oil wars. While she’s still not ready to join, after today she’s much closer.

Other comrades who went got valuable practice in putting forward communist ideas to workers who otherwise would not be exposed to them. Only the Party was championing the working-class to take state power.

While we call for a general strike to shut down the entire system and unite the working class, still this is just a tactical move. The only long-run strategy we can follow is winning millions of workers to fight for communist revolution.

We agreed that our political offensive must be recruiting and developing more comrades through this struggle in Wisconsin. We’ve formed a committee to organize visits to contacts we made in Madison and to plan regular trips there. We also want to have some Madison workers speak at our Chicago May Day dinner.

However this struggle in Wisconsin turns out, we have everything to win by seizing this opportunity to build the Party. The struggle for state power and the building of a communist society is not a mere dream for the international working class.