Here we reprint a Socialist Action analysis of the 2008 Wall Street bailout. Today, once again, the U.S. ruling class is desperately trying to prop up its crisis-ridden capitalist system. We are already seeing the same “socialism for the rich” that this article pointed to the last time, as trillions of dollars are put into the pockets of Wall Street at an instant, while the working class is deprived of healthcare, shelter, and food and forced to work in deadly infection-threatening conditions as capitalists try to turn a profit by whatever means necessary.
By JEFF MACKLER
Originally published September 26, 2008
One day in late September 2008, the top representatives of the tiny hereditary US ruling class, the trillionaires who really run the country and own and control its banks, insurance companies and major corporations, cloistered in a very private locale, most likely in Washington, to figure out how to deal with what everyone today understands is the most catastrophic financial meltdown since the Great Depression of 1929.
No one knows who was present. There will be no official transcription of the discussion released until most if not all of the participants are long gone. When decisions are taken concerning the robbing of American workers to an extent unprecedented in the nation’s history, mum’s the word.
But everyone knows who was not present. No member of the U.S. Senate or House of Representatives – even of their Finance Committees – was there. President Bush was not. Neither were presidential candidates Obama and McCain. Indeed, none of these “representatives” of “our” government were consulted. This was a ruling class affair. The stakes were too high to allow mere hirelings to decide anything of substance. And the substance concerned nothing less than the future of American, if not world, capitalism.
When the decisions were made, the Congress and President were properly briefed and duly instructed to set about the task of engineering a spectacular Potemkin village public debate designed to convince a wary public that the two-and-a-half page proposal they received to grant at least $700 billion to their ruling class masters was best for the country. With the stage dramatically set for the show, Democrats and Republicans, both accepting the fundamental premises of the bailout, stammered and stuttered about how or whether to grant working people a dime’s worth of relief or to slap the wrists of bankers who gave themselves millions and billions in bonuses. They appeared before microphones to tell the world that agreement had been reached, adding without specification that provisions were made to help some foreclosure victims and limit future CEO compensation.
But the deed was done. Treasury Secretary Henry Paulson was granted unprecedented power to purchase virtually worthless securities, bonds, and other financial instruments. Whatever junk the ruling rich had for sale will now be purchased by Czar Paulson at a price that will only bring smiles to the corporate elite, who couldn’t sell it to anyone at any price.
It has now became clear that $700 billion was an initial figure only. Perhaps the final amount this time around will be $1.2 trillion. Indeed, the fake nationalizations the week before of Fannie and Freddie to the tune of $200 billion, the bailout/purchase of Bear Stearns, and the $75 billion to AIG, the nation’s largest and failed insurer, will add hundreds of billions to the package.
The congressional plebes who will approve the final package next week, protests duly registered and “compromises” made on both sides of the aisle, always do as they are told, as they did when they twice granted the ruling elite trillion dollar tax breaks under the first Bush regime and an equal amount under Clinton. It was Clinton, remember, who the New York Times called “the best friend corporate America ever had.” His last tax break/bailout amounted to $1.3 trillion, while his social service and welfare cuts exceeded the combined totals of the previous three Republican Administrations. There is only bipartisanship when it comes to figures of this magnitude, squabbles aside.
It is critical to repeat here what has been systematically denied by the ruling rich and their corporate media. The source of the present crisis does not lie in the failure of bad mortgages, or bad banking practices, or hyperspeculation, sheer stupidity or even capitalist greed. It lies in the undeniable fact that American capitalism is no longer king in the world marketplace. In the face of a merciless competition where the most sophisticated and technologically advanced corporations everywhere are pitted against each other for ever-shrinking markets, average profit rates have been on the decline for decades everywhere.
The world’s once-greatest corporations, like GM, now stand in line at Washington’s “socialism for the rich” trough for their own bailouts. GM, Ford, Chrysler, and virtually every other major corporation cannot effectively compete on the world marketplace.
Three or four decades ago, investment in the sector of the US economy that produces commodities for the US and world marketplaces, was some 85% of available capital. Today it has fallen to less than 50%. The laws of the system compel today’s robber barons to seek the most profitable investments. These are less and less in US industry.
Last year the ongoing “financialization of capital” process reached a peak with more than half of GDP resulting from speculative investments in the stock market, real estate and in a myriad of bank-driven pyramid-type schemes that created the fictitious values that are now evaporating.
Nor are the problems of the US economy due to “bad” decisions by US automakers or other companies, but instead can be traced to the inevitable functioning of an economic system with cyclical booms and busts, and the constant rise and fall of companies and nations subject to the interactions of a falling rate of profit, overproduction and underconsumption.
The titans of industry and their government have not been asleep at the wheel. They made every effort to remain profitable. They cut wages, eliminated pensions and healthcare for millions, transferred a million jobs a year to low-wage countries and employed immigrant workers to work for starvation wages in order to drive down the wage levels of the entire working class. The result has been a yearly trillion dollar transfer of wealth from us to them, from workers to the “struggling” ruling class elite who can’t beat the ever-present, ever-threatening international competition. Of course capitalists in every other nation face the same dilemma. They subject their working classes to the same horrors for the same reasons.
There is no way out for the ruling class other than on our backs. The US is the world’s largest debtor. The official debt is almost $10 trillion. Add in unsecured obligations to Social Security, Medicare and related mandated programs, already looted to the extreme, and the figure rises to 55, perhaps 65, trillion dollars of debt, and growing another trillion each year.
A huge proportion of US debt is held by banks in Europe and Asia. They loan the US money in return for access to the US market. But foreign banks and nations find themselves holding increasing amounts of ever-declining US dollars.
The US bailout architects asked their “friends” abroad to help fund the most recent bailout. Several of their chief spokespersons responded publicly with a resounding “No!” on September 25 in speeches to the UN General Assembly. They are caught between two equally catastrophic choices: bail out the US with additional purchases of bonds whose value falls in proportion to their confidence in the US economy, or suffer the consequences of the collapse of what is still the world’s largest market.
American workers have no interest in supporting bailouts for their bosses. To turn an old phrase, “What’s good for GM is bad for American workers.” The same is true for Wall Street trillionaires.
To begin to reverse the crisis, we must demand the nationalization of the entire banking system under workers’ control. Open the capitalists’ books so we can determine what has been stolen, hidden and/or squandered at our expense! Worker’s control of the banks, the energy industry and transportation! For the election of committees of workers to run these industries – workers who represent the millions whose pensions have been eliminated or are on the line, and whose jobs and healthcare have been disappeared. No to mortgage foreclosures! Restore and guarantee all pensions! For a real Social Security system that pays for quality healthcare and a quality lifestyle for all! Reduce present mortgage payments in proportion to the capitalist-caused decline in value! Bring all the troops home now from everywhere and spend the trillions for war on rebuilding the nation’s inner cities, schools and hospitals. One hundred percent tax on the war industries! Take the profit out of war and mass murder! Jobs for all at top union wages! Reduce the workday to 30 hours with no cut in pay to provide jobs for all!
To open a fight for all of the above, and more, the unions and allied organizations should convene an Emergency Congress of Labor to plan the concerted national fightback that can effectively challenge and reverse capitalism’s deepening assault on our jobs, well-being and very lives. Integral to the organization and success of this Congress is the full participation of the nation’s immigrant workers with whom unity and solidarity is essential for victory.
Break with the twin parties of capital! Organize the unorganized! For a Labor Party based on a fighting union movement and all the oppressed and exploited!
