Capitalism Gives Birth to the Socialist Revolution

After the 2008 crash, the Federal Reserve began to print money in fantastical quantities. They lent it to banks at negligible interest rates, in the hope of increasing loans and investment to stave off collapse of the world economy. However, as a zerohedge.com article shows (in the graph below) the circulation of money actually decreased in nearly inverse proportion to the priming of the stimulus pump. This is precisely the opposite result expected by the bourgeois economists. It shows that monopoly capitalism has reached an impasse. The system is groping in the dark and could stumble into something dangerous.

Money vs. Capital

The zerohedge article fails to mention that money and capital are distinct, with different roles in the economy.

We all buy goods and services with money, which is the universal equivalent. Money is a way of measuring the value of one thing against another. A package of batteries, for example, costs five dollars, but it costs five thousand dollars for a large-screen television. The television embodies more value than the batteries, because of the greater labor time and expenditures that went into the creation and assembly of its components.

Capital, though, is money or machinery or infrastructure that is applied to the production of goods and services. Moreover, capital requires exploitation of labor, as a virus needs a host, to multiply itself in the form of profits. And what after all are profits? Contrary to the charade that they fall from heaven into the deserving laps of entrepreneurs, profits are in reality the unpaid portion of the workers' creative activity.

Here we have the process at the root of our economic system. This is the gory guts of the capitalist mode of production, stripped naked of the myth of free enterprise. For it is the working people who produce the wealth, but they only receive a small part of it back as their wages.

Crisis of Capitalism

The normal ups and downs of capital accumulation have given way to stubborn stagnation in every corner of the world. The long period of economic growth after the Second World War is but a distant memory. Credit-fueled growth of the eighties and nineties has left a painful hangover of debt. The property bubble of the new millennium exploded with a destructive blast.

The market is saturated, purchasing power is weak, and free trade deals are causing a competitive race-to-the-bottom. Where is the incentive to invest? Far from a time to invest, now is a time to mothball operations and lay-off staff.

Fortunes today are often made through financial speculation, and not through investment in production. The capitalists squeeze costs and shed jobs, for instance, by merging conglomerates; they buy back their own stocks to inflate asset values (without benefit to the wider economy); and they rely on stock market manipulations to gamble with the savings of working people.

The lengthy crisis is weakening the ruling classes of the nation states. They are seen to have no solutions to the chronic problems. As a result, people are shaking off routine and complacency. The youth especially are feeling the zeitgeist. They are asking penetrating questions about why society functions in favor of the rich; and they are looking for answers outside politics as usual. The legitimacy of the social order is under a microscope. The ruling ideology is losing its grip.

Disarray in the ruling classes is evident in many countries. In the US election primaries, for example, Sanders and Trump are causing cracks to appear in the edifice of the two-party hydra, injecting instability into the political process. In Britain the resurgent Labour left is prompting indignant military leaders to mutter about the possibility of a coup. In France the government of Hollande, elected on a platform of anti-austerity, caved in to big business and implemented cuts, and is now plumbing the depths of unpopularity. Spain has been without a real government for months, due to fractured national election results, which have made a shambles of the old political setup.The examples above could be multiplied at will, but they are enough to show the case.

The ruling classes have tried nearly everything in attempts to escape the crisis. When massive bailouts of the banks and monopolies initially failed to do the trick, they tried to jump start the economy with stimulus measures and printing money out of thin air. They have also implemented austerity and cuts to public spending, but this has proven self-defeating and harmful to the chances of a recovery. They are tinkering with low interest rates, and even with negative interest rates, which shows the desperation of their position. But nothing whatever has been accomplished with these devices. Debts and deficits have continued to mount; unemployment levels among young adults in most countries are at all-time highs. The banks are even bigger than they were in 2008, when they were dangerously 'too big to fail.' Growth sputters along, if it occurs at all. It is becoming apparent that the next downturn will completely expose the emptiness of the economic toolbox of the bourgeoisie.

The next phase of the crisis could take on an even more ominous character. We should not forget that in the period after 2008, the world economy was saved from total disaster by the strong economic performance of China (the largest importer of goods in the world). During a new slump, however, China will not be able to play the savior role again, nor will any other country. China too is entering crisis. Growth rates are plummeting. The building and lending spree of the last decades has engendered enormous amounts of shaky debt and overcapacity in industry and real estate. As purchasing power declines in the world, there is a knock-on effect on Chinese manufacturing. Millions of Chinese assembly-line workers have lost their jobs. Millions more are facing redundancy in the heavy industries (due to a huge oversupply of steel, concrete, coal, chemicals, etc.). All this has the rebound effect of dampening imports into China from countries such as Brazil, Canada, Nigeria, Argentina, South Africa and Germany. It is a multi-dimensional feedback loop of economic devastation. Globalized capitalism has managed to globalize the crisis itself.

The world is in an extended period of dislocation. It is akin to the lengthy Depression era of the 1930s that led to trade wars and a world war. As then, the crisis today is rending the fabric of nation states and power blocs. It is sharpening the struggle for markets and influence; it is raising the military stakes between the major powers, as we see in Syria, Ukraine and the South China Sea. Massive migrations of economic refugees are on the move toward Europe, but salvation is nowhere in sight.

Under these circumstances, convulsions will occur in many countries. There will be political swings to the left and to the right, as people look for a way out. Mass protest movements will wax and wain. Political parties will be tested and rejected and replaced. And if history is anything to go by, revolutionary struggles against capitalism can arise if the crisis is long and protracted. However, no ruling class gives up its privileges without a serious fight; and no oppressed class wins the fight without conscious organization and a revolutionary program. If social revolution, therefore, fails to develop in time, if working people remain in class bondage, then moribund and senile capitalism will likely linger on life support for many dreary decades of social decay to come. Truly the choice at that juncture will boil down to socialism or barbarism.

Socialist Revolution

Marx explained that the dynamic of capitalism transforms competition into monopoly. This truth is very evident today, when 62 individuals own as much as half the world's population (Oxfam). Such concentration of wealth should be enough proof for anyone that capitalism cannot be reformed but only overthrown. Its irreversible state of monopolization makes it ripe for expropriation and socialist revolution.

Capitalism is not motivated by concerns of freedom and opportunity, as it likes to let on. That joke has worn very thin. Creating jobs is not its real concern either, but is just its way of making profits. Capital is only concerned with accumulation of more capital. It desires to dominate markets and competitors. It is always on the lookout for pools of cheap labor as it seeks to reproduce itself everywhere.

In terms of logic and social justice, then, the solution to the crisis of humanity is self-evident. Private and egoistic ownership of the commanding heights of the world economy must be abolished; it belongs only in history books. Likewise, making profits through exploitation of labor must give way to cooperative labor, and a commonwealth of working people.

The hour of revolution has surely come! Society must free itself from the straitjacket of capitalism with its narrow focus on private profit. The economic and political power of the banks and monopolies must be broken forever. A new form of popular power must emerge and cast aside the putrid bourgeois state. Democratic workers control over the economy must prevail, which means, in the first instance, the expropriation of the banks, insurance conglomerates, hedge funds and industrial monopolies. Only then can the ample resources that exist in the economy (hitherto hoarded by the ruling class) be used to build a new society of cooperation and equality.

This is the socialist revolution! It is already forming by necessity within the womb of capitalism itself, and will ultimately be born on a world scale.